There are signs that East Timor will soon have not only a new President but also a new government, one that will not include current Prime Minister Xanana Gusmao.
The electorate’s focus is now on the second round Presidential elections, due on 16 April. However the new government will be further shaped by the June parliamentary elections. That government will have a series of challenges, not least from the five year legacy of Gusmao’s government.
The Presidential second round is beginning to favour the Fretilin candidate, Francisco "Lu Olo" Guterres (28.8 per cent in the first round). Most of the Timorese Social Democratic Association (ASDT) and former Fretilin Minister Rogerio Lobato (who ran fifth with 3.5 per cent) now back Lu Olo. The three female first round candidates, plus Lurdes Bessa, the Vice-President of the Democratic Party (PD), now also back Lu Olo.
On the other side, important allies of Gusmao, who backs former army general Taur Matan Ruak (25.7 per cent in the first round), have the current Prime Minister at arm’s length. Third and fourth place-getters, President Jose Ramos Horta, PD leader (and Parliamentary President) Fernando "Lasama" de Araújo, and Social Democratic Party (PSD) President (and Gusmao’s Foreign Minister) Zacarias Albano da Costa have all called on their supporters to exercise a "conscience vote". All this does not bode well for Taur Matan Ruak or for Gusmao.
Horta has also made some comments against Taur’s campaign (over the use of military uniforms and intimidation), indicating he favours Lu Olo. Some suggest Horta wants to block a second Gusmao term.
Whoever wins the presidency, the most likely parliamentary outcome is a Fretilin-led coalition. Fretilin has always been the largest party in Timor. The only reason they were excluded from government in 2007 was that Gusmao managed to unify other groups against them. Since then, Fretilin’s discipline has held up and the anti-Fretilin coalition has collapsed after bitter recriminations within the Gusmao-dominated government. A number of Gusmao’s former allies would now work with Fretilin.
The collaboration announced between President Horta and the Democratic Party (PD) President Fernando "Lasama" de Araújo (third and fourth in the Presidential first round) does not signify a party block larger than Fretilin, even though their combined vote was 36 per cent.
Both men are well known and enjoy personal support, but that will not translate directly into parliamentary votes for the PD. Horta’s supporters come from a wider group, while Lasama’s personal vote in the 2007 Presidential elections was considerably higher than the PD vote that year. On the other hand, the Fretilin parliamentary vote is likely to be higher than Lu Olo’s personal vote, as it was in 2007. Nevertheless, Horta’s backing for the PD might mean that some of them would become candidates for inclusion in a Fretilin-led coalition.
Potential leaders of the new government are former Prime Ministers Mari Alkatiri and Estanislau Da Silva and former Deputy Prime Minister and Health Minister Dr Rui Araujo, who has worked with Fretilin for some time, but only recently joined the party.
It seems a change in government may be coming. So what legacy will Gusmao leave, and what are the key challenges for the new government?
Much has changed since independence. Most obviously, annual budgets have increased ten-fold, with incoming petroleum and gas revenue. Many of the basic elements of constitutional government are firmly in place. Yet there has been squandering of much of the new revenue, an escalation in corruption and waste, and failures to invest in the key sectors of education, health and agriculture.
Gusmao’s legacy includes a series of economic liberal measures, a culture of corruption and weak capacity building. An elite culture was nurtured, where large "packets" of private contracts were distributed, combining infrastructure development with "economic stimulus". This "big money" approach approved of by economic liberals such as former World Bank official Jeffery Sachs, did little to build institutional or human capacity. In many cases the infrastructure outcomes were seriously deficient. Any new government has to face the reaction of those elite groups if and when the tap is turned off.
Gusmao’s coalition government has had little policy coherence, in part due to internal conflicts. Follow through on important programs suffered. The national literacy program, started by the Fretilin-led government, was neglected. The important health program with Cuba was maintained, but there was little investment in the new faculty of medicine. Hundreds of students arrived back from Cuba over 2011-12 to find very limited general development of the national health system. Investment in schools and the national university was similarly limited.
Timor’s 2006 political crisis damaged agricultural programs and capacity and, as a result, domestic farm production in face of the 2008 global food crisis was weak. Import-dependent food programs were needed, but these too became a target of corrupt dealings. Support for small farming, which employs around 70 per cent of the population and forms the basis of future sustainable food supply, had never been high. Under Gusmao’s government it fell from 5 per cent to less than 3 per cent of the state budget.
At the same time, there were several attempts to lease out land to foreign owned agro-industry and bio-fuel companies. Most of these projects did not go ahead. The parliament did change the Petroleum Fund law, removing many of the prudential controls on the country’s main financial asset. Up to half that fund might now move offshore (even before the parliamentary elections) into the less accountable hands of external fund managers. And while the state budget became more dependent on petroleum revenues, the abolition of several classes of taxes restricted government options for raising alternative revenues. The tax base is very narrow.
Altogether this is not a pretty developmental picture for a country which had the advantages of relative stability, economic growth and substantial state revenues. One of the key lessons from Gusmao’s government may be that a great resistance leader does not necessarily make a great nation builder.
Assuming that the new government will not be led by Gusmao, the first step would be to develop and chart a new development strategy.
A key priority must be the approach to education, training and general human capacity building. Gusmao’s SDP did in fact have ambitious school completion objectives, but lacked the means to achieve them. State budget allocation to education fell from 15 per cent in 2005 to 10.2 per cent in 2010. Fourteen developing countries spend more than 25 per cent of their state budgets on education, and hardly any of these have the population growth rates of East Timor.
Similarly, public spending on health fell from 12 per cent of the state budget in 2005 to less than 6 per cent in 2010. That is, a strong decline in commitment to public investment in health, alongside the most rapidly expanding body of doctors in the world, thanks to the Cuban training program. The development monitoring body La’o Hamutuk points out that commitment to education and health shrank even further in the 2011 budget, to "less than a fifth as much as [the]physical infrastructure contracts with foreign companies".
Another priority area must be agriculture and food security. The Gusmao government’s attempt to push into new export cash crops was counterproductive, in a country with limited arable land, food import dependence and a history of food crises. Some of the worst, recent Millennium Development Goal (MDG) outcomes were in child malnutrition. This Achilles heel in Timor undermines progress in health and education alike.
At the root of it are failures in rural development. A lot of attention is paid to Dili, but the fact is that most of the country’s population is rural based. Further, the only sustainable food security solution lies in strong support for a small farming sector. In this regard Timor may have more to learn from the Japanese than from big agricultural exporters like Australia.
Yet another important challenge is how to manage the diverse army of foreign aid bodies or "development partners" in the country. The long term impact of the dual economies, inflation and outright racial discrimination from such regimes can be seen in cities such as Luanda, N’Djamena and Port Moresby: among the most expensive and unequal cities on earth.
Yet East Timor still has the capacity to develop that combination of a strong state and levels of participation which seem essential for successful development. Its national identity, sense of history and social conscience all remain strong. Despite all the recent problems, we can still expect remarkable things from this small country.
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