Insights and Analysis

U.S. Secretary of State Clinton’s Timor-Leste Visit Highlights Growth

September 12, 2012

By Silas Everett

Last week, U.S. Secretary of State Hillary Clinton arrived at Nicolau Lobato Airport in Timor-Leste. The plane sailed in low over pristine reefs with the U.S. flag on the tail of plane and lettered in white then neatly across the powdered blue body – “The United States of America.”

Banana trees lined the road from the airport, and 200 or so children dressed crisply in dresses or slacks and polo shirts waited with great anticipation along the newly paved road. The motorcade soon approached and Secretary Clinton waved at the students. The students waved back and remained standing looking in the direction that the motorcade had come from, seemingly in anticipation of something else. When nothing came and the traffic started again, the students seemed to shrug, appearing to have wanted a grander spectacle.

In the statement put out by the State Department prior to her trip to Cook Islands, Indonesia, China, Timor-Leste, Brunei, and Russia, Secretary Clinton spelled out that the purpose, broadly, of her visit to the Asia Pacific region was to “emphasize the depth and breadth of American engagement across economic, people to people, strategic, environmental, and security interests.”  Specifically for Timor-Leste the statement explained, “She will emphasize U.S. support for the young democracy of Timor-Leste in her meetings with senior officials.”

Clinton is the first U.S. Secretary of State to visit Timor-Leste since its independence in 2002, so analysts in the daily news cycle dug in for a bit more grist.  Like the students lining the road in search of something more monumental, a trail of similar reports began popping up. What did her visit really mean? The BBC World Service reported the purpose of Secretary Clinton’s visit to Timor-Leste was to meet the country’s newly elected President Taur Matan Ruak and Prime Minister Xanana Gusmao in an effort to shore up relations in light of large Chinese investment in the country’s infrastructure of late. The Wall Street Journal wrote that the visit “comes just months after the U.S. stationed troops on Australian soil nearby for the first time. Basing up to 2,500 marines in the northern city of Darwin was widely seen as an effort to counter the growing sway of China in the region, including East Timor.”

It is true that the Chinese development scorecard in Timor-Leste boasts gifting the Ministry of Defense Headquarters, Presidential Palace, Ministry of Foreign Affairs, Center for Diplomatic Studies, Army barracks and housing, and patrol boats. Yet, so far the Timorese government has been careful to refrain from letting the Chinese go further and build anything that may affect the country’s strategic relations, such as with radar systems, which the Chinese had proposed in the past.

Construction work outside the Presidential Palace.

Construction work outside the Presidential Palace in Dili. Timor-Leste’s development dreams rest largely on the use of its finite petroleum resources to spur non-oil economic growth. Photo by Conor Ashleigh.

The non-defense development efforts by the U.S. in the country are significant. Their importance is not missed by the young democratic nation. Many Timorese have benefited, for example, from establishment of a fair trade coffee cooperative that accounts for the majority of the country’s non-oil exports earnings. The U.S. has also contributed to substantial decreases in child malnutrition within a suite of supported health program activities. USAID also supports a national system providing legal aid services to vulnerable groups where women make up more than two-thirds of the clients. (The Asia Foundation is involved with this latter program.)

A more sober way of describing Timor-Leste’s security relations with China and the U.S. is that Timor-Leste seeks to benefit economically and politically from relations with a rising China while remaining close to the U.S. and Australia.  As a newly independent nation it has good reason to maximize its sovereignty.  Timor-Leste has suffered from 450 years of colonial rule, Japanese occupation during World War II, and 24 years of Indonesian military occupation. However, to avoid stirring the geopolitical pot, Timor-Leste must perform a balancing act requiring public caution as much as raw diplomatic skill.

Timor-Leste’s development dreams rest largely on the use of its finite petroleum resources to spur non-oil economic growth.  The row between Timor-Leste and Australia’s Woodside Petroleum over the location of an LNG processing plant has not helped to subdue fears of further Chinese expansionism. Peter Coleman, chief executive of Woodside, rhetorically asked, “Who would risk billions of dollars of shareholders cash [in an onshore facility] in Timor-Leste?”

While claims of heavy geopolitical competition over oil in the Timor Sea are spurious, China is viewed to have invested more heavily in the private sector in Timor-Leste than other countries.  In fact, the Prime Minister Gusmao admonished Australian businesses early this year at the Australia/Timor-Leste Business Council in Sydney. He said Australian businesses “should make the most of the ‘first mover advantage’. I never went to China to spread this message but the Chinese heard it clearly!”

To put foreign business activity further into perspective, the World Bank ranks Timor-Leste as one of the hardest places to do business in the world. For American and Australian firms and others that are under strict regulation to disclose expenses paid to governments, the prime minister’s remarks to the business council might resonate down under as mixed invitation.

Chinese businesses, some backed by China’s state banks, have aggressively pursued public contracts in Timor-Leste as the Timorese have dramatically increased state spending from the $10 billion surplus in its petroleum fund. In 2008, the Timorese government reportedly awarded a $400 million construction contract to China Nuclear Industry 22 without tender. Claims of corruption over the deal were heard within government and across civil society. Meanwhile, further concessionary Chinese loans and discussion of Chinese firms building national roads and more infrastructure abound.

Thailand’s Nation newspaper reported that over 10,000 Chinese workers are already active in construction on electricity and telecommunications infrastructure.  However one must be careful not to place too much emphasis on these numbers.  Timor-Leste has had an indigenous Chinese population for centuries. A more nuanced view is required to distinguish between old and new immigrants, including their interests and allegiances.  Apart from workers of Chinese decent, thousands of other foreign workers such as Indonesians and Filipinos are squarely footed in Timor-Leste as well.  While the link between foreign workers and political influence is weak, immigration raises the stakes the new nation is grappling with foreign investment while seeking to create jobs, training and economic opportunities for its citizens.

Among the frayed ends of analysis, the simple thread remains: among Southeast Asian countries Timor-Leste has demonstrated it is one of the strongest democracies in the region. It has arguably achieved political stability faster and with less bloodshed than any other nation in the region during the last 10 years, compared to other nations during their post-independence period. Timor-Leste deserves due respect for solving its own problems.

Like other poor, newly democratic, oil-dependent nations, Timor-Leste’s development dreams are likely to be increasingly interrupted by instances of corruption, largess, and inefficiency in its institutions for some time. It is these very institutions, abiding by and upholding the rule of law, that are needed to turn petro-dollars into broad based economic growth for the benefit of all rather than for a few powerful elite. Therefore, to achieve the greatest degree of sovereignty, in the short term the government of Timor-Leste needs to think less about defense cooperation and a lot harder about how it will improve the business enabling environment to attract the “right kinds” of foreign businesses that will strengthen rule of law in the country.  Accordingly, despite visits from well placed friends, Timor-Leste needs to make these decisions for itself.

Silas Everett is The Asia Foundation’s country representative in Timor-Leste. He can be reached at [email protected]. The views and opinions expressed here are those of the individual author and not those of The Asia Foundation.


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