No clean sweep

The Economist

A poor country with a tragic past argues over its nest-egg

Jun 30th 2012 | DILI | from the print edition

AT THE crack of dawn brigades of streetsweepers fan out across Timor-Leste’s capital, Dili. In smart blue overalls and armed with brooms, they ensure that Dili’s main streets can vie for cleanliness with Singapore’s or Tokyo’s. It is a project designed to provide jobs for the city’s many unemployed. And it works. Despite the many burned-out buildings, the town feels less depressing than it did. But just off the main roads, the squalor of extreme poverty still prevails, and large families live in tiny shacks without water or sanitation.

To hear the parties campaigning ahead of a parliamentary election set for July 7th, such poverty will soon be a thing of the past in this country of 1.1m people. Setting up a political party is easy. The fact that each one gets a state subsidy helps explain why more than 20 mostly tiny parties will contest the 65 seats. Only two have a chance of winning: the Congresso Nacional de Reconstrução de Timor-Leste (CNRT) led by Xanana Gusmão, a charismatic former independence leader and now prime minister, and the Frente Revolucionária de Timor-Leste Independente (Fretilin), the party under whose flag the independence struggle was fought. Neither is likely to win an absolute majority.

Fretilin, now five years in opposition, has a hard core of support yielding up to 30% of votes. The CNRT aims higher. It hopes its huge expansion of public spending, including cash-transfer schemes, has bought it popularity. The budget has increased more than fourfold since 2008.

If it fails to win outright, the CNRT will reluctantly consider a coalition. But Mr Gusmão has tired of the struggle to keep his present five-party coalition on the rails. Meanwhile his government has been accused of widespread graft. His former finance minister, Lucia Lobato, was sentenced in June to five years in jail.

The wild card in the election is José Ramos-Horta, president until May and a former resistance leader-in-exile. Since his defeat in the presidential election earlier this year, he has tried to counterbalance the CNRT by supporting two smaller parties. He has made it clear that he hopes to see Fretilin included in the next government.

Much is at stake. Just this month a mass grave, holding dozens of bodies, was discovered in, of all places, Mr Gusmão’s garden in Dili. They had apparently been there since the bloodshed surrounding the end of Indonesia’s occupation in 1999, or even its invasion in 1975. Mr Gusmão himself has always said that economic development should trump the settling of old scores. Since then Timor-Leste has become rich, at least on paper, from oil and gas, with the income kept in a Petroleum Fund, which has swollen to $10 billion. Mr Gusmão wants to use the fund for a big development plan covering multi-billion-dollar infrastructure projects, including highways, new ports and an airport.

Mr Gusmão has been funnelling money from the fund to buy off influential groups of resistance veterans with generous pensions, and with development projects in rural areas seen as staunch during the occupation. Lucrative contracts to build the power grid in the countryside were awarded to the most loyal veterans.

But Mr Gusmão’s critics, among them Fretilin’s secretary-general, Mari Alkatiri, say his government has been spending unsustainably, bringing high inflation­an annual rate of nearly 18%­and risking emptying the Petroleum Fund within ten years. They also argue that the huge expenditure has benefited only a fifth of the population, even as over half still live in the sort of poverty seen in the poorest parts of Africa. Malnutrition among children is common, maternal mortality is one of the highest in Asia, and infectious diseases such as tuberculosis and hepatitis-B are endemic.

Despite all this, a lavish ceremony was staged at midnight on May 20th to celebrate the tenth anniversary of independence and to inaugurate the new president, Taur Matan Ruak, a former guerrilla leader and armed-forces chief. He will play a crucial role in forming a widely accepted government after the election.

If the vote goes smoothly, the United Nations will end its assistance mission and pull out its people, including 1,200 UN police, this year. A symbolic key to all the property it will leave behind has already been solemnly presented to Mr Gusmão. This will be the UN’s second withdrawal. After it left in 2006, a breakdown in security nearly led to civil war. Many Timorese are still nervous about the potential for political strife after the election. But the smooth conduct of this year’s presidential poll has built some confidence that democracy in Timor-Leste has matured enough to shake off its violent past.