Timor-Leste: Stability at What Cost?

Dili/Jakarta/Brussels  |   8 May 2013

Although swelling oil and gas revenues have bought Timor-Leste peace, political empowerment, security reforms and fiscal caution are needed to ensure stability can outlast the boom.

“The government has been less interested in pursuing difficult reforms than in transforming the image of a country known for too long as a place of violence” Jim Della-Giacoma, Crisis Group’s Asia Program Director

Timor-Leste: Stability at What Cost?, the latest report from the International Crisis Group, examines the situation following the withdrawal of UN peacekeepers in December 2012 after two successful elections that demonstrated the young country’s stability. Although pragmatic decisions by local leaders after the 2006 crisis to spend their way out of conflict have worked so far, this strategy is unsustainable as revenues from the petroleum industry may start dwindling soon.

The report’s major findings and recommendations are:

• Elections have centralised power in the hands of a few. Although the government and the sole opposition party have a better working relationship, parliament and the broader policy and legislative development processes remain somewhat anaemic.

• Stability has not come through institutional reforms within the security sector, whose weaknesses triggered the 2006 crisis. Policing capacity remains weak, the army's role is still not clearly defined and broader institutional arrangements providing a clearer division of labour among the state's security forces need to be formalised.

• The government needs to be more prudent about spending and ensure that investment generates long-term returns. The greatest challenge will be to make progress in providing economic opportunities without exhausting national wealth. The government will have to prioritise the search for more sustainable employment for a rapidly growing workforce, driven by one of the world's highest birth rates.

• Dili will also need to find ways to tackle the perceived growth in social inequality, produce visible results against corruption, and work with parliament and civil society in order to produce legislation and policies that enjoy a greater degree of public legitimacy.

“Timor-Leste deserves praise for the success with which it has implemented pragmatic policies that stabilised the country following the 2006 crisis”, says Cillian Nolan, Crisis Group Senior South East Asia Analyst. “There are, however, serious concerns about sustainability that will have to be dealt with over the next decade”.

“The government has been less interested in pursuing difficult reforms than in transforming the image of a country known for too long as a place of violence”, says Jim Della-Giacoma, Crisis Group’s Asia Program Director. “Promoting confidence at home and abroad is important for transforming any post-conflict society. But Timor-Leste has a very limited window of opportunity for making the changes that might mitigate the still real risks of an eventual return to conflict”.