Taming the “Banana Republic”


March of last year, a USAID-funded kid’s book released in East
Timor provoked outrage.

and Noi’s Adventure to Parliament

was an International
Republican Institute (IRI) book teaching Timorese kids about democracy.
All the characters in the book were drawn as monkeys, including
the government leadership, who appeared on the front cover like
some line-up of suspected criminal apes. Describing someone as a
monkey is particularly tasteless in Timor. “This is definitely
an attempt to humiliate us,” said Lu-Olo, the Fretilin party
head of Parliament, who has spent most of his life dodging U.S.-manufactured
bullets as an independence guerilla. 

passed a resolution condemning the book and it was withdrawn, but
not without a very public fight. The responsible IRI project staffer
quarreled with President Xanana Gusmao—the revered resistance
leader—for withdrawing his support for the publication. IRI
complained that the books had cost $15,000 to print and banning
it was a denial of their right to free speech. IRI claimed that
they had consulted broadly on the book, which the government contests.
Regardless of where the truth lies, commentators are right to point
out that “monkey-gate” was a convenient political distraction
from corruption allegations pitted against the government at the
time. Yet the racist and condescending tone of the book and brash
IRI response is symbolic of U.S. actions in Timor and around the

Timor, USAID bankrolls most of the non-government media and many
civil society organizations working on legal reform, media training,
and policy research among others. It is, however, the “democracy
promotion” agencies funded by the quasi-U.S. governmental National
Endowment of Democracy (NED) that have attracted the most attention.
The IRI and the National Democratic Institute (NDI)—the respective
foreign policy wings of the U.S. Republican Party and Democratic
Party—are the key tools in containing and directing the political
agenda in countries, like Timor, undergoing “transition.”

best, this can be “dangerous whistling in the dark,” as
historian Eric Hobsbawm describes it. For Hobsbawm, it can be a
naïve and self-interested attempt at imposing a U.S. ballot-box
brand of democracy that has little local resonance. At worst, it
is political meddling. It was NED groups that infamously stirred
up the failed coup in Venezuela and the successful one in Haiti.
IRI are also openly pitted against Hun Sen’s government in
another “reconstructing” country, Cambodia. 

in particular, have been training Timor’s fledgling political
parties in the tricks of the trade. Through circumstances both deliberate
and coincidental, they have ended up helping only the Washington-friendly
opposition. While IRI see themselves as “life support”
for the country’s opposition, Fretilin, the ruling party, see
them as interfering. In response, they enacted a repressive and
open-ended immigration law banning foreigners from “engaging
in political activities.” Many see it as a direct response
to IRI activities. Fretilin even threatened to deport IRI staff
under the law after IRI sponsored an opinion poll that they felt
was worded to deliberately undermine them.  

the opposition parties it is a tricky bind. Despite reservations
they may have with the U.S., USAID is offering them needed resources
at the same time the Fretilin government is trying to silence them.
A prominent example was the suspension of 32 civil servants for
attending a meeting of the rival

Partido Democratica

Party) in Suai district. They were accused of skipping work, yet
the meeting was held on the weekend.

individual USAID projects are harmless and sometimes sorely needed,
e.g., NDI’s lobbying to ensure civilian control of the military.
But step back and what emerges is a U.S. political hegemony over
civil society spread by USAID’s check book. From generous project
grants to prominent positions in USAID-backed NGOs, the U.S. is
grooming a set of domestic political elites and subtly co-opting
the radicalism of the independence movement.  

the fortress-like U.S. embassy, now tastelessly located in the former
Indonesian governor’s house, an “unnamed diplomatic source”
discusses the underlining tension between the U.S. and Prime Minister
Mari Alkatiri’s government. “Timor is at a crossroads…I
feel that Alkatiri is trying to follow the Malaysian model of development,”
with the attendant “weakening of democratic institutions,”
he comments. 

Alkatiri’s Mahathir-style posturing is mostly just that. The
government is on the tight leash of an international donor community
that continues to wield quasi-sovereign power. However, even with
its limited space for maneuver, the government has frustrated U.S.
attempts at policy engagement, especially in the justice sector,
which the U.S. views as incredibly weak. If the standoff continues,
comments my diplomatic source, “We will direct our resources
into other areas such as building civil society and increased support
for IRI and NDI.” 

Structural Adjustment of Independence 


irony of promoting democracy in Timor is that all major decisions
since independence have been made by a coterie of U.S., international
donors, and Bretton Woods institutions. State utilities have been
partially privatized. The IMF effectively controls a non-interventionist
central bank. The entire economy has been thrown open with all tariffs,
save on luxury goods, set at 6 percent. The government, restricted
to 17,000 staff under structural adjustment-style conditionalities
and a miserly $75 million budget, is unable to make any impact on
living standards beyond the city of Dili. The Ministry of Agriculture,
for example, has an annual budget of just $1.5 million, yet 85 percent
of the country relies on agriculture for their livelihood. In contrast,
the former Indonesian occupiers had 33,000 people on the government
payroll managing $135 million in 1997. That was just to administer
what was then a distant province, not a nation-state. 

liberalization of the economy, combined with the inflationary pressures
of a well-funded international donor elite, has rendered most Timorese
economically unviable. With just under half of its 925,000 inhabitants
living in “extreme poverty” as defined by the UN, Timor
is already the poorest nation in Asia and getting worse. For each
of the last 2 years the economy has shrunk by 2 percent and a further
decline of 1 percent this financial year is predicted. At the same
time, the population has grown by 17.5 percent since 2001, adding
at least 15,000 people to the workforce each year. Add these pressures
together and even the IMF concedes that this is “reinforcing
widespread poverty and serious underemployment.” 

the national budget already facing serious shortfalls, it’s
hard for the government to get the courage to deviate from donor
policy orthodoxy—especially as they fund a little under half
of it. “Put bluntly,” opines a U.S. Congress memo on activities
in Timor, “it seems likely that assistance levels will decline
if East Timor’s government pursues economic or budgetary policies
which were unacceptable to donors.” 

the May 2004 donors’ meeting the IMF summarized donors’
solutions to Timor’s economic malaise: “Development of
a dynamic private sector is key to attaining higher economic growth,
generating increased employment opportunities, and alleviating poverty.”
It’s a pervasive and unchallenged idea in Timor.  

at Timor, with its crumbling roads, UNHCR tarpaulin-covered markets,
low-skilled workforce, and comparatively high-waged economy, talk
of creating “enabling environments” for the private sector
or attracting Foreign Direct Investment (FDI) looks like a dance
to the rain gods. “The start up costs here are 30 percent higher
and the operating costs are 50 percent higher than the rest of the
region,” says Jose Goncalves, the U.S. government-funded Senior
Investment Advisor with the Ministry of Development and Environment.
“There aren’t too many areas for investment in this country,”
he adds, pausing. 

levels of investment are a common story among the Least Developing
Countries (LDCs). Indeed, according to the United Nations Commission
on Trade and Development (UNCTAD), the LDCs in Asia experienced
a decline in annual FDI investment from an average of $786 million
from 1995 to 1999 down to just $339.7 million by 2002. 

the U.S. continues to push heavily for foreign private sector-led
growth. It is funding a number of studies on FDI promotion, agribusiness
development, a finance sector framework, and developing a land law
regime friendly to the private sector. My unnamed diplomatic source
sees this last policy as Timor’s only option to attract investors.
“The government has tons of land, about two thirds of the country,”
he proclaims, “some of which of course is tied up in Adat [traditional
title]. This is one incentive they can offer. They can give out
land for FDI.” 

this strategy succeeds, and whole villages don’t mind being
thrown off their land, will it actually be beneficial? UNCTAD, in
their latest report on LDCs has asked why “there is no guarantee
that export expansion will lead to a form of economic growth that
is inclusive.” UNCTAD’s former secretary-general Rubens
Ricupero blames what he labels “enclave-led growth” and
paints a classic picture of colonial capitalism: “A relatively
rich commodity-exporting sector, well connected to roads and ports
and supported by ancillary services, existed side by side with large
undeveloped hinterlands where the majority of the population lived.”
If donor plans for building an export processing zone (EPZ) in the
town of Baucau happen, Ricupero’s description is probably the
best Timor can hope for. However, the “build it and they will
come” faith behind EPZ promotion is a gamble that has failed
in other LDCs. 

with a decent flow of oil revenue expected over the next 20 years,
Timor has one chance to “cross the desert” of underdevelopment,
as Goncalves puts it. It is a critical choice. Does Timor gamble
on EPZs or instead use the revenue to strengthen rural communities
and economies and create mutually beneficial linkages between domestic
and international markets? Is it even a choice Timor has the political
space to make? 

Baseless Rumors? 


grandeur of U.S. plans to spread democratic capitalism over the
world is bettered only by Pentagon delusions of achieving global
“full spectrum dominance.” Indeed, the two crusades are
intimately and contradictorily linked, as the residents of Fallujah
can attest. 

Timor isn’t being bombed into freedom by the U.S., the frequent
visits of U.S. warships and Marines to Dili place Timor under the
U.S. military umbrella. It’s a tricky bind for Alkatiri. The
U.S. military presence reinforces an already distasteful U.S. “democracy
promotion” agenda, yet also provides a perceived counter to
an Indonesia that looms large in all of Timor’s foreign policy
calculations. Dili recognizes their vulnerability towards their
former oppressors across the border. Jakarta would only have to
halt imports of instant noodles into Dili to starve them. 

the U.S. could be staying for more than just the weekend. One of
the most persistent rumors in Dili is U.S. plans to build a military
base on Atauro Island, about 20 km north of Dili. The official U.S.
response is denial:  “We have no interest in Timor whatsoever
—zero,” responds my unnamed diplomatic source, making
a zero sign with his left hand. 

well placed government sources privately contradict this, as do
the U.S.’s own historical strategic interest in the submarine
passages lying north of Timor. This was a key reason for the U.S.
giving Suharto the green light to invade Timor. The U.S. needed
“the continuing good will of the Suharto Government,”
to guarantee “American security interests,” writes John
Taylor. “Paramount in these interests was the use of the Ombai-Wetar
Straits for deep-sea submarine passage.” These straits have
increased their significance for the Pentagon since the recent identification
of Southeast Asia as a zone of “instability.” The Straits
are also critical trade routes, especially for Australia and New
Zealand who are rumored to be investigating setting up facilities. 

Timor’s Independence Day on May 20 this year, the navy ship

USS Vandegrift

anchored off the coast of Dili to pay a diplomatic
visit. Republican-appointed Ambassador Joseph Rees commented on
why the ship’s visit was important: “Timor Leste wants
a close relationship with the U.S., not only because they believe
it enhances their security, but also because they share our commitment
to freedom and democracy.” 

the hundreds of Timorese that protested two months earlier outside
the old U.S. embassy on the first anniversary of the U.S. occupation
of Iraq didn’t share what Rees’s definition of freedom
or democracy meant in reality; nor do the Timorese who have long
lamented the U.S. backing of Indonesian atrocities committed against

body that could have deterred or perhaps punished such genocide—had
it been formed earlier—is the International Criminal Court
(ICC). Created in 1999, it is designed to catch those committing
crimes against humanity who would otherwise slip through the gaps
of politically compromised national jurisdictions. This is exactly
the problem currently facing both the Indonesian and Timorese legal
systems responding to the atrocities of 1999. 

U.S. has waged a campaign to undermine the ICC. It has been twisting
the arms of dozens of poor and weak nations into signing Article
98 “non-surrender” agreements committing them to never
handing over U.S. citizens to the ICC. In the case of Timor, the
U.S. didn’t twist Dili’s arm, they broke it. “If
Timor hadn’t signed those agreements then we would have pulled
out any military from here,” comments the diplomatic source.
U.S. Secretary of State, Colin Powell, went further, writing to
the incoming government in April 2002 urging them to sign the agreements,
otherwise the U.S. Congress would find it difficult to continue
giving aid. According to diplomatic sources in New York, the U.S.
engaged the Timorese government in some “special coaching,”
as Anett Keller puts it, “during the weeks preceding East Timor’s
signature to the bilateral agreement.” In June 2002, they threw
a tantrum at the UN Security Council, threatening not to replace
their three UNMISET (UN Mission for East Timor) members if they
couldn’t secure immunity from the ICC for all UN peacekeeping

Timorese quickly buckled. Timor’s strongly pro-U.S. Foreign
Minister Jose Ramos Horta, perhaps needing U.S. backing for a suspected
stab at the UN’s highest job, signed the ICC Article 98 exemption
and a Status of Forces Agreement (SOFA) on October 1, 2002. One
year later, Timor’s Council of Ministers approved this Article
98 with the United States, binding East Timor to never surrender
or transfer, “current or former government officials, employees
(including contractors), or military personnel or nationals”
of the United States to the International Criminal Court. Forcing
a nation that barely survived genocide into a campaign to undermine
the ICC is a truly tragic example of who calls the shots in the
world’s newest nation. 

addition, the SOFA gives diplomatic immunity to U.S. military personnel
in Timor from any criminal matter and an economic agreement between
the two governments also exempts U.S. staff from paying taxes and
bothering with immigration requirements. It also makes their property
“inviolable” and makes them immune from civil suit. For
all the U.S. complaints about Timor’s justice sector with its
weak “rule of law,” U.S. citizens seem to be exempt from
every law in the country. 

The Quiet Americans 


on the issue of military bases, the unnamed diplomatic source adds,
“Timor is just not a factor in the strategic thinking of the
United States. It is really a question as to what Timor becomes.
If it is a failed state like PNG, then it has no importance to the
United States: we’ll walk away. If it is a prosperous and democratic
state then it could have important symbolic value for the region,
‘Look here, Timor did it, so can you’.” But which
of those options are U.S. actions contributing to? 

Timorese elites can avoid failed statehood by walking the fine line
between placating local constituents while following the flawed
prescriptions of their international overlords. But there is a more
likely scenario. Imagine an anxious Prime Minister Alkatiri at his
office desk, painstakingly searching for more funds in his flimsy
national budget to silence the din of angry protestors outside his
window. Crowding out his thoughts and his policy options would also
be the groundwork laid by the Quiet Americans—no control over
a dysfunctional economy, Venezuela-style moves by the IRI, and that
U.S. warship with its 1,800 Marines sitting in Dili Harbor. On deck
unnamed U.S. officials are no doubt muttering something about yet
another “failed state.”

Ben Moxham works
for Focus on the Global South (www. focusweb.org), a research and
advocacy organization based in Bangkok.