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Professor James Cotton
East Timor continues to accumulate the desiderata of an independent nation. The August 2001 elections proceeded peacefully. The Constituent Assembly thus elected provided the personnel for a transitional authority composed of the majority party, Fretilin, and its junior partners, the Democratic Party.
After extensive debate a constitution was drawn up, and following popular consultations, has been adopted. While in that constitution most authority is invested in a Prime Minister and his Cabinet, it also provides for the largely ceremonial position of President, and it was decided that this post should be filled by election.
On 14 April East Timorese citizens will be asked to choose between Xanana Gusmão and Xavier do Amaral as their President. While Amaral, as the first Head of State of independent East Timor in 1975, has a strong following especially in his native region, he is unlikely to win against Gusmão, whose prestige as a guerrilla leader transcends the everyday political divide. In this connection it is noteworthy that Gusmão chose to refuse the endorsement of Fretilin in order to emphasise his non-partisan nation-building obligations. With this event concluded, the formal political framework for an independent state will have been constructed.
The decision of Phillips Petroleum on 13 March to proceed with the development of the Bayu-Udan gas deposits in the Timor Gap represents a major breakthrough in securing East Timor’s longer term economic future. The development of the field was delayed by a taxation dispute with the transitional East Timor authority, and Phillips was forced to find new customers for the resource after its original partners withdrew. Now the gas will flow via a pipeline to Darwin on to Japan, and over the 17 year life of the contract the East Timor government is expected to earn some A$6 billion in royalties. If the Greater Sunrise field is also developed these earnings could double. For the otherwise impoverished nation, this is a major step towards sustainable financing.
In many respects, however, East Timor still lacks the infrastructure and capacity to make the best use of this resources windfall. Its lack of capacity is reflected in a warning from the United Nations Transitional Administration (UNTAET) that following independence, many services currently provided by the UN (and funded in some cases paid for directly from the Assessed Budget of the UN and also of the Security Council) will cease to operate. These include the present public radio and television services, support for the judiciary and the legislature, and much of East Timor’s limited internet access. How well the independent government manages the transition from UN control in such practical areas will provide a tangible guide to its future performance.
WATCHPOINT: How well will the newly independent East Timor government assume responsibility for services previously the responsibility of the UN?
About our company:
AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.
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