Billions in international aid for East Timor missing its target

DILI, EAST TIMOR —  A decade after tiny East Timor broke from Indonesia and prompted one of the most expensive U.N.-led nation-building projects in history, there is little to show for the billions of dollars spent.

The world has given more than $8.8 billion in assistance to East Timor since the vote for independence in 1999, according to figures compiled by the Associated Press from the United Nations and 46 donor countries and agencies. That works out to $8,000 for each of East Timor’s 1.1 million people, one of the highest per-person rates of international aid.

But little of the money, perhaps no more than a dollar of every 10, appears to have made it into East Timor’s economy. Instead, it goes toward foreign security forces, consultants and administration, among other things.

In the meantime, data from the International Monetary Fund, World Bank, World Food Program, U.N. Development Program and others show the money has done little to help the poor. In fact, poverty has increased. Roads are in disrepair, there is little access to clean water or health services, and Dili, the capital, is littered with abandoned, burned-out buildings where the homeless squat.

“The international intervention has preserved the peace, which was always its primary objective,” said James Dobbins, director of the Rand International Security and Defense Policy Center. “Its success in promoting political reform and economic development has been more limited.”

East Timor was once seen as the poster child for U.N. nation-building.

After a bloody 24-year occupation by Indonesia that left 174,000 dead, the people of this predominantly Roman Catholic former Portuguese colony voted overwhelmingly in a U.N.-managed referendum on Aug. 30, 1999, to separate. The vote triggered a rampage by Indonesian soldiers and proxy militias who killed more than 1,000 people and destroyed much of the infrastructure.

A provisional U.N. administration restored basic services, repaired buildings and resettled hundreds of thousands of people who had lost their homes. With greater powers than for any previous mission, the U.N. was supposed to help create the pillars of a new country, virtually from scratch.

The vastness and complexity of the job became apparent in early 2006, just as the U.N. was pulling out its last staff members. Fighting broke out between rival police and army factions, killing dozens and toppling the government. Then, last February, President Jose Ramos-Horta was nearly killed by rebel gunmen in an ambush.

East Timor still faces grave challenges:

-- From 2001 to 2007, the number of East Timorese living in poverty jumped nearly 14% to about 522,000, or roughly half the population, according to the World Bank.

-- Children make up half of the poor, and 60% of those under 5 suffer malnutrition, the World Bank and World Food Program found.

-- The Norwegian Agency for Development Cooperation concluded in a 2007 report that very little aid was channeled into “productive activities, including private sector development.”

-- The unemployment rate for 15- to 29-year-olds in the capital, who make up the vast majority of the national work force, was more than 40% in 2007, according to the IMF.

Atul Khare, who has headed the U.N. operation in East Timor since 2006, dismissed the World Bank and IMF figures as “absolutely incorrect” and not representative. He said the country has made “considerable progress” since 1999, and that the U.N. East Timor mission has been effective and successful.

“All these figures are a cause of concern, but they are extrapolations, they are not the real figures, and I would not rely on those figures for making assessments,” he said. “In the last 10 years, with their own efforts . . . assisted by the international community, this country has largely, yes, been a success.

“Were you here in 1999? If you were not here, you cannot gauge.”

Khare cited increased fertility rates, among the highest in the world, new buildings and fewer potholes in Dili as positive signs. He said accurate numbers will emerge after 2010, when the next national census is held.

But groups that study East Timor have concluded that a mere fraction of aid money is trickling into the economy -- just 10% of about $5.2 billion, estimates La’o Hamutuk, a respected Dili-based research institute. Its figure excludes more than $3 billion in military spending by Australia and New Zealand.

The other 90% went to international salaries, overseas procurement, imported supplies, foreign consultants and overseas administration, the institute said. About 20% of pledged aid was never delivered, it said.

Another group, the Peace Dividend Trust, concluded that as little as 5% of the U.N. mission budget trickled into East Timor’s economy between 2004 and 2007.

The U.N. spent $2.2 billion on missions in East Timor between 1999 and 2009. Roughly $3 billion in donor aid -- the bulk of it from Australia, Japan, the European Union, the U.S. and Portugal -- was channeled through 500 not-for-profit groups and institutions such as the World Bank and Asian Development Bank.

The World Bank has expressed concern that too much is being spent on consultants, but could not provide a comprehensive figure. High-level East Timorese government officials told the Associated Press that millions of dollars have been wasted on projects that overlapped or were not completed, donor rivalry, mismanagement and corruption. They asked not to be named for fear of a backlash from donors.

President Ramos-Horta, a Nobel peace laureate, said the world needs to rethink its aid model.

“Where has this money been invested? That is the question the donor community needs to ask itself,” he said. “If that money were to have been spent mostly in Timor, it would have transformed this country, economically and socially.”

Much of the money has gone toward security and impact of this is difficult to measure. An Associated Press tally shows that $3.6 billion was spent in the last 10 years on troops from Australia and New Zealand, who make up the bulk of a foreign intervention force.

East Timor’s leaders and most experts agree that without outside help the country would have been at risk of becoming a failed state. Thousands of foreign soldiers and U.N. police officers and staff remain across the nation, but will start departing early next year.

Today, East Timor’s streets are calm. The economy is starting to grow under a government that took over in 2007 after peaceful elections and is tapping into a $5-billion petroleum fund from oil and gas fields. The fund will be exhausted by 2023, and analysts say if the non-oil economy is not stable by then, people will starve.

Under the current government, compensation has also been paid to the third of the armed forces who deserted in 2006. Pension payments have also started for the generation of guerrilla fighters who battled Indonesian troops in the mountains for more than two decades.

In the meantime, the people are still waiting for help.

Domingos Pereira, a 40-year-old street vendor, lost his father, siblings and other family members in the fight for independence, and his house was destroyed in riots in 2006. He now supports his wife and six children by selling sodas, cigarettes and candy.

“My expectation was that when East Timor became an independent country, small people like me would see an improvement in our lives,” he said. “But after 10 years of our independence, I don’t have it yet.”

Duarte Beremau sleeps in a two-room, dirt-floor shack with eight family members, including four unemployed adult children. The shelter is cobbled together from rusting sheet metal and has no water, electricity or sanitation.

Beremau, who is illiterate and doesn’t know his age, earns $10 a week from a coffee factory, part of which he bets on a Sunday afternoon cockfight in the dusty back streets of Dili.

“Nothing has changed my suffering,” he said. “My life is still like it was.”

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Deutsch writes for the Associated Press. Researchers Julie Reed and Randy Herschaft in New York; writers Yu Bing in Beijing; Jae-Soon Chang in Seoul; Robert Gillies in Toronto; Foster Klug in Washington; Slobodan Lekic in Brussels; Ray Lilley in Wellington, New Zealand; Rod McGuirk in Canberra, Australia; and Tanalee Smith in Adelaide, Australia, contributed to this article.