From Colony to Global Prize

The destruction of Timor Loro Sa’e (East Timor) and the consequent forced deportation of a quarter of its population have ironically created a bonanza for Australian businesses and a handful of Timorese business partners. The recent report of the World Bank called for a three-year reconstruction effort worth about A$450 million, on top of the approximately A$300 million being sought for immediate needs. The UN assessment of humanitarian aid requirements for the next nine months or so puts the bill at A$300 million. The overall costs of reconstruction and development are still being assessed but are likely to be upwards of A$100 million a year for several years (da Costa, 1999).

This price tag does not include the US$550 million procurement budget estimated by the UN’s chief of procurement, Andrew Toh, long before the InterFET troops landed in Dili, based on a similar scenario in Cambodia (Australian, 27 April 1999).

So, around A$1.2 billion will be up for grabs for businesses from all around the world in Timor Loro Sa’e during the next two to three years. This has come as very good news to the Northern Territory (NT) business people and administrators.

As Drake International spokeperson Bill Feilberg concluded, developments in Timor Loro Sa’e and opportunities in expanding information technology services are likely to cushion the Northern Territory from a significant decline in employment for the quarter to 31 December (NT Business Review, November 1999). Darwin itself has enjoyed a boom of economic activity, thanks to the deployment of about 8,000 peacekeeping troops in Timor Loro Sa’e, whose supplies have to come from the Northern Territory. Most of the construction work in Dili also seems to be supplied from Darwin. On one lucky day, according to my source, Bunnings Building Supplies sold more than A$110,000 worth of timber to be shipped to Dili.

There are many similar stories of the extraordinary prosperity which Indonesia’s destruction of Timor Loro Sa’e has brought to the Top End.

This Timor bonanza reflects a complete reversal of the NT government’s stance towards Timor Loro Sa’e. The Country Liberal Party (CLP), which has held power in the Northern Territory since self-government in 1978, strongly supported Suharto’s regime to attract Indonesian businesses into the Territory as well as to promote NT-based businesses into Indonesia. In fact, the Northern Territory became the first Australian state or territory to sign a Memorandum of Understanding (MOU) with the Indonesian government in January, 1992.

Chief minister after chief minister have made their courtesy calls to Suharto. The previous chief minister, Shane Stone, even represented John Howard soon after his election as Australia’s prime minister. When Mrs Suharto died in April 1996, Howard requested Stone to attend the funeral to represent Australia. In fact, Stone was the only ‘European’ invited to the service (Hawley, 1996; Asian Business Review, November 1996).

In all those years, all NT chief ministers assured Suharto that the Northern Territory strongly supported Indonesia’s occupation and annexation of Timor Loro Sa’e. In fact, supporting Timor Loro Sa’e’s annexation seems for the NT government to be a condition sine qua non for promoting business with Indonesia. This policy culminated during the tenure of Shane Stone. As Robert Wesley-Smith, a long time pro-Timor Loro Sa’e activist in Darwin puts it:

Ever since Mr Stone became chief minister, and also police and fire services minister, Free East Timor protesters have had charges thrown at them in an obvious attempt to distract us from our cause. He had been appointed by Mr Perron as the first ‘Asian relations’ minister, and is widely thought to be a great admirer of President Suharto as he copies so many of his methods. (Wesley-Smith, 1997).

This pro-Jakarta position was shared down the line by CLP members. One CLP official had even stated that the East Timorese independence supporters in the Northern Territory merely represented about a hundred FRETILIN leftist individuals continuously making pro-leftist propaganda, contributing in this manner to maintaining social, personal and family division in the community. The answer of the pro-East Timor nationalists to such charges is to retaliate by affirming they have become a scapegoat because their political action jeopardised the intent of the local and federal governments to safeguard its close relations with Indonesia.

Interestingly, after the referendum and its violent aftermath, the president of the National Council for Timorese Resistance (CNRT) instantly became the NT government’s darling. NT authorities warmly welcomed Xanana Gusmao on his first official visited to Darwin in late September 1999. Immediately after this meeting, NT Chief Minister Denis Burke sent his special representative, Paul Tyrell, to assess the country’s damage and report on urgent immediate requirements for houses, port operation and essential infrastructure, accompanied by teams from the Territory’s Transport and Works and PAWA (Power and Water Authority). Lt. General John Grey, the Chief Minister’s special consultant estimated that the costs of reconstruction could reach as high as A$500 million – a figure that is way above the World Bank’s estimate.

The results of the NT government’s assessment were immediately fed back to the NT business community in a ‘sell out’ breakfast briefing hosted by the Chief Minister himself, attended by more than 350 people. Following up on the briefing, the NT government also provided assistance to businesses to apply for registration with the UN agencies. So, eventually, 40 to 46 per cent of work in the disaster regions went to tenderers from the Territory (NT Business Review, November 1999).

One of the attractions of opening shop in the newborn (or, reborn) nation, without a functioning state apparatus, is that wages are still very low. As it is advertised in a bulletin which mainly caters for the business community, in a patronising language that borders on nineteenth-century colonialism:

The going rate is about A$5 a day, A$25 a 5-day week or, at an exchange rate of Rp 4000, Rp 20,000 and 100,000 respectively. There are no awards or trade unions in East Timor, but it is worth remembering that good management practice apply in every country.

Ensure you keep plenty of water available. It is very hot throughout the day and if your people are doing manual work, make sure the water is at hand. They also need to eat so give them a break in the middle of the day. Some expats drive the workers home at noon and ask them to be back on the job (they find their own way) about 2 p.m. Of course you can structure the day however you want, but your workers must be given time to eat. It is also worth giving them a 10-minute break here and there. A nine-hour day is fair to everyone.

The free ride home is simply a good management technique as there is no public transport and very few of these people have their own means of getting about.

While you can pay your workers on a daily basis and ask them to work seven days (and they will almost be happy to do so) remember that on Sunday most will want to attend church. It is wise to allow them to do so.

Settle wages weekly

Some expats get a local to act as the foreman for the Timorese. This is of course ideal, especially if the foreman speaks English. Having a foreman ensures that the locals are treated as they would expect to be treated.(Dili Times, 19 November 1999).

This A$5 or Rp 20,000 daily wage is not only the going rate among the expatriate business community, but is also endorsed and practised by the UN authorities themselves. According to my sources in Dili, the UN Office for the Coordination of Humanitarian Affairs (UNOCHA), which co-ordinates the dozens of international and national NGOs involved in the relief work in the country has suggested the Rp 20,000 daily wage rate to the foreign NGOs. Then, the UNTAET cafeteria itself pays a daily wage of between A$2 to A$3 to its Timorese employees, while a meal at the cafetaria costs A$6.

Obviously, this top-down exploitative labour policy turns Timor Loro Sa’e into a paradise for expatriate business people. In the Northern Territory, for instance, the minimum wage in the hotel industry is A$15 per hour, with only 38 hours of regularly paid work allowed each week. Or, a maximum of eight hours per day. That means Australian hotel workers are paid a minimum of A$105 per day.

Usually, Australian hotel workers earn much more, depending on the collective bargaining between their union and the hotel management, and could therefore earn roughly A$25 per day. This means that Australian hotel workers are earning at least three times what their Timorese brothers and sisters are earning. To put it the other way around, Timorese workers are subsidising the Australian tourism business and the entire United Nations and foreign NGO community in their country. So, who is helping whom, one could ask.

With a captive market of a couple of hundred foreigners, a handful of big businesses could practically have a monopoly over certain commodities and services. Or, form an oligopoly – a cartel, so to speak.

Which Australian businesses are currently profiting from the reconstruction of Timor Loro Sa’e? The following is a tentative list which is certainly not yet exhaustive.


Immediately after the last Indonesian soldier pulled out from the country, the Indonesian government switched off the telecommunication link of its former twenty-seventh province. Satellite phones became the only means of communication.

After weeks of communication limbo, Telstra stepped in. Actually, Telstra had already moved in through the InterFET, since Telstra personnel entered the country together with the first Australian troops. Telstra’s intel people went along with the troops and recommended an almost complete replacement of the old system with the new CDMA technology.

In only a matter of days after the troops landed, Telstra signed a deal with InterFET for a minimum of six years with no tendering process. Based on that deal, it would gain complete coverage of the island within eight months, and in the areas that the mobile towers would not reach, dual satellite/CDMA mobile handsets were being investigated. It is still planning to put payphones in Timor Loro Sa’e similar to Australia’s outback satellite payphones, or connect them via optic fibre from the local CDMA tower.

Telstra made it very clear to the Australian Defence Forces (ADF) that the entire project required a massive initial capital outlay of between A$300 to A$350 million. It also made it clear to the ADF that it would only agree if it were given a six-year exclusivity guarantee from any other telephone carrier. Telstra’s argument was that it has to recoup its outlay – which should be recovered within the next few months with all the aid workers. The telecommunication giant apparently now even has the exclusive rights on the satellite footprint.

Who authorised this deal? InterFET. Who was consulted in the process of making this deal? Certainly no other service providers and no East Timorese. Who will it affect? Nobody but the East Timorese. InterFET – who signed the deal with Telstra – will be gone in a matter of months; UNTAET, in three years. The East Timorese will then be forced into honouring this contract – and other contracts made by InterFET – which they had no say in formulating; hopefully not to the detriment of their economic and social development.


Westpac is the only Australian bank which has opened a branch in Timor Loro Sa’e. One of Australia’s biggest banks, Westpac is a sponsor of the Sydney 2000 Olympic Games.

The bank, however, has a contradictory reputation in incorporating social and environmental criteria into its lending and investment activities. On the one hand, it is the only Australian bank to have signed onto the UNEP Banks and Sustainability statement. It began serious energy management and efficiency programs in 1992. This concept took off in 1994 with the introduction of the Energy Savers Awareness Programs; and it initiated a partnership with the Greenhouse Challenge to reduce energy consumption and decrease emission levels. Under that agreement, the bank’s original target to save 24,000 tonnes of carbon dioxide was surpassed in September 1998, according to National Environmental Manager for Westpac Corporate Facilities, Larry McNab.

On the other hand, there are contradictions in Westpac’s environmental policy, including its record in financing environmentally disastrous mining projects in North Australia as well as in West Papua. One member of the Westpac group, Westpac Custodian Nominees, has come under strong pressure from environmentalists through its role in providing equity investment for Energy Resources of Australia (ERA) and North Ltd., companies behind the controversial plan to mine uranium in the Kakadu National Park in the Northern Territory. This plan is strongly opposed by the Mirrar people, the traditional owners of Jabiluka, the proposed mining site.

Westpac Custodian Nominees is also the second largest institutional investor in Rio Tinto, a company condemned world-wide for its poor environmental and social record. It owns 11.8% shares in PT Freeport Indonesia, Inc., which controls the disastrous copper, gold and silver mine in the Amungme people’s homeland in West Papua (Kennedy, Chatterjee and Moody, 1998; MPI, 1998; Australian, 19 December 1999).

Westpac has several overlapping shares and directorships with mineral and oil mining companies. The bank’s chairman, J.A. Uhrig, is also chairman of Santos Ltd, while also functioning as Deputy Chairman of Rio Tinto Ltd. In addition, Westpac is a shareholder of BHP Ltd. which, until mid-1999 was the co-leader of the consortia of oil companies exploiting the Timor Gap reserves. Santos is, meanwhile, still a major partner in the Elang, Kakatua, and Kakatua North oil fields, which have been producing 32,500 barrels of oil per day since July 1998, and also is still involved in the much more lucrative Bayu-Undan gas field soon to be exploited under Phillips Petroleum’s direction (Aditjondro, 1999; ASX, 1998).

Finally, Westpac has very close links with the NT government. In 1994, the chief executive of the NT Department of Industries and Development was former Westpac chief manager, Lyal Mackintosh, who worked in the Pacific region for the bank. He believed that the Northern Territory’s role as a business broker in Asia was a natural one. The bank has also been the major corporate sponsor of the NT Expo for three consecutive years (1996, 1997, 1998). The NT Expo has been reported as a major regional business promotion event bringing many Dili-based Indonesian business people to Darwin (Business Review Weekly, 21 November 1994). Westpac was major corporate sponsor of the NT Expo for three consecutive years – 1996, 1997 and 1998.

Hotels and tourism industry

This sector is the most ‘crowded’ with investors and their Timorese or Timor-based partners. Although it reflects one of the priority areas of the World Bank, it does increase the socio-economic gap between Dili’s expatriates and the locals, who mostly still have to squat in buildings which are not theirs. This sector is also reproducing a pattern similar to that which took place in Timor Loro Sa’e during the Indonesian occupation. This irony has not escaped the CNRT leader, Xanana Gusmao, who said that:

It’s an insult to the misery, the suffering of our people. Our people need soap, they need food. They have primary needs. I have already heard about prostitution. Sometimes we felt that the Indonesian generals had no human feeling. Some businessmen also exploit the situation. It’s very sad, because I cannot do anything about it. If I have a little power I can tell them to go, but I have no power. (Socialist Worker, 19 December 1999).

Dili Lodge is a hotel cum beer garden cum car and motorcycle rental business in Dili and is run by the Timor Lodge Hotel Pty. Ltd. Initially called Dili Lodge Hotel Pty. Ltd., the company was incorporated in Darwin on October 18, 1999, with Wayne Leighton Thomas and his wife, Margaret Ann Thomas, as directors. Both are from Brisbane. Mr Thomas claims to be the principal shareholder. As he explained to the author, he is also the chairman of the Thomas Group of Companies with diverse interests across Australia, especially hotels and resorts in the Northern Territory and Western Australia.

An early beneficiary of the 1992 Memorandum of Understanding (MOU) between Indonesia and the Northern Territory, in March 1994 Thomas exported to the island of Lombok (Nusa Tenggara Barat province) a shipment of thirty pieces of new and used heavy earth-moving machinery (worth A$4 million). As he stated at that time, the exercise, the first in what he expected to become a lucrative and ongoing venture, could not have been achieved without the MOU framework. ‘The MOU made us reputable, gave us a semi-government status which definitively opened up doors for us’, he said, and added: ‘You have to travel in Eastern Indonesia to understand that. Every time you walk into a government office you see copies of the MOU – one in Indonesian, one in English – on the wall. There is no doubt the Indonesians think it is a very significant agreement’ (Australian, 20 January 1994).

Other investors in the company are diverse and come from three Australian states, thirty of them from the NT (Sunday Territorian, 12 December 1999). The only one whose identity Wayne Thomas agreed to disclose in my written interview, is Shane Stone, who directs a company which has a 2.5 per cent share in Timor Lodge Hotel. The former NT Chief Minister has invested A$70,000 in the Dili Lodge. Stone is an NT Member of Parliament for Port Darwin and president of the Federal Liberal Party (NT News, 9 December 1999).

According to Thomas, he (Thomas) went into this venture after extensive consultations with unnamed senior UN personnel, with a lease over the subject property for five years with another five-year option. With a total investment of A$2 million, Timor Lodge Hotel currently employs 98 local staff and eleven Australians. Local wages were negotiated and range from Rp 650,000 to Rp 1.5 million (around A$130 to A$300) per month, with meals provided for all the workers.

Interestingly, the hotel is located at the former ground of the Battalion 744 of the Indonesian army near the Comoro airport. According to my interview with Thomas and Stone’s Timorese partner, Manuel Carrascalao, that 179-hectare property was formerly owned by Manuel Carrascalao Sr.

The late Manuel Viegas Carrascalao Sr. was the Mayor of Dili in the early 1970s (Tomodok, 1994). In that capacity Carrascalao Sr. could certainly influence the land use planning of the city. He may also have foreseen that the land on the western bank of the Comoro River – which at that time was still relatively uninhabited – could become a future asset. On the other hand, he may also have known that this piece of land would become Dili’s main source of ground water in the future.

Manuel and his brother, Mario, who had served for ten years as Jakarta’s appointed governor of Timor Loro Sa’e, both have a pro-Indonesian background. Manuel and another brother, Joao, the current Sydney-based UDT chairman had led the UDT fighters which assisted the Indonesian army invasion between October and December 1975 (van Klinken, 1997b). Other sources told me that after the invasion, Manuel and his UDT troops had still assisted the Indonesian army in hunting down the FRETILIN/FALINTIL guerillas in the mountains of Timor Loro Sa’e.

When Indonesian military power was consolidated in Timor Loro Sa’e, Manuel moved to business, managing the family’s civil engineering firm, CV Algarve Timor. In 1982, he became a member of the Indonesian provincial puppet parliament, on the platform of the government party, Golkar. He become one of the most vocal voices in the parliament, but still supported the Indonesian occupation.

After the 1996 Nobel Peace Prize for two of his compatriots – Bishop Carlos Filipe Ximenes Belo and Jose Ramos-Horta – both Manuel and his younger brother, Mario, began to shift their political directions in line with their younger brother, Joao, the UDT leader. Early in December 1997, Manuel launched his Movement for Reconciliation and Unity of the People of Timor (GRPTT: Gerakan Rekonsiliasi dan Persatuan Rakyat Timor Timur) at a UDT congress in Perth, Western Australia. This movement, which also embraced other former Indonesian collaborators, began to campaign for a referendum to respect the Timorese right to self-determination, and instantly became the target of military and militia intimidations (van Klinken, 1997b; Taudevin, 1999). The major event, though, which could be seen as the public announcement that both Mario and Manuel have become supporters of the nationalist cause was, the first pro-independence public meeting in Dili on 9 June 1998. Mario chaired the public meeting, called by the East Timor Students Solidarity Council (ETSSC).

Eventually, to accommodate all former collaborators into the CNRT, Xanana appointed Manuel Carrascalao to coordinate the CNRT committee in Dili, together with another UDT member, Leandro Isaac, and a former political prisoner from FRETILIN, David Dias Ximenese. Manuel’s pro-independence campaign eventually cost him the life of his eighteen year-old adopted son, Manuelito, when one hundred military and militias stormed his mansion on 17 April, 1999 (Taudevin, 1999).

Soon after my interview with Wayne Thomas, the United Nations wind in Dili turned around. The UN ordered Wayne Thomas to dismantle and abandon the A$3 million ‘instant hotel’ created only moments after InterFET took control of Dili. The new UNTAET chief, Sergio de Mello, found out that Thomas did not have written UN permission to occupy that land. This change occurred after CNRT members told the UN that Manuel Carrascalao had sold the land to the Indonesian army and thus no longer had a claim on it. It also came after CNRT president, Xanana Gusmao, delivered a stern warning on 6 December 1999 that, in times of national crisis, CNRT members were supposed to serve the people, not themselves. The comment was widely seen as an attack on Manuel Carrascalao’s involvement with Wayne Thomas. But apart from the intra-CNRT politics, it reflected the UN position to deem all former Indonesian army land as ‘state property’ until land claims can be heard by the embryonic Timor Loro Sa’e court system.


Potentially the most lucrative business deal in Timor Loro Sa’e is still to be made by Australian construction giant, Multiplex Constructions Pty. Ltd. The chairman and CEO of this company, John Charles Roberts, has family ties with the 2/2 commandos that served in Timor Loro Sa’e in World War II. Multiplex’s Darwin-based manager, John Brears, recently visited Aileu, which at that time was still the headquarters of CNRT and FALINTIL, and has tendered to rebuild some public buildings there, while donating some computers and vehicles to the CNRT.

‘We are primarily interested in the short term in helping the Timorese people get themselves established’, John Brears told Catherine Munro from the Sydney Morning Herald on 16 November, 1999. But Multiplex also wanted a long-term relationship, he added. ‘We are not being carpet-baggers, we are not here to make a quick buck.’

What do the UNTAET officials think about this proposal? According to the same news article, Sergio de Mello’s legal adviser, Hansjoerg Strohmeyer, was already in Dili designing the planned property and land commission in consultation with East Timorese independence leader, Xanana Gusmao.

As he has spent most of his adult life fighting in the mountains, in underground bunkers, and in jail cells in Dili, Semarang, and Jakarta, it is still debatable whether Xanana knows what kind of corporate giant he is dealing with. Or, whether Multiplex is the right partner to reconstruct Timor Loro Sa’e’s public buildings for the lowest cost.

As far as the company’s history shows, Multiplex is certainly not interested in small-scale developments. It also has a history of financially underwriting local political elites. Founded in Perth in 1962, it still is a family business under the leadership of its founder and present chief executive, John Charles Roberts. Since 1983 it has been involved in overseas construction activities, with significant operations in Singapore, Malaysia, and Indonesia. In 1997, it employed more than 3,000 direct and indirect workers on its sites and undertook work with a value of over A$2 billion. In Sydney, it completed Australia’s most prestigious office building, the Chifley Square, and is currently constructing Stadium Australia, the main stadium for the Sydney 2000 Olympic Games, with a contract value in excess of A$450 million.

According to sources in Darwin and Dili, Multiplex had received a sympathetic ear among the CNRT leaders thanks to Joao (‘Joy’) Goncalves and Darwin-based lawyer, Martin Hardie. Joy is a Timorese who fled to Melbourne in the mid-1970s, and later moved to Cairns, Queensland, where his family owns a supermarket. Goncalves, who had a very low profile role during his twenty-four years in Australia, as far as Timorese politics is concerned, seems to be currently well-entrenched in the CNRT inner circle. He is often seen managing the CNRT office in Dili, or travelling with Xanana Gusmao. Many Indonesian-educated Timorese jokingly call him ‘Mensekneg CNRT’, referring to the Indonesian acronym of ‘State Secretariate Minister.’ By cooperating with Multiplex Corporations, Joy allegedly plans to open a new supermarket and a hotel in Dili. Martin Hardie was fortunate to have the right contacts to approach the CNRT leadership. Those contacts were Jose Gusmao, a relative of Xanana Gusmao and formerly the CNRM Representative in Darwin, and Angie Pires, a Timorese woman whose sister was Gusmao’s former wife. During my visit to Dili in mid-November 1999, I was told that Martin Hardie was the one I had to see in Dili, to make an appointment with Xanana Gusmao.

Due to Goncalves’s mediation, Multiplex has recently obtained a contract of A$0.5 million to rebuild the Dili headquarters of the old Portuguese-era chamber of commerce, called ACAIT (Associacao Commercial Agricola e Industrial de Timor). During the Indonesian occupation ACAIT had been changed into KADINDA (Kamar Dagang dan Industri Daerah) Timor Timur, which was headed by Manuel Carrascalao. ACAIT has recently been revived by an ad hoc committee, again headed by Manuel Carrascalao with Joy Goncalves as the secretary. Without consulting other former members and without holding a public tender, this ad hoc committee has appointed Multiplex to reconstruct the old ACAIT building. In the meantime, Joy is already planning to open a restaurant in the reconstructed building. Apart from the absence of a public tender, the A$0.5 million proposal to rebuild the ACAIT building also contain some labour irregularities. The proposal is based on an A$25 minimum wage for construction workers, while in reality Timorese workers are mostly only paid A$5.

Slowly but surely, Multiplex is beginning to receive other contracts as well. Recently, it obtained a A$2 million contract to rebuild the former Indonesian provincial parliament building, which during the Portuguese time housed most of the government offices.

Legal services

Since the transition towards full independence, and the destruction of so many public and private properties have created immense legal problems, obviously Timor Loro Sa’e has become a lucrative market for law firms. One Australian law firm which has moved into the country is Dunhill, Madden and Butler. This law firm is politically well connected in Australia, since Stephen Loosley, a former NSW State Secretary of the Australian Labor Party (ALP), joined it after leaving the NSW state parliament.

With a recommendation from Xanana Gusmao, they found their Timorese partner, Manuel Tilman, to form their joint venture in Dili, called Tilman and Dunhill. This Portuguese-educated lawyer, who was previously based in Macao, had been involved in the so-called ‘reconciliation process’ among pro-independence and pro-Jakarta Timorese initiated by Suharto’s eldest daughter, Tutut. In December 1993, Tilman attended the infamous London Meeting as part of the so-called grupo de seis, which included the highly respected Timorese community leader, Padre Francisco Fernandez (Gunn, 1997).

Three years later, Tilman joined a consortium with three other Timorese collaborators, Abilio de Araujo, the Lisbon-based former top executive of FRETILIN, Francisco Lopes da Cruz, a former UDT leader who had become Suharto’s ‘roving ambassador for East Timor’, and Jose Abilio Osorio-Soares, then Jakarta-appointed governor of Timor Loro Sa’e and co-founder of the pro-Indonesian party, APODETI.

During Suharto’s last years in power, Tilman gradually moved from Tutut to Jose Ramos-Horta and Xanana Gusmao. On 23-27April 1998, Tilman and his Macao Group were even trusted by Xanana to organise the National Congress of the Timorese in the Diaspora in Peniche, Portugal. This was attended by 218 delegates from various political parties, and civic, cultural and sporting associations. Two groups were absent from the convention, namely the Timor Socialist Association, who ran their own resistance network in Indonesia and inside Timor Loro Sa’e and Manuel Carrascalao’s Reconciliation Group for East Timor’s Development (GRPTT). Joao Carrascalao, the UDT leader, who was in Lisbon attending another conference, initially refused to attend the convention but later changed his mind.

For the sake of unity, the convention replaced the name Maubere in CNRM with Timor, to accommodate UDT’s rejection of the name Maubere which they considered to be derogatory. So, CNRM became CNRT. The convention also elected Xanana in absentia as the umbrella organisation’s president and Ramos-Horta and an unnamed person inside Timor Loro Sa’e as vice presidents. Finally, the convention approved a Pact of Rights, Duties, Liberties and Safeguards for the People of East Timor. This ‘Magna Carta’ was based on a draft from FRETILIN leader Mar’i Alkatiri, incorporated parts of a draft from Luis Cardoso, former CNRM Representative for Portugal and Spain, but rejected a draft made earlier on by RENETIL (ETRA, 1998; Taudevin, 1999; Carlos da Silva Lopes, personal communication, 1998).

At the moment, Tilman is being trusted by Xanana to co-ordinate CNRT’s taskforce on legal affairs, and co-operates with the United Nations to investigate the post-referendum human rights violations perpetrated by the Indonesian military and their Timorese collaborators (Sydney Morning Herald, 16 December 1999).

The question is now, without any legal regulations in place against conflicts of interests for Timor Loro Sa’e’s public figures, is it appropriate for a figure with such important legal power to run a law firm, which may be recruited by business people who may have supported the previous regime during the occupation?

To avoid potential conflicts of interests, as in the case of Manuel Tilman’s ‘double function’ as Coordinator of CNRT’s Legal Affairs Taskforce and partner of a large international law firm, it is highly recommendable that the UN should pay reasonable salaries to CNRT staffpersons, who should be prohibited from directing any business and should put all their family’s company shares into a blind trust during their term of office. Learning from the Australian model rather than reproducing the Indonesian-style of ‘KKN’ (korupsi, kolusi, nepotisme), which brought the Indonesian economy to a standstill and facilitated the downfall of Suharto, should be the way for the newborn (or, reborn) country to go.

The World Bank: from supporting genocide to building a country from scratch

Compared to all those Australian and other capitalists, the role of the World Bank is much more crucial in the reconstruction and future development of Timor Loro Sa’e. Understandably, the first city which Xanana Gusmao visited, after his first CNRT meeting in Darwin, was Washington, DC. In Washington, the former guerilla leader, now in his three piece-suit and tie, persuaded the World Bank to allocate its resources to reconstruct and develop his country during the interim UN administration over the next years.

Xanana’s plea did not fall on deaf ears. Klaus Rohland, the World Bank’s country director for Papua New Guinea and the Pacific Islands, has been charged with co-ordinating the Bank’s involvement with East Timor. Without waiting for the grass to grow, Rohland himself led an international mission to conduct a three-week assessment of the country, assisted from the Bank’s side by Sarah Cliffe and from the Timorese side by Mario Carrascalao, the longest serving governor of Timor Loro Sa’e during the Indonesian occupation.

In their press conferences in Canberra and Dili, Rohland and Cliffe did not unveil much of their mission’s findings, except that it may cost up to A$375 million over the next three years, and that it will be discussed at a meeting of lending institutions and countries in Tokyo. They did mention, however, that in contrast to the poorly paid, graft-prone public service of more than 28,000 under the Indonesian occupation, the mission wants no more than 12,200 in the three-year transitional period, with nearly 90 per cent of these to be teachers and health workers. The mission also identified agriculture – particularly coffee – as central to the country’s economy (Sydney Morning Herald, 10 and 19 November 1999).

An article in the Asian Wall Street Journal on 7 October 1999 sheds some light on what Timor Loro Sa’e means to the World Bank: ‘This tiny, devastated former Portuguese colony is to become an important testing ground for the World Bank, the International Monetary Fund and a group of wealthy donor countries’ (Casey, 1999). A testing ground for what? A testing ground to show the world how to build a macro-economic infrastructure from scratch.

They – meaning the World Bank, the IMF and a group of wealthy lending countries – have the task, according to Casey, ‘of building the foundation of the fledgling country’s economy. A finance ministry, a revenue-collection agency, a monetary authority, a currency regime, customs and payments systems, regulatory bodies – all probably will be designed and built by a clique of Washington-based economists and development planners’ (1999).

The Bank has already aggressively sought to take charge, says Casey. In addition to organising an informal meeting of prospective Timor Loro Sa’e lending institutions and countries in Washington, DC, during the last week of September 1999, in the following month the Bank had provided a three-week crash course in international economics to a small group of East Timorese economists. According to Casey:

The few ethnic East Timorese holding PhDs are mostly former exiles living in places like Sydney or Lisbon, for whom starting a new life in Dili might be hard. Even so, World Bank staffers say they are impressed with the support they have found among the far-flung East Timorese diaspora. (1999)

What the World Bank – and also Xanana and the young and overseas Timorese paired to the Bank’s East Timor mission – seem to forget, is that during the Indonesian occupation, the World Bank was also part of the problem, and not the solution. As several authors have highlighted, the World Bank was an active and very willing participant in two genocidal policies in Timor Loro Sa’e, during the Indonesian occupation, namely (a) the so-called ‘transmigration’ policy of resettling Balinese and Javanese farmers on the rice-fields of the Timorese farmers in the border areas and southern plains; and (b) the so-called ‘family planning’ program, where Timor Loro Sa’e in particular became targetted for the promotion of the more permanent fertility control techniques, such as Depo Provera injectables and Norplant implants. In fact, Timor Loro Sa’e had the highest level – 72.22 per cent – of all new users of injectables among all Indonesian provinces in 1993-1994 (Otten, 1986; Aditjondro, 1994; Scharfe, 1996; Sissons, 1997).

In addition, in 1992 the World Bank also happily took over the chair of the club of Indonesia’s lending institutions and countries, which changed its name from IGGI to CGI, after the Netherlands and Canada protest against the Santa Cruz massacre of 12 November 1991 (Scharfe, 1996).

In other words, the World Bank has helped to legitimise Indonesia’s occupation by assisting the New Order regime to utilise all those ‘idle and under-utilised’ rice-fields in the Maliana and Zumalai plains, and re-filling the population gap as a result of the deaths of a third of Timor Loro Sa’e’s pre-invasion population.

Looking at it from that perspective, all the loans from the World Bank to reconstruct Timor Loro Sa’e should be turned into grants, as a form of compensation for helping Jakarta to legitimise its illegal occupation of this still-born nation.

Agrarian Reform

In all these plans and efforts to reconstruct and develop the war torn country, what seem to be missing, so far, are talks or plans on how to redistribute the excessive land holdings inherited from the two former colonisers: Portugal and Indonesia.

Since agriculture, and coffee in particular, seems to be a major focus of the World Bank’s reconstruction plan, agrarian reform is certainly very relevant in this sector. About 60 per cent of the coffee plantations are still in the hands of smallholders, 10 per cent are in the hands of large family plantation owners, or facenderos, and 30 per cent were in the hands of the Portuguese government company, SAPT (Sociedade Agricola Patria e Trabalho) until taken over by a military-backed company, P.T. Salazar Plantations, during the Indonesian occupation.

During the occupation, one of the Portuguese facenderos, Antonio Brito, was fortunate enough to keep managing his seven coffee plantations, but in a profit-sharing arrangement with the military. Hence, a Portuguese television journalist, Rui Araujo, described Brito, (who formerly was the manager of the Dili branch of Banco Nacional Ultramarino) as a privileged person.

He works, and works hard for the Indonesians. There are few others like him. To encourage the Timorese, Jakarta pays the collaborators generously. They want them to set an example by [creating a] contrast between plenty and generalised penury. Inequality serves, on top of it all, to create or emphasise the abyss that is beginning to separate the Timorese from each other. [By] creating first-class and second-class citizens, Indonesia is applying the old axiom of dividing to dominate. (Budiardjo and Liem, 1984)

Now that the Indonesians have left, legal problems might occur in relation to the future of Antonio Brito’s coffee plantations, as well as the ex-Salazar Plantations coffee plantations in Ermera.

SAPT is the oldest large-scale coffee plantation in Timor Loro Sa’e, established in 1897 by the then Portuguese Governor Celestino da Silva. In 1904, the Companhia de Timor, also based on metropolitan capital, emerged as a rival to SAPT in the coffee plantation business in Ermera. By the 1910s they were joined by four other plantation companies, the most important of which was Associacao Commercial Agricola e Industrial de Timor (ACAIT) administered by da Silva’s son. By 1910, an additional 6,000 hectares of land had been granted by the colonial rulers to other individual Portuguese planters (Gunn and Lee, 1994; Abrantes, 1994).

However, will a future Timor Loro Sa’e government still recognise absentee ownership of land in the country by a foreign government and foreign nationals? If that is the case, it will open the door to other foreign control of land in Timor Loro Sa’e by foreign governments, foreign companies and foreign individuals.

If, on the contrary, a democratically elected Timor Loro Sa’e government will not allow foreign control of land in the country, then decisions need to be made in the immediate future as to how to redistribute the 16,000 hectares of land. This question also applies to large plantations with commodities other than coffee, such as coconut, which was also heavily dominated by SAPT and SOTA, and was obviously also taken over by Indonesian army-backed interests.

In addition, a decision needs to be made: whether the facenda system will still be allowed to be continued, even if the facendero family members have already moved out of their facenda into non-farming business. Mario Carrascalao’s own opinion is that the facendas should be taken over by the new government, by paying a certain compensation to the former owners. The next step is to redistribute those mostly idle coffee plantations to the actual farmers, which may have a huge employment effect.

Large land holdings are not limited to those families who might try to regain the land appropriated from them by the Indonesian occupation forces. If we exclude the former Suharto land-holdings, which will definitely be taken over by the future Timor Loro Sa’e government and returned to their rightful owners, then it may be said, safely, that the Catholic Church is the largest landlord in the country. It covers many tracts of land all over the country, from Fuiloro in Lautem in the east, to Fohorem in Covalima in the west. Or, just outside Dili, it covers the Fatunaba stretch of land from the War Memorial south of Dili to the former seminary in Dare.

This church-related agrarian reform should not only be focussed on redistributing excessive church-held land, but also on a review of the relations between local church authorities and peasants, where the renting of church-owned tractors and other mechanical equipment involves a portion of the peasants’ harvest. This means that in their daily lives these same parishioners are basically the church’s sharecroppers.

Unlike what some people on the Right may argue, agrarian reform is certainly not a policy limited to marxist regimes, such as North Korea. Under pressure from US General MacArthur, three East Asian capitalist countries – Japan, South Korea, and Taiwan – carried out redistribution of excessive and absentee agriculture land-holdings to facilitate the transfer of former agriculture land into urban-based industries, while also increasing rural land productivity.

The question is, has the UNTAET and CNRT any interest in those issues? What limits should be put on landholdings in rural areas? Should those limits only be put on rural properties, or also on urban properties? Who is entitled to own land in Timor Loro Sa’e: only those born in this country, before the Indonesian invasion, or also those born after the invasion?

The basic question is, however: should the future Timor Loro Sa’e government base its agrarian policy on Timorese customary law and customary land right systems, which often prohibit outsiders who are not members of the local knua (clan) from owning land in their respective hamlets? Or, should the government develop a new agrarian law, which would simply whitewash the disparities and social stratification created by the Portuguese colonial system of ‘bribing’ deportados with large facendas, as well as appropriating the Maubere people’s land to rich and powerful people from the Metropole or to the Catholic Church?

If the basic solution to solve all land disputes in Timor Loro Sa’e is to uphold the customary land rights of the indigenous people, who have been marginalised by two colonial powers in a row, then at least the customary land laws of three ethno-linguistic groups need to be investigated. In the case of the coffee plantations, the future government should investigate the customary law of the Mambai people, whose homelands covers Ermera, Aileu, Ainaro and Manufahi (Traube, 1986). In the case of transmigration, the customary land law of the Bunak and Kemak peoples in Maliana and, again, the Mambai land law in Manufahi, should be investigated. And in the case of land appropriation in the Eastern tip (Ponta Leste), where a hydro-power plant was planned, the customary land law of the Fataluku people should be investigated. This all demands a full-time investigation, which preferably should be initiated by the CNRT Legal Affairs Taskforce.

An overall policy of agrarian reform should also cover the large land holdings of the Catholic Church, to abolish an archaic form of exploitation which dates back from the Portuguese colonial era. Obviously, various church institutions may still need to keep some of that land to generate the funds to cover their costs, but a substantial part of what is currently church land was also obtained from parishioners as a form of gratitude, or as a form of future investment, after the occupation forces had left their country.

Sweeping those matters under the carpet would only be a temporary solution. Since with the limited resources available to the majority of the Timorese people, sooner or later any disparity in standards of living and ownerships of assets will become the target of public criticism, if not vandalism. And questions on ‘how free are we?’ will emerge, if political freedom does not go hand in hand with economic justice.


Based on these observations, allow me to draw the following conclusions. First of all, the empirical evidence indicates that Frantz Fanon’s observation of post-colonial states in Africa, where the new national middle class became a ‘transmission line between the nation and [global] capitalism’ is very relevant in analysing the current situation in Timor Loro Sa’e.

The destruction of Timor Loro Sa’e by the Indonesian military and Timorese collaborators, and the forced deportation of a quarter of its population, has created an excellent market and bonanza for Australian businesses. These were the major contributors to previous regimes in Canberra and Darwin, which for more than two decades had supported the occupation of East Timor.

Despite all the rhetoric of helping Timor Loro Sa’e to get on its feet and with more than a billion dollars to be pumped into the country, what is missing from the equation is a serious study on what proportion of the aid funds is actually leaving the country again in goods and services. These are purchased from overseas companies and are consumed by foreigners who are soon going to leave the country, without a significant ‘trickle down’ or ‘multiplier’ effect for the local, grassroots economy. With the very low standard of wages for local workers, set by the business community and endorsed by the United Nations, Timorese workers are subsidising their Australian employers and the UN and foreign NGO community at least twice the amount of their wages (using the Darwin hotel workers’ wage rate as a yardstick).

The absence of a code of conduct among CNRT officials and employees raises the questions of conflict of interests of those in political power who are simultaneously involved, or related to those involved as joint-venture partners of the overseas investors.

Likewise, the absence of a socially and environmentally friendly foreign investment policy and the agressive promotion of Australian businesses into the country is turning Timor Loro Sa’e into a paradise for market-driven foreign investors, without considering the real need for foreign investment.

Finally, by failing to investigate the urgency of agrarian reform in Timor Loro Sa’e, the World Bank-CNRT mission may intensify future problems of social justice and agricultural productivity.

Timor Loro Sa’e is rapidly moving away from its previous status as Jakarta’s colony towards becoming a new outpost of global capitalism in the Asia-Pacific region, due to the absence of a democratically elected government. Such a government would rely more on its own people’s resources and traditions, and would therefore put the brakes on this massive influx of foreign capital.

This is the second part of an edited version of an article which was written in December 1999. The first part appeared in arena magazine number 46.


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George Aditjondro is in the Department of Sociology and Anthropology at the University of Newcastle

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