Autor: Damien Kingsbury, Deakin University
After a period of parliamentary instability in 2020, Timor-Leste tried to embark on a more stable political course in 2021. As the country continued to face poverty, malnutrition, and unsustainable government spending, the political process eventually evolved into a workable pattern. This enabled an orderly response to emergencies by avoiding the distractions of political power struggles and clashes.
Timor-Leste faced political unrest following the withdrawal of the National Council for the Reconstruction of Timor (CNRT) party from two ruling coalitions by resistance-era leader Xanana Gusmao. This followed disputes with the Fretilin party’s coalition partners and the refusal of Fretilin President Francisco ‘Lu-Olo’ Guterres to swear seven proposed but allegedly corrupt CNRT ministers.
Gusmao’s overt offer to reshuffle Timor-Leste’s policies in favor of CNRT failed in 2020 when President Lu-Olo refused to accept the resignation of the People’s Liberation Party Prime Minister Jose Maria ‘Taur Matan Ruak’ Vasconcelos. This kept him in office until a new coalition could be formed, which left the minority government with a monthly budget and crippled the state-dependent local economy.
The new parliamentary coalition formed later in 2020 included the Fretilin, the People’s Liberation Party, and the Noble Advancement of Timorese National Unity. The coalition held 36 of the 65 seats in parliament and remained stable through 2021. The stability enabled a more effective response to COVID-19 in 2021.
While Xanana Gusmao seemed isolated from power, at least for the time being, his political arch-rival, two-time prime minister and Fretilin leader Mari Alkatiri, had also withdrawn from politics at the front. Since the former president and Nobel Peace Prize winner Jose Ramos Horta is also no longer involved in day-to-day politics, three of the country’s most influential political figures and the remaining “generation of 75” leaders were no longer directly involved in the leadership of the country. This could be seen as a long-awaited generation change, but President Lu-Olo and Prime Minister Taur Matan Ruak were also figures of the resistance era.
Timor-Leste declared a state of emergency and limited international travel to the COVID-19 storm relatively successful. This was especially in the face of something porous border with pandemic ravaged Indonesia. The total infections have been curbed to about 20,000 cases with only 122 deaths.
Although the distribution was inconsistent, around half the population of Timor-Leste had received at least one dose of the AstraZeneca or Sinovac vaccine. Just over 37 percent of the population was double-vaccinated by the end of the year. While Timor-Leste’s young population may have contributed to the low COVID-19 numbers, the government’s regular “stay at home” lockdown orders with family grants have been important measures to fight the coronavirus. This was a similar policy that Timor-Leste used to effectively eradicate malaria earlier.
The ongoing closure of Timor-Leste – with the exception of inbound emergencies – had little impact on the otherwise oil-dependent economy, and growth fell back to 2 percent after a 7 percent slump in 2020. Growth was below the originally forecast 3 percent, mainly due to extensive flooding in April and May 2021. The floods affected each of the country’s 13 counties, with significant parts of Dili being inundated, other areas experiencing severe landslides, and April to August 2021 a “State of Disaster” was proclaimed.
As a result, median income per capita remained low at around US $ 1,300, making it the poorest country in Southeast Asia. The rent-seeking behavior of the elites continued and marked a clear gap between rich and poor.
After losing around 10 percent of its value in early 2020, the country’s sovereign wealth fund Petroleum Fund rebounded towards the end of the year, reaching $ 18.9 billion in March 2021.
Despite falling oil revenues, the Petroleum Fund performed well and continued to draw the Timor-Leste economy. Earlier predictions of financial collapse by the late 2020s, based on government spending exceeding sustainable disbursements from the petroleum fund, seemed less imminent. However, government spending continued to more than double the sustainable withdrawals.
Without the development of other economic sectors, the country would at some point face a financial settlement. The government seemed to understand the unsustainability of its budgetary position, but remained unable to cut spending in the face of COVID-19 and the flood.
There was no sign of any other sector making significant economic strides, let alone meaningfully supplementing the country’s oil revenues. Despite previous plans to make tourism one of Timor-Leste’s top three foreign sources of income, international visitors are unlikely to flock to the country anytime soon. In addition to the already high travel and accommodation costs and limited infrastructure, COVID-19 travel restrictions pose significant obstacles to tourism.
The Tasi Mane liquefied natural gas project of the previous government of the Alliance for Change and Progress, which is central to the country’s development plans, has been quietly mothballed. There was no international interest in the development of the Great sunrise Liquefied natural gas field as the heart of Tasi Mane, unlike in China as a loss-making partnership in exchange for strategic concessions. The possibility of China gaining a strategic foothold in Timor-Leste has been central to three of Timor-Leste’s key partners – Australia, Indonesia and the United States.
Regardless of what otherwise would have been a recipe for ongoing political turmoil, including poverty, a pandemic and a natural disaster, Timor-Leste remained calm in 2021. The country’s electoral process, which has meanwhile been tried and tested many times, also contributed to this calm. Despite the challenges of 2021, it has defied all odds and confirmed that the country is the most successful democracy in Southeast Asia.
Damien Kingsbury is Professor Emeritus in the School of Humanities and Social Sciences at Deakin University.
This article is part of an EAF special series looking back at 2021 and the year ahead.