The elevation of East Timor’s former foreign minister, Jose
Ramos-Horta, to the position of prime minister is likely to refocus
attention of the tiny state’s organisational capacity. Ramos-Horta has
a huge task ahead of him as PM, the first step being to create a sense
of security and to get tens of thousands of refugees back to their
homes. Beyond that, the challenges remain formidable.

Ramos-Horta will have to oversee the reorganisation and retraining of
the police, which had been known for corruption and brutality and which
fell apart in recent weeks. He will also have to address the problem of
the army, more than a third of which deserted and was sacked. Elements
of the rest were also implicated in the recent violence, and the army’s
future will be carefully reconsidered.

But East Timor’s bottom line is its economy, which last year moved from
recession into growth, albeit just 1% off a very low base.

Under the Fretilin government, East Timor has focused on using its
limited resources in ways that have the best chance of producing a
clear benefit, which has meant that some government funds have remained
unspent. Ramos-Horta will seek to free up those funds as minor economic
stimulus, especially in the districts.

The existing policy of avoiding international loans will probably be
maintained, to in turn avoid a future debt trap, while the existing
food self-security program will also continue. These are wise,
conservative moves that have attracted the approval of the IMF.

Most importantly, though, Ramos-Horta will seek to have the Greater
Sunrise oil and gas field deal with Australia ratified by the
parliament. He will also push for gas processing in East Timor, for
both income and technology transfer purposes, although could agree to
an alternative proposal if East Timor continued to receive a benefit
from it.

But most importantly, East Timor’s decision making process will now
assume a more rational and organisationally clear format. This alone
will ensure that East Timor is able to move ahead with developing its
tiny economy, which will in turn underpin the rest of its development.

Peter Fray

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