Post-Intervention East Timor: Inclusionary Neopatrimonialism and Latent Conflict

After East Timor attained independence, the UN designated two successive missions, the United Nations Mission of Support in East Timor (UNMISET, 2002-2005) and the UN Office in Timor-Leste (UNOTIL, 2005-2006), to assist with the program of continued reconstruction. The central dimension of both those mandates was to provide continued capacity-building assistance to the East Timorese administration. Although by September 2001, UNTAET had established the East Timor Public Administration as part of an all-Timorese transitional government, this embryonic civil service had only a very limited capacity. The civil administration was highly dependent on international assistance to make up for a low level of professional skills, particularly in the central government functions of human resources and public financial management.[1] Timorese political leaders’ emphasis on political incorporation had meant that little attention was paid to the statestrengthening dimension of the peacebuilding program. Measures of government effectiveness in East Timor demonstrate that state capacity did not much improve after the transition to independence and has remained at low levels.[2]

FRETILIN’s domination of the political process after the transitional period - facilitated by UNTAET’s slow moves to incorporate broader political participation and the sequencing of the Timorization of government - proved problematic for the strengthening of the state and the longer-term consolidation of democracy in East Timor. FRETILIN, in essence, “placed the new National Parliament in clear subordination to a government intent on using its majority to push through its ambitious legislative program.”[3] It also quickly began to consolidate its patronage networks throughout the country by politicizing civil service hiring in district administration, ensuring positions were filled by FRETILIN cadres.[4] By mid-2005 it became apparent that, notwithstanding its grassroots support and dominating organizational presence throughout the country, the population at large did not necessarily share FRETILIN’s goals for the country.

The FRETILIN leadership’s particular history and contemporary policymaking style and content increasingly compromised the party’s political legitimacy. The party compounded a pattern of Timorese elitist political behavior that threatened true democratic consolidation. In an oft-cited example of what was viewed as the FRETILIN leadership’s political tone-deafness and elitist orientation, it chose Portuguese as the official national language, marginalizing the Indonesian-educated and Bahasa-speaking urban youth who were in the process of forming their own increasingly significant political constituency. Timorese civil society representatives have criticized the country’s hierarchical and closed political culture, pointing out that although it may have contributed to the success of a national resistance movement it has since been detrimental to democracy.[5] The opposition began to mobilize - the Catholic Church, for example, began to take on a more activist and populist role, opposing the government over certain pieces of legislation.[6]

Politically motivated violence erupted in April 2006, reflecting deep and long-standing political animosities among the elite, emerging state capture and competing patterns of patronage behavior, and an absence of elite efforts to engage with community and customary forms of governance.[7] This conflict turned violent as FRETILIN proved unable to assert legitimate control over armed groups - the breakdown in authority resulted in an episode of arson and looting in Dili and its environs. Over the course of several months of severe political instability, 38 people were killed and 69 wounded, 1,500 houses were destroyed, and 150,000 people were internally displaced.[8] Eventually, the majority of the population had their wishes fulfilled when FRETILIN Prime Minister Mari Alkatiri was forced out of office at the behest of Xanana Gusmao and other revolutionary leaders.

The 2006 conflict marked the onset of internal strife and political instability, distinct from both the decades-long resistance and the 1999 conflict associated with the independence vote. It revealed deep- seated social tensions in East Timor and some saw it as an outcome of UNTAET’s failure to broker a domestic political settlement at independence.41 The “crisis,” as it became known, was triggered by rising tension between factions in the armed forces and police. There was some truth to the notion that this dispute reflected long-standing animosities between the Western and Eastern factions within the armed forces - more Western commanders were killed during the Indonesian occupation and Western soldiers complained that their treatment under mostly Eastern commanders was unfair. The tension was a concrete manifestation of decisions made during the transitional governance period: when the East Timor Defense Force was created at independence, the first of its two battalions was recruited from the ranks of the FALINTIL guerrilla fighters in a process that disproportionately favored Gusmao loyalists and troops from the eastern districts of the country.[9] Some of this tension was also the outcome of political intrigue: the Minister of the Interior Rogerio Lobato, with the implicit consent of Alkatiri, established loyalist groups inside the armed forces as a counterweight to those troops loyal to Gusmao. A UN Security Council assessment mission found that Lobato also supplied an irregular paramilitary group involved in the violence with arms intended for the police and that he instructed the group to use the weapons against political opponents.[10] Yet the crisis quickly spiraled to encompass a number of sociopolitical grievances and dimensions - escalating because it became a vehicle for key groups, particularly resistance veterans and Dili residents, to rally against the unpopular Alkatiri government.[11]

Overlaid on the political scene was the fact that during this period East Timor had rapidly become one of the most petroleum-dependent countries in the world, with oil and natural gas revenues providing about 90 percent of government revenues, on average, since petroleum production commenced in 2004. In retrospect, observers point to the role played by petroleum revenues in lubricating the 2006 civil conflict and political fight.[12] At the time of independence the FRETILIN government had to operate with a very small budget and refused to borrow to finance more spending. As the country began to reap its first hydrocarbon revenues in 2004, the opposition disapproved of the continued austerity measures in the face of this windfall. By 2005-06 FRETILIN’s decision not to spend the country’s petroleum

Nations Security Council 2006; United States Library of Congress 2009.

Table 5.2 Electoral results in East Timor, 2007—2012

May 2007 Presidential, second-round runoff

June 2007 Parliamentary

April 2012 Presidential, second-round runoff

July 2012 Parliamentary

Jose Ramos- Horta

(independent) 69 percent (22 percent first round) Francisco Guterres (FRETILIN) 30 percent (28 percent first round)

FRETILIN 21 seats CNRT (National Congress for Timorese Reconstruction) 18 seats

PSD-ASDT 11 seats Democratic Party 8 seats

Other 6 seats Result: CNRT-led coalition government

Taur Matan Ruak

(independent) 61 percent (22 percent first round) Francisco Guterres (FRETILIN) 39 percent (29 percent first round)

CNRT 30 seats FRETILIN 25 seats Democratic Party 8 seats Other 6 seats

Result:

CNRT-led

coalition

government

wealth to relieve poverty, kick-start growth, and create much-needed employment had contributed substantially to the population’s widespread disaffection with the party.

New presidential and parliamentary elections were held in May and June 2007, respectively. Xanana Gusmao stepped aside as president to run for prime minister, the real seat of power in the country, and his ally Jose Ramos-Horta easily won the presidential election against the FRETILIN candidate. In the parliamentary elections, FRETILIN received the largest number of votes but, in a serious rebuke from the voters, it saw its tally slip from 57 percent in the 2001 elections to 29 percent and it was unable to form a coalition government. (Official electoral results from 2007-2012 are presented in Table 5.2.) Gus- mao’s new National Congress for the Reconstruction of East Timor or CNRT - conveniently the same acronym of the enormously popular national resistance front under whose banner the independence referendum was won in 1999 - won 23 percent of the vote, the next highest share after FRETILIN’s. In a contentious decision, President Ramos-Horta exercised his constitutional right in selecting the CNRT to form the new government - but Gusmao was only able to do so at the head of a volatile new coalition.[13]

A precedent for the peaceful transfer of power was thus set relatively early in East Timor’s post-conflict years. Yet this was still a government where authority was concentrated in the hands of a small group of revolutionary-era political elites. The crisis had also clearly thrown the country into a serious constitutional and political crisis, the resolution of which was not uncontentious. For example, observers criticized Gusmao for having initially compromised the constitution by demanding Alkatiri leave office; yet there is no legal process in East Timor for determining the constitutionality of his actions as president. There appeared to have been a reversal of some degree of earlier behavioral democratic consolidation among core political elites - but public attitudes toward democracy remained encouraging. In a more promising sign of renewed political institutionalization, smaller parties were proliferating and growing in strength, capitalizing on the frustration of young, urban, and educated East Timorese with the older, Portuguesespeaking, conservative leaders of FRETILIN and attempting to better channel the political participation of the East Timorese population. On the statebuilding front, the insistence on political participation and development on the part of both the UN and the Timorese elite continued to overshadow responsibility being undertaken for reconstructing the still-eviscerated structures of state. Although the formidable statebuilding challenge may have been obscured by the attempts to repair the country’s fragile democracy, the lack of attention to institutional and human capacity-building contributed in no small part to the political instability experienced in 2006.

Under the Gusmao-led coalition government, the neopatrimonial nature of politics in East Timor has become increasingly apparent. Political elites began to benefit from the oil price spike and the significant stream of petroleum revenues in the late 2000s, distributing the patronage made possible by these fiscal receipts and gaining political support on that basis. East Timor thus began to follow a pattern familiar to rentier states, with public sector hiring and pay increasing along with growing concerns over elite capture of petroleum concessions and lucrative procurement contracts.[14] The new governing coalition viewed the Timorese population’s dissatisfaction upon failing to see some immediate benefits emerging from the country’s newfound peace and its petroleum wealth as a key dimension in the downfall of FRETILIN. The electoral campaign run by Xanana Gusmao’s CNRT thus pledged to increase social spending rapidly in order to deliver a peace and petroleum dividend. Once in office, Gusmao’s administration delivered on that promise by initiating social transfers to specific groups in the population and opening up decentralized mechanisms for rapidly increasing public infrastructure spending - with immediate and sustained results. Capital spending climbed from less than $25 million in 2005 to about $180 million in 2008 and $600 million in 2011.[15] Cash transfers constitute a very large share of the budget - $234 million, or 13 percent of the 2012 budget, and a great deal more than the $153 million spent on the health and education sectors.[16] These spending increases were made possible through the government’s repeated annual requests to Parliament to exceed the legally prescribed level of petroleum revenue spending established to prevent the short-term squandering of resource wealth.[17]

In short, since the 2007 elections, it has become both legitimate and relatively easy for the government to engage in the neopatrimonial distribution of ever-higher shares of the country’s petroleum rents. Viewing the various public spending measures in the best possible light, the new coalition government acted in the aftermath of the 2006 crisis to “buy the peace” with the country’s best interests in mind. From this viewpoint, the government fulfilled its campaign promises and perceived mandate to distribute rents in the form of public expenditures to key constituencies - thereby maintaining post-election political stability by pacifying the social dissent and controlling the internecine elite conflict that had together led to the 2006 crisis. A preliminary analysis of the geographic allocation of public spending in East Timor found that the government was spending more - in terms of both cash transfers and public investment allocation - in those districts most strongly supportive of the coalition partners in the 2007 election.[18] The coalition was rewarded with another victory in the 2012 elections, in which FRETILIN failed to make an expected comeback in the polls; and there has been no return to widespread conflict since 2006.

Yet this is an equilibrium underpinned by a neopatrimonial political order, rather than the effective and legitimate governance envisaged by the international community and the major UNTAET intervention. A small group of political-economic elites has cemented its place in authority by dispensing patronage in exchange for broad political support. The coalition government, for example, has targeted its major clientelistic practices to very deliberately and very successfully co-opt the veterans of the clandestine resistance. High-level veterans are best understood as being still-armed militia leaders who represent a substantial threat to political stability. They are the specific individuals dispersed throughout the country who still have the capacity - and, if their demands are unmet, the expressed willingness - to mobilize civil conflict and even violence against the regime.[19] Of the aggregate spending on cash transfers, $85 million - a full 5 percent of the total 2012 budget - went to veterans.[20] The official annual veteran payment averaged just under $3,200 per beneficiary in 2011, representing 137 percent of the Timorese average total household budget.[21] These transfer payments to veterans have been framed as recognition for past service to the country rather than as a form of social assistance and outpace and crowd out other social spending. Veterans have also been explicitly targeted as the beneficiaries of the government’s decentralized public investment efforts. Several interviewees in 2013 urged me to imagine the counterfactual - asking, in particular whether political stability would have persisted had major patronage distribution through government spending channels not been initiated and targeted to veterans.[22]

A different dimension of the neopatrimonial political order has manifested itself at the national level, through elite rent-seeking and the capture of significant elements of the government’s public investment program and recurrent public sector contracts. In contrast to the distribution of government spending to different groups of the population, this latter channel of rent distribution benefits only an extremely small and concentrated political-economic elite and their clients. Reports abound of well-connected contractors - especially the family members and business partners, both Timorese and foreign, of senior government officials - winning single-sourced contracts, in contravention of the procurement law, with extremely high profit margins.[23]

This type of predatory rent capture by elites is a typical rentier state syndrome - but the East Timor experience exhibits an interesting twist. During the term of the first coalition government from 2007 to 2012, there was the sense that individuals and companies with particular ties to the coalition partners were capturing the lion’s share of the contracts, thereby excluding those connected with the opposition from the lucrative rent streams. Since the government’s re-election in 2012, however, there have been signs that opposition elites are also being incorporated into the system of rent-sharing. In one sign of this increasingly collusive elite behavior and capture of petroleum rents, the CNRT government and FRETILIN opposition in February 2013 came to a budget agreement behind closed doors that led to an unprecedented unanimous budget vote in Parliament. Many surmised that the implicit quid pro quo for the opposition’s agreement was their increased access to rents through preferred procurement channels.[24] As in Cambodia, it appears that neopatrimonial practices may be as important, if not even more important, to establishing inter-elite compromises and accommodation as they are to bolstering popular support for the governing party and the reigning political order. At the same time, the Timorese population has also demanded cleaner and more efficient government. In February 2015, Gusmao stepped aside as prime minister to make way for a new generation of leadership. In a sign of a continuing thaw in elite political rivalries - combined with a move toward a more technocratically inclined executive - Gusmao and his ruling CNRT party recommended FRETILIN member Rui de Araujo, the country’s successful health minister at independence, to be prime minister.

Elite collusion in neopatrimonial governance is unsurprising in the context of East Timor’s contemporary political history. Leaders across the political spectrum in the small country come from a small slice of society - being primarily drawn from three main groups: the mestigo elite; smaller groups of Indonesian-Chinese-affiliated businessmen; and a handful of “Timorese-Timorese” leaders of the clandestine resistance, many of whom come from indigenous royal houses. The current generation of leaders for the most part grew up together while attending one of two major Portuguese seminaries near Dili; divided themselves into opposing factions in the 1975 civil war; and then came together again, albeit playing diverse roles, during the resistance and the post-independence UN transitional period. Their political- economic incentives are, for the most part, aligned - especially in the context of the relatively short time horizons in place as a result of the known end circa 2022 of the revenue stream from the country’s only operational major gas field and the projected depletion at current spending rates of the country’s petroleum revenues by 20 2 8.[25] The number of politically and economically powerful families in East Timor has certainly multiplied since independence, with the Indonesian-Chinese-affiliated group particularly in the ascendant. Nevertheless, the core political-economic elite in East Timor represents, in essence, a very small winning coalition necessary to remain in power.[26] Over the past five years, moreover, through a deliberate neopatrimonial strategy, this elite has elicited and reinforced the political support of the only real potential spoilers, veteran leaders, by distributing just enough of the gains to pacify dissent and secure an element of legitimacy across the country.

  • [1] Author interviews with East Timorese government officials in civil servicehuman resources management and public financial management; Dili, EastTimor, April 2005.
  • [2] Such measures include, for example, the World Bank’s Country Policy andInstitutional Assessment (CPIA) public sector management and institutionscluster score for government effectiveness, as well as the “governmenteffectiveness” measure in the Worldwide Governance Indicators dataset.Kaufmann, Kraay, and Mastruzzi 2010.
  • [3] Goldstone 2004: 84.
  • [4] Author interviews with academics, East Timorese provincial officials, anddonor officials; Dili, East Timor, 2005. One Timorese official reported thatFRETILIN was the only party that had a presence in his (relatively large)province.
  • [5] Author interviews with East Timorese NGO representatives and journalists;Dili, East Timor, April 2005. At the time, Gusmao escaped criticism of elitistpolitical decision-making. Also, Bowles and Chopra 2008.
  • [6] In April 2005, the Catholic Church trucked in tens of thousands ofunemployed youth from the provinces to Dili in order to stage a demonstrationagainst the government’s plan to make religious education in schools optionalrather than mandatory.
  • [7] Boyle 2009; Brown 2009; and Scambary 2009.
  • [8] Figures from Hughes 2009a: 154. 41 For example, Ingram 2012.
  • [9] Ingram 2012: 11. See also Rees 2004.
  • [10] United Nations Security Council 2006.
  • [11] Scambary 2009 provides a detailed examination of this crisis. See also United
  • [12] Barma 2014.
  • [13] Politically motivated violence continued after the election, with rebel soldiersundertaking coordinated, unsuccessful assassination attempts against PresidentJose Ramos-Horta and Prime Minister Xanana Gusmao in February 2008.
  • [14] Barma 2014; and Blunt 2009. 2 International Monetary Fund 2009, 2013.
  • [15] 49 Republica Democratica de Timor-Leste, “State Budget 2012: Budget
  • [16] Overview - Book I.” Dili, October 2011.
  • [17] East Timor’s Petroleum Fund Law of 2005 established a concept known asEstimated Sustainable Income (ESI) that is intended to ensure intergenerationalsaving. ESI is defined as the maximum amount that can be appropriated fromthe fund in any given fiscal year, such that enough revenue is left in the fund forthe same value to be appropriated in all subsequent years. The Petroleum FundLaw sets ESI at 3 percent, on the assumption that the Petroleum Fund willgenerate an annualized 3 percent return on investment. Republica Democraticade Timor-Leste, Petroleum Fund Law, Law No. 9/2005.
  • [18] Catherine Anderson, Naazneen Barma, and Douglas Porter, 2009, “ThePolitical Economy of Natural Resource Management in Timor-Leste: A ValueChain perspective,” Unpublished report, Washington, DC: The World Bank.
  • [19] International Crisis Group 2011.
  • [20] Republica Democratica de Timor-Leste, “State Budget 2012: BudgetOverview - Book I.” Dili, October 2011.
  • [21] Dale, Lepuschuetz, and Umapathi 2014: 292.
  • [22] Author’s interviews with government officials and donor and civil societyrepresentatives, Dili, East Timor, November 2009 and February 2013.
  • [23] Author’s interviews with government officials and donor and civil societyrepresentatives, Dili, East Timor, February 2013. A number of intervieweesmentioned a recent Deloitte audit of procurement in East Timor, circa 2012,that catalogued specific irregularities and sources of leakage. During my visit toDili in February 2013, newspapers focused on the particularly egregious caseof the award of a lucrative hospital provisions contract to the husband of theMinister of Finance.
  • [24] Author’s interviews with opposition politicians and donor and civil societyrepresentatives, Dili, East Timor, February 2013.
  • [25] La’o Hamutuk, “How Timor-Leste Got Ten Billion Dollars ... and HowQuickly We Will Spend it All.” Dili, May 30, 2012. Blog posting accessed at:http://laohamutuk.blogspot.com/2012/05/how-timor-leste-got-ten-billion-dollars.html.
  • [26] Bueno de Mesquita et al. 2003.
 
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