Xanana Gusmao has built a coalition that would support his infrastructure development plans through the release of more funds than is legally stipulated from the sale of Timor-Leste's rich oil and gas resources.
Twenty-four-year-old Saturnina da Silva's face had gone deathly pale. She had just given birth to a baby boy, 12 hours before parliamentary elections in Timor-Leste convened on a Saturday two weeks ago. Without even first providing her baby with a name, da Silva left her newborn in Dili, Southeast Asia's poorest capital city. She left to return to her hometown, Viqueque, which lies 180 kilometers southeast of Dili approximately the distance between Jakarta and Bandung in West Java. The journey took five hours. "Despite how tired I was, I went home because voting is important for me. I need to determine the future of my country," confided da Silva, who works as a shop assistant.
Ten years after it gained its independence, Timor-Leste remains a poor nation. Forty-one percent of its 1.2 million inhabitants live below the poverty line. The average income stands at 0.88 cents, or roughly Rp8,000 per day. According to the World Bank, 20 percent of the population is unemployed. A sufficient supply of food, clean water and electricity remains a major problem.
The National Congress for the Reconstruction of Timor (CNRT) party which was established by Prime Minister Xanana Gusmao won the recent parliamentary elections. CNRT obtained 36.6 percent of the votes, which converted into 30 parliamentary seats from a total of 65 seats in parliament. Meanwhile, the Fretilin party only succeeded in obtaining 29.8 percent of the vote, or 25 seats in parliament, followed by the Democrat Party which was able to draw 10.3 percent of the votes, or eight parliamentary seats. The remaining seats were taken by Frente Mudansa, a splinter party from Fretilin. The CNRT was very successful in the parliamentary elections this year, especially in comparison with their performance in the 2007 elections a time when they had only succeeded in winning 18 seats in parliament. They had then been defeated by Fretilin which won 21 seats.
CNRT's victory however is not enough for Xanana. CNRT still does not have a sufficient majority in parliament. An idea emerged to invite all the political parties to form a grand coalition. The idea was conveyed to Xanana by Timor-Leste leaders such as Jose Ramos-Horta and Bishop Alberto Ricardo. They were of the opinion that the government could not perform optimally due to the stark differences in parliament shared between the government and the opposition. Xanana has offered cabinet seats to the rival Fretilin party. "We are open to receiving any party in the new government," the secretary-general of CNRT, Dionisio Babo Soares, told Tempo on Wednesday a week ago.
The presence of the opposition has frequently been a thorn in the side of the government's efforts. Last year, the government's plans to take more funds derived from the sale of Timor oil and natural gas which is set aside in Timor-Leste's Oil and Natural Gas Sovereign Wealth Fund under its existing regulations, were foiled by the opposition.
According to the constitution, the government can only use at most 3 percent of the oil and natural gas sale funds which are stored in accounts in the United States. The remainder of the funds is to remain invested for the future of the people of Timor Leste. The oil and natural gas fund now amounts to US$10.5 billion or roughly Rp98.8 trillion. However, with access to only 3 percent of the funds, the Timorese government is unable to build the infrastructure needed to develop Timor-Leste's economy in fields outside the oil and gas sector. For this the Timor-Leste government would require Rp5.5 trillion.
Fretilin is concerned that should the law be amended to allow the government to withdraw larger amounts of money than 3 percent of the total funds, it would open the door to wider misappropriation or abuse of funds. Such concerns are understandable, bearing in mind that during the last five years of government three cabinet ministers were involved in corruption cases. They were the Deputy Prime Minister Jose Luis Guterres, the Finance Minister Emilia Pires and the Justice Minister Lucia Lobato.
Soares said that the sale of oil and natural gas would remain the country's main source of income as revenues from other sectors of the economy including tax still remained miniscule. Timor-Leste claims that it lost millions of dollars when the oil companies working in oil fields in the Timor Gap only paid the Timor-Leste government a part of the funds owed to it. Each company had agreed to pay US$10 million in taxes every year. The companies were America's Conoco Phillips, Australia's Santos and Woodside, Royal Shell from the Netherlands, Japan's Inpex and Italy's Eni.
As a result the government is determined to fight in parliament for an amendment to the Oil Fund Law so that the amount of funds allocated to be used by the government is increased to more than 3 percent. "Our only hope is to scrape up more oil funds," observed Soares.
Building the infrastructure and poverty alleviation remain the country's top priorities. Soares explained that without proper infrastructure Timor-Leste would never progress. "We want a coalition so that the opposition will support government efforts and not continually try to cause the government to fall," he declared. That means a coalition that would agree to greater use of the oil fund.
However, there is no such thing as a free lunch. One of Tempo's sources in CNRT confided that both Fretilin as well as the Democrats are vying for ministerial seats. The Democratic Party has ambitions to occupy important ministerial posts such as the ministries of Finance, Justice as well as Fisheries and Agriculture. According to the source Xanana does not agree with their demands. Fretilin meanwhile has asked for the ministerial posts for Finance, Economic Development and Tourism. Fretilin has also demanded that former Prime Minister Mari Alkatiri who is a senior official in the Fretilin party, be appointed Attorney General and head oil management. Alkatiri's appointment is also supported by the Democrats as well as a number of non-governmental organizations. "We are concentrated on corruption eradication and Alkatiri has the capability of doing so," stated Ancieto Guterres, the head of the Fretilin fraction, last Thursday.
Ancieto also demanded that changes be made in the management of the oil and natural gas sector. By way of example, he cited Timor-Leste's weak bargaining during negotiations for production sharing of oil exploitation of the Greater Sunrise oil field a joint oil development area. Since 2002, Australia obtained 82 percent of the production share, with the remainder going to Timor-Leste. However, by 2006 Timor-Leste was taking home 50 percent. The country has ambitions to increase its production share to 90 percent. In addition Timor-Leste also hopes to install a domestically produced gas pipeline which would result in the government no longer having to purchase gas. Australia is determined to have the pipeline built in Darwin however. Alkatiri meanwhile, is an experienced negotiator when it comes to oil issues. "We must obtain our rights. The fate of our people depends upon it," declared Aniceto. Soares said that the coalition has not yet been formed. He verified that Xanana had received the suggestions for ministerial posts. Informal meetings have been taking place all week between the various sides. However, the coalition first needs to be discussed at the CNRT Congress scheduled for Sunday, 15 July 2012. "The decision will be made by CNRT inner circles without involving other parties."
By Eko Ari Wibowo, Jose Sarito Amaral (Dili)
No. 47/12, July 17, 2012
Parliamentary election in Timor-Leste, July 7.