Young, Restless–But Not Failed Yet

January 08, 2010

By Anthony Anderton

The defeat of former Prime Minister Alkitiri and Fretilin in the 2007 election was widely expected to result in cooler ties. But so far, Gusmao and Ramos-Horta have maintained the momentum.

In September 2009, Gusmao led a high-level government delegation to China to discuss a range of projects and cooperation. The official reason given was to attend a trade fair. But as the delegation reportedly also included the Minister for Resources, Minister for Finance and representatives of the defence forces, there was almost certainly more on the agenda.

‘Nothing Sinister’

China’s courting of Timor-Leste has been seen by some as part of a Pacific strategy aimed at countering US dominance in the region and, by implication, allies including Australia.

But Lowy Institute Fellow Fergus Hanson says fears over Chinese intentions are overblown. ‘I don’t buy the threat analysis,’ he says. ‘I just don’t think that anyone can point to China doing anything sinister.’ He also dismisses speculation that China’s moves are part of a coherent regional policy. ‘China doesn’t have a strategy in the Pacific–it’s all a bit ad hoc really. And Timor-Leste is like everywhere else, with China building high profile building projects.’

And he adds: ‘If you drill down beyond the superficial, China is not a contributor in a serious way to the aid program, or the redevelopment program. Australia is still by far and away the biggest player in Timor-Leste.’

Over the past decade, China’s total bilateral aid contribution of around $50 million is dwarfed by Australia’s commitment of over $700 million. Japan, the United States, Germany and the EU also rank well ahead of China. Australia is also the key international partner in maintaining Timor’s national security and law and order.

Hanson says Timor’s relationship with Australia is in excellent shape and that regional concerns about Timor’s pursuit of closer ties with China are misplaced. ‘From Timor’s perspective, it’s totally natural that they should hedge their interests, being wedged between Australia and Indonesia,’ he says. ‘China is very interested in resources in the region, and Timor is keen to make the case for a processing base for oil and gas.’

Charles Scheiner, spokesman for non-government organisation Lao Hamutuk, says the motives behind China’s aid program should be interpreted in exactly the same way as all other bilateral aid programs–‘Like Australia and the United States, China expects something in return.’

However, critics have said that moves by the Timor-Leste government to strengthen ties with China, even if justified, have been shrouded in unnecessary secrecy, including the contract for new naval vessels. ‘We question it (the agreement), not because the patrol boats come from China, but because of the process that was used–whether it’s China, the United States or Australia,’ Texeira says.

Fretilin says the lack of transparency meant the details of the contract were largely hidden from effective parliamentary and public scrutiny. ‘Timor-Leste needs to maintain a very open regime for foreign direct investment. It needs to be non-discriminatory, and we must keep government to government commercial deals to a minimum,’ he says. ‘We should be very careful not to mix commercial relationships with diplomatic relationships.’

A 2008 contract awarded to China’s Nuclear Industry 22nd Construction Company to build a heavy oil power generating plant outside Dili has also been heavily criticised for undue secrecy over the terms of the agreement, and Scheiner says the $380 million dollar contract is anyway too expensive for Timor-Leste and a waste of money.

‘Timor-Leste is buying used equipment that nobody else wants,’ he says. Lao Hamutuk also claims the Chinese heavy oil plant will be environmentally unsound and unable to meet the country’s future energy needs.

A further grumble is that the Chinese-funded building projects do not create any jobs or skills transfer for Timorese. Crews of Chinese workers, technicians and engineers are typically brought in for construction of projects. With urban unemployment worsening, Hanson says there’s the potential for a local backlash and adds growing ties could create some unexpected problems for Timor, including Chinese organised crime and people smuggling.

‘[Traffickers see Timor] as an easy launching pad into Australia,’ he says.