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"International supporters of East Timor, working with local organizations, can play an important role in securing more funds, and greater control over the funds by the East Timorese people. In this regard, international advocates can lobby their governments to provide more genuine support (in terms of funds and political power) for East Timor. UNTAET can begin to support this human rights activism by ending the practice of closed-door discussions about budget matters." The La'o Hamutuk Bulletin Editorial

From: The La'o Hamutuk Bulletin

Volume 2, Nos. 1-2
April 2001

Issue focus: 

Table of contents: To read this issue on the internet, or to download a printable PDF version, go to:
La'o Hamutuk Bulletin:

Editorial: Money Matters: Questions of Priorities and Process

The question of money is one of the most sensitive matters faced by UNTAET. Many in East Timor and abroad wonder where the hundreds of millions of dollars have gone that the United Nations has provided to the mission from assessed contributions.

Undoubtedly, UNTAET has achieved much with the funds: it has overseen a generally successful humanitarian relief program in the aftermath of the Indonesian military's September 1999 campaign of terror and destruction; it has provided security from the TNI and its militia; and it has set up a functioning administration for the soon-to-be independent country. At the same time, it has helped to lay the foundation for the transition to full independence. These are not insignificant accomplishments.

Yet, the situation remains extremely difficult for the majority of East Timorese. Unemployment is pervasive, hunger is common, and basic social services remain highly inadequate. Meanwhile, the budget of UNTAET is more than 10 times that of the East Timor Transitional Administration (ETTA)--the future government of an independent East Timor.

These factors, combined with impressions that UNTAET has much more money than for which it can show concrete benefit, have led to a good deal of displeasure. Sergio Vieira de Mello acknowledged the validity of these sentiments last June, when he stated "Something's not right when UNTAET can cost 692 million dollars and the budget of East Timor is little more than 59 million. ... It should come as no surprise that the United Nations is targeted for so much criticism, while the East Timorese continue to suffer."

And last November, de Mello told the UN Security Council he found it "frankly absurd, as a transitional administrator, to preside over a UN mission that spends 10 assessed dollars on itself for every voluntary dollar spent administering the country for which the Council made us responsible."

Insufficient Resources

ETTA is the beneficiary of some of these voluntary dollars. Funded through the UNTAET Trust Fund and internally generated revenues, ETTA serves, in effect, as an auxiliary to UNTAET. Its resources are simply inadequate given its tasks.

ETTA Infrastructure Minister Joao Carrascalao, for example, used the occasion of a visiting delegation from the UN Security Council last November to explain the poverty of resources experienced by the embryonic East Timor government. "We need at least 100 million dollars to rehabilitate the basic services that the population needs and to set up a proper administration, and now we are running on a budget of 15 million dollars," Carrascalao told a reporter.

A conservative estimate, according to Carrascalao, of the damage to East Timor's infrastructure wrought by the Indonesian military and its militia in September 1999 was $3 billion. The current budget is woefully insufficient not only for rebuilding the infrastructure, but also for hiring and training the personnel to carry out the work. Given current funding levels, he estimated that his department would not have adequately-trained personnel to be self-sufficient even after five years.

The lack of sufficient resources extends to sections of the UNTAET mission as well. In early March, three prisoners--two convicted murderers (from the jail in Gleno, Ermera) and one convicted rapist (from the prison in Becora, Dili)--escaped. One of the escapees was Joao Fernandes, the first militia member convicted of a serious crime. A court had recently sentenced him to 12 years for killing a pro-independence activist in Maliana in September 1999. "[T]here are indications that there are limitations in the current [prison] infrastructure," stated Isabel Hight, the Director of Prisons. (UNTAET subsequently apprehended two of the three escapees, expending considerable resources in the process.)

At the same time, UNTAET officials assert that they do not have the funds to investigate many of the serious crimes committed in 1999. Scarce resources have forced UNTAET to prioritize five high-profile cases initially, and thus to neglect the important first phase of investigation of other cases. Indeed, there has been no excavation of a large number of graves from 1999 simply due to the lack of forensic experts and sufficient morgue space.

The 6 September, 1999 massacre at the Catholic church compound in Suai, for example, is not one of the five initial cases. Local leaders in Suai complained to the visiting Security Council delegation in November that individuals who participated in the killing spree are living freely among the local population. Kenji Isezaki, UNTAET's local District Administrator admitted that "We've had to release criminals who've confessed to rape and murder" due to a lack of resources for investigation.

These people have not been subjected to vigilante retaliation because of a community decision not to administer popular justice, based on the expectation that they will one day appear before a court. Although the United Nations recently made additional resources available following the Security Council visit, there is still a danger that if investigations and prosecutions do not speed up, acts of revenge will take place.

Even East Timor's embryonic court system is impoverished. At the Dili courthouse, for example, there is a shortage of translators; there are also regular power cuts and no system for electronic recording of the trials. For photocopies, the registrars' office must go to the nearby CivPol office. And there are no funds to house and support witnesses from outside Dili.

A Bad Process or Misplaced Priorities?

Why is there so little money for such matters? Because of the non-public nature of the budget process, it is difficult to know. In terms of assessed funds (which provide UNTAET's budget), it appears that there are significant opportunities for UNTAET to influence budgetary allocations.

UNTAET's budget process begins in Dili. UNTAET's Department of Administration asks each department to determine what its needs are. After Administration approves the resulting budget, it goes to New York where the departments of Peacekeeping Operations and Management screen it. In consultation with UNTAET, Management then decides what to change, to keep, and/or eliminate, and then sends an overall budget proposal to the NY-based Advisory Committee on Administrative and Budgetary Questions (ACABQ).

The ACABQ carefully reviews every detail of the proposal. When it identifies problems, the ACABQ requires UNTAET to revise its proposal. Once satisfied, the ACABQ sends a report to the UN General Assembly's Fifth Committee. The Fifth Committee (on which all UN member states are represented) then decides whether or not to support the proposed budget. In the case of support, it drafts a resolution for final approval by the General Assembly.

A lot of politics take place within this complicated process. Powerful countries especially are in a position to shape the final budget. The ACABQ, for example, is fully aware that the United States contributes one-quarter of the United Nations budget, and thus often recommends changes to budgets that the U.S. would like made.

We do not know what changes ACABQ made that might explain shortfalls in specific UNTAET departments. The UNTAET budget proposal for FY2001 was US$592 million. The ACABQ recommended reductions worth about $29 million (about 5 percent of the original proposal), which resulted in a final budget of $563 million.

To the extent that there are unfulfilled needs, there are a variety of courses of action that UNTAET might pursue. In its "Background Paper for Donors Meeting on East Timor" (for the December 2000 meeting in Brussels), for example, UNTAET/ETTA identified a number of "unfunded priorities" as part of an effort to get donors to increase their funding by supporting specific projects. These "priorities" included capacity building for East Timorese civil servants, civic education, reintegration into society of former FALINTIL guerrillas, and ferry service between Dili and Oe-cusse. Funds for infrastructure, housing, and criminal justice, however, were not on the list. Why not?

Inflexibility of Funds?

UNTAET is not permitted to use funds that it receives from the United Nations to rebuild East Timor. It must restrict its spending to matters of peacekeeping and governance. At the same time, UNTAET cannot move funds from one department to another (for instance, from the PKF to the Serious Crimes Unit). If, for example, UNTAET were to reduce the money it spends renting and operating planes and helicopters--an amount roughly equal to ETTA's entire budget of $60 million--it could not use the savings to provide more funds to the East Timor Transitional Administration.

It is for such reasons that Sergio de Mello has asked the Security Council to allow UNTAET more flexibility in how it spends its money, so that UNTAET can provide support for ETTA--ostensibly to undertake activities that UNTAET cannot.

While this would be a welcome change, there is no doubt that UNTAET could have made--and could still make--much better use of the money it does control.

The now-departed Hotel Olympia is perhaps one of the more obvious examples. While it was understandable that UNTAET needed to provide emergency housing to international staff in the early months of the mission, might there have been a better way to use the more than US$7 million UNTAET spent on the floating hotel?

No Commitment to Stimulating Local Economy

A big part of the problem is that the United Nations appears to have no policy to use its funds to help stimulate the East Timorese economy. Instead of spending so much money on the foreign-owned Olympia, UNTAET could have used a significant portion of the funds in a more constructive fashion. UNTAET could have, for example, encouraged international staff to rent rooms from East Timorese families and thus enabled families to fix up their houses or to start businesses. Instead, those monies had little effect on the local economy--most of the Olympia's employees were not East Timorese.

Buying into narrow IMF logic of "fairness," UNTAET champions competitive bidding whereby contracts go to the lowest qualified bidder. At the same time, because there is no consultation with the local community about spending matters, there is no exploration of alternative methods (that ultimately might prove to be more cost-effective in the long run) of spending funds and meeting UNTAET's (and East Timor's) needs. In this manner, UNTAET fails to support local economic development over non-East Timorese interests.

Just take the case of water: UNTAET spends over $10,000 per day (almost $4 million annually) on bottled water for the PKF alone. (See Bottled Water Facts, page 9.) Had UNTAET awarded the contract for bottled water to Parmalat (an East Timorese company), instead of Aquase (an Indonesian company), it is estimated that 1,000 local jobs would have resulted. At the same time, because Parmalat uses re-usable 19-liter bottles, instead of disposable, 1.5 liter, single-use bottles, there would be a lot less waste and environmental damage.

A better choice would be to use the money to build and/or repair a potable water system. At a recent presentation, for example, eight engineers estimated that $2 million would be sufficient to rehabilitate the water purification and delivery system for Dili and provide potable water to nearly all the city's residents. Other studies estimate as much as $10 million. For an estimated $18.5 million nearly all of the city's water pipes could be replaced, not just repaired to a serviceable level.

Why is the International Community Here?

Without a doubt, many internationals come to East Timor with the best of intentions, with a selfless willingness to share the burden of rebuilding East Timor. But the high wages enjoyed by UN international staff (in contrast with UN Volunteers) and by some employed by international NGOs creates an impression that personal gain is often a significant motivation.

While there is a sensible argument that internationals should receive higher salaries than East Timorese due to the generally higher cost of living in the home countries of international staff, the average wage differential between East Timorese and internationals is obscene. Even UN Volunteers--the lowest paid international members of the UN mission--receive almost $30,000 per year, 34% more than East Timorese Cabinet Ministers. Meanwhile, the average local UNTAET staff member receives $2,880 annually.

Unfortunately, recent actions by some internationals reinforce the resulting perception of greedy and insensitive foreigners.

In late January, for example, UNTAET announced a small reduction in the daily living allowances of international staff (see "In Brief," p. 12). That upwards of 200 international staffers expressed outrage at this very minor cut is, in and of itself, outrageous. As one aid worker stated to a reporter, "You have to question their dedication."

Also recently, a group of international NGOs has launched a campaign protesting attempts by ETTA to tax the wages of their international employees. Arguing that these taxes will undercut their ability to do humanitarian work, these international NGOs are threatening non- payment or even their departure.

Why should internationals who have relatively high earnings be exempt from supporting East Timor's embryonic government? All who live in East Timor benefit from government services such as police, ambulances, firefighters, law courts and roads. This also applies to World Bank, UN, and IMF (non-local) staff -- all of whom are exempt from paying taxes. Additionally, some companies that have UN contracts have not paid taxes and are likely, alongside the UN itself, to argue their exempt status based on a fifty-year old UN convention. Taxing the profits of those businesses would generate an estimated $5-10 million annually. (See Tax chart, above.) While the tax revenue from the INGOs would be considerably less than this, the best leadership that the INGOs could provide in terms of capacity-building and modeling would be to pay their taxes and encourage their staff to do so too. If East Timor cannot raise taxes from locals and foreigners, then it will not be able to provide essential government services like health and education, ironically the very areas the INGOs are promoting.

Time for Budgetary Democracy

UNTAET can act to make budgetary matters more transparent and efficient.

First, UNTAET should translate and publicize all budget-related documents. Many of the relevant documents are very difficult to obtain. One easy step would be to ensure that most of the material on the internal UNTAET website is also posted on ETTA's publicly accessible website ( Another step would be the establishment of a public documents room in each of the UNTAET district offices as well as in the UNTAET/Dili headquarters.

Second, UNTAET should democratize the budget making process by involving East Timorese civil society in decisions about priorities and the allocation of funds. Tied to this is the Timorization of UNTAET--a process that is advancing much too slowly.

Third, UNTAET should serve as a much more vocal advocate for the East Timorese by identifying publicly and lobbying for funding for unmet needs, as defined in conjunction with civil society.

In sum, the problem is three-fold:

1)  There is not enough money for East Timor to rebuild in a manner that will ensure a standard of living consistent with international human rights standards and basic notions of justice;

2)  Spending decisions are not made with serious consideration for their long term impact; and

3)  There is not enough transparency, public knowledge, and effective input by East Timorese civil society over the money that
does exist.

International supporters of East Timor, working with local organizations, can play an important role in securing more funds, and greater control over the funds by the East Timorese people. In this regard, international advocates can lobby their governments to provide more genuine support (in terms of funds and political power) for East Timor. UNTAET can begin to support this human rights activism by ending the practice of closed-door discussions about budget matters.

Tetum: (the most common East Timorese language)
La’o Hamutuk, Instituto Timor Lorosa’e ba Analiza no Monitoring Reconstrucao  Updated Feb 26
Saida mak La’o Hamutuk? La’o Hamutuk organizasaun klibur Ema Timor Lorosa’e no Ema Internacional ne’ebe buka atu tau matan, halo analize ho halo relatorio kona ba hahalok (actividade) instuisaun internacional ne’ebe oras ne’e haknaar iha Timor Lorosa’e, liu-liu hahalok sira ne’ebe iha relasaun ho rekonstrusaun fizika no social Timor Lorosa’e nian. La’o Hamutuk fiar katak Povo Timor Lorosa’e mak tenke hakotu iha procesu rekonstrusaun ne’e nia laran no procesu rekonstrusaun ne’e tenke demokratiku no transparante duni.
Local Contact:  P.O. Box 340, Dili, East Timor (via Darwin, Australia)  Mobile fone: +61(408)811373;  Telefone Uma: +670(390)325-013
International contact: +1-510-643-4507
Email:  Homepage:
Boletim La’o Hamutuk: [Tetum PDF format]
Vol. 1, No. 4, 31 Dejembru 2000 Banku Mundial iha Timor Loro Sa’e:
Vol. 1, No. 3, 17 Novembro 2000 Hari Sistema Saude Nasional iha Timor Lorosa’e:
Vol. 1, No. 2, 17 Julho 2000 Protesaun ba meio ambiente iha TL:
Vol. 1, No. 1, 21 Juñu 2000 Rekonciliasaun:

La'o Hamutuk: East Timor Institute for Reconstruction Monitoring and Analysis  Updated May 11
La'o Hamutuk (Tetum for Walking Together) is a joint East Timorese-international organization that seeks to monitor, to analyze, and to report on the reconstruction activities of the principal international institutions. It believes that the people of East Timor must be the ultimate decisionmakers in the reconstruction process and that the process should be as democratic and transparent as possible ...
East Timorese staff: Inès Martins, Fernando da Silva, Thomas Freitas; International staff:Pamela Sexton, Mark Salzer Executive board: Sr. Maria Dias, Joseph Nevins, Fr. Jovito Rego de Jesus Araùjo, Aderito Soares
International contact: +1-510-643-4507  Email:  Homepage:
La’o Hamutuk Bulletin:

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