Managing Diversity: Changing Aid Landscape in Timor-Leste[i]
In the history of Timor-Leste, international aid has been an important element, particularly during the period between 1999 and 2005. At that time, donors’ financial support contributes to more than 50% of the total public expenditure. It is through this financial support that finances the reconstruction and development process, to pay the salary of the public employee. At present, financially, aid’s contribution toward the public expenditure is around 10%, and expected to decrease in the coming years. This trend, however, does not reduce the importance of development partnership. In fact, as the world is more integrated and interdependent, aid is not solely about financial aid. It is important to frame aid as a part of the relationship between country to country. Nowdays, knowledge sharing, people to people relations, and equal partnership become more important.
Aid in Timor
What Timor-Leste is today, is the result of a long process. Revisiting the history of Timor-Leste, especially from 1999 to 2005, International Aid plays an important role in the development of the country. Aid was an important element of the international community’s contribution to the processes of nation and state building in Timor-Leste. Donors money were used to build basic infrastructures such as schools, hospitals, and roads as well as to pay for the salaries of public employees, to assure law enforcement efforts and others. There were numerous community development projects implemented by the donors and aid agencies, such as Community Empowerment Project, RESPECT[iii], and AMCAP[iv].
Donors used different means to channel their financial aid. Among them were Consolidated Fund for East Timor (CFET), Trust Fund for East Timor (TFET), UN Regular Fund, UN Assessed Fund, Bilateral and Multilateral Fund, and Funding through Non-Governmental Organizations.[v]
Numerous studies have since been commissioned on the experience of Timor-Leste as recipient of international aid. A general conclusion is that Timor-Leste would have been better today, had the aid money been wisely and properly invested. Various issues discussed including: the competing narratives about the real problems, spending on Timor but not in Timor, lack of long-term vision, lack of consultation with local authority, lack of transparency and accountability mechanism, fermenting the mentality of dependency, lack of ownership, imposing donors’ agenda, and the list goes on.
Timor’s experience reaffirms what have globally been accepted as the shortcomings of international aid in addressing problems in post-conflict societies. As such, these are not unique for Timor; although Timor’s context is an important factor when it comes to specific problems and how these problems transpire in Timor.
Changing Aid Landscape in Timor
Nonetheless, the international aid landscape in Timor-Leste is changing. Different factors contribute to this changing nature. One such factor is the international campaign for more effective international aid. The emergence of the g7+ group and the new approach in the way Timor-Leste Government perceives aid is another. Also, change in international economy brings about new countries into the list of donors. In Timor-Leste, China, South Korea and Brazil becoming increasingly important as a result. On top of these, the revenues from the oil and gas resources since 2005 has changed the way international aid is spent and perceived in Timor-Leste.
In terms of aid delivery in dollar term, the amount of the development partners’ contribution has not changed much. What changes, however, is the State Budget. Right now, in terms of annual real expenditures, development partners have been spending a bit more than US$ 200 million per year in the past 11 years. This represents around 10% – 12% of the total public expenditure. For example, in 2013, the Combined Sources Budget for Timor-Leste on an initial budget basis was US$1,850.9 million, comprised of US$1,647.5 million in general state budget and US$203.4 million in development assistance on off-budget grant basis. ODA in off-budget grant represented 10.9% of the initial total public spending. It is expected that aid would decrease significantly from 2015 onwards.
Almost 90% of the annual state budget is financed from the Petroleum Fund; with the remaining covered by domestic revenues. It is through state budget that the government finances essential sectors such as infrastructure, basic service such as education and health, paying public employee, ensure law enforcement, and other development programs. The rapid expansion of the state budget also financing the implementation of multi-mullion dollar projects, such as electrification of the country, Special Economic Zone, the south coast petrochemical industry hub and others. This highlights the contrast with the budget situation just over a decade ago.
The international donors, meanwhile, continue to provide visible supports in several sectors such as water and sanitation, judicial sector, institutional strengthening, community policing, domestic violence and others. Development agencies also sometimes co-support the programs initiated by the Government that target the rural community. One such example is the PNDS[vi] program, which is supported by the Australian DFAT with assistance from other partners. Development assistance have also taken the form of placing advisers in several Ministries and State department under the program of institutional building.
All of the above has resulted in another significant change in this particular relationship; that it is no longer about Donor-Recipient relationship but Partnership in development. Previously, Timor-Leste was perceived as a mere recipient country. This crafted the tendency to view Timor-Leste as a sick-man needs remedy from the donors’ agency. Now, the change in relationship brings about a more equal relations and partnership. Every year, the Government organizes Development Partner Meeting, which, theoretically speaking, is to review the success and challenges of development process and how to improve them. This mechanism is based on the Paris Declaration on Aid Effectiveness principle, which is about effective and inclusive partnership.
Transparency in Aid Management is another change that is evident. Right now, the government is putting in place mechanisms to coordinate all aid money spent in Timor-Leste. The Aid Transparency Portal allows the public to track donors’ annual spending, the commitment they make, disbursement, and which agency is responsible for which programs. It is expected that this effort will contribute to improve aid management, make reporting more accurate and predictable, better reporting and better coordination and more effective in responding to the development priorities. This helps the public to understand where the aid is going as well as to track their impacts.
Historically, Timor-Leste has benefit considerably from international solidarity from across the globe in its struggle for independence. This, perhaps, has taught Timor-Leste to appreciate the fact that it also has the duty to contribute to a better world. So, within what she can, Timor-Leste has been active in various areas. Its leading roles in g7+, now as chair of the CPLP[vii], financial support for Guinea Bissau Crisis, contribution to the international fight against Ebola and humanitarian assistance to the victims of natural disaster such as in Thailand and Malaysia, to mention a few of moderate contribution Timor-Leste has made. Between 2008 and 2014, Timor-Leste has financially contributed some $24.8 million. Timor’s contribution is not limited to financial aspect. Timor-Leste, for instance, is playing leading role facilitating experience and knowledge sharing within the g7+ of the war and conflict affected countries.
Timor’s experience in the past once again has manifested what has been globally documented as the problem with international aid. However, the change since 2007 as posed the question of whether or not Timor-Leste is still in need for international aid. In order to answer this question, it is important to note at the outset aid is not a dollar matter only. It is imperative to approach aid from a macro-level, by looking at relations between countries. In that framework of thinking, financial aid is only one part of relation between country to country. Therefore, aid is still and will continue to be an important element of Timor’s development. Its form, technicality and priority areas are somewhat debatable, but it is an important element of Timor’s development regardless.
So, in terms of the way ahead, there are various mechanisms to be considered. First is changing the relationship. It is not donor-recipient, but partnership where both parties can put together their resources for development. The resource here is not limited to financial resources. It also involves know-how, local context, and experiences. When it comes to technical assistance. Technical advisers need to work together with their counterparts. Counterpart should not be looked down on as “KNOW NOTHING.” By acknowledging their existence, their history and experiences, the context they have been through, we can create a better partnership. At the same time, institutions are still under the development and it is evolving. Partners need to consider that working in such environment pose different challenges and dynamic from working in a country where institutions have been well developed.
As aid is a small part of the relations between Timor and its development partners; it is also important to explore different venues where people to people relations are promoted. It will strengthen people to people relations, knowledge sharing, mutual understanding and solidarity among people. It is important that solidarity cannot be limited to State-to-State relations.
In terms of areas of priorities, there are various areas that are important for Timor’s long-term development. One such important area is youth and education. One cannot ignore that education is key driver for change. An example is that of the Australian Development Scholarship (ADS) Program in Timor-Leste that has contributed to changing young people’s lives and enables many of ADS Scholarship recipients to play key roles in Timorese public policy making.
Public Health is another important sector. This involves access to clean water, sanitation, food availability. Malnutrition is a cross-cutting issue in public health in Timor-Leste. It is positive to see that so far, many aid agencies have involved in trying to solve these issues. For future, partnership on these issues is still critical. For if they are not rightly addressed, it will be very costly for the future; as it will reduce the productivity, increase the cost of public health.
There are a couple of final points to make in conclusion. Firstly, as the international economic landscape is changing and the realization of the fact that aid is not effective, it changes the way aid is perceived and spent in Timor. Secondly, aid cannot be limited financial aspect only. It needs to be framed within the broader framework of thinking; which is the country-to-country relationship. In that framework, aid is still and will be an important element of Timor’s development, as Timor-Leste is part of larger part of the international community.
[i] This presentation paper was presented at the Annual Australasia Aid Conference, organized by The Development Policy Center and the Asia Founadtion, Canberra, February 12th, 2015, Canberra, Australia
[ii] Researcher and Adviser on Political Economy at the Presidency of the Republic of Timor-Leste, 2014 Asia Foundation Development Fellow.
[iii] The Recovery, Employment and Stability Program for Ex-Combatants and Communities in Timor-Leste (RESPECT)
[iv] Ainaro-Manatuto Community Activation Project (AMCAP)
[v] More about this can be accessed at http://www.laohamutuk.org/reports/06ParadoxOfAid.htm
[vi] PNDS stands for Progama Nasional Dezenvolvimentu Suku or National Program for Sucu Development
[vii] Communidade dos Países de Lingua Portuguesa