Risk of conflict in Timor Leste

Consequences of the economic crisis on state fragility and risk of conflict in Timor Leste

To what extend is the international economic crisis affecting the process of nation building and stabilization in Timor Leste?

The contemporary financial and economic crisis has started from developed western countries, but it has soon had indirect negative effects on the less developed part of the world causing remarkable consequences for the global political stability and security. In particular, the situation of instability is more critical for fragile states. In fact, the crisis worsen the economic conditions of these country and consequently deteriorates their political institutions and governance capability. Fragile states constitute one of the main concerns for international peace and security.

Timor Leste is in the list of fragile states according to World Bank (WB). WB defines those states as characterized by “weak policies, institutions and governance” (World Bank, Which countries are LICUS?). To highlight the importance of the connection between economic and political instability it is important to notice that WB has recently adopted the term “fragile states”, before those countries were called Low Income Countries Under Stress (LICUS). Therefore, the definition of fragility was conceived merely according to economic criteria. On the contrary, the more general definition of fragile states gives space also to the political weakness of those countries and to other causes of fragility. Fragile states, due to their institutional weakness, are not fully capable to guarantee the control of the territory and the population, nor to fully perform the duties and functions that derive from the social contract.

The indicators of fragility can have an internal or external origin. The internal causes of fragilization are mainly due to low level of human and economic development. Some of the main indicators are: conflicts, dependence of economy from a single commodity, poverty, weak infrastructures, low level of education, sharp social ethnic divisions and discrimination, low social cohesion, wide presence of criminal activities, corruption, presence of governmental and economic elite and absence of equal mechanisms of economic redistribution among population (GSDRC, Structural economic and political causes and characteristics of fragility). External international factors and trends can trigger the fragilization of a country: decline of international aid, global liberalization and privatization, international communication and transnational identity, brain drain and migration, raw resources boom, trade and international prices shock, international economic trends (Junne, lecture notes 28th November 2009).

Fragility and conflict trap

The model of “Conflict Trap” (Collin et al. 2003) offers a useful tool of analysis of the link between economic trends and political stability. In particular, it investigates the connection between the level of human economic development and the likelihood of occurrence of conflict.

The term “trap” indicates the vicious circle dynamics that characterizes the correlation between low human/economic development and conflict. Low economic and human development performances influence the risk of conflicts, conflicts worsen the economic and human development conditions, in this way the vicious circle starts.

The internal indicators of fragility are closely connected with low human development and they mutually influencing each other. Therefore, the process of fragilization can easily drive to the conflict trap (Kim and Conceição 1).

(Kim and Conceição 4)

State fragility and conflict's causes in Timor Leste

Timor Leste is located in the oriental part of Timor Island which is shared with Indonesia. The enclave of Oecusse-Ambeno (in the western part of the island, in Indonesia territory) is also part of Timorese national territory. The country reached independence in May 2002 after a long period of Portuguese colonization, followed by Indonesian brutal occupation. Timor Leste has a population of about 1.1 million people (CIA, The world Factbook Timor Leste), however recently there has been an important demographic growth (IRIN, Timor-Leste: addressing the baby boom). The demographic change might cause alteration of the social balance.

The process that led to the independence was influenced by the financial and economic crisis of the mid 1990's and by the post cold war conditions. The Indonesia regime of Suharto was pushed toward a negotiation process with UN and Timorese leaders. In a referendum in august 1999, the Timorese people expressed its will for independence. A violent conflict between Indonesian forces and Timorese armed resistance broke out. After one month, UN approved the deployment of a multinational force led by Australia: International Force for East Timor (INTERFET). Since September 1999 until independence, East Timor had been under the United Nations Transitional Administration of East Timor (UNTAET). In 2006 Timor Leste experienced new civil conflict. The control and the power of government became weaker and weaker. In response to this crisis an International Stabilization Forces (ISA) (again led by Australia) and the United Nations Integrated Mission in Timor Leste (UNMIT) were deployed in late May and August 2006 and a delicate stability was restored (CIA, The World Factbook: Timor Leste). In February 2008, the Timorese president José Ramlos Horta and the prime minister survived to an attack by rebel groups which surrendered in April 2008. Since then a certain stability and peaceful atmosphere seem to be assured (CIA, The World Factbook: Timor Leste). The international engagement has been a key element for the stability of Timor Leste and for the process of nation building.

From an economical perspective, Timor Leste occupies the 162nd position of the Human Development index out of 182 countries (UNDP, HDI Report 2009 Timor Leste). The Timorese economy is based essentially on Oil and gas exportation (CIA, The World Factbook: Timor Leste). The main agricultural product is coffee. The majority of labor force is employed in agricultural sector, while the industrial and services sectors are underdeveloped (UNDP Timor Leste, Timor Leste at a glance; CIA, The World Factbook: Timor Leste). Timor Leste is facing a situation of widespread poverty, almost 42% of the population is below poverty line and the inflation rate is estimate to be at 7,8% (CIA, The World Factbook: Timor Leste). The oil revenue allows the government to maintain a certain economic stability and fiscal balance. However, the risk is that Timor economy becomes completely dependent on Oil and the revenues deriving from natural resources will not be used for the diversification of the economy, the development of other sectors and for reducing poverty. One of the main problems the country has to face is the structural weakness of infrastructures (UNDP Timor Leste, Crisis and Prevention recovery). Reconstruction, economic and political security are the main problems Timor Leste is handling (Security Council 19/02/2009, Timor East est aujourd'hui en paix). Other challenges concern the creation of job opportunities, promotion of education, bettering public health conditions (Security Council 19/02/2009, Timor East est aujourd'hui en paix).

From this analysis of the Timorese background is possible to derive four main groups of indicators of internal fragility of Timor Leste:

1. Timor Leste has recently put to an end its colonial/occupation experience. Its political and institutional traditions are not solid.

2. Timor is still in a post crisis transitional phase. Social protection, services and security need to be strengthen together with governance capacities and social cohesion.

3. Human development is low: poverty is widespread, education rate is low, infrastructures need to be rebuilt, violent episodes of 2006 have showed internal division between eastern and western part of the country that if not properly addressed might reoccur.

4. Timorese economy tends to be based almost exclusively on oil and gas revenues (IMF, Democratic Republic of Timor Leste: selected Issue 12). However, this situation exposes the country to the prices fluctuation and to the risk of formation of governmental and economical élites controlling the resources.

Those indicators constitute the potential root causes of future conflicts, they are also indicator of the general vulnerability of Timor Leste. At this regard, the engagement of UN is still fundamental. The UNDP in Timor Leste is currently implementing a project of Crisis Prevention and Recovery (CPR) with the aim of addressing the “structural causes of conflict and natural disaster” and the problem listed above (UNDP Timor Leste, Crisis prevention and recovery).


External international trends can be the trigger causes of fragility and can constitute the starting point of the vicious circles of the conflict trap. Timor Leste is a fragile state and is highly vulnerable to the risk of conflict. Government and international organizations' efforts in the process of nation building can be negatively affected by the international economic crisis which can reduce the institutional capacity and lead to the conflict trap.

From this analysis, the following research question emerges:

To what extend is the international economic crisis affecting the process of nation building and stabilization in Timor Leste?

From this main research , the following sub-questions derive:

- To what extend is Timor Leste exposed to the crisis?

- To what extend has the financial crisis affected the internal indicators of fragility and development?

- How have the Timorese governmental institutions and international actors reacted in terms of countermeasures and policies? And are they effective?

- Is there a concrete risk of falling in the conflict trap?

These questions will be answered through the analysis of the conflict in Timor Leste. Particular attention will be dedicated to the last decade and in particular to the international intervention and efforts for the stabilization and reconstruction of the country. The process of nation building will be described

In the light of the situation of institutional and economical fragility of Timor Leste, the effects of the crisis will be examined by taking into account the following factors: capital flows and foreign investments, fluctuation of oil prices and international trade, international financial aid and support, migration and remittances. These factors have an indirect impact on the government and international actors' capacity in providing social services, protection and security. The investigation on the effectiveness of the countermeasures and policies will follow. In the end, the overall impact on political stability and risk of falling in the mechanism of the conflict trap will be assessed.


Briguglio, L. “Measuring vulnerability”. UNEP. 05/02/2010.

< http://www.unep.org/OurPlanet/imgversn/103/17_mea.htm>

CIA. The world Factbook : Timor Leste. 05/02/2010


Collier, P. et al. Breaking the conflcit trap: civil war and development policy. World Bank and Oxford University Press: Washington DC. May 2003.

Duponchel, M. “Can aid break the conflict trap?”. CSAE. February 2008. 05/02/2010.


Everett, N. 17/11/1993. “East Timor: roots of the political crisis”. Green left online. 05/02/2010.

< http://www.greenleft.org.au/2006/673/6328>

Federer, J. 10/06/2006. “The failure of East Timor”. Global Policy Forum. 02/05/2010.

< http://www.globalpolicy.org/component/content/article/191/38497.html>

Grono, N. International Crisis Group. 29/01/2009. “Fragile state: searching for effective approaches and the right mix of instruments”. 02/05/2010.

< http://www.crisisgroup.org/home/index.cfm?id=4672&l=1>

GSDRC. “Fragile state: Social and International causes and characteristic of fragility”. 05/02/2010

< http://www.gsdrc.org/go/topic-guides/fragile-states/social-and-international-causes-and-characteristics-of-fragility>

Haggard, S. and Kaufman, R. R. “The Political Economy of Democratic Transitions”. Comparative Politics. Vol. 29, No. 3. (Apr., 1997), pp. 263-283.

IMF. Democratic Republic of Timor-Leste: Selected Issues. IMF Washington DC. July 2009.

IRIN. 27/01/2010. Timor Leste: Addressing the baby boom. 05/02/2010

< http://alertnet.org/thenews/newsdesk/IRIN/7e25337a72257408dd9690c212ebd51a.htm>

Kim, N. and Conceição, P. The Economic Crisis, Violent Conflict, and Human Development. UNDP New York. May 2009.

Meltz, J. “Runner of East Timor have emerged as a symbol of independence”. New York Times. 21 May 2001.

O' Brien, S. P. “Anticipating the good, the bad, and the ugly: An Early Warning Approach to Conflict and Instability Analysis”. The Journal of Conflict Resolution. Vol. 46, No. 6 (Dec., 2002); pp. 791-811.

ODI. The global financial crisis and developing countries. Synthesis of findings of 10 country case studies. ODI London, June 2009.

-----. The global financial crisis and developing countries: taking stock, taking action. ODI London September 2009.

Security Council. 19/02/2009. Séance 6085. «Timor East est aujourd'hui en paix». 05/02/2010


Thompson Reuters Foundation Alernet. 01/09/2008. “East Timor Nation Building”. 05/02/2010.

< http://alertnet.org/db/crisisprofiles/TP_NAT.htm?v=in_detail>

UN. Report of the United Nations Independent Special Commission of Inquiry for Timor-Leste. UN Geneva. 2 October 2006.

UNCTAD. The Global Economic Crisis: Systemic Failures and Multilateral Remedies. UN New York and Geneva. 2009.

UNESCO. Early impact assessment of the global financial crisis on education financing: country case studies. UNESCO Institute for statistic, Montreal. 2009.

UNDP. “ HDI Report 2009 Timor Leste”. 05/20/2010.


UNDP Timor Leste. “Crisis prevention and Recovery”. 05/20/2010.

< http://www.tl.undp.org/undp/recovery.html>

UN News Center. 25 March 2009. “Economic crisis could trigger political instability, social unrest, warns ban”. 05/02/2010.

< http://www.un.org/apps/news/story.asp?NewsID=30293>

Wheeler, N. J. and Dunne, T. “East Timor and the New Humanitarian Interventionism”. International Affairs. Vol. 77, No. 4. (Oct., 2001), pp. 805-827

World Bank. Worldwide governance indicators 1996-2008: Country data report for Timor Leste 1996-2008. World Bank Wshington DC 2009.

-----. Swimming against the Tide: How developing countries are coping with the global crisis. World Bank Wshington DC. March 2009.

-----. “Timor Leste: country overview”. 05/02/2010.


-----. “Timor Leste: what is TFET?”. 05/02/2010


-----. Independent Group Evaluation. “which countries are LICUS?”. 05/02/2010.

< http://www.worldbank.org/ieg/licus/licus06_map.html>

-----. “Fragile and conflict affected countries: state and peace building fund”. 05/02/2010.


Please be aware that the free essay that you were just reading was not written by us. This essay, and all of the others available to view on the website, were provided to us by students in exchange for services that we offer. This relationship helps our students to get an even better deal while also contributing to the biggest free essay resource in the UK!