Clinton Visits East Timor for First Trip Since Independence

Hillary Clinton stopped in East Timor today, lending her support to efforts to expand economic opportunities in the tiny Southeast Asian nation that is lagging behind its better-off neighbors 10 years after independence.

The first U.S. secretary of state to visit, Clinton underscored American support for Asia’s newest democracy ahead of the planned end of two peacekeeping missions led by the United Nations, Australia and New Zealand, and the withdrawal of two 1,600 international forces at the end of this year. East Timor is still recovering from two decades of civil war under Indonesian occupation.

“I was determined to get here before the year was out as a very visible sign of our support for all that has been accomplished by the people and the nation,” Clinton said in the capital, Dili. The U.S. was proud to stand beside its people during their struggle for independence, she said.

Clinton met with newly-elected President Taur Matan Ruak and Prime Minister Xanana Gusmao, key figures in the former Portuguese colony’s independence struggle. State Department officials told reporters traveling with Clinton that the U.S. wants to coordinate with China to provide development assistance to East Timor, a half-island state neighboring Indonesia that is one of the least-developed countries in the world.

‘Central Pillar’

The U.S. is standing by East Timor’s commitment to the rule of law and protecting rights of all citizens, Clinton said. “Advancing democracy and human rights is a central pillar of our engagement throughout Asia.”

Gusmao thanked Clinton for her “relentless advocacy for peace,” for her focus on the Asia-Pacific and her commitment to the “peaceful development and prosperity” of the nations in our region.

The U.S. last month praised East Timor’s third peaceful, electoral transition and the formation of a coalition government under Gusmao.

The U.S. is seeking to promote economic development to help the country catch up with its more prosperous Southeast Asian neighbors. A dozen U.S. agencies have contributed more than $350 million in assistance since 2000, according to the State Department.

100,000 Deaths

While the economy is growing around 10 percent a year, unemployment and underemployment hovers at 70 percent, according to a 2010 survey by the International Labor Organization and the government. War and occupation by Indonesian forces resulted in at least 100,000 deaths from extrajudicial killings and starvation, according to a 2005 report by a UN commission. Fighting destroyed infrastructure and left the country the poorest in the region.

Gusmao’s government is seeking to diversify the economy, and officials say there’s an urgent need for investment in roads, ports, communications and electrical grids.

East Timor’s challenges included low English proficiency, a 40 percent poverty rate and a dearth of infrastructure. Last year at a conference in Bali, Indonesia, Clinton and Chinese officials announced a joint agricultural project to promote food security, though the plan isn’t yet under way.

China has invested in building projects in East Timor and other small nations across the Asia-Pacific that are often costly, energy-inefficient and difficult for local authorities to maintain, U.S. officials said.

U.S. Grant

“We want Timor Leste to have as many friends and partners as possible,” Clinton said today. “We are not here against any other country, we are here on behalf of our partnerships and relationships with other countries in the region. We happen to believe that Asia and the Pacific are quite big enough for other countries to participate.”

Clinton announced a $6.5 million grant to help young people study at U.S. schools to boost English proficiency and expand job opportunities, and visited a cooperative started with U.S. funding that supports health clinics that officials said treat 100,000 people annually.

East Timor started earning oil and gas revenue in 2005 from fields shared with Australia, and petroleum revenues surpassed $2.5 billion last year. The government established a sovereign wealth fund aimed at ensuring the long-term sustainability of oil revenues, whose assets now exceed $10 billion, according to the State Department.

East Timor’s second-largest export after oil is coffee, generating $10 million a year for local farmers, the State Department said.

Private Industry

Clinton highlighted initiatives to boost private industry with a visit to an organic coffee cooperative founded in 1992 with USAID support. Now, Cooperativa Cafe Timor is a self- sustaining business that employs 4,000 workers during the harvest season and has 23,000 farmer-members, making it the largest private employer in East Timor, cooperative officials said.

Clinton toured a coffee bean processing plant in Dili that employs 300 workers, 85 percent of whom are women, cooperative officials said. The employees are paid $8 a day -- twice the minimum wage, officials said.

The jute bags stuffed with coffee beans had address labels routing them to Starbucks Corp. (SBUX) in Seattle, the cooperative’s largest buyer. Clinton sampled the strong coffee, declaring it “fabulous.”

Convention Speech

While the U.S. supports East Timor’s integration into the regional Association of Southeast Asian Nations, Asean members have objected to its entry, saying the country’s lack of development would deplete the body’s assistance funds, a State Department official told reporters traveling with Clinton.

In response to high levels of violence, the U.S. has contributed assistance to programs to improve the national police, promote conflict prevention and increase engagement between security forces and civil society, the State Department said. The U.S. military is engaged in professional development of East Timor’s armed forces and humanitarian assistance.

Clinton delayed her departure from Dili to watch a recording of her husband’s nominating speech at the Democratic National Convention at the U.S. ambassador’s residence. An aide said she was riveted through the speech, cheering and almost leaping out of her seat when President Barack Obama unexpectedly joined Bill Clinton onstage in Charlotte, North Carolina. She called her husband on her way to the airport to congratulate him.

“It was great,” she told reporters enthusiastically on her plane before taking off for Brunei, where she will have dinner with the sultan tonight.

The oil-rich Southeast Asian sultanate will host next year’s East Asia Summit, and is the only country among the 10- nation Asean group that Clinton hadn’t yet visited.

To contact the reporter on this story: Indira A.R. Lakshmanan in Washington at ilakshmanan@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

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