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The La’o Hamutuk Bulletin
Vol. 5, No. 3-4: October 2004
Part 2 of 2

English PDF Format (2MB)  |  Bahasa Indonesia PDF Format (1.6 MB)

Issue focus: Justice

Table of contents:

Part 1

Part 2 (this part)


East Timor Exchange Visit

A Nigerian Perspective from Oilwatch Africa

As part of a South-South exchange, seven Timorese activists representing organizations focused on environmental issues, human rights, development, labor rights, women’s rights and other areas, traveled to Nigeria between January 16 and 28, 2004 to observe and learn about the effects of petroleum activities and development and how communities and local people respond to them. The group visited Lagos, Port Harcourt and several Niger Delta communities and petroleum facilities and met with local activists, environmental experts, government officials, community leaders and journalists.

The South-South Exchange visit was initiated and implemented by the East Timor Institute for Reconstruction Monitoring and Analysis (La’o Hamutuk) and was hosted by Environmental Rights Action, an environmental human rights group at the forefront of the defending human ecosystems and the empowerment of local communities to defend their environmental human rights in law, and Oilwatch Africa, a decentralized regional network of NGOs coordinated from a regional office in Port Harcourt, Nigeria, hosted by ERA.

The group’s visit was aimed at enabling them to witness first-hand the effects of the oil industry in Nigeria. In particular the group hoped:

The delegation arrived in Port Harcourt, the capital of Rivers State on January 17, 2004. The team held an introductory session at the ERA/Oilwatch Africa office where the itinerary and program of the visit were discussed.

As part of the program, the host organizations, ERA and Oilwatch regional office took the East Timor activists on a tour of the rural communities in the Niger Delta region of Nigeria, affected by oil and gas productions.

In each of the communities, interactive sessions were held with the youths, women, community activists and traditional rulers of the community. After the discussion in each community, a tour was undertaken to see oil fields, oil wells, gas flare sites and oil spill sites, especially the ones closer to human settlement areas.

The East Timor delegation was taken by local activists from one community to another to examine the negative impact of oil and gas production activities on the fragile rural environment and people. The places visited were:

RUKPOKWU COMMUNITY: This community near the oil city of Port Harcourt is where Shell’s facilities were installed in 1963 and intense oil and gas activities have continued to date. On December 3, 2003, a huge explosion occurred at the Rukpokwu-Rumuekpe trunk line, a large pipeline that crisscrosses community settlements, forests, farmlands and wetlands. At the time of the visit, East Timor activists were shown the raging inferno which was the result of the explosion and which continued to rage until February 24, 2004 when it was put out after wreaking unprecedented havoc. The community belongs to the Ikwerre ethnic group. Rukpokwu is in the Obio Akpor Local Government area of Rivers State.

EREMA AND OBAGI COMMUNITIES, ONELGA, Rivers State: The delegation visited Erema and Obagi communities in the Egi clan of the Ogba ethnic group in Rivers State. At Erema community, the delegation had an interesting session with the rural people on the impacts of oil and gas activities on their environment and livelihood sources. The community has been a flashpoint of agitations led by Women for a Better Environment against the giant French group, TotalFinaElf.

After that, the delegation visited Obagi, a nearby community. TotalFinaElf discovered its first oil well (code named OB58) in Nigeria in 1962. Since then, it has ceaselessly explored the area, producing crude oil. The policies and oilfield practices of the company have demonstrated scant regard for the environmental impact of oil exploration and production. The visiting East Timor group was shown raging gas flares burning near residential areas for days and nights on end. The youth and women of the Obagi community during the visit told the team of the demeaning experience of hosting TotalFinaElf.

AKALA-OLU COMMUNITY Ahoada West LGA, Rivers State: The team also visited this rural community in Ahoada West Local Government Area of Rivers State. Here, apart from holding discussions with the rural people who lamented their plight, the team also saw devastating impacts of oil and gas activities on the environment and livelihood. The group was startled by the atmospheric pollution and heating or thermal pollution of air, land and water, of the flaring facilities located within the poor rural community. The Italian Agip Oil Company (NAOC), the Transnational dragon, is the sole operator of oil and gas in Akala-olu community.

OGONI: The East Timor activists also visited some sites of significance in Ogoni land. They visited K-Dere community where huge Shell facilities have devastated the environment. They also visited Finimale Nwika Hall in Bori where a monument depicting the Late Ken Saro Wiwa was built by his followers to evoke his image and struggle. Ogoni is a closely-knit rural community of hitherto prosperous farmers and fishermen but had its prosperity, environment and life disrupted by Shell Petroleum Development Company (SPDC) in 1958 when it discovered oil in commercial quantity in the area.

Angered by the devastation and desecration of its environment and people, in the early 90s, Ken Saro Wiwa, a famous Ogoni writer and activist, mobilized his Ogoni people and stopped oil operation in the area. Though Saro Wiwa was hanged with his other compatriots, SPDC has not returned to resume operations in the area.

BONNY, Rivers State: The East Timor Exchange group also visited the Finima Community. The team traveled in an engine powered boat through the creeks and rivers to Bonny Island, home of Nigeria’s Liquefied Natural Gas (NLNG). Finima is a community in the Bonny Kingdom, which is of the Ijaw ethnic group of the Niger Delta. It is located in an island off the Atlantic coast in Rivers State.

Finima in Bonny Island is significant because the community was resettled because of the NLNG plant. The Finima people lamented their sad experiences of losing their ancestral homes, livelihoods, and ecology to oil and gas interests.

AKASSA COMMUNITY, Bayelsa State: Akassa, a community noted for its peculiar fishing business, was also visited. Indigenous fishermen and women whose community is close to the shore use dugout canoes (powered by wind or oar), and boats made from wood to do their fishing. But Texaco Overseas, the major oil company operating in the Akassa waterways (or what can be called offshore operation) had also destroyed the rural fishing industry as incessant oil pollution and toxication of the waterways has not helped matters.

KOLO CREEK, Bayelsa State: The team also visited Kolo Creek in Otuasegha Community in the Yenagoa Local Government Area of Bayelsa State, in the central Niger Delta, where two mountain-like flares from Shell’s pipes had ravaged the community forests, streams and farmlands. Other sites had been devastated from Shell’s actions in the area and the company refused to clean were visited in and outside Kolo Creek.

RUMUEKPE COMMUNITY, Emohua LGA, Rivers State: The team also visited Rumuekpe Community and saw oil facilities belonging to Elf, Agip, and Shell. The team spent some time in the community listening to the bitterly recounted tales of local people. After that they visited a big horizontal flare pit in the community with houses close to it. Rumuekpe community hosts a lot of oil facilities and serves as a transport route via underground through which crude and gas are transported to Forcados and of late, Bonny Island.

On the last day of the tour of the Niger Delta, a round table was held in the Port Harcourt office and participants talked about their experiences, impressions and how they expect to disseminate information acquired on their return to East Timor.

To create awareness of the exchange visit, publicity was generated through local and international media. Journalists representing The Guardian Newspaper, Beacon Newspaper and others were part of the delegation during the tour of the Niger Delta. To further facilitate and increase awareness of the program, a press briefing was held in Lagos with several media representatives in attendance. There was also a discussion session that was aired live on a popular national television program on Africa Independent Television (AIT) Lagos.

For more information contact:
#214, Uselu-Lagos Road, P. O. Box 10577,
Benin City, Nigeria
Tel/Fax: + 234 52 600165 E-mail: eraction@infoweb.linkserve.com


Learning from Nigeria’s Experience: Another Paradox of Plenty?

 Nigeria East Timor
Population (millions of people) 120.90.8
Year oil production started1960 1998
Year of achieving independence 1960 2002
Income from oil and gas to date (million USD) $300,000 $90
Human Development rank among 177 countries in the world
(1 = best, 177 = worst)
151 158
Life expectancy at birth (years)51.649.3
Probability at birth of dying before age 4035%33%
Infant mortality rate (per 1,000 live births)110 89
Under-five mortality rate (per 1,000 live births) 183 126

Source for most figures: 2004 UNDP Human Development Report

East Timor is rich in oil and natural gas resources. The people of East Timor are hoping that income from the oil and gas in the Timor Sea can be used to build roads, schools, hospitals and funding the development of the country. This much was what the people of Nigeria, West Africa also thought. Nigeria, with some of the most plentiful oil and natural gas reserves in the world, is still one of the poorest countries.

La’o Hamutuk, in cooperation with Oilwatch International and Environmental Rights (ERA)/Friends of the Earth Nigeria, organized an exchange trip for delegates from Perkumpulan HAK, NGO Forum, Kdalak Sulimutuk Institutu (KSI), Centro Feto in Oecusse, and ETADEP to study Nigeria’s situation. It was funded by HIVOS (Holland) and CAFOD (United Kingdom).

The exchange had three main objectives:

  1. To understand how the exploration and exploitation of natural resources had impacted on environmental and social issues as well as its effects on the grass roots communities.

  2. To learn more about the links between oil companies and the Nigerian government and military.

  3. To develop relationships and solidarity between East Timor and Nigerian people.

The delegates visited areas affected by the exploitation of oil and natural gas resources. They included Lagos, Port Harcourt, Erema, Obadi, Akassa, Yenagoa, Bekeriri, Imiringi, Ogoni, and Bonny Island. The delegates found that the communities in these areas experienced very similar problems as a result of the oil industry.

Corrupt Government

Since its independence from the United Kingdom in 1960, Nigeria has been characterized by political instability and repressive military government. The Nigerian Government supported the operation of multinational companies by sacrificing the lives of its people. Multinational companies including Shell (United Kingdom and Holland), Agip (Italy), ChevronTexaco (USA), Con Oil (Nigeria) and TotalFinaElf (France) were encouraged by the Nigerian Government, which promised to open job opportunities, protect and sustain the environment, and develop electricity, clean water, main roads, health and other public facilities. In reality, the level of violence increased due to higher unemployment, economic decline, social imbalance, as well as corruption amongst police and politicians. On the other hand, only about 30% of the people gained access to clean water, while babies continued to die from curable disease like malaria, bleeding cough, diarrhea, and pneumonia.

The Niger Delta community has protested repeatedly, but the national government and other authorities have not listened. According to the community, the government closed its ears and eyes to all the complaints and demands, and is not helpful because the multinational companies have chosen the government officials, including politicians, judges, prosecutors, and police, and even journalists.

Aside from no effort by the Government to pressure these multinational companies, the Government also does not openly explain the use of income from oil and gas. For years, the Government has let the companies process oil and gas, causing environmental pollution due to burst pipes that have not been replaced for 40 years, and resulting in burning around populated areas, as well as dumping liquid waste into the sea.

Military Support for Foreign Companies

The military apparatus responds to Community protests with violence. Nigeria has lived for a long time under a repressive and corrupt military regime. The development of the oil and gas industry should have provided income for the government and welfare for the Nigerian people, but instead it has only built a haven for multinational companies. To protect the companies’ income, the Nigerian military have behaved like guard dogs in protecting their facilities. The Nigerian navy works with the company security guards, while the police and other members of the military have total freedom to act as they wish in the streets.

Community demands for the Nigerian Government to stop the companies’ violations of economic and social rights, along with the freedom of expression, have never stopped. A decade ago, a military kangaroo court in Port Harcourt decided to execute Ken Saro Wiwa, a prominent Ogoni writer and environmental activist, and eight of his colleagues. Shell’s alleged involvement in these killings proves that the Nigerian military and Government have been co-opted by the multinational companies.

Environmental Genocide

The community of Nigeria certainly is continually reminded of the leakage and explosion of the oil pipes in a number of oil and gas industrial areas in Port Harcourt. On 3 December 2003, for instance, there was an explosion of a 40-year-old oil pipeline, devastating around 400 hectares of community farmland.

The burning and explosion occurred in a village where 200 people lived, left huge impacts on the environment such as air pollution, poisoning the rivers close to it, killing fish and making it difficult for fishermen to work. Up to January 2004, the pipe’s explosion still caused mountains of thick smoke that pollutes the region of Port Harcourt. To date, Shell has refused to fix the damage resulting from the explosion.

We also visited Rumuepke, a community 20 km from Port Harcourt where there was a gas pipe explosion. While in Akala Olu, there is a fire raging in the air approximately 100 meters high — every day flashes of fire are witnessed and felt by the local community. In Imiringi, 20 km from Yenagoa, two giant gas pipes exploded and expelled an outpouring of fire to the dry and wet fields of the population. The heat was even felt from 50 meters away.

Non-government organizations who observe the oil and gas industry as well as the local community believe that the development of the oil and gas industry in Nigeria has really destroyed their environment. It is exacerbated by the explosions of the oil and gas pipelines and the heavy metals leaked into the rivers, sea and on land. There is no more fertile soil or productive forests, the farmers have difficulties working their wet and dry fields, even the fishermen have difficulties catching fish, and the mangrove forests which are the breeding place for certain species of fish are nearly extinct. In the eyes of Ken Saro Wiwa, the environmental degradation of the land amounted to direct environmental genocide on a wide and systematic scale.

Change in the Social Life of the Community

An activist from the Erema Trade Union said that for more than 40 years, the multinational oil and gas companies have made the Nigerian people slaves in their own motherland. In other words, he said that before oil and gas was found in Nigeria there were many fish and other natural resources for the people to make their lives, but now many people have to bring their plates to beg for food from Shell, Agip, and ELF.

In the 1980s, around 50 percent of the Nigerian population worked in the farming industry but now there is only 3 percent and the rest move in the sectors of service and industry, especially the mining industry. The land is no longer fertile and does not give life because it is polluted. The farmers find it hard to work on wet and dry fields, the fishermen find it hard to make a living from the rivers because of rips in their nets due to oil in the sea and a lack of fish along with the loss of a variety of productive forests. In the region of Akassa, the community pays high prices for nets and fish.

In many areas, including Akala Olu and the Finima people on Bonny Island, people have been evicted to make space for oil and gas operations.

The community of Akala Olu has experienced that Agip’s oil and gas developments cause illness, including rheumatism and pneumonia. The general population also often suffers tuberculosis. Access to medicine is very expensive. For example, anti-malarial pills cost nearly $20. The high level of poverty prevents the community from obtaining good health access.

Lessons for East Timor

The revenue from oil and gas in the Timor Sea is expected to provide money to develop our country and eradicate poverty. However there are a few points we can learn from the Nigerian people in relation to the oil and gas industries.

Firstly, for the majority of the Nigerian people oil and gas has become a source of curses and tragedies. The destruction of the environment has resulted in worsening social conditions. To stem social unrest associated with these worsening conditions the violence inflicted upon the local communities by the state apparatus has become more brutal.

Secondly, since the discovery of oil and gas, the country has become even poorer than before. The development of the oil and gas industry has benefited a few officials and a corrupt Government, but not the people in general.

Thirdly, the negative impact on the environment should be studied and avoided, so that farming and other sources of livelihood remain possible.

Fourthly, some of the oil and gas companies operating in Nigeria are also operating in the Timor Sea. We can learn from the patterns of human rights violations that were committed by them in a number of other countries rich in oil, and find a strategy to keep our rights.

To prevent the terrible things above, it is important for the people of East Timor to participate in the process of developing our petroleum resources. La’o Hamutuk urges the monitoring of every step taken by the RDTL Government, the Australian Government and multinational companies above in order to continue to preserve the sovereignty of RDTL, consistent with the maintenance of environmental sustainability along with transparency in the agreement process and the amount of revenues received by all parties.

The community should also insist that all parties sign international environmental instruments related to sea pollution, disposal of poisonous waste in the sea, and other legislation to preserve the environment. Furthermore, our country should not become dependent on oil alone, but must also develop other productive economic resources such as farming, fishing and tourism.

For a fuller report on the Exchange, click here.


We Thought it was Oil. But it was Blood.

By Nnimmo Bassey, Oilwatch Nigeria

The other day

We danced in the street

Joy in our hearts

We thought we were free

Three young folks fell to our right

Countless more fell to our left

Looking up,

Far from the crowd

We beheld

Red-hot guns

We thought it was oil

But it was blood

We thought it was oil

But this was blood

Heart jumping

Into our mouths

Floating on

Emotion’s dry wells

We leapt in fury

Knowing it wasn’t funny

Then we beheld

Bright red pools

We thought it was oil

But it was blood

We thought it was oil

But this was blood

Tears don’t flow

When you are scarred

First it was the Ogoni

Today it is Ijaws

Who will be slain this next day?

We see open mouths

But hear no screams

Standing in a pool

Up to our knees

We thought it was oil

But it was blood

We thought it was oil

But this was blood

Dried tear bags

Polluted streams

Things are real

When found in dreams

We see their Shells

Behind military shields

Evil, horrible, gallows called oilrigs

Drilling our souls

We thought it was oil

But it was blood

We thought it was oil

But this was blood

The heavens are open

Above our heads

Toasted dreams in a flared

And scrambled sky

A million black holes

In a burnt up sky

Their pipes may burst

But our dreams won’t burst

We thought it was oil

But this was blood

We thought it was oil

But this was blood

This we tell you

They may kill all

But the blood will speak

They may gain all

But the soil will RISE

We may die but stay alive

Placed on the slab

Slaughtered by the day

We are the living

Long sacrificed

We thought it was oil

But it was blood

We thought it was oil

But this was blood

Editorial: Can East Timor Avoid the Resource Curse?

Printable PDF version of this editorial, with pictures (271K)

Around the world, many countries, including East Timor, have oil and gas under their territory. These can provide tremendous wealth for some citizens of the country, and for the companies which extract and sell the oil and gas (petroleum). But in most nations, the wealth does not benefit most of the people, and developing the petroleum resources can cause more harm than good. This is especially true for nations which did not have a well-established government, long democratic traditions, and a strong and diverse economy before they began to sell their petroleum. (See LH Bulletin Vol. 5, No. 1 "Oil Money Requires Good Management", and LH Bulletin Vol. 3, No. 5).

If East Timor is to be the exception to this pattern, we must first understand why many people around the world, from Venezuela to Nigeria to Aceh, believe that they would be better off if oil had never been discovered in their territory.

In rich, industrialized countries, the comfortable lifestyles of most people depend on oil and gas for electricity, for transportation, for industry, and for petrochemical products. International oil companies are among the largest corporations in the world. This industry, based on complex technology which requires huge investments and employs few workers, is one of the most profitable on the planet. For example, Shell’s annual revenues are nearly twice those of the Australian government; ConocoPhillips receives three times as much as Indonesia each year.

What harm can oil development do?

More often than not, oil development does not benefit most of the people of the country, especially if the country does not have a well-established government with strong traditions of professional civil service, responsiveness to the voters, and accountability of officials. Instead, the money goes to a few people or leads to misguided or unsustainable economic policies. The oil industry can damage the environment, and often leads to war or human rights violations. This takes place in many ways:

Corruption of public and industry officials

Oil profits are so large that they tempt both public and corporate officials, and can lead to fraud or bribery. From Suharto to Saddam Hussein, dictators have taken power to obtain oil’s huge profits, and used them for personal gain, to maintain control, and to finance repression. But even in rich, democratic countries, corruption is widespread in the oil industry. For example, the heads of Statoil (Norway’s state oil company) and Royal Dutch Shell were implicated in paying bribes and false reporting last year, and forced to resign. Norway is being used as a model for East Timor, and Shell had a reputation of being one of the most conservative companies in the industry. In another example, three major oil companies, now known as Exxon Mobil, BP, and Conoco Phillips, systematically lied to the government of Alaska state, USA, for many years. After more than 141 legal cases, Alaska forced the companies to pay it more than $10.6 billion.

Environmental destruction

Wherever petroleum is extracted, processed and used, on land or in the sea, the natural environment is at risk. Catastrophic accidents fires, explosions, spills or pipeline breaks are an ever present danger to workers, nearby communities, and the local environment. But even during normal operation, low level leakage, pollution and small spills can injure marine and land environments, affecting water, fishing, biological diversity, agriculture and daily life.

On-shore oil extraction and processing uses land for factories, pipelines, roads, security buffer zones, wells and other facilities, displacing local people.

And globally, processing and burning petroleum and other fossil fuels adds carbon to the atmosphere, causing global warming, rising sea levels and extreme weather conditions, which will drastically change our planet over the next century.

War, militarization and repression

Oil is so valuable that governments go to war to obtain it. We know that one of the main reasons Australia supported Indonesia’s invasion of East Timor was to get access to Timor Sea oil. More recently, one of the principal reasons for the United States-led invasion of Iraq last year was Washington’s desire to better control global oil supplies.

In Indonesia, Aceh is rich in oil and gas, but the benefits are not shared by the local population. When people resist the Indonesian military responds with violence, partly to keep Exxon Mobil’s facilities secure so that oil money continues to flow to Jakarta. In Malaysia, Niger Delta, the Ecuadorian Amazon and around the world, military forces repress local people to protect oil and gas facilities.

Economic and social consequences

The unstable price of oil, combined with its huge revenues, causes even non-corrupt governments to make development decisions against their people’s long-term interests. Other sectors of the economy, such as agriculture, are often neglected because policy-makers see oil as an easier and larger source of revenue. Imported food and other items may be preferred over local products, reducing self-sufficiency.

When oil prices and revenues are high, governments undertake major development and infrastructure projects, or embark on expensive programs. When the revenues later decline, they have to borrow from the World Bank or other international institutions. In many oil-rich countries, debt payments are now larger than oil revenues; total debt is larger than remaining petroleum reserves.

Petroleum is a non-renewable resource. The deposits under the Timor Sea will be exhausted in 50 years, and East Timor will have to rely on other sources of revenue. But oil revenues can be addictive, and very few countries have succeeded in using petroleum money to build a strong economic base in other sectors. A similar problem exists globally — petroleum is so profitable that alternative energy sources are not developed or prioritized, leading to climate change and major crises when the petroleum flow is disrupted or used up.

Because of the specialized nature of oil facilities, the expensive infrastructure they require is rarely made available to nearby communities. Although some local workers will be hired during construction, the operation of petroleum facilities is very technical, and the few dozen jobs are highly technical, requiring particular skills. It will be difficult for many East Timor people to obtain this work.

East Timor’s reality may bring the curse

No history of democracy or self-government

Because this nation is newly independent, we have no tradition of constructive public involvement in policy making. For most people, their relationship with government before 1999 was only to resist. Government officials tend to be protective of information and reluctant to trust civil society, which is still developing its ability to analyze and advocate on complex technical issues. When officials do engage with civil society, socialization often substitutes for consultation, where the government tells the people what it plans to do rather than asking what the people want or need. This pattern was set by Indonesia and the United Nations, and will be hard to break.

Few good examples to learn from

The Portuguese colonial bureaucracy was famous for inefficiency and arbitrariness, and the Indonesian military and civil service here raised corruption and brutality to record levels. East Timor is trying hard not to continue those traditions. Many international agencies currently here teach about transparency and accountability, but often do not practice what they preach.

Inexperienced officials and civil service

Because of the newness of East Timor’s government, few laws and regulations are yet in effect, and both the citizens and the civil servants are just learning them. We lack a solid understanding of what is acceptable and what is not. Without a professional, experienced civil service, possibilities for corruption or inconsistent application of law are widespread, but it will take time to establish a tradition of honesty, transparency and accountability.

Because East Timor has so few experienced managers or public officials, and because our government structure has not had time to learn from its mistakes, there are a number of potential conflicts of interest and people serving dual roles, which could reduce East Timor’s chances of making the best decisions possible. These are structural concerns, with no implication that any currently serving individuals are not honest, capable and well intentioned.

No effective checks and balances to guarantee accountability

Up to now, East Timor has not established effective mechanisms for combating secrecy or corruption. Two years after independence, the Constitutionally-mandated Office of the Provedor has not yet been established, and draft regulations for this office do not guarantee sufficient independence. East Timor’s legal system has little experience and many problems, both in the functioning of the courts and in the laws and procedures themselves.

At present, one political party has a large majority in Parliament, which reduces the ability of Parliament to counterbalance Government activities. Furthermore, the minority parties have little expertise or political experience, and have not yet developed the ability to constructively analyze and offer alternatives to Government policies.

In many democratic societies, the media can be a check on government corruption or misguided policies. In East Timor, journalists are largely inexperienced, with little tradition of independent investigation, or of checking statements by public officials against alternate sources or prior records.

East Timor has some features which could reduce the oil curse risk

Because East Timor is just starting to exploit its petroleum resources, we can learn from failures and successes in other countries. (See report on Nigeria.) Also, because most of our known resources are under the sea, disruption of local communities and environment may be less dangerous.

The people of East Timor are fiercely committed to this country’s independence, and will continue to struggle for its sovereignty and rights, and to demand that our government serves the people’s interest. Perhaps more than any other factor, this may help keep the government in line. In addition, East Timor’s small size and effective rumor communications system make it harder for illegal activities or corruption to be conducted without exposure.

Also, the use of the United States dollar as East Timor’s currency frees the country from managing inflation or foreign exchange problems caused by oil money. In return, East Timor loses the tools of financial control which could be exercised through appropriate, timely exchange rate adjustments, and has its economy linked in with that of the United States.

Saving for future generations

Another major decision area, still to be made, is how East Timor will spend or invest revenues received from oil and gas, which will be used up within many of our lifetimes. One option is to use them for each year’s government budget expenses, which could include "investment" in East Timor itself, such as education, health, infrastructure and economic development.

The International Monetary Fund (IMF) is providing a Norwegian advisor to work with the Ministry of Planning and Finance to design a "petroleum fund," which will help East Timor’s people and government keep track of how much money comes in from petroleum, and whether it is spent or saved. But the proposed fund will not limit the amount of oil revenues spent each year, guard against unpredictable, global oil price fluctuations, or protect against bad economic decisions.

La’o Hamutuk will examine this "Norway Plus" fund model in more detail in the future, but we are worried that it will not adequately protect East Timor from having its major natural resource squandered over the next few decades, with nothing left for future generations.

According to the government’s projected budget for the three years 2005-2008, 65% ($139 million of $215 million) of non-donor government revenues will come from oil, plus $86 million additional oil money which will be saved in the petroleum fund. This will increase in following years, as Bayu-Undan Phase II and Greater Sunrise come online, and the temptation to spend will be great.

La’o Hamutuk is concerned about the government’s lack of transparency on this issue so far. Last year, the IMF prepared a report discussing options in a petroleum fund designed for East Timor, but the government has refused to make it public. We are even more bothered by Banking and Payments Authority (BPA) and government secrecy about oil money already received. So far, the government has received approximately $15 million in oil royalties (FTP), which was deposited in the BPA to be transferred to the petroleum fund when the fund is established next year. But repeated questions from media and civil society about where the money is currently invested have gone unanswered.


East Timor has many of the pre-conditions which have cursed other oil-rich, newly-independent countries, and it will take tremendous effort to ensure that our petroleum is a net benefit to our people. But decisions have already been taken which might not be best for East Timor. There is momentum to extract the oil and gas as quickly as technically feasible, before maritime boundaries, a strong civil service and well-established regulations are in place

However, East Timor may still be able to avoid repeating the bad experiences of other countries. The following steps are essential:

It will not be easy to ensure that East Timor’s oil and gas benefits East Timor’s people, in both the long and short term. But it is not impossible.

[Click here for an earlier, longer version of this paper, or for a slide presentation that went with it.]

The above video, in English and Tetum, is available on VCD for $5 from La'o Hamutuk or the Sah'e Institute for Liberation in Dili. For orders outside East Timor, contact charlie@laohamutuk.org .


Listen to La’o Hamutuk’s Radio Program

Interviews and commentary on the issues we investigate -- and more!

In Tetum and Bahasa Indonesia

Every Sunday at 1:00 pm on Radio Timor Leste


Who is La’o Hamutuk?

La’o Hamutuk staff: Inês Martins, Tomas (Ató) Freitas, Mericio (Akara) Juvinal, Yasinta Lujina, Charles Scheiner, Simon Foster, Cassia Bechara, Selma Hayati, , João Sarmento, Maria Afonso, Joaozito Viana, Guteriano Nicolau, Alex Grainger

Executive board: Sr. Maria Dias, Joseph Nevins, Nuno Rodrigues, Pamela Sexton, Aderito de Jesus Soares

Translation for this Bulletin: Kylie

Photographs for this Bulletin: Samep (8,17), Selma Hayati (5,6,9), IKOHI (10)

Drawings for this Bulletin: Cipriano Daus

What is La’o Hamutuk?

La’o Hamutuk (Walking Together in English) is an East Timorese non-governmental organization that monitors, analyzes, and reports on the principal international institutions present in East Timor as they relate to the physical, economic, and social reconstruction and development of the country. La’o Hamutuk believes that the people of East Timor must be the ultimate decision-makers in this process and that this process should be democratic and transparent. La’o Hamutuk is an independent organization and works to facilitate effective East Timorese participation. In addition, La’o Hamutuk works to improve communication between the international community and East Timorese society. La’o Hamutuk’s East Timorese and international staff have equal responsibilities, and receive equal pay. Finally, La’o Hamutuk is a resource center, providing literature on development models, experiences, and practices, as well as facilitating solidarity links between East Timorese groups and groups abroad with the aim of creating alternative development models.

La’o Hamutuk welcomes reprinting articles or graphics from our Bulletin without charge, but we would like to be notified and given credit for our work.

In the spirit of encouraging greater transparency, La’o Hamutuk would like you to contact us if you have documents and/or information that should be brought to the attention of the East Timorese people and the international community.

La’o Hamutuk, The East Timor Institute for Reconstruction Monitoring and Analysis
P.O. Box 340, Dili, Timor-Leste
Mobile: +670-7234330; Land phone: +670-3325013
Email: laohamutuk@easttimor.minihub.org; Web: http://www.laohamutuk.org