The years under review have seen an important political shift stemming from the victory in presidential elections in April 2022 of renown diplomat José Ramos-Horta, himself backed by another veteran, the former guerrilla hero of the resistance, José «Xanana» Gusmão. Coming out of a well-managed yet constricting COVID-19 crisis abetted by highly damaging floods in the capital city, Dili, expectations ran high during the electoral campaigns as to a new turn in leadership. With Ramos-Horta sworn in on the 20th anniversary of East Timor’s formal independence, the change of leadership also brought into focus the prospect of parliamentary elections in 2023. Significant issues include whether Timor-Leste should pursue big infrastructure projects given diminishing revenues generated by oil and gas, or whether to prioritize job creation and rural extension in a low-income nation with major social and health issues as increasingly urged by the World Bank and other interested parties. Internationally, the change in leadership also came at a time when three important foreign policy developments were occurring. China was extending its diplomatic outreach to South Pacific nations, East Timor included. Timor-Leste’s relations with its largest donor country and near neighbour, Australia, were sometimes difficult. Finally, Timor-Leste’s candidature for ASEAN membership was still pending.

Keywords – Timor-Leste; COVID-19; Political Alliances; Presidential Elections; Economic Performance; International Relations.

1. Introduction

While the 2021-2022 period saw no repeat of the political instability of recent years, East Timor witnessed a virtual isolation from the outside world as it struggled with some success to mitigate the worst of the COVID-19 pandemic. The period also coincided with floods in April 2021 creating misery for large numbers of people including in the capital, Dili. With the local economy flagging, and COVID-related restrictions in place, struggle appeared to be the lot of most [Gunn 2020; Gunn 2021a]. Thus while a surface stability returned to East Timor in the period under review, politically the cohabitation between the presidency and the parliament dominated by a coalition government under incumbent Prime Minister Taur Matan Ruak remained tense [Feijó 2020]. Undoubtedly the major event bringing East Timor into the international news in 2022 was the presidential contest pitting a candidate backed by resistance hero José «Xanana» Gusmão and his Congresso Nacional de Reconstrução de Timor (National Congress for Timorese Reconstruction) or CNRT, and the incumbent Frente Revolucionária de Timor-Leste Independente (Revolutionary Front of Independent Timor-Leste) or FRETILIN-backed president, Francisco “Lu Olo” Guterres. In this contest, the veteran diplomat José Ramos-Horta emerged victorious and was sworn in as the nation’s president for a term of five years coinciding with the 20th anniversary of the nation’s independence on 20 May.

2. Dealing with national disasters

2.1. Containing the COVID-19 pandemic

It no doubt helped in the management of the COVID-19 pandemic that the half-island nation could mostly seal its border with neighbouring Indonesian West Timor. Yet isolation had its downside disrupting cross-border trade, the embryonic tourism industry, and the dispatch of workers overseas, just to mention a few of the issues. It mattered as well that just as Timor-Leste sought to strengthen its badly stretched health sector, it gained the critical assistance of the World Health Organization (WHO) along with an Australian medical centre and, at a later stage, Chinese medical supply deliveries. With a state of emergency first declared for 30 days beginning on March 28, 2020, monthly extensions continued to be endorsed by presidential decree throughout the year and beyond [Gunn 2021a]. As the Dili-based NGO, La’o Hamutuk reported, when COVID-19 cases increased rapidly in February and March 2021, Timor-Leste introduced stricter prevention and control measures, including compulsory home confinement [La’o Hamutuk 2021].

In March, the Council of Ministers proposed a revision to the 2021 budget to fund economic measures to alleviate some of the impacts of the lockdown. Shortly after the revised law was submitted to Parliament, heavy rains, and flooding from Cyclone Seroja inundated Dili and surrounding areas, causing widespread damage. Dili was hit particularly hard, with at least 48 deaths and thousands of people rendered homeless. Nationally more than 30,000 households were impacted and more than 2,000 hectares of agricultural land damaged. On 4 May the government intervened with US$ 135 million in additional expenditure and by shifting money from other appropriations. Management of the COVID-19 pandemic went through various phases, including compulsory home confinement, at least until temporarily suspended in mid-2021. This, in turn, was followed by another reversal later in the year as new daily cases peaked at over 350 in August 2021 and with Timor-Leste having suffered 122 deaths and 19,839 cumulative cases of COVID-19 by the end of the year. Even so, thanks to international assistance and actions on the part of the local health authorities more than 60% of the population had been double-vaccinated by December. In February 2022, Timor-Leste experienced another COVID wave peaking at some 175 cases a day, albeit declining to near zero by March [La’o Hamutuk 2022].

2.2. Coping with the food problem

Owing to multiple shocks in 2021 linked with the COVID-19 pandemic and Cyclone Seroja, the food security situation deteriorated. According to the 2021 Socio-Economic Impact Assessment of COVID-19 published in January 2022, 40% of the total population (about 500,000 people) were estimated to be moderately or severely food insecure in 2021 (a figure consistent with the previous year). The number of food insecure people further increased in 2022, because of the elevated international prices of energy, fuel, and food, which have been transmitted to the domestic markets. Prices of important food items such as oil and fats, fruit, and vegetables, were at record or near record levels in April 2022, marking a 6.8% increase in the Consumer Price Index between September 2021-September 2022, seriously limiting households’ access to food. Since the start of the war in Ukraine at end of February 2022, fuel prices started to increase leading to increased agricultural production costs. [Reliefweb 2022, 7 June; Reliefweb, 2022, 16 November].

Responding to the food security situation in Timor-Leste, in March 2022, the UN Sustainable Development Goals Fund awarded the country a US$ 1 million contribution, enabling the World Food Programme (WFP), the Food and Agriculture Organisation (FAO), and WHO to continue strengthening national food systems and implementing disaster risk reduction activities in partnership with the Timor-Leste Ministry of Agriculture and Fisheries and the Ministry of Health. As signalled by the UN report, with one-third of the country’s total population chronically food insecure, Timor-Leste had one of the highest rates of food vulnerability in the Southeast Asia region. Hence the urgency to empower the most vulnerable producers and consumers, including women and girls. As the report pointed out, the subsistence agricultural production, being the backbone of Timor-Leste’s non-oil economy, employed 70% of the Timorese working population (and this is a far cry from the early World Bank thrust of triumphing market-oriented policies) [Gunn 2003]. Still, as pointed out, the country remained a food deficit country, and 40% of its food needs had to be met through imports. Although not mentioned in the report, changes in diet and consumption away from traditional food crops as with corn and tubers to a rice-based diet along with the consumption of imported noodles from Indonesia abets this problem, as does rural-urban drift.]. Noting as well that a significant amount of the country’s food production is lost through post-harvest loss and waste before it reaches consumers, FAO pledged to provide technologies and capacity-strengthening activities to deal with those problems. On its part, WHO sought to introduce healthy eating habits through consumer education and nutrition-sensitive behaviour change programmes. Its avowed goal was «breaking the inter-generational cycle of malnutrition, particularly for vulnerable groups, including women and children» [Reliefweb 2022, 31 March].

3. Governance: Ushering in the Eighth Constitutional Government

Reaching back to 2020 the seeds of political crisis emerging around budget issues led to the collapse of Gusmão’s three-party coalition, the Aliança de Mudança para o Progresso (Alliance for Change and Progress). At the same time CNRT refused to back a national budget proposed by its coalition partner, that of the Partidu Libertasaun Popular (People’s Liberation Party) or PLP, headed by Ruak. This led Ruak to tender his resignation in February that year, albeit agreeing to stay on until a new government was formed.

The following month, Gusmão informed Timor-Leste President Francisco “Lu-Olo” Guterres that he (Gusmão) was prepared to form a six-party coalition government controlling 34 of Parliament’s 65 seats. However, in March 2020, as the pandemic raised its head, Ruak reversed his resignation pledge saying he would stay in power to oversee the looming health crisis and, at the same time, to gain government approval for a special US$ 250-million fund to fight it. The following month, Ruak nominated five FRETILIN members and one from the Partido Democrático (Democratic Party) to fill long-vacant positions including portfolios in the government’s Council of Ministers. However, Ruak left FRETILIN founding chairman, Mari Alkatiri, out of office. Unexpectedly breaking ranks with Gusmão and the CNRT, the youth-oriented Kmanek Haburas Unidade Nasional Timor Oan (Enrich the National Unity of the Sons of Timor) or KHUNTO threw its support behind the fledgling PLP-FRETILIN alliance, thus giving Ruak a mandate to govern until 2023 [Rahmani 2020]. By June the new coalition government or Eighth Constitutional Government, as the current administration is formally known, was in place (with a parliamentary majority and with presidential support). Significantly, on 23 October, the Council of Ministers endorsed the 2020 General State Budget, thus breaking an impasse that had stymied the work of the previous government [Gunn 2021a]. More generally, through 2021 down until the time when these lines are written (mid-January 2023), the Ruak government restored a sense of both stability and continuity, yet not without challenge, as faced by severe social problems.

3.1. Presidential elections

In March-April 2022 Timor-Leste staged the country’s fifth presidential elections since the recovery of independence in 2002. Coming under a semi-presidential and unicameral political system, the position of president in Timor-Leste is more than ceremonial as it enjoys considerable powers in vetoing ministerial appointments and calling for parliamentary elections. More generally, Timor-Leste has won plaudits for staging peaceful elections, giving it a reputation as one of the most democratic nations in a region dominated by authoritarian regimes [V-Dem Institute 2022]. It also has a record of demonstrated competence in running elections without international assistance while at the same time inviting international election monitors, a practice commenced under UN rule. Out of an estimated 860,000 eligible voters, some 200,000 of them, all born after independence, were eligible to vote for the first time.

The 19 March presidential election, the fifth since independence in 2002, featured more candidates than ever before: sixteen in total, including four women. This reflected the emergence of young leaders as well as the generational divide between resistance leaders of 1975 and their successors. As well noted by Li-Li Chen, compared to previous elections, the field in 2022 was more diverse. It included a number of male leaders from the older generation, such as the ex-general of Timor-Leste Defence Force, Lere Aman Timur, Rogério Lobato (a founding member of FRETILIN), the former president, Ramos-Horta, representing CNRT, the current President Francisco “Lu Olo” Guterres of FRETILIN, and Mariano Assanami Sabino of the Democratic Party. But it also included quite a few independent candidates, among whom four women, five former youth and student resistance leaders, and one former Catholic priest [Chen 2022a]. Besides Pires, younger candidates included former resistance youth leader and academic, Antero Benedito da Silva, and Mariano Sabino Lopes, a former cabinet minister. The elections also raised expectations of a political transition from the revolutionary generation to the youth generation, including a wider presence of women candidates [Chen 2022b]. In this context we should not ignore the ascendancy of a younger generation of FRETILIN leaders emerging out of a party congress held in September 2022, namely Rui Maria de Araujo and José Agostinho Sequeira, also known by the pseudonym Somotxo, used during the war of liberation, possibly adding new blood in legislative elections scheduled for 2023 [Feijó 2022].

3.2. The run-off results

In the first round of the elections held on 19 March, Ramos-Horta finished on top with about 46% of the vote, with incumbent Francisco Lu Olo Guterres coming second with about 22%. Because neither obtained the majority of the votes, a second-round runoff ballot was held on 19 April. No other candidate gained more than 9% in the first round: Armanda Berta dos Santos (8.7%), Lere Anan Timur (7.6%) and Mariano Assanami Sabino (7.3%). All others received 2% or less.

In the 19 April presidential run-off Ramos-Horta outvoted the incumbent, Francisco «Lu-Olo» Guterres, by a 24% margin, winning in 11 of 13 municipalities. Ramos-Horta, having earlier serving as president of Timor-Leste (2007 to 2012), and prime minister (2006 to 2007), was no stranger to high office. This time, as alluded, support from Gusmão, the country’s first president, iconic resistance figure and the current leader of CNRT, was crucial.

As reported on 9 June, Timorese Prime Minister Taur Matan Ruak expressed deep appreciation for the public statement made by the new President, a day earlier, that he would not dissolve the national parliament to avert worsening the political situation in the country. Citing the need for political stability and stable governance in order to accelerate national development, Ramos-Horta also took note of the negative impact of Timor-Leste’s political impasse in 2017 and 2018 setting back progress and economic growth. As Ruak generously responded: «President Horta has always reiterated his idea of having a national dialogue with other State Organs, including the Government, and National Parliament. And we are deeply grateful for such commitment» [Martins 2022c].

4. The macro economy

4.1. Evaluating the Petroleum Fund

Timor-Leste’s most crucial economic policy concerns the management of the Petroleum Fund, a National Investment Endowment Fund based on the model employed by Norway. The management of the fund is governed by the Petroleum Fund Act, established in 2005, which aims to mitigate negative impacts associated with the exploitation of natural resources. The balance of the Fund is determined by inflows from petroleum revenues, investment returns, and outflows from Government withdrawals. Unfortunately, the less than sizable petroleum revenues and meagre investment returns are offset by substantial withdrawals. While the unsustainability of the Fund has long been criticized by civil society groups, it is only in the present conjuncture that the World Bank and other international agencies have belatedly added their concerns [La’o Hamutuk 2022].

The unsustainability of the Fund has been worsened by the collapse in the oil price. Moreover, according to a Portuguese news agency report of 27 March 2020, citing Timor-Leste’s Central Bank spokespersons, the Fund lost almost US$ 1.8 billion in value due to volatility of the stock markets. The situation continued to worsen with the fall in international stock exchanges and the price of oil during 2020 [Lusa, 2020, March 27]. In July the changed circumstances also promoted the newly sworn-in Ruak government to approve the dismissal of Francisco da Costa Monteiro, the founding chief executive of the national oil company (TimorGAP), along with Alfredo Pires, the long-standing minister for petroleum and mining. The latter was replaced by Victor Conceição Soares [Evans 2020]. In this context we should not ignore the role of Gusmão who hitherto took a lead role in negotiations over maritime boundaries with Australia in the Timor Sea such as settled in a ruling delivered at The Permanent Court of Arbitration in The Hague in March 2018. While technically out of office, as discussed below, this reshuffle of personnel was by no means an abandonment on the part of Gusmão of his vision to develop oil-related infrastructure project on the island’s south coast, only a re-set.

According to La’o Hamutuk, despite the positive return on the Petroleum Fund’s investments in 2021, which boosted its balance to US$18.9 billion at the end of the year, deposits into the Fund were projected to fall. Of concern was also the end of production in the not-too-distant future at the Bayu-Undan field, the sole in operation. As no alternative fields have been shown to be commercially viable, this increased the urgency to optimize state spending for maximum long-term benefits, and to identify and develop sustainable, non-oil, local economic activities.

In October 2021 the Government presented a US$ 1,675 million budget for 2022 to Parliament which included projections for future spending that cannot be deemed sustainable. Projected Petroleum Fund withdrawals and Infrastructure Fund spending in 2023-2025 are several times higher than current levels. Nonetheless, oil revenues will have disappeared during that time frame and domestic revenues will be insufficient to cover the gap. In late December 2021, Parliament passed the 2022 State Budget, having approved amendments increasing its outlay to US$ 1.95 billion. Yet withdrawals from the Petroleum Fund above the Estimated Sustainable Income will increase from US$ 488 million to US$ 757 million to pay for the increased spending, leaving a rapidly declining Petroleum Fund Balance [La’o Hamutuk 2021, p.2].

According to a World Bank Group source, the balance of the Fund at the end of Q1 2022 increased by less than 1% year on year. Since Q1 2021, higher hydrocarbon prices have driven petroleum revenues and contributed US$ 1.2 billion to the Fund. However, close to US$ 1.1 billion was transferred out to the state budget and to remunerate the management of the Fund. It is also worth noting that the Fund recorded more than US$ 900 million in losses during Q1 2022 because of weak investment returns. Conversely, investment return was just US$ 44 million. The Petroleum Fund was expected to fall in value unless there were inflows from a new hydrocarbon production field or unless there was a considerable change in the government’s fiscal policy.

Despite adopting a permanent fund framework, a further depletion of the Fund was seemingly inevitable due to a number of challenges. These included excess withdrawals from the Fund. In particular, withdrawals from the Fund since 2009 exceeded the 3% limit of total Petroleum Wealth rule.1 Also, as noted, reserves in the Bayu-Undan hydrocarbon field were nearly fully exhausted, yielding negligible revenue during 2022. Added to that, future investment returns are expected to be lower because of the post-COVID-19 crisis and other factors. As the report summed up, overall, the value of the Petroleum Fund is projected to continuously decline, leading to a «fiscal cliff» that may force an abrupt reduction of the fiscal deficit and hence stop the provision of basic public services [World Bank, Timor-Leste Economic Report, 2022].

As of October 2022, the picture appeared even bleaker and with reported losses to Petroleum Fund investments of US$ 1.4 billion in 2022, attributed by the Timor-Leste finance ministry to increases in interest rates by central banks around the world leading to both equities and bonds falling in value this year. As the ministry predicted, the balance at the end of the year would likely have fallen to US$ 16.225.1 billion, or 17% less than the balance at the beginning of 2022 (when it was US$ 19.565 billion). In the case of withdrawals from the Fund, that figure included US$1 billion for the national liberation fighters fund (FCLN) – an amount not formally disaggregated from the Petroleum Fund – along with withdrawals to the Treasury account to fund the 2022 state budget. As noted, in line with the current spending trend, the Petroleum Fund was expected to be exhausted by the end of 2034 [Lusa, 2022, October 5]. Taking measure of the drastic situation, on 15 December 2022 and with the endorsement of the Court of Appeal, the president sought fit to revise the General State Budget for fiscal 2023 downwards from US$ 3 billion to US$ 1 billion by removing the FCLN allocation as earlier approved by the National Parliament [Martins 2022f]. With provision for funding 49 programs, the president’s action thus brought the budget back in line with the nation’s strategic development framework.

4.2. TimorGAP and South coast development

It is logical then that Timor-Leste should seek to exploit new oilfields. In fact, seven companies bid for nine blocks in the Bid Submission for the Timor-Leste Second Licensing Round period 2019/2022. Timor-Leste had offered 18 blocks in total, 7 of which are onshore, and eleven offshore [OE Digital Another Oil Discovery, 2022, 16 March]. Still the question remained as to whether, under pressure from Gusmão and CNRT, Timor-Leste would seek restitution of its grandiose albeit stalled plans to build petroleum processing infrastructure on East Timor’s south coast. Also known locally as the Tasi Mane project, certain of the infrastructure has already been constructed as with an airport and a east-west road but the total plan also envisages a corridor of projects at three sites including a refinery and petrochemical project. The key to Timor-Leste’s development plans is the exploitation of the Greater Sunrise gas fields, located in a maritime jurisdiction jointly administered by Australia and East Timor. Located about 150 kilometres south of the East Timor coastline, the Greater Sunrise fields are much closer to Timor-Leste, than Darwin, 450 kilometres distant in northern Australia. However, the Greater Sunrise gas fields are split from the Timor-Leste coast by the 3,300-metre-deep Timor Trench, thus complicating efforts to pipe the gas there. While such a solution is technically feasible, Woodside Energy, the Australian corporate giant seeking to exploit the gas fields, has so far insisted that piping the gas to a liquefied natural gas processing plant in Darwin was the only commercially viable option [Knaus 2022]. To the present, the commercial risk argument presented by Woodside Energy brings the developer into sharp conflict with the aspirations of the Timor-Leste government. Dili has already invested some US$ 1 billion in south coast infrastructure and wishes to pursue this option practically as a nation building project. Should East Timor go for this option it is understood that the costs of constructing the onshore export facility and pipelines would stand at an additional US$ 14 billion.

President and CEO of the state oil company, TimorGAP, António de Sousa, assumed his role at a crucial time in mid-2020. the Timor-Leste government had then entered into negotiations on the Greater Sunrise Special Regime Legal Framework with Australia. These negotiations led to the formation of a joint venture to govern the development of the Greater Sunrise Field’s resources, currently estimated to have recoverable reserves of 5.1 trillion Cubic Feet (TCF) of natural gas and 226 million barrels of condensate. TimorGAP owns a 56.56% interest in that joint venture, with Australia-based Woodside Energy owning 33.44% and serving as operator. The remaining 10% are owned by Japan-based Osaka Gas. In an interview, de Sousa detailed TimorGAP’s plans to create an onshore Timor-Leste LNG export facility for part of the gas, as well as plans to use a large share of the gas to reduce emissions in the island’s power generation. He also discussed plans for a carbon capture and storage project targeting another field called the Bayu-Undan, soon to be decommissioned. «The commitment by all parties to the (joint venture) agreement to protecting the environment is clear», he said. Another key aspect of Timor-Leste’s energy future is that the Greater Sunrise Field is far from being the only area with a significant oil and gas potential. As de Sousa revealed, TimorGAP is currently conducting seismic surveys and evaluations in several other areas, both offshore and onshore, that they believe have potential for future natural gas and liquids development [Blackmon 2022, May 10].

In mid-August 2022, a first shot was fired by Timor-Leste petroleum minister, Víctor da Conceição Soares, who warned Woodside Energy and the incoming Labor government in Australia that offshore gas located between the two countries must be piped to East Timor and that other Asian countries are circling to develop the potential US$ 50 billion energy resource. Also entering the fray at this moment through media interviews, including a high-profile interview on the Australian broadcaster ABC, President Ramos-Horta issued a virtual public ultimatum to Woodside Energy and the Canberra government to either endorse the Timor-Leste plan or face the new reality, moulded by the presence of China or other players, capable and willing to cooperate with Dili in developing its energy potential [Knaus 2022].

At this writing, negotiations between Woodside and the Timor-Leste government had reached a critical and somewhat acrimonious stage. After a long period of hesitation, Woodside Energy was considering both development options for the Sunrise gas project in the Timor Sea, namely: a) to pipe the gas to East Timor’s southern coastline or b) to pipe over longer distance to the established LNG facility in Australia’s Northern Territory. In a major rethink in November 2022 Woodside chief executive officer Meg O’Neill asserted:

We also recognise that East Timor see Sunrise as an important project for their economy, and they also have a lot of international friends that would like to see a downstream LNG plant built on East Timor and so that has caused us to reconsider Sunrise’s development concepts [Morrison 2022].

She also noted that technological developments in the industry also worked in favour of building a liquefaction plant in East Timor [ibid.]. Still, at this writing no announcements had been made as to a final decision.

4.3. The local economy

According to a World Bank report of 16 December 2021, after the dual shocks of COVID-19 and natural disasters, Timor-Leste’s economy recorded some signs of recovery, with real GDP growth expected to improve to 1.9% in 2021. According to Bernard Harborne, World Bank Country Representative for Timor-Leste, «The COVID-19 crisis came on top of a period of low growth, suggesting deeper structural problems in the economy». He projected the economy to expand further to 2.4% in 2022, driven by more manageable COVID-19 infections, and less restrictive public health measures (other estimates place this figure at 3%, an increase of 1.5 percentage points compared to the figure for 2021). On the demand side, a gradual rebound in private consumption (2.9%) was predicted to drive economic growth in 2022. Private investment was likely to remain low while global trade was expected to pick up further, positively affecting both exports and imports. The report recommended collecting more revenue by introducing value-added taxes and increasing income and excise tax rates to match regional norms [World Bank press release, 2021, 15 December].

As the price of fuel increased substantially heading into 2022, an upward trend in food prices was observed across Timor-Leste in March that year compared to the previous month – reflective of the global trends. An uptick in local rice price by 6% compared to previous month, was attributed to tight supply conditions pending the next harvest. A fuel increase was an added burden. An increase in imported rice price mirrored the continued uptick in the FAO rice price index in the first quarter of 2022. Price of non-cereals had mixed reaction, as wheat and eggs exhibited significant increase on the back of supply chain disruptions on the global market while salt and sugar remained subdued [Reliefweb, 2022, 12 April]. Nevertheless, amid the surge in food and fuel prices throughout 2022, the consumer price index rate was stable in Q3 [Reliefweb 2022, 16 November].

4.4. The impending crisis of human capital

Striking a note of urgency, as a World Bank report of June 2022 cautioned, Timor-Leste faced a crisis of human capital and needs to improve the efficiency, equity, and sustainability of its investments, especially in child nutrition and education, to have a hope of reaping any demographic dividend from its young population and to avoid the situation worsening still further. The report also stated: «Timor-Leste faces multiple human capital challenges», noting as well that: «A child born in Timor-Leste today will only be 45 percent as productive as an adult as she could be if she enjoyed complete education and full health». As the report further explained, this was lower than the global and regional average and that without «urgent transformative action, things could get worse». With respect to education, and notwithstanding advances, «learning outcomes are poor and disparate», with a high failure rate. As the report stressed, there was an absolute need to «put the fiscal position on a sustainable basis» flagging the stark facts that, minus drawdowns of the petroleum fund, the Timorese population «will now, more than ever, have to be the driver of the country’s income growth» [Agence France Presse, 2022].

4.5. Overseas worker remittances

The East Timorese diaspora continues to expand, even apart from the earlier wave of migration to Indonesia and even Malaysia. Basically, out-migration takes two forms. One is private or spontaneous, as with those Timorese who have made their way to the United Kingdom or other destinations in Europe, Portugal especially. The other is government sponsored as with seasonal worker programs engaging Australia or contract labour dispatched to South Korea. As revealed in June 2022 by Prime Minister Ruak, the government sought to explore more opportunities for overseas Timorese workers, not only in the traditional destination countries for Timorese emigration, such as South Korea and Australia, but also in other states as, for example, Ireland and Japan. Later in the year it was revealed that Japan, Israel, and Brunei Darussalam had entered into negotiations in this area. In view of the fact that job creation was difficult in Timor-Leste, sending workers overseas was viewed favourably by both the government and the beneficiaries of worker remittances sent home. Significantly, Ruak described the Timorese emigrants remitting money to their homeland as «our new heroes» [Martins 2022a, 1 May].

As Ruak revealed, in 2021 Timorese workers overseas contributed more than US$ 120 million to Timor-Leste’s economy and so helping the nation combat poverty while, on their part, gaining valuable experiences and earning money to continue their studies. It is estimated that up to 30,000 East Timorese are currently residing in the UK. Likewise, many thousands of East Timorese have availed themselves of the Australian Seasonal Worker Program, basically employed as fruit-pickers. With more than 3,000 Timorese workers still currently working in South Korea mostly as unskilled laborers, as Ruak explained, «Since 2009, Timorese workers in South Korea have contributed more than US$ 39 million to the country», namely a much more conspicuous sum than the US$ 11 million that the government had invested in promoting emigration [Martins, 2022b].

It might also be said that East Timor migrant workers both male and female – as with a group lured by human traffickers to a Middle Eastern destination in 2022 – are potentially subject to discrimination or abuse, frequently exploited and lacking labour rights according to their respective destinations, a subject that merits much closer documentation and study. Additionally, as exposed in late 2022, many hundreds of East Timorese were found in destitute condition in Portugal prior to state intervention, namely face-to-face dialogue between Ramos-Horta and Portuguese President Marcelo Rebelo da Sousa in Lisbon on 3 November 2022 [Martins 2022e].

5. International relations

Given its location and size, Timor-Leste has much incentive to hedge in its international relations posture. Such a balancing act became all the more obvious in the 2022 election campaign and its aftermath. Preeminent on the radar screen was how to manage relations with ASEAN, China, as well as such donor countries and agencies as Australia, the largest donor to Timor-Leste (with US$ 105.7 million budgeted for 2022-23), followed by Japan, itself exceeding the US, European Union, along with the Asian Development Bank and the World Bank.

5.1. Australia

Besides China, Australia was the main overseas player in the country’s COVID-19 recovery, gifting more than 1 million vaccine doses. Although recalled locally for its peacekeeping activities in 1999 and again in 2006, the Canberra government still has an image problem with its near neighbour just 500 kilometres away across the Timor Sea. These difficulties stem from historical issues relating to boundaries, and as discussed, Timor Sea petroleum exploitation. The latter problem was complicated even by the spying tactics used by the Australian authorities in an attempt to gain benefit in negotiations. Australia’s complicity with Indonesia in the invasion of the former Portuguese colony and cover up of intelligence relating to genocidal activities is not forgotten by an older generation in East Timor today, but they also look to the future [Gunn 2005].

The problem of the oil and gas pipeline route to connect the Greater Sunrise oil and gas field to either Timor Leste or Australia remained open. In an interview with The Sydney Morning Herald, Ramos-Horta signalled the resumption of the push for a pipeline directly connecting the Greater Sunrise oil and gas field to East Timor. While calling for increased economic support from Australia, Ramos-Horta claimed that that was «not only a one-way street in terms of only benefiting Timor». In fact, in Ramos-Horta’s opinion: «to see a pro-Australia, pro-Western values Timor-Leste on Australia’s doorstep» was in Australia’s interest. [Barrett, 2022].

Following on closely the visit to Timor-Leste by Australian foreign minister Penny Wong in early September, Ramos-Horta launched his own 6-day visit to Australia. With development of the Greater Sunrise field at the top of his agenda, also calling for Australian support for economic diversification, he gained no specific committal for his vision of building a liquified natural gas plant in East Timor. Australia did agree, however, to appoint a special representative to Dili to continue negotiations on how to best develop the gas field. On her part, Wong had used her visit to Dili to publicly chide Ramos-Horta from seeking to exploit Australian media on the issue. Pointedly, however, Ramos-Horta chose Indonesia as his first overseas visit since his inauguration. Arriving in Jakarta for a one-week visit on 18 July, besides talking up ASEAN membership with the Indonesian president, officials, and business leaders, he also drummed up mutual interest in creating a free trade zone to service local cross-border Timor-Leste-Indonesia trade.

5.2. China

When it comes to international relations, China is never quite out of the picture, whether as donor, not excluding military aid, or interested partner in infrastructure. Moreover, from mid-2020 through 2021, Beijing sent charter flights to Dili, loaded with medical supplies in support of containing the COVID-19 crisis.

China’s footprint over East Timor is not without significance, especially as it fits in with China’s economic statecraft as well as its vision of the Belt and Road strategy. China also won kudos from the Timor-Leste political elite for its early backing for independence and support for UN initiatives in 1999. Beijing also went on to participate in UN missions and contribute to infrastructure construction, particularly public buildings, electricity generation and infrastructures around roads and ports [Gunn 2021b].

Chinese President Xi Jinping and his Timor-Leste counterpart, President Ramos-Horta, exchanged congratulatory messages to celebrate the 20th anniversary of Timor-Leste’s restoration of independence and the establishment of diplomatic ties between the two countries. As Xi pointed out, «since the establishment of diplomatic ties 20 years ago, the two sides have steadily deepened political mutual trust, made solid progress in practical cooperation and witnessed ever closer people-to-people and cultural exchanges». Stressing that he attached great importance to the development of China-Timor-Leste relations, the Chinese president said he is ready to work with his Timor-Leste counterpart to bring their «comprehensive cooperative partnership» to a new level. As Ramos-Horta replied, Timor-Leste appreciated China’s key role in promoting regional and world peace and stability, as well as its strong support for his country’s national development process [Lusa 2022, May 5]. On the same day, Chinese Premier Li Keqiang exchanged congratulatory messages with Prime Minister Ruak. As Ruak responded, Timor-Leste and China shared a «long-standing brotherly friendship and fruitful bilateral cooperation». He looked forward to further strengthening cooperation between the two sides to jointly address the challenges of post-pandemic recovery [Xinhua, 2022, June 20].

Of course, the Timorese decision-makers were aware that the increasingly tight and cordial relations with China were viewed with preoccupation by Australia. However, in the already quoted interview with The Sydney Morning Herald, Ramos-Horta made no apologies for fostering stronger ties with China. That position was in line with Ramos-Horta’s desire, already made public when he had been sworn in as president, to broaden links with Beijing in areas such as trade, renewable energy, digitisation, artificial intelligence and urban and rural infrastructure. In the interview, Ramos-Horta pointed out that, while he did have a good relationship with China, he was not aprioristically pro-Chinese. Simply, he declared: «It would be a total mistake not to have a good relationship with China» [Barrett, 2022].

In September 2022, Chinese State Councillor and Foreign Minister Wang Yi and his Timor-Leste counterpart, Adaljiza Magno, agreed that the two countries should strengthen cooperation within the framework of the Belt and Road Initiative (albeit with no other committals). As Wang made known, China was willing to continue to offer assistance in enhancing Timor-Leste’s public health capacity. Wang also stated that China was willing to «inject impetus to the post-pandemic recovery of Timor-Leste through jointly building the Belt and Road». He also expressed hope that personnel exchanges between the two countries could be expedited «to ensure the smooth advancement of major cooperation projects and the resumption of work and production» [Xinhua 2020, 21 September]. Neither did the Chinese foreign minister neglect meeting with FRETILIN chairman, Mari Alkatiri, talking up historic ties on the part of the lead pro-independence party.

5.3. ASEAN

Between 19-21 July 2022, ASEAN conducted a fact-finding mission in Dili aimed to ascertain that Timor-Leste’s low economic and skill base did not become a liability, once Timor adhered to ASEAN. As announced on 12 August by Timor-Leste Foreign Minister Adaljiza Magno, Timor-Leste had met all the conditions for ASEAN membership [Martins, 2022d]. As further announced during an ASEAN summit under the chairmanship of Cambodia, Timor-Leste was granted observer status to all ASEAN meetings until full membership was achieved. As the year 2022 progressed, the Timor-Leste leadership appeared convinced that membership was a formality that would be consummated at the 42nd ASEAN Summit of 2023 chaired by Indonesia. Still, Timor-Leste’s accession to ASEAN depends upon the political will of Indonesia in line with the consensus of the ASEAN Coordinating Council.

6. Conclusion

Given its location, size, and asymmetric status with respect to neighbouring countries, Timor-Leste has much incentive to hedge in its international relations. As highlighted in this article, the imperative to balance these relationships became even more obvious in the 2022 election campaign and aftermath with Australia, China, distant Portugal, Indonesia, and ASEAN membership all on the radar screen. Undoubtedly the victory of Ramos-Horta in the presidential elections restored a figure with a huge reservoir of international admiration for his diplomatic skills and energy. Such was on full display in the latter half of 2020 with the new President’s proactive diplomatic forays to, respectively, Indonesia, Australia, Cambodia, Portugal, Singapore, Malaysia, Brazil (on 1 January 2023, to attend the inauguration of Luiz Inacio Lula da Silva as president), and to Davos later in the month to attend the World Economic Forum. Even so, as this essay has pointed out, Ramos-Horta’s domestic support cannot entirely be separated from popular adulation of the national hero and elder statesman, «Xanana» Gusmão. How far Ramos-Horta will go to follow Gusmão’s lead and ambitions in parliamentary elections slated for 2023 remains to be seen especially with a reinvigorated FRETILIN following its September 2022 congress. But also, Ramos-Horta assumed his new office at a time when critical decisions must be definitively made as to pursuing costly – possibly ruinous – major infrastructure planning versus addressing critical social needs.

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