LUNCHEON TALK

OXFORD UNIVERSITY SOCIETY IN VICTORIA 

THURSDAY 11 SEPTEMBER 2008

The Honourable Justice John E Middleton

Ladies and Gentlemen,
As you know from the invitation to this luncheon I have recently visited East Timor.
The paradox which hits you on arrival in East Timor results from the disconnect between one’s preconception of the country as a warzone, along with the expected destruction and chaos, and the reality, which is a country of great natural beauty at peace.  A travel brochure would conjure up the stunning mountains, pristine tropical beaches and the beauty of the coral reefs, the cleanest water in the world, and ‘the red fish’ – the clown fish from the popular movie ‘Finding Nemo’.

Getting to Dili does not involve checking in at the First Class Lounge at Tullamarine, having a glass of Veuve and then being woken upon touch down in Dili. It involves the best part of a day getting to Darwin, overnighting at the Star City Casino – itself an experience worthy of a luncheon speech, and then a 5am wake up for a 7am flight to Dili in a double propeller plane, complete with Snickers bars served for breakfast.

As you descend towards Dili airport, the plane banks steeply and you notice the unexpected natural rugged beauty of Timor. You fly over steep mountains which make up much of the land, and then the limited flat land on the coast, where most of the larger towns are. Dili itself is built on a long, curving stretch of beach, with the mountains on one side forming a spectacular natural backdrop and the ocean, lined with palm trees on the other. On one side of the bay is a Rio-esque statue of Jesus, standing atop a metal globe.

The Timorese people were, in my experience, gregarious, charming and positive. It was common for a young Timorese person to approach me or my associate and strike up a conversation. One even asked me to be her ‘benefactor’ for her University course, which I think requires nothing more than what I do for my own children, but with infinitely more gratitude.

It is important to understand some of the history relating to East Timor, as it helps us understand the situation today.  Timor was first colonized by the Portuguese in 1520. The Dutch, who claimed many of the surrounding islands, took control of the western portion of the island in 1613. Portugal and the Netherlands fought over the island until an 1860 treaty divided Timor, granting Portugal the eastern half of the island .

In 1949, the Netherlands gave up its colonies in the Dutch East Indies, including West Timor, and the nation of Indonesia was born. East Timor remained under Portuguese control until 1975, when the Portuguese abruptly pulled out after 455 years of colonization. The sudden Portuguese withdrawal left the island vulnerable and, nine days after the Democratic Republic of East Timor was declared an independent nation, Indonesia invaded and annexed it. 

Indonesia's invasion and its brutal occupation of East Timor, which was small, remote, and desperately poor, largely escaped international attention. East Timor's resistance movement was violently suppressed by Indonesian military forces, and more than 200,000 Timorese are reported to have died from famine, disease, and fighting since the annexation.

After Indonesia's hard-line president Suharto left office in 1998, his successor, B. J. Habibie, unexpectedly announced his willingness to hold a referendum on East Timorese independence, reversing 25 years of Indonesian intransigence. On Aug. 30, 1999, 78.5% of the population voted to secede from Indonesia. But in the days following the referendum, pro-Indonesian militias and Indonesian soldiers retaliated by razing towns, slaughtering civilians, and forcing a third of the population out of the province. After enormous international pressure, Indonesia finally agreed to allow UN forces into East Timor on Sept. 12. Led by Australia, an international peacekeeping force began restoring order to the ravaged region.

On May 20, 2002, nationhood was declared. Charismatic rebel leader José Alexandre Gusmão, who was imprisoned in Indonesia from 1992 to 1999, was overwhelmingly elected the nation's first president.

The first new country of the millennium, East Timor was also one of the world's poorest. Its meager infrastructure was destroyed by the Indonesian militias in 1999, and the economy, primarily made up of subsistence farming and fishing, was in shambles. East Timor's offshore gas and oil reserves promised the only real hope for lifting it out of poverty, but a dispute with Australia over the rights to the oil reserves in the East Timor Sea threatened to thwart those efforts. The oil and gas fields lie much closer to East Timor than to Australia, but a 1989 deal between Indonesia and Australia set the maritime boundary along Australia's continental shelf, which gives it control of 85% of the sea and most of the oil. Under these terms, Australia was to receive 82% of the oil revenues and East Timor just 18%.  Finally, after years of wrangling, the two countries agreed in May 2005 to defer the redrawing of the border for 50 years and to split the oil and gas revenues down the middle.

East Timor's capital, Dili, descended into chaos in early 2006, when the then prime minister, Mari Alkatiri, fired almost half the country's soldiers for striking. The fired soldiers, who had protested against low wages and alleged discrimination, then began rioting, and soldiers loyal to the prime minister started battling them. Soon the violence had spread to the police force and the civilian population, causing about 130,000 to flee their homes to avoid the bloodshed. Australian troops were called in to control the unrest. In June 2006, Prime Minister Alkatiri resigned in an effort to stop the country's disintegration. In July Alkatiri was replaced by José Ramos-Horta, winner of the 1996 Nobel Peace Prize.  José Ramos-Horta later became President, and Xanana Gusmao became Prime Minister, which is the situation today.  

The recent political instability of the country reached boiling point in February 2008 with assassination attempts on both Prime Minister Gusmao and President José Ramos-Horta.

Turning now to the current position.  The current political situation is best described as stable but fragile, notwithstanding that the government is democratically elected. There is still some level of pro-Indonesian sentiment amongst certain Timorese, as the Indonesians arguably did more to create infrastructure than the Portuguese. Although there is no contesting the horror that ruled at times under the Indonesian regime, there were some very real advantages under Indonesian rule – for example, I was told that rice was subsidised under Indonesian rule and cost US$1 a bag, rather than the US$14 a bag it costs today. 

The Timorese soil is poor, and there is relatively little primary agriculture as a result. A lot of rice is imported from Vietnam or Thailand, and although it is still subsidised by the Timorese Government the higher prices now make it unaffordable for many Timorese, who get by on what they can grow as part of their subsistence lifestyles. There is another tier of society in Timor however - expats and the educated Timorese. Most Timorese who can afford to eat in the limited restaurants or own cars were educated overseas – many in Melbourne - and now work for NGOs, international agencies or in the public service (which pays between $US100-400 a month). 

The expats in Timor (with the exception of the UN) come generally from Portugal or Australia. Foreign aid workers, army and police are ubiquitous, and are comprised mainly of the UN, whose white Landcruisers would comprise roughly every second vehicle in Dili, the Portuguese GNR – a unit of the UN Police who spend a lot of time working on their bodies and tans running along the foreshore - the Australian Federal Police, and the Australian Army. The coffee shops in Dili were filled with soldiers casually resting their rifles against the tables.

The buildings in Dili are in varying states of disrepair. There is still some very pretty Portuguese architecture, but many of these buildings were gutted by the fires set by the Indonesians on their departure following the referendum in 1999. Many of them sit unused today. Some of the newer buildings are constructed by foreigners – many bars and restaurants owned by Portuguese and Australians, and some incredible Embassies of mammoth proportions – notably those of China and the United States. The Chinese constructed a building recently with Timor’s only elevator, but given Dili’s unreliable electricity supply (which comes from a few old generators), the lift remains unused.

Nevertheless, the atmosphere is a very calm one, and ran in the face of my expectations. It feels in many ways like other south-east Asian cities, but the military presence tempers any ‘holiday’ vibe which might otherwise exist. Certainly there was no violence there during our visit, but it’s hard to know whether the calmness exists only because of the Australian army officers drinking coffee with their rifles or whether the large numbers of military and UN officers are somewhat superfluous. Some of the potential sources of unrest include disaffection from the growing number of unemployed youth as well as supporters of political parties not in the current ruling coalition. The current government is about to embark next year on its Year of Infrastructure, during which it will spend some of the $US3.2 billion sitting in its coffers from its sources of oil and gas in the Timor Sea. 

The government in East Timor also wants to ensure that it sets up appropriate anti-corruption law this year as part of its Year of Administrative Reform so that all building contracts created during its Year of Infrastructure are subject to proper governance and subject to scrutiny.

So East Timor is at a crossroads. It has the opportunity, with careful guidance and management of its people and resources, to become a prosperous democracy. It also, like many failed states before it, could become another Sudan or North Korea. Like the Australian bush in Summer, it is in a precarious position, and tensions could ignite at any moment. Players such as international aid agencies, foreign governments, multinational corporations, and of course the East Timorese government, will need to proceed with caution.

As for potential tourism, one has to be realistic about the island nation’s ability to become a tourist mecca anytime soon.  It first needs vital infrastructure to support such an industry. A lack of infrastructure is also holding up serious foreign investment in the country.

The government now has the $US3.2 billion in oil revenues I have spoken of tucked away in US Treasury bonds, which should provide the financial backbone to delivering new roads, electricity and improved port and airport services.

But Prime Minister Gusmao, on a trip to Australia recently to meet with politicians and senior business figures, was keen to find new sources of revenue by promoting East Timor’s investment opportunities to foreign companies. Timor has a multi-billion economy with a growth rate of around 8% a year with very low taxes, so opportunities are there.

My own view is that Timor is in a very good position to head down the road to creating a successful state. Its people, ministers and particularly its Prime Minister seem determined to use Timor’s resources wisely and transparently, and to move forward at a pace which is practically achievable and which is economically sound. They realise that the time to act is now, and that their goals need to be clearly identified and documented. The fact that this year and next year have been designated as a Year of Administrative Reform and the Year of Infrastructure illustrates this. 

So, what was my Associate and I doing in East Timor?  In order to implement its anti-corruption law as part of its administrative reform, the Prime Minster of East Timor requested from the Chief Justice of the Federal Court of Australia, Michael Black, earlier this year some assistance from a judge and requisite support staff.  It was arranged that I be the judge to provide the assistance, after much prompting on my part to have the opportunity to support East Timor’s endeavour.

Our task was to assist the Prime Minister by advising on a possible format, and range of functions, powers and duties, of an anti-corruption body to reflect the desires of the Timorese government. Given that the precise nature of the body is still to be finalized (as the government is consulting with the Timorese people and agencies and Timorese institutions before implementing any anti-corruption measures), the advice I was to give needed to be malleable; that is, it needed to be in a form which could be implemented notwithstanding whether the relevant powers were to be exercised by, for example, a Commission, a Commissioner, or the Provedor (an office currently in existence and with, inter alia, human rights functions). I was instructed however that a non-negotiable feature of the laws was that they would be effective, broad and comprehensive. With that in mind, and with reference to the anti-corruption legislation in force in Hong Kong, Macau, Singapore, Indonesia, Malaysia, Western Australia and New South Wales, we went about drafting a document which set out what were considered to be the important functions, duties and powers of an effective anti-corruption body. The definition of corrupt conduct was wide, and covered the general notion of ‘conduct involving the abuse of power or trust or violation of duties by a public official enriching or benefiting himself and/or a third party or causing damage to someone’ as well as specific examples of corruption, including:
•	official misconduct (including breach of trust)
•	extortion
•	nepotism
•	embezzlement, or embezzlement of use
•	favouritism 
•	bribery
•	blackmail
•	obtaining or offering secret commissions
•	fraud
•	theft
•	perverting the course of justice
•	illegitimate use of public force 
•	any crimes undertaken in the exercise of public functions

The possible functions which an anti-corruption body might need to undertake include:
•	To conduct research on corruption, the incidence of corruption, and related issues.
•	To undertake preventative, educative and advisory action to prevent corruption.
•	To direct, instruct, advise and assist any public agency or entity, public official or other person on ways in which corrupt conduct may be eliminated.
•	To investigate any allegation or complaint regarding corruption.
•	To examine the laws governing, and the practices and procedures of, public agencies and entities, in order to facilitate the discovery of corrupt conduct and to secure the revision of methods of work or procedures which may be conducive to corrupt conduct.
•	To make and furnish reports and recommendations, and make findings and form opinions for this purpose.
•	To assemble evidence that may be admissible in the prosecution of a person for corrupt conduct.

The powers necessary to achieve these aims, as provided in other legislation, included public enquiries (which can be important for dealing openly with public disquiet, and putting any unfounded claims to rest quickly) and private examinations, and all the usual powers to summon witnesses and obtain evidence (including search and seizure powers). Included also were powers to freeze bank accounts, restrain travel and tap phone calls. 

It was necessary to include reference to the mandated cooperation of the anti-corruption body with all public agencies, the Prosecutor-General and other integrity institutions. One of the practical problems we faced in terms of giving the legislation teeth is that there is a backlog of over 4,000 cases resting with the Timorese Prosecutor General. Accordingly, to make sure that corruption cases were seen as of utmost importance, corruption cases will need to take precedence over other cases. 

The drafting and passing of the anti-corruption law may have been the easy part – it is the implementation of the law which will provide the real challenges. The first and most obvious hurdle will be finding the people power and fiscal resources. Finding the number of sufficiently trained people to staff an anti-corruption body will be tricky in an underdeveloped country.  If need be, I am sure that the Australian Government will give proper consideration to supporting an anti-corruption body for East Timor, to make sure that it is effective and sustainable. Secondly, even if the cases are investigated and presented to the Prosecutor-General, there is the further problem that the Prosecutor and Courts are under-resourced. Hopefully, prioritizing corruption cases will be some answer to this problem. Thirdly, as I eluded to earlier, the most appropriate body to fight corruption is a source of some disagreement. Presently, the Provedor has certain very limited anti-corruption powers, and there are some who argue that his or her role should simply be expanded. This view is countered by the fact that the Provedor has numerous other functions, including human rights abuses; the potential conflict of these functions with anti-corruption powers is obvious.

I am optimistic about the implementation of the proposed law, although, as I have said, the obstacles in its way will be the lack of human resources, both in number and technical expertise. However, the time is right for improvement. 

Paul Collier wrote in his book ‘The Bottom Billion - Why The Poorest Countries Are Failing and What Can Be Done About It’ (2007):
Unfortunately … technical assistance in a failing state prior to turnaround has little effect on the prospect of a turnaround occurring. The experts come and preach and people listen politely, but not much happens. This is bad news for the agencies that do this and little else, and it is also bad news for failing states since pouring in big technical assistance would be pretty easy. However, things look dramatically different once a turnaround has started, or indeed if the state has a new leader. Technical assistance during the first four years of an incipient reform and especially during the first two years, has a big favourable effect on the chances that the momentum of the reforms will be maintained. It also substantially reduces the chance that the reforms will collapse altogether.

Turnaround has commenced in East Timor.  The country has a new leader.  For Timor there is an open moment in history – these moments are most productive when leaders see into the future and seize opportunities.  I am confident that is happening in East Timor.