Timor-Leste

Abstract

Timor-Leste Michael Leach (bio) On 30 August 2019, Timor-Leste hosted a major celebration of the twentieth anniversary of the 1999 popular consultation that saw it secure its independence from Indonesia. This significant date was also chosen for the exchange of notes between the East Timorese and Australian prime ministers, bringing the 2018 Australia–Timor-Leste maritime boundary treaty into effect. Meanwhile, Timor-Leste’s first experience of semi-presidential “cohabitation” saw the political impasse over the president’s refusal to appoint ministers continue throughout the year. The year 2018 had ended with a presidential veto of changes to the Law on Petroleum Activities, which was designed to lift the legislated 20 percent limit on state ownership and allow the East Timorese government to become a major joint venture partner. President “Lu Olo” Guterres—a senior figure of the opposition Revolutionary Front for an Independent East Timor (fretilin) party—expressed concerns over the financial sustainability of the nation’s now us$17.7 billion petroleum fund (La‘o Hamutuk 2020b). For their part, some local nongovernmental organizations argued that changes to the law were actually aimed at preventing Timor-Leste’s Audit Court from reviewing large contracts—an accusation the government denied (La‘o Hamutuk 2018). Parliament successfully reversed the presidential veto on 10 January 2019, as the fretilin opposition staged a parliamentary walkout, allowing the government a rare opportunity to assemble the two-thirds supermajority required to reverse the veto. President Guterres then vetoed the 2019 budget on 23 January, arguing that it was gravely unsustainable and drew too heavily on the principal reserves of Timor-Leste’s sovereign wealth fund. This action placed the Greater Sunrise joint-venture payment in jeopardy, as the fretilin opposition has twenty-three seats— enough in normal circumstances to deny the government a parliamentary reversal of the veto. However, this tension was soon resolved on 31 January, when Parliament revised the 2019 budget to us$1.4 billion by removing the us$650 million joint-venture payment. The government was confident it could use the petroleum fund itself as the source of the payment, having altered the fund’s investment rules in the Law of Petroleum Activities amendments. Though opposition members of Parliament referred the legislation to the Court of Appeal, the changes were soon found to be constitutional, and the us$650 million was paid to Conoco Philips and Shell on 16 April (La‘o Hamutuk 2018–2020), making the government of Timor-Leste a 56 percent stakeholder in the Greater Sunrise joint venture. The revised 2019 budget was promulgated by the president on 7 February 2019, to the relief of business groups concerned about the economic impact of a possible return [End Page 605] to the reserve “duodecimal” budget system, which issues monthly installments of one-twelfth of the previous year’s budget and was widely blamed for economic contraction in 2017 and 2018. This particular fear would recur eleven months later as the year turned to 2020. Wider problems beset the Alliance for Change and Progress (amp) government throughout 2019 and came to a head spectacularly early in 2020. These tensions started in mid-2018, with President Lu Olo’s refusal to install nine ministerial nominees from the largest party in the alliance, the National Congress of the Timorese Reconstruction (cnrt), citing judicial inquiries into misconduct or “poor moral standing” (Leach 2018). The president’s stance produced a political standoff that persisted throughout 2019 and was in its eighteenth month as the year closed. This resulted in an executive government dominated by ministers from the two smaller amp parties, Popular Liberation Party (plp) and Kmanek Haburas Unidade Nacional Timor Oan (khunto), despite cnrt being the largest party of the parliamentary coalition. cnrt was frustrated by its lack of access to ministries and had not been satisfied that Prime Minister Taur Matan Ruak—the leader of plp—had adequately pursued this issue with the president. The disjunction between cnrt’s dominance of the parliamentary alliance and its limited presence in executive government was made worse by other tensions internal to amp itself: most notably the general absence from government decision-making of cnrt chairman and former independence movement leader Xanana...