East Timor used to be part of Indonesia. Most Indonesians consider the establishment of East Timor in 2002, as nothing less than foreign interference and stealing of part of Indonesia. Australian soldiers led the peacekeeping force during this operation, and Indonesians hold Australia largely responsible for this "land grab". The rest of the world accused Indonesia of atrocities in their brutal treatment of the population in East Timor, beginning when Indonesia took over the province after the Portuguese colonial government left in the 1970s (and East Timor's declaration of independence was ignored). But East Timor was always a very poor and small (1.1 million people) part of Indonesia and is an even more poverty stricken independent nation. East Timor is propped up by foreign aid and growing business with neighboring Indonesia. Foreigners and Indonesians are finding that bribe money goes a long way in East Timor. But the corruption also means less effective government and less economic growth.
Indonesia has largely adjusted to losing East Timor, a province that never really fit in. That was because largely Malay and Moslem Indonesia was dealing with Melanesians (similar in appearance to Australian aborigines) who were mostly Christian. The Melanesians and Malays never really got along, as can be seen by the continued problems Indonesia is having with the largely Melanesian provinces in Papua (the western half of New Guinea). Indonesia is determined not to lose Papua, the way they did nearby East Timor. Papua is much larger and populated with more of a less-educated population with a more tribal Melanesian culture. As Papuans gain more education and political skills, Indonesia will have more difficulty holding onto the place. At the moment, the government is trying to tag the separatists as violent. But the evidence for this is often murky and the Indonesians security forces have often carried out secret attacks and tried to blame then on someone else.
In East Timor the local police force (some 3,000 locally recruited and trained personnel and 1,500 UN police advisors and instructors) have, over the last three years, taken over responsibility for security throughout the country. There are doubts that the police are yet professional enough to be left on their own. The government has little income to speak of and depends on foreign aid to meet the payroll and keep the lights on. The economy is minimal and unemployment was over 30 percent until the development of the gas fields began. The rate has since declined to about 20 percent but there are the usual problems with putting the gas income to good use and not seeing most of it stolen by government officials.
The major problem in East Timor is that some 20,000 young men are part of over a hundred tribe and clan based gangs. The high unemployment, and concentration of so much of the population in urban areas, makes it easy for these gangs to form. The gangs generate a lot of crime, both against other gangs and ordinary citizens. The government is corrupt, with the politicians stealing much of the foreign aid and now the growing funds from oil and gas fields as well. A decade ago about a third of the half million population was living below the poverty level. Despite GDP more than doubling in the past six years, there has been little change in the poverty rate. That’s because the GPD increase largely came from the development of off-shore natural gas deposits. The gas is mostly exported and the income is not having a major impact yet, if ever. East Timor is turning into an economic basket case despite all the natural gas income. The government is trying to get some economic growth going, using some of the gas money. So far, there has not been much progress. Meanwhile the population keeps growing rapidly while the economy does not.
East Timor ranks 143 (out of 176 countries) on international corruption surveys. East Timor rose in the rankings this year but that was due to a statistical quirk, not because there was less corruption in East Timor.