This paper explores the economic reconstruction efforts after the independence of Timor-Leste by the United Nations Transitional Administration in East Timor (UNTAET) and the international community. The author investigated academic journals, modern literature on post-conflict settings, and studies published by the World Bank, the United Nations, and the Australian government. As of 2010, Timor-Leste ranks 147 of 183 countries in the UN Human Development Index; but the author argues, in accordance to recent literature, the situation would have been significantly worse without the extensive foreign assistance Timor-Leste received. The economic reconstruction of Timor-Leste was successful in providing a basic economic system to help it prosper from its growing petroleum industry, but some aspects of the reconstruction failed due to poor funding allocations and miscommunications with the local Timorese.
Timor-Leste gained its independence in October 1999 after a history of violence and occupation by foreigners, but independence was not synonymous with peace and stability. The international community played a large role in reconstructing all aspects of Timorese society after the Indonesian occupation. Indonesia invaded Timor-Leste nine days after the Portuguese fled their colony in 1974. A truth and reconciliation commission conducted by UNTAET estimated that during the Indonesian militarized occupation of Timor-Leste a minimum of 102,800 Timorese conflict-related deaths occurred. The international community allowed the violent occupation due to concerns that the territory would fall to communism.
Following the end of the Cold War, the United Nations, Indonesia, and Portugal created a referendum to decide whether Timor-Leste would remain part of Indonesia or gain independence. On September 4, 1999, UN Secretary General Kofi Annan announced that 78.5 percent of the voters wanted independence. As a result, Indonesian forces and militias within the country killed over 1,000 people and seriously damaged Timor-Leste’s physical infrastructure. Indonesian personnel fled the country leaving Timor-Leste without a functioning banking system, judicial sector, and police force. UNTAET, an Australian multi-national force, stepped in to restore normalcy to Timor-Leste.
Timor-Leste had a history of economic instability and poor growth prior to the violent outbreak in 1999. According to the 1999 UN Human Development Index, Timor-Leste had the lowest ranking standards of living, education levels, and life expectancy in Asia, and was similar to that of Rwanda. The GDP per capita between 1995 and 1999 ranged from $304 to $424; the majority of the population engaged in subsistence-level farming as a means of survival. The Indonesian central government controlled all finance and spending that occurred in the territory without concern for local needs. Therefore, once violence erupted in Timor-Leste, the Indonesian government employees fled,...