The global recession is wrecking havoc across the developing world, as investors pull their money out of emerging economies and flee to the relative safety of the U.S. dollar. Developing oil producers are particularly hard hit, as the price of their major export has dropped 70 percent in a year. Bizarrely, there’s one big exception to these rules: East Timor, that tiny nation abutting Indonesia like a verdant afterthought.
East Timor, a country of 1 million that borders major undersea oil reserves, expects a 10-percent increase in GDP this year, because the falling price of imported food and other goods is more than offsetting the drop in oil revenues, according to president Jose Ramos-Horta, who won his post two years in the country’s first election (election violence pictured) and survived an assassination attempt last year.
But Ramos-Horta acknowledges the big role foreign aid plays in this predicted growth. Foreign grants comprise a full third of Dili’s billion-dollar federal budget. The country is also spending some of its Australian-administered oil-revenue savings fund. This week, Prime Minister Xanana Gusmao was in Japan to sign deals accepting Japanese capital investment, engineering expertise and police and military training.
For Japan, the world’s second economy, East Timor is a stepping stone to greater direct involvement in world affairs. That’s a role Dili is perfectly happy to play.