World Bank reconstruction role in Timor-Leste creating problems

31 January 2007 | Guest comment

versión en español

The World Bank came to Timor-Leste in 1999, when the UN was still planning the intervention mission. The lack of attention given by the UN Transitional Administration in East Timor to economic development allowed the Bank to assume a central role. After the end of mass violence, the Bank and Fund visited Timor-Leste and conducted a joint assessment mission. This was done with little consultation with the Timorese people. The mission report was submitted to the donors’ conference in Tokyo in December 1999, and was to determine reconstruction and development plans.

There were several roles played by the Bank in the reconstruction and development effort in Timor-Leste:

  • through its supervision of the Trust Fund for Timor-Leste (TFET), the Bank funded agriculture, health, and education. Most donors preferred to channel their assistance through TFET because it was easier for them to control how the money was used. By the time it finished in 2006, TFET had channeled $178 million, approximately ten per cent of total donor support to the country.
  • the Bank administered the health fund, provided by the European Commission, through which it could influence health policy;
  • the Transitional Support Program (TSP), created by the donors to assist Timor-Leste’s post-independence government, required it to submit its plans and timeframes to Bank approval; and
  • advisers from the Bank were placed within key ministries, such as petroleum and natural resources, and planning and finance.

The presence of the Bank and other IFIs should be critically examined. When the Bank assumed its central role in the reconstruction and development of Timor-Leste, most local people had no idea about the Bank, its roles, background, and its experience in other countries. Initially, Timor-Leste was not a member of the World Bank or IMF, only joining in 2002. But of course Timor-Leste’s voting power in the Bank is far too low to influence its decisions.

Although the terminology of transparency, accountability and participation have become the religion of the World Bank, the concepts are not reflected on the ground. The Bank has no proper mechanisms to be accountable to local people, only those to be accountable to the donors. The Bank doesn’t even have an office in the rural area, where more than 80 per cent of Timorese live. While the Bank produces a lot of documents, they are not accessible for local people, due to both language problems and the use of jargon.

In the agricultural sector, the Bank programme has been criticised for destroying traditional forms of production and exchange. Under the Agriculture Rehabilitation Project, the Bank created the Pilot Agricultural Services Centre (PASC). However, the objective of the PASCs was to enforce the introduction of a market economy. Traditionally, Timorese farmers have lived outside the monetised economy, using non-currency forms of exchange such as bartering. The Bank has encouraged Timorese farmers to adopt export crops such as coffee, allowing labour-intensive staple crops such as rice to be replaced by cheaper imports. This raises serious concerns both about unemployment in the agricultural sector and long-term food security.

The Bank’s Community Empowerment Project aimed to establish transparent, democratic, and accountable local structures in rural areas to make decisions about development projects in a decentralised fashion. However the programme conflicted with traditional structures.

Even though the Bank argues that its presence has reinforced the position of the government, the reality is that is has subordinated and marginalised it. Most of the Bank’s programme does not involve the government in the decision-making process, undermining the accountability of democratically elected representatives. In the end, the Bank’s presence has created problems rather than solving them.