Following a UN supervised referendum in 1999 Timor-Leste has emerged sovereign in 2002 after a 24 year struggle for independence from Indonesia. Since then the country has made remarkable steps in nation building; however, political stability remains an issue. Acknowledging this situation, the European Commission has included Timor-Leste in a pilot initiative targeting countries in a situation of fragility. Timor-Leste is among the poorest countries in the world. The economy is mainly agriculture-based and suffers from low productivity and insufficient diversification. However, the country's significant off-shore oil and gas reserves may offer Timor-Leste a credible economic potential. The country's main development challenges are widespread: structural poverty, particularly in rural areas, low life expectancy, high adult illiteracy rates, very high population growth and a lack of sanitation and potable water, especially in the rural areas. In this context, a key challenge is to manage the oil and gas revenues to alleviate immediate social problems and to develop a sustainable non-oil economy. With substantial donor support the country is building up its institutions and progress is being recorded, especially in the overall functioning of the Ministry of Finance. It is however recognised that it will take time to achieve sustainability due to the severe shortage of qualified nationals.
The Country Strategy Paper for Timor-Leste (2008-2013) presents the strategic framework for cooperation between the European Commission (EC) and Timor-Leste under the 10th European Development Fund (EDF). EC assistance under the 10th EDF will concentrate on sustainable rural development, health and institutional capacity building. In addition, an allocation is foreseen to foster cooperation among ACP Portuguese-speaking countries and to support Non-State Actors.
The EC's total allocation (2008-2013) foreseen for Timor-Leste to address these priorities amounts to €81 million. An additional €1.1 million is set aside for unforeseen needs. Support through the Instrument of Stability is also provided, as well as under other budget lines (e.g. food security).
All EU projects in Timor-Leste are also addressing cross-cutting issues, notably gender equality, the promotion of human rights, children's rights, the rights of indigenous people, environmental sustainability as well as combating HIV/AIDS (although this is not yet a major problem).
Following the initial emergency phase between 1999 and 2002, EC support focused on humanitarian assistance (€145 million), rural development (€34.5 million), including rural infrastructure and rural employment generation, and health (€24.5 million). The Country Strategy Paper for Timor-Leste (2006-2007) under 9th EDF funding gave priority to rural development (€10 million) and capacity building (€8 million). The EC's ongoing Rural Development Programmes focus on sustainable agriculture production, diversification and rural infrastructure rehabilitation.
The Delegation of the European Union in Timor-Leste is spearheading an enhanced cooperation mainly with the EU Member States active in the country (Portugal, Ireland, Germany, Spain, Sweden, France), aiming at an eventual joint programming (tentatively envisaged for 2014). Cooperation with Australia, the biggest by far Donor to Timor-Leste, and Brazil, as well as with the World Bank is actively pursued.
Whereas Timor-Leste has made a strategic decision to join ASEAN by 2012, it is eligible to participate in the 10th EDF Regional Programme for the Pacific. To this effect, the EC Delegation is facilitating the contacts between Timor-Leste and the Pacific regional organisations concerned in order to assist the country derive maximum benefits from the regional programme.
Also, the country is a member of the PALOP (Portuguese speaking ACP countries) group and can benefit from the relevant programme under the 10th EDF.
Other sources of information
The Directorate-General for Development is responsible for drawing up the cooperation strategy with Timor-Leste.
More information on past EU relations with Timor-Leste is available on the pages of the Delegation of the European Union to Indonesia, which was, until early 2008, also responsible for co-operation activities in Timor-Leste.
Updated information can be obtained from the Delegation of the European Union in Dili: firstname.lastname@example.org.
Information on trade relations in the ACP region can be found on the website of the Directorate-General for Trade.