After more than two decades of civil conflict under Indonesian occupation, on May 20, 2002, Timor-Leste became an independent nation. In the years of violence that rocked the small country, there were an estimated 100,000 to 250,000 casualties. East Timor had already once declared independence from then-occupier Portugal in 1975 but was subsequently invaded and incorporated into Indonesia as the province of Timor Timur (or East Timor).
In 1999, anti-independence militias killed about 1,400 Timorese and drove 300,000 into western Timor as refugees. By 2005, some refugees had settled in Indonesia or returned and the government currently is continuing efforts to promote resettlement for more of the displaced. During this period, most of East Timor’s homes, schools, irrigation and water supply systems and the national electrical grid were destroyed. In April 2006, the country was again threatened with internal tensions when a violent military strike erupted in Dili. An Australian-led International Stabilization Force (ISF) has been set up in Timor-Leste since, and presidential and parliamentary elections in 2007 were held under largely peaceful conditions. Although in 2008 there was an unsuccessful attack against the president and prime minister, the majority of the rebels have surrendered to the government since.
Timor-Leste is one of the poorest countries in the world. Its income, health and literacy levels are similar to those of countries in sub-Saharan Africa. Unemployment and underemployment are estimated to be a combined 70 per cent while approximately 40 to 50 per cent of the country’s population lives below the poverty line.
Timor-Leste continues to face major challenges. Development of oil and gas resources offshore has created some economic gains for the government but has had minimal impact on job creation because of a lack of facilities in the country. In June 2005, the National Parliament approved the creation of a Petroleum Fund. The fund is a repository for petroleum revenues to preserve the value of Timor-Leste’s petroleum wealth for future generations. Now, the country must find a way to best utilize this fund to boost the rest of the economy and to reduce poverty.
In 2005, Indonesia and Timor-Leste formed a Truth and Friendship Commission (TFC) for reconciliation and diplomacy. Timor-Leste has pursued a foreign policy that seeks relations with a wide-range of countries and organizations including Malaysia, Singapore, Australia, the US, Japan, Portugal and the EU. It joined the UN in 2002 and ASEAN in 2005.