I thank the joint committee for inviting us today. I have given the secretariat the full text of my remarks. In my presentation I will be as succinct as possible but I will also be thorough, as this item requires. We welcome the committee's decision to draw up this report. We will continue to work closely with it and are at its disposal and that of its officials for any assistance that might be required with the report.
I intend to outline the development needs and challenges facing Timor-Leste, as well as Ireland's response to them. I will also look ahead to the factors that will shape our policy in coming years. First, however, I will briefly recall the historical backdrop against which we are operating in Timor-Leste.
Timor-Leste was subject to Portuguese colonial rule until 1975. Following a civil war, FRETILIN or the Revolutionary Front for an Independent East Timor declared independence. Indonesia invaded and annexed East Timor in 1975 and it was estimated at the time that up to one third of the pre-invasion population had perished during the resistance. In August 1999 a United Nations supervised referendum took place in which there was a large vote in favour of independence. This was followed by a systematic campaign of violence conducted by pro-Indonesian militias in which the death toll was up to 1,200 people. A total of 70% of all private residences, public buildings and utilities were destroyed. Public services collapsed and more than 75% of the population was displaced. Timor-Leste achieved independence on 20 May 2002. That is the context, with which most of us are broadly familiar.
With regard to development needs, it is important to have a sense of precisely what is required and what are the challenges facing Timor-Leste which is one of the poorest countries in the world, with a GNP per capita of $420, a little more than $1 a day. It is the poorest country in Asia and its human development indicators invite comparison with the poorer African countries. The UNDP’s human development index for 2005 ranks it at 140 out of a total of 177 countries. Ireland is ranked eighth.
What does this mean in practical terms for the people of Timor-Leste? We could offer endless statistics but will not do so. However, there are key indicators which give a succinct picture of what we face. Life expectancy at birth is 56 years; 40% of the population live below the national poverty line, while 48% lack access to a safe water supply. As a new state, Timor-Leste has effectively started from scratch. There was no administration and no institutions to restore. Timor-Leste faces enormous challenges as a post-conflict country in nation building — extreme poverty, high population growth, a weak and stagnant economy, high unemployment, lack of capacity in the public sector and low levels of service delivery in key sectors such as health and education.
What has been our response? The Irish public took a strong and sympathetic interest in Timor-Leste's struggle for independence, due in large part to the efforts of Mr. Tom Hyland and the East Timor-Ireland Solidarity Campaign. That commitment was shared by other NGOs. Ireland played an active role up to Timorese independence. It participated in the UN observer team; a platoon of Irish troops served with the UN peacekeeping mission and it provided humanitarian and recovery assistance. In October 2002 Ireland established diplomatic relations and in November that year a representative office, headed by a development specialist, was established in Dili.
In March 2003 Timor-Leste was designated Ireland's seventh programme country. The current programme country strategy covers the period 2003-05 and has a budget of €11.1 million. Its key components are support for the transitional support programme of the government, capacity building in the public sector, support for local government, promotion of gender equality, promotion of democracy and human rights and sectoral support.
The transitional support programme is the main vehicle of support for Timor-Leste. It allows donor funds to be effectively channelled through the World Bank trust fund to support the implementation of the Timor-Leste national development plan. It focussed initially on the creation of government institutions, a legislative and regulatory framework and the strengthening of public sector management, all key areas in which there is a major lacuna. This has been followed up with a successor programme entitled the "consolidation support programme". In 2005 we allocated €2 million under this heading. The absence of capacity across all the institutions of government is the single most serious constraint facing Timor-Leste. We are supporting capacity building in two ways — through an UNDP programme, which provides advisers to help run government departments and to mentor Timorese officials, and through direct assistance to the capacity building co-ordination unit within the Prime Minister's office. Funds have also been provided for a personnel management information system and a sum of €600,000 was allocated in 2005.
With regard to local government, we have provided assistance for local village councils, elections to these councils and studies on options for the organisation and arrangements of local government in the country. I refer to the promotion of democracy and human rights. We are working with the UNDP to strengthen the justice sector, which is seriously under-resourced, as well as working with civil society organisations involved in human rights education and training. A sum of €300,000 was allocated in 2005. With regard to gender equality, assistance is being provided to the office for the promotion of equality, which is located in the Prime Minister's office. The mandate includes the promotion and mainstreaming of gender in government and a sum of €300,000 was allocated in 2005. In addition, funds are also being provided to Irish NGOs, including Trócaire and Concern under DCI's multiannual programme scheme in respect of their activities in Timor-Leste. In 2004, €280,000 was provided but final figures are not available for this year.
Looking to the future, Timor-Leste experienced an economic boom in 2000 and 2001, which was largely fuelled by the reconstruction activity undertaken by the international community. However, as was expected at the time, GDP declined again in 2002 and 2003 by approximately 6% each year. Growth was modest in 2004 but with estimated population growth at 3%, GDP per capita is still declining and can be expected to decline further. The medium-term prospects for economic growth and development are limited. Offshore gas and oil production is expected to contribute more than $5 billion in revenues over the next two decades but the full impact of this on the economy will not be felt for years. The government has put in place a prudent and well respected savings and expenditure policy based on international best practice. It is the correct mechanism for the management of finite resources and it provides for transparent management and independent oversight while ensuring future generations benefit. Consequently, the challenge of providing the population with sustainable income and of driving the economy in the immediate future will fall to sectors other than oil and gas. Timor-Leste will continue to face a funding gap and will continue to require strong support from its development partners.
DCI's current strategy programme for Timor-Leste expires this year. A stocktaking exercise has concluded that, broadly, the areas supported by the programme are closely aligned to the country's needs and the modalities for its delivery are also aligned to the particular situation of Timor-Leste. Work is under way at official level on drawing up a new country strategy for the period 2006-08. The details are being worked out but the overall thrust at this stage is towards consolidation of the existing programme. The Timor-Leste national development plan will likely remain the main vehicle for DCI support. This ensures our assistance is aligned with the policies and priorities of Timor-Leste, that it is co-ordinated with other donors and that the people of Timor-Leste are in the driving seat regarding their own development, which is an important consideration. Any decision on an increase in the overall allocation must take account of the absorption potential on the ground and the related capacity considerations both here and in Timor-Leste. We will continue to work closely with the authorities and civil society in Timor-Leste to ensure optimum use of Ireland's development support.
The challenges facing the government of Timor-Leste are daunting but considerable progress has been made. The government has made very effective use of the resources and support provided by the international community and the basic institutions of government are in place. The government has given strong leadership. It has put in place a prudent legal framework for oil production and revenues. It is working hard to establish the institutions and machinery of the state and deliver visible improvements in the quality of life of the people of Timor-Leste. However, Timor-Leste is likely to remain dependent on the continued assistance of the international community for a number of years. It is important that the progress achieved so far is consolidated and that it does not diminish before the economy reaches a sustainable growth path. Ireland's support to date is the tangible expression of its commitment to the development of Timor-Leste. Development Co-operation Ireland looks forward to continuing to give effect to this commitment.
We will try to answer any questions posed or give any additional information the Chairman or members may request.