East Timor

USAID Program Description and Activity Data Sheets

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USAID Program USAID's goals during the critical initial phase of East Timor's recovery and reconstruction are to: (1) quickly restore and expand productive economic activity and exports in the coffee sector; (2) enable key indigenous civil society organizations to participate as equal partners in relief, reconstruction, and nation building activities in East Timor; (3) support community-led reconstruction, development, and employment projects; and (4) help build the foundation for stable democratic development through efforts such as development or revival of independent media outlets; and demobilization and reintegration of pro-independence militia. In the initial phases of East Timor's recovery and reconstruction, the East Timorese expressed their displeasure with being excluded from decision-making about the planning for the territory's future. USAID's Office of Transition Initiatives (OTI) stepped in with a series of small grants to East Timorese organizations, including liaison units, human rights groups and other local NGOs, that enabled these organizations to restart their operations and begin to engage directly with foreign donors on reconstruction and development issues. Now the highest priority in this transition phase is to help the East Timorese revive productive economic activity and begin to rebuild their economy and communities. These are areas in which USAID's resources will be concentrated. In partnership with broader employment programs of other donors, OTI will provide quick impact assistance that will help spur the creation of much-needed employment opportunities, such as a small grant to a vocational school to restart it operations. In addition, USAID will continue its support for the National Cooperative Business Association (NCBA). The re-launch of the successful coffee cooperative project, and its gradual expansion form 17,000 to 40,000 farm families, will be an important step in spurring East Timor's economic recovery. Coffee is one of the few cash crops and foreign exchange earners in East Timor and represents the primary source of income for a large number of small farmers. In addition to coffee production, NCBA is planning to establish a finance project for small business, business training, and a retail cooperative. It is also rebuilding its health program, reestablishing three rural clinics and laying the groundwork for an expansion to include three more. Taken together, the health program will enable NCBA to provide immunizations, public health, family planning services, and outpatient health care to families living in the coffee production areas. In the absence of a civil administration (other than the United Nations Transitional Administration in East Timor, UNTAET), local communities in East Timor will have to assume greater responsibility in the recovery and development of their communities. Through USAID's Office of Transition Initiatives (OTI), support will be provided for community-led empowerment and development projects in East Timor. Through these projects, communities are integrally involved in prioritizing their needs, participating in decision-making to allocate donor resources to meet those needs, as well as the actual implementation of projects funded. These programs also foster participatory processes and democratic principles at the community level and offer opportunity for new, grass roots political leaders to emerge. Other donors such as the World Bank and UN plan to undertake similar programs in this sector. OTI's "jump start" activities would then feed into longer term initiatives of these other donors who need a much longer lead time for start-up. Although the priority for USAID assistance is economic and community revival, USAID, through OTI, will consider providing selective support to help build the foundation for stable democratic development through efforts such as development or revival of independent media outlets and demobilization and reintegration of pro-independence militia. At this stage of East Timor's recovery and reconstruction, it is impossible to predict the pace or success of change. Consensus on future directions for the new nation must be built among players who, in the past, may have been on different sides of the independence issue. Donor assistance is notoriously slow to move, yet East Timor's recovery is heavily dependent on speedy and effective mobilization of such assistance. And last but not least, militia activity and resolution of refugee issues continue to pose major threats to recovery, stability and development of East Timor. Because of the high degree of uncertainty introduced by these factors, USAID's programs and plans will remain focused yet flexible in order to ensure our assistance remains relevant as East Timor's needs evolve. ACTIVITY DATA SHEET PROGRAM: East Timor TITLE AND NUMBER: Revitalization of the Local Economy - 472-001 STATUS: New PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $18,100,000 ESF PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $10,000,000 ESF INITIAL OBLIGATION: FY 2000 ESTIMATED COMPLETION DATE: FY 2003 Summary: East Timor, a small mountainous territory, has long been one of the poorest regions in Southeast Asia. The economy is primarily agricultural, contributing the largest share to GDP, employing almost three quarters of the workforce, providing more than 70% of the population with their main sources of livelihood and offering the greatest potential for exports and trade. East Timor's rugged erosion-prone terrain, poor soils, and varying (often-unpredictable) rainfall have always presented challenges to agriculture. Approximately 30% of households live below the poverty line, life expectancy is 56 years, and only two out of five people are literate. While humanitarian assistance is indispensable in the short-term to mitigate the hardships and facilitate the reintegration of persons displaced in the aftermath of the post-referendum campaign of terror and violence, it is important to move beyond relief to restarting economic activities. Restarting economic activity will help avoid dependency on donor programs and focus societal efforts on reconstruction rather than on past conflicts. Since the Portuguese presence in East Timor, coffee has been the main income earner for farmers. Through the end of FY 1999, the National Cooperative Business Association (NCBA), working closely with some 17,000 coffee farmers (roughly 10% of the population) established a cooperative network of small-scale coffee-growing families (more than 100,000 persons) producing specialty coffees for export. Since 1994, this program which includes production training and extension services as well as the development of processing, transport and warehousing facilities, has become the area's largest single non-governmental agriculturally based income-generating activity. From the outset, program field staff reported the poor health conditions of the rural population and cited the lack of health care and health maintenance services as serious impediments to sustainable development. As a result, in July 1998 USAID provided additional funding for NCBA to initiate the "Health Maintenance and Health Care (HMHC) in East Timor" activity. HMHC has begun to provide basic health services to the rapidly growing number of coffee producing families affiliated with the NCBA's Indonesia Enterprise and Trade and Development Project (IETDP). By meeting a minimum delivery level of coffee cherry to the program's processing enterprises, the costs for health services are covered through a deduction from a small percentage of the margins paid to farmers on their coffee sales. Coffee farmers and their families are then eligible to access health services, including prenatal care, well-baby check-ups and vaccines, deliveries attended by trained health care providers, micronutrient supplementation for pregnant women and newborns, and treatment for malaria and tuberculosis. During the devastating events of August and September 1999, coffee producers were killed and thousands of participating families were forced to flee their villages and their homes burned, resulting in a temporary suspension of the NCBA program. The NCBA/IETDP program has begun to rebuild and continues to represent the single most important means of providing immediate assistance and income-generating opportunities to a large portion of East Timor's farm families. The second prong of USAID's efforts to revitalize economic activity in East Timor will be through a community-led empowerment and development program. In the absence of a civil administration (other than the United Nations Transitional Administration in East Timor, UNTAET), local communities in East Timor will have to assume greater responsibility in the recovery and development of their communities. Through USAID's Office of Transition Initiatives (OTI), support will be provided for community-led empowerment and development projects in East Timor. Through these projects, communities are integrally involved in prioritizing their needs, participating in decision-making to allocate donor resources to meet those needs; as well as the actual implementation of projects funded. These programs also foster participatory processes and democratic principles at the community level and offer the opportunity for new, grass roots political leaders to emerge. Other donors such as the World Bank and UN plan to undertake similar programs in this sector. OTI's "jump start" activities would then feed into longer term initiatives of these other donors who need a much longer lead time for start-up. Key Results: The NCBA project will be expanded to include an additional 5,000 farmers each year. The maximum number of coffee farmers, which could be reached by the project, would be close to 40,000. Assuming some 20,000 people involved seasonally in the coffee trade, a total of over 240,000 people will benefit from the expanded project. Performance and Prospects: This strategic objective will stimulate economic growth. Coffee exports, which earn dollar revenues, accounted for half of agricultural revenues prior to the conflict. Production, primarily of a high quality Arabica hybrid variety organically grown in the upland areas of central East Timor, increased substantially and became a major income earner for smallholders. Coffee is one of the few cash crops and foreign exchange earners in East Timor and represents the primary source of income for a large number of small farmers. From the smallholder producer level through the intermediary and final crop processing and storage levels, the coffee sector has survived nearly intact. The violence that occurred after the harvest did not affect the basic production regimen employed by East Timor's small holders. Rehabilitation and expansion of the successful coffee cooperative project has already begun. NCBA has integrated business education and training into its project by providing apprenticeships and starting a business school that provides a three-year Bachelor of Arts program in business, accommodating 400 students. While coffee represents the only viable commercial operation at this time, it is recognized that diversity is a must if the economy is to grow. The business school will contribute to the strengthening of the capacity of small entrepreneurs to speed East Timor's economic recovery. Through purchasing cooperatives, NCBA will provide credit and training for small-scale and micro-entrepreneurs. The coffee project integrates community health maintenance and health care services into other facets of the project. Eventually to provide basic health services to 17,000 families participating in coffee cooperatives, the program has already established three clinics in rural coffee-growing areas. It expects to set up three more in the next year. These were also the first health clinics that charged for services, an important example for future sustainable health programs in East Timor. Possible Adjustments to Plans: The fragility of the operating environment for development and possibility of instability in the near-term might slow project progress. Other Donor Programs: In December 1999, over 50 countries and international agencies met in Tokyo and pledged $522 million in bilateral and multilateral development and humanitarian assistance over the next three years. Donors agreed to contribute to two trust funds - a World Bank-administered trust fund for reconstruction projects in all sectors and a second trust fund administered by the United Nations Transitional Administration in East Timor (UNTAET) for the costs of governance and projects that will build the capacity of the East Timorese to play a lead role in governance and guiding the future direction of the new nation. Decisions regarding the use of both trust funds will be undertaken in collaboration with a newly established consultative council of East Timorese representatives. The trust funds are supplemented by bilaterally funded activities in various sectors. Concerted attention to donor coordination will be essential for effective utilization of assistance to address East Timor's vast development needs. Principal Contractors, Grantees or Agencies: USAID will work primarily with the National Cooperative Business Association and local private voluntary organizations (PVOs) and contractors to implement activities in support of this strategic objective. Selected Performance Measures: Baseline (1999) Target (2000) Target (2001) Number of farmers employed by NCBA 17,000 22,000 27,000 Number of health clinics established 3 5 6 Number of retail outlets established by small-scale enterprises 0 75 150 Development of a more comprehensive performance monitoring plan will be an integral part of design efforts for new activities. U.S. Finance Table (Microsoft Excel) ACTIVITY DATA SHEET PROGRAM: East Timor TITLE AND NUMBER: Selected Development Needs Addressed, 472-002 STATUS: New PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $6,900,000 ESF PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: -0- INITIAL OBLIGATION: FY 2000 ESTIMATED COMPLETION DATE: FY 2002 Summary: East Timor faces a very serious challenge. At issue is not only the massive physical destruction but the social trauma wreaked after the ballot. East Timor lacks the institutional capacity necessary for a nation state. Major investments and reform programs are needed. This Special Objective is comprised of selected activities that support the reconstruction effort of East Timor and compliment the mainstream activities of the primary USAID program. Given the vast reconstruction and development needs to build a sustainable nation state in East Timor, it is crucial for donor assistance to work together in a coordinated and comprehensive manner to tackle these needs. The Joint Assessment Mission (JAM) to East Timor, coordinated by the World Bank, was endorsed at a meeting of donors, UN agencies and East Timorese representatives in September 1999. Early deployment of the mission was driven by lessons of other post-conflict countries, where the lack of coordination between relief and development planning delayed the transition from emergency relief to more sustainable development support. The JAM identified priority short-term reconstruction initiatives and provided estimates of external financing needs. Among its recommendations was the establishment of two trust funds to facilitate a coordinated donor approach to supporting East Timor's recovery and reconstruction. The World Bank administered trust fund will finance reconstruction activities in economic management, health, education, community empowerment, agriculture, and infrastructure. UNTAET and East Timorese representatives will be responsible for prioritizing, approving, and implementing projects. A second trust fund, focused on governance and capacity-building, will be administered by UNTAET. This trust fund will be used to ensure that basic public services continue and that East Timorese develop the skills to provide them. Most of the trust fund will be used to directly benefit East Timorese by paying salaries for public workers, most of them teachers and health care workers. UNTAET will also use the funds for democracy and governance projects. In supporting both trust funds, the U.S. Government will help strengthen overall coordination of the international reconstruction effort in East Timor. A high degree of donor coordination is vitally important to reducing duplication of effort and gaps between projects and for facilitating the involvement of East Timor's leadership in the decision-making regarding uses of donor funds. In addition to the U.S. Government's contribution to the above trust funds, the Department of State will provide assistance in judicial training, institution building, and promotion of the rule of law. At present, there are only five certified lawyers in East Timor, and only 60 people with any minimal legal training. Assistance would include training of judges and prosecutors, help in revising the legal code, and assistance in thinking through the judiciary's role within the governmental structure as an independent arm of the government. There is also an urgent need for human rights training and forensic assistance. The East Timorese who are responsible for investigating and documenting past human rights abuses lack a basic understanding of how to conduct such investigations, have little access to forensic expertise and possess little to none of the specialized equipment. In addition to financing the foregoing, the Department of State will assist the East Timorese to monitor current human rights abuses, e.g., establishment of a human rights ombudsperson, and to prevent future ones. Key Results: The Department of State will develop a performance monitoring plan that will establish key results anticipated under this strategic objective. Possible Adjustments: None. Other Donor Programs: In December 1999, over 50 countries and international agencies met in Tokyo and pledged $522 million in bilateral and multilateral development and humanitarian assistance over the next three years. Donors agreed to contribute to two trust funds - a World Bank-administered trust fund for reconstruction projects in all sectors and a second trust fund administered by the United Nations Transitional Administration in East Timor (UNTAET) for the costs of governance and projects that will build the capacity of the East Timorese to play a lead role in governance and guiding the future direction of the new nation. Decisions regarding the use of both trust funds will be undertaken in collaboration with a newly established consultative council of East Timorese representatives. The trust funds are supplemented by bilaterally-funded activities in various sectors. Concerted attention to donor coordination will be essential for effective utilization of assistance to address East Timor's vast development needs. Principle Contractors, Grantees, or Agencies: UNTAET, World Bank, the Asian Development Bank Selected Performance Measures: The Department of State will develop indicators for, and report on, forensics and human rights assistance, judicial training and rule of law. When plans for utilization of the UNTAET and World Bank trust funds have solidified, the Department of State will submit a separate Congressional Notification providing a full description of this program, indicators, benchmarks, and targets. U.S. Finance Table (Microsoft Excel)

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