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World's Newest Country Must Remain Debt-Free

The World's Newest Country Must Remain Debt-Free! East Timor's May 20 Independence Threatened by Donors' Economic Chains

Act NOW to Support Real, People-Centered Development On May 20, East Timor will celebrate its first Independence Day. But the jubilation may be short-lived. A lack of funds could stand in the way of East Timor's commitment to use future revenues to secure healthcare and education for its people rather than to service a debt to wealthy states and financial institutions. The East Timorese government has joined with civil society in making poverty alleviation its highest priority. Top officials have publicly affirmed their determination to avoid the debt trap faced by so many countries in the Global South, and a "no loans" policy has been put into place.

The challenge is that the nascent government faces an estimated US $154-$184 million shortfall in its already lean budget for the first three years of independence. Compared to the US military budget, this sum is peanuts; the U.S. pays more for one F-22 fighter plane. But for East Timor, it could represent the difference between "life and debt." Activists have a unique chance to take preemptive action - to prevent the stranglehold of structural adjustment, loans, and the vicious cycle of poverty from putting its deadly grip on the new country.

On May 14 and 15, donor countries and international financial institutions (IFIs) will hold a pledging conference to cover the financing gap in Dili, East Timor's capital. With concerted grassroots pressure from within the U.S. and other countries, we can make sure that grants with no strings attached cover the gap in its entirety. Otherwise, East Timor may have no choice but to resort to loans with terms dictated by the IMF, World Bank, and Asian Development Bank. We must not let this happen.

WHAT YOU CAN DO - Call, fax, and email your Senators, Representative, and Deputy Secretary of State Richard Armitage.

Tell your Senators and Representative - The U.S. government should build on its recent support for East Timor by helping to meet its short-term budget gap. - The U.S. should not allow East Timor to go into debt immediately after independence. With their country devastated by Indonesian occupation, the East Timorese are among the poorest on the planet. They should not be forced to choose between feeding the hungry and servicing a debt. - East Timor represents the first chance for both the administration and Congress to put statements about global eradication of poverty into action by taking preemptive measures. The U.S. government should make the most generous donation possible at the May pledging conference in East Timor, funding at least 25% of the expected financing gap in East Timor's recurrent and development budget. Grants must not be tied to the crippling conditions of structural adjustment. - The Senator/Representative should use every opportunity to ensure this by (1) voicing this most important concern to Deputy Secretary of State Richard Armitage by phone or letter; and (2) working with other Members of Congress to attain the necessary funds through appropriations and/or State Department monies.

Phone calls and faxes are generally more effective than emails. The congressional switchboard number is 202-224-3121, or check on the Internet for fax or e-mail information.

Tell Deputy Secretary of State Armitage: - The U.S. government should build on its recent support for East Timor by helping to meet its short-term budget gap. The U.S. should not allow East Timor to go into debt immediately after independence. With their country devastated by Indonesian occupation, the East Timorese are among the poorest on the planet. They should not be forced to choose between feeding the hungry and servicing a debt. - The administration has recently emphasized the importance of poverty eradication and the futility of the world's poorest countries drowning in debt. East Timor represents the first chance for the administration to put their words into action and take preemptive measures. - The U.S. government must pledge to finance at least 25% of the needed funds to cover East Timor's expected financing gap at the May donor conference in East Timor. The pledge must come without the crippling conditions of tructural adjustment. - Senior administration officials must work with colleagues both within the US government and the governments of East Timor's donor countries to ensure the entire financing gap is funded with unconditioned grants.

Contact for Armitage: tel:202-647-9641, fax:202-647-6047

Time is not on our side. We only have a few weeks left to exert public pressure. Please make these calls today!

Please let us know the results of your contacts. Thank you! Your efforts do make a difference!

BACKGROUND The courageous people of East Timor paid a terrible price for their freedom. Many powerful nations actively supported the Indonesian military occupation that killed one-third of the population between 1974 and 1999, "investing" in East Timor through weapons sales to Indonesia. The U.S. government, the largest supporter of the Indonesian military, supplied the military with 90% of the weapons used during the 1975 invasion of East Timor followed by well over a billion dollars worth of military assistance and weapons sales throughout the occupation. In 1999, Indonesian security forces and their militia proxies violently retaliated after the East Timorese opted for independence in a UN-sponsored referendum. Troops destroyed 75% of the already poor country's infrastructure, displaced two-thirds of the population, raped hundreds of women and girls, and killed some 2,000.

Centuries of Portuguese colonial rule and 24 years of brutal, illegal Indonesian military occupation have made East Timor one of the poorest places on the planet. East Timor has a 60% illiteracy rate, a per capita gross national product of $340, and a life expectancy of only 48 years. The infant mortality rate is 135 per 1000 live births, and the maternal mortality rate is twice that of other countries in Southeast Asia and the Western Pacific.

The Bush administration and other governments have recently stated their commitment to eradicating global poverty. The U.S. now advocates that a large portion of international assistance to poor countries should come in the form of grants. President Bush must put his money where his mouth is and help East Timor embark on its new nationhood free of debt and without crippling structural adjustment conditions. Worldwide poverty and inequality within and between countries have increased throughout the era of structural adjustment. The people of East Timor have only to look to their neighbor Indonesia for a good example. Unfortunately, IFIs and the U.S. leadership appear to be ignoring these lessons. In doing so, they are doomed to repeat failed policies and practices, and it will be the East Timorese people who suffer. At the UN International Conference on Financing for Development in March, the U.S. continued to insist on tying money for poor countries to the stranglehold of structural adjustment. Unless those mobilized for global justice and debt cancellation rally in support of a debt-free, structural adjustment-free East Timor, the people of the world's newest country may be subjected to a new form of economic colonialism.


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