TIMOR-LESTE 2/11: FOURTEEN DAYS LATER

UNCLAS SECTION 01 OF 03 DILI 000061

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR EAP/MTS;BANGKOK PASS A/S HILL AND DAS MARCIEL

E.O. 12958: N/A
TAGS: PGOV PREL TT
SUBJECT: TIMOR-LESTE 2/11: FOURTEEN DAYS LATER


DILI 00000061 001.2 OF 003


Summary

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1. (SBU) Two weeks after the shooting of President Ramos Horta
and the apparent attempted assassination of Prime Minister
Gusmao, Timor-Leste remains calm but fragile. In contrast to
past political crises, Timor's governing institutions have
functioned well in meticulous observance of the constitution and
law. Instead of fighting each other, the military and police
reunited in an effort to track down the February 11 attackers.
But the perpetrators remain at large and heavily armed, and the
rumors and conspiracy theories regarding the events of 2/11
continue to spiral, adding to a sense of instability and
uncertainty. The prime minister both privately and publicly has
conveyed his strong determination not only to bring the
attackers to justice, but also to deal quickly and effectively
with the military "petitioners" and the IDPs to generate
stability and an environment for economic growth. The political
risk associated with Timor-Leste tragically rose on February 11,
and things could still get worse, but the U.S. must maintain our
commitment to this young democracy. Indeed, given the PM's sure
hand after February 11 and the determination of this government
to improve public services and create conditions for economic
and social development, we encourage strengthening our
engagement. End Summary.



[Note: This cable is a sanitized version of a report that we
were unable to transmit on February 25 due to equipment failure.
End Note.]



The Good News

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2. (SBU) During the spring 2006 crisis, virtually all of
Timor-Leste's governing institutions collapsed. The police and
military violently imploded into an internecine feud; senior
officials fled their posts or far worse; the Prime Minister
ignored constitutional provisions and declared a state of
emergency with no ministerial or parliamentary consultation,
backdating the implementing decree when it was finally drafted
several days later. In stark contrast, the current government
in its response to the February 11 events has been meticulous in
following the constitution and law. The Prime Minister,
demonstrating great personal courage, and his ministers quickly
convened the appropriate councils after the attacks of February
11, consulted with parliament, spoke to the public, and
implemented proportionate measures in response. There has been
a strong consensus across the political spectrum in support of
the government's actions to date.




3. (SBU) Further, President Jose Ramos-Horta steadily recovers
in a Darwin hospital. Dili and the remainder of the country
have remained remarkably calm, with even petty crime falling to
record lows. The state of siege that temporarily suspended the
rights of assembly and demonstration, a dusk-to-dawn curfew, the
continued presence of 1500 UN police, and a surge of 200
Australian troops (adding to the 850 already present)
unquestionably contributed to keeping the peace. But so have
Timorese actions. The local military and policy, formerly
deadly rivals, have formed joint operational command to capture
the February 11 perpetrators. All in all, the performance of
the Timor-Leste government has been laudable.



And, the bad news

DILI 00000061 002.2 OF 003



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4. (SBU) Between seventeen and thirty men that participated in
the 2/11 attacks remain at large and heavily armed. The effort
to capture them could be prolonged or go badly. As days pass
without their arrest, the confidence of the public in the
ability of the local or Australian forces to bring them to
justice is undermined, especially in Timor-Leste where taking to
the hills and staging an armed resistance is a revered national
vocation. The actions of the military, both by the close
protection unit assigned to the president and by its leadership
in the aftermath of the 2/11 events, again raise serious
questions regarding the military's coherence, discipline, and
ability to modernize. Finger pointing among the political
leadership regarding security failures on 2/11 is rampant, as is
the generation of conspiracy theories to explain the attackers'
motives and identify their supporters. Major Reinado, the rebel
leader killed on February 11, enjoyed considerable popularity
particularly in the western part of Timor and among unemployed,
disaffected youth in Dili - how his legacy and that of his death
play out once the emergency is over remains to be seen.




5. (SBU) More broadly, the 2/11 events, the extended state of
emergency, the sense of insecurity and instability - all these
can only further harm Timor-Leste's reputation and raise its
political risk to potential, much-needed investors. The
unresolved crisis threatens to distract the PM and his cabinet
from other immediate priorities stemming from Timor's last major
crisis in 2006, such as resettling the IDPs and resolving the
issues surrounding the military "petitioners," with whom Reinado
was once aligned. Promising efforts aimed at political
reconciliation among ruling and opposition parties, and among
key political leaders, to end their endless bickering - cited by
many Timorese as a major source of instability - were stalled
when their architect, Jose Ramos Horta, was shot. Finally, the
government faces the urgent task of improving its delivery of
public services and investment, and tackling the enormous
challenge of creating jobs and boosting economic growth.
Timor-Leste remains an exceptionally poor country, with razor
thin managerial capacity; astonishingly high unemployment/child
mortality/illiteracy rates; soaring youth unemployment;
explosive demographics as the population grows by 4% annually;
breathtakingly poor infrastructure; inadequate rule of law and
incomplete property rights; and, except for oil and coffee
exports, no meaningful connection to the regional or global
economy.



U.S. support welcomed

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6. (SBU) According to Prime Minister Gusmao, President Bush's
rapid condemnation of the attacks gave him and the country
strong moral support. In this vein, we should continue to
assist the GOTL in dealing with the present crisis, especially
to keep its focus on resolving the two immediate sources of
political instability, the petitioners and the IDPs. The Prime
Minister reassuringly told us on February 25 that he had three
priorities: bringing the armed men that attacked the president
to justice, moving quickly to resolve the petitioners'
grievances, and resettling the IDPs.



Time for increased U.S. engagement

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7. (SBU) As we have in the past, the U.S. also should stand
ready to provide tangible assistance. The quick assignment of
three FBI agents to Dili last week to assist in the criminal
investigation of the February 11 attacks received universal
praise from among Timor's leadership (and newspaper headlines
with what seemed to be 100-point fonts). Locally, we just
launched two USAID programs that address causes and consequences
of the 2006 crisis. One, designed to extend full property
rights, will tackle both a key issue to resettling the IDPs and
put into place the basis for a sound investment environment.
The other will provide job skills and employment to thousands of
youth in the districts. But much more can be done. We strongly
encourage the Millennium Challenge Corporation to engage as
expeditiously as possible with GOTL to improve policy
performance and negotiate a compact (building out the national
road network is a compact possibility; if undertaken, it would
have vast economic benefits, including for Timorese farmers
currently unable to bring their produce to market, and create
much needed employment). We look forward to working with S/CRS
and PACOM in developing a U.S. contribution to resettling IDP
camp members, perhaps in the form of housing. We are poised to
increase our engagement with Timor's security institutions to
support their professionalization. Finally, we urge the Peace
Corps not/not to terminate their program - to do so now would be
a sharp, gratuitous blow to the Timorese leadership that would
needlessly undermine their confidence in the U.S. commitment
(note: in my first meeting with the PM and Foreign Minister last
August, both had a quick resumption of the Peace Corps program
at the top of their agenda).




8. (SBU) The events of February 11 tragically reminded us of
the frailty of the Timorese democratic experiment. The risk of
collapse rose that day, as did the specter of a failed state
sandwiched between our ally Australia and partner Indonesia.
Fortunately, Timorese institutions held on February 11, although
this is not necessarily a reliable predictor of future behavior.
It is in our interest, therefore, to support those leaders
seeking to steer this country towards a democratic, peaceful and
prosperous future. Together with Timor's democratic partners
and the UN, we must step up our engagement to support these
goals, and use our resources most effectively across the board
to assist this young democracy onto a path of sustainable social
and economic development.
KLEMM