>X-Mailer: Microsoft Outlook Express Macintosh Edition - 4.5 (0410) >Date: Mon, 31 Jan 2000 21:55:31 -0100 >Subject: Dollarisation in East Timor >Reply-To: [EMAIL PROTECTED] > > Source: World Socialist Web Site (http://www.wsws.org) > > Comrades were recently discussing the possibility of a radicalisation of >the East Timorese masses and even the establishment of a workers' state in >East Timor; possibly we could get a mass reaction against the invasion of US >capital there. We all know how the Ecuadorian people reacted to >"dollarisation"... > >---- >WSWS : News & Analysis : Asia : Indonesia & East Timor > >US dollar to be official currency in East Timor > >By Mike Head >31 January 2000 > >Back to screen version > >The UN Transitional Administration in East Timor (UNTAET) announced last >Monday that the US dollar would be the official currency of the former >Portuguese >colony and Indonesian territory. As a result, government transactions must >be conducted in dollars for at least the two to three years of UNTAET's >expected rule. > >Private contracts may still be executed in any currency, but civil service >wages, taxes and other payments owed to any public authority must be in US >dollars. The >former official currency, the Indonesian rupiah, may be used to make such >payments temporarily, subject to a yet-to-be-determined transaction fee. > >UNTAET said the move had been adopted by the 15-member National Consultative >Council (NCC), which includes seven representatives of East Timor's >nationalist >coalition, the National Resistance Council of East Timor (CNRT). The >announcement was followed by a joint news conference of officials from the >UN and the >CNRT. > >A senior CNRT figure, Joao Carrascalao, president of the Timorese Democratic >Union (UDT), was anxious to dispel the impression of a complete lack of >economic >sovereignty. "It was a unanimous decision by the UN and the CNRT," he said, >without "any pressure" from the UN or the International Monetary Fund. He >admitted, however, that the choice of the dollar would make the creation of >a future local currency "more difficult" because it would have to be "at >least as strong" as >the US currency. > >Despite Carrascalao's assurances, remarks by IMF representatives in East >Timor point to definite pressure from the US-based institution. Luis >Valdivieso, the head >of the IMF office in Dili, said use of the dollar could avoid potential >problems associated with the Portuguese escudo, the currency previously >favoured by many >CNRT leaders. As one of these problems, Valdivieso mentioned the escudo's >future absorption into the euro, the currency of the European Union. > >Valdivieso added that if the country started with the dollar it could stay >with it, suggesting that the decision would not be a temporary one. He >indicated that one of >the primary factors in adopting the dollar had been the territory's >desperate dependence on IMF funds, foreign aid and investment. "I think the >main consideration >has been one of pragmatic consideration given the fact that it is urgent now >to receive the payments on execution of the budget." > >In the lead-up to the UN decision, an IMF economist, Luis Mendonca, had >publicly opposed use of the rupiah or the escudo. Without waiting for the >official >announcement, he declared that the rupiah-whose value collapsed in the >financial crisis of 1997-was too unstable for East Timor's use. As for the >escudo, it >"really doesn't exist. It is just a division of the euro." > >The decision makes a mockery of claims to national self-determination. In >effect, the half-island's currency will now be controlled by the United >States Treasury. Its >decisions on money supply, interest rates and other economic policies will >determine the currency's value, dictate the territory's terms of trade and >largely shape the >direction of the economy. > >Given the close ties between the IMF and the US government, it is >inconceivable that the Clinton administration did not support and approve >the UN decision. In its >media statement, UNTAET admitted that the governments of the US and Portugal >had been informed in advance. > >The decision provoked ructions within the CNRT, which is an amalgam of >formerly pro-independence, pro-Portuguese and pro-Indonesian groups. An >unnamed >CNRT source told a Reuters correspondent that the move was an affront to the >CNRT. "We believe the national currency should be an affirmation of >independence >and sovereignty," he said. "Having the US dollar as legal tender will make >our dream of adopting the escudo just a dream." > >To associate the Portuguese currency with independence and sovereignty only >underscores the fraudulent character of the CNRT's claims that the formation >of a >statelet in the tiny territory can free the Timorese masses from colonialism >and exploitation. Portugal plundered East Timor for more than four >centuries, leaving it in >1975 as one of the most impoverished enclaves in the world. Portuguese >authorities revived their colonial claims in the late 1980s following the >discovery of huge oil >and gas deposits in the Timor Sea. > >The dollar decision will fuel tensions between the US, Portugal and other >economic powers over the future of the strategically located territory. >After last year's >Indonesian pullout, Portugal, backed by some CNRT leaders, including its >vice-president Jose Ramos-Horta, strenuously pushed for the escudo to be >restored as >Timor's currency. > >Portugal's overseas bank, Banco Nacional Ultramarino, even attempted to make >the escudo the de facto currency of the UN occupation. It began trading in >Dili last >December, paying East Timorese public servants in escudos and refusing to >issue US or Australian dollars. As an added incentive for the UN and CNRT to >adopt >the escudo, the Portuguese government offered to underwrite East Timor's >expected $US100 million balance of payments deficit for five years. > >After the UNTAET announcement, Portuguese Foreign Minister Jaime Gama issued >a terse statement to the effect that Portugal "respected" the decision even >though >it had provided the necessary "technical conditions" for the escudo to >operate as the official currency. > >Portugal's loss is also a blow to its partners in the European Union, who >backed the revival of its claims over the territory. Japan is also unlikely >to welcome the >dollar's dominance. It has become the largest aid supplier to East Timor and >last month chaired an international donors' conference in Tokyo. > >The dollarisation of East Timor has a distinct class content. Since >Indonesian rule ended, the US greenback, along with the escudo and the >Australian dollar, has >become the currency of the elite economy that surrounds the operations of >UNTAET and aid agencies. By contrast, the destitute people of the devastated >territory >have largely continued to use the rupiah-or relied on barter. > >A stark example is the floating Hotel Olympia, sitting in Dili harbour for >the use of UN personnel. Even before the UN decision, only US and Australian >dollars, >and escudos, were accepted as legal tender. Other hotels took only US >dollars; some restaurants accepted Australian dollars. > >One youth leader commented that the rich and the poor were using two >different sets of currencies. "The poor are holding onto Indonesian rupiah >while the rich UN >people and foreign aid workers pay in escudos, American dollars or >Australian dollars," said Fernando Araujo, the outgoing secretary-general of >Renetil-a youth >organisation previously affiliated to the CNRT. > >For the most part, ordinary Timorese people are excluded by sheer poverty >from the dollar economy. The arrival of the Australian-led INTERFET force, >followed by >aid agencies and the UN, has inflated prices for food and other essentials. >An ad hoc price survey by the World Bank found that the cost of living for >poor >households increased by 200 percent between August and September. > >Most people remain unemployed and homeless. The few employed by official or >aid organisations are paid a pittance. The National Consultative Council >recently >unveiled a five-tier wage system for civil servants, with unskilled workers >on about $US3 a day. Aid agencies have agreed between themselves to pay >equally low >wages to local staff. "There is an explicit understanding between employing >agencies that they will adhere to these salary ranges in order to minimise >the poaching of >employees," stated a recent report by UNTAET and eight agencies. > >In some cases, the UN and relief agencies do not even pay cash, using food >handouts instead. "Salaries can be paid in a mixture of cash and >commodities," the >UNTAET report said. Official dollarisation will further widen the already >growing inequality. > > > > > > Copyright 1998-2000 > World Socialist Web >Site > All rights >reserved > __________________________________ KOMINFORM P.O. Box 66 00841 Helsinki - Finland +358-40-7177941, fax +358-9-7591081 e-mail [EMAIL PROTECTED] http://www.kominf.pp.fi ___________________________________ [EMAIL PROTECTED] Subscribe/unsubscribe messages mailto:[EMAIL PROTECTED] ___________________________________
