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Despite 10 Years of Self-Determination, Economic Progress Slow in East Timor

Ten years ago, the people of East Timor voted for independence from Indonesia. With self-determination came the expectation of a better life. But economic progress on this small island nation has been slow. While the country has serious problems like entrenched poverty and high unemployment, East Timor also has great economic potential.

Francisco Lopez, has a small coffee plantation in the East Timor countryside. Last year he made slightly more than $100.

He says it is a good price but still not enough to buy what they need.

After the people of East Timor voted for independence from Indonesia in 1999, many thought the country's economic hopes lay in coffee. But as exports increased, the price of coffee in the world market dropped.

The East Timor group Cooperativa Cafe Timor has joined with international aid organizations to help farmers produce and market higher quality coffee for specialty coffee shops like the U.S. chain Starbucks. It is also encourages farmers to grow other crops like vanilla and raise cattle to supplement their incomes.

But improving the agricultural sector alone will not solve the growing poverty in urban areas where 40 percent of the population is unemployed. New industries and development are needed to create jobs and give people reasons to spend money in East Timor.

Tourism is slowly growing. Paul Piaia came from Australia not just to enjoy the quiet beaches but also to race in the Tour De Timor, the country's first international cross country bicycle race.

"I'm impressed. They are getting there. They still have a long way to go," he said.

Developer Tony Jape is building a new, modern office and apartment complex and betting that the country will continue to develop.

"Let's look forward. I think a lot of people have focused on the past. Now this project will give pride to the Timorese and the government and the people here," he said.

East Timor is also becoming a major energy producer. The development of oil and gas resources in the East Timor Sea has so far generated close to five billion dollars in revenue for the government.

How the government uses this revenue is a matter of debate in the parliament. Some of the money now goes to buy rice from Vietnam, which is then sold below cost in East Timor to help the poor. Critics like former Prime Minister Mari Alkatiri with the opposition Fretilin party say this policy hurts local rice producers who cannot compete.

"If you are subsidizing rice, if you are distributing rice for a very cheap price, it means that people are not really going to produce rice in the country. You are stopping the productivity of the country. You are really blocking the production and this is not the kind of development we are looking for," said Alkatiri.

All seem to agree that the money should be used for long term development needs like roads, education, and healthcare.

Maria Lay, a member of the ruling CNRT party, the National Congress for Timorese Reconstruction, says first on the government's list is building new power plants.

"The government has identified the critical problem we have at the moment is electricity for all the population. And we are starting and we hope that it will finish in two years later, maybe 2011," she said.

But this plan has also come under criticism. The proposed power plants will burn heavy oil, which must be imported and causes pollution.

And there have been questions over how and to whom contracts get awarded.

Arguments over the details of how to spend East Timor's newfound wealth, continues to slow the pace of economic progress.