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East Timor Urges Australia to Reinstate Aid for Jobs Program

East Timor's president is asking Australia to reinstate funding to what he says is one of the few effective aid projects in his impoverished country. The Peace Dividend Trust is credited with creating jobs in a nation where the youth unemployment rate is estimated to be 40 percent.

But Australia, East Timor's largest aid donor, has decided to stop funding the Peace Dividend Trust. Since August, Australia has donated $500,000 to the project, but now the federal aid agency, AusAid, says the money will be reallocated to areas of greatest need, such as health.

East Timor President Jose Ramos-Horta is asking Canberra to reconsider, saying the trust has been a real success in helping lift his people out of poverty.

In an interview with the East Timor newspaper, Tempo Semanal, Mr. Ramos-Horta said he is angry with Australia's decision and says they should have consulted him first.

The Peace Dividend Trust tries to channel aid directly into the economy and to reduce the amount spent on international companies and consultants.

The trust has helped boost small businesses in East Timor, says founder Scott Gilmore.

"For example, right now when an international company or the U.N. issues a tender for contract we translate that and distribute it to Timorese companies," Gilmore explains. "And then perhaps most importantly we work in the poorest rural areas helping any international agency that happens to be operating out there to buy their food and water locally, any goods they might need, as opposed to having it brought in from overseas or buying it in the capital of Dili."

Without Australian funds, there are fears that the organization could shut down as early as next month. East Timor's unemployment rate is estimated to be 20 percent, but the jobless rate for young adults in urban areas is thought to be at least twice that.

While the development of offshore oil and gas fields has raised government revenue, few jobs have been created because East Timor has no oil production facilities.

These economic challenges follow decades of upheaval, as separatists fought Indonesian rule, which began in the mid-1970s. The bloody campaign culminated in independence in 2002.

The tiny nation has struggled with political squabbles and poverty ever since and has relied on foreign peacekeepers for its internal security.