Updated November 2, 2022
Timor-Leste: Background and U.S. Relations
Overview
government can withdraw a limited amount of funds
Timor-Leste (also known as East Timor), is one of the
annually. The fund’s balance stood at $18.9 billion as of
world’s youngest nation-states, having gained its
December 2020. The issue of how deeply to tap the fund’s
independence from Indonesia on May 20, 2002. The United
reserves for infrastructure development is a controversial
States and the U.S. Congress have lent significant support
question. Previous governments have broadened the scope
to the new nation’s efforts to provide stability, economic
of fund investments to include large-scale infrastructure and
prosperity, and democratic governance.
human capital projects, while opponents alleged that the
government was spending unsustainably.
Timor-Leste’s independence ended more than three
centuries of foreign rule, including over 300 years of
U.S. congressional concerns focus on internal security,
Portuguese rule followed by 24 years of Indonesian control.
human rights, and the development of democratic
The transition was traumatic: Following a 1999 nationwide
institutions. The House Democracy Partnership initiated a
referendum that supported independence, paramilitary
Timor-Leste program in 2006 that has managed training
militias supported by elements of the Indonesian military
programs for Timorese legislators, and assisted with the
killed around 1,300 Timorese and displaced nearly 500,000.
building of a parliamentary library and the improvement of
Today, with a population of 1.3 million, Timor-Leste is one
information technology in the Timorese parliament.
of the world’s poorest nations, although it has made
progress in many social development indicators over the
Historical Background
past two decades.
During the 1640s, Portugal began to assert control over
Timor-Leste, a small outpost surrounded by Dutch-ruled
Timor-Leste also has made considerable strides in building
Indonesia. Although Indonesia won its independence in the
stability and democratic institutions, although it continues
1940s, Portugal’s colonial presence lasted until 1975, when
to face challenges in consolidating its democracy. The
the Revolutionary Front for an Independent Timor-Leste
nation’s 2012 presidential and parliamentary elections,
(Fretilin) gained ascendancy and declared independence on
conducted peacefully as a U.N. peacekeeping mission
November 28, 1975. Indonesia invaded Timor-Leste on
prepared to leave the country, were widely seen as a turning
December 7, 1975, and began a period of occupation in
point in Timor-Leste’s development. Subsequent elections
which an estimated 100,000 to 250,000 Timorese were
have seen high voter participation, with many international
killed. The United Nations did not recognize the Indonesian
observers describing them as largely free and fair.
action, and human rights violations in Timor-Leste by the
However, the country has been led largely by weak and
Indonesian military became a long-standing thorn in U.S.-
unstable political coalitions, leading to periodic stages of
Indonesia relations.
political stalemate and crisis. Timor-Leste’s political parties
remain mostly led by a small group of leaders who were
part of the country’s independence movement, whose
rivalries contribute to this instability.
In April 2022, Jose Ramos -Horta, leader of the National
Congress for Timorese Reconstruction (NCTR) party, won
the presidency with 62% of the vote in a runoff election.
Ramos-Horta, who won the Nobel Peace Prize in 1996 as
an exiled leader of the independence movement and
previously served as President from 2007 to 2012, took
office in May 2022. The Presidency traditionally has held
relatively little formal authority, although some
Presidents—notably Timor-Leste’s influential “founding
father” Xanana Gusmao—have used it to exert considerable
informal authority. The government is run by the Prime
Minster, currently José Maria Vasconcelos (also known at
Taur Matan Ruak, or “two sharp eyes” in the Tetum
language), who led a guerilla movement for independence
from the 1970s until 2002.
Timor-Leste’s economy is deeply dependent on energy

resources in the Timor Sea. Oil generates substantial
Sources: Graphic created by CRS. Data are from CIA World
revenues managed in a Petroleum Fund from which the
Factbook and World Bank.
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Timor-Leste: Background and U.S. Relations
Following the 1998 fall of Indonesia’s authoritarian
large role in providing stability in the new nation’s early
government, Timor-Leste held a national referendum to
years. Timor-Leste and Australia settled a long-standing
choose either autonomy within Indonesia or independence.
maritime boundary dispute in 2018, utilizing compulsory
Seventy-eight percent of the nearly 99% of registered voters
dispute resolution under the United Nations Convention on
who turned out opted for independence. This led to
the Law of the Sea (UNCLOS). The two nations still
widespread retaliation and destruction by militias backed by
disagree over their joint development of hydrocarbon
elements of the Indonesian military that were in favor of
resources in the Timor Sea. Timor-Leste hopes to construct
integration with Indonesia. In addition to widespread
an onshore Liquefied Natural Gas (LNG) processing plant,
killings and displacements, militias destroyed or damaged
while the Australian company Woodside Petroleum favors
much of Timor-Leste’s economic infrastructure, including
LNG processing at existing facilities in northern Australia.
homes, public buildings, utilities , schools, and medical
facilities. To quell the violence and restore order, a U.N.-
Timor-Leste has maintained good working relations with
authorized peacekeeping mission, International Force
Indonesia. It is also seeking to join the Association of
Timor-Leste (INTERFET), was established under
Southeast Asian Nations (ASEAN). (It is the only Southeast
Australian command and deployed on September 20, 1999.
Asian nation not currently in the grouping.) China has
increased its assistance to Timor-Leste in recent years.
Relations with the United States
Although its overall aid totals are lower than those of many
U.S. relations with Timor-Leste focus primarily on
donor nations, China constructed Timor-Leste’s Parliament
fostering stability and economic development with a young
building, presidential palace and foreign ministry
nation that has major needs in many areas, and deepening
headquarters. China also sold Timor-Leste two naval patrol
the U.S. relationship with a developing nation within the
boats in 2010, and provided training to dozens of Timorese
Indo-Pacific region. U.S. assistance seeks to “help Timor-
government officials. Many analysts posit that Timor-Leste
Leste develop its democratic institutions, diversify its
may be amenable to greater Chinese investment in the
economy, and enhance security capacity.” Since Timor-
country’s infrastructure. Chinese Foreign Minister Wang Yi
Leste’s 2002 independence, the United States has provided
visited Timor-Leste in June 2022, and the two countries
$500 million in assistance to the young nation. The
signed bilateral agreements on agriculture, media
Departments of State, Defense, and Justice, and USAID all
partnerships, economic and technical cooperation, and the
have presences in Timor-Leste, and in 2017, the
dispatch of a Chinese medical team to Timor-Leste.
Millennium Challenge Corporation selected Timor-Leste as
a candidate for developing an MCC compact. The Peace
U.N. Role in Timor-Leste
Corps had a presence until February 2020, when it
Between 1999 and 2012, the United Nations provided a
evacuated its volunteers due to the COVID-19 pandemic.
range of assistance to Timor-Leste, including peacekeeping,
supporting capacity-building efforts to strengthen the
U.S. programs include training for staff at the Ministries of
security and justice sectors, ensuring the provision of
Finance, Health, Tourism, and Agriculture; efforts to raise
humanitarian and reconstruction aid, and addressing issues
farmers’ incomes and improve resilience to environmental
faced by refugees who fled in 1999. The U.N.’s
shocks; raise nutrition standards; and deliver healthcare for
peacekeeping role ended in 2012 with the completion of the
women, newborns, and young children. The United States
U.N. Integrated Mission in Timor-Leste (UNMIT). The
offers International Military Education and Training
U.N. High Commissioner on Refugees (UNHCR) also
(IMET) courses for Timorese defense forces.
closed its office in 2012. However, the U.N. remains active
in Timor-Leste, focusing on economic development and
U.S. development assistance is delivered through USAID
strengthening governing institutions.
governance, health, tourism, private sector
productivity, digital connectivity, and agricultural
Development Challenges
programs; year-round rotations of U.S. Navy Seabees; and a
Timor-Leste is one of the world’s youngest nations, with
(currently suspended) Peace Corps program. Through its
37% of its population aged 14 or younger. Although it has
Compact program, the MCC is partnering with the Timor-
made progress in many human development measures, it
Leste government to address key drivers of poverty and
remains one of the poorest nations in Asia. According to the
promote economic growth. In 2018, the U.S. Department of
World Food Programme, more than 45% of the country’s
Agriculture announced Timor-Leste as a recipient of a $26
population lives below the poverty line. Some 47% of
million, five-year McGovern-Dole nutrition and education
children under five years of age are stunted, and 8.6%
program. In July 2015, U.S. Marines conducted a joint
suffer from acute malnutrition.
exercise with members of Timor-Leste’s security forces.
The exercise—known as Koa Moana 15.2—involved two
Many international donors seek to promote development of
platoons. The U.S. Navy also sent 150 sailors and engineers
agriculture. Some 75% of Timor-Leste’s population lives in
to Timor-Leste, instructing Timorese troops on basic
rural areas, and 41% of the labor force works in agriculture.
seamanship and working on community service projects.
Food security is a concern: Timor-Leste faces rising food
prices, shortages of dietary staples, scarcity of arable land,
External Relations
frequent typhoons, and the impacts of climate change.
Timor-Leste continues to receive extensive political,
economic and security assistance from Australia, New
Ben Dolven, Specialist in Asian Affairs
Zealand, Portugal, and the United Nations. Australia is the
largest international donor to Timor-Leste, and it played a
IF10320
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Timor-Leste: Background and U.S. Relations


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https://crsreports.congress.gov | IF10320 · VERSION 4 · UPDATED

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