The World Bank's Health Projects in Timor-Leste: The Political Economy of Effective Aid

Abstract

The World Bank's health sector projects in Timor-Leste have been among the few operations it has funded in that country that have achieved any sort of positive results. This paper examines the factors underpinning their relative success and considers the wider lessons for the delivery of effective aid in the context of peace-building operations in fragile contexts. We argue that political economy factors played an important role in shaping the relative success of these projects, extending and revising an earlier analysis by Rosser. In terms of wider lessons, we argue for a more political understanding of the determinants of aid effectiveness. Specifically we suggest that aid effectiveness needs to be seen as a function not just of the technical quality of project design and the administrative competence of project managers but also the extent to which there is congruence between donor and local elites’ agendas.

Introduction

The World Bank has invested heavily in promoting the reconstruction and development of the Democratic Republic of Timor-Leste (hereafter Timor-Leste) since Indonesia's violent withdrawal from the territory¹ in 1999. It was a key part of various donor missions that planned the territory's reconstruction in 1999–2000 and it has overseen a substantial grant programme there ever since. Yet the returns on this investment have been modest, even by the Bank's own assessment: in a report issued in 2011, the Independent Evaluation Group (IEG), the Bank's evaluation arm, rated the vast majority of the Bank's project and sector outcomes in Timor Leste as either ‘unsatisfactory’ or ‘moderately unsatisfactory’.² One of the few sectors in which the Bank has achieved some positive results is health. In its review, the IEG rated the Bank's major health projects – the Health Sector Rehabilitation and Development Project (HSRDP I) and the Second Health Sector Rehabilitation and Development Project (HSRDP II) – ‘satisfactory’ and ‘moderately satisfactory’ respectively. Although both projects experienced significant delays and failed to achieve results in certain areas, they were credited with having made a substantial contribution to the rehabilitation of Timor Leste's health system, improved governance within the sector and made improvements in a range of health indicators including immunization rates and health service utilization rates.³

The purpose of this article is to explore the factors that have shaped the World Bank's relative success in Timor-Leste's health sector. It also considers the wider lessons of the Bank's experience for the delivery of effective aid in the context of peace-building operations in fragile contexts. Much commentary on the HSRDPs has suggested, either implicitly or explicitly, that good design and management was a key factor in their success.⁴ We argue that political economy factors also played an important role, extending and revising Rosser's earlier analysis of these factors.⁵ In particular, we suggest that the HSRDPs benefitted from (a) a political economy context that was relatively conducive to aid effectiveness in general and (b) the fact that there was relatively little elite resistance to the World Bank's agenda in the health sector. In terms of wider lessons, the article thus reinforces arguments for a more political understanding of the determinants of aid effectiveness, in particular ones that emphasize the role of competing coalitions of interest in shaping state policy and the uses of aid.⁶

In presenting this analysis, we begin by examining the country context in which the two projects were established, focusing on Timor-Leste's health situation in 1999. We then examine the nature of the two projects and the results they achieved before moving on to our explanation of their relative success, bringing in the World Bank's performance in the education sector for comparative purposes. The final part of the article assesses the lessons of the Bank's experience in Timor-Leste for our understanding of the determinants of aid effectiveness in fragile contexts.

The Country Context

When the World Bank began its first operations in post-Indonesian East Timor – as Timor-Leste was known during the years of Indonesian occupation (1975–99) and UN transitional administration (1999–2002) – in 1999, the territory was among the least developed in the world, reflecting centuries of oppressive and violent rule, underinvestment in the territory's economic development and the widespread destruction that accompanied Indonesia's withdrawal. While the Indonesian government transferred substantial resources to East Timor during its occupation, much of these went into funding Indonesian military forces and a bureaucracy staffed largely, at least at the most senior levels, by Indonesians.⁷ Development outcomes were poor. Timor's Human Development Index (HDI) was just 0.395 in 1999, placing it in 152nd place out of the 162 countries for which HDIs were calculated that year. Poverty indicators were high, with 41 per cent of the population living below the national poverty line of $0.55 per person per day, over half the population were illiterate and maternal mortality rates were extremely high with 420 women dying for every 100,000 live births.⁸

In August 1999, the Indonesian government, under international pressure, organized a plebiscite on the territory's future. This resulted in a massive vote in favour of independence and in turn triggered a wave of orchestrated violence by pro-Indonesian militias backed by the Armed Forces. In this context, troops from the International Force for East Timor (INTERFET) arrived in East Timor to restore security and address the intensifying humanitarian crisis. A team of experts known as the Joint Assessment Mission to East Timor visited the nation shortly after the arrival of INTERFET troops to examine the existing situation and identify short-term relief and reconstruction priorities, as well as longer-term development requirements. It noted that there was severe psycho-social stress, food insecurity, population displacement and that water and sanitation systems had collapsed.⁹

The territory's health situation was particularly precarious. During their occupation, the Indonesians had assembled a territory-wide health system, comprised of Indonesian government-run hospitals and clinics, and district-based health centres that were operated by approximately 160 doctors and 2000 nurses and midwives. In 1999, most doctors, many of whom were Indonesian, fled the territory, leaving just 30 behind. Most senior health administrators left as well.¹⁰ At the same time, health care facilities were intentionally targeted during the 1999 violence, with one-third being severely damaged or destroyed entirely. An assessment conducted in January 2000 found that two-thirds of Timor's health facilities were without mains electricity or essential medical equipment, while almost half were without mains water.¹¹ Finally, the crisis displaced huge numbers of people from their homes: between 520,000 and 620,000 people, an estimated 65–80 per cent of the total population, ended up residing in Internally Displaced Persons (IDP) camps in East Timor or West Timor. The result was that the majority of the population was without access to adequate medical care, food, shelter, clean water and sanitation for some time. There was strong concern that such conditions would lead to high levels of malnutrition, escalated risks of disease outbreaks and increases in mortality due to diarrhoeal disease, vaccine preventable diseases, malaria, upper respiratory diseases and mental health problems.¹²

In the immediate aftermath of the Indonesian withdrawal, civil society organizations played the key role in health service delivery. The Catholic Church and religion-based charities had provided health services throughout the years of Indonesian occupation, operating small hospitals and local clinics.¹³ Following the Indonesian withdrawal, they were joined by a flood of international NGOs that arrived to provide emergency services. These included the International Committee of the Red Cross, World Vision International and Médecins Sans Frontières. The efforts of the Catholic Church and other NGOs combined saw 71 health facilities established by February 2000, in comparison to the 96 facilities that were operating prior to the violence. These facilities operated at a sub-district level or higher, meaning that health services for many Timorese were limited, particularly those residing in rural villages.¹⁴

The Joint Health Working Group (JHWG), a team of representatives from UN agencies, the NGO community and Timorese health professionals from the East Timorese Health Professionals Working Group (ETHPWG) provided an initial means of coordination. Following the establishment of the United Nations Transitional Administration in East Timor (UNTAET) in October 1999, the JHWG developed plans to establish a local health authority to rebuild and administer the health system in Timor and agreed to a minimum set of standards at a workshop in February 2000. After this workshop, an Interim Health Authority (IHA) was established as part of UNTAET. The IHA was a joint international–Timorese body – something that made it distinct from most other parts of UNTAET – and became the de facto ‘Ministry of Health’.¹⁵ Led by Dr Jim Tulloch, the head of the UNTAET Office of Health, and Dr Sergio Lobo, a founding member of the ETHPWG and East Timor's only qualified surgeon, it consisted of 16 East Timorese health professionals at the central level, an additional 13 at the district level and 6 UNTAET health staff.¹⁶

The HSRDPs

Overview of Projects

To address the burgeoning health crisis, the IHA and foreign donors agreed that two health projects should be funded through the Trust Fund for East Timor (TFET), a multi-donor facility established under World Bank and Asian Development Bank auspices to fund grants for projects in key sectors such as energy infrastructure, health, education and governance. The first, HSRDP I began in mid-2000 while HSRDP II began in mid-2001. Both were supported by grants from the World Bank while the latter was also supported by a grant from the European Union.¹⁷

HSRDP I sought to provide immediate, short-term health services and prepare long-term services, frameworks and policies that were appropriate to the conditions of East Timor.¹⁸ To this end, it consisted of two main components: (1) restoring access to basic health services; and (2) health policies and health systems development. The first of these components was designed to address immediate health needs. It had a short-term focus and involved a number of subcomponents, namely:

1. a transitional strategy for service provision centred on the contracting of NGOs to provide the delivery of high priority programmes at the district level;

2. the establishment of a pharmaceutical logistics system to ensure the timely availability of drugs and medical supplies, including the construction of a central warehouse and the development and adoption of an essential drug list and standard guidelines;

3. the rehabilitation and equipping of a number of health facilities;

4. the establishment of a referral system and facilities through ambulance and radio supply;

5. capacity strengthening within the health system through training on service delivery, administration and management responsibilities; and

6. a small grants scheme to enable community organizations and professional associations to carry out health promotion activities.¹⁹

The second component of HSRDP I had a longer-term focus. It aimed to develop a functioning health system and sound health policies, and also comprised a number of subcomponents: (a) policy development to provide input into the role of the government and financing of the health sector, while supporting the development of a Health Policy Framework; (b) designing a health system, including a baseline demographic and health survey to assist future development, designing a logistics system for pharmaceuticals and the construction of health legislation and regulations; and (c) a strategy to develop human resources based on the profile of existing health staff.²⁰

In mid-2001, donors and the successor to the IHA, the Division of Health Services, agreed that a second project should be funded to continue and expand the progress made under HSRDP I. Whereas HSRDP I focused on the provision of basic health services and the establishment of public health initiatives such as immunization programmes, HSRDP II aimed to increase the utilization of health services and increase the quality of care. It had three components: (1) supporting ongoing service delivery through technical assistance to health sector managers, particularly at a district level, as well as via the supply of pharmaceuticals to health facilities; (2) improving the range and quality of services and implementing support systems, with a particular emphasis on re-equipping hospitals, standardizing service delivery and strengthening referral systems and creating an effective Autonomous Medical Supply entity (to be named SAMES); and (3) the development and implementation of health sector policies and management systems, including through development of a Human Resource Management Strategy and financial management capacity-building activities.²¹

During HSRDP I, there was a heavy reliance on international NGOs to deliver health services, reflecting the fact that the government (i.e. UNTAET) lacked the capacity to deliver these services itself. Agreements were reached whereby NGOs continued to act as the primary health care providers, but were regulated by a Memorandum of Understanding between them and the government.²² HSRDP II aimed to shift the responsibility for service provision from NGOs to the government in an effort to reduce the high costs associated with international organizations, while also addressing concerns about Timorese control over the health system. District health management teams (DHMTs) replaced NGOs in the delivery of basic services at the local level and plans were made to encourage expatriate East Timorese doctors to return home, and to recruit doctors from other developing countries to take the place of Western doctors who had been employed by the NGOs.²³ Both the HSRDP I and HSRDP II contained a set of key performance indicators that were used to measure project performance as well as that of the overall health system (Table 1).

TABLE 1 HSRDP I AND II PROJECT DEVELOPMENT OBJECTIVES

Indicator	Baseline value (2001)	Original target values (from approval documents)	Actual value achieved at completion or target years
1: Percentage of children under 1 year of age immunized against measles in each district	20%	50%	63%
Date achieved	1 June 2001	30 June 2003	31 December 2007
2: National percentage of births with skilled attendance	20%	35%	37.3%
Date achieved	1 June 2001	30 June 2003	31 December 2007
3: Percentage of population with access to basic health services within two hours from home	60%	95%	N.A. (Note: this measurement was deemed unreliable by the Ministry of Health)
Date achieved	30 June 2001	30 June 2003	31 December 2007
4: Number of outpatient visits per person per year at each health facility	1	2.5	1.9
Date achieved	30 June 2001	30 June 2002	31 December 2007
5: Percentage of health facilities reporting no stock-outs of essential drugs lasting more than two weeks in the previous quarter	60%	90%	87%
Date achieved	1 June 2001	30 March 2003	31 December 2007

Source: World Bank, ‘Implementation Completion and Results Report on Grants in the Amount of US$12.6 Million (TF-51363) and Euro 16.2 Million (TF-51363) to Timor-Leste for a Second Health Sector Rehabilitation and Development Project', Dili: World Bank, 2009, pp.iii–iv.

Outcomes

Both projects experienced significant difficulties. There were substantial delays in the construction and rehabilitation of health centres and the rehabilitation of regional hospitals, the main hospital in Dili and the Central Lab, due to, among other things, the complexity of the World Bank's procurement procedures.²⁴ SAMES experienced problems as a result of underqualified staff and language differences, the latter being an obstacle to knowledge and skill transfers from expatriate to local staff. Weak forecasting of demand due to a lack of good quality health data was partially responsible for US$2.66 million in overstocked and expired drugs at SAMES in early 2004.²⁵ A 2012 review found that stock-outs of essential medicines were common, language differences were a continuing hurdle and a lack of coordination between the Ministry of Health, Department of Pharmacy, SAMES staff, medical practitioners and pharmacists was resulting in logistical problems.²⁶ Finally, neither project addressed Timor Leste's shortage of qualified medical personnel. Both included components aimed at increasing the capacity of the Timorese workforce but these were focused on administrative and bureaucratic activities rather than the supply of medical personnel.²⁷ In the end, Timor Leste struck a deal with Cuba that saw a large contingent of Cuban doctors sent to Timor to service national, regional and rural hospitals and health clinics and Timorese students studying medicine in Cuba. In 2005, a Faculty of Medicine was opened at the National University and students were no longer sent to Cuba, but were enrolled in the new Cuban-operated Faculty.²⁸

Nevertheless, the HSRDPs made a positive contribution to the rehabilitation and development of Timor-Leste's health sector in two respects. First, they helped to transform the country's health system from a state of almost total devastation following the violence in 1999 into a functioning health service. The immediate basic health needs of the population were met due to the rehabilitation of health care facilities and other infrastructure, the procurement and distribution of essential medications and supplies and strengthened planning and implementation of health services at the district level. Project monitoring and evaluation showed increases in immunization rates and the number of births that were attended by a skilled health worker, while the average travel time from one's home to a health facility decreased for a large portion of the population following the implementation of the projects.²⁹ The poor quality of baseline data makes it difficult to judge the precise extent of improvement in these respects. But the overall trend is fairly clear. There have also been improvements in health service utilization rates, the fertility rate and infant and maternal mortality.³⁰

Second, the HSRDPs contributed to improved health sector governance. A major contribution of the first project was the preparation of district health plans for the 12 districts outside of Dili. This was a task that was considered to be ‘beyond the capacity of the IHA alone’ and was the first step towards the IHA being viewed as a legitimate government body.³¹ In late 2001, just over 18 months after the devastation that followed the independence vote, a Timorese-run Ministry of Health had been established and over 800 health staff had been recruited.³² The implementation of the HSRDPs also saw the production of the Health Policy Framework which outlined the strategic policy direction of the Ministry of Health, based upon its Mission Statement: ‘the Mission of the Ministry of Health is to strive to ensure the availability, accessibility and affordability of health services to all East Timorese people, to regulate the health sector and to promote community and stakeholders participation’.³³ Finally, despite SAMES's difficulties, its establishment provided a mechanism for the distribution of medical supplies. Its establishment was an improvement on the state of total disarray during the Indonesian occupation and following the violence in 1999.

Overall, it is probably fair to say that the two projects’ achievements were modest. But compared to most other World Bank interventions in Timor Leste, their contribution to the country's development has been relatively positive. In this respect, a comparison with the Bank's projects in Timor Leste's education sector, also implemented through TFET, is informative. Remarkable progress was made in both sectors in terms of reconstructing and rehabilitating facilities and making them operational again. Huge numbers of schools and health facilities were rebuilt, large numbers of teachers and medical personnel recruited and school enrolment rates and health facility usage rates increased. But there was a marked difference in the quality and effectiveness of the services delivered. The resumption of basic health services led to significant improvements in a range of health-related indicators. By contrast, there is little evidence to suggest that school students’ skills and abilities have improved. For instance, a 2009 assessment of reading ability showed that ‘many children spend years in primary schools in Timor-Leste without learning to read’.³⁴

Explaining the HSRDPs’ Effectiveness

What explains this relatively positive outcome? As noted earlier, much commentary on the HSRDPs has suggested, either implicitly or explicitly, that the projects benefitted from good design and management. Yet our concern here is with the role of political factors in shaping this outcome. In an earlier paper researched and written in 2004–05, Rosser argued that the HSRDPs benefitted from a relatively favourable political economy context, reflecting five aspects of Timor Leste's political economy.³⁵ First, donor funding for Timor Leste was relatively generous in the years immediately following Indonesia's withdrawal and for health in particular because of the ‘political attractiveness of emergencies and the undeniable health needs in such situations’³⁶ and public pressure on many Western governments to make amends for having effectively abandoned East Timor after the Indonesian invasion in 1975. Second, Timor Leste's dependence on aid income and vulnerability in security terms meant that the government had a strong incentive to cooperate closely with donors and make a concerted effort to achieve development results. To do otherwise would have jeopardized relationships crucial to the new nation's survival. Third, the country's Health Minister during the Fretilin government (2002–07), Rui Maria de Araujo, had strong technical, leadership and administrative skills. Fourth, decision-making authority both in general and in relation to health policy in particular was concentrated in the hands of the Council of Ministers (i.e. the cabinet), reflecting the ruling party Fretilin's dominance of the national parliament. This made the HSRDP's policy and institutional development work much easier politically than it would have been had the political system been more fragmented and parliament exercised strong oversight of the executive's activities. Finally, between 2000 and 2005, the country was relatively politically stable, allowing its political leaders to focus on promoting economic and social development and reducing the risk that renewed violent conflict would result in the destruction of rehabilitated health infrastructure.

Most of these conditions changed after 2005. Most notably, the country's political stability was brought to a dramatic end following the government's dismissal of roughly one-third of the country's armed forces in early 2006. The dismissal triggered widespread violence, the displacement of tens of thousands of people, an Australian-led intervention to restore stability, the resignation of then Prime Minister Mari Alkatiri, an assassination attempt on then President Jose Ramos Horta and ultimately a change of government in 2007. The subsequent Parliamentary Majority Alliance (AMP) government, a multi-party coalition, has lacked the coherence and discipline of the previous government.³⁷ This did not prevent the government's re-election in 2012 with a slightly different configuration of political parties. But it has meant that policy making has been more contested than under the Fretilin government. Finally, since 2002 aid to Timor Leste has declined slightly in constant $US and per capita terms and fallen dramatically as a proportion of Gross National Income (GNI), reflecting the growing importance of oil to Timor Leste's economy as a result of the exploitation of Timor Sea oil reserves. With the government less reliant on aid, donors have exercised less leverage over policy than previously. The main line of continuity with the pre-2006 period has been in relation to leadership of the Health Ministry. As under the Fretilin government, this ministry has continued to be led by figures with relatively strong technical, leadership and administrative skills, although the standing of the current Minister has been undermined by a scandal related to domestic violence.³⁸

Despite the changes since 2006, however, it is still fair to say that Timor-Leste has offered a relatively favourable political economy context to donors engaged in peace-building efforts. The country has not descended into civil war, experienced a major economic crisis (in fact, it has progressed from low income to lower middle income country status in the World Bank's classifications, thanks largely to increased oil revenues) or suffered a military coup (although it came close to one in 2006). In this respect, it has been different to many other post-conflict societies.

Noting that the broad political economy context has been relatively conducive to aid effectiveness does not explain, however, why the World Bank's experience in Timor Leste has differed so dramatically across sectors (or indeed why its performance overall has been so poor). To explain this, we need to understand the politics of each of these sectors and the extent to which this politics constrained the World Bank's ability to promote its development agenda. The point, as we will show below, is that the World Bank's agenda encountered much less resistance from domestic political elites in the health sector than in other sectors. In the health sector, domestic political elites offered tactical support to the Bank or, at least, were able to engineer an accommodation between the Bank's policy agenda and alternative policy agendas.

The Political Economy of Relative Success

To illustrate the way in which political factors have shaped outcomes for the World Bank in Timor Leste's health and education sectors, we begin by identifying the main actors involved in struggles over development policy in Timor Leste since 1999 and then examine the way in which their interests, agendas and forms of leverage over the policy-making process shaped policy outcomes in these sectors.

The Contending Actors

From the end of Indonesian occupation in Timor Leste in 1999 until the mid-2000s political and social power in that territory was concentrated in the hands of Western donors; that is, the various Western governments that have had bilateral aid programmes in the territory and the multilateral organizations over which these governments exercise enormous influence. Their power was arguably at its height in the two to three years immediately following the Indonesian withdrawal when the United Nations Transitional Administration in East Timor (UNTAET), the body established to govern the territory until independence, was formally the sovereign power.³⁹ But they remained powerful after the territory gained independence in May 2002 because of their importance as a source of funding and their role in guaranteeing Timor Leste's security. Their influence has declined somewhat since the government of Timor Leste started to receive substantial income from the oil and gas sector in the mid-2000s. With alternative investment resources at its disposal, the government has been less dependent on donors and consequently had far greater autonomy in devising policy than in the period before the mid-2000s. In broad terms, donors’ agenda has been to promote policy and institutional reforms aimed at ensuring the emergence and proper functioning of a liberal market economy and liberal democratic political system.⁴⁰ In particular, it has promoted fiscal rectitude and accountability, the liberalization of trade and foreign investment regimes, the rule of law, reduced corruption and the delivery of quality public services on an affordable basis.

A second set of actors that has shaped development policy in Timor Leste since 1999 is the leadership of Fretilin, the dominant political party in the period between 2002 and 2007. The Fretilin leadership's power stemmed from two main sources: its control of parliament during this period and party members’ occupation of key positions in the state apparatus. In the 2001 national elections Fretilin won 57 percent of the vote, less than expected but enough for it to secure 55 out of a total 88 seats in the national parliament. With the support of the Timorese Social Democratic Party (ASDT), which won six seats in parliament, it held enough votes to pass a national Constitution in 2001 that, in establishing a semi-presidential rather than the presidential political system,⁴¹ ensured that the party in control of parliament played the central role in policy making. After the election, the Fretilin leadership appointed party members to senior political and bureaucratic positions, giving it further influence over policy formulation as well as influence over the implementation of policy. Since losing the 2007 election, however, its influence through both mechanisms has declined. In broad terms, the Fretilin leadership supported much of the donor development agenda⁴² during its time in government despite having a formal commitment to Marxism-Leninism for most of the Indonesian occupation.⁴³ This likely reflected a tactical judgement that the party's electoral interests were best served by keeping donor funds flowing and, in so doing, providing a basis for economic survival and the re-establishment of public services. Its support for a neoliberal democratic agenda was, however, tempered by nationalist concerns to define a distinct East Timorese national identity and promote national strength and resilience.⁴⁴

A third set of actors that has shaped development policy in Timor Leste is the leadership of Falintil, the armed wing of the resistance movement during Indonesian occupation, and associated organizations. In 2001, Falintil was dissolved as its members were either decommissioned or recruited into the Armed Forces (F-FDTL). The power of the Falintil leadership has stemmed in part from its influence over the F-FDTL and its consequent ability to use violence, legitimately or illegitimately, in pursuit of its objectives;⁴⁵ its ability to influence popular opinion and mobilize large numbers of people for demonstrations and other forms of collective action, reflecting the fact that Falintil leaders are widely regarded as national heroes; and its control over key parts of the state apparatus, especially the presidency and from 2007 the national parliament. Within this group, Xanana Gusmão has been the dominant figure. He was the head of Falintil during the Indonesian occupation and, following a landslide election victory in early 2002, became President of Timor Leste from 2002 to 2007.⁴⁶ In the run-up to the 2007 elections, he vacated the presidency in an attempt to seize control of parliament away from Fretilin, establishing the National Congress for Timorese Reconstruction (CNRT) as an electoral vehicle. The CNRT won 24 per cent of the vote, enough to allow it to form government in coalition with a diverse group of other parties and deliver Gusmão the prime ministership (a more powerful position than the presidency). As noted above, the AMP government was re-elected in 2012. At the same time, another Falintil leader, Taur Matan Ruak was elected President.

In terms of policy, the CNRT has lacked a clear platform.⁴⁷ In public statements, Gusmão has expressed support for liberal market economic policies⁴⁸ and in government the CNRT has overseen an overall shift in development policy towards a more market-based approach.⁴⁹ But, like the Fretilin leadership, Gusmão and the CNRT's support for neoliberal reform has most likely been tactical in nature – reflecting a desire to maintain good relations with the international community and keep donor funds flowing – and been tempered by a concern to promote national strength and resilience. It has also been tempered by a desire to ensure that the F-FDTL has adequate access to financial resources.⁵⁰ Finally, the government's burgeoning oil wealth has enabled Gusmão and other AMP leaders to encourage a form of patronage politics that one observer has characterized as ‘runaway state-building’.⁵¹

A number of other actors have also sought to shape development policy in Timor Leste post-1999 but, in general, had much less impact than the aforementioned three sets of actors. These include the Catholic Church, the minor political parties, local NGOs and martial arts, veterans and extremist groups. During the Indonesian occupation, the Catholic Church became a lightning rod for Timorese grievances against the Indonesian government and military, reflecting the fact that Timor Leste is predominantly Catholic while Indonesia is predominantly Moslem and the fact that military rule meant that few other institutions existed in Indonesian East Timor that might perform this role. But since 1999, its role as a lightning rod for grievances has declined as the major cleavages in Timorese politics have become ones within the Timorese community, rather than between this community and Moslem outsiders. At the same time, senior Church figures were excluded from the Fretilin government, as the Fretilin leadership sought to reserve formal political authority for itself, although they did exercise influence over some issues, particularly ones of religious significance: in 2004, for instance, they persuaded the Fretilin government to endorse natural methods of family planning alongside the use of contraception as part of its family planning policy. The AMP government has ‘adopted a much more engaged approach to the Church’, steering significant resources its ways for anti-violence programmes, Church buildings and renovations and accommodating Church concerns on issues such as the criminalization of prostitution and abortion.⁵² But its role in policy making has been minor compared to the actors mentioned above, reflecting the fact that there has remained a clear separation between Church and state in Timor-Leste throughout the post-independence period.

The role of the minor political parties has similarly increased over time but remained modest compared to the aforementioned three sets of actors. During Fretilin's term in government, these parties had too few seats in the national parliament to influence legislation and the Fretilin leadership completely excluded them from the cabinet. Since the formation of the AMP government in 2007, some minor political parties have exercised greater influence over policy by virtue of their membership of the governing coalition, most notably the Democratic Party (which grew out of the student and youth movements under Indonesian occupation), the Social Democrat Party (PSD) and the Timorese Social Democratic Association (ADST). Yet none of these parties have had clear ideological and policy agendas, being more focused on securing control of political offices. At the same time, the AMP government has been so dominated by Gusmão that their role has remained minor. Gusmão reportedly tends to act ‘on his own initiative’ rather than in consultation with members of his own party and coalition partners and sees ‘his role as a leader, not as a member of a team of ministers representing their own political parties’.⁵³

For their part, local NGOs and martial arts, veterans and extremist groups have had almost no role in the formal political process.⁵⁴ In general, the only way in which these actors have been able to influence policy has been to organize demonstrations, engage in violence or otherwise cause disruption. When their attempts to cause disruption have intersected with attempts by elements such as soldiers from the F-FDTL to do the same thing, they have had some effect. But otherwise, they have exercised limited influence.

In the following sub-section, we examine the way in which contests between these sets of actors – particularly the first three – have shaped the nature of government policy in the health and education sectors and, in so doing, the extent to which the World Bank has been able to use its aid effectively.

The Political Economy of Aid Effectiveness in Health and Education

Donors’ development policy agenda in Timor Leste's health and education sectors has focused on building the capacity of the state to deliver affordable basic health and education services in order: (1) to ensure that Timor Leste's poor are equipped with the skills and abilities to enable them to compete in the international labour market; and (2) to build the foundations for a functioning procedural democracy.⁵⁵ In short, it has been to transform Timor Leste's poor into market citizens.⁵⁶ The Fretilin and Falintil leaderships have supported this approach much more strongly in the health sector than the education sector. At the beginning of the government's 2002 Health Sector Policy Framework, Gusmão declared: ‘Let us not be tempted to build and develop modern hospitals that are costly and in which only half a dozen people benefit from good treatment. Let us concentrate above all on planning intensive campaigns of sanitation, prevention, and the treatment of epidemics and endemics for the whole population.’⁵⁷ This statement can be seen as reflecting concern within Timor Leste about the way in which the health system and in particular the hospital system during the Indonesian occupation primarily served the interests of Indonesian military and bureaucratic officials rather than ordinary Timorese. But it also resonates with donors’ concerns about the cost-effectiveness of the government's health and education programmes. Anderson has suggested that the government's deal with Cuba for the training of Timorese doctors reflected a commitment by the country's political leadership to progressive Latin American notions of ‘social medicine’.⁵⁸ Likewise the government's accommodation of the Catholic Church in relation to issues such as abortion and contraception indicates a willingness to back away from technocratic approaches to health on religiously sensitive issues. But, in broad terms, donors, the Fretilin leadership and the Falintil leadership have all been on the same page in relation to health policy issues. The Cuban deal arguably complemented rather than challenged the HSRDPs⁵⁹ by addressing an acknowledged gap in these projects’ activities – namely, insufficient attention to manpower issues.⁶⁰ And the influence of the Catholic Church has only extended to a specific set of issues rather than health policy in general.

But while the Fretilin leadership and the Falintil leadership broadly supported the donor development agenda in health, their support in relation to the education part of this agenda was tempered by their simultaneous commitment to building a particular national identity. In public speeches, Gusmão has echoed donor concerns that the education system should focus on producing job-ready graduates in order to enhance national economic competitiveness and reduce unemployment.⁶¹ But the Fretilin and Falintil leaderships have both been willing to compromise on this objective in order to promote nation-building objectives. The Fretilin and Falintil leaderships consist largely of individuals who were educated during the Portuguese colonial era and, in the case of the Fretilin leadership, spent most of the Indonesian occupation in the former Portuguese colony of Mozambique. Reflecting this background, they have promoted a particular brand of nationalism in the post-1999 period in Timor Leste that has emphasized Portuguese cultural values and the use of Portuguese language as a marker of national identity. This reduced their commitment to the donor development agenda in so far as they prioritized the use of Portuguese in the education system – a language in which less than 40 per cent of the population is considered ‘literate’⁶² – over the effectiveness of the education system in providing the skills and abilities needed to produce a labour force and voters. The Portuguese and Brazilian governments made it possible for the government to carry out its attempts to promote use of Portuguese through the education system by funding Portuguese language training programmes for teachers. Other (especially Anglophone) donors, however, were highly critical of the language policy, arguing that educational considerations dictated use of Bahasa Indonesia, the national language of Indonesia, or Tetun, an indigenous lingua franca, as the primary language of use in school classrooms because both are much more widely spoken in Timor Leste than Portuguese.

Notwithstanding the position of the Portuguese and Brazilian governments, then, it is clear that a contradiction emerged between donors, on the one hand, and the Fretilin leadership and F-FDTL, on the other hand, over which state capacities should be prioritized in the education sector. While all actors agreed that they should seek to build the state's capacity to deliver basic education services and, in so doing, its capacity to produce educated workers who could compete in the international labour market, the Fretilin leadership and the Falintil leadership sought to subordinate this agenda to their particular nation-building objectives. For them, it became more important that the state develop the capacity to promote a particular national identity and concept of citizenship than the capacity to deliver basic education services effectively. While the country needed to produce skilled and educated workers, their position implied, it needed to produce citizens – or, at least, particular types of citizens – first. The result of this political situation was to make realization of the donor agenda – and the projects associated with it – much more difficult in the education sector than the health sector.

Conclusion/Implications

This article has examined the factors underlying the World Bank's relative success in Timor-Leste's health sector. We have argued that HSRDP I and II were relatively effective, not simply for reasons related to their design and implementation, but also because (a) they were implemented within a political economy context that was conducive to aid effectiveness in general and (b) there was relatively little elite resistance to the World Bank's policy agenda in the health sector. Whereas the Bank's education projects ran aground in the face of elite efforts to use the education system to promote a particular national identity, its health projects were advantaged by the fact that donors and elites shared the same health policy objectives. The results for the Bank were consequently stronger in the health sector than in the education sector.

In terms of wider lessons for peace-building efforts in fragile contexts, this analysis suggests that we need a more political understanding of the determinants of aid effectiveness. Specifically it suggests that aid effectiveness is a function not just of the technical quality of project design and the administrative competence of project managers but also the extent to which the agendas of donors and developing country elites align with one another. In recent years, donors have increasingly argued that aid effectiveness is a function of the extent of country ownership. This needs be viewed in explicitly political terms. Specifically, it needs to be seen as a function of political and social relationships: where the interests and agendas of donors and powerful domestic political and social groups within recipient countries are well aligned, the political commitment required to create ownership will emerge; where it does not, the situation will be characterized by resistance to the donor agenda and aid ineffectiveness.

This idea has important implications for the way in which the international development community seeks to enhance aid effectiveness in fragile contexts. First, it suggests that in making decisions about how to allocate aid, both between countries and within countries between competing sectors and activities, donors need to (1) make assessments about the likelihood their agendas will encounter resistance from powerful domestic groups; and (2) decide whether it is thus feasible to proceed with an intervention. Second, donors need to develop a better understanding of the political and social environments of the countries/sectors/activity areas in which they operate. Donors’ commitment to political and social analysis has so far been inconsistent and half-hearted.⁶³ This needs to change. Finally, progressive civil society organizations should contest and monitor donor aid policies. One cannot assume that the donor agenda will necessarily be pro-poor, notwithstanding the fact that popular support for aid programmes in donor countries rests partly on claims about their effectiveness in promoting poverty reduction.

If the World Bank had employed a more politically informed approach in designing its aid programme in Timor Leste, its results would have depended on the quality of its political analysis and the appropriateness and effectiveness of its response to prospective elite resistance. These are difficult things to get right. However, the World Bank arguably would have given itself a much greater chance of producing successful results than by employing a technocratic approach.

ACKNOWLEDGEMENTS

We wish to thank Rachel Gisselquist for comments on an earlier draft of this article and UNU WIDER for funding the research project of which this article is a part. We also wish to thank the two anonymous reviewers who provided feedback on the article. The usual caveat applies.

ABOUT THE AUTHORS

Andrew Rosser is Australian Research Council Future Fellow and Associate Professor in Development Studies at the University of Adelaide. His research focuses on the political economy of development issues in Indonesia and Timor‐Leste.

Sharna Bremner is a Ph.D. candidate in Development Studies at the University of Adelaide. Her current research interests include men's violence against women in conflict and post-conflict settings and the role of women in peacekeeping and peace‐building processes.

Notes

1. We describe East Timor/Timor-Leste as a ‘territory’ at various points in this article to account for its changing political/administrative status over time – that is, Portuguese colony, Indonesian province, UN administered territory and now independent country – as well as the fact that the UN never officially recognized East Timor's incorporation into Indonesia.

2. IEG, Timor Leste Country Program Evaluation, 2000–2010, Washington, DC: Independent Evaluation Group, 2011.

3. Ibid., pp.29–33.

4. Ibid. See also Jim Tulloch, Fadia Saadah, Rui Maria de Araujo, Rui Paulo de Jesus, Sergio Lobo, Isabel Hemming, Jane Nassim and Ian Morris, Initial Steps in Rebuilding the Health Sector in East Timor, Washington, DC: The National Academies Press, 2003; and Andrew Rosser, ‘The First and Second Health Sector Rehabilitation and Development Projects in Timor Leste', in James Manor (ed.), Aid That Works: Successful Development in Fragile States, Washington, DC: World Bank, 2007, pp.123–43.

5. Rosser (see n.4 above).

6. See Jane Hutchison, Wil Hout, Caroline Hughes and Richard Robison, Political Economy and the Aid Industry in Asia, Houndmills: Palgrave Macmillan, 2014.

7. Ian Patrick, ‘East Timor Emerging from Conflict: The Role of Local NGOs and International Assistance’, Disasters, Vol.25, No.1, 2001, p.50.

8. United Nations Development Programme, ‘East Timor Human Development Report 2002', Dili: UNDP, 2002, p.1.

9. See Annex 1 of World Bank, Building a Nation: A Framework for Reconstruction and Development, Washington, DC: World Bank, 1999.

10. World Bank, Joint Assessment Mission: Health and Education Background Paper, Washington, DC: World Bank, 1999, p.1.

11. Kelly Morris, ‘Growing Pains of East Timor: Health of an Infant Nation', The Lancet, Vol.357, No.9259, 2001, p.873.

12. World Health Organization, Plan of Action for Humanitarian Health Assistance and Public Health Action in Response to the Crisis in Timor, September 1999–February 2000, Geneva: World Health Organization, 2000.

13. Patrick (see n.7 above), p.58. See also Andrew McGregor, Laura Skeaff and Marianne Bevan, ‘Overcoming Secularism? Catholic Development Geographies in Timor-Leste', Third World Quarterly, Vol.33, No.6, 2012, p.1135.

14. World Bank, ‘Project Appraisal Document on a Proposed Grant in the Amount of $US12.7 Million Equivalent to East Timor for a Health Sector Rehabilitation and Development Project', Washington, DC: World Bank, Human Development Sector Unit, 2000. See also Rosser (see n.4 above), p.127.

15. La'o Hamutuk, ‘Building a National Health System for East Timor’, La'o Hamutuk Bulletin, Nov. 2000.

16. Tulloch et al. (see n.4 above), p.8.

17. Ibid., p.2.

18. World Bank, ‘Implementation Completion Report (TF-23768) on a Grant from the Trust Fund for Timor Leste in the Amount of $US12.7 Million to the Democratic Republic of Timor-Leste for a Health Sector Rehabilitation and Development Project', Dili: World Bank, 2005, p.2.

19. Ibid., pp.2–3.

20. Ibid., p.3.

21. World Bank, ‘Implementation Completion and Results Report on Grants in the Amount of US$12.6 Million (TF-51363) and Euro 16.2 Million (TF-51363) to Timor-Leste for a Second Health Sector Rehabilitation and Development Project', Dili: World Bank, 2009, pp.1–3.

22. Tulloch et al. (see n.4 above) p.12.

23. World Bank, ‘Project Appraisal Document on a Proposed Grant in the Amount of US$12.6 Million Equivalent to East Timor for a Second Health Sector Rehabilitation and Development Project', Washington, DC: World Bank, Human Development Sector Unit, 2001, p.8.

24. World Bank (see n.21 above), pp.10–11.

25. Maggie Huff-Rouselle, Starting from Scratch in Timor Leste: Establishing a Pharmaceutical and Medical Supplies System in a Post-Conflict Context, Washington, DC: World Bank, 2009, pp.20–1.

26. Kathleen A. Holloway, ‘Timor-Leste Pharmaceuticals in Health Care Delivery – Mission Report 6–17 February 2012', New Delhi: World Health Organization, 2012.

27. IEG (see n.2 above), p.31.

28. Tim Anderson, ‘Solidarity Aid: The Cuba–Timor Leste Health Program’, Asian Studies Association of Australia Conference paper, Melbourne, 1–3 Jul. 2008, p.53; and ‘Social Medicine in Timor Leste', Social Medicine, Vol.5, No.4, 2010, p.185.

29. World Bank (see n.21 above), pp.15–16.

30. Catherine Anderson, ‘Timor Leste Case Study: Ministry of Health’, in Naazneen Barma, Elisabeth Huybens and Lorena Vinuela (eds), Institutions Taking Root: Building State Capacity in Challenging Contexts, Washington, DC: World Bank, 2014, pp.305–8.

31. Tulloch et al. (see n.4 above), p.10.

32. Ibid., p.16.

33. Ministry of Health, East Timor's Ministry of Health – Health Policy Framework, Dili: Ministry of Health, 2002, p.26.

34. World Bank, ‘Timor Leste: An Analysis of Early Grade Reading Acquisition’, 2010 (at: http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/EASTASIAPACIFICEXT/0,,contentMDK:22540804~menuPK:3970762~pagePK:2865106~piPK:2865128~theSitePK:226301,00.html). See also Rosser (n.4 above).

35. Rosser (see n.4 above).

36. Tulloch et al. (see n.4 above), p.29.

37. Dennis Shoesmith, ‘Political Parties', in Michael Leach and Damien Kingsbury (eds), The Politics of Timor Leste: Democratic Consolidation after Intervention, Ithaca, NY: Cornell Southeast Asia Program Publications, 2013, p.126.

38. Anderson (see n.30 above) and Judicial System Monitoring Programme, ‘JSMP Comments to the Sergio Lobo Interlocutory Appeal', 2001 (at: http://members.pcug.org.au/~wildwood/01julappeal.htm).

39. Astri Suhrke, ‘Peacekeepers as Nation-Builders: Dilemmas of the UN in East Timor', International Peacekeeping, Vol.8, No.4, 2001, pp.1–20.

40. Rosser (see n.4 above), pp.173–5.

41. Dennis Shoesmith, ‘Timor Leste: Divided Leadership in a Semi-Presidential System', Asian Survey, Vol.43, No.2, 2003, pp.231–52.

42. George Aditjondro, Timor Lorosa'e on the Crossroads, Jakarta: Center for Democracy and Social Justice Studies, 2001, pp.6–7; Joao Saldhana, ‘Anatomy of Political Parties in Timor Leste’, 2006, mimeo.

43. Shoesmith (see n.41 above), pp.238–41.

44. Rosser (see n.4 above), p.178.

45. Edward Rees, ‘Under Pressure: Falintil – Forcas de Defesa de Timor Leste: Three Decades of Defense Force Development in Timor Leste 1975–2004', Geneva Centre for the Democratic Control of Armed Forces Working Paper 139, 2004, p.5.

46. Shoesmith (see n.41 above), p.244.

47. Shoesmith (see n.37 above), p.132.

48. Xanana Gusmão, Timor Lives! Speeches of Freedom and Independence, Alexandria: Longueville Books, 2005, pp.162–9.

49. Tim Anderson, ‘Development Strategy', in Michael Leach and Damien Kingsbury (eds), The Politics of Timor Leste: Democratic Consolidation after Intervention, Ithaca, NY: Cornell Southeast Asia Program Publications, 2013, pp.215–38.

50. Rosser (see n.4 above), pp.178–9.

51. Shoesmith (see n.37 above), pp.138–40.

52. McGregor et al. (see n.13 above), p.1139.

53. Shoesmith (see n.37 above), p.132; Saldhana (see n.42 above).

54. Richard Holloway, ‘NGO Advocacy in Timor Leste – What Is Possible’, in Catholic Relief Services (ed.), Aspects of Democracy in Timor Leste – NGOs Advocating for Social Change, Dili: Catholic Relief Services, 2004, pp.7–16; and Anthony Smith, ‘Timor Leste: Strong Government, Weak State’, Southeast Asian Affairs, 2004, pp.285–7.

55. World Bank, Timor-Leste Education: The Way Forward, Dili: World Bank, 2003, p.1; World Bank (see n.18 above), p.21.

56. Kanishka Jayasuriya, Statecraft, Welfare and the Politics of Inclusion, Basingstoke and New York: Palgrave Macmillan, 2006.

57. Ministry of Health (see n.33 above).

58. Anderson (see n.28 above).

59. By 2008, there were approximately 300 Cuban health workers in Timor-Leste, while almost 700 Timorese students were studying medicine in Cuba, and another 150 had taken up their studies at Timor's National University. The first graduates of this programme arrived back in Timor and began internships in their country's health system in late 2009/early 2010, after the completion of the HSRDP II in 2008. See Anderson (n.28 above).

60. IEG (see n.2 above), p.31.

61. Gusmão (see n.48 above), pp.29–30.

62. Ministry of Finance, Highlights of the 2010 Census Main Results in Timor-Leste, Dili: Ministry of Finance, 2010.

63. Thomas Carothers and Diane de Gramont, Development Aid Confronts Politics: The Almost Revolution, Washington, DC: Carnegie Endowment for International Peace, 2013.