A Generational Clash: Timor-Leste’s Political and Economic Future

Timor-Leste's parliamentary election in May 2023 saw the return of Xanana Gusmão to the country’s premiership. Gusmão, a key figure in the country’s independence movement who has held a leadership role for over half of the country's 21-year history, is not the only revolutionary leader to have held a position of power for significant portions of the country’s history. Others include José Ramos-Horta, Francisco Guterres, and Taur Matan Ruak, who have each served as president, prime minister, or both since the country’s independence. The constant rotation of these leaders and their policies poses a serious question for Timor-Leste: will the current structure and style of leadership beget economic policies for a sustainable future? This case will be expanded on by analyzing the current issues surrounding the political landscape of Timor-Leste, as well as the current economic conditions within the country.  

In terms of its political landscape, Timor-Leste currently grapples with the lack of a clear plan for how the country will be administered as it moves further from its revolutionary past. Leadership has “remained firmly in the hands of a small number of individuals from the generation of 1975, divided by the schism between Fretilin and its opponents, personified above all in Gusmão.” Because of this, the country’s leadership fields the same faces every election cycle. This is especially problematic as none of these leaders have named any successors. José Ramos-Horta once stated that if “Timor-Leste had ‘such a thirst for a new generation…they would have been elected by now.” The Fretilin party, the People’s Liberation Party (PLP), and the National Congress for Timorese Reconstruction (CNRT) make up the parliament’s majority, holding a combined 54 out of 65 seats. The common thread among these three parties is that they are linked to a revolutionary leader. The centrality of these revolutionary leaders has made it difficult for those outside that circle to break into the highest leadership positions of the political sphere, especially the youth (ages 18-30).

There have been few opportunities for the youth to hold positions in government. In the past two elections, the Kmanek Haburas Unidade Nasional Timor Oanm (KHUNTO) party—a youth affiliated party—won 5 out of parliament’s 65 seats, signifying that there is a desire from the youth to be politically involved. However, the youngest member of parliament is only 36 years old. Because Timor-Leste holds the second youngest population in Asia, where the average person is around 20 years old, it is important that the youth population’s ideas are properly represented in government, which is not happening currently.

Many young voters are interested in politics and seek to be involved in creating their country’s future, including by exploring new methods of economic development. While the status quo continues to prioritize large-scale infrastructure projects, the youth want to prioritize human development and job-creation. With the youth expressing that they feel underrepresented by the current system, the generational disconnect in priorities could become a sharper issue as the youth gradually grow into positions of power.

Despite Timorese leadership intending to create change, the ruling parties have not yet been able to fully resolve the significant political and economic challenges for the better part of a decade. The current leadership should involve the Timorese youth in finding solutions to these challenges. Because youth groups are currently underrepresented in the political process, not involving them now could negatively affect their ability to lead in the future due to a lack of experience.

Continuing onto the current economic conditions of Timor-Leste, according to the Lowy Institute, Timor-Leste’s “non-oil GDP growth rate is lower than other Southeast Asian countries” and “agriculture and tourism…have not shown strong indicators of growth in terms of exports or productivity.”  This lower growth rate has become a point of concern for the Timorese people. In a 2023 survey asking the population about their two most pressing concerns, the two issues most cited were cost of living and unemployment. The Timorese economy relies heavily on petroleum exports, which account for around 70 percent of the country’s GDP and 90 percent of its exports. Furthermore, because there is no revenue from the dried-up Bayu-Undan oil fields and the Greater Sunrise fields, Timor-Leste has relied on its $17 billion sovereign petroleum fund as the main source of its budget. This reliance, however, is unsustainable, with the fund estimated to be completely exhausted in the next 10-15 years.

Current political and economic conditions indicate that Timor-Leste should make changes, especially those that complement the progress that the country has made both politically and economically. The Timorese government should prioritize youth involvement in the economy, including human development and job-creation initiatives. One sector where the Timorese government should heavily invest is its digital capacities. As of 2022, 51 percent of the population used the internet, and there were 1.47 million mobile connections in Timor-Leste. However, mobile connectivity is slow, and currently the most expensive in Southeast Asia. Developing this sector would help the Timorese people develop digital skills, reduce financial burdens, create jobs, and allow them to be more competitive on the world stage.

The government should also continue to diversify the economy to ensure that jobs for the Timorese people become abundant. Timor-Leste has already taken steps to do so, including by opening the French-owned Tibar Bay Port, a fully functioning shipping port that could pave the way for the country to assume a more prominent shipping role in the region. The government has also sought increased foreign investments in the tourism and hospitality industries, with Singaporean companies planning to develop hotels, residential spaces, and retail lots, bolstering the Timorese work force across different industries. These investments will help Timor-Leste diversify its economy and reduce its overreliance on oil and gas revenues. However, since several projects are still relatively new, and as the economy remains heavily reliant on petroleum exports, it is too early to say if these investments are enough to tackle the economic issues affecting Timor-Leste in the near future.  

Overall, the government should involve the youth in the policy making process. This will address the lack of representation for the youth, and create an environment where they can contribute to a long-standing, healthy democracy. Furthermore, the government needs to create forward facing economic initiatives that integrate the youth’s preferred approach—they need to create jobs and encourage investment in other industries to decrease the country’s reliance on its sovereign petroleum fund. This approach will equip the Timorese youth with a stronger economy while ensuring that their approach is well represented and integrated.

The international community could also play a part in making investments in Timor-Leste’s future. The United States could explore increasing investments in emerging industries in Timor-Leste, such as those that center on digital technologies, which could help nurture the diversification of the country’s economy. The United States could also increase recruitment of Timorese participants for the Young Southeast Asian Leaders Initiative (YSEALI), which could equip Timorese youth with the tools they need to lead effectively in the future. Timorese participants represent only 1 percent of YSEALI alumni, making this an area of untapped potential.

Timor-Leste is a young and vibrant democracy, and it is critical that today’s leadership reflect that in its policies and—more importantly—prepare the next generation of leaders for challenges that may lie ahead.

Ramil Mercado is a former research intern with the Southeast Asia Program at the Center for Strategic and International Studies in Washington, D.C.

Ramil Mercado

Former Research Intern, Southeast Asia Program