Timor-Leste became an independent nation in 2002, following over four hundred years of Portuguese colonization, twenty-four years of Indonesian occupation, and three years of United Nations transitional administration. The country faces the challenge of building a strong democracy and vibrant economy against a background of still-fragile institutions and limited human capital. The U.S. and Timor-Leste enjoy excellent bilateral relations based on shared interests and values, and the U.S. is committed to strengthening and deepening this partnership.
U.S. Assistance to Timor-Leste
The U.S. has a significant bilateral development assistance program and is also a major donor member to a number of multilateral agencies active in Timor-Leste such as the United Nations, Asian Development Bank, and World Bank. U.S. development assistance is delivered through U.S. Agency for International Development (USAID) governance, health, and agricultural programs, year-round rotations of U.S. Navy Seabees, and a growing Peace Corps program. In December 2017, the Millennium Challenge Corporation selected Timor-Leste for compact development and aims to partner with the Timorese government to reduce key drivers of poverty and promote economic growth. U.S. assistance focuses on bolstering stability by strengthening the foundations of good governance, improving the health of the Timorese people, supporting the professionalization of the Timorese security forces, and creating jobs for the rapidly growing and youthful population by accelerating economic growth.
Bilateral Economic Relations
Timor-Leste remains one of the least developed countries in the world and there is little direct trade with the U.S. The economy is dependent on government spending (financed by petroleum revenues) and, to a lesser extent, assistance from international donors including the U.S. Private sector development has lagged due to human capital shortages, infrastructure weakness, an incomplete legal system, and an inefficient regulatory environment. The U.S. Overseas Private Investment Corporation and the Government of Timor-Leste have signed an Investment Incentive Agreement. The major U.S. investor in Timor-Leste is ConocoPhillips; its Bayu-Undan gas condensate development is located in the Timor Sea joint petroleum development area between Timor-Leste and Australia. The second largest export is coffee, which generates between $15 and $30 million a year. Starbucks Coffee Company is a major purchaser of Timorese coffee.