In the past few years, everyday life in Timor-Leste has been disrupted by the multiple effects of the COVID-19 pandemic. Conditions were imposed on the exercise of public liberties, the composition of government and the dynamics of political life were challenged, economic performance weakened and the wellbeing of the population suffered. Rather than being a localised phenomenon impacting only public health, the effects of COVID-19 were felt widely, inducing social and political change.

Timor-Leste quickly realised that it was ill-equipped to deal with COVID-19. The public health service was poorly managed and lacked both the necessary equipment and the resources to fight the disease — in early 2020 there was only one ventilator in the country’s main hospital.

A strategic decision was taken to sever most links with the outside world to prevent the virus from entering the country. For most of 2020, this proved successful, with only a few dozen cases reported. But this decision had severe consequences on the population, economy and political environment.

Significant restrictions to movement and public liberties were put in place. Economic performance was extremely poor even though oil and gas resources were not as heavily affected as other sectors of the economy. According to the World Bank, non-oil GDP in 2020 contracted by 8.6 per cent. The crisis came on top of an existing period of low growth.

The political environment was even more adversely affected. A major strain was imposed on the democratic consolidation process, and fears emerged that some form of democratic backsliding was taking place.

COVID-19 appeared right when a tug-of-war was taking place between the directly elected President of the Republic, Francisco ‘Lu Olo’ Guterres, who was backed by his party FRETILIN, and the leader of the parliamentary coalition who had the support of the majority in the House, Xanana Gusmão. Differences between the two go back to 2017 and the parliamentary elections that followed Lu Olo’s accession to the presidency. Divisions deepened in the wake of the president’s decision to dissolve parliament in 2018 and call fresh elections, which his party lost.

The political truce drawn when COVID-19 threatened to disrupt social life was short-lived. Xanana — the charismatic leader of the Resistance against the 1975–1999 Indonesian occupation and widely regarded as Maun Boot (big brother) — opposed the indefinite renewal of the exceptional rule that the president requested. This led to a significant reshuffle of the government. Taur Matan Ruak kept his job as prime minister, but FRETILIN — which had lost the 2018 elections — entered the cabinet in lieu of Xanana’s party, the largest in parliament.

For the first time since independence, a clash of formal political legitimacy derived from institutional rules and charisma marked the political scenario. A country with shallow institutional legitimacy had thrived for over almost two decades on the back of a convergence between new forms of legitimacy and those rooted in popular political culture.

2022 saw the return of the old-style mix of political legitimacy. Lu Olo ran for a second term as president but was defeated. Former president Jose Ramos-Horta, supported by Xanana and vowing to return the presidency to a non-partisan figure, won in a landslide victory. The road was paved for the political temperature to cool down and return to the model experienced during the first three presidencies. Fresh elections are due in the first half of 2023 and will pit presidential camp and Xanana against the FRETILIN-controlled incumbent.

The much-anticipated FRETILIN congress — an event that takes place once every five years — was held in September 2022. The historical leadership of Mari Alkatiri and Lu Olo was challenged by Rui Maria de Araujo and José Somotxo. In a way, the Katuas or ‘old men’ defeated the Gerasaun Foun or ‘New Generation’ who came of age under Indonesia and engaged in the nationalist cause. The emergence of a new generation of main political actors cannot be ignored at the next legislative elections in 2023.

2022 also witnessed a potential breakthrough in the dispute over oil and gas resources. Timor-Leste has insisted the new field ought to send its output to the country’s south coast where a petrochemical complex would process it. This view has long been opposed by other stakeholders who prefer to use the facilities that already exist in Darwin. The issue is expected to be settled in 2023, with important consequences for the development model to be pursued.

Authorities eventually eased internal restrictions as well reopened channels of contact with the outside world. The economy readjusted to the new situation with modest gains and living conditions improved. In 2022, GDP growth is estimated to have reached a positive, yet modest, 3 per cent — up from 1.5 per cent in 2021. Still, the current level of GDP is still below what it was when Lu Olo was elected president. The scenario is further complicated by economic challenges of rising inflation rates internationally.

Major questions remain about Timor-Leste’s capacity to fully implement an economic development agenda that takes into account both the limits of the Petroleum Fund and the pressing need to foster human capital to achieve a higher international development status by 2030. An important step in that direction may be attained in 2023 if its accession to ASEAN is finally completed, facilitating the integration of Timor-Leste’s economy into a major regional market.