With the announcement that his country is ready to buy Portuguese debt, the president of East Timor, José Ramos-Horta, set a precedent in international economic relations that was universally praised in political and financial circles in this southern European country.
The president of one of the poorest countries on the planet, whose per capita income of 600 dollars ranks it 130th in the world, offered a hand to its former colonial power to help it weather the financial crisis.
"I don't see difficulties for East Timor, in terms of buying Portuguese debt," Ramos-Horta said Sunday on a visit to the former Portuguese enclave of Macao in China, where he announced that the government of Prime Minister José Alexandre Xanana Gusmão had decided to diversify investments by East Timor's petroleum fund.
The oil fund was established by the government in 2005 to receive and distribute billions of dollars in tax revenue from emerging oil and gas projects in the Timor Sea, with the aim of ensuring the proper distribution of the earnings.
The president added that other investments could be made in highly successful public or quasi-governmental enterprises that guarantee high returns, such as companies in telecoms or renewable energy, an area in which Portugal is a world leader.
On Monday, State Budget Secretary Emanuel dos Santos described Ramos-Horta's announcement as "a gesture of friendship."
According to initial projections, East Timor's investment in Portugal, slated for next year, could total one billion dollars.
However, the Diario Económico newspaper of Lisbon put the amount at 700 million dollars, because the East Timor oil fund is worth around seven billion dollars and by law, 90 percent of the assets must be invested in U.S. Treasury bonds.
The article goes on to describe new Brazilian and Angolan investment projects in Portugal, a phenomenon also described in an earlier IPS article.
The idea that Portugal may receive substantial amounts of aid-cum-investment from its colonies--all of which have GDP per capitas well below the Portuguese average, recent growth notwithstanding, only one of which has a GDP larger than Portugal's (although admittedly Brazil's a huge exception to this)--is an interesting inversion of the standard postcolonial paradigm. It says much about the current weakness of Portugal, and at least as much about the strength of Portugal's more fortunate ex-colonies. It also suggests that, in one critical way, Portugal's integration with the European Union and the Eurozone isn't going to be as complete as (say) that of Greece or many other peripheral Eurozone countries, simply because Portugal is a periphery of the Lusophone world in addition to the Eurozone. Competition's never a bad thing, at least.