FIVE years after being liberated from Indonesian occupation, the tiny country of East Timor is in a downward spiral of poverty, poor health and illiteracy, according to a grim report by the United Nations.

East Timorese die on average 15 years younger than other East Asians and four out of ten of them survive on less than 30 pence a day.

One child in a hundred dies before its first birthday, and only half the population can read and write, says the UN Development Programme, which launched the report in the capital, Dili, yesterday.

"This is the poorest country in the region, with a per capita income of only $370 (£213) per year," says the report. "And it is getting poorer: following the withdrawal of the UN personnel and other aid workers the economy has continued to shrink."

In September 1999, East Timorese became the object of international sympathy after shocking violence was perpetrated by the Indonesian military.

In the previous month, the UN had supervised a referendum on independence.

After 80 per cent of Timorese voted for independence from Indonesia, the occupying army went on a rampage of violence, killing 1,500 people, deporting hundreds of thousands more and burning down 70 per cent of the territory’s buildings.

An multinational peacekeeping force eventually restored order, and East Timor became independent in 2002, under the leadership of Xanana Gusmao, a poet and former guerrilla leader who spent years as a prisoner of Indonesia.

Since then international attention has turned elsewhere, and the world’s newest country has struggled to overcome the handicaps of meagre natural resources and a poor, uneducated population traumatised by decades of oppression. Even the prospect of oil and natural gas in the seas south of East Timor have failed to stimulate investment in the country.

"Poverty and chronic deprivation continue to tragically affect more than 40 per cent of our society," President Gusmao writes in the introduction to the report. "The poor continue to be chained by what is called ‘poverty trap’."

Life expectancy is estimated at only 55.5 years, compared with 70.5 years for East Asia as a whole. Half the population lack access to safe drinking water, and 90 children out of 1,000 die in their first twelve months of life. "Health standards are still very low," the UNDP reports. "The people of Timor-Leste remain vulnerable to respiratory and diarrhoeal diseases as well as malaria, dengue fever, TB and leprosy."

Literacy is only 50 per cent, and as many as three out of ten children do not attend primary school. Only 60 per cent live above the poverty line - which is defined as an income of 30 pence a day. The poorest East Timorese are people living in the countryside and the victims of the Indonesian occupation, widows and orphans of former resistance fighters, veterans and former child soldiers.

East Timor’s great hope lies in the Timor Sea where oil and gas reserves in the Great Sunrise Field are expected to bring in billions of pounds of revenue over the long term. After months of contentious negotiations a treaty was signed with Australia in January to share income from the oil and gas.

But many Timorese and their advocates have accused Australia of taking advantage of East Timor’s desperate need for cash to negotiate an unequal treaty.

"You’ve got the poorest country in Asia, one of the smallest countries in the world, and then you have Australia, which is a very wealthy country,", said Tom Clarke, of the Timor Sea Justice Campaign. "It’s a bit like if someone was dying of thirst in the desert, you’re not going to be in a good position to negotiate the price of a glass of water."

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