Even set against its long history of misery, 2006 was one of Timor-Leste's worst years. While there have been other years in which more people have died and in which its physical infrastructure has been more destroyed, 2006 saw, if not the ending of a dream, then the harsh realization that the value of independence was only as good as its political community made it. In 2006, Timor-Leste's political community tore itself apart, setting in train an internal conflict that had scope to run well beyond the year's end, and which threatened to relegate the country to the status of just another post-colonial failed state.

Timor-Leste's descent into factional conflict and the related forced resignation of its Prime Minister reflected the type of political chaos that has affected many newly post-colonial states, in which competition for power overwhelmed a fragile and still fragmented political environment. So much had been hoped for and invested in Timor-Leste by the international community, by the United Nations, and not least by the people of Timor-Leste themselves, yet so little was shown to have been achieved.

Despite the change of prime minister, with the ascendance of the popular Foreign Minister Jose Ramos-Horta, the establishment of a UN police presence, along with continuing external military support from some 3,000 foreign troops, violence and destruction continued, entrenching a regional divide that challenged Timor-Leste's future.

Before the Crisis

Prior to the crisis, the state had been moving along at a steady, if slow, pace towards achieving a series of its development goals. Timor-Leste's most pressing issue was poverty. At around US$366 per capita GDP (corrected for purchase pricing parity) Timor-Leste was the poorest country in the world, although with a slightly better Human Development Index ranking of 140 of 177 states. Such poverty underpinned and exacerbated all other social and political tensions.

Against this backdrop, Timor-Leste's Fretilin government, led by Mari Alkatiri, had made several sound development decisions, in particular avoiding external debt, seeking local food security and bringing down inflation.