East Timor begins countdown

President-elect Gusmao: 'Independence is only the beginning'

DILI, East Timor (CNN) -- The U.N. representative who headed the transition of East Timor to independent nationhood has symbolically handed the keys of his office to the new country's president-elect.

In a brief and light-hearted ceremony Thursday, kicking off the final countdown to independence on Sunday night, Sergio Viera de Mello presented former guerilla leader Xanana Gusmao with a large foil covered cutout key.

Standing in front of the building in Dili that will be East Timor's seat of government, de Mello wished his successor "all the very best" before the two men embraced and shook hands.

In the coming days the United Nations will wind down its presence in East Timor, handing over full power to the territory's first ever democratically elected government.

IN-DEPTH East Timor: Birth of a Nation    WEB MOVIE Flash intro: Birth of a Nation    RESOURCES Photo gallery: Voices of Timor  Photo gallery: Countdown to nationhood    PROFILES • Xanana Gusmao  • Jose Ramos-Horta  • Bishop Belo    CNN NewsPass VIDEO CNN's Atika Shubert reports on how observers are rating the performance of the United Nations as it prepares to hand over administrative duties to a newly independent East Timor. Play video • East Timor video archive    EAST TIMOR • Timeline: Road to nationhood  • Country profile

Ready or not, East Timor is set for independence.

After years of bloodshed and struggle, Sunday's ceremony will be an occasion for the territory's 740,000 people to reflect on the sacrifices of the past and look forward to an independent future many doubted they would ever see.

But as the country prepares to celebrate, many are also looking to the challenges facing what is to become both the world's newest nation -- and one of its poorest.

Heavy price

For East Timor independence has come at a heavy price.

Sunday's ceremony will mark East Timor's final and formal break from Indonesia after 25 years of often-brutal occupation, which was preceded by four centuries of Portuguese colonial rule.

Under Indonesian rule an estimated 200,000 people were killed or died from starvation -- about one quarter of the population.

After years of oppression and a bitter resistance struggle, East Timorese were finally given the chance to have their say in August of 1999, voting overwhelmingly to cut ties with Jakarta.

The referendum sparked a destructive and murderous backlash from pro-Indonesian militia groups and their backers in the Indonesian military, who did their best to leave the territory a smoldering ruin.

An estimated 80 percent of East Timor's infrastructure was destroyed. Two and a half years later, much of the territory is still reeling from the destruction.

Signs of recovery

But while large swathes of the capital, Dili, still bear the scars of the violence, signs of recovery are everywhere.

Dozens of new shops, hotels, supermarkets, cafes and even karaoke lounges have sprung up over the last few months -- although many of these arose to service the highly paid expatriate personnel of the U. N. and other aid agencies.

For its part, the United Nations says its two-and-a-half-year stint in East Timor has been unlike any other in its 50-year history.

"We had to create a new country basically from scratch," says de Mello, the departing head of the transitional U.N. administration.

Much remains to be done.

A report issued earlier this week by the U. N. Development Program put the average income of many East Timorese at just $.055 a day.

Unemployment is widespread with an estimated 60 percent of the population out of work.

Across the territory, literacy levels remain among the lowest in the world and for many East Timorese access to power, clean drinking water and medical care is extremely limited.

Hope in oil

East Timorese have started to rebuild their country

Working in East Timor's favor is the continued goodwill of the international community and the proven determination of its people to overcome hardship.

Also lending a helping hand is oil -- large reserves lie under an area of sea known as the Timor Gap.

Under a treaty due to be signed by the East Timorese and Australian governments following Sunday's ceremony, East Timor will reap the lion's share of the revenue, dividing the income 90-10 in its favor.

East Timor is expected to earn around $7 billion from the Timor Gap reserves over a seven-year period, with other oil and gas fields also up for exploration.

However, the oil will not begin flowing for some time to come and it is expected to be at least three years before the government sees even a cent of the much-needed cash.

Aspirations

East Timor's institutions are very fragile, having had no tradition of democratic government

Another key test for the nation's leaders will be how to settle disputes. Many of East Timor's overwhelmingly poor population will be eager to see the fruits of independence, and the government's fragile institutions will need to work out to handle their expectations.

The United Nations has said it will remain committed to East Timor, although its presence in the new country will be significantly reduced -- a fact that, in itself, is expected to hit East Timor's economy hard.

It has called for the international community to continue to support East Timor and ensure the stability of this fledgling nation.

After Sunday's festivity East Timor will finally be able to close a long and bloody chapter in its struggle for freedom.

But in its place many new hurdles will have to be overcome and perhaps the hardest part still lies ahead -- building a new nation, making it work and making it prosper.

In the words of president-elect Gusmao: "Independence is only the beginning."