Portugal colonized Timor Lese from the end of the 18th century through 1975, and Indonesia invaded one week after the end of the former’s rule. Indonesian rule was marked by the brutal repression of pro-independence rebels. In 1999, as the reformasiprocess in Indonesia progressed, a referendum resulted in an overwhelming vote for independence. This vote was met with violence from pro-Indonesia militias, which prompted an Australia-led military intervention under UN auspices to restore peace. From 1999 until 2002, Timor-Leste was under UN administration, pending the approval of the Constitution and the official declaration of independence on 20 May 2002. 

Since the declaration of independence, political institutions have been dominated by figures linked to the independence struggle. The country has successfully organized elections and built a democratic governance structure, but disagreements about how to run the country and who gets access to the associated power drive tensions between the main two parties, FRETILIN (Frente Revolucionária de Timor-Leste Independente) and CNRT (Congresso Nacional de Reconstrução de Timor). Political deadlock, particularly regarding the transformation of dwindling oil dividends into development and the pending economic transformation of the country, remain problematic. A context where  interpersonal relationships can sometimes supersede party loyalty, along with a focus on consensus and consultation, means that decision-making can be slow. With a poverty rate of above 40 per cent, unemployment and cost of living are what citizens find most pressing.

Timor-Leste is ethnically diverse and home to multiple Indigenous groups and small Chinese and Portuguese minorities. The majority practice Catholicism, but there are Muslim, Protestant and Animist minorities. The country’s small ethnic minorities are generally considered well-integrated into politics and society.  Poverty is concentrated in rural areas and is often linked with geographic location rather than ethnicity alone. Timor Leste has 16 Indigenous languages, with Portuguese and Tetum as official languages, and English and Bahasa Indonesian recognized as working languages. Language remains a divisive issue in the country, reflecting broader issues of national identity. 

Timor Leste performs slightly above the regional average in Gender Equality, with a 2006 gender quota resulting in high levels of female political representation. However, challenges persist, including high rates of gender-based violence and cultural norms that limit women’s economic and local political participation. While positive steps have been taken to establish transnational justice processes, challenges remain in providing reparations to victims, especially women, who suffered abuses under Indonesia's occupation. Key issues include prosecuting past perpetrators and addressing resource constraints in the justice system. 

Looking ahead, it will be important to watch how the government develops plans to sustainably advance the economy, while continuing efforts to strengthen the Rule of Law as well as whether independence-era political figures, such as Prime Minister Xanana Gusmão, will open the way for new generations of politicians. 

Last updated: June 2025