Presidential Election in East Timor: A Fragile Nation Charts an Uncertain Future Beawiharta / Reuters Electoral workers hold a ballot paper as counting takes place in Dili March 17, 2012 When residents of Dili voted to elect a new president five years ago, more than a hundred thousand displaced people were scattered about the city in tent camps and gangs of disgruntled youths exorcised their angst in the street. The scene this year reflected a very different mood. "In the last election, people hurried to go home after they voted because they were concerned there might be trouble," said Florenco Mendes, a 40-year-old father of four, after he voted in the capital city. This year people feel comfortable to stay afterwards. Indeed, in Dili on Saturday dozens of people lingered outside a neighborhood polling station to chat and observe the spectacle of their friends and neighbors passing through lines and booths and emerging with an ink-stained finger. Many returned at day's end to observe ballot counting in order to ensure fair play. The vote follows several years of stability after national crises shook the shallow foundations of East Timor's young democratic government. In 2006, disgruntled soldiers staged a mutiny in the capital that left dozens dead, caused tens and thousands of residents to flee the city and threatened to escalate into civil war. Further violence did not materialize during the 2007 presidential poll but ignited in 2008 when President Jose Ramos-Horta was shot several times in an assassination attempt that he barely survived. PHOTOS: Timor's 2008 Turmoil The government hopes the relative tranquility of this year's election will let the country shed the "post-conflict" and "fragile state" suffixes as it reaches its tenth year of self-rule in May. East Timor was ruled by Portugal as a colony from the 16th century to 1975, and then existed as an independent state for less than two weeks before neighboring Indonesia invaded and embarked upon a 24-year campaign of brutal subjugation under which some 180,000 East Timorese - then a quarter of the population - died. When Indonesia's army withdrew, it vindictively laid waste to what little infrastructure East Timor had. The country was administered by the United Nations from 1999 to 2002 and the international body has ever since played a peacekeeping and governance role. If peace prevails, 1280 UN police, along with a smaller security contingent from Australia, will depart at year's end, leaving East Timor alone in managing its security for the first time since independence.Skepticism remains among East Timorese about the ability of the domestic police force, which is much more experienced at bluntly enforcing order than at gently enforcing laws. Peace is also necessary if East Timor is to be accepted into the main regional political bloc, the Association of Southeast Asian Nations (ASEAN), a step the government sees as important to diversify the country's foreign relations and boost its international credibility. The tiny half-island nation has punched above its weight in the international stage in part due to the profile of the incumbent president, Jose Ramos-Horta. He earned a Nobel Peace Prize in 1996 for his decades-long work in exile, lobbying foreign powers to support his country's independence, and in subsequent years was cited as a serious contender for the post of UN Secretary General. The 62-year-old has not been re-elected, however. With most votes counted, the poll was led by Francisco Guterres (better known as "Lu Olo"), the head of Fretelin, a party holding the most seats in parliament, and Jose Maria de Vasconcelos (addressed invariably by his nom de guerre, "Taur Matan Ruak"), who recently retired as chief of the country's armed forces. They will face off next month in a deciding vote because neither secured an outright majority of first-round support. MORE: East Timor: A Former Colony Mulls the Politics of Teaching Portuguese Both figures had also been liberation leaders - Guterres was head of a political resistance network and Vasconcelos led guerilla fighters hiding out in jungle redoubts. The calm, serious Guterres, 57, won the most votes in the first round of the 2007 presidential election but was soundly defeated in the run-off when other candidates" constituencies swung to Ramos-Horta. The more animated Vasconcelos, 55, who positioned himself during his campaign as a political outsider, was boosted by an endorsement from Prime Minister Xanana Gusmao's party, the National Congress for the Reconstruction of East Timor (CNRT). The spirit of the liberation movement still resonates strongly for East Timorese. Bonds between candidates and voters often extend back decades. Justo dos Santos, 65, who attended Taur Matan Ruak's last campaign rally in Dili before Saturday's vote, said he fought beside the candidate in guerilla campaigns against the Indonesian army. "Xanana and Taur Matan Ruak led the country in war, and now they should lead the country in peace," he said, referring to the candidate and as well as the current prime minister, Xanana Gusmao, who, until his capture in 1992, preceded Vasconcelos as head of the liberation army. The country's constitution established the presidency as mostly a ceremonial role, but the outspoken Ramos-Horta molded the post into an influential perch from which to weigh in on the country's domestic and international affairs. The election is also seen as an important staging ground for parliamentary election in June, which should prove a tight contest given the strength of both Gusmao's CNRT and the Fretelin opposition. Control of the government comes with a deep chest: a sovereign fund holding revenue from sales of offshore oil and gas now stands at around $10 billion, a considerable sum for an impoverished nation of 1.1million people. The current ruling coalition headed by Gusmao has drawn heavily - alarmingly so, say some critics - from the fund since it took control of the government in 2007. It initiated a popular pension program for the elderly as well as the liberation struggle's veterans. The biggest portion of the pot has gone to infrastructure. MORE: Five Reasons to Visit Dili The Prime Minister's vision is to pave the way to development through asphalt and power lines, a plan whose basic outlines are widely supported. But critics contend that roads are perennially being re-built because they are poorly maintained. And Gusmao's marquee electricity project, a 120-megawatt power plant ten kilometers outside of Dili, suffered constant delays and cost-overruns because of poorplanning and dubious craftsmanship by the contracted firm, the ominously named China Nuclear Industry 22nd Construction Company Ltd. Low spending on social services has also drawn criticism. This year's government budget has allotted approximately the same funds for road construction as education and healthcare services combined. East Timor has one of the highest rates of child malnutrition in the world, and schools lack basic resources such as textbooks, chairs and clean toilets. "If the budget keeps growing but regular people are still drinking dirty water, we can't call that social justice," said Lourdes Alves de Araujo, head of Organizasaun Popular Mulher de Timor, a women's group affiliated with the opposition Fretelin party. Most concerning, argues the local NGO Lao Hamutuk, is that the country is falling victim to the oil curse. Government spending has generated few jobs or industries, driven inflation above 17% and distracted the government from addressing longer-term problems, says the group. Measured by proportion of the government's budget derived from oil revenues - over 90 percent - East Timor is the world's most oil-dependent country. MORE: World Bank to East Timor: We Messed Up Unemployment is already high - at least 20% in urban areas - and could jump within a decade as the country's post-conflict baby boom matures to working age. Apart from modest amounts of coffeesales, East Timor produces nothing for sale. Furthermore, says Damien Kingsbury, a professor of political science at Australia's Deakin University, the country's low skills base, geographical isolation, and high labor costs compared to other countries in the region offer no comparative advantages to attract investment. His conclusion paints a rather grim picture: "There are few options but for Timor-Leste to carefully manage its oil fund and to generate jobs through government spending, such as on roads, etc." Navigating overwhelming obstacles is nothing new to East Timor, whose very existence as an independent state was long in doubt and whose ability to self-rule was regarded abroad with skepticism in its first years of independence. "When I received [the presidency] in 2007, the country was on the verge of civil war," Ramos-Horta, told TIME in an interview at his residence in Dili a day before the vote. Today, he says, "The country is at peace. People have regained faith in the government.