Timor-Leste Opposition Urges Proactive Measures to Mitigate Economic Impact of Israel-Iran Conflict
The opposition in Timor-Leste has urged the government to take proactive measures to address the economic challenges arising from the escalating conflict between Israel and Iran, with particular concern over rising global fuel prices. The Strait of Hormuz, a vital maritime passage for global oil shipments, faces potential disruption, prompting opposition leaders such as FRETILIN deputy Maria Angélica Rangel and Popular Liberation Party deputy Maria Angelina Sarmento to call on the government and Ministry of Finance to prepare contingency plans to manage fuel shortages and inflation.
Fuel prices have surged to around $120 per barrel, posing a significant threat to inflation in Timor-Leste, a country heavily dependent on imports and foreign investments. The government acknowledges these risks. Vice Minister of Finance Felícia Claudinanda Cruz explained that while the use of the U.S. dollar as the national currency may help mitigate some inflationary effects, ongoing vigilance and preparedness remain essential to manage potential economic shocks.
Civil society organizations, including Luta Hamutuk and Asia Justice and Rights (AJAR), have also expressed serious concerns about the broader economic and security implications of the conflict. They warn that global tensions could escalate further, indirectly impacting Timor-Leste’s economy due to its reliance on maritime trade routes and imports. The Strait of Hormuz is a critical chokepoint for nearly 20% of global maritime trade, and any disruption could significantly affect the cost and availability of essential goods in Timor-Leste.
These groups emphasize the importance of strategic economic diversification, increased investment in agriculture, and improved education quality to strengthen the country’s resilience against external shocks. They highlight that Timor-Leste’s agricultural production currently falls short of meeting local food needs beyond a few months, raising concerns about food security in the event of prolonged global instability. The risk of social unrest, including potential food shortages and related disturbances, is a pressing concern.
Moreover, civil society advocates stress the need for inclusive policymaking that involves community participation to ensure government responses effectively address the local consequences of this international crisis. They encourage open public discussions to gather ideas and develop preventive strategies that can mitigate the impact on Timor-Leste’s economy and social stability.
Although a temporary ceasefire was announced on June 23, 2025, mediated by the United States and Qatar, the situation remains fragile. Both Israel and Iran have accused each other of violating the ceasefire, and no long-term peace agreement has been reached. U.S. President Donald Trump has indicated that further talks with Iran will continue, focusing on nuclear issues and regional stability.
In this context, Timor-Leste’s government is closely monitoring developments and preparing to intervene in markets if necessary to stabilize fuel prices and ensure the availability of basic goods. The government draws on experience from the 2008 global financial crisis, when it successfully managed sharp price increases to protect the purchasing power of its population.
Overall, the conflict between Israel and Iran presents a complex challenge for Timor-Leste, underscoring the need for comprehensive economic planning, strategic investments, and inclusive governance to safeguard the nation’s economic and social well-being amid ongoing global uncertainties.