By Kate Bissonnette

The people of Timor-Leste will go to the polls Saturday to elect their next president. Parliamentary elections will follow in June. This is the second election cycle for the country, and is being closely watched in Washington, New York, Canberra, and capitals around Southeast Asia. Much is at stake: whether voting on March 17 remains peaceful will help determine if the United Nations can end its peacekeeping mission by the year’s end, and if ASEAN accepts Timor-Leste’s bid for membership. Amid the U.S. rebalancing toward Asia, Washington has made it clear that another democratic voice in ASEAN would be welcome.

The United States has supported Timor-Leste since its independence, providing bilateral aid valued at $25 million in 2010, as well as multilateral aid through agencies such as the UN, the World Bank, and the Asian Development Bank. Much of this aid is focused on promoting good governance, stimulating economic development, and supporting professionalization of the military and the police.

The UN Security Council voted February 23 to extend its peacekeeping mission in Timor-Leste until the end of 2012. The UN Integrated Mission in Timor-Leste, or UNMIT, was established in 2006 to stabilize Timor-Leste as partisan violence brought it to the brink of civil war. In late 2011 an ASEAN working group was established to draft a road map for Timor-Leste to become the 11th member of ASEAN. Singapore previously rejected the country’s application, saying it did not think Timor-Leste could contribute to the grouping’s goal of establishing an economic community by 2015.

Whoever controls the new government will control the country’s Petroleum Fund, currently valued at $9.3 billion. The government is pushing for greater development through its Strategic Development Plan paid for by the Petroleum Fund, but implementation of the plan has been haphazard The poverty rate has fallen 10 percent since Timor-Leste started withdrawing money from the fund five years ago, but the current rate of withdrawal is not sustainable, and development remains low.

The presidency is mainly ceremonial, but the president grants permission to a party to form a new government, giving him a crucial political role. The country’s first two presidents, José Ramos-Horta and current prime minister Xanana Gusmão, pushed the boundaries of their position, inserting themselves into political struggles and domestic politics. If none of the candidates wins a majority in the March 17 voting, the top two candidates will compete in a runoff April 14.

Of the 12 candidates running for president, three are major contenders. Current president Ramos-Horta remains popular, but lacks the support of a major party. Francisco Guterres, or Lu-Olo, is head of the Revolutionary Front for an Independent East Timor, or Fretilin, the country’s most prominent political party. José Maria de Vasconcelos, or Tuar Matan Ruak, retired as chief of the armed forces in October 2011 to run. A former member of Fretilin, He received a significant boost when Gusmão’s National Congress for the Reconstruction in East Timor Party, head of the current ruling coalition, offered him its support.

Some of the biggest challenges facing the elections are the institutional weakness of the election commission and the national police, which remain largely untested in riot and crowd control. A lack of reliable polling makes it difficult to predict who will win the elections. A recent rise youth violence has raised concerns about possible mob violence if the election results do not match the expectations of certain groups. Violence after the 2007 elections was partly triggered by constituents believing that their party had fared better than it actually had.

So far, the campaign has been largely nonviolent and key candidates and political leaders have pledged to ensure peaceful elections. Whether a democratic transition has been achieved won’t be known until after the new government is formed. Limited economic development leaves the country with a long to-do list, and winning the election will be only the first of many hurdles facing the country’s new leaders.

Ms. Kathleen Bissonnette is a Researcher for the CSIS Southeast Asia Program.