Asean membership draws a tiny but strategic Indo-Pacific nation closer to US-China chess match
East Timor set to become newest member of Asean bloc, but can it balance relations with its neighbours while safeguarding its own interests?
At 71, he still carries the weight of a tiny country that only gained sovereignty in 2002, after nearly 400 years under Portugal and a generation under Jakarta’s rule.
Back in Washington for a second, non-consecutive stint as ambassador – his first was under George W. Bush – Guterres sipped Timorese coffee on a late summer afternoon and reflected on the turbulent path that his nation of about 1.3 million people took to independence, and the challenges ahead.
“We are focused on the future, not on revenge for past mistakes,” he told The Post, noting the dramatic turnover of Indonesia from occupier to partner.
With a tiny economy heavily reliant on oil and gas exports, a petroleum fund invested largely in US markets, and a population eager for jobs and infrastructure, the country now faces the delicate task of balancing growth ambitions, consensus-driven Asean diplomacy, and the pressures of global geopolitics.
It also offers a chance to attract investment, build critical infrastructure and accelerate development. This will potentially create a once-in-a-generation opportunity for more work, higher-paying jobs and better living standards for the country’s citizens.
The benefits also present a challenge: the country must now navigate a delicate diplomatic tightrope, balancing relations with powerful neighbours while safeguarding its own interests.
According to Prashanth Parameswaran, founder of the weekly Asean Wonk newsletter and visiting scholar with the Asean and Indo-Pacific Studies Initiative at American University, “Asean is divided,” and East Timor’s admission as a “full member” will place it more directly in the arena of intensifying US-China competition, which it will need to “manage carefully”.
He added that it will be “critical for smaller countries like Timor to continue to speak up on the importance of principles like multilateralism and international law, because they understand their value more so than the great powers”, especially as the global order shows signs of fracturing.
For decades, the nation has largely stayed on the sidelines, using its small size and relative isolation to avoid entanglement in regional conflicts.
But as a full member, it will now have to navigate the competing expectations of larger neighbours, balancing diplomacy, development and security in a region where the stakes – and the scrutiny – have never been higher.
However, Guterres rejected concerns that the influence of China’s geopolitical gravity could obliterate the economic and defence strategies that Asean members want to adopt, and leave tiny East Timor completely unable to manoeuvre.
Becoming an Asean member carries “a lot of responsibilities”, he said, adding that “we have to align our foreign policy to the consensus that exists in Asean”.
“We want to be seen as a loyal partner, a loyal friend which seeks peace,” Guterres emphasised.
But questions linger about whether East Timor can navigate Asean’s consensus-driven system. In practice, consensus means decisions move forward only when all members agree – or at least do not openly object.
The approach has long kept the bloc stable, giving smaller states a voice while slowing decision-making.
Parameswaran of Asean Wonk said East Timor will bring its “strong support for democracy, international law, and multilateralism” and its leaders will “likely continue” to speak out on the need for more activism on flashpoints, such as the South China Sea, “but they will also realise they are only one voice of many in Asean’s consensus-based system”.
Asked about choosing between China and the US, Guterres described both China and the US as “big powers”. “We don’t have allies, but we want to be friends with everybody, including China,” he said.
Guterres added that Timoreans do not “feel that China is a threat” as he made clear that East Timor seeks to remain impartial in the Indo-Pacific power contest.
Earlier this year, East Timor’s President Ramos-Horta indicated that his country was open to taking part in Chinese military exercises. Yet the bulk of the relationship remains economic.
Chinese aid has financed major infrastructure projects, including the presidential palace, the foreign ministry and the military headquarters, while state-owned Chinese companies constructed the national power grid and key port facilities.
Still, Guterres emphasised that concerns about a so-called “debt trap” and Chinese influence were unfounded.
“Many people in the world talk about debt traps … a few times we were offered loans by companies from China, but our policy is that you cannot spend when you do not know how to repay,” Guterres shared, adding that Beijing never forced the country to receive loans or aid.
On the trade war front, East Timor is not likely to find itself in Trump’s crosshairs: it runs a trade deficit with the world’s largest economy.
Guterres noted that East Timor relies on the US dollar and channels much of its US$18 billion petroleum fund into American markets, leaving the country exposed to currency swings and global trade tensions.
His country was not “worried” about the tariffs, Guterres said.
“We are more worried about the value of the US dollar as it is also East Timor’s currency,” he added.
In the first half of 2025, the US dollar dropped 10.7 per cent – the worst performance for this period in more than 50 years – driven by inflation worries, trade uncertainties and other economic pressures.
“The government of East Timor is conscious that different positions that we have in world trade,” Guterres said, calling it “something temporary”.
“At the end of the day, every country in the world wants to have a trade that is going to be predictable”, he said.
For a man who has carried his country’s voice through exile, occupation and independence, the mission remains unchanged: securing East Timor’s place in the world.
“We want the people of the world to know that a small country, a beautiful country that is far away from many places … what we want is that all wars must end everywhere,” Guterres said.
“It’s important that every person in the world seeks peace, because without peace, you cannot be happy, nor can you develop your country and your people.”