In East Timor, U.S. Retreats From Plan to Build ‘Lifesaving’ Sewage Plant

Ravaged by a brutal military occupation, East Timor won its independence just over two decades ago. The young nation has built itself into a stable democracy, but poverty remains widespread.

Nearly half of the children in Dili, the capital, are physically stunted by malnutrition and repeated infections from waterborne diseases. The city does not have a municipal sewer system, and drinking water is often contaminated by raw sewage.

The United States offered to help fix the problem. A small U.S. development agency, the Millennium Challenge Corporation, agreed to spend $420 million in part to build a wastewater treatment system. The local government spent millions buying land and preparing it for construction.

But a field of debris may be the project’s lasting legacy.

In August, the M.C.C.’s board of directors recommended terminating the agreement with East Timor, which is also known as Timor-Leste, according to the offices of two senators notified of the action. The board’s decisions are subject to congressional review.

It also recommended scrapping large infrastructure projects in the African nations of Lesotho and Malawi, and agreements in development with eight other poor countries. At the same time, it selected two South Pacific countries, Fiji and Tonga, for possible investment.

The M.C.C. referred queries to the State Department, which declined to comment. But in a statement, it said “the United States is proud to support Timor-Leste and remains focused on advancing and strengthening our strong bilateral relationship.”

Reneging on the commitment with East Timor could tarnish America’s reputation in the young democracy, where China competes for influence. Citing East Timor’s longstanding relationship with the United States, President José Ramos-Horta said the grant’s termination “is beyond comprehension and is unprecedented between friends.”