s economic crisis and to meet IMF
targets. In order to diversify the island's production base, the
government is attempting to develop an offshore financial sector and
is planning to construct an oil refinery on the eastern part of the
island.

Dominican Republic
The Dominican Republic is a Caribbean
representative democracy that enjoyed strong GDP growth until 2003.
Although the country has long been viewed primarily as an exporter
of sugar, coffee, and tobacco, in recent years the service sector
has overtaken agriculture as the economy's largest employer due to
growth in tourism and free trade zones. Growth turned negative in
2003 with reduced tourism, a major bank fraud, and limited growth in
the US economy (the source of about 80% of export revenues), but
recovered in 2004-06. With the help of strict fiscal targets agreed
in the 2004 renegotiation of an IMF standby loan, President
FERNANDEZ has stabilized the country's financial situation. Although
the economy continues to grow at a respectable rate, high
unemployment and inflation remain important challenges. The country
suffers from marked income inequality; the poorest half of the
population receives less than one-fifth of GNP, while the richest
10% enjoys nearly 40% of national income. The Dominican Republic's
development prospects improved with the ratification of the Central
America-Dominican Republic Free Trade Agreement (CAFTA-DR) in
September 2005.

East Timor
In late 1999, about 70% of the economic infrastructure of
East Timor was laid waste by Indonesian troops and anti-independence
militias, and 300,000 people fled westward. Over the next three
years, however, a massive international program, manned by 5,000
peacekeepers (8,000 at peak) and 1,300 police officers, led to
substantial reconstruction in both urban and rural areas. By the end
of 2005, all refugees either returned or resettled in Indonesia. The
country faces great challenges in continuing the rebuilding of
infrastructure, strengthening the infant civil administration, and
generating jobs for young people entering the work force. The
development of oil and gas resources in nearby waters has begun to
supplement government revenues ahead of schedule and above
expectations - the result of high petroleum prices - but the
technology-intensive industry does little to create jobs for the
unemployed, because there are no p