Outright begging is rare and East Timor's peaceful election last week and the emotion involved in achieving independence draws admiration and respect.

But what independence brings is daunting in a place with 80 per cent unemployment and a negligible skills base.

'We see their dignity because we admire their struggle, but that's more to do with our fantasies than theirs,' said an international expert in shelter provision programmes.

'Real dignity will only come with income. And that's still a distant dream.'

Others worry that for the next few years, before disputed oil and gas income comes on stream, maintaining gains of the two years since the pro-independence ballot will be difficult.

Even the political achievements of the East Timorese are damaging their economic prospects.

'It's ridiculous now. People aren't killing each other so much as before and they don't appear to be starving in the streets, so some donors see this as no longer an emergency situation and not enough money is coming in,' said another development worker.

'These people, the reluctant donors, just don't realise the incredible lack of skills, the depth of the damage in this place,' He said that after centuries of outside rule there was no viable decision-making structure, no pool of skills and virtually no concept of taking initiative.

'Now the government is no longer the enemy,' another aid worker said. 'Some of the smarter local non-government groups are fully aware of this. The paradigm is rapidly shifting as they learn to work with government, help create laws and oversee implementation after literally fighting these things for years.'

The shocking visual aspect of the new democratic East Timor is that one can drive for hundreds of kilometres and see only wrecked towns, destroyed homes and markets reduced to a pile of vegetables in the dust.

There is no doubt that the Indonesian-backed revenge rampage in September 1999 was systematic, and remains a major hurdle to nation-building.

The most practical ways of helping East Timor rebuild are probably not the big-name, high-cost projects of multinational institutions whose bureaucracies alienate local partners and often fail to meet high expectations.

Instead, the breeze-block construction of a student hostel on land donated by the village of Caicola in central Dili, is likely to do more for the future.

The project is by Hong Kong philanthropist Eric Hotung, who, as a smaller operator, can move quickly to meet specific needs.

The few dozen high-school and university students who will stay there when term starts in October had lost their housing to returning refugees from West Timor. They would have had to drop out of class without it. The local community and church leaders also feared the return of a brothel to the site.

But handouts have their limitations and development experts say the sooner the UN and large groups pull out the better, so that locals stop expecting outsiders to provide. One private foreign businessman openly wondered why he was bothering to build a hotel.

He is part of the 10 per cent of potential tourism investors who have persevered through UN and local obstacles, but he thinks East Timorese do not want to work and would be better off in a client-state relationship with a larger power.

That bitterness is not shared by development experts who were involved in East Timor before such work became fashionable.

'Yes, East Timor can survive if its natural resources are managed properly,' said Douglas Ramage, Indonesia country director of the Asia Foundation, which has been active in East Timor for 10 years. 'If the natural gas and oil reserves are managed properly, they should be enough for this country of less than a million people to survive for years to come.

'The trouble is that with potentially huge oil and gas revenues the potential for mismanagement is high. East Timor would do well to avoid the experience of Brunei, Nigeria and others in this regard. The key is that East Timorese people have the spirit and determination to survive. So it's a moot point whether it is viable or not, as these people will continue to try.'