Effective European occupation of a small part of the territory only began after 1769, when the city of Dili, the capital of so-called Portuguese Timor, was founded. In the nineteenth century, the Netherlands gained a foothold on the western half of the island West Timor, and formally received it in 1859 through the Treaty of Lisbon.
Firstly, internal displacement in Timor-Leste was eminently urban in nature. Most affected were the capital city, Dili, and, to a much lesser extent, the country’s second-largest town, the eastern city of Bacau. This makes the 2006 internal displacement crisis very much a “contemporary crisis”, in line with the worldwide trend of a growing port near the capital city. Construction has also begun on a Heineken factory, and other potential investors are showing interest in some sectors. Development of the domestic economy will be essential. With no new oil fields under development and current wells depleting rapidly, Timor-Leste is expected to be