Frontline: Dili, East Timor - Shock to the system as UN dallies in Dili

LORD ALFRED Wallace, the great 19th-century naturalist and explorer, was a judicious man, not given to ill- considered outbursts or attacks of verbal bad temper, but when he visited the Portuguese colony of East Timor in the late 1850s he was unable to restrain himself. The capital, Dili, he described as "a most miserable place".

The houses, he declared, were "dirty and poor". The people had abandoned themselves to "an indolent mode of life, all their actions being redolent of laziness and apathy". Until 50 years, 10 years or even six months ago, visitors to Dili could still nod their heads in agreement when they read the great biologist's words. Today, he would not recognise the place.

In the space of a few weeks, Dili has been transformed from a dozy port in the outback of Asia to one of the most cosmopolitan towns in the world. On the long dusty promenade that runs along the harbour, you will pass Bangladeshi brigadier generals and Dutch cameramen. In the Javanese-owned Portuguese restaurant on Americo Thomas Street, Uruguayan policemen fight for elbow-room with Russian army officers and Korean election officials. Their uniform is a blue baseball cap with a white map of the world stencilled on the front; their vehicles are a fleet of white Toyota Landcruisers. The United Nations have come to town, and East Timor does not know what has hit it.

Unamet, as it is called, is not a huge mission by UN standards, but its impact on a town of this size is enormous. A thousand personnel of 67 nationalities have been brought in for Monday's referendum on independence, which Unamet is supervising. In their wake have come thousands more diplomats, electoral observers, NGO workers, and journalists.

Dili is a town of two three-star hotels, and a handful of lesser hostels; five, or sometimes only three times a week, a small jet makes the four- and-a-half-hour journey from Jakarta, via Bali. At Jakarta airport, there have been desperate scenes as frantic foreigners beg, grovel and bribe their way on to overbooked planes. Having landed in Dili, they then face the biggest challenge of all: finding somewhere to sleep. A group of British policemen was gazumped at the last minute by a team of high-spending American diplomats. Everyone lives in fear of the Japanese TV companies, who pass like the pied piper, leading away drivers, interpreters and guides. A crew from Tokyo turned up at the Hotel Mahkota offering to pay five times the going rate - if the manager would make rooms available by evicting their current occupants. They were politely refused.

The effect of all this on the local economy can be imagined and, for new arrivals the first day in Dili is an anxious, and expensive, scramble for transport and interpreters. Unamet, with its 4,300 local staff, has scooped up the cream of East Timor's English speakers. Students who would have been paid pounds 14 a day as interpreters can now ask for four times that, and hotel rooms have gone up by a similar multiple. The increase has not been matched by better service: every morning, the hotel restaurants are full of crumpled-looking foreigners in acute need of a hot shower and a decent cappuccino.

But the biggest change can be seen in East Timorese people. A year ago, Dili was a town of constant, low-level fear. Opposition to the Indonesian government was barely tolerated, even after the fall of the Indonesian dictator, President Suharto. There were still knocks on the door late at night, and disappearances along lonely roads. These days, there is plenty of terror in the regions of East Timor, in the strongholds of the pro-Indonesian militia. But after nearly 500 years of overbearing rule by foreign powers, the town of Dili has found a new confidence.

All day yesterday, a snake of cars and trucks weaved slowly through the town - 7,000 people or more in the biggest popular demonstration that the territory has seen, under Portuguese or Indonesian rule. For hours they drove up and down, waving posters of the East Timorese guerrilla leader Xanana Gusmao, shouting independence slogans. There is much that could go wrong, but the image of Dili as a fundamentally listless place has been blown away for ever.