Subject: East Timor's blood, Australia's oil?

East Timor's blood, Australia's oil?

Today, East Timor is the poorest state in Asia. It could be one of the wealthiest. The reason is oil.

by Jeffrey Smith and David Webster August 25, 2003

Four years ago this month, East Timor voted for independence following a quarter-century of brutal foreign occupation. Invaded and occupied by Indonesia in 1975, it finally took its place as the first independent state of the new century. Whether that independence will be secure depends on an economic question: who will control the offshore oil of the Timor Sea?

Today, East Timor is the poorest state in Asia. It could be one of the wealthiest. The reason is oil: billions of barrels in untapped reserves in the Timor Sea. But the ownership of that oil is in dispute. The international community once again holds the key to East Timor's fate.

One of the main countries that sold out East Timor in the past is Australia. Today it is doing much the same thing in a battle over ownership of East Timor's offshore oil.

Petroleum revenues, says East Timor's Prime Minister Mari Alkatiri, “will finance our future and allow us to wean ourselves gradually from the generosity of international donors.” The country's budget now relies heavily on foreign aid. Oil offers a way out: offshore reserves in the Timor Sea are worth as much as $30-billion (U.S.) over the next 30 years. East Timor need not continue to be the poorest country in Asia, a ward of donor states; it can be self-sufficient based on wise use of oil revenues.

But the power to decide lies not in East Timor, but in Australia. And Australia is playing hardball with its smaller neighbour. “We are very tough,” Foreign Minister Alexander Downer told Alkatiri. “We will not care if you give information to the media. Let me give you a tutorial in politics — not a chance.”

Maritime boundaries in the Timor Sea are still not fixed. Australia has historically claimed the bulk of the waters under the outdated continental shelf principle, and demarcated its boundaries with Indonesia under this principle in 1972. That treaty left the boundary between East Timor and Australia undefined, creating an oil-rich zone of uncertain control called the Timor Gap.

After Indonesia invaded East Timor, it began negotiations with Australia to close that gap. With the Law of the Sea convention now favouring a median line in the determination of maritime boundaries, the two countries agreed on a complex revenue-sharing agreement for the disputed waters. Australia also agreed to recognize East Timor as part of Indonesia as the price for beginning oil exploration. But the treaty was reached with no input from the Timorese people.

“Now that major petroleum projects in the Timor Sea are poised to begin, the issue of [East Timor's] permanent maritime boundaries is more important than ever before,” according to Alkatiri. But while the Timorese parliament has declared borders in keeping with Law of the Sea principles, Australia has refused arbitration and even withdrawn from World Court jurisdiction. In effect, there is a gap in East Timor's independence: Australia continues to occupy part of its territory.

Given the history of Australian-Timorese relations, that is ironic. Many Australians recall how in their country's hour of need, East Timor was there. In the Second World War, Australian forces used East Timor as a shield against the Japanese advance. As many as 80,000 Timorese died fighting alongside Australian soldiers in a war that was not theirs. “The government never really acknowledged our debt to the Timorese from the war,” in the words of Paddy Kenneally, one of the Australian soldiers who fought in East Timor.

Given this history, and Australia's complicity with the Indonesian occupation that cost another 200,000 Timorese lives, Australia should be generous. It can do so with long-term aid at the expense of the taxpayers of Australia and the international community in general, or it can do so by giving East Timor a better break on the oil reserves. There is no reason why foreign oil companies cannot work with the government of East Timor as easily as they can with the government of Australia. The course of justice and the course of enlightened self-interest both argue for a more generous policy by Canberra.

East Timor was abandoned for years by the world. Will it be abandoned again in the name of greed?

Jeffrey Smith is a maritime lawyer who has advised the East Timorese government. David Webster is co-editor of a forthcoming book on East Timor.

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