Received from Joyo Indonesian News

The Economist March 13th, 2003

Australia and East Timor

A squabble over oil

The Timorese say they were bullied

Sydney

BULLYING is not new to East Timor. After living under Indonesian occupation for almost 25 years, the tiny former Portuguese colony won its independence last year after much chaos and bloodshed. As they face up to the realities of life on their own, many in East Timor are now starting to wonder if they have rid themselves of one coercive neighbour only to deal with another one, this time Australia.

The issue at stake is the vast oil and gas reserves under the Timor Sea, which separates Australia and East Timor. For Australia, already rich in oil and gas deposits of its own, it is hardly a question of life or death. For East Timor, South-East Asia's poorest nation, it represents the difference between gaining a foundation for economic independence and being propped up by aid. On March 6th, the two countries signed an agreement dividing the Timor Sea's wealth. Accusations followed in the Australian Parliament that the conservative coalition government, led by John Howard, had "bullied" and "blackmailed" Mari Alkatiri, East Timor's prime minister, into accepting a deal that favoured Australia; East Timorese officials were quoted in the Australian press saying that Mr Howard and his ministers had treated Mr Alkatiri "as if he was a child".

A leaked transcript of talks in Dili, East Timor's capital, in November between Mr Alkatiri and Alexander Downer, the Australian foreign minister, appeared to bear out the accounts. During the talks, Mr Alkatiri accused the Australians of offering their neighbour "scrapings off a plate". Mr Downer retorted, "Your claims go almost to Alice Springs. You can demand that for ever for all I care...but if you want to make money you should conclude an agreement quickly." The Australian minister added, "We are very tough. We will not care if you give information to the media. Let me give you a tutorial in politics - not a chance." The transcript has not been denied by the Australian government.

Most of the Timor Sea's wealth lies in an expanse once known as the Timor Gap, and renamed the "joint petroleum development area" under the Timor Sea Treaty that Australia and East Timor signed last May. After much wrangling, Australia agreed that East Timor would receive 90% of government revenues from Bayu-Undan, the main gas field within this area, about A$26 billion ($15 billion) over its full life. That left Greater Sunrise, another big gas field that lies more problematically only partly inside the area. East Timor argued that it should have the lion's share of revenues from Greater Sunrise. Based on the seabed boundary halfway between the two countries, Greater Sunrise would be within East Timor's economic zone under the UN's Law of the Sea.

But Australia last year withdrew from the Law of the Sea convention, and from the International Court of Justice's jurisdiction on maritime-boundary questions. Australia recognises instead a boundary that Australia and Indonesia defined between them in 1972 (excluding the "Gap"), a boundary that puts Greater Sunrise mainly in Australian waters. The Howard government delayed ratifying the Timor Sea Treaty until a deadline in early March, leaving East Timor with the grim choice of demanding greater revenues (and risking the agreement collapsing) or accepting Australia's terms. Under those terms it will receive 90% of revenues due from just the one-fifth of Greater Sunrise that lies within the development area: by one estimate, about A$8 billion against the A$40 billion Australia will take from the rest of the field.

Australia hailed the signing as giving certainty to the international consortia investing in the Timor Sea; a big gas deal from Bayu-Undan is being concluded with Japan. But the East Timorese must be left wondering about another of Mr Downer's reported homilies to their leader: "On principle we're surprisingly inflexible...To call us a big bully is a grotesque simplification of Australia."

Back to March menu
February
World Leaders Contact List
Human Rights Violations in East Timor
Main Postings Menu