The Japan Times: March 18, 2003

Energy deal will fuel East Timor's growth

By ALAN GOODALL Special to The Japan Times

SYDNEY -- Southeast Asia's newest and poorest nation has done an oil deal that should bankroll its way to real independence.

East Timor has signed an agreement with neighboring Australia to develop huge, untapped oil and gas reserves under the Timor Sea. Within years the country's empty treasury could be receiving lucrative payments from the sales of these energy resources. The new agreement between Dili and Canberra is being hailed in both countries. It comes at a time when cordial relations are being tested by an awkward problem Canberra must soon solve -- whether to forcibly repatriate 1,800 East Timorese refugees living in Australia.

Some of these refugees have lived in Australia for decades. Mostly Christians, they fled from an assimilation program imposed by Jakarta following its 1975 invasion under the Suharto regime. Others arrived in Australia after escaping the brutal crackdown that Indonesia launched in East Timor four years ago.

Still assisted by the United Nations, the former Portuguese colony, although formally independent, is struggling to establish itself as a fully functioning entity. East Timor's President Xanana Gusmao has declared his wish to set up a government and social infrastructure using only a minimal amount of overseas aid. But the problem has been a lack of resources to generate income. Tourism was seen early on as a potential source of revenue, but years of neglect and fighting have reduced hotels and other related infrastructure to rubble. Even getting handicrafts and tropical fruit to export markets has been a hassle.

Suddenly there's oil. Reserves that once would have been shared between Indonesia and Australia under an old deal have now entered as the savior. Renegotiated, a $50 billion deal will bring to East Timor a share of revenue that will form the basis for commerce certain to attract big overseas capital.

A last-minute hitch almost scuttled the much-argued Timor Sea Treaty. Dili finally bowed to intense pressure from Australia, allowing Canberra to rush through the signing of the development agreement.

Foreign Minister Alexander Downer broke from talks with Washington over the Iraq crisis to fly to Dili. His endorsement of a second-stage oil-gas development followed months of Canberra-Dili wrangling. Unnamed Dili officials claimed the breakthrough came only after Prime Minister John Howard threatened to block enabling bills in Parliament.

In the Australian Senate, where the Howard Government is in the minority, Greens Senator Bob Brown accused Howard of blackmailing Dili into signing a deal on the larger of two undersea fields, called Greater Sunrise, or risk losing an earlier deal on the Bayu-Undan field. Brown was suspended from the Senate when he refused to withdraw the allegation.

An angry Howard denied threatening to scuttle the Bayu-Undan development unless Dili ratified the 80-percent Australian-owned Greater Sunrise. He phoned East Timorese Prime Minister Mari Alkatiri to ask whether the Sunrise deal could be ready for signing on the deadline date.

"My call was totally civil and cordial in accordance with our close relationship," Howard said. "It related to formal processes, not to the substance of the negotiated package."

Rushed through Parliament in the nick of time to meet the deadline, the enabling bill signals a go-ahead for the international oil giant, Conoco-Phillips. That consortium will begin building a pipeline from Bayu-Undan wells to a gas liquidation plant to be built at Darwin. From there huge tankers will ship the liquid gas to two Japanese utilities, bolstering that country's energy security

Conoco-Phillips had earlier warned that unless Parliament passed enabling legislation on time, it would miss a deadline set by the utilities and the multibillion dollar deal would collapse. The combined worth of the projects is put at $20 million. Some $18 billion of that is earmarked for East Timor. Australia will get 10 percent of previously agreed-to revenues and East Timor will receive 90 percent.

Despite the 11th-hour wrangling, most observers are happy with the outcome of the agreement. The daily newspaper, The Australian, editorialized with some satisfaction: "Negotiations over gas reserves in the Timor Sea have become a defining moment in our relationship with East Timor, and have injected a bracing element of reality into that relationship. The postindependence love-in -- in which we played liberator and provider, and the Timorese played grateful beneficiaries -- has given way to realpolitik and hard-nosed deal-making."

Much as Australians are delighted that real independence is coming East Timor's way, they still have to face up to an unhappy aftermath to the old East Timor political tragedy. That is, the future of East Timorese refugees who have become part of the Australian community, notably in Darwin.

The tough way Canberra deals with illegal immigrants has won it criticism around the world -- and many a plaudit from countries plagued with unwelcome arrivals claiming to be political refugees. Barbed-wire fences around detention camps in the middle of harsh deserts are stark reminders of how Canberra locks up boatloads of Iraqis, who used to struggle ashore before the government cracked down on Indonesians trafficking in the human cargo.

The 1,800 East Timorese are in a different category. They fled from political and religious persecution. Besides, older Australians still remember fondly the help Timorese gave in holding back Japanese Imperial Army advances during World War II.

Tough-talking Immigration Minister Philip Ruddock says East Timor is no longer under threat and the refugees will not be at risk of persecution if they go home. They are guilty, as he sees it, of exploiting Australian law courts in trying to stay.

Australians are inclined to let them stay. This view exists despite the harsher attitude toward Middle Eastern "queue-jumpers" who have come here and are now forming enclaves in Sydney suburbs.

The row will boil over if Iraq is invaded. Australian troops are pledged to join U.S. and British forces. Already Indonesian protesters are rampaging through Jakarta streets demanding a holy war against the proposed invaders.

Having seen East Timor comfortably settled, the last thing Australians need is to hear ugly noises from the big neighbor up north.

Alan Goodall is former Tokyo bureau chief for The Australian.

The Japan Times: March 18, 2003

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