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The Australian

The message finally gets through By Nigel Wilson, Comment August 12, 2004

THE message has finally got through in Dili - 100 per cent of nothing is nothing.

But while East Timor has backed away from its intransigent position, so has Foreign Minister Alexander Downer.

While details remain to be worked out, the new deal between Dili and Canberra appears to boil down to this: Australia maintains the seabed boundaries that give it most of the Greater Sunrise gas field; East Timor gets substantially more than the 18 per cent of Greater Sunrise revenue that this boundary would suggest; and Australia takes responsibility for maritime security in the Timor Sea.

Labor leader Mark Latham got a sniff that this sort of deal was in the wind. But his comments suggesting the negotiations might have to go back to scratch under a Labor government only served to throw a diplomatic spanner in the gasworks.

Now Downer can appear to be conciliatory to Dili after taking months of flak from the UN, the US Congress and Indonesia over his stance that it was not in Australia's interest to make concessions on the boundary.

For months, Australia and East Timor have been arguing about the timeframe for establishing a maritime boundary between the two countries.

East Timor does not recognise the present arrangements, which were negotiated with Indonesia between 1972 and 1989.

Australia and East Timor signed a treaty in May 2002 that effectively deferred a final decision on maritime boundaries.

Under this arrangement, East Timor receives 90 per cent of the revenues from the recently commissioned Bayu Undan gas project, which is delivering greater than anticipated revenues to East Timor because of the record international crude oil price.

But the Timor Sea Treaty left 80per cent of Greater Sunrise under Australian control, which meant East Timor could receive only 18 per cent of total revenues from any development.

Under advice from international experts including Peter Galbraith, a former US ambassador to Croatia, East Timor stuck out for a better deal.

It has taken time for East Timor to accept that Woodside and its partners are serious in maintaining the Greater Sunrise project will not go ahead unless they have firm legal rights to the gas.

Faced with the prospect of no project, Dili has succeeded in winning a better deal -- but one that seems not to require Australia to give up any of its seabed sovereignty.