A Dangerous Oil Slick

Australia Tries to Hijack East Timor’s Future

by Joseph Nevins

It is hoped that revenues from oil and natural gas will provide East Timor the financial means necessary to successfully battle the country’s profound poverty and the legacy of underdevelopment brought about by 24 years of Indonesian occupation and centuries of Portuguese colonialism. These lucrative resources are contained in a seabed between East Timor’s south coast and the north coast of Australia in an area called the Timor Gap. But an intensifying struggle between the East Timorese and Australian governments over the eastern and western boundaries of the seabed has thrown into doubt an agreement between the two countries.
The Timor Gap is a continental shelf area between northern Australia and the island of Timor. In 1972, Australia and Indonesia agreed to a shelf boundary between the two countries to the east and the west of East Timor; the agreement gave Australia 85 percent of the sea territory between the two countries. The Portuguese, however, refused to sign a similar agreement, arguing that the boundary should be halfway between the coastlines of the two territories. The disputed area in between the boundaries delimited by Indonesia and Australia is what is popularly known as the “Timor Gap.”

Australia was more than willing to exploit the opportunity presented by Indonesia’s bloody annexation of East Timor to “close the gap.” Negotiations began in 1979. Ten years later, the Australian and Indonesian foreign ministers signed the Timor Gap Treaty while flying in a plane over the seabed. The treaty divided the area into three sectors: one under Indonesian control; a second under Australia; and a third controlled jointly. Observers and analysts tend to agree that Australia got the better deal. Indonesia was eager to sign the treaty as a way of solidifying its claim to East Timor and gaining international support for that claim. Australia, in fact, extended legal or de jure recognition of Indonesia’s annexation of the former Portuguese colony as a pre-condition for entering into formal negotiations over the seabed.

In the aftermath of Indonesia’s withdrawal and the United Nations’ assumption of power, Australia has had to renegotiate with East Timor, now standing in for its former occupier. This is an ongoing process.

A July 5, 2001 “memorandum of understanding” (MoU) signed by Canberra and Dili granted East Timor 90 percent of the revenues from the entire “Gap,” leaving only 10 percent to Australia. While this may seem to be a good deal for East Timor, it is problematic for two reasons. First, because international law states that sea boundaries should be the median line between the two countries concerned, it is highly questionable if Australia has a right to any of the resources within the seabed. Second, and most important, because the MoU only revised the division of the resources within the gap, and did not call into question its east-west boundaries.

International experts who participated in a seminar in Dili in March 2002 contended that, were the east-west boundaries to be drawn in a manner consistent with international law, the boundaries would move outward and include the most lucrative Timor Sea deposits within the gap’s boundaries. This would make a dramatic difference in the amount of revenues earned by East Timor.

It is impossible to know with certainty how much East Timor will earn from the gap as they are predicated on always changing commodity prices. But were the MoU to become a treaty once East Timor becomes independent, as Australia wants, it is thought that the country would receive about US$8 billion in revenues over a few decades. But if the would-be treaty were to reflect international law, East Timor could earn up to $US36 billion, the difference being monies that Australia would have received otherwise.

It is for this reason that Canberra announced in late March that it will no longer submit to international legal rulings regarding its maritime boundaries. Instead, the Australian government states that it will only negotiate such boundaries directly with the concerned parties, in this case East Timor.

Canberra is well aware that there are tremendous pressures on East Timor to ensure that revenues from exploitation begin flowing into the country’s poverty-stricken treasury as soon as possible (which requires an agreement with Australia). East Timor also needs to maintain good relations with its powerful southern neighbor. Canberra’s expectation is that East Timor will thus not be able to negotiate from a position based fully on principle and will feel compelled to take a “pragmatic” approach to the renegotiation.

It is unclear if East Timor’s post-independence government will have the political will and the strength needed to take on Australia and to ensure East Timor’s control over what are clearly its own resources—at least as defined under international law. It is for such reasons that the roles of pro-East Timor forces within Australia, East Timorese civil society, and the international solidarity movement could prove to be very important in this evolving controversy.

see Timor Gap links