E. Timor Head Says Iraq `Not Ready' to Follow Election Example

Dec. 8 (Bloomberg) -- The president of East Timor, the democracy born three years ago after a deadly struggle with Indonesia, said continuing attacks in Iraq suggest the country is unprepared for elections scheduled Jan. 30.

``Because of the violent situation that still exists, I would say that the Iraqi people are not ready,'' President Xana Gusmao said today during an interview in Washington.

``Security, stability and harmony'' were prerequisites for the United Nations-organized elections in East Timor in 1999, Gusmao said. The former Portuguese colony warred with neighboring Indonesia for more than two decades, an independence effort that cost an estimated 100,000 to 250,000 lives.

Iraq is preparing for its first national elections since U.S.-led forces deposed dictator Saddam Hussein in April 2003. Insurgents in the central-west and north are fighting to derail the Jan. 30 vote, and the U.S. military is sending two extra battalions and delaying the withdrawal of thousands of other troops to bolster security for voters.

``Security doesn't mean you have a weapon behind you,'' Gusmao said. ``It means people don't provoke instability.''

U.K. Prime Minister Tony Blair said today in London that he was confident Iraq can go ahead with elections as scheduled even though security forces are facing almost daily attacks.

``All the information we have from people in Iraq is that they are desperate to take part in elections,'' Blair said. ``If we succeed in that vision for Iraq, we will succeed in making the world a safer place.''

Washington Talks

Gusmao was visiting Washington for security talks on East Timor, where UN peacekeepers and nation-building teams are scheduled to depart in May. The country of about 1 million people is turning to ways to build its economy as the political transition ends.

East Timor has been engaged recently in a dispute with Australia over oil and gas exploration in their common sea. East Timor officials say the existing boundary gives Australia too big a share of royalties.

As the boundaries stand, East Timor is forecast to get about $4 billion of revenue from the development of known oil and gas reserves, while a midpoint boundary between the two countries would give it $12 billion, Prime Minister Mari Alkatiri said in August.

Won't `Rush'

Gusmao today reiterated that East Timor would ``not rush'' to meet Australia-based Woodside Petroleum Ltd.'s end-of-year deadline for an agreement on a proposed $3.7 billion project called Sunrise.

``The current line of agreement only gives us 18 percent of the disputed area we claim belongs to us,'' Gusmao said. ``We will lose $1 million of revenue a day.''

``If we don't have an agreement by the end of this year, the project stalls and that means we won't spend any more money on it,'' Woodside Petroleum spokesman Rob Millhouse said Dec. 5.

Royal Dutch/Shell Group, Europe's second-largest oil company, ConocoPhillips Co. and Osaka Gas Co. also own stakes in Sunrise.

``We have Bayun-Undan field working,'' Gusmao said, referring to an undisputed offshore project also involving Woodside and ConocoPhillips. ``It will bring in $100 million in the first year, more after that,'' Gusamao said, noting his country's annual budget is $75 million.

Australia last month lodged a claim with the UN for minerals, oil and gas resources off its continental shelf, more than 200 nautical miles from its coast. The move could give Australia legal rights to extra income from minerals and petroleum exploration,

East Timor will resume talks with Australia early in the new year, Jose Teixeira, secretary of state, said yesterday in Singapore, without giving a date.

China's Interest

Teixeira said that China has joined the list of nations interested in East Timor's energy reserves. PetroChina Co. and its parent company, China National Petroleum Corp., are in talks to explore for oil and gas.

``These are onshore projects,'' Gusmao said, and don't involve the disputed area with Australia. He said it was too early to forecast the dollar value or amount of onshore reserves that might be available for Chinese or other bids.

East Timor's foreign minister, Jose Ramos-Horta, is set to visit Beijing on Dec. 13 to visit his counterpart, Li Zhaoxing, for the inauguration of the East Timorese Embassy.

To contact the reporter on this story: Demian McLean in Washington at dmclean8@bloomberg.net.

To contact the editor responsible for this story: Edward DeMarco in Washington at edemarco1@bloomberg.net.

Last Updated: December 8, 2004 15:39 EST