Subject: RT: E. Timor At Risk of Failed State: Oxfam

also: E. Timor at Risk of 'Failed State;' and E. Timor Making Progress In Infrastructure, Economy -Donors

East Timor Could Become Failed State - Aid Agency

By Michelle Nichols

CANBERRA, May 19 (Reuters) -- East Timor, the world's newest nation, is in danger of becoming a failed state because Australia is dragging its feet on maritime border talks and hindering the development of its neighbour, aid agency Oxfam said on Thursday.

An Oxfam report released to coincide with East Timor's second anniversary of independence showed less than half the nation's 760,000 people could read or write, 41 percent live below the poverty line and one in 10 children die before the age of five.

Australia and East Timor are negotiating a border in the resource-rich Timor Sea. At stake are billions of dollars worth of oil and gas royalties, which East Timor has vowed to use to alleviate poverty, create jobs and improve education.

"Two years after independence, the Australian government's approach to maritime boundary negotiations with East Timor is limiting East Timor's capacity to plan for and finance its future development," Oxfam and Australian arm Community Aid Abroad said.

"This could push newly independent East Timor to the brink of becoming a failed state through no fault of its own," it said.

Australia has said it is only able to meet East Timor twice a year, but East Timor wants monthly meetings in a bid to accelerate maritime border talks that began last month in the East Timor capital Dili. The next meeting is set for September.

Australia denies claims it is cheating East Timor out of A$1 million ($700,000) a day in disputed oil and gas royalties and says it has been more than generous to its tiny neighbour by giving it 90 percent of royalties from a joint development area.

A year ago the two countries agreed to a revenue sharing Timor Sea Treaty for a shared 62,000 square-km (23,900 square-mile) region that splits royalties 90:10 in favour of East Timor until a permanent maritime boundary is negotiated.

BIG MISTAKE

East Timor, which gained independence in 2002 after a quarter of a century of often brutal Indonesian rule, wants negotiations on a maritime border completed in three to five years. Australia has refused to put a deadline on an agreement.

"They've made a very big mistake thinking the best way to handle this negotiation is by trying to shame Australia, by mounting abuse on our country, accusing us of bullying, when you consider all we've done for East Timor," Australia's Foreign Minister Alexander Downer told Australian television recently.

"We will do what we believe to be right but, of course, in our interests," he said.

East Timor can claim a sea boundary 200 nautical miles (370 km) from its coast, consistent with its entitlement under international law and the U.N. Convention on the Law of the Sea.

But Australia can also claim a boundary 200 nautical miles from its coast. At the closest point, the countries are about 230 nautical miles apart.

Timor Sea gas fields include the $3.3 billion ConocoPhillips-operated Bayu-Undan project and the $5 billion Woodside Petroleum-run Greater Sunrise venture.

East Timor is one of the world's poorest nations and gets $150 million ($113 million) in aid a year. Australia, Japan and the United States are main donors.

($1-A$1.45)

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E. Timor Making Progress In Infrastructure, Economy -Donors

DILI, East Timor, May 19 (AP)--Fledgling nation East Timor is making good progress in rebuilding its shattered infrastructure, cutting its budget deficit and making laws to stimulate its moribund economy, international donors said Wednesday.

However, East Timorese officials insist they need more aid to reduce poverty, establish a judiciary and provide security.

"We will continue with pragmatic policies and actions that are adequate to our emerging democracy," Prime Minister Mari Alkatiri told the donors Wednesday at the end of the two-day meeting that comes just ahead of the country's second independence anniversary.

"We seek perfection and excellence, but in the context of the real world ... we develop our capacities step-by-step," Alkatiri said at the conference in the country's capital, Dili.

Aid donors from international financial organizations and foreign governments praised East Timor authorities for reducing the budget deficit from US$126 million in 2003 to US$30 million this year.

They also applauded Parliament for approving a commercial code and company law aimed at spurring private investment, and praised the government for improving access to health services and electricity.

"Your progress has been impressive, though the remaining challenges remain formidable," said Jemal-ud-din Kassum, the World Bank's East Asia Pacific vice president.

After four centuries of Portuguese and then Indonesian rule, East Timorese voted for independence in a 1999 U.N.-sponsored referendum. Indonesia's military and its proxy militias then laid waste to the former province, killing at least 1,500 East Timorese.

East Timor became independent on May 20, 2002, after a period of U.N. administration.

In its report to donors, the World Bank said the economy was set to grow by 1% this year after contracting 2% in 2003. Unemployment remains at 20%.

Government officials have warned that oil revenues could be much less than expected, partly due to a dispute with nearby Australia over the ownership of undersea oil fields between the two.

Meanwhile, trials over the 1999 violence are continuing. Two militiamen were sentenced Wednesday to long prison terms for killing an independence supporter.

Fifty-two people have so far been convicted by the Special Panels For Serious Crimes.

-Edited by Hilary Mc Cully

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Courier-Mail [Queensland] Thursday, May 20, 2004

E. Timor at Risk of 'Failed State'

By Darrin Barnett

EAST Timor was at risk of becoming a failed state unless Australia came to a fairer agreement over joint oil reserves, an Oxfam report said today.

As the country celebrated its second anniversary of independence, Oxfam Community Aid Abroad said the battle to overcome extreme poverty remained at the forefront of Timor's problems.

Agency director of public policy James Ensor said East Timor was at risk of becoming a failed state, and that Australia had a responsibility to support its nearest neighbour.

"Australia should continue its generous assistance in terms of East Timor. We note that in the federal Budget approximately $40 million was allocated for East Timor in 2004/05 and we welcome that," he said.

But the key sticking point central to East Timor's woes is the Australian government's approach to negotiating maritime boundaries covering the country's oil fields.

Under a temporary treaty signed with East Timor, Australia has access to two-thirds of the known oil and gas deposits in the Timor Sea, even though a maritime boundary set according to international law could deliver most, if not all, these resources to East Timor.

"Australia has withdrawn its adherence to the International Court of Justice and International Treaty of the Law of the Sea, denying East Timor's right to independent, third-party arbitration of maritime disputes" Mr Ensor said.

"While Australia is required to show restraint in exploiting oil and gas reserves in areas of overlapping claims, the Australian government continues to issue unilateral exploration licences and receive revenues from some oil fields within these areas."

East Timor President Xana Gusmao has repeatedly said ownership of the oil fields represented the difference between ongoing poverty and self-sufficiency, a point reiterated by Mr Ensor.

"The vast oil and gas reserves of the Timor Sea provide East Timor with a window of opportunity for providing for its people and future generations," Mr Ensor said.

"However Australia is not displaying good faith in its current negotiations with our neighbour."

He said the Australian government was reaping over $1 million per day from oil and gas in a disputed area of the Timor Sea that is twice as close to East Timor as it is to Australia.

Australia had received roughly $2.1 billion in royalties from oil and gas since 1999, compared to total aid contributions of $234 million, he said.

Mr Ensor did, however, concede that this figure did not include the cost of Australia's substantial military and police presence since independence.

And he welcomed yesterday's announcement Australia will contribute to the continued United Nations mission in East Timor.

The United Nations Security Council has adopted a resolution renewing the mandate of the UN Mission of Support in East Timor (UNMISET) for 12 months up to May 20 next year.

Defence Minister Robert Hill and Justice Minister Chris Ellison said Australia would contribute 100 soldiers and 16 police, with the prospect of further support to consolidate stability if required.

The Australian Defence Force will contribute about a quarter of the total UN military presence.


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