Selected postings from east-timor (reg.easttimor)

Subject: FEER Books: Shakedown: Australia's Grab for Timor Oil

Far Eastern Economic Review

November 2007

Book Reviews

Shakedown: Australia's Grab for Timor Oil by Paul Cleary Allen & Unwin Academic, 336 pages, $19.95

Reviewed by Jeff Kingston

In late 2006 while walking home one starry night, stupidly ignoring warnings about the dangers on Dili's streets after dark, I was accosted by several youths who asked in menacing tones if I was Australian. I set them straight and they let me pass, making me wonder just how many places in the world these days it is better to be an American than from Down Under….not many I suppose.

So how did things go so wrong for Australia, erstwhile savior of East Timor? After all, Australian troops were the first to arrive after the Indonesian military and their militia thugs laid waste to Dili in 1999-just after the courageous vote for independence by U.N.-administered referendum. Since then, Australia has been at the forefront of nations seeking to rebuild East Timor with generous assistance and the commitment of much needed security personnel. Paul Cleary helps us understand why a nation that has given so much inspires more resentment than gratitude. The Australian government's checkered record on East Timor-a case of greed trumping principle-causes many Timorese (and Australians) to feel an acute sense of betrayal.

Certainly this sordid chapter in Australian diplomacy is one that Canberra's diplomats will rue, but it should be required reading for new recruits so that they can learn the folly of arrogance, duplicity and hypocrisy. East Timor, the first nation born in the 21st century, is one of the poorest nations in the world and has been plagued by a host of problems as it emerges from 24 years of brutal Indonesian occupation from 1975-1999. Mr. Cleary makes a compelling case that Australia, its wealthy and powerful neighbor, has much to answer for by trying to plunder Timor's oil and gas resources and deny this impoverished nation its rightful revenues.

Bullying Australian diplomats were determined to seal a deal that would leave East Timor destitute and dependent on external assistance. The resource curse-the sudden gushing of revenues that get squandered or pocketed-has long plagued developing nations and many have little to show for their windfall. Perhaps Team Australia was trying to help East Timor solve the paradox of plenty by robbing them of their resources.

Shakedown details the extortionate tactics that Australian diplomats deployed to deny East Timor its legal share of oil and gas resources in the seabed of the Timor Sea that divides the two countries. Mr. Cleary takes us back to the decision by Canberra to recognize Indonesian sovereignty over East Timor back in 1978.

After Indonesian troops invaded in 1975, Richard Wolcott, then ambassador to Indonesia, advised then Prime Minister Gough Whitlam that a better deal for seabed resources could be struck with Indonesia than an independent government, helping explain why Australia was the only Western nation to recognize Indonesian sovereignty over East Timor. Canberra managed to cut an extremely favorable deal with Jakarta, a shady quid pro quo that did little to burnish Australian honor.

East Timor's leaders, however, made it clear early on in the negotiations that began in 2001 that it was not going to allow Australia to profit from this criminal deal with its former occupier. As an advisor to the East Timor government, Mr. Cleary gives us an insider's account of the negotiations, providing some lessons about maritime law and a tutorial on cupidity. A former journalist, the Australian author does not let the technical details overwhelm a contemporary David-versus-Goliath tale. He sketches the personalities that shaped the negotiations and shares fascinating anecdotes that breathe life into the "smoked-filled rooms."

In 2005, after four years of acrimonious negotiations, a partial agreement was struck on one of the large oil fields, Greater Sunrise, that gave East Timor 50% of the revenues, the minimum Dili could accept and the maximum Canberra could abide. Part of this creative agreement involved postponing settlement of the maritime boundary in the Timor Gap for 50 years. Much credit for rescuing the negotiations goes to then Foreign Minister and current President Jose Ramos-Horta, a Nobel laureate with considerable diplomatic savvy and a far less abrasive style than then Prime Minister Mari Alkatiri.

The villains in this unseemly tale constitute a who's who of Australian politics. From Mr. Whitlam to John Howard, Australian leaders have been unapologetic about their oil grab. Foreign ministers from Andrew Peacock to Alexander Downer have also staunchly asserted the national interest to cover the ignominy of official policy.

Mr. Downer proved both obdurate and puerile, issuing ultimatums, slamming tables and threatening to prevent any exploitation of the resources unless Australia got its way. He also cut funding to Timorese NGOs that criticized Australia, undoubtedly a valuable civics lesson. In order to protect against arbitration that would most likely favor East Timor's claims, the Howard government also withdrew from dispute settlement procedures under the International Tribunal for the Law of the Sea and rescinded recognition of the jurisdiction of the International Court of Justice for maritime disputes.

Upon finishing this fine book the reader is left wondering why so many of the best and brightest acted so dishonorably in support of a policy that undermined the national interest by tarnishing Australia's moral stature. What did they seek to "win" at the expense of a desperately needy neighbor?

One of the prominent non-Australian actors who does not emerge particularly well from this tale is Peter Galbraith, a renowned diplomat and writer, who also happens to be the son of John Kenneth Galbraith, the illustrious economist and presidential adviser. He is described as loud and proud, abrasively American even to his fellow countrymen. Working out of the United Nations on behalf of the East Timor team, Galbraith's blustering ways antagonized the Australian negotiators, but imparted a needed bravado to the inexperienced and outgunned Timorese. However, as the discussions dragged on, he is portrayed as being overeager to accept a buyout, pressuring the Timorese to accept a $3 billion cash settlement that in retrospect would have been a very bad deal. By sticking to their principles and standing up for their legal entitlements, the Timorese ended up with a far more lucrative arrangement that enables them to share in the upside of surging energy prices. So much for hotshot consultants.

Mr. Cleary also presents a mixed portrait of former Prime Minister Mr. Alkatiri, a man he knows well from working closely together. In the negotiations Mr. Alkatiri remained steadfast in refusing to cave in to the threats and tactics of Team Australia. He was confident that international law was on David's side and that ultimately this would force Goliath to bend. His brinksmanship and resolute negotiating stance made him few fans among the Australian officials and he remains convinced today that enemies he made in standing up for East Timor's resource rights conspired against him and engineered his downfall.

Mr. Alkatiri resigned in disgrace in June 2006 due to allegations about his role in arming hit squads and for mishandling a crisis within the military ranks. The military dissension morphed into looting, arson and violence on the streets of Dili, displacing some 15% of the population, many of whom still live in temporary shelters. Mr. Cleary suggests that Australia is partly to blame for the unrest, but also takes Mr. Alkatiri to task for his authoritarian tendencies and nepotism. His party, Fretilin, did poorly in the 2007 elections, an outcome that Mr. Cleary seems to anticipate. In the chapter entitled "Animal Farm," he describes the formerly dominant party in Orwellian terms and gives it poor marks for governance.

One of the more interesting angles in this story is the role of civil society organizations in Australia and the improbable heroics of a Melbourne-based optometry baron, Ian Melrose. He became engaged upon seeing a program concerning the health problems of Timorese children and outraged by his government's larcenous diplomacy. He funded an ad campaign that aroused public opinion against official policy, appealing to the deep-rooted sense of fair play among Aussies and shaming the government for trying to fleece its poor neighbor. NGOs mounted a spirited campaign and the media raised the heat on the Howard government, contributing in no small part to the compromise settlement. The dignified Australian public understood common decency even when their government could not.

Mr. Kingston is director of Asian studies at Temple University's Japan campus.

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