Subject: IPS: Leaders Keep Eye on Timor Gap Revenue
Date: Fri, 12 Mar 1999 18:35:14 -0500
From: "John M. Miller" <>

*Leaders Keep Eye on Timor Gap Revenue

By Andrew Nette

MELBOURNE, Australia, Mar 11 (IPS) - Last August, as Canberra was still in a state of shock after the overthrow of Indonesian President Suharto, a representative from Australia's largest mining company paid a quiet visit to jailed East Timorese leader Xanana Gusmao.

Few observers doubted that the subject for discussion was the status of the 1989 treaty that covers what some estimate could be billions in oil and mineral reserves in the seabed of the Timor Gap, between northern Australia and Indonesia.

With the trend toward some sort of independence for East Timor now seemingly irreversible, oil and gas companies operating in the contested seas of the Timor Gap will have to talk to a new government in Dili.

Publicly, the position of East Timorese resistance on the treaty's future is simple: It says it will honour all existing contracts in place in the resource-rich area and has no intention of negotiating any significant changes to the treaty.

That is also the position of Australia's Foreign Minister Alexander Downer, who raised the issue with Gusmao during a recent visit to Indonesia.

But off the record, senior members of the East Timorese resistance are keenly aware that independence would give Dili the right to negotiate with both the Australian government and the corporations operating in the Timor Gap.

''The Timor Gap Treaty will definitely be reviewed in relation to getting our new government a bigger share of the royalties,'' says one Australia-based member of the resistance.

The government in Jakarta has said it would put up no opposition to giving up its rights if East Timor breaks away from Indonesia.

The resistance claims the new East Timorese state could easily build a solid agricultural economy to feed the population, while generating money from the export of commodities like coffee, and from tourism and fisheries.

Informed observers say, however, the revenue from Timor Gap's resources, the worth of which some put at 11 billion U.S. dollars, could be vital for the newly independent state.

While the real figure is unknown, East Timor's annual budget is estimated to be from 100 to 150 million dollars, nearly of all which comes from Jakarta.

Indonesia has said that independence would mean an immediate cut-off of East timor from the financial support it receives from the central government.

East Timor, which generates only a few million dollars a year in tax revenue, will then be reliant on international support to keep government administration and public infrastructure functioning.

Located between Indonesia and the northern coast of Australia, the treaty splitting up the area's resource wealth between the two nations was signed in 1989.

While some companies are already involved in extracting crude oil, the real profits are thought to lie in the estimated three trillion cubic feet of gas in an untouched part of the Timor Gap known as Bayu-Undan.

Plans to develop this were dealt a blow on Mar 3, when a consortium of companies looking at a major liquefied gas project said it had postponed them in the wake of poor commodity prices.

Political uncertainties over the future administration of the area, given the prospect of an independent East Timorese state, were also stated as a factor in the decision.

At recent talks between Australia and Indonesia in Bali, Indonesia, Mines and Resources Minister Kuntoro Mankusubroto said: ''Most investors will hesitate to invest in the Timor Gap,'' and that the oil and gas reserves are not as big as first suspected.

Despite big predictions of size of mineral reserves in the Timor Gap, Australia made only 1.1 million dollars in royalties from operations in the area last year.

''Realistically speaking that's hardly enough to base a future East Timorese state on, and there is little doubt that as such East Timor is expected to be the recipient of major overseas aid,'' says one analyst.

In a recent interview with 'Asiaweek' magazine, Nobel Laureate Jose Ramos Horta, vice president of the National Timorese Resistance Council, said he had received assurances of financial support from Canada, the United States and Europe.

Visiting Jakarta, Downer also pledged that Canberra would give East Timor around 100 million dollars in annual subsidies if it breaks away from Indonesia.

He said Australian troops, police and civilians were also likely to be sent to East Timor early next year as the backbone of a United Nations peacekeeping force that could go to help rebuild the territory's civil and law and order infrastructure.

Australian police would help train a new police force. Civilian aid workers are to help establish a government structure and assist in running schools, hospitals, transport and customs system, revenue raising and help set up a central bank and a new currency.

Already there are signs that health and education services are collapsing amid an Indonesian exodus in the lead-up to the province's possible independence.

Sources in East Timor report that approximately 15,000 Indonesians have left the territory since Jakarta announced in January that it would withdraw its military forces if East Timor rejected a proposal for special autonomy. (END/IPS/ap-dv- ip/awn/js/99)

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