SYDNEY -
Benefactor or bully? Australia has been portrayed as
both in its protracted standoff with tiny East Timor
over US$30 billion worth of deep-sea oil and gas
reserves. So uneven is the contest, between the richest
and poorest nations on the southern rim of the Pacific,
that Canberra was always going to come off worse in the
public relations battle.
"It is, quite
literally, a matter of life and death," Timorese Prime
Minister Mari Alkatiri declared in one of the more
excitable quotations to come from the latest
negotiations, which ended inconclusively in Dili on
Thursday. "Timor-Leste loses $1 million a day due to
Australia's unlawful exploitation of resources in the
disputed area. That is too many lost and wasted lives,"
he said.
Five years ago, Australia was hell-bent
on saving those same lives when it intervened in the
militia war between Indonesian special forces and
Timorese guerrillas, using hard cash and military
firepower to eventually secure independence for the
eastern half of the island of Timor.
It later
conceded 90 percent of royalties from the most
accessible of two continental fields that contain an
estimated 20 trillion cubic feet of gas in the Timor
Sea, the narrow shipping lane separating East Timor from
Australian's northern outpost of Darwin. Each country
has taken up its entitlement under the United Nations
Convention on the Law of the Sea to claim a sea boundary
of 200 nautical miles off its coastline. But at the
closest point between the land masses, the sea is only
230 nautical miles wide, resulting in overlapping
claims.
The agreed solution was to share the
proceeds. Millions of dollars are already being funneled
from a Joint Petroleum Development Area (JPDA) operated
by the $3.3 billion ConocoPhillips consortium in the
Bayu-Undan field. But Alkatiri said this week that Dili
would not ratify an International Unitization Agreement
(IUA) confirming the arrangement because it would in
effect be shut out of a second drilling field, known as
Greater Sunrise, that is believed to have far better
prospects.
The sticking point is a 1975
agreement Australia initialed with Indonesia after
Jakarta's bloody takeover of the former Portuguese
colony that delineated the maritime border as a step
toward the eventual recovery of seabed resources. Under
the treaty, Australia's border extends to the edge of
the continental shelf, maintaining a policy, widely
accepted internationally at the time, that Canberra had
pursued since 1953. Indonesia's own boundaries with
Australia were delineated on the same basis.
A
December 1989 deal, which became known as the Timor Gap
Treaty, provided for joint administration of the
overlapping territory and divided all revenues 50:50,
though in practice, the exploitation of resources was
hampered by a host of investment issues tied to Timor's
oblique diplomatic status.
Former colonial
master Portugal, which never accepted Indonesian
sovereignty of East Timor, challenged the 1989 treaty in
the International Court of Justice in 1995. The court
decided Lisbon had a case, but concluded it had no
jurisdiction over the issue.
Significantly, the
court suggested that Portugal should have been
negotiating directly with Indonesia, thus implying that
there were doubts over the legitimacy of the 1975
invasion - and by implication, the 1989 treaty with
Australia.
Undeterred, Canberra has continued to
recognize the jurisdiction of the 1975 border
delineation that provides the basis for the treaty. This
is not surprising, as the agreement cedes 82 percent of
the Greater Sunrise field to Australia, while the
remaining 18 percent of the field lies in uncontested
Timorese waters.
East Timor maintains that
neither agreement is viable because Indonesia's
occupation was illegal and wants the border to be
repositioned at the midway-point line to comply with the
International Law of the Sea.
Accepting the
jurisdiction of the United Nations maritime-resources
law would mean that about two-thirds of the gas deposits
would come under Timorese sovereignty, leaving Australia
as the poorer partner. By some estimates, East Timor
would gain another $10 billion.
Dili undoubtedly
has won the sympathy vote, but its options for recourse
are limited. Failure to ratify the JPDA will merely play
into Australian hands, as there is less urgency in
Canberra to start drilling in the contested fields.
Greater Sunrise is not due to enter the
production phase until 2009, leaving Australia with
ample time to build a case internationally with the help
of the oil industry as reserves dwindle elsewhere on the
globe. And Australia, unlike East Timor, does have other
energy sources. There are even doubts in some circles
that Greater Sunrise will live up its billing, as most
recent drillings in the North West Shelf, Australia's
existing continental reservoir, have not met
expectations.
Prospects for outside arbitration,
the course now favored by Dili, are equally dim.
Canberra announced in 2002 that it would no longer
submit to rulings by the International Court of Justice
on maritime boundaries.
"Australia is not the
only country to avoid international jurisdiction when it
feels the law is against it. The rule of law is not only
for weakest and the poorest. The powerful nation should
be the example," Alkatiri said of the treaty pullout.
However, there are doubts in some legal circles
that East Timor would win even if it did secure an
arbitration hearing, as the physical characteristics of
the shallow Timor Sea appear to offer Australia a
potential let-out. The requirement under the Law of the
Sea for equal boundaries is only applied when the two
countries concerned share a continental shelf. In this
instance they don't: only Australia is actually on the
shelf. Hence bilateral treaties would probably take
precedence, shifting the legal focus back to the
contested 1975 accord, and Canberra's apparent stalling
tactics.
Dili charged during the latest talks
that Australia was deliberately stringing the
negotiations out as long as possible by insisting that
the two sides meet only twice a year. East Timor asked
for monthly negotiations, but was rebuffed.
Brinkmanship or not, the failure to resolve an
issue that is arguably impeding East Timor's economic
development has attracted the attention of the
international community, handing Dili another sympathy
vote.
Last month 53 US congressmen petitioned
Canberra to move the talks forward "fairly and
expeditiously". European legislators have been vocal in
their criticism of Canberra, as have religious and aid
groups within Australia.
Australian Foreign
Affairs Minister Alexander Downer is undaunted.
"They see it as a useful way of strengthening
their negotiating hand by accusing us of bullying and
being aggressive," Downer said dismissively of the
Timorese publicity offensive.
Yet for all of its
apparent complacency, Canberra is also playing a
high-stakes economic game. If realized, the Timor Gap
windfall will be big enough to supply Darwin with gas
for 1,000 years.
While Australia has
unilaterally awarded exploration licenses in Greater
Sunrise, there are few prospects for actual production
until the legal uncertainties have been removed. One
lingering problem is a leftover from the Portuguese era:
US-based PetroTimor contends that it was granted
exploration licenses by Lisbon in 1974 and is prepared
to defend these rights in court. Last month the company
filed a lawsuit in the United States against an East
Timorese politician who, it alleged, had been paid $2
million to advance the cause of an energy multinational
in potential licensing blocks in the Gap.
Alkatiri warned this week that East Timor would
prosecute any oil companies operating within the joint
exploration field without Dili's authority if it were
later awarded sovereignty under a boundaries review. The
oil industry appears to have gotten the message, with
Australian energy group Woodside Petroleum declaring it
will scrap its $5 billion oil and gas development in the
Timor Sea unless the IUA is ratified by Dili's
parliament.
Canberra's motives in recognizing
Indonesian sovereignty over East Timor in 1975 against
the flow of international opinion and securing the
boundaries treaty, were undoubtedly self-serving. But
there is more to its stance than a simple desire to
safeguard commercial interests.
Australian
foreign policies have historically been driven by the
need for a stable neighbor to help protect the thinly
populated northern coastline, especially as the demise
of the Suharto regime and spreading secession struggles
have created doubts over the long-term cohesion of the
Indonesian archipelago.
For reasons of
geography, East Timor will remain firmly within the
Australian sphere of interest. Canberra has pledged
almost $100 million worth of development aid in the next
three years to hammer this message home.
There
is little room for flexibility in Australia's
territorial policies, as a midway split in the Timor Gap
would inevitably force the renegotiation of adjoining
agreements with Indonesia and Papua New Guinea that also
carry economic implications.
Australia will
still have to make the first move, as East Timor is very
much the minor partner. But despite the rhetoric, there
is growing confidence that a solution will be found,
reflecting a belief in some quarters that the real Timor
gap is a communication one.
"Good diplomacy
depends on each side making an appreciable effort to
understand the parameters of the argument. In my view,
the Timorese set themselves an unrealistic target at the
outset, perhaps as a consequence of flawed legal advice,
that will be impossible to attain," said a diplomat.
"I believe it would be churlish to expect
Australia to make further territorial concessions. [But]
this doesn't preclude an economic solution from a
development standpoint ... offering some more economic
incentives in return for a signed IUA."
(Copyright 2004 Asia Times Online Co, Ltd. All
rights reserved. Please contact content@atimes.com for information
on our sales and syndication policies.)
