Asia Times: Leaders keep their eyes on Timor Gap riches



	March 13, 1999	atimes.com

Oceania

Leaders keep their eyes on Timor Gap riches
By Andrew Nette

MELBOURNE - Last August, as Canberra wasstill in a state of shock after the overthrow of IndonesianPresident Suharto, a representative from Australia's largestmining company paid a quiet visit to jailed East Timorese leaderXanana Gusmao.

Few observers doubted that the subject for discussion was thestatus of the 1989 treaty that covers what some estimate could bebillions of dollars worth of oil and mineral reserves in the seabed of the TimorGap, between northern Australia and Indonesia.

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

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

That is also the position of Australia's Foreign MinisterAlexander Downer, who raised the issue with Gusmao during a recentvisit to Indonesia.

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

''The Timor Gap Treaty will definitely be reviewed in relationto 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 noopposition to giving up its rights if East Timor breaks away fromIndonesia.

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

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

While the real figure is unknown, East Timor's present annual budget isestimated to be from $100 million to $150 million, nearly all ofwhich comes from Jakarta.

Indonesia has said that independence would mean an immediatecut-off of East Timor from the financial support it receives fromthe central government.

East Timor, which generates only a few million dollars a yearin tax revenue, will then be reliant on international support tokeep government administration and public infrastructurefunctioning.

The treaty splitting up the Timor Gap's resource wealth between Australia and Indonesia was signed in 1989.

While some companies are already involved in extracting crudeoil, the real profits are thought to lie in the estimated threetrillion cubic feet of gas in an untouched part of the Timor Gapknown as Bayu-Undan.

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

Political uncertainties over the future administration of thearea, 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, Indonesian Mines and Resources Minister Kuntoro Mankusubroto said that ''most investors will hesitate to invest in the Timor Gap,'' andthat the oil and gas reserves are not as big as first suspected. Australia made only $1.1 million in royaltiesfrom operations in the area last year.

''Realistically speaking, that's hardly enough to base a futureEast Timorese state on, and there is little doubt that as suchEast Timor is expected to be the recipient of major overseasaid,'' says one analyst.

In a recent interview with Asiaweek magazine, Nobel laureateJose Ramos Horta, vice president of the National TimoreseResistance Council, said he had received assurances of financialsupport from Canada, the United States and Europe.

Visiting Jakarta, Downer also pledged that Canberra would giveEast Timor around $100 million in annual subsidies if itbreaks away from Indonesia.

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

Australian police would help train a new police force. Civilianaid workers are to help establish a government structure andassist in running schools, hospitals, transport and customssystem, revenue raising and help set up a central bank and a newcurrency.

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

Sources in East Timor report that approximately 15,000Indonesians have left the territory since Jakarta announced inJanuary that it would withdraw its military forces if East Timorrejected a proposal for special autonomy.

(Inter Press Service)