Brian Guerin

 
After the fall of Suharto in 1998, when Portugal made efforts to restore its old influence, the Howard government sent troops to support the formation of an independent East Timor in 1999. The purpose of the Australian intervention was advertised as the protection of the Timorese people from attacks from Indonesian military and militia groups.  
The facts speak otherwise. Within months, the Howard government was engaged in threatening and blackmailing the embryonic Dili administration to ensure that Australia, not East Timor, or anyone else, kept the lion’s share of the oil and gas. In February 2000, just before the Australian-led international force (Interfet) formally handed over power to troops of the UN Transitional Administration for East Timor (UNTAET), Australian representatives insisted on the signing of 2 critical treaties. [1]

The first treaty was a continuation of the Timor Gap Treaty, with the UN simply replacing Indonesia as Australia’s partner in the joint development zone. The second treaty cleared the way for a US-Australian-Japanese consortium to exploit the large Bayu-Undan field, which is located 250km south of Suai in East Timor and 500km northwest of Darwin, and is expected to yield up to 400 million barrels of liquefied petroleum gas (LPG), now valued at more at more than $5 billion. The agreement foisted on Dili, however, involved building a pipeline to Darwin, where the Houston-based ConocoPhillips has commissioned a $2.4 billion refining plant.

Both of these treaties were initialled by UN officials, and were designed to legally bind any incoming “independent” East Timor government. As for Timor’s people, in whose name name Australia had intervened, they were granted no say in these binding arrangements. (Ibid).
In October 2000, the Howard government unilaterally rejected a UNTAET call for the realignment of the undersea boundary. If the borders were drawn at an equal distance from both coastlines, in accordance with international law, East Timor would be entitled to nearly all of the Timor Sea royalties and taxes.
Howard and his ministers issued thinly veiled threats of retaliation against East Timor if it dared take the dispute to the International Court of Justice. Australian Foreign Minister Downer directly linked the future of Australia’a aid program - 90% of which was devoted to military purposes - to the size of the royalties obtained by Dili. Downer’s colleague, Resources Minister Nick Minchin, warned that a border dispute would destroy “investor confidence” in the Timor Gap.
In March 2002, just 2 months before East Timor was proclaimed “the first newly independent country of the 21st century,” the Howard government announced that it would no longer submit to maritime border rulings by the World Court. East Timor’s Prime Minister-elect Mari Alkatiri denounced the move as an “unfriendly” act, “tying the hands” of his incoming government. [2]

In May, a week before Prime Minister Howard arrived in Dili for the Independence Day celebrations, Alkatiri was summoned to Canberra, where Australian government officials tried to force him to sign an agreement ceding most of the vast $25 billion Greater Sunrise field to Australia.
Australian-based company Woodside Petroleum, 34% of which is owned by Royal Dutch Shell, is the major shareholder in the Greater Sunrise field, in partnership with ConocoPhillips and Japan’s Osaka Gas. The area is thought to contain as much gas as the nearby North West Shelf, Australia’s largest resource development, also operated by Woodside. The North west Shelf has identified reserves of 100 trillion cublic feet, sufficient to make about 2 billion tons of LPG, enough to meet world demand for more than a decade.

From that moment on, the Howard government repeatedly refused to approve various agreements necessary to commence the Bayan, Undan and Greater Sunrise projects, thus starving the Timorese government of desperately needed revenue, until Dili agreed to delay or renounce its territorial rights.
The mercenary character of the “negotiations” was revealed in March 2003, when the transcript of a meeting between Downer and Alkatiri in November 2002 was leaked and published on the internet.
“We can stop everything,” Downer repeatedly declared, threatening to abort the talks. Alkatiri pleaded with Downer, “We want to accommodate all your concerns, but accommodating is one thing and scraping off a plate is another.” Downer reiterated that the boundary would not be redrawn, saying “you can demand that forever for all I care, you can continue to demand, but if you want to make money, you should conclude an agreement quickly.”
The Howard government therefore deliberately prolonged the border dispute, while continuing to draw revenues from the Timor Sea and East Timor sank deeper into poverty. During 2003 alone, Australia received $172 million in royalties from the fully operational Laminaria-Corallina field – twice as much as the entire budget of the East Timorese government.
Having received only a fraction of the oil revenue it was due, and with the steady elimination of international aid, the Dili government had little to spend on schools, health care, housing or job creation. 5 years after East Timor’s so-called “liberation” by Australia, half of its working people remained unemployed, 40% of the population were living on 50 US cents or less a day, life expectancy was júst 40 years and infant mortality rates were among the highest in the world.
During another round of border talks in April 2004, East Timor’s President Xanana Gusmao joined Alkatiri in a series of public pleas for relief from Australia’s merciless position. Alkatiri insisted that a new agreement granting East Timor a greater share of the offshore revenues was a matter of “life and death.” Speaking to the Portuguese newspaper Publico, Gusmao openly accused Australia of theft. In an interview with the Guardian, he warned of dire political consequences unless East Timor received a better deal. “We would not like to be another failed state. Without this we will be another Haiti, another Liberia, another Solomon Islands.”
Nevertheless, Canberra’s repeated diplomatic pressure was sustained until, in April 2005, Dili finally agreed to drop its border claims for fifty to sixty years.

The result of this piracy was that, in 2004-5, East Timor’s oil and gas revenues came to a total of just $25 million. This amount is forecast to rise to $75 million in 2007-08. Apart from the vast profits already being made by the oil corporations, the bulk of the country’s royalties, $550 million by April this year, are frozen in US treasury bonds in a Petroleum Fund at the insistence of the IMF and World Bank, supposedly to provide for the county’s future. [4]
The current Australia-New Zealand intervention follows a number of key decisions by the Fretilin-led government in Dili which sought to lessen, or at least counter-balance, Australian hegemony over the Timor Sea fields. In December 2004, Alkatiri, who was also East Timor’s Natural Resources Minister, announced that a consortium involving China’a largest state-owned oil group, China National Petroleum, and Norway’s Global Geo-Services would conduct a full seismic exploration of the Timorese side of the sea boundary. This immediately raised the prospect of East Timor being able to gain additional revenue from its own resources by opening licences to competing European and Asian interests.

During 2005, according to some media reports, Alkatiri’s government entered into talks with China’s PetroChina for the construction of refining capacity in Timor, cutting directly across Australian plans for the piping or shipping of all Timor Sea crude, from both sides of the border, to Darwin, Australia. Alkatiri also called for undertakings by Australia that it would not block the piping of oil from the Greater Sunrise field to Timor.
While many of the details remain obscure, these reports featured in media, diplomatic and business commentary in the build-up to the move by Australia and New Zealand. Writing in The Australian on May 9, columnist Philip Adams declared that Alkatiri’s “insistence on having gas production facilities in Timor’s Suai area rather than Darwin may open the door to China; PetroChina seems to have the deal stitched up. Many in the Western diplomatic and corporate communities think that’s too close for comfort.”
Loro Horto, the son of Timor’s Foreign Minister Jose Ramos-Horta, wrote in the Asia Times on May 27th: “There was also widespread speculation that Alkatiri planned to award a multibillion-dollar-gas-pipeline project to PetroChina, an invitation that would have won both the United States’ and Australia’s ire.”

In September 2005 Alkatiri started an international tour to attract oil and gas explorers to East Timor’s own offshore area of some 30,000 square kilometers, declaring that “Timor-Leste is open for business.” In November he reported that these efforts attracted more than 20 petroleum companies, “among them some of the biggest in the world.”
In January 2006, after 6 years of bitter negotiations, Alkatiri finally extracted a minor concession from the Howard government. Canberra reluctantly agreed to a 90-10 share, in East Timor’s favour, of the proceeds from part of the Greater Sunrise field - the 20% that lies in the so-called Joint Petroleum Development Area, which sits astride the disputed border line. The agreement shares equally (50-50) the royalties from the remaining 80% of Greater Sunrise, in what Australia claims as its exclusive jurisdiction.
Earlier the Australian government had insisted on a more aggressive siphoning of revenues to Australia. However, in response, the Timor parliament threatened to scuttle the April 2005 deal in which the Alkatiri government had agreed to abandon its claim for the redrawing of the boundary.
In February, the Dili government sought tenders for its own Timor Trough fields after the Chinese-Norwegian survey estimated that the area held half a billion dollars of light oil, and some 10 trillion cubic feet of gas (about 10% of the total estimated Timor Sea reserves). By the April 19th deadline, 5 companies had submitted bids, either individually or in consortia. They were Italy’s ENI, Portugal’s GALP (in which ENI is the majority shareholder), Brazil’s Petroleo Brasileiro (Petrobas), Malaysia’s Petronas and India’s Reliance. It is of the greatest significance that none were from the US and Australia. [5]
From this moment onwards, from early February, the destabilisation of the Alkatiri government began.


Part III of this article.
 


Footnotes

[1] http://www.wsws.org/articles/2006/jun2006/etim-j06.shtml