East Timor: hydrocarbons, invasions and independence

Twenty years ago, on December 11, 1989, the Australian and Indonesian governments signed the Timor Gap Treaty (TGT), giving the go-ahead to energy corporations to exploit the large natural gas and petroleum reserves located in East Timor’s territorial waters. The deal marked the conclusion of 10 years of delicate negotiations between the Suharto dictatorship and successive Australian governments. Access to these oil and gas reserves that the deal provided was a key strategic focus for Australian governments for nearly 30 years.

The Timor Gap came into existence as a consequence of the maritime boundary negotiations between Indonesia and Australia in 1971-72, which left a “gap” in the boundary adjacent to East, a Portuguese colony at the time. Portugal had refused to participate in the 1971-72 negotiations. Test drilling for oil and gas in the area of the Timor Sea in the early 1970s showed great promise, prompting Australian-based mining companies to push for a quick resolution of the incomplete boundary.

Portugal, however, was not so keen to conclude a separate agreement during negotiations with Australia in 1974-75, preferring to await the outcome of the third UN Law of the Sea Conference which included in its agenda discussions on how maritime boundaries between adjacent countries should be determined. Relations between Canberra and Lisbon soured when the Portuguese government awarded exploration rights to a US-based company (the permit covered some 60,700 square kilometres) over an area that the Whitlam Labor government had also granted rights to a rival Australian-based exploration consortium.

With the rise of a radical pro-independence movement in East Timor in the wake of the April 1974 left-wing military coup in Lisbon against the 48-year-old right-wing military dictatorship in Portugal, it was highly unlikely that an independent East Timor would accept Australia’s proposition to draw a more-or-less straight line and close the gap. Key Australian foreign ministry bureaucrats and members of the government, including PM Gough Whitlam himself, began to more openly support annexation of East Timor by Indonesia, with the view that this would enable a quick and favourable boundary agreement and the commercial extraction of oil and gas.

This position was most articulately expressed by Australia’s ambassador to Indonesia, Richard Woolcott, who in a cable sent to Canberra in August 1975 remarked: “We are all aware of the Australian defence interest in the Portuguese Timor situation but I wonder whether the department has ascertained the interest of the department of minerals and energy in the Timor situation. It would seem to me that this department might well have an interest in closing the gap in the agreed sea border and this could be much more readily negotiated with Indonesia than with Portugal or independent Portuguese Timor. I know I am recommending a pragmatic rather than a principled stand but that is what national interest and foreign policy is all about ...”

Timor Gap Treaty

The belief that negotiations with Indonesia would be resolved quickly proved false. Negotiations did not begin in earnest until February 1979, following the announcement by Fraser government foreign affairs minister Andrew Peacock in December 1978 that Australia would accord full recognition of Indonesia’s annexation of East Timor as a perquisite to concluding the maritime boundary. As the talks were underway, numerous human rights atrocities and war crimes were being committed in East Timor by the Indonesian military. Canberra provided diplomatic cover and support to the Indonesian occupation of East Timor, ensuring favoured status for Australian-based companies and tenders operating in Indonesia.

From the outset of the negotiations, Jakarta expressed the view that it was not going to accept the same principles as those applied during the earlier boundary negotiations. Indonesian foreign minister Dr Mochtar Kasumaatmadja described the 1971-72 negotiation result as one in which Jakarta had been “taken to the cleaners”. This time, Jakarta wanted a boundary based on the median line – or half-way point – between the coastlines of East Timor and Australia. What resulted in the final TGT was a set of zones of “development co-operation” where royalties from mining companies were split on a proportional basis.

After the collapse of the Suharto dictatorship in 1998, the prospects for East Timor’s independence improved dramatically. The East Timorese resistance leadership indicated that an independent East Timor, while supporting the development of the oil and gas fields in the Timor Gap, would not accept the terms of the TGT. In November 1998, National Council of Timorese Resistance (CNRT) spokesperson Mari Alkatiri confirmed that an independent East Timor was not going to be “a successor to an illegal treaty”.

Following the UN-sponsored referendum in 1999, in which the overwhelming majority of East Timorese voted in favour of independence, the Australian government, then headed by John Howard, immediately began to pressure the East Timorese political leadership and the United Nations Transitional Administration in East Timor (UNTAET) to merely replace Indonesia as signatory to the TGT. Both the East Timorese leadership and UNTAET flatly refused this proposition. A further six years of drawn-out negotiations ensued, during which Canberra bullied and cajoled the East Timorese, blustering about how “ungrateful”’ the East Timorese where being.

As a means to avoid the maritime boundary dispute being resolved by internationally accepted means, the Howard government announced in March 2002 that it was withdrawing from the legal mechanisms under the auspices of the International Court of Justice and the International Tribunal for the Law of the Sea used to resolve boundary issues that cannot be settled by negotiation. By this time, Canberra had already illegally acquired around US$1 billion in oil and gas royalties that rightfully belonged to East Timor.

In Australia, solidarity activists campaigned against the Howard government’s threats to cut aid to East Timor and thus attempt to deny East Timor its territorial rights and control over its oil and gas reserves. An alliance formed during 2004 called the Timor Sea Justice Campaign, which gained a significant boost with the support of maverick businessperson Ian Melrose, who funded an extremely embarrassing and pointed national media campaign highlighting the Howard government’s belligerence and illegal actions.

In 2006 a compromise was reached which resulted in the signing of the treaty on Certain Maritime Arrangements in the Timor Sea (CMATS), under which East Timor’s share of tax revenues from the Greater Sunrise gas field to 50%, from the previous miserable 18%. East Timor also agreed not to finalise the maritime boundary for a further 50 years. Since then, the dispute between East Timor and Australia has centred on where the downstream processing of the natural gas from the huge Greater Sunrise field should take place. The current East Timor government of PM Xanana Gusmao, with the support of President Jose Ramos Horta, has continued to call for the gas to be processed in East Timor, rather than the option preferred by the Australian and Northern Territory governments, which is to have it piped to Darwin.

‘Under Australia’s control’?

Some of the Australian socialist groups that opposed the sending of Australian troops to stop the Indonesian military-sponsored slaughter in East Timor in August/September 1999 abstained from Timor Sea Justice campaign. In recent coverage on the 10 years since the independence ballot, the publications of Socialist Alternative and Solidarity, for example, have also argued that the sole purpose and result of the Australian-led military intervention in 1999 was to protect the Australian capitalist rulers’ interests in East Timor, including the TGT under which they control of around 90% of the oil and gas reserves in East Timor’s territory. Thus, the October edition of Solidarity headlined its article “Ten years of Australian control of East Timor”. But if this were the case, then the 1999 military intervention can hardly be said to have been successful. Under the arrangements negotiated with post-independence East Timor, Canberra’s control of these reserves has fallen from 90% to about 25%.

Far from maintaining or increasing its control over East Timor’s economic resources, Australian imperialism has had to witnessed a situation where economic competitors from Asia in the form of Chinese, Malaysian, Indonesian and Singaporean companies have significantly increased their presence and influence upon East Timor’s economy. Portuguese-based investors also maintain a significant influence in East Timor, as evidenced by the recent awarding to Portuguese construction firm Ensul of the contract to upgrade the airport facilities at Bacau, East Timor’s second largest city.

The consortium of corporations that exploit the largest oil and gas field under East Timor sovereignty —the Bayu-Undan field, royalties from which provide 90% of the East Timor government’s revenues — is dominated by a US corporation (Conoco-Phillips, with a 57% stake). Australia’s Santos company only has an 11% stake. Conoco-Phillips acquired its dominant position in the consortium when Australia’s BHP sold its 23% stake in April 1999.

This reality also contradicts the claims of Socialist Alternative, Solidarity and some other commentators on East Timor, who allege that the 2006 political crisis was deliberately engineered or used by Canberra to install a more compliant, pro-Australian East Timorese government in place of the Fretilin government headed by Alkatiri. There is little evidence to support this claim, as the ongoing stand-off between Canberra and the Horta-Gusmao regime over the Greater Sunrise dispute demonstrates.

According to an article in the September edition of Socialist Alternative, “Australia saw Alkatiri as too independent and friendly towards China, and therefore openly backed the creation of a new government under Jose Ramos-Horta and Xanana Gusmao”. This claim lacks any evidence to support it. In fact, the Gusmao government has been pursuing closer relations with Beijing. Thus the November 23 Australian reported that “East Timorese plans to build a naval base for Chinese-made patrol boats has raised concerns about Beijing’s military influence in a region traditionally regarded by Canberra as its own … Last year, the Gusmao government controversially agreed to buy two 1960s-era 43m armed Shanghai Class patrol boats for $25 million, a deal that apparently included construction of a landing dock on the south coast.

While no offer has been made to give China military access, the base underscores growing military links between Beijing and Dili. Those ties are consistent with Dili’s desire to assert more independence from Canberra and Jakarta, said Hugh White, head of Australian National University’s Strategic and Defence Studies Centre.” The Murdoch mouthpiece quoted White as saying: “What Australians fail to recognise — notwithstanding our role 10 years ago — for East Timor, living next door to a country like Australia is somewhat uncomfortable. Seeking to balance Australia’s role, and for that matter Indonesia’s role, in their international position is a perfectly understandable thing to do.”

[Jon Lamb is a member of the Revolutionary Socialist Party and former coordinator of the Timor Sea Justice Campaign in Darwin]