Scrap the Timor Gap Treaty

May 17, 2000


Scrap the Timor Gap Treaty


Media reports during the recent visit to Australia by East Timorese leader Xanana Gusmao highlighted the improving diplomatic relations between Australia, East Timor and Indonesia. Not so widely reported during Gusmao's trip were renewed calls for the Timor Gap Treaty to be renegotiated.

Speaking on ABC radio on May 7, National Council of Timorese Resistance (CNRT) vice-president Jose Ramos Horta called for the treaty to be renegotiated with terms fairer to East Timor.

Horta stated that East Timor is entitled to up to 90% of gas and oil royalties from exploration in the area covered by the treaty. Commenting on the possibility of the treaty being changed, Horta said: "I believe that Australia is an enormously rich country and I am confident it is prepared to take the initiative itself, so that the East Timorese can benefit much more from the treaty."

In response to questions on the Timor Gap Treaty raised by journalists at the National Press Club on May 5, Gusmao hinted that the future East Timorese government would seek to renegotiate the treaty. "Hopefully, as soon as possible, when East Timor is independent we will have also a team of experts to deal with this matter", he said.

The treaty was also raised in a forum held at federal parliament on May 5. Representatives of the federal Coalition government and the Labor opposition skirted questions on where they stood on renegotiation. Labor's shadow foreign affairs minister Laurie Brereton said it was matter to be dealt with "in the future", while Liberal Senator Marise Payne (speaking on behalf of foreign affairs minister Alexander Downer) declined to comment.

Downer was just as evasive when asked by reporters on May 8 whether the government would consider changes to the treaty. He could only bring himself to say that the government "will be happy to talk with the East Timorese on this issue [the Timor Gap Treaty] as East Timor moves toward independence".

A more blunt and forthright reply was made on May 7 by Northern Territory chief minister Denis Burke. He told Radio Australia that "the negotiations that were done when the Indonesians had control was

a very good deal for Indonesia at the time and that deal passed directly through to East Timor. It's probably the best deal they would get. I wouldn't be fearful if I were East Timorese about loss of revenue."

Burke also urged the federal government to do "everything possible" to assist oil and gas industry developments projected for the Timor Sea because "there are plenty of alternate suppliers".

Burke's claim that the Timor Gap Treaty is the best deal for East Timor is false. If the area which the treaty covers is renegotiated under internationally accepted norms and laws, then a vast amount of territory would return to East Timor. This would result in a substantial amount of oil and gas reserves and associated royalties from exploration coming under the control of the United Nations Transitional Administration in East Timor (UNTAET) or the East Timorese state, once the mandate of UNTAET concludes.

When the Timor Gap Treaty was signed in December 1989 it signified a big step forward in relations between Indonesia and Australia. The treaty marked the end of lengthy negotiations (which had begun as far back as 1972) to bridge "the gap" in the sea bed boundary between Australia and Indonesia.

The gap existed in the territorial waters of East Timor because the Portuguese government — the administering power of East Timor prior to the Indonesian invasion in 1975 — refused to accept the Australian government's claim that the boundary be set along the edge of the continental shelf, rather than along the median line.

The signing of the treaty was only able to take place because successive Australian governments acknowledged Indonesian sovereignty over East Timor. Though not entirely acceptable to oil and mining interests in Australia, the Timor Gap Treaty enabled exploration and development of lucrative oil and gas deposits to begin.

The treaty divides the gap into three zones: zone A, the largest zone, which is jointly administered, with revenue raised from taxes shared equally; zone B, which is under Australian jurisdiction (with most of the revenue going to Australia); and zone C, which was under the jurisdiction of Indonesia (now UNTAET).

There is potentially billions of dollars in royalties and taxes to be generated from oil and gas developments, especially in Zone A. When the Senate passed the Timor Gap Treaty (Transitional Arrangements) Bill 2000 on March 16 — under which UNTAET formally replaced Indonesia as the co-signatory for the Timor Gap Treaty — industry minister Nick Minchin stated: "It is likely that projects currently awaiting approval could, if developed, provide several tens of millions of dollars per annum to both East Timor and Australia for a period of 10 to 20 years commencing in about 2004".

According to a report in the April 13 Sydney Morning Herald, the Bayu-Undan field (located in Zone A) alone could potentially generate $5.2 billion in government revenue over a 24-year period. Under the current terms of the Timor Gap Treaty, this would be split evenly between East Timor and Australia. If the sea bed boundary was changed to the median line between East Timor and Australia, the Bayu-Undan field would fall within East Timor's territory, so all revenue from Bayu-Undan would go to East Timor.

The hypocrisy of the Howard government's grandstanding on its aid commitment to East Timor is more apparent when the current terms of the Timor Gap Treaty are considered. According to budget figures, the government is only prepared to commit a paltry $150 million in aid to East Timor over the next four years. This is less than 6% of the expected revenue from the Bayu-Undan field income alone — which rightfully belongs to East Timor.

The Howard government is trying to hoodwink both the Australian and East Timorese people by claiming to provide much aid and assistance to East Timor. If it was really committed to helping East Timor, it would scrap the Timor Gap Treaty immediately, and return the territory and revenue it gained by giving support to Indonesia's murderous and illegal occupation of East Timor.

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