On July 5, representatives of the East Timor Transitional Cabinet, the United Nations Transitional Administration in East Timor and the Australian government met in Dili and signed the Timor Sea Arrangement, concluding 10 months of negotiating and wrangling over a new deal to replace the Timor Gap treaty.
The new agreement represents a moral and political victory for East Timor, with the Howard government finally conceding to the demands pushed by UNTAET representative Peter Galbraith and East Timorese negotiators Mari Alkatiri and Jose Ramos Horta that East Timor receive at least a 90% share of the royalties from oil and gas developments in the area currently covered by the "joint zone of co-operation".
The new agreement will mean East Timor will receive an estimated $7 billion in revenue from royalties over a 20-year period, providing a crucial source of income for the devastated and newly independent nation.
From the outset, the Howard government negotiating team — headed by foreign minister Alexander Downer, resources minister Nick Minchin and attorney-general Daryl Williams — have sought to obstruct East Timor from asserting its rights under international law.
The back down by the Australian government was not motivated by concerns of helping East Timor. It was primarily motivated by the desire to safeguard the interests of oil and gas companies operating in the Timor Gap and the financial windfall for itself and the Northern Territory government ensuring that Darwin becomes the transit port for the export of East Timorese oil and gas.
On top of this, the Howard government was also keenly aware that with East Timor gaining a better royalty deal, this offered another justification not to provide more humanitarian aid and assistance to East Timor. Both the Coalition government and the Labor opposition want to diminish as much as possible responsibility (and any notion of compensation) for the part played by Australia in supporting the 24-year-long Indonesian military occupation.
How "generous" really is this new agreement? Certainly the royalties will make a big difference for East Timor, but the spin-off for US and Australian oil companies operating in the Timor Sea (and for the Northern Territory and Australian governments) is enormous by comparison.
Some $13 billion is expected to be invested in new pipelines and downstream processing in the Northern Territory. The Northern Territory treasury department estimates that these projects will generate $50 billion in economic activity in the NT over the next 20 years.
Downer asserts that the new deal "is a fair and just" agreement, "an agreement with a true basis in international law". An article by Alkatiri and Galbraith in the July 6 Sydney Morning Herald gives a more accurate appraisal of the agreement. They wrote:
"The new Timor Sea treaty is a fair deal for East Timor and an even better deal for Australia and the companies developing oil and gas in the Timor Sea ... [the agreement] also rights a historic wrong.
"It will not make East Timor rich. However, if the money is well spent, it will give the people of East Timor the opportunity to escape the grinding poverty that is the legacy of occupation and war".
They added that: "Under international law, East Timor is entitled to a seabed boundary at the mid-point between East Timor and Australia. This would give East Timor not 90 per cent, but 100 per cent of the oil and gas in the Timor Sea.
"Thus while it may look like Australia is making a major concession in moving from the 50/50 revenue sharing it had under the Indonesia treaty to the 90/10 split in this new treaty, it is more than fair for Australia".
And, as Galbraith noted following the signing of the agreement, "it provides a hell of a lot more certainty than they [energy companies] had under a treaty with Indonesia in which they were in effect making investment in stolen property".
Still, the companies and the Australian government are far from satisfied. The corporate media have started a new scare campaign over the prospect that East Timor's new constituent assembly, due to be elected in August, may seek changes before ratifying the treaty or impose at some future date a higher fiscal regime upon companies operating in the Timor Sea.
If a future East Timorese government chooses to make such changes, this is an entirely justifiable and reasonable action to take. The people of East Timor will need as much solidarity as possible in the coming years to defend their newly one independence from the greedy moves of companies in the Timor Sea and the profits-before-people foreign policy of the Australian government.