GLW: Scrap the Timor oil treaty

Green Left Parramatta glparramatta at
Tue May 16 17:49:14 MDT 2000

The following article appeared in the latest
issue of Green Left Weekly (,
Australia's radical newspaper.


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

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

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

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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