If rhetoric is a guide, Australia has descended from the rank of best friend to big bully in its dealings with East Timor. The immediate issue is where to fix a permanent boundary in the Timor Sea that separates the two countries. The seabed contains valuable oil and gas fields that are being exploited or explored by Australian and foreign companies, and may well contain even greater petroleum riches. So the position of the boundary will determine how much of the royalties and taxes from development of these fields goes to Australia and how much to East Timor. But the bigger issue is what kind of relationship Australia, one of the world's richest societies, should have with East Timor, one of the world's poorest nations. Australia played a major role in the United Nations operation in 1999 that helped protect and revive East Timor after its vote for independence from Indonesia triggered mayhem. And since then, Australia has been generous with aid and other assistance to its northern neighbour. However, East Timor's leaders argue that the key to their plans to shift the economy from heavy dependence on foreign aid to self-reliance and rising living standards is an assured stream of future oil and gas revenue from the Timor Sea. They want a maritime boundary to be fixed halfway between their southern coastline and Australia's Northern Territory, and have accused Canberra of bad faith and stealing resources that rightfully belong to them. 'How can we prevent poverty if we don't have the money?' asked President Xanana Gusmao. 'How can we reduce disease, how can we stabilise the country, how can we strengthen the democratic process, how can we strengthen tolerance?' Australia's Foreign Minister Alexander Downer said that East Timor was making 'a very big mistake thinking that the best way to handle this negotiation is trying to shame Australia ... accusing us of bullying, when you consider all we've done for East Timor'. Current arrangements for sharing a zone known as the Joint Petroleum Development Area in the Timor Sea give 90 per cent of taxes and royalties to East Timor, amounting to long-term revenue of about US$4 billion. But the joint zone was positioned much closer to East Timor than Australia in a deal worked out with Indonesia, which invaded East Timor in 1975 and occupied it for the next 24 years. The deal was based on a legal argument advanced by Australian officials that the seabed boundary between northern Australia and East Timor was naturally determined where Australia's continental shelf plunged into a deep trough about two-thirds of the way to East Timor. Since then, international law has evolved and a median line has become the generally accepted principle in fixing seabed boundaries between close neighbours. Some of the oil and gas fields in the Timor Sea lie outside the joint development area, in waters claimed by Australia and now East Timor. If the latter could get the border placed at the halfway mark, an extra US$8 billion in royalty and tax revenue would flow to East Timor. But Australia is playing hardball. It has withdrawn the dispute from the jurisdiction of the International Court of Justice and continues to take tax revenue of about US$1 million a day from several of the disputed oil fields that lie much closer to East Timor. The Australian government is concerned that if it makes major concessions to East Timor on the maritime frontier, its credibility with oil and gas companies will be undermined. It is also worried that Indonesia will demand a renegotiation of its adjacent seabed boundaries with Australia in the Timor Sea that were fixed in the early 1970s. Michael Richardson, a former Asia editor of the International Herald Tribune, is a visiting senior research fellow at the Institute of South East Asian Studies in Singapore. The views expressed in this article are those of the author
