A Timorese youth makes finishing touches on a mural in Dili, East Timor. Photo: AP

East Timor drops bugging claims against Australia to help resolve maritime border dispute

East Timor has withdrawn its Australian espionage claims in the permanent court of arbitration as a “confidence-building measure”, as the two countries continue to negotiate over their maritime border.
In 2013 it was revealed the Australian government had bugged the Dili cabinet room of the East Timor government in 2006 – under the guise of Australian aid-sponsored renovations.

The East Timor government claimed the espionage gave Australia an unfair advantage in negotiations over the Certain Maritime Arrangements in the Timor Sea (Cmats), which divides future revenue from the tens of billions of dollars worth of oil and gas that lie beneath the sea.

In a joint statement issued on Tuesday by the East Timor and Australian governments, the two countries confirmed East Timor had withdrawn from Cmats and the treaty would cease to operate from 10 April this year.

As the final in a series of “confidence-building measures”, East Timor agreed to withdraw two arbitration cases before the permanent court of arbitration (PCA) in The Hague: the “espionage case” and a second arbitration concerning jurisdiction of a gas pipeline from Bayu-Undan to Darwin.

The dispute over the Timor Sea – more precisely the lucrative oil fields beneath the sea – has pre-empted and then overshadowed the short and chequered history between independent East Timor and Australia.

The fields are estimated to hold 9 trillion cubic feet of gas and 300 million barrels of condensate and liquefied petroleum gas worth about US$53 billion.

East Timorese children wave their country's flag. Photo: Reuters

But the agreement to terminate Cmats and “commitment to good faith talks” appear to have mended mistrust in the relationship and helped with the progress of negotiations.

Both countries are engaged in a year-long compulsory conciliation, overseen by the permanent court of arbitration, and say they are working towards a final agreement on a permanent maritime boundary by September this year.

“The commission and the parties recognise the importance of providing stability and certainty for petroleum companies with current rights in the Timor Sea,” the joint release said.

“The parties are committed to providing a stable framework for existing petroleum operations [and] the commission intends to do its utmost to help the parties reach an agreement that is both equitable and achievable.”

In order to provide a stable framework for existing petroleum operations, Australia and East Timor have agreed that the 2002 Timor Sea Treaty and its regulations would remain in force in its original form until a final delimitation of maritime boundaries has come into effect.

Father Frank Brennan, former director of the Jesuit Refugee Service in East Timor , adviser to the church-constitution working group in that country and professor of law at Australian Catholic University, said the fledgling country had taken a huge gamble in its negotiations.

“From here the stakes are high,” Brennan wrote. “The Timorese may get the whole of [the Greater

Sunrise oil and gas field] but then they will need to find a developer willing to incur the added cost and uncertainty of a pipeline across the Timor Trough and subsequent development in Timor.

“Then again, they may be left with only a 20 per cent share in any future Sunrise development rather than the 50 per cent presently on the table. They could also lose lucrative exclusive fishing rights.”

A renegotiation of Australia’s maritime boundary with East Timor, which international legal precedent would suggest will fall along a median line between the two countries, could also give rise to a claim by Indonesia to renegotiate its maritime boundaries with Australia.

The current boundary, which is different for the seabed and the water column, is significantly closer to Indonesia than it is to Australia.

This article appeared in the South China Morning Post print edition as: East Timor drops claims of espionage and bugging in border spat with Australia