Boundaries dispute leaves East Timor’s riches in limbo

Jul 04, 2004 02:00 AM

Four years after Australia helped East Timor gain independence the goodwill is being threatened by a disputed line on the seabed that will decide how revenue from multi-billion dollar oil and gas deposits is divided.
The stakes are high for both parties. For East Timor, which operates on an annual budget of less than $ 100 mm -- about what the Australian government spends on advertising -- redrawing the seabed boundary would put $ 12 bn in its coffers over the next generation, compared with $ 4 bn currently.

East Timor Prime Minister Mari Alkatiri highlighted the significance of the revenue in April, saying it would mean "the money to immunise and educate every child" in the fledgling nation.
"It means more children will reach the age of five years," Mr Alkatiri said. "It means more lives spent productively."
Australia's concerns centre on the potential political and economic consequences of redrawing the boundary -- ensuring that East Timor's border does not provide a source of friction with our largest neighbour, Indonesia.

Australian foreign minister Alexander Downer said last June moving the boundaries east and west "would not only take territory from Australia, it would take territory from Indonesia as well".
"And we don't think that that is in any way consistent with international law," Mr Downer said.

The dispute dates back to before Indonesia's 1975 invasion of East Timor. Australia negotiated a seabed boundary with Indonesia but was unable to reach an agreement with Portugal, which was the colonial ruler of East Timor.
In 1989 Indonesia and Australia reached a compromise with the Timor Gap Treaty, effectively sharing equally the income from oil and gas in the area between the two proposed boundaries, known as the "gap". It is in this zone that the most significant finds of gas and oil have been made.

The gap treaty sparked an exploration boom in the Timor Sea that led to a string of oil and gas discoveries -- 16 in the past five years alone.
After Indonesia withdrew from East Timor in 1999, the 1989 gap treaty was declared illegal by the United Nations and East Timor sought to renegotiate the boundary.

Source: AAP Finance
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