Timor-Leste’s Troubled Waters Asia Rising

Professor Nick Bisley Welcome to Asia Rising, the podcast of La Trobe Asia where we discuss the news, events and general happenings of Asian States and Societies. I'm your host Nick Bisley, Executive Director of La Trobe Asia.

Australia and East Timor have a curious relationship, in 1999 Australia led the International Peace Keeping Operation which played a crucial role in stabilising what was then a part of Indonesia that had been thrown into turmoil as the newly democratic country tried to work out just what to do with this former Portuguese Colony that it had annexed in 1975.

Yet Australia was one of the few countries that had recognised Indonesia's claims to Timor and historically taken a decidedly realpolitik approach to its populist Northern neighbour. In recent years tensions in the relationship have resurfaced once again. In 2012, Timorese representatives accused Australia of bugging government buildings to gain an unfair advantage in their negotiations about their maritime boundary. What began as odd became almost farcical as the Australian Government refused to acknowledge these claims and then in 2013, there followed an ASIO raid on the Canberra offices of a member of Timor's legal team as well of the residents of an ASIS agent.

Joining me to help shed light on the problems of one of the world's newest, smallest and poorest countries and its large rich neighbour is Dr Beck Strating. Beck is a lecturer in the Department of Politics and Philosophy at La Trobe University and a leading authority on East Timor's foreign relations. Welcome to the program Bec.

Dr Beck Strating Thank you for having me.

Nick Bisley Well, let's start with this curious exchange, in which Australia has been more coy than the heroine of a Victorian novel, while the Timorese are fulminating quite publicly. What's the issue here and what's at stake in this really peculiar exchange?

Bec Strating Talking specifically about the spying claims, this is quite a convenient set of events for Timor. So Timor-Leste seems to present an attitude of being genuinely saddened or genuinely upset by the fact that Australia spied on them during the negotiations for the CMATS Treaty. Now the CMATS Treaty was negotiated largely across 2004 and 2005, between Australia and Timor-Leste and it was a protracted set of negotiation. It wasn't until 2012 when Xanana Gusmao, the then Prime Minister of Timor-Leste found out that this bugging had happened, but there was almost suspicion among the negotiators, among Timor representatives in 2004, that Australia was keeping tabs on their negotiations.

Just to go back to before 2012, in the public sphere there were already comments by Timorese leaders that they were not happy with the CMATS Treaty, the Treaty wasn't fair, that Australia was stealing Timor's resources, this is a narrative that has continued for a long period of time and it was gaining kind of traction. So you could kind of interpret that these spying allegations were quite convenient for the Timorese leadership, who were probably already looking for a way of getting out of that CMATS Treaty anyway.

So one of the central issues for Timor with the maritime boundaries, is that Australia withdrew from the relevant international legal instruments that arbitrate maritime boundary disputes. They did that quite deliberately, clearly in reference to this issue with Timor-Leste, so Timor cannot take Australia to the ICJ on the issue of permanent maritime boundaries because Australia has withdrawn.

So the spying allegations actually allow Timor to take this issue to court, not to do with the actual limitation of the boundaries, but to do with the issues around good faith and that this compromised Timor's position when it was negotiating the CMATS.

Nick Bisley So this is their kind of Get Out Of Jail card.

Bec Strating Yeah.

Nick Bisley So let's take a step back just for people who are not familiar with it, because it's a bit of a murky or complex issue, so in essence you've got a disagreement between Australia and Timor as to exactly where to draw the line and sea, if that metaphor holds, and the consequences that the follow from that in terms of exploiting the natural resources.

Bec Strating That's right. Indonesia annexed Timor in the late 1975, but even before that Indonesia and Australia were trying to draw up maritime boundaries. So Portugal said, "We don't want to be a part of that," and this created a gap. Portugal was administrating East Timor and so Indonesia and Australia were only able to create boundaries up to the boundaries of East Timor effectively.

Nick Bisley Yes, because Timor was a colony of the Portuguese and very few countries apart from Australia, the US and a handful of others recognised Indonesia, so the rest of the international community were dealing with Portugal but Portugal says we're not dealing with UNCLOS.

Bec Strating And this is a binding treaty and it sits between Indonesia and Australia but there's a gap in that line because that reflects Timor's territory. And this line is a lot closer to Indonesia than what it is to Australia.

Nick Bisley If we then fast forward, the legal ground shifts, when Timor's sovereign, how does Australia then approach this question of where this line should be drawn?

Bec Strating The history really matters because it informs the way that Timor-Leste and Australia have to deal with this issue. It's no good to say, "Alright well now Timor's independent, let's just clear the slate and start from scratch." Australia doesn't accept that.

Indonesia and Australia created the Timor Gap Treaty which basically created a joint area for exploiting the resources. Following the 1999 Independence Referendum, Timor-Leste went through a period of state building and it was well acknowledged that Timor's viability relied pretty much solely on oil and gas. Like its economic viability, it's capacity to be an independent sovereign state relies significantly on getting access to those resources and exploiting them quickly.

This resulted in the Timor Sea Treaty which was actually signed on the day that Timor-Leste became independent. The Timor Sea Treaty was based on the terms of the Timor Gap Treaty between Indonesia and Australia and that's become a real bone of contention. Some of the advocates of Timor-Leste's position want that clean slate. They want to go – "These lines don't exist."

Nick Bisley So is that what's lying behind this gambit around the espionage. So we'll start from scratch and here's a way we can go to the courts and say that whole thing is a breach of the fundamental principle so we're not negotiating in good faith, let's chuck it out and let's start from scratch? Is that where we enter the public diplomacy, if you like, of publicly outraged East Timor and Australia who is putting it's hand in its pocket, looking at the floor and saying, "Nothing to see here governor?"

Bec Strating The real issue I think in terms of the outrage comes from the fact that there was the Timor Sea Treaty in 2002, which Australia refused to ratify unless Timor-Leste agreed to what's called 'a unitisation' of a particular area, a particular oil field called The Greater Sunrise Field. Estimated to be worth about $40 Billion and this is the real issue at the moment.

Nick Bisley That's the total sort of if you sucked it all out?

Bec Strating Yeah, I think so. So Australia refused to ratify the Timor Sea Treaty until Timor-Leste agreed to a unitisation of the Greater Sunrise Field that put approximately 80% of the Greater Sunrise Field in Australia's Territory and around 20% in the shared area. Like this is a realist approach, this is a hard-core realist approach to this issue in my opinion.

Nick Bisley Plain piece of paper the Timorese want, you've got the situation set up in which the deal has been struck that very clearly, economically at any rate is in Australia's advantage. The Timorese are trying to say, 'Let's reset the clock'. If you could get inside each sides' negotiators, what do they want, what's the ideal outcome in the real world? What is it that you reckon they'd be happy to settle on?

Bec Strating I'm really glad that you asked this question because just going back to the terms of the CMATS Treaty that was eventually signed. Australia, while they claimed 80% and this unitisation was signed, they ultimately agreed that they would share the revenue of the Greater Sunrise Field 50/50, but they left open the question of how the downstream revenues would be exploited. Timor-Leste wanted a pipeline to go to the South Coast in order to develop its petro-chemical industry.

Nick Bisley To the South Coast of Timor?

Bec Strating Yes. And at the moment Timor-Leste's government has been pushing a project called the Tasi Mane Project which is about developing an oil refinery on the South Coast and there's a lot of criticism from civil society organisations as well as Australia on whether or not they're efficient, whether or not they're economical, whether they represent good value and those sorts of issues. And so while they negotiated this CMATS and it was split 50/50 despite the fact that both sides had signed a unitisation that said that Australia has effectively 80% of the territory there's still been this on-going issue around this pipeline.

Now when I went to Timor recently, I was trying to figure out in the minds of Timor-Leste's leaders, were they really trying to prosecute the case that they should be able to develop that pipeline to the South Coast, in order to industrialise and develop. You know they talk about sustainable development as being a crucial aspect of Timor-Leste avoiding the resource curse. Or is the priority settling permanent maritime boundaries? If Timor-Leste got the pipeline, would they been prepared, as they have in the past, to put a moratorium on setting boundaries?

Nick Bisley A classic negotiating tactic when you say, "We want all of this," where really you want less of that and you want your refinery and that's where you're prepared to give grounds to get what you want.

Bec Strating I hypothesize that the permanent maritime boundaries and the issues around sovereignty and how Timor-Leste was presenting sovereignty, I thought that was a way of perhaps pressuring Australia on the issue of the pipeline. I thought that would be the key issue and that's what they were really focusing on and I was wrong. From my interviews it is all about sovereignty.

I had an interview with the foreign minister who said quite directly, "The pipeline issue was a real issue around 2010 and 20011 and now it's all about permanent maritime boundaries." And the public discourse, the narrative sees maritime boundaries as being as important as territory – as land. The way that Timor-Leste concedes or constitutes of its sovereignty is very much linked to the sea and it's linked to the oil reserve, but it's also linked to things like the exclusive economic zone and fishing and just the fact that they want these boundaries to be settled.

But the other issue is that they don't want the boundaries just settled. There's a sub-claim to that, and that is, "We have the right to settle permanent maritime boundaries according to how we see permanent maritime boundaries, as including all of the Greater Sunrise Fields.

Nick Bisley Given that shift, I mean is this purely like an economic story, we want a permanent boundary there that maximises our return, is there a political symbolic component to this which is actually more important?

Bec Strating Yeah.

Nick Bisley What's your sense of…?

Bec Strating My sense is that this is not about oil anymore. This is much more about identity and recognition. This has always been a theme but it's intensified over time, it intensified particularly after Xanana Gusmao came into power I think, because I've been tracing the public discourses over time. This is an ongoing struggle for recognition. This is positioned by Timorese leaders and its advocates as being a continuation of the Independence Movement. This time the occupier is Australia and in fact, I had it put to me by one advocate that Australia is a "Longer term occupier of Timorese Territory than Indonesia". And you can imagine that Australia probably gets a little bit upset with this kinds of characterisations.

Nick Bisley It's interesting to say that the dispute is now being framed very much in political symbolic identity terms, because if you think, how's this going to end, that's going to make it much harder? As in any negotiation if it's just about resources, if it's just about bucks, you can divide that up and you may not get exactly what you want.

But when it's about this is who we are, this is about what we are: that becomes really hard. So gazing into your crystal ball which is polished in front of you, how do you think this is going to end?

Bec Strating You are right about the issues of sovereignty and rights. It's really hard once a state starts talking about rights and entitlements in the way Timor-Leste are, it's really hard to them compromise on those. At the moment Timor has one strategy and that is to win. It's informed by the Independence Movement and the people of Timor-Leste have struggled against an occupier before. Walk into the Resistance Museum in Dili and on the wall is, "To resist is to win." You know the name of Xanana Gusmao's biography is ‘la lutte continue’ and it means – The Struggle Continues and these phrases continue on to kind of inform decision making and to inform National Identity, issues to do with struggle and resistance and heroism.

And so these themes linger and Timor has been trying to mitigate its particular vulnerability when it comes to the negotiations which is around time. Australia has a stronger negotiating position because, it can wait a long time. Timor cannot wait a long time. The oil reserves that are currently being exploited, they're expected to run out in 2020, one of the civil society organisations that's well respected La'o Hamutuk, has estimated that the petroleum fund that Timor-Leste has set up might only last five to eight years after that and Timor-Leste doesn't have a diversified economy. It really does rely significantly on oil.

So while Timor says, "We've been through this struggle before", my question is well, "Can you afford to do that? And it seems like the CMATS negotiation, which I should point out was negotiated by Jose Ramos-Horta who tends to take a more pragmatic approach to things. He thinks negotiation is possible, but it shifted from this pragmatic realist approach where you can compromise, to an idealistic approach which suggests that we are right, therefore we will win.

From the research I've conducted I don't think there's a Plan B, so there's a public campaign that continues, there's the International Court Cases that continue, there's attempts to involve the broader international community to pressure Australia. But I did a presentation on this at one of the universities and I tried to put this issue in the context of Australia's broader foreign policy and it's not looking really good at the moment when it comes to being a good international citizen.

So in terms of gazing into my crystal ball, I don't want to make any kind of outlandish predictions, but I suspect that Timor will be attempting to get what it wants through public diplomacy, through activism, through the courts, it's trying to invalidate the CMATS Treaty. We'll really have to see whether or not it's successful in that court case, but my feeling is, Australia is not going to budge on this issue. It hasn't since 1972 and this is bi-partisan support. Nick Bisley Backed by the big end of town in Melbourne and Sydney. Yeah I remember talking to an Attorney General's negotiator and he said, without question, the hardest people they ever have to deal with in terms of negotiation are the Timorese. Toughest of nuts, he said.

Nick Bisley Well that's all the time we have, East Timor is not only Asia's newest state, but it's among its most interesting. It's been a subject of a few episodes of Asia Rising and we look forward to having you back on the program to have another look of how this fares and East Timor and the International Stage more generally.

Bec Strating Thank you for having me.

Nick Bisley You've been listening to Asia Rising, a podcast of La Trobe Asia. If you like this podcast you can subscribe to Asia Rising on iTunes or Soundcloud. And while you're there read the rating and review and spread the word. Thanks for listening.