Global Policy Forum

By Jonathan Steele

Australia, which led an international peace force to help East Timor become independent last year, has become the greatest barrier to the country's hopes of breaking free from reliance on foreign aid, according to stark budget figures released yesterday.

Despite starting out as one of the world's poorest and most war-torn states, East Timor stands to benefit from huge gas reserves which lie under the sea that separates it from Australia. But harsh Australian negotiating tactics over disputed claims to the gas have forced the government to accept that long-promised revenues will not materialise for several more years, if ever. As a result the Timorese budget deficit for the three years from June next year will be roughly double the $70m (£42m) previously projected, the finance ministry in Dili announced yesterday. News of the revenue shortfall came as Xanana Gusmao, East Timor's president, started an official visit to Britain. "We're not asking too much from Australia. What belongs to us is ours. We hope Australia can understand that," he told the Guardian in London.

Mr Gusmao has been dubbed Asia's Nelson Mandela because of his long years in prison as leader of the armed struggle against Indonesian occupation, and more recently as a champion of post-conflict reconciliation. But he could not conceal his anger at Australia's behaviour. "They still haven't agreed when to start maritime border negotiations," he said.

The huge reserves of gas in question are known as the Greater Sunrise field. Although they are closer to East Timor than Australia, they were "awarded" to Australia under a treaty with General Suharto, in 1989. Economic factors were a key incentive in making Australia one of the first countries to recognise Indonesia's illegal invasion of East Timor after the territory declared independence from Portuguese colonial rule in 1975. An international outcry finally arose in 1999 when the Indonesian army and local militias massacred hundreds of Timorese after a nationwide vote to move to independence.

The Timorese government, with the backing of the UN, announced last year that it wanted to renegotiate the boundary line. Under normal international practice it would be fixed as the halfway mark, putting all of Greater Sunrise inside East Timor's waters.

Australia first announced it would not accept any decisions by independent arbitrators such as the international court of justice, thus leaving East Timor at the mercy of bilateral negotiations with its giant neighbour. Then it persuaded cash-strapped East Timor last year to agree that 20% of Greater Sunrise was part of a "joint production area", giving Australia a right to a share. Now Australia is declining to set a timetable for completing negotiations on the remaining 80%. By delaying production, the apparent aim is to press East Timor to soften its claim.

"We don't have to exploit the resources. They can stay there for 20, 40, 50 years. We are very tough. We will not care if you give information to the media. Let me give you a tutorial in politics - not a chance," Alexander Downer, Australia's abrasive foreign minister, recently told East Timor's prime minister, Mari Alkatiri, according to a leaked transcript.

Australian officials were not available last night for comment on the budget figures. "Australia is giving AU$1m in emergency food aid for families affected by a two-year drought and is launching a major new initiative to provide training for East Timor's police," said a spokesman for the high commission in London.

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