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The future of East Timor

East Timorese student Agretina takes part in a class in health and hygiene.
Photo: Lara McKinley/OxfamAUS.

When East Timor celebrated independence in May 2002, enormous economic and social development challenges lay ahead.

Only 60 per cent of East Timorese people can read and write, life expectancy is just 57 years and more than one in ten East Timorese children born today are likely to die before the age of five. East Timor remains the poorest country in East Asia.

Fortunately for East Timor, there is a window of opportunity for financing its development needs and investing for future generations over the coming decades - the lucrative oil and gas reserves of the Timor Sea. Under the waters of the Timor Sea between Australia and East Timor lie vast reserves of oil and natural gas worth tens of billions of dollars which are currently subject to overlapping maritime boundary claims by the two countries.

It is in Australia's national interest to do all it can to reduce poverty and promote social, economic and political stability in East Timor. Central to this is an urgent need to expedite agreement to a permanent maritime boundary with East Timor. Access to oil and gas revenue from the Timor Sea is a vital economic lifeline to address the poverty experienced by the majority of East Timorese people.

To this end, the Australian Government should:

1. Negotiate a permanent maritime boundary with East Timor within the next three to five years. In the event negotiations fail, the issue should be referred to the impartial independent arbitration process set out within the International Tribunal on the Law of the Sea (ITLOS).
2. Negotiate a maritime boundary in good faith and not link in any way development assistance or support for security in East Timor to negotiations over the Timor Sea. These are separate issues, and should be treated as such.
3. Reinstate Australia's adherence to the dispute settlement mechanisms of the International Court of Justice (ICJ) and International Treaty on the Law of the Sea (ITLOS).
4. Cease unilaterally issuing new exploration licenses in the Timor Sea in areas subject to overlapping maritime claims.
5. Hold all revenues from licensing, royalties and taxation on East Timor's side of the median line, but outside of the Joint Petroleum Development Area, in escrow until completion of negotiations on permanent maritime boundaries.

The Government of the Democratic Republic of East Timor should:

1. Initiate a process of public information and consultation and subsequently establish the proposed petroleum fund to ensure transparent administration of Timor Sea oil and gas revenues.
2. Ensure that East Timorese civil society organisations are allowed both sufficient access to information and are provided with political space to be active in scrutinising Government management of Timor Sea oil and gas revenues.