[East Timor's fledgling parliament has made a key decision about the nation's borders which could be the first big test of its relations with Australia. Its declared a maritime boundary with Australia that would give East Timor full ownership of lucrative oil and gas deposits that now fall inside Australian waters .. in the process, putting the two countries on course for a political collision.]

Presenter/Interviewer: Anne Barker, Darwin

Speakers: Don Rothwell, Sydney University.

Barker: It's a high stakes gamble that could bring vast wealth to a struggling nation or end in an international legal wrangle. East Timor has formally staked a claim to huge oil and gas reserves that Australia counts as its own, and on a trade visit to Darwin, East Timor's President, Xanana Gusmao, put his nation's cards squarely on the table.

Gusmao: We are not asking for less or more than the international law allows us to claim.

Anne Barker: East Timor's parliament has approved legislation that puts the maritime boundary with Australia 200 nautical miles from the Timorese coast, well beyond the halfway mark. It takes in all of the lucrative Sunrise field, 80 percent of which is now in Australian waters, and other vast reserves Australia partly or wholly owns.

Jonathan Morrow heads the East Timorese government's Timor Sea office in Dili.

Morrow: Well there's nothing in international law that requires us to limit our claim to a halfway mark. All East Timor is doing is making the maximum claim to which it is entitled under international law.

Barker: Do you agree that it could be seen as provocative?

Morrow: No, I don't believe that the Australian government will see that as provocative. All we're doing is exercising the right of any newly independent nation, which has no maritime boundaries.

Barker: In Australia's eyes, its own territorial waters extend to the edge of the continental shelf, conveniently north of the seabed's biggest spoils. It all depends now on the extent of Australia's goodwill and international law expert, Donald Rothwell, believes Australia has the upper hand.

Rothwell: The Timor Sea Treaty concluded back in May between Australia and East Timor does in fact recognise that there is continuing obligation to negotiate a permanent boundary between the two countries. But of course we know, that Australia has removed itself from the jurisdiction of the International Court of Justice and as a result it will impossible for East Timor to force this case into the ICJ.

Barker: So who's going to ultimately win?

Rothwell: Well that's a very difficult one to say at the moment. I think that there is certainly some prospect of East Timor trying to launch some litigation against Australia, whether that litigation would be successful or not remains to be seen. But it's quite clear that, as I said, from this action that East Timor is not going to step down or step away from this particular dispute.