Jon Lamb – Australian Labor Party federal leader Mark Latham's comments on July 22 that a government led by him would start new negotiations with East Timor over the maritime boundary in the Timor Sea has provoked a threat from Prime Minister John Howard's government to cancel the next round of talks between Canberra and Dili scheduled for September.
Speaking on Lismore radio station 2LM on July 22, Latham said: "If we come into government, I think we'll have to start again because, from what I can gather, there's been a lot of bad blood across the negotiating table and you never get it right in these sensitive areas unless you're there doing things in good faith." Responding to Latham's comments, Australian foreign minister Alexander Downer told reporters: "If the Labor Party is still going to take the view that it wants to politicise these delicate negotiations, we'll have no choice but to suspend the next round of negotiations".
The day before Latham's comment, Downer was forced to respond to comments by East Timor's Foreign minister, Jose Ramos Horta, who told a packed public meeting on July 21 in Sydney: "On our side we have very, very solid legal grounds. We are supremely confident and we will be prepared to go to the International Court of Justice. We will be prepared to accept arbitration and we will honour whatever result." Horta also suggested that if Australia maintained its opposition to arbitration by the World Court, then a third-party such as New Zealand should be involved.
On July 28, Australian oil giant Woodside Petroleum weighed into the dispute between the ALP and the government warning that if the dispute with East Timor is not settled by the end of the year, the $5 billion Greater Sunrise gas development will not go ahead. Woodside is the lead developer in the Greater Sunrise gas project which lies between East Timor and Australia.
Woodside is demanding that, at a minimum, the East Timorese parliament pass legislation similar to that passed by the Australian parliament earlier this year ratifying an agreement under which 80% of the Greater Sunrise field – believed to hold the largest deposits of gas and oil in the Timor Sea – would be placed under Australian control. This would give Canberra the vast bulk of future government revenue from the development of the field.
Within hours of Woodside's public threat, Howard told reporters that Labor and government need to adopt a bi-partisan approach to defend Australia's "national interest" because "dealing with another country, you're both on the same side". He also said that he would be personally meeting with Woodside and its US partner, Conoco-Phillips, to discuss the government's next steps.
The threat of Woodside pulling the plug on the Greater Sunrise project propelled Northern Territory Chief Minister Claire Martin to repeat her call for the Howard government to be more generous and provide a better royalty deal or one-off payment to East Timor. Woodside plans to export the oil and gas from Greater Sunrise via the Northern Territory, rather than East Timor.
Martin's Labor government has been pushing the "generous" solution as a compromise to the stalemate and as a means to directly avoid recognising or supporting East Timor's sovereign territorial rights.
Public and private lobbying of the East Timorese government has dramatically increased as a result of Latham's remarks. Woodside sent its newly appointed CEO, Don Voelte, to Dili for talks with East Timorese Prime Minister Mari Alkatiri. Also on the path to Dili was Labor's former shadow minister for foreign affairs, Laurie Brereton.
According to Australian press reports, Brereton's visit was to help clarify Labor's position and to urge approval for the Greater Sunrise project. His visit and the comments by Martin indicate that there are differences within the ALP over how to deal with the maritime boundary issue, despite Latham's call for "negotiations in good faith".
Both Labor and the Howard government are acutely aware of the growing public understanding and support within Australia for East Timor's claim for the maritime boundary to be settled in accordance with international law. This is one of the reasons behind Labor's apparent shift toward a fairer deal. A more important motivation, however, is the ALP's desire to reassure the oil companies that a Labor government could provide a speedier resolution to the dispute.
For East Timor, there is much at stake. The East Timorese government – along with East Timorese non-government groups and international solidarity organisations – point out that the current proposal for the split of royalties from Greater Sunrise would see East Timor denied at least US$8 billion.
"This $8 billion more than doubles East Timor's budgets for 30 years but adds less than 1% to Australia's budgets", remarked Greens Senator Bob Brown on July 24. "It is essential for schools, hospitals and roads in East Timor where there is up to 90% youth unemployment".
The Howard government's stance was also criticised by a US legislator during the debate in the US House of Representatives on the US-Australia Free Trade Agreement.
Representative James McGovern stated on July 21 that he was concerned by Australia's "ruthless treatment and disregard of East Timor's rights." He urged the Howard government "to do the right thing by East Timor ... rejoin the international dispute resolution mechanism for maritime boundaries; refrain from offering disputed areas for new petroleum contracts; and expeditiously negotiate in good faith a permanent maritime boundary in the Timor Sea." McGovern added that "the US and Australia scarcely took one year to negotiate a free trade agreement. Australia has been dragging its heels since 1999 to resolve this dispute with East Timor."