Dennis Shanahan and Nigel Wilson – Mark Latham's pledge to start new boundary talks with East Timor is threatening the tiny country's economic future, with owners of a $5 billion gas project saying they will stop development plans if present arrangements are not honoured.
East Timorese officials have become alarmed as the project partners warn they will have no choice but to pull out, and Foreign Minister Alexander Downer has told the Opposition Leader his position "is damaging to the national interest".
Revenue from the Greater Sunrise gas project, led by Australian resources company Woodside, is vital to the future of East Timor and is now being drawn into a three-way pre-election wrangle.
There is concern in East Timor that Mr Latham's remarks about restarting negotiations could threaten the project as Woodside tells the East Timorese the project partners have no choice but to withdraw if there is a delay beyond the end of the year.
Mr Latham said last week that if Labor were elected, the talks on revenue sharing between Australia and East Timor would "have to start again because, from what I can gather, there's been a lot of bad blood across the negotiating table".
East Timor claims the present maritime boundary has no validity because it was negotiated with Indonesia. It has accused Australia of acting like a thief, as the Coalition Government opposes any change to maritime boundaries.
East Timor and Australia earlier this year negotiated an agreement that shares revenue from Greater Sunrise.
The federal parliament has ratified the agreement but East Timor has delayed ratification for several months, using it as a lever to force Australia to set a deadline for concluding maritime boundary talks.
Woodside's new chief executive, Don Voelte, will go to Dili later this week, where he will emphasise that the partners have no option but to abandon plans for Greater Sunrise if the East Timorese do not ratify the agreement by the end of the year.
Mr Voelte will argue that without firm arrangements backed by both the Australian and East Timor governments, the project cannot win orders for liquefied natural gas worth billions of dollars in the increasingly competitive world market.
Mr Downer says East Timor's poverty can be met by aid programs, rather than by Australia ceding sovereignty over the Timor Sea.
In a letter to Mr Latham, Mr Downer said that "obviously if the Labor Party has a different position to the Government, then East Timor will be able to play one side against the other and this will be very damaging for the national interest".
He challenged the Labor leader to adopt a bipartisan position on negotiating with East Timor before the election so that talks can continue in "good faith".
Mr Downer said that if Mr Latham believed the oil talks should "begin again", then he would postpone the talks due in September until after the election. "If we do have to suspend the negotiations, it will delay for a substantial period of time any prospect of an agreement," Mr Downer said. "I will also advise interested Australian companies of this decision forthwith."
John Howard will visit the Woodside headquarters in Karratha, in northwestern Western Australia, today. Mr Latham told The Australian last night: "We'll negotiate the matter in good faith." Mr Latham said the leaking of Mr Downer's letter showed the minister was "more interested in playing politics than in the national interest".
Mr Latham's key supporter and the man who shifted Labor policy on East Timor, Laurie Brereton, was in the nation's capital of Dili yesterday and met Prime Minister Mari Alkatiri. It is understood Dr Alkatiri told him that East Timor would not ratify the agreement signed between Australia and East Timor last year providing a legal and fiscal framework for development of the Greater Sunrise reservoirs.