Damien Kingsbury – Australia's relationship with East Timor is at its lowest ebb since 2005 when Alexander Downer bullied then Prime Minister Mari Alkatiri into accepting a fundamentally unfair division of the Timor Sea between the two countries.

Since then, however, Australia has sent troops and police to help control serious instability in 2006 and has continued to be East Timor's single largest aid provider.

Yet in recent weeks, Prime Minister Xanana Gusmao has attacked Australia in ways that have left diplomats reeling and which are beginning to cast doubts over the future of the relationship. The fallout between the countries is being driven from within East Timor. In this, confusing categories play a major role, as illustrated by East Timorese journalist Jose Belo.

Belo focused on East Timor receiving two Chinese Jaco-class patrol boats, rather than accepting similar craft under the Australian Pacific patrol boat scheme. Belo complained that accepting Australian patrol boats would come with strings attached, including overarching Australian command and intelligence being routed through Australia, which he viewed as "neo-colonial" and, parroting PM Gusmao, an infringement of East Timorese sovereignty.

Instead, East Timor has accepted the Chinese boats, complete with Chinese regular sailors as "training crews". The Australian offer included training and in-country advisors, in a parallel capacity to Australian army training and support for the East Timor Defence Force.

East Timor's concerns about sharing intelligence diminishing its sovereignty is nonsense. All friendly countries share intelligence in areas of mutual interest. So, what of Belo's other concerns?

Belo complains about Australian aid to East Timor, failing to recognise it is the largest aid supplier, that the aid budget has just increased again and that most of its projects, such as in water supply and health, have delivered tangible benefits to the East Timorese.

Belo says other projects have not delivered desired outcomes.

What Belo fails to say, however, is that Australian supports justice behind the scenes in management and logistics. In that the justice sector is failing, this is due to using Portuguese – which is spoken by at best 15 per cent of the population – poor local training and local interference.

Financial management is improving with Australian aid but the biggest impediment is the appalling low skills base of its trainees. Non-water infrastructure development in East Timor is the responsibility of its own government, not Australian aid.

Australia is increasingly the fall-guy for complaints about foreigners in general.

Belo complains about corruption and a lack of accountability – problems that are entirely home-grown.

If the people of East Timor wonder why, eight years after independence, they have not developed further, the first reason is because development is slow, especially when starting with no infrastructure and little capacity to learn skills. Australia can help but it cannot and should not do everything.

In East Timor, over the past year or so, there has also been a pronounced tendency to regard international assistance as an entitlement. This author has experienced a push, from Baucau to Balibo, to assume control of this "entitlement" without accountability or transparency. That is, Australia is obliged to provide unaccountable funds for East Timorese to do with what they choose. That is not how aid works.

But more importantly, after decolonisation, things get worse – due to lack of infrastructure, skills and capital – before they get better. If East Timor is angry over its colonial past, it might do better to look at the signal failures of Portuguese colonialism and the brutality of Indonesia, rather than Australian aid.

So what is really behind this anger coming from East Timor? Belo gave it away when he said that Australia and East Timor have long had disagreements over the Timor Sea.

East Timor agreed, albeit under undue pressure, to the Timor Sea Treaty to put off resolving the sea boundary issue until 2055. Many East Timorese remain angry about this. That is why, under the terms of the Greater Sunrise gas field agreement, rather than opting for an 80-20 split as per the treaty, Australia opted for a 50-50 split of royalties on that project.

And this is what it is all really about: the Greater Sunrise gas field and Woodside Petroleum's decision to build a floating processing platform rather than accede to East Timorese demands to build a processing plant on East Timor's southern coast.

East Timor wants the infrastructure and technology transfer such a development implies. But Woodside has baulked at the extra $US5 billion cost, the technical difficulties of building a gas pipeline in a deep sea trench and the sovereign risk of building in a still fragile country.

Gusmao believes in the absence of this, the gas can stay under the ocean or East Timor can find an alternative development partner. By beating up on Australia for matters that are not within the remit of its government, he cannot but send a negative signal to anyone interested in East Timor.

If anyone has concerns about East Timor's sovereign risk – the unpredictability of its government – East Timor's increasingly shrill claims only serve to heighten them.

[Professor Damien Kingsbury is with the School of International and Political Studies at Deakin University, and is author of East Timor: The Price of Freedom. He is currently researching political issues in East Timor under an Australian Research Council Grant.]