Jonathan Pearlman – Australia faces growing accusations that it spied extensively on Timor Leste during crucial talks over a deal to share gas and oil fields worth an estimated A$40 billion (S$45 billion).
In an embarrassing and deepening scandal that is damaging ties between the two countries, Australian agents are accused of pretending to do work for Canberra's aid arm, AusAID, while conducting widespread espionage on Timor Leste's leaders. The spying was allegedly designed to assist Australia's position during negotiations in 2004 over a division of the oil and gas resources in the Timor Sea.
The negotiations led to a treaty signed in 2006 which included a 50-50 split of the lucrative Greater Sunrise fields. The fields are closer to Timor Leste than Australia, and would belong entirely to Dili if the midway point between the countries were used as the maritime boundary, a marker commonly used in international law.
In the latest espionage revelations, which appeared in The Australian newspaper last weekend, Australia allegedly offered to renovate the residence of Timor Leste Prime Minister Xanana Gusmao in Dili in 2004, and then deployed its foreign spy agency, the Australian Secret Intelligence Service (Asis), to install bugs and surveillance equipment. The renovations included construction of a secure "situation room", which was later used extensively by Timor Leste's negotiating team.
Timor Leste has taken Australia to the Permanent Court of Arbitration in The Hague over the spying claims, and wants the treaty overturned. The affair has badly damaged ties between the two countries, which had become close after Australia played a leading role in Timor Leste's bid to end Indonesia's rule and eventually gain independence in 2002.
Timor Leste, with a population of 1.2 million, is a poor nation with 18 per cent unemployment and 12 per cent inflation. Its economic future largely depends on its underwater oil and gas resources.
According to Mr Paul Cleary, a journalist and former adviser to Timor Leste during the negotiations from 2003 to 2005, Dili will present the court with an affidavit by a former Australian spy to allege that agents planted listening devices inside the walls of the meeting room, which was next to the Prime Minister's private office.
"The (building) contract provided the perfect vehicle to bug the office because it gave unfettered access to the building, including the roof cavity," he wrote in The Australian.
"Throughout these (treaty) negotiations, Timor Leste's ministers and advisers operated on the premise that all of their phone calls and e-mails were being intercepted by Asis, but no one expected that the office would be physically bugged."
Mr Cleary said Australia not only used espionage, but may also have bribed or blackmailed a senior member of Timor Leste's negotiating team.
In a strange twist, Australian intelligence agents last month raided the suburban Canberra office of lawyer Bernard Collaery, who is representing Timor Leste in its case.
On the same day, a separate group of agents raided the home of a former Australian spy who is allegedly the star witness for Timor Leste and plans to speak out about Australian spying. The spy's passport was cancelled, and it is not clear whether he will be able to take part in proceedings at The Hague, possibly later this year.
The raids were described as "aggressive" and "unconscionable" by Timor Leste's Prime Minister. Dili launched fresh proceedings in the International Court of Justice, saying Australia should apologise and destroy the seized documents.
The Australian government denied the raids were designed to interfere with the case, saying they were conducted to protect national security. Attorney-General George Brandis told Parliament last month that such claims were "wild and injudicious".
International relations expert Clinton Fernandes of the Australian Defence Force Academy of the University of New South Wales said there was little doubt Australia spied on Timor Leste during the treaty talks. He said the recent raids effectively proved Canberra's guilt.
"The government has virtually confirmed that it was conducting espionage as a result of ordering raids on the agents involved," he told The Straits Times. He said Australia should agree to a fairer resources deal with Timor Leste, and "risked having a resentful neighbour on our border".