Four years ago this month, East Timor voted for independence following aquarter-century of brutal foreign occupation. Invaded and occupied byIndonesia in 1975, it finally took its place as the first independent stateof the new century. Whether that independence will be secure depends on aneconomic question: who will control the offshore oil of the Timor Sea?

Today, East Timor is the poorest state in Asia. It could be one of thewealthiest. The reason is oil: billions of barrels in untapped reserves inthe Timor Sea. But the ownership of that oil is in dispute. Theinternational community once again holds the key to East Timor’s fate.

One of the main countries that sold out East Timor in the past is Australia.Today it is doing much the same thing in a battle over ownership of EastTimor’s offshore oil.

Petroleum revenues, says East Timor’s Prime Minister Mari Alkatiri, “willfinance our future and allow us to wean ourselves gradually from thegenerosity of international donors.” The country’s budget now relies heavilyon foreign aid. Oil offers a way out: offshore reserves in the Timor Sea areworth as much as $30-billion (U.S.) over the next 30 years. East Timor need notcontinue to be the poorest country in Asia, a ward of donor states; it canbe self-sufficient based on wise use of oil revenues.

But the power to decide lies not in East Timor, but in Australia. AndAustralia is playing hardball with its smaller neighbour. “We are verytough,” Foreign Minister Alexander Downer told Alkatiri. “We will not careif you give information to the media. Let me give you a tutorial inpolitics — not a chance.”

Maritime boundaries in the Timor Sea are still not fixed. Australia hashistorically claimed the bulk of the waters under the outdated continentalshelf principle, and demarcated its boundaries with Indonesia under thisprinciple in 1972. That treaty left the boundary between East Timor andAustralia undefined, creating an oil-rich zone of uncertain control calledthe Timor Gap.

After Indonesia invaded East Timor, it began negotiations with Australia toclose that gap. With the Law of the Sea convention now favouring a medianline in the determination of maritime boundaries, the two countries agreedon a complex revenue-sharing agreement for the disputed waters. Australiaalso agreed to recognize East Timor as part of Indonesia as the price forbeginning oil exploration. But the treaty was reached with no input from theTimorese people.

“Now that major petroleum projects in the Timor Sea are poised to begin, theissue of [East Timor’s] permanent maritime boundaries is more important thanever before,” according to Alkatiri. But while the Timorese parliament hasdeclared borders in keeping with Law of the Sea principles, Australia hasrefused arbitration and even withdrawn from World Court jurisdiction. Ineffect, there is a gap in East Timor’s independence: Australia continues tooccupy part of its territory.

Given the history of Australian-Timorese relations, that is ironic. ManyAustralians recall how in their country’s hour of need, East Timor wasthere. In the Second World War, Australian forces used East Timor as ashield against the Japanese advance. As many as 80,000 Timorese diedfighting alongside Australian soldiers in a war that was not theirs. “Thegovernment never really acknowledged our debt to the Timorese from the war,”in the words of Paddy Kenneally, one of the Australian soldiers who foughtin East Timor.

Given this history, and Australia’s complicity with the Indonesianoccupation that cost another 200,000 Timorese lives, Australia should begenerous. It can do so with long-term aid at the expense of the taxpayers ofAustralia and the international community in general, or it can do so bygiving East Timor a better break on the oil reserves. There is no reason whyforeign oil companies cannot work with the government of East Timor aseasily as they can with the government of Australia. The course of justiceand the course of enlightened self-interest both argue for a more generouspolicy by Canberra.

East Timor was abandoned for years by the world. Will it be abandoned againin the name of greed?