July 2005


Fields of dreams

By Tony Clifton
Fields of dreams
The battle for the Timor Sea, home of oil, gas, hot air and hope

Now here’s a puzzle, and it’s right on Australia’s sea-girt northern doorstep. Under the sea between Australia and Timor – but much closer to Timor than Australia – sits a huge geological formation known as Greater Sunrise. It contains perhaps $50 billion or more worth of gas and oil. Not a drop of this oil, or a breath of this gas, has been raised to the surface above because Australia and Timor cannot agree who owns it. This doesn’t bother Australia all that much because it has plenty of gas and oil, plus all the other riches we carol about in the national anthem. But it bothers Timor a lot. Take a half-hour taxi ride from the small airport of the capital, Dili, and you can go to a clinic where you see starving people and lepers, and babies dying from malnutrition, and old people racked by malaria and tuberculosis. You would have to say something seems wrong here. Why aren’t these people driving Mercedes and living in air-conditioned mansions, just like they do in Dubai?

There are plenty of reasons. One is that only six years ago Indonesian troops were looting, burning and murdering their former subjects because they had the temerity to vote for Timor to become an independent country. Another is that before Indonesia’s 24-year reign the Portuguese, as colonial masters, had neglected them for 400 years – hadn’t educated, hadn’t built roads, hadn’t electrified, hadn’t developed industry. They had barely raised a structure more than ten metres high, apart from some Catholic churches and a small handful of forts set up to scare off the Dutch and British, who really weren’t too interested anyway in a mountainous half-island with virtually no natural resources.

And the final, and main, reason Timor is in terrible trouble is because Australia has gone to extraordinary lengths to deny Timor access to what should be a solution to its most pressing problems: the wealth stored in the Jurassic strata of the Greater Sunrise oil and gas field.

Greater Sunrise was known, through seismic testing, to be a big oil field as early as 1974, when the Portuguese empire was in its death throes. It is about 175 kilometres off the south coast of Timor, and if you drew a line across the middle of the Timor Sea, Greater Sunrise would be much nearer to Timor than Australia. Under international law Greater Sunrise should belong to Timor, and if it did they would be able to sell gas and oil from it, and they would be living on more than 70 cents a day, which is the average income for 40% of Timor’s 900,000 or so people. Maybe they wouldn’t be driving Mercedes, but they wouldn’t be dying of malnutrition during the island’s dreaded “hungry season”, which lasts from November when the old crops are used up until March when the new ones are harvested.

The world’s newest country, Timor Leste, or East Timor, celebrated its third birthday on May 20 in a very muted way. What Timor has that it didn’t have three years ago is independence. After that there was not a huge amount to cheer about. This is a country under enormous stress. It is literally a sick country. When you analyse its problems you probably need to start with its health, because a country whose adults are weak and sick and whose children are dying has no more urgent priority than curing these ills.

In Timor, 44% of children under five suffer from moderate to severe malnutrition. Timor has one of the world’s biggest fertility rates – families average almost eight children – and one of the region’s highest infant mortality rates of 88 per thousand live births. Australia, by comparison, averages less than five per thousand. Only half the people in rural areas have clean water and people are killed by all the usual tropical diseases, like dengue fever and malaria and that reaper of weakened kids, diarrhoea. Timor is riddled with TB and afflicted by both the most ancient and modern of curses: leprosy and HIV-AIDS.

To see sick Timor up close you go to Dr Dan’s Barrio of Pigs clinic, a tattered compound not far from the vast, fortified Australian embassy that sprawls along Dili’s western beachfront. The Bairo Pite (which is the Portuguese name for the Barrio of Pigs, the clinic’s run-down location) is a former medical centre of the Indonesian army. On most days you can still see the odd pig snuffling around, along with the dogs and chickens that seem to inhabit every open piece of ground on the island. The clinic’s buildings – wards, a dispensary, an emergency room and Dr Dan’s yellow-painted office – run along three sides of a rectangular courtyard. And down the whole of one side, under a long verandah that keeps off the sun, the people wait.

They start arriving around dawn, at 6 a.m., and by opening time at least 200 people will have gathered. By the end of the day Dr Dan and his assistants will have seen about 300, talking to some about symptoms, giving prescriptions to others, and sending a very sick few to the main hospital in Dili or to the clinic’s own crowded wards. These are small, slight, dark-skinned people. The women wear colourful batik sarongs and blouses, the men dress mostly in T-shirts and cotton pants, and virtually everyone wears rubber flip-flops; it’s a very middle-class thing in Timor to own a pair of leather shoes. Almost all the women are carrying babies, pouched in a sling across one shoulder and resting on a hip. In this country, with no nurseries and few secure houses, small children and babies go where their mothers go. There is little talk but a continual background noise, like white sound from a boom box. It is the sound of 200 men, women and children coughing from TB and from fevers like malaria and dengue.

In the end, all of these people will be seen by Dr Dan. Dr Daniel Murphy is a tall, laconic American from Iowa. He has a scrubby white beard and often wears a flat black cap, and he will be played by someone like Donald Sutherland when they make the Barrio of Pigs movie. He is one of those doctors, like the people from Médecins sans Frontières, who carry a medical qualification around the world, working for poor people and not getting much for themselves. Dr Dan worked in Mozambique in the 1970s, which gave him the precious gift in Timor of speaking Portuguese, an official language but one hardly spoken by the doctors from NGOs who work in Dili’s main hospital. “I’d been following what was going on in Timor,” Dr Dan explains, “and when Suharto fell I thought, I could work there. I could be in there right at the beginning.”

He was. He got there in 1998, after President Suharto had been overthrown to end three decades in power but before Indonesia had relinquished its grip on Timor. He overstayed on a tourist visa and opened a clinic in a Carmelite church where he treated, among others, wounded guerrilla fighters from Falantil, the Timorese militia camped up in the hills. “If you were a wounded fighter,” Dr Dan says, “you couldn’t go to the official hospital because you wouldn’t come out.” He was deported after a while, came back, opened Bairo Pite when freedom from Indonesia came in 1999 and has been there ever since.

So what’s good about his job today that wasn’t so good when the Indonesians were in charge? “We don’t have to treat gunshot wounds and machete slashes and torture injuries any more.”

And after that?

“Well, after that there’s not a lot of good news. To start with the worst first, the number one problem in Timor is TB. It’s a legacy of Indonesia’s last days as masters here. They chased half the population out of their homes and herded thousands of them into these huge compounds. Stressed-out, undernourished people were sleeping out on the ground in the rain, crowded in with people who had TB already. Perfect breeding grounds for TB.” He pauses. “And then you’ve got very high malaria rates, dengue, malnutrition, HIV-AIDS and leprosy of course. The highest leprosy rate in Asia and one of the last leprosy hotspots in the world.” And he takes me to see Antonio.

Antonio is sitting in the sun in a wheelchair, a young man of about 25, although nobody knows his real age. The first thing you notice is his lower legs and feet – they look as if someone has made a wire frame shaped like a human leg and stretched thin black plastic over it. The bones and sinews press through the skin like strands of wire. The skin itself is mottled by healed sores.

“He was found up in the mountains,” says Dr Dan. “His relatives couldn’t deal with it anymore and left him on the side of the road. He was lying in a foetal position, covered with leprosy sores, legs and arms curled up. He probably lay there for days not feeling any pain because the disease had killed off nerve endings. I looked at him and said: ‘This is the guy who knocked the prophet Job off his number one perch.’ We used drugs to clear up the sores, and we’ve been working on him for months, talking to him to bring him back to the world, trying to un-knot his arms and legs. We can treat leprosy with intensive care but you have to get these people before they die.”

We get back to Dr Dan’s office. He is explaining how his whole operation – which deals with 6–7,000 consultations a month, has 30 or 40 in-patients, and is staffed by nurses and a handful of volunteer medical students – costs less than US$5,000 a month to run. He is interrupted by a middle-aged woman carrying a tightly wrapped bundle and holding the hand of a girl who looks about 12, who I assume is her daughter. Dr Dan unwraps the bundle to reveal a tiny, brown baby girl, weighing possibly two kilograms. Her ribs show; her chest is heaving from its rapid – too rapid – breathing. The baby is a week old, the little girl is her mother, the older woman is her grandmother.

Dr Dan thinks the baby contracted an infection when she was born and the umbilical cord was cut at home. The girl says, as many village women do, that she didn’t breastfeed for the first three days because she had “bad” milk. What she didn’t realise is that the first milk is different in colour and texture because it contains antibodies and nutrients for the newborn baby. And so the baby didn’t get these, and was instead fed only water for three days. “I can’t do anything here,” says Dr Dan. “Too many systems aren’t working.” He sends the baby off to the main hospital. “There’s a fifty-fifty chance it will be dead in the morning.” When I see him two days later I ask how the baby fared. “I don’t know. We just don’t have time for follow-ups.”

A ward round in Dr Dan’s clinic would make a western hospital doctor call for a doctor. He does a round every morning, accompanied by half a dozen medical students from Europe, America and Australia. The first “ward” they visit is a smallish room packed with ten beds, containing a mixture of men, women and children. The man closest to the door has a left eye bulging out of his head. “Probably a hydatid swelling,” says Dr Dan. “It will probably need surgery.” I have a mental picture of the tapeworm larvae causing the swelling, bursting out of the surgical cut. It reminds me that Ian Melrose, the Melbourne businessman who is spending millions of his own money on TV advertisements criticising Australia’s grab for Greater Sunrise, decided to become involved after reading about a Timorese girl infested with worms. When the worms felt she was collapsing they all rushed into her throat and choked her as they struggled to leave her dying body.

Next to the hydatid man is a middle-aged woman doubled up in pain. “Probably peptic ulcers. She shouldn’t be here but we didn’t have another bed.”

Next to her is a small, thin boy with a tiny, childish voice, choked by asthma and TB. I ask whether they have a special children’s ward. “He’s not a child. He’s 20, at least.”

Beside the boy is another young man, staring wildly around. He is coming out of an attack of cerebral malaria, which affects the brain and often kills, and he doesn’t know who or where he is. “Let’s keep talking to him, see who he is, let’s bring him back,” Dr Dan tells the young interns, moving on to the next bed, which contains a young woman holding a skeletal baby with stick-like arms and legs and a chest heaving from the effort of breathing through TB-infected lungs. “We have to work out how to feed these tiny babies every three or four hours. We can’t feed them just in daytime hours because their stomachs are too tiny to hold enough food to get them through the night.”

So what would Dr Dan do if he had money – oil money, Bill Gates money, lottery money, any money? “Well, the dream would be to have a properly equipped medical school at the university with an attached clinic and hospital.” That’s the dream – a distant dream, because there’s no medical school at all right now, and Timor has a total of about 30 Timorese doctors. Money would build the place and pay for the foreign lecturers and doctors needed to set it up and keep it running, until there were enough trained Timorese doctors and nurses to take over.

And what would he buy more immediately – not in the dreamworld of a distant tomorrow, but in the reality of today? “With extra money you could go out to the villages and set up clean water supplies. You could teach people personal hygiene. You could have a clinic up in the mountains so poor people wouldn’t have to walk for hours when they get sick. You could set up centres to care for and teach and protect women and children. We need a centre for pre-natal education and treatment, to teach the simplest things, like how to breastfeed. This is, after all, a country of women and children. That wouldn’t take an enormous amount of money. This is a small country where you could do great things with a relatively small amount of money.”

AIDS, although there are fewer than 100 carriers in Timor today, also has to be talked about. At the moment it is confined to the groups where it always begins: prostitutes and the men who see them, including the largely male military and police, and gay and bisexual men who have unprotected sex. “People used to say there wasn’t any AIDS here until the foreigners – the peacekeeping troops and aid workers – arrived after independence,” says Jim Rock, an Australian who is the Timor director of Family Health International. “But that’s just not so. It would have come in from Indonesia, where there is a huge AIDS problem. So the main game is not among the foreigners. It’s among the locals who for too long have been in denial, saying: ‘We’re immune because we’re decent, clean, God-fearing people.’”

God-fearing perhaps, but how do you define clean and decent? Rock’s surveys show that 60% of men who say they have sex with other men also say they are bisexual. Among married men, 60% say they have sex with prostitutes. And zero per cent say they use contraceptives every time they have sex. “The Catholic Church here is very powerful, and while it doesn’t campaign actively against contraceptive use it doesn’t support their use,” says Rock. “And men here don’t like using condoms, so they say they don’t use them because the church forbids it. We give out condoms, about 250,000 a year, and the government supports us. But if we can’t reach you, and if you’re a worker on three dollars a day, you’re not going to spend a dollar on a condom.

“The problem we face is that while there is a low incidence of AIDS, there are bridges from the most highly infected groups – like bisexuals and sex workers – into the community at large, mainly through husbands transmitting the virus to their wives. We’re holding a thin line between safety and perdition. Unless we act, the door is wide open for HIV-AIDS to spread. And if HIV does break out into the general population there will be an epidemic that could chew up a whole national budget. Just look at Africa today.”

Rock’s group gets $750,000 a year from USAID, the American government aid organisation. This budget cuts off at the end of 2005 because USAID has other priorities. Rock’s program will have to finish. “Money would make a huge difference,” he says. “And you need big money – for prevention, education and a really big program of condom distribution. We need to have much more extensive testing of vulnerable groups, but we have only two test centres in the whole country. And we need a reproductive health program. Teenagers here know nothing about contraception, nothing about the prevention of AIDS and sexually transmitted diseases.”

Big money is not something Timor has right now. The annual budget for the whole country is about $130 million, much less than half the annual income of a single Australian like, say, Kerry Packer. Health is the most urgent problem but education is up there too. The government is building and rebuilding schools but it is a rare child who completes high school. Out of every 100 children, 80 will start primary school. Only six of those starters will finish high school.

Teaching beyond primary school is crippled by a questionable decision at the time of independence to make Portuguese one of two official languages (the native Tetum is the other). Because the Portuguese left in 1975, virtually no young people speak Portugese. Most speak Tetum but many teenagers, educated under Indonesian occupation, speak Indonesian. Maths and science are taught in Indonesian because Tetum doesn’t have the vocabulary. Adding to these problems, 80% of secondary school teachers went back to Indonesia after 1999. Big money could hire the hundreds of Portuguese-speaking teachers needed to spread the language among the people. In education, money would literally talk.

Xanana Gusmao’s office has no air-conditioning, in what is a very hot climate, and virtually no security either. He works from a modest room at the back of the Palacio de Cinzas – or the Palace of Cinders – a former motor registry that was smashed and burned by the Indonesians when they left. You walk round to his office and tell the man at the desk that you are here to see the president of Timor. Nobody pats you down, nobody asks for proof of who you say you are. You don’t see anyone with a gun. Gusmao’s assistant, Betti, comes to greet you and takes you into his office, where he’s sitting at a desk. He is wearing a blue open-necked shirt and speaks fluent, if accented, English.

Gusmao is self-deprecating, has no grand airs and seems, like Nelson Mandela before him, not to have suffered from his years of struggle, jail and house arrest. He turned 59 on June 20 but has the attitudes and appearance of a younger man, though his wavy hair and short black beard are now greying. As with Mandela, the achievement of all he fought for – first as leader of the Falantil guerilla movement, then as president of its political arm, Fretilin – appears to have erased any of the physical infirmities you might expect in a man who has led a hard life. Variously described as a soldier poet and reluctant leader, he once reportedly said: “I would rather be a pumpkin farmer than president.” Now he says he will step down in 2007 at the end of his five-year term, and his words ring true; had he wanted to carry on, he would surely have stayed in the ruling party, Fretilin, and used their infrastructure for another run, rather than running for president as an independent candidate, something which irritated a lot of his old supporters. But no. When I joke to him that we should both meet as civilians in a couple of years he replies, tapping on his fingers: “I’m counting the days.”

For now, money is Gusmao’s biggest preoccupation. He knows it is vital, though he also talks of how a flood of oil riches brought corruption and chaos to Nigeria. He believes that settling Timor’s sea boundaries with countries such as Australia is more important in the long term than squabbling over oil revenues. After all, if the boundaries had been settled by international arbitration at the beginning, Australia and Timor wouldn’t be fighting now, and Timor would be spending some proper money on its all-too-obvious problems.

“We haven’t had our own money since the year 2000,” says Gusmao. “We’ve been dependent on international assistance. If we know we’re going to have our own money over the next ten or 20 years we can have a new understanding of our priorities. Right now, we can’t even name our priorities – the donors do. If the donors say education is a priority, then we must follow. But agriculture and small and medium enterprises would give people an income now, and the priority must be to give people an income, to reduce poverty. It’s bullshit to say we should spend on education alone and become a knowledge country because that will automatically make us rich.”

As Keryn Clark, the Timor program manager for Oxfam Australia, says: “None of these really bad problems – health, illiteracy, joblessness – are going to be solved over two or three years. There is no magic wand for Timor. They need long-term planning and that needs a long-term revenue source. If you’re talking ten or 20 years ahead for Timor, and you take out oil and gas revenue, then you just can’t look that far into the future.”

But the oil and gas is out there. The seas between Timor and Australia belch and fart oil and gas in gigantic quantities, and they are nowhere near fully explored. Colourfully named fields dot the offshore map of northern Australia: Browse, Blacktip, Gorgon, Angel, Jahal-Kuda Tasi, Stybarrow and, of course, Greater Sunrise. Australia has been making a million dollars a day from the Laminaria field, which Timor claims is entirely theirs, and it also splits revenue with Timor on the Bayu-Undan field, which pumps gas into the Wickham Point terminal in Darwin. And yet Australia and Timor have been wrangling over who owns what ever since the Timorese achieved independence.

Timor’s case is fairly simple. They contend that under international law, when a body of water separating two countries is less than 400 nautical miles wide – as it is between Timor and Australia – the convention is that a line is drawn across the middle of the strait between the two countries. Had this line been drawn, says Timor, most of the disputed oil and gas fields – Greater Sunrise, Laminaria, Bayu-Undan – would fall on the Timor side of the line.

Australia immediately disagreed with Timor’s contention. It wanted to stick with a much more favourable agreement drawn up between Indonesia and Australia in the days when Timor was an imprisoned province of Indonesia. This agreement established what is now known as the Joint Petroleum Development Area, which gives Australia shared rights in what is usually described as a coffin-shaped patch of sea on the Timor side of the median line. From the Bayu-Undan field, Timor takes 90% and Australia 10%, which sounds generous until you remember that, as Gusmao once said, “East Timor is giving 10% of what belongs to it to Australia.”

In retrospect, the agreement with Indonesia over this delineation stands as a real blot on Australia’s recent history. Australia stood aside when Indonesia invaded Timor after the Portuguese freed their former colony in 1975. Australia was the only country to recognise the takeover as legal. Australia allowed Timor to be brutally recolonised, and in return Indonesia gave Australia a favourable configuration in the Timor Sea. This was realpolitik at its nastiest.

Greater Sunrise lies largely outside the JPDA, but enough of it lies within to make its exploitation a matter of joint agreement between Australia and Timor. So when Australia said no to a median line, Timor suggested the two countries should submit their case to the International Court of Justice and the International Tribunal for the Law of the Sea. Again Australia said no; they weren’t going to any court, they preferred bilateral negotiations to international arbitration. They emphasised this preference by withdrawing – cynically – from the jurisdiction of the ICJ’s maritime division only two months before Timor became independent in 2002. Various critics have since suggested this was like Hermann Goering saying he didn’t recognise the Nuremberg court and was retiring to his holiday home in Bavaria. Or as Timor’s defender in Melbourne, Ian Melrose, put it: “The only reason you don’t go to court is because you think you’ll lose.”

Now Australia seems on the point of emerging as victor in the battle over Greater Sunrise. Teams from the two countries have been meeting alternately in Australia and Timor for the past year. In late May they half-announced, half-leaked the news that an agreement had been reached, although it has yet to be ratified by the respective governments. Timor would get half the proceeds from gas and oil production from Greater Sunrise, which Australia says is a generous concession on its part, because under the previous JPDA agreement the split was 82% to Australia and only 18% to Timor. In return, Timor would agree not to talk about boundary issues for the next 50 years. Australia would provide some naval security around Timorese waters. And the vital question of where to base a pipeline carrying gas and oil from Greater Sunrise would be left to the operator, Australia’s Woodside Petroleum.

The Timor negotiators will most likely claim this as a victory of sorts. They can say they have upped the amount of money they’ll get from Greater Sunrise to a possible US$19 billion, based on current (and upwardly mobile) world oil prices, over the field’s 30-year life. Woodside can start the immensely complex and expensive work required before the field goes on stream (and Timor’s share of the proceeds starts flowing) five to ten years from the day work begins.

But not everyone sees Timor as the winner of this scrap. Stratfor, a Texas-based strategic intelligence agency, summed up the result this way: “Australia had the bargaining position and financial resources to stall until a smaller country buckled under the strain. The Timorese, needing cash flow, were forced to accept the Australian offer in order to survive, regardless of their position in the sea-boundary dispute.”

That sort of judgment enrages the Australian negotiators. One diplomat close to the Australian team tells me: “That’s rubbish. There’s no question we somehow tried to wait them out. Australia’s preferred position has always been to negotiate permanent boundaries. But we have responded positively to East Timor’s request for a creative solution that would put permanent boundaries off for some time.” Rather surprisingly, he goes on: “Australia doesn’t need the money from Greater Sunrise, and Timor probably doesn’t either. There’s a substantial amount of money flowing to Timor. It’s coming in from Bayu-Undan at about $3 million a week and will probably reach US$700 million a year in two or three years’ time.”

Timor disputes the $700 million contention. It says peak production will be worth about $500 million, and that peak will last only two or three years before the field starts to run out. But then, a lot of the Australian analysis is disingenuous. It’s true that Australia does not need Greater Sunrise’s oil and gas. But saying that Australia’s preferred position has always been to negotiate permanent boundaries is true only when those boundaries are the ones defined by Australia. What this new deal, if ratified, will do for Australia is get it off the hook on boundary issues for the next 50 years. This means that Australia will maintain its allegedly unfair position in the Timor Sea for a very long time to come – and that Timor, in theory, could have to fight for every new discovery in the disputed region.

It’s just possible that Timor’s government will refuse to ratify what Australia believes is a done deal. It will come under pressure from those Timorese who think the proposed agreement is at best a cave-in and at worst a sell-out. A substantial number of people, including President Gusmao, think fixing the boundary lines is much more important to Timor in the long run than oil is now. Tomas Freitas, a leader of the leftish group La’o Hamutuk, tells me: “I don’t care how much gas and oil is out there. When Timor fought the Indonesians we weren’t fighting for oil and gas, we were fighting for an independent country … And now if we look at a map we can’t even see what that country is. You know, we’ve now got a border with the enemy, Indonesia, but not with our so-called friends, the Australians. So when they sent troops in 1999, did they come to save us – or to take our oil?”

It is hard enough to read Australia’s diplomatic stance in the whole south Pacific area, let alone just with Timor. Certainly Australia appears not to be trying to make friends with the small countries of the region. Australia muscles Timor out of its oil. It turns poor, broken Nauru into a prison camp for its refugee rejects. It has its police in the Solomon Islands and in Papua New Guinea – or had its police in PNG. They were forced to leave in mid-May after the courts found the special immunities they had been granted from PNG law were unconstitutional. Gusmao’s view is that Australia isn’t playing its cards very cleverly with its small neighbours. “When you foreigners go to a place and you behave like a teacher, then it is 51% probable you will fail. But if you go as a brother to help, you have a 91% probability of success. This is a problem of international politics. Do we go to understand, or do we go to impose? It’s hard to see how Australia is doing anything but imposing itself in the question of Timor Sea oil and gas.”

I ask Gusmao whether he ever thought about that oil, first in the years when he was fighting the Indonesian occupiers in the mountains and jungles of his country, and then in jail in Indonesia after his capture. There’s something of an other-worldly aura about Gusmao, and it comes as a surprise to hear him say yes, he used to think about oil all the time. “I thought about it because we were fighting not only the Indonesian army, but also the Indonesian propaganda that if we became independent we could never be a viable and self-sufficient state. But of course, with oil, I knew that could never be true – even though Gareth Evans tried to sign it away [through the 1989 Timor Gap Treaty].”

It is possible that Timor’s negotiators would not have struck this latest oil agreement with Australia if they weren’t under such enormous economic pressure back home. But it is also the case that Timor’s government has not so far proved an especially effective one. Guerrillas do not necessarily make good bureaucrats and planners, and the government is experiencing the classic difficulties freedom fighters have when they stop fighting and have to run a civilian administration. Opening up Greater Sunrise would not have oil money flowing in time for the 2007 election – but it would certainly make promises of a brighter future a lot more believable.

You can see why the people of Timor are unhappy as you move around the countryside. In Dili, the tropical sun sets in a spectacular scarlet splash over the bay at around six o’clock. Then everything goes dark – that is, completely dark – a couple of hundred metres from the edge of town, because that’s as far as the electricity goes. Travelling along the northern coast road, westward to the Indonesian border, you pass through small, pretty villages with perhaps two solid concrete buildings: an administrative centre and a primary school. The people live mostly in one-room huts with walls of split bamboo, thatched with palm leaves and standing on a concrete base. They present an enchanting spectacle, these little huts, because they quickly weather to a silvery grey and look quaintly beautiful against the lush green background of coconut palms, bougainvillea and bananas. But you see very few shops or eating places, because there is no power for lighting or cold storage or cooking. You can tell who the rich families are because their houses are lit up by their own generators after dark.

These are villages and towns where a lot of people have literally no money, which is another reason why there are no shops. With an average income of under a dollar a day, people barter for their daily fish, rice and corn. In the town of Maleana, at a meeting organised to explain oil policy, a young woman in a sarong and pink top tells officials: “We’ve got to have some money. We don’t have electricity, we don’t have clean water, we don’t have healthcare. We need credit so we can set up businesses and buy equipment for farming and fishing.” These are a people who are not well-educated, with literacy levels below 60%. But if they are around middle-age they have lived tough lives under two colonial masters, and they know what they want of their independent government. It is only six years ago, after all, that Indonesian militias were murdering villagers and burning their houses at the end of an occupation that may have been responsible for the deaths of as many as 200,000 Timorese people.

As you drive around the country, you can see how concerted was the Indonesian campaign to destroy any solid structure before they finally left in 1999. Fire-blackened white concrete ruins are scattered all over Dili and the larger towns. People point to the Santa Cruz cemetery in Dili, where the Indonesians slaughtered close to 300 people as they tried to hide among the tombstones after a peaceful demonstration; and to the church in the town of Liquica, where people fled for sanctuary and were cut down in the church itself. In Balibo, near the Indonesian border, they point to the house where, in 1975, five Australian journalists painted an Australian flag on the wall to show they were not locals. And then they take you to the ruined house nearby where the five were machine-gunned to death by the invading Indonesian army.

When a government team arrives in the little town of Atabae, a small man with a loud voice starts asking questions about oil. His name is Manuel Mendes, and he is the chief of another small village further in from the coast. “We’ve got to settle the boundary issues,” he says. “We know there’s oil and gas all over the Timor Sea, not just in Greater Sunrise. If we don’t settle the boundaries first, Australia will try to cheat us out of any new discovery, like they have with Greater Sunrise and Bayu-Undan. And we won’t be able to do anything about it because we won’t know where our boundaries are.”

Manuel Mendes was one of thousands of angry people showing their rage during the ten days I spent in Timor. Driving near the border one evening, we suddenly became aware of blue-uniformed police officers patrolling the small towns, and then of the roads filling with trucks flying the yellow-and-white flags of the Vatican. The trucks were mainly occupied by young men, but there were some older men and women and even nuns too, all singing hymns as they rode towards Dili. By next morning, April 20, police roadblocks were in place and stationary trucks were offloading angry travellers.

They were taking part in a demonstration called by the Catholic Church in protest against the education ministry’s plan to drop religion as a compulsory subject in schools. Throughout the morning Catholic radio broadcasts called out to the faithful in the name of Don Alberto Ricardo Da Silva, the bishop of Dili: “Come to demonstrate. The Catholic Church has been with Falantil and the people of Timor for the past 24 years.” As the day wore on, radio announcements became less about religious teaching and more about Prime Minister Mari Alkatiri. “We fought for freedom and independence, not for Alkatiri … Dili police, defend your own people, don’t defend Mari Alkatiri … Kick Alkatiri out.” The crowds grew larger, converging on the long, white, two-storeyed national parliament building that faces out across the water from Dili’s seafront centre. Thousands of demonstrators, standing under trees draped in “Alkatiri, Dictator” banners, faced off against armed police carrying pistols, tear-gas grenades, gas-masks and shields. In the end the two sides were separated only by a row of flimsy tables, decked out by demonstrators with yellow-and-white papal flags and bearing dozens of images of the Virgin Mary.

That demonstration might have ended peacefully but it was a warning that both the church and the people are unhappy with the way the country’s affairs are being managed. The government will come under even closer scrutiny when it finally announces the details of whatever agreement it has reached with Australia over oil and gas, because all indications are that the deal will give Timor far less than it wanted. It will have no offshore boundaries and, disastrously for its future development, probably no pipeline from Greater Sunrise to an oil and gas terminal in Timor.

When you listen to Australian and Timorese experts talking about the importance of having oil and gas land in their countries, you hear men telling the same story with different accents. In a badly lit room with a partial view of a car park, in the charred front section of the Palace of Cinders, sits Francisco da Costa Monteiro. Da Costa, a New Zealand-trained petroleum geologist, is President Gusmao’s specialist adviser. “It is absolutely essential,” he says, “that the pipeline runs from Greater Sunrise to Timor. It’s in the national interest that we have the pipeline and an LNG plant. It will change the whole country. It will show that this country can run a huge, sophisticated industrial operation. Of course we’ll need foreign experts and advice at the beginning, but that’s been the same everywhere when oil and gas is exploited for the first time.”

Da Costa talks of the industries that grow up around a big liquefied natural gas plant, from engineering, electronics and plastics to food-and-services suppliers. He cites the example of Bintuni, in Malaysia, which was a nondescript town of 50,000 until oil started coming ashore 20 years ago. “Now Bintuni has a population of 500,000 and three LNG plants. And look at the Northern Territory with Wickham Point. They’re predicting 10,600 new jobs in the next 30 years.”

Across the water, 400 miles away, Dave Malone looks out to the bay from the luxurious 14th-floor Darwin offices of the NT’s chief minister Clare Martin. Malone is executive director of the chief minister’s department, and he points to a gigantic white cylinder on the horizon. “That’s Wickham Point, and that’s the biggest LNG tank in the world.” At the moment the tank takes in gas from Bayu-Undan. “But we want the pipeline from Greater Sunrise because that flow would make Darwin a critical gas hub … With Greater Sunrise gas coming in here you would have plants working 24 hours a day, and that 24-hour operation would need goods, technological services and skilled labour. Adding Greater Sunrise to what is already coming in would bring world-class industry to the Territory, and that’s what we want.”

Malone’s wish will almost certainly come true. Last year, Timor attempted to make it a condition of any agreement that the pipeline would have to go to Timor. Australia disagreed, saying the question of where a pipeline ended was a commercial decision for the main contracting company – Woodside – which just happens to be Australian. Given this, da Costa gloomily concedes that Timor will probably lose what he considers the most important aspect of the whole Greater Sunrise deal. “Woodside is an Australian company and there’s an LNG terminal already built at Wickham Point. So if you leave it to the company it’s 99% certain they’ll want to pipe Greater Sunrise into Australia, even though Greater Sunrise is only 175 kilometres from Timor and 500 kilometres from Darwin.”

Probably even more than 99% certain. Woodside has now confirmed it would prefer to run the pipeline into Wickham Point, which is owned by ConocoPhillips, one of Woodside’s partners in the Greater Sunrise project. A pipeline to Timor, says Woodside’s latest survey, would “not be feasible”.

To end this story, you have to speculate – because if what Australian negotiators say is true, there will be no certainties in the Timor Sea for 50 years. For 50 years, assuming the current deal goes through, nobody will know where Timor’s maritime boundaries extend.

But you can speculate that unlike penniless Nauru, Timor will at least survive, because it has survived on very little through centuries of colonial maladministration. In the context of 400 years of misrule, another decade or so won’t matter much – except to the babies and old people who will die of malnutrition, TB, malaria and all the other usual scourges. In fact, Timor should be a middle-class sort of a country in 20 years, because even apart from Bayu-Undan and Greater Sunrise it is surrounded by oil and, in particular, gas. The gas literally seeps out of the ground in Timor; there are small flares of it that the locals call “eternal flames”. As Dave Malone in Darwin points out: “Gas is the energy of the future and the whole region seems surrounded by it. The fact is that the fields we know about have been found by companies that were looking for oil – not gas. Imagine what it will be like when they really start looking for gas.”

Darwin should flourish too. With gas and oil money pouring in, it could become a major south-east Asian city. It is not incredibly hard to see Darwin as a potential Singapore, swollen to mega-city size by energy wealth and by a population of Asians from unstable south-east Asian countries – such as Indonesia, which is already fraying, and Taiwan and Hong Kong, which are continually under stress from China. That is, of course, if a future Australian government is more friendly to displaced people than the present one.

You could speculate too that Australia, if it’s not careful, will find itself a rich pariah. The small states won’t forget their treatment at Australia’s hands, and the world’s next superpowers – China, or possibly India – will find a ring of potential allies in Australia’s north. China already has a large embassy in Dili, and the Chinese oil company BGP is conducting seismic surveys onshore and in undisputed Timorese waters. Timor sees China, with its huge energy needs, as an important prospective client.

Australia is a big country only in its own small pond. Japan recently showed Australia where it stands among the world’s big kids, giving it a taste of what it’s like to be an unimportant little nation – like Timor, perhaps. In early May an Australian patrol boat found Japanese fishing boats poaching protected Patagonian toothfish in the seas off Heard Island, Australia’s World Heritage-listed Antarctic territory. Australia asked permission to board the boats. The Japanese told them, diplomatically, to piss off. A few days later Japan announced that it would apply at the next meeting of the International Whaling Commission for the right to hunt humpback whales as part of its “scientific research” into whale numbers (read “sushi”). The meeting was still in progress when this story went to press. But the Japanese seemed likely to get their wish, because they give money to all those little Pacific island countries which Australia doesn’t get along with but which have votes on the IWC.

Naturally, Australians were appalled. We love watching whales and pay about half a billion dollars each year to see them frolicking around our coastlines. Environment Minister Ian Campbell decried the evil Japanese campaign to harpoon “these beautiful creatures”. Labor’s foreign affairs spokesman Kevin Rudd, ever eager to say anything about anything so long as it is on TV, demanded that “the Howard government prepare a case now for the International Court of Justice which will bring the international public spotlight on Japan’s claims about its scientific quota on whaling”. Well there’s a thing: a leading member of a party that betrayed Timor in the first place, demanding that a government which spurns the International Court of Justice should go to that same court to save the whales. I suppose a humpback hurling itself out of the ocean is a much finer spectacle than a Timorese trying to catch a coral cod to feed his family. But you have to wonder about the ethics and priorities of our politicians.

High in the hills above Dili, on a winding jungle road leading to a place called Dare, is a memorial pool. It was donated by Australians in recognition of the help the Timorese people gave Australian troops, at the risk of their own lives, during the bitter battles against the Japanese in World War II. The wording on the dedication slab reads: “To all the peoples of East Timor, this memorial and resting place is given to them for their use by the Australian people in grateful recognition of their assistance to Australian soldiers …”

I was going to end with “how soon we forget”. But that’s a cliche and old-fashioned and that war … well, it was so long ago, before Big Brother, and Australian Idol, and poor Schapelle Corby, and the Bali Nine. (Doesn’t that really put you off Bali? Maybe we should go to Timor for the next holidays, although they say it’s got a terrible bar scene.) And all that other really important stuff.

From the front page

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Taiwan’s minority indigenous peoples are being used to refute mainland China’s claims on the island – but what does that mean for their recognition, land rights and identity?

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A sort of homecoming. Familiar strands in an unfamiliar land

‘The Grave at Thu Le’ by Catherine Cole

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