A tiny, impoverished former Portuguese colonial backwater hopes to reap a bonanza from undersea oil and gas, reports Chris Pritchard

 East Timor is the mouse that roared. Asia’s newest nation – among its smallest and poorest – blamed a larger and richer neighbour, also a major aid donor, for condemning it to perpetual poverty. But somehow it has managed to win its campaign without disrupting cordial relations.

At the heart of differences with nearby Australia was a dispute over the maritime border between the two. The East Timorese contended it was in the wrong place, and skewed unjustly in Australia’s favour. This might appear an obscure point of detail, but beneath the Timor Sea are reserves of oil and gas that could transform the economic prospects of East Timor. Not one drop of this precious petrochemical wealth has been pumped to the surface, due to the border dispute, but on August 30 it was finally resolved.

The former Portuguese colony had played hardball, considering the border’s position of vital economic importance. It accused Australia of bullying tactics in negotiations, and even of spying, by bugging meetings of East Timorese officials. Though these assertions aren’t proven, they are widely believed in Australia as well as in East Timor. A delegation led by the tiny country’s national hero, former guerrilla leader Xanana Gusmão, took the dispute to the International Court of Arbitration at The Hague, where Australia blinked first.

For Australians the border dispute was not a major issue, unlike in East Timor.

FREEDOM FIGHTERS: Xanana Gusmão (l) and José Ramos Horta
FREEDOM FIGHTERS: Xanana Gusmão (l) and José Ramos Horta

Australia is already a major petrochemical exporter, and is poised to expand further, with several key liquefied natural gas projects being developed. Despite the fact that it is possible to fly from Darwin to Dili, the East Timorese capital, in 90 minutes, average Australians are barely aware of the country’s existence.

But for such a new and small nation, East Timor has a dramatic and blood-soaked history. The Democratic Republic of Timor Leste (Leste means ‘east’ in Portuguese) has been vibrantly democratic since declaring independence on May 20, 2002. That was the second time it had done so: the first was in 1975, a year after the ‘Carnation Revolution’ in Portugal ended the country’s dictatorship, but on that occasion freedom was snuffed out by an invasion from West Timor by Indonesia, which annexed the territory as its ‘27th province’.

For such a new and small nation, East Timor has a dramatic and blood-soaked history

Civil war quickly followed. The East Timorese pro-nationhood movement was led by Fretilin (the Revolutionary Front for an Independent East Timor). Its armed wing, Falantil (Forças Armadas para a Liberação Nacional do Timor Leste), waged an ultimately successful guerrilla war against Indonesian troops, but Indonesian repression and famine are thought to have cost 200,000 lives in a territory with a population of less than a million at the time. The most notorious incident was in 1991, when troops opened fire on mourners at a funeral in Dili of a Fretilin supporter, killing more than 100 people.

The Dili massacre brought East Timor’s independence struggle to world attention. The Indonesians captured Gusmão in 1992 and sent him to prison, where he was often compared to South Africa’s Nelson Mandela. But the other great independence leader, José Ramos Horta, campaigned tirelessly from his base in Australia, and shared the 1996 Nobel Peace Prize with East Timor’s Catholic primate, Bishop Carlos Belo. (The Portuguese legacy means more than 98 per cent of the population is Roman Catholic, and Dili’s Immaculate Conception Cathedral, a 33-year-old landmark blessed by Pope John Paul II when he visited in 1989, is south-east Asia’s biggest Catholic church.)

Both Gusmão and Horta have been, at different times, their country’s president and prime minister. Both are still politically active, but neither now belongs to Fretilin, which remains a major party, though it has, perhaps temporarily, lost the special status of a liberation movement. Fretilin currently rules in a shaky coalition with the more conservative Democratic Party, and its leader, Mari Alkatiri, is prime minister.

Immediately before and after independence, East Timorese leaders wanted to take advantage of the country’s geographic location, straddling Asia and the South Pacific. Indeed, many commentators have noted the physical resemblance of many East Timorese to their Melanesian cousins, such as Papua New Guineans. Nevertheless, many are of Asian appearance and local culture is interwoven with that of Indonesia. Though the country initially seemed likely to join both Asian and South Pacific regional groupings, it has in fact concentrated on its Asian ties.

But after the savagery and bloodshed of the late 20th century, in the 21st the country has returned to obscurity and poverty. In colonial days it was an open secret that East Timor was a low priority for Portugal: one of its few purposes was as a distant place of exile for political dissidents. The colonisers spent minimally on education or health. Showpiece colonial architecture, such as the British left in India and Myanmar, or the French in Vietnam, is largely absent in low-rise Dili.

The country is an Asian minnow, home to barely 1.3 million people, most of whom live on the coast, in or near the capital. In more remote villages along the coast, and in the mountainous interior, subsistence agriculture remains common. Coffee, East Timor’s best-known export crop, is highly prized in Australia, because most is unintentionally organic. This is a consequence of war, when many coffee plants became wild and were not treated with fertilisers or pesticides.

Fretilin currently rules in a shaky coalition with the more conservative Democratic Party

Tourism could be a valuable source of income, but remains undeveloped. When a scheduled air service between Darwin and West Timor ceased and the Indonesian half of the island briefly suffered political instability, hopes that foreign visitors, mostly Australian, would switch to East Timor proved vain. There are no big resorts, only small inns in Dili and a few guesthouses outside, such as the Portuguese-style Pousada de Maubisse, a 70km drive along a mountainous, winding dirt road. Several dive companies successfully market the clear waters and exquisite fish-filled coral reefs. But mass tourism will be hard to develop when Australians can take advantage of cheap packages and plentiful flights, and head instead to the Indonesian holiday island of Bali.

For East Timor, therefore, the end of its dispute with Australia is important. Though dreams of an oil boom in Dili might be premature, petrochemical earnings seem set to speed development. The size of the windfall depends on fluctuating prices, but it is estimated that as much as $40 billion could flow into East Timor’s coffers over the next two decades.

Gusmão hailed the end of the border dispute after ‘long and at times difficult’ negotiations, calling it an ‘historic’ event. Australia’s foreign minister, Julie Bishop, argued the deal would strengthen already ‘deep ties’ between the two. The border is scheduled to be redrawn soon.

Sydney-based journalist Chris Pritchard, a former BBC and Wall Street Journalcorrespondent, frequently visits Asia

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