As press coverage of Iraq shifts focus to plans to rebuild the war-torn nation, much has been made of the extensive reconstruction that could be carried out with the country's immense oil wealth.

But mere ownership of oil does not guarantee that its proceeds would be used for the people who should benefit from it. Just ask Timor Leste (formerly known as East Timor).

Several years after it's independence in 1999, efforts to exploit vast oil and gas reserves in the Timor Sea have yet to bring Southeast Asia's poorest nation much cash returns.

Reconstruction works have been painfully slow in the country where more than 70 percent of its infrastructure was destroyed during the violence-racked months that followed its independence vote.

Poverty and unemployment remain serious problems no thanks to the country's expensive dollarised economy.

To make matters worse, there are now signs that Timor Leste was bullied by its powerful neighbour -Australia - into giving up more than half of its rightful oil inheritance.

New perspective

Much of this may come as a surprise. In the wake of the destruction wrecked by pro-Jakarta militia after Timor Leste's independence vote, peace and order were restored o­nly with the intervention of a voluntary self-financed Australia-led peacekeeping force.

And last May, amid much fanfare, Australia and Timor Leste signed the 'Timor Sea Treaty' in which the former "generously" offered to reduce its stake of royalties from the Timor Sea Joint Petroleum Development Area (JPDA) from 50 percent to 10 percent.

However, in a short film entitled Timor Gap Oil and Gas: Don't rob their future , freelance journalist HT Lee called for a sense of perspective into Australia's calculated involvement in the world's youngest country.

In the video, Dr Andrew McNaughton, a convenor with the Australian East Timor Association (AETA), claimed that Timor Leste was entitled to much more than the 90 percent proceeds from the Bayu Undan field.

At the heart of the dispute were two other oilfields which should fall under Timor Leste's jurisdiction if maritime boundaries between Australia and Timor Leste are drawn based o­n the median line divider between the nearest coasts an accepted practice under international law.

Instead, the Greater Sunrise gasfield, three times the size of Bayu Undan, is over 80 percent owned by Australia. The other significant oilfield, the Laminara Corallina, is presently operated solely for Australia's benefit.

"East Timor will get 90 percent for the JPDA but it is in fact entitled to much wider maritime boundaries. Under international law, all of these (oil and gas fields) are East Timorese," said McNaughton.

To preempt any move by Timor Leste to reclaim the oil and gas resources, Australia in March 2002 withdrew from subjecting itself to international dispute settlement mechanisms o­n matters relating to maritime boundary delimitations.

"This means that East Timor will have to negotiate directly with Australia. As a newly independent state, East Timor will be locked in a David and Goliath battle with Australia to resolve fair and equitable maritime boundaries," said Kate Eastman, an international law lecturer and barrister at Sydney's Wentworth Chambers.

Poor bargaining position

The significance of this move became evident last May when Australia refused to ratify the Timor Sea Treaty (and hence settle uncertainties over the JPDA negotiations) until Timorese leaders agreed to sign a separate agreement giving up 82 percent of royalties from Greater Sunrise to Australia.

A widely-circulated leaked transcript of talks held last November in Dili between Australian Foreign Minister Alexander Downer and Timorese Prime Minister Mari Alkatiri gave an idea of the poor bargaining position Timor Leste found itself in.

During the talks, Alkatiri had accused the Australians of offering Timor Leste o­nly "scrappings off a plate" o­nly to be countered by Downer's terse recommendation that Timorese "conclude an agreement quickly" if they wanted to make money.

Downer also forewarned, "We are not going to negotiate the Timor Sea Treaty understand thatThere will be no new joint development area for Greater SunriseWe are very tough. We will not care if you give information to the media. Let me give you a tutorial in politics not a chance."

Indeed, the complicity of Australia's recent dealings with the small nation recalls the darker role that it played in the country's destiny over the past twenty-odd years.

Carving up the gap

During an interview with malaysiakini last week, Lee said the scramble for Timor Sea resources began in the early 1970s when Portugal was still ruling Timor Leste.

"In 1972, Australia wanted its sea boundaries to be drawn 200 nautical miles from its shore, thereby encompassing the three oil and gas fields. Portugal refused to accept this. Australia realised then that it was better to negotiate with Indonesia than Portugal," he said.

In a deal which was to have dire consequences for hundreds of thousands of East Timorese, Australia and Indonesia both agreed for the Portuguese colony to join the latter for reasons of "regional security".

When the Indonesian army invaded a year later and begun their long and often brutal occupation, Australia not o­nly stood by and watched but became o­ne of o­nly two countries the other was India - to recognise the invasion.

The carving up of the Timor Sea bounty started the year after the occupation and was solidified with the signing of the Timor Gap Treaty between Australia and Indonesia in 1989.

"Indonesia later found that it had been taken to the cleaners with the 1972 agreement but it could not go back o­n its word without going to war. Indonesia also could not take the case to the International Court of Justice because the United Nations did not recognise its incorporation of East Timor," said Lee.

In the late 1990s, Australia began altering its position with respect to Timor Leste's independence after facing increasing domestic pressure in favour of Timorese self- determination.

This shift became more viable in the light of instability across Indonesia during the 1998 reformasi period which saw President Suharto ousted.

Yet, despite the illegality of the Indonesian invasion, Australia continues to insist that Timor Leste abide by the boundaries negotiated in the Timor Gap Treaty.

Spinoff losses

A key question now remains over the value of resources which Timor Leste would forfeit should it not contest Australia's claims.

In Lee's video, oil and gas consultant Geoff McKee estimated the total reserves in the three Timor Sea fields at 3.3 bn barrels of oil equivalent (BOE).

"Under current arrangements, East Timor will have jurisdiction over 1.3 bn BOE which is 40 percent of the total," he said.

McKee said based o­n a "reasonable" crude oil price of US$20 per barrel, the total royalties accruing to the two governments would total some US$30 bn and out of this, Timor Leste would be allocated a 40 percent entitlement under the Timor Sea Treaty provisions.

"Even a five percent increase in revenue is worth hundreds of millions of dollars to East Timor. This is more than Australia's entire contribution to the East Timor campaign since September 1999," he said.

"Think of what it could do with that money - how many schools, classrooms, roads, hospitals and other infrastructure that the money could provide."

The Timor Sea Treaty also required for any gas extracted from Bayu Undan and Greater Sunrise to be piped over to Darwin rather than the closer southern Timor shore - a plan that would cost at least a third more.

"East Timor will also miss out o­n additional spin-offs worth millions of dollars and thousands of jobs," said McKee.

For Timor Leste, the resources represent the crucial difference between continued reliance o­n unreliable foreign aid and true economic independence.

But as was with its short-lived independence before the Indonesian invasion, the balance seems to be tilting against it o­nce again.

Photos courtesy of HT Lee in 'Timor Gap Oil and Gas: Don't Rob Their Future' and Praem Poobalan.