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Stephanie Henaro MA Geopolitics, Territory and Security King’s College London

Witnessing Geopolitics: the case of the Timor Sea

Abstract: In the 1970s, discoveries of key natural resources in the Timor Sea turn that area into the centre of endless disputes that still continue today. Several agreements reached from 1971 to 2006 have approached the issue from different geopolitical scopes, reflecting the political, ideological and economic realities of the period. This essay will analyse the agreements concerned in their geopolitical context and the framing of the Australian foreign policy, as a means to understand the current reality of the zone.


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Student Reference Number: 1049264 3986 words

Witnessing Geopolitics: the case of the Timor Sea

As stated by Dennis Rumley, the essence of geopolitics can be understood as “the development of strategies for the projection of national or regional power and the portrayal of a dynamic process of special competition for power and influence associated with the interaction among ideology , military power, economic power and the environment” (Rumley 1999: 9). In this sense, the analytical evolution of the geographical factor, departing from a “naive determinism” (Prescott 1972) to a structural constraint or “context” (Rumley 1979), ensures that the presence of natural resources straddling the boundary line will almost inevitably lead to friction between neighbouring states (Deely 2001). The geographical structure of interacting power units (Cohen, 1964) becomes reflected in the State’s foreign policy and in turn manifests itself in space (Agnew 1995). The fixed conception of space will be replaced by a fluid geopolitical dynamic process, where it will recast itself. Hence, to understand the world, it is necessary to understand its changing geography (Agnew 1989). Since the discovery of key hydrocarbon reserves in the Timor Sea in the 1970s, there have been disputes surrounding rights to the ownership and exploitation of the resources situated in a part of the Timor Sea known as the “Timor Gap”. This area, located outside the territorial boundaries of the nations to the north and south of the Timor Sea, has been the reason of numerous disagreements that initially involved Australia and

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Indonesia, although a resolution was reached in the form of the Timor Gap Treaty. However, after the independence of East Timor, the terms of the Treaty were abandoned and negotiations culminated in the Timor Sea Treaty. This essay will draw an analysis of the changing circumstances of the Timor Sea, which it will argue are the result of the evolution of global geopolitical and legal contexts reflected in the framing of Australian foreign policies. The first part will expose a brief historical background aiming to serve as a departing point, leading to a second part focusing on the changes that occurred during the geopolitical Cold War order, and concluding with a third part which frames the current circumstances in a Post- Cold War order.

I- Brief History
First and foremost, it can be argued that the current formulation of the Timor Sea Treaty has been shaped in part by historical and legal factors relating to the colonial history in the region, namely Indonesian independence and the delimitation of maritime boundaries between Indonesia and Australia directly preceding the end of colonial rule. The Portuguese discovery of the Island of Timor in 1520 was contested by the Dutch influence in the Island's west, resulting in a de facto partition of the island into two spheres of influence from 1701 (Deeley 2001). However, it would not be until a string of “arm-wrestling” treaties, that took place from 1859 to 1904, the international land boundaries were delimited, leaving no agreements concerning common maritime boundaries between the European powers. At the point of Indonesian Independence in 1949, as the successor state to the Netherlands, it inherited the international boundary with Portugal (Marques Antunes 2003). The 1974 revolution in Portugal, and the subsequent civil war in Portuguese Timor, gave the Indonesians the opportunity to add East Timor to their Republic by an invasion in 1975. Despite condemnation from the international community, with some exceptions such as Australia and New Zealand, East Timor was de facto incorporated into the Indonesian territory. The former international boundary was thus relegated to the status of a first order administrative division, separating the province of Propinsi

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Nusa Tenggara Timur and the new acquired province of Propinsi Timor Timur. Still, necessity to arrive at a maritime boundary agreement was not forthcoming (Deely 2001). Nonetheless, the repercussions of three previous maritime agreements between Indonesia and Australia concerning the Island of Timor still impact the current maritime treaty relating to the now independent state of East Timor. The legality of the first two, signed in 1971 and 1972, before the Indonesian occupation is not put into question, unlike the third, a treaty signed in 1989, again between Indonesia and Australia, but involving the sovereign waters of East Timor.
The 1999 United Nations referendum on which the East Timorese people expressed their will to become an independent country had the aim of recovering and reaffirming the international boundary which existed before its incorporation into Indonesia in 1975 (Neely 2001). Hence, the 1989 Timor Gap Treaty fell between Australia and an independent state.

Indonesia’s stake was taken over by the United Nations Transitional Administration for East Timor (UNTAET) on behalf of East Timor, claiming that it did not represent any kind of prejudice for further agreements between the two states (Cotton 1999). Therefore, the current 2002 Timor Sea Treaty and the subsequent 2003 International Unitisation Agreement for Greater Sunrise (IUA) and 2006 Treaty on Certain
Maritime Arrangements in the Timor Sea (CMATS Treaty), are better

understood as the most recent stage of a geopolitical-legal process whose roots lie in the 1960s (Marques Antunes 2003), in the post-colonial Cold War era.

Maritime Boundaries and Cold War order

Indeed, it can be argued that the Australian foreign policy towards East Timor was heavily influenced by the Cold War context, and the security fears that arose at the time with regard to China and Japan – Australia saw control of the natural/maritime resources as a means to curb regional threats and assert its status as a powerful player in the region and on the global stage. Although not a major issue in earlier times, Australia’s interest in East Timor for security and economic reasons is as old as the Australian Federation (Cotton 2004). Rumours of Portuguese abandonment or Japanese acquisition of the island were recurrent in national security debates during the decades

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before World War II, while the first oil concession sought by an Australian business dates from 1905 (Hastings 1999). However, it would be under the geopolitics of the Cold War (1945-1989) the present essay will start its focus to explain the current situation of the Timor Sea. For parts of the Asia- Pacific region, especially after the experiences lived in Korea and Vietnam, the Cold War was a justification for the United States to intervene in the Developing World (Feste 1992). Increasing regional complexity associated with decolonization and emergent nationalism, perpetuated a “security dilemma” leading to the widespread delimitation of political geographical regions which emphasized “otherness” (Rumley 1999). Therefore, the spread of bipolar influence resulted in a greater degree of global geopolitical differentiation, characterizing Australia as a “trade dependent maritime state” with clashing geostrategic interests with Japan, a country feared deep down in the nation’s psyche, located next to an unstable Southeast Asian “shatterbelt” (Cohen, 1964) as shown in Figure 1.

Figure 1 Geostrategic regions and geopolitical subdivisions


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Source: Rumley, Dennis 1999. The Geopolitics of Australia’s Regional Relations. London: Kluwer Academic Publishers based on Cohen, Saul Bernard 1964.

The 1958 Convention on the Continental Shelf (CS Convention) clearly influenced by the 1948 Truman Proclamation, entitled states to a continental shelf on a dual basis. It defined the extension of the legal shelf as an alternative of the 200 metre isobaths and the exploitation criterion, and also specified that the rights of coastal states over the continental shelf did not depend upon occupation, effective or notional, or on any express proclamation. In respect of delimitation between neighbouring states, the CS Convention used a formula that gave prominence to equidistance between the coasts of the states involved. Under this regime, Australia adopted the 1967 Petroleum Submerged Lands Act establishing an “adjacent zone” going roughly up to the 500metre isobath on the southern side of the Timor Trough. Later in 1970, as a means to obtain international recognition to this Act, the Australian Foreign Minister made reference to the resolution of the International Court of Justice (ICJ) in the North Sea cases, and formulated what became known as the Australian theory of the two shelves:

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“...The essential feature of the sea-bed beneath the Timor Sea is a huge steep cleft or declivity called the Timor Trough, extending in an east-western direction, considerably nearer to the coast of Timor than to the northern coast of Australia... The Timor Trough thus breaks the continental shelf between Australia and Timor, so that there are two distinct shelves, and not one and the same shelf, separating the two opposite coasts. The fall-back median line between the two coasts, provided for in the Convention in the absence of agreement, would not apply for there is no common area to delimit” (Australian Yearbook of International Law 1970: 145). The first maritime agreement was signed in 1971. It listed twelve turning points between Australia and Indonesia New Guinea and served as a reference to the 1972 Australia/Indonesia seabed boundary Treaty. The Treaty reflected the principles of the two shelves theory, apparently used by the Australian authorities to obtain more “room to negotiate” (Marques Antunes 2003), and resulted in the adoption of a boundary located south of the Timor Trough, closer to the Indonesian coast – a position that might be perceived as a “fall back”, compared to the limit stipulated in the 1967 Australian legislation. Indeed, the 1972 boundary extends to areas that concerned the rights and interest of the, at the time, Portuguese dominion. A “gap” was left between two mapped points, “A16” and “A17,” equating to the spot where East Timor and Australia face each other across of the Timor Sea, better known as the “Timor Gap” (Deely 2001). Indeed, it is arguable that Australia´s treatment of Indonesia´s annexation of East Timor was driven by wider strategic considerations and concerns relating to Cold War shifts in the global balance of power, in particular, fears over the rising influence of China and Russia in the region. By the mid-1970s, the global structure of power evolved from a bipolar to a multi-centred and hierarchically organized structure. Australia and Indonesia were listed into “second order” powers in a region where China and Japan were considered as two of the “first order powers” (Rumley 1999). Therefore, the necessity of applying explicit policies of cooperation with Indonesia in order to promote regional order was a high priority as a way to counterbalance the intense rivalry between China and Japan.


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The 1975 Indonesian incorporation of East Timor is still considered as the greatest difficulty in the relationship between that country and Australia, as it proved to have domestic as well as external repercussions

(Parliament of the Commonwealth of Australia, Joint Standing Committee on Foreign Affairs, Defence and Trade 1993, Australia’s relations with Indonesia: 95). On the domestic front, Prime Minister Whitlam stated Australia’s determination to support a post colonial world order by declaring support to the Portuguese was not in the country’s interests. This policy was soon regarded as acquiescing to Indonesian occupation within the Labour Party and was repudiated after a bitter internal debate. From that time until recognition of Indonesian sovereignty by the Hawke government in 1985 differences within the party were strongly pronounced (Cotton 2004). On the other hand, in the framing of foreign policy towards Indonesia, the communist victories in the Indochina states generated the conviction that the emerging political forces in East Timor might seek to establish a communist aligned regime. Therefore a pragmatic and realistic approach based on national interest was adopted. As Richard Woolcott, the 1975 Australian ambassador in Indonesia stated: “It is Indonesia’s policy to incorporate Timor... we must adopt a policy of disengagement, allowing events to take their course” (Woolcott 1975 in Walsh and Munster 1980: 217).

As shown in Figure 2, friendship with Indonesia was crucial for security reasons and any wider multi-lateral strategies such as the ASEAN (Rumley 1999). This approach would ultimately have a payoff, in the form of presenting an opportunity to negotiate Australia’s territorial claims on key seabed resources of the Timor Sea. Nevertheless,
according to the rules of international law in 1975, as articulated in the covenant of the League of Nations, expanded by the Kellogg-Briand Pact, and codified in the United Nations Charter, the Indonesian annexation of East Timor was invalid. Therefore, the legal entitlement and administrative authority of the territory remained with the Portuguese. The 1972 Treaty was juridically considered as res inter alias acta between Australia and Indonesia under international law, and thus protecting the rights and interests of East Timor by the pacta tertiis rule 8

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(Marques Antunes 2003). Hence, nothing prevented the Portuguese or East Timorese authorities from advancing claims extending beyond points A16 and A17. In fact, Article 3 provides for further negotiation between the two parties with respect to any further delimitation in the Timor Sea between the points mentioned. This is exactly what happened in

1989 resulting in the Timor Gap Treaty.

Figure 2 Australia’s regional geopolitical orientation

Source: Rumley, Dennis 1999. The Geopolitics of Australia’s Regional Relations. London: Kluwer Academic Publishers

The closing of the Timor Gap had become a high priority for Australian oil companies who were anxious to exploit the suspected hydrocarbon resources below the seabed in this region (Cotton 2004). Until 1985 the Australians had argued for a continuation of

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the delimitations agreed in 1971 and 1972, which would have left them with control of approximately 70% of the seabed (Deely 2001). However, the evolution of international law along with the Indonesian perception that they had been “short-changed in the earlier boundary agreements”, weakened Australia’s arguments based on natural prolongation (Schofield 2008: 11). Therefore, as shown in Figure 3, a joint development zone was adopted as a way of “bridging the different views the two nations took of their perspective rights of the resources of the sea bed” (Bergin 1990:383-93) in the form of the Timor Gap Treaty, which formally underlined Indonesia’s sovereignty over East Timor. The Treaty was expressly “sovereignty neutral” and provided a temporary expedient, valid for forty years with an option to extend for a further twenty (Marques Antunes 2003). Three zones of cooperation were identified along with a detailed regime for exploitation of hydrocarbons, framing a joint development maritime agreement. Figure 3 The Timor Gap Zones of Cooperation

Source: IBRU Boundary and Territory Briefing 2001


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All the same, Portugal, who truly objected to the two-shelves theory and therefore rejected negotiations with Australia in 1973 on the delimitation of the continental shelf, was particularly concerned by these developments (Marques Antunes 2003). As a way to reaffirm its position, it granted a concession to Petrotimor based on equidistance. It
denied the treaty-line and the ‘Timor Gap’ any sort of recognition based on Article 6 of the CS Convention and made its feelings known to Australia during negotiations over the Timor Gap Treaty. Moreover, the Europeans

initiated proceedings against the legality of the agreement before the ICJ arguing that it violated Portugal’s rights as administering power, and also infringed upon the rights of the East Timorese people to self determination (Cotton 2004). The Australian counter to this claim was to assert that if there was a dispute about the status of the Agreement, it was between Portugal and Indonesia and not with Australia.


From the “Timor Gap” to the Timor Sea Treaty in a Post Col War order

Since the demise of the USSR, “cultural wars took over ideological wars” giving birth to the Post Cold War geopolitical period (Agnew 1998: 120). Along with this, there arose a significant increase in the value of economic power and the relevance of environmental questions, especially questions relating to “energy security”. Moreover, the rise of doctrines focussed around humanitarian intervention and economic blocs, strengthening the controlling power of the state were to be reaffirmed in the new political reorganization of space aiming to “re-establish human above economic values” (Rumley 1999: 30). In terms of the “energy question”, in the Asia-Pacific region the juxtaposition between rapid population growth and finite natural resources is likely to produce instability as a result of the states’ inability to move away from the overriding pursuit of material growth towards sustainable development policies (Brunett, 1992). As a response to this, the Australian government released in 1998 the Australian Ocean Policy to establish a ‘framework for integrated and eco-system based planning and management for all of Australia’s marine jurisdictions’1. The policy promotes “ecologically-sustainable

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development of the resources of our oceans and the encouragement of internationally competitive marine industries, while ensuring the protection of marine biological diversity”, a situation that has a direct effect on the Timor Sea industries. Thus, the question of “energy security” becomes increasingly important since rapid economic growth is closely associated with rising energy demand (Rumley 1999). Based on this, Australia’s longer-term future as an energy supplier is assured, enhancing economic and political links with the region. These links have been notably in the case of oil and gas throughout the different stages of the Treaties regarding the Timor Sea as Figure 5 and 6 will show.

Figure 5 Australia’s Energy Exports


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Source: ABARE 2009

Figure 6 Total Energy Supply and Exports: OECD countries and selected others 2008

Source: International Energy Agency 2007

Furthermore, apart from a perceived enhancement of security in the broadest sense, states can also be inclined towards regionalism as they see it as one potential means of controlling the behaviour of other “local” states (Ravenhill 1995, 192) – in this case, through the rise of doctrines focussed around humanitarian intervention and economic

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blocs which developed in the post Cold War context. This is arguably reflected in the creation of the ASEAN and the Australia- Indonesia Development Area Initiative (AIDA) created in 1997 as a sub-regional agreement to develop closer economic relations between Australia and the fourteen provinces of Eastern Indonesia. Moreover, as stated by Hutton (1996), the increasing power of multinational corporations and financial institutions ensured market control beyond the power of the state. The development of regional economic blocs associated with the growth of this new kind of regionalism will inevitably impact upon the nature of state power (Palmer 1991). In this sense, “regional economic development will be linked with human rights and that criticism of human rights abuses will emanate from the region’s richer states”, such as Japan and Australia in the Asia-Pacific Region (Rumley 1999: 30). Indeed, the reassessment of the East Timor affair by Australia is proof of the parallel between Australian foreign policy and the similar policy of human interventionism pursued by the US in other countries at the time. Australia´s break with its traditional policy to support Jakarta was undoubtedly fuelled by the impact of the regional financial crisis on Indonesian policy capacity and the collapse of the Suharto regime (Ball and McDonalds 2000; Way 2000). The issue of human rights was used as leverage against financial and other assistance, such as the suspension of the International Monetary Fund aid to Jakarta, thus forcing Indonesia to authorize humanitarian intervention by the United Nations and led by Australia (Cotton 2004).
Following the 1999 United Nations referendum where the East Timorese people expressed their wish to become an independent country, conflict ensued, prompting international intervention under the UN auspices (Schofield 2008). The 1989 Timor Gap Treaty fell between Australia and an independent state. Therefore, Indonesia’s stake was taken over by the UN

UNTAET on behalf of East Timor as a means to safeguard ongoing resource development activities in the Timor Sea, underlining that the arrangements did not amount the continuation of the Timor Gap Treaty and that it was “without prejudice
to the position of the future government of an independent East Timor with regard to the Treaty” (United Nations 2000).

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As a part of the evolving circumstances of the Post Cold War period, the Australian Government decided to engage in negotiations with East Timor prior to its independence, as a means to maintain its status quo regarding the benefits of an estimate of 29 million barrels of oil, 300 million

barrels of condensate and 85 billion cubic metres of gas located in the Timor Sea, and
to maintain a “secure north front” in a economical and surveyed way, especially in the context created after a 9/11 (Flint 2003). Thus, new revenue shares and security measures were discussed in the following stage of the treaty.

On the eve of the East Timorese independence in 2002, clashing perceptions regarding the legality of the 1989 Treaty remained between Australia and East Timor (Marques Antunes 2003: 14). Based on this, Australia announced in March of the same year its withdrawal of Maritime Disputes from the Jurisdiction of the ICJ and the ITLOS, leaving East Timor with no recourse to third party judicial settlement procedures (Triggs 2002). The new nation was therefore locked into an asymmetric negotiation process in terms of development and economic needs. Hence, in order to ensure continuity in oil and gas exploration activities, both countries agreed to the Timor Sea Treaty which came into effect on the East Timorese Independence Day (United Nations 2002).
The Treaty established a Joint Petroleum Development Area (JPDA) coinciding with the central part of the old Timor Gap Treaty area. However, a significant readjustment regarding the revenue-sharing regime was made getting to a 90:10 split in East Timor’s favour compared to the previous equal sharing terms reached with Indonesia. Along with this, an agreement was also reached on the unitisation of the seabed oil and gas resources, such as the Greater Sunrise complex of fields, better known as the Greater Sunrise International Unitisation Agreement (United Nations 2002). It states that the production “shall be distributed on the basis that 20.1% is attributed to the JPDA and 79.9 % is attributed to Australia” (United Nations 2002). In consequence, according to these agreements, East Timor was set to benefit from only 18.1 per cent of the proceeds from Greater Sunrise (90 per cent share of the 20.1 per cent of the field falling within the JPDA).

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The negotiations evidently had a strong national security dimension, as the hydrocarbon deposits in the JPDA represented a valuable resource to both countries. The protection of such a resource, in order that it can be exploited to the benefit of Australia and East Timor, is clearly in the national interest (Flint 2003). Australia claims the right to conduct patrols of both its territorial waters and its EEZ for craft that may be in breach of national legislation. The Treaty provides, however, for surveillance patrols to be tasked by the Designated Authority, in cooperation with the governments of both Australia and East Timor. Operations include a surface component, an air component and also a radar component, likely to be supplied by the RAN Patrol Boat Force Element Group (FEG), the RAAF Maritime Patrol Group (MPG), and the Jindalee Operational Radar Network (JORN), respectively as shown in Figure 7.

Figure 7 Security Operations Concerning the JDPA

Source: Flint, Matther 2003. The Timor Sea Joint Petroleum Development Area Oil and Gas Resources: The Defence Implications. Canberra: Sea Power Centre Australia.

Despite the agreements, tensions between the two parties remained over boundary delimitations and development of the resources, particularly over the destination for the

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pipeline aiming to bring the resources onshore (Marques Antunes 2003), leading to a new negotiation stage on 2006. The 2006 Treaty on Certain Maritime Arrangements in the Timor Sea (CMATS) was signed as a “further interim agreement that is without prejudice to the position of either country on their maritime boundary claims” (Australian Government. DFAT 2010). It does not provide a definitive maritime delimitation or specify the destination for the anticipated gas pipeline. However, as shown in Figure 8, this was decided to be placed in Darwin later on by the oil company in charge of the concession. The principal aim of the treaty is to allow the exploitation of the Greater Sunrise gas reservoirs. In this sense, maritime boundary claims are suspended for a period of 50 years, while Australia continues to regulate petroleum activities outside of the JPDA and south of the 1972 Australia-Indonesia seabed boundary. However, it does provide for the equal sharing of revenues deriving from the upstream exploitation of petroleum resources within the ‘Unit Area’ which includes the Greater Sunrise complex of fields. As a result, rather than an 18.1 per cent share in Greater Sunrise as would have been the case under the earlier accords, East Timor stands to gain a full 50 per cent share in the revenues deriving from the development of those fields (Schofield 2008).

Figure 8 The JDPA under the Timor Sea Treaty


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Source: Northern Territory Government of Australia 2007

As a conclusion, one could argue that the natural resources dispute over the Timor Sea has had a direct impact on the setting of the maritime boundary delimitation between Australia and East Timor. The clash of national interests regarding this area, have resulted in the impossibility of the closure of the “Timor Gap”. However, as Agnew (1995) states, “ the transition from one order to another, involves a transformation of the “common sense understandings” of how international relations work and what is at stake for particular parties as the position-practice system”. Thus, the current circumstances of the Timor Sea most need to be understood also as the reflection of the evolution of geopolitical, economic and international law realities.

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The first attempts to delimit boundaries around the area, were framed under the belief that sovereign claims based on the natural prolongation of a territory will ensure a larger security reach against rival ideologies in the form of the 1971 and 1972 maritime agreements. Then, as the global context evolved, economic benefits took priority over sovereign claims. The creation of Zones of Cooperation between Australia and Indonesia in the form of the Timor Gap Treaty constitutes the tacit proof. Finally, as the global context has set “energy security” at the top of its priorities, the current Timor Sea Treaty not only continues to leave the maritime boundary aside, but includes security issues as a way to reflect the world we are living in now.


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