Year 20215In May, natural gas from the Bayu-Undan oil and gas field off the coast of Timor-Leste was discovered in a newminingphase of the project. To date, Timor-Leste has been exploring for this oil and gas field, and has been in the process of developing a largeincomeThe country has been gaining In fact, the oil and natural gas sector accounts for a large portion of Timor-Leste's state revenues and has contributed significantly to those revenues since independence.dependenceThe company has been doing so. In addition, the world as a whole is "in the process ofdecarbonationAs the "Timor-Leste" movement moves forward, attention has been focused on the relationship with neighboring Australia over mining rights and how the government can make use of this finite resource. This article considers the future of Timor-Leste.

A tanker transporting natural gas extracted from the Timor Sea for export from Australia to Japan (Geoff Whalan / Flickr [CC BY-NC-ND 2.0])

History of Timor-Leste

East Timor is located on the island of Timor, north of the Australian continent.eastern partand borders Indonesia, which has the western part of the island as its territory.

16Before the 19th century, there were several kingdoms in East Timor. However16In the 19th century, ships from Portugal arrived in search of sandalwood, an aromatic tree, and the area was later ruled by Portugal. When World War II broke out, the Japanese took control of the region, and Portuguese rule began again when the war ended. After that1974In 1949, Portugal gradually weakened its control over East Timor after a coup d'état in the Portuguese home country led to the collapse of the former regime that had been promoting colonial rule. The following year1975In 1949, with the rise of the independence movement, the Revolutionary Front for Independence in East Timor (Fretelin:FRETILIN) and other independent groups declared their independence. However, following an invasion by neighboring Indonesia, the following year27It was annexed by Indonesia as the second province. On the other hand, the United Nations did not recognize this annexation by Indonesia and granted Portugal the legal right to govern. Thereafter, the movement for independence from Indonesia continued, led by Fretelin, and Indonesian attempts to suppress this movement resulted in massacres, murders, and other humanitarian crimes.

In 1998, dissatisfaction with the government's response to the Asian currency crisis led to a large-scalecitizens' groupoccurred, and the government of the time collapsed. The new government that was subsequently established allowed Timor to hold a referendum for independence. The following year1999In 2006, the United Nations Security Council (Security Council) mission to Timor-Leste (UNAMET), and the establishment of theUNAMETA referendum on the question of independence was held by the The result,about8rateof residents chose "secession/independence". The turnout at this time was98.6% (%)This shows how highly concerned the residents were about independence.

However, immediately after the vote, acts of destruction and violence by opponents of independencesurgeand because of this, theUNAMETwere forced to withdraw from East Timor. The uprising was triggered by the various actions taken by the Indonesian military before and after the referendum.handicraftis suspected that Indonesia was trying to prevent East Timor from gaining independence.In response to this precarious situation, the 1999In 2006, the Security Council approved a multinational force (INTERFETand the United Nations Transitional Administration in East Timor (UNTAETThe United Nations (UN) temporarily governed Timor-Leste after it decided to establish the United Nations Economic and Social Commission for East Timor (UNESCAP). In 2002, 27 years after the declaration of independence in 1975, East Timor officially became an independent state. The first president (*1) was Shanaana Guzman, and the first prime minister was Mari Alkatiri, leader of Fretelin, the leading party in the ruling party at the time. Both men had been central to the independence movement since the 1970s, and both were members of Fretelin at the time of the 1975 Declaration of Independence.

Left: Mari Alkatiri (World Bank Photo Collection / Flickr [CC BY-NC-ND 2.0])
Right: Shanana Guzman (World Trade Organization / Flickr [CC BY-SA 2.0])

Both were energetic in their efforts for independence, though,1980After Mr. Guzman left Fretelin in the 1950s, a conflict gradually developed between the two men.2006In 2006, national army soldiers fired by Alkatiri accompanied demands for the prime minister's resignation.riotThe two men were at loggerheads at the time, and Mr. Alkatiri resigned from his position as prime minister. The fact that Guzman, who was president at the time, demanded Alkatiri's resignation also indicates the conflict between the two men.2007In 1964, Mr. Guzman established the National Council for the Reconstruction of Timor-Leste ((CNRT)was established and became the second largest party in parliament, and Guzman became prime minister and assumed real power. However,2012Around 1985, Mr. Guzman proposed a man from the rival party, Fretelin, to succeed him as prime minister, and the relationship between Mr. Alkatiri and Prime Minister Guzman, which had been at odds with each other, improved.stabilityThe new government will be led by a new generation of politicians from the independence movement to the younger generation. This was due to Guzman's commitment to a generational shift in government, from the generation that has been involved in politics since the independence movement to a younger generation.speculationIt is believed that there were But in the end,2017In 2006, Alkatiri returned to the prime minister's office,9He established a short-lived administration that lasted for three months. Then, under the leadership of GuzmanCNRTA coalition government led by the2020Since 2006, a coalition government led by Fretelin has again been in power.

Development of natural resources

Natural resources such as oil and gas exist in the Timor Sea to the south of Timor Island and have been developed in the past. Therefore, let us unravel the history of the Timor Sea by focusing on the situation of natural resources in the Timor Sea. Prior to East Timor's independence, arrangements over the Timor Sea were mainly made between Australia and Indonesia. The first arrangement made between these two countries was,1972It was the Seabed Boundary Treaty of 1949. However, it was later discovered that the treaty contained an undetermined portion of the seafloor boundary, known as the "Timor Gap. Therefore1989Again in 2006, in both countries.Timor Gap TreatyThe "Timor Gap" is a joint petroleum development area (JPDAAs a result, the region was considered an area that the two countries could jointly develop. At this time, Portugal, which had been granted the right to govern by the United Nations, claimed that its own right to govern and East Timor's right to national self-determination had been violated, and Australia wasInternational Court of Justiceto appeal, but the court held that Portugal's claim toDismissed.The court ruled that the case itself was a matter of interest to a third country, Indonesia. The court ruled humbly against this decision because the case itself is also a matter of interest to Indonesia, a third country.how to look at something (e.g. noh, train schedule)There are also Although agreements have been made on the seabed over the Timor Sea, the area of the sea has not yet been determined. Therefore, the following is a summary of the agreement,1997In 1949, Australia and Indonesia signed the Perth Convention to define their respective exclusive economic zones.

and2002When East Timor gained official independence in 1949, it in turn signed the Timor Sea Treaty with Australia. This was1989The new Timor Gap Treaty replaced the Timor Gap Treaty of 1949.JPDAThe Treaty is a treaty that defines the allocation of oil revenues from the Perth Treaty, which is succeeded by the Perth Treaty with respect to the boundaries.JPDAThe main oil and gas fields in Timor-Leste are the Bayu-Undan oil and gas field and part of the Greater Sunrise oil and gas field, from which oil revenues are allocated to Timor-Leste:Australia=Australia.9:1The treaty was concluded in 1976. On the other hand, the treaty states that Australia has jurisdiction over the pipeline from the Bayu-Undan oil and gas field to Darwin, a city in northern Australia, and that Australian companies will be allowed to sell liquefied natural gas (LNG) production in the United States. The treaty states.LNGThe Australian firms with the technology and capital were not in a position to make arrangements for theLNGThe treaty was to benefit from the In addition, the treaty provides for1974of the Greater Sunrise oil and gas field that had been discovered as of 2006.79.9% (%)falls within Australia's Exclusive Economic Zone as defined by the Perth Convention mentioned earlier, and the remaining20.1% (20.1%)school (e.g. of ikebana)JPDAIt was held that the oil and gas belonged to the Therefore, the benefit to Timor-Leste from this Greater Sunrise oil and gas field is,JPDAbelong within20.1of the Greater Sunrise Oil and Gas Field in %.90%, so about 10% of the total.18This would mean a %. In other words,JPDAAlthough the treaty appears to be favorable to Timor-Leste in terms of revenue sharing with respect to the Greater Sunrise oil and gas field, it was actually a small revenue share from one of the major oil and gas fields, the Greater Sunrise oil and gas field.

Note that the exclusive economic zone claimed by Australia is aligned with the continental shelf and is closer to Timor-Leste than the median line between the two countries claimed by Timor-Leste. In theseunderstandingUnable to do so, Timor-Leste continued discussions with Australia,2006In 1949, the two countries again signed the Timor Sea Boundary Treaty (CMATS(AUSTRALIA). As a result, the revenue sharing from the Greater Sunrise oil and gas field will be Timor-Leste:Australia=5:5The "M" in "M" was deemed to be "M". At the same time, since50 yearsThe decision on the border line was put on hold.

In 2013, Timor-Leste experienced a turning point.CMATSAustralia's espionage activities in East Timor, including wiretapping key government facilities, including the Prime Minister's office, during the negotiations for thedetectionThe first time, Timor-Leste was the first country to take the matter to the International Court of Justice (ICC). Timor-Leste took the matter to the International Court of Justice (ICJ(the "MRC"), and a mandatory mediation was implemented. This resulted in aCMATSis discarded,2018In 2006, the two countries re-signed the Timor Sea Treaty and decided on a new distribution of revenues from the Greater Sunrise oil and gas field. The revenue earned by Timor-Leste depends on which country the extracted gas is sent to by pipeline. If it is sent to Timor-Leste, the70%.If you are sending to Australia, please send80%.The idea is that the company will get a share of the income from the The treaty also provides that at the same timeJPDA.Abolished, the maritime boundary was defined at the midline between Timor-Leste and Australia, including the Bayu-Undan oil and gas field, which was originallyJPDAThe government decided that Timor-Leste would get all the profits from the area that had been a "profitable" area. Nevertheless, international oil capital from the U.S. and Australia is still involved in the actual mining, and capital continues to flow out of the country.

Government building in the capital Dili (David Stanley / Flickr [CC BY 2.0])

As we have seen, since its independence, Timor-Leste has tried to secure its own interests through repeated negotiations and treaties with Australia, a regional power, in an unfavorable power relationship. However, at present, with regard to the source of income lying at the bottom of the seaopaqueThere are many parts to this story. First, the above mentioned2018There are several problems with the Timor-Leste Maritime Border Treaty of 2005: first, while Timor-Leste has negotiated a boundary with Australia and decided on revenue sharing, it has not clarified the boundary and revenue sharing with Indonesia, another neighbor. This could lead to a new border dispute with Indonesia.frictionSecond, there are no clear rules for the management of the marine environment in the region, and there are concerns that oil and gas development could damage the environment in the future.JPDAThe problem is that Australia delayed its ratification, although all the revenues from the oil fields within the country were to belong to Timor-Leste. In fact,2018counter for years (following a number in the hito-futa-mi counting system)3Australia ratified the treaty, which was signed in June, the following year.7It was in June. During that time, Australia had favorable conditions for its own2002Under the Timor Sea Treaty of 1949.JPDAto the entire10The company continued to earn a percentage of revenue. That amount totaledUS$5 billionThe amount is estimated to be as much as $3,000,000, and although some people, including politicians on the Australian side, have demanded compensation, it has not yet been repaid.

In addition, as mentioned at the beginning of this paper, there is a global trend toward "decarbonization," but the future of Timor-Leste itself, which relies on fossil fuels for much of its national income, is uncertain in relation to this trend. Timor-Leste isState revenues in 2016 and 2017.Approximately 90were obtained from the oil and gas sector,This isextremeThe economy is a monoculture economy. Although technological developments have increased the amount of oil and gas resources that can be drilled, they will eventuallystarvationIt is a well-known fact that Timor-Leste has a large share of its oil and gas revenues. Currently, Timor-Leste receives all of its oil and gas revenues from2005The goal is to sustainably use oil and gas revenues by investing them in an oil fund established in 2006, from which the necessary portion is transferred to the national budget. In fact, in the early years, the rural electrification program and infrastructure investments have resulted in a certain amount ofresultswere seen.

However, the resources of the Bayu-Undan oil and gas field areYear 2023The current profit management method is expected to be depleted inUS$19 billionThe balance of a certain fund could be as early as2030It is expected to run out in 2012. Therefore, the development of the Greater Sunrise oil and gas field has been urged. Mr. Guzman decided that the gas obtained from the Greater Sunrise Oil and Gas Field would not be transported to Australia for processing, but would instead be transferred to the coast of Timor-Leste for processing.LNGThe project is to build and process an export facility.claimThe project has been in the works for some time now. On the other hand, Timor-Leste is having difficulty in raising funds for the construction of this facility, and the development of the project claimed by Mr. Guzman and the Greater Sunrise oil and gas field itself is currently stagnant.

People protesting against Australia's claims (Andrew Mercer / Wikimedia [CC BY-SA 4.0])

General economic issues

Immediately after escaping from colonial rule, Timor-Leste experienced oppression and conflict by neighboring Indonesia, and there was much turmoil before formal independence. In the process, much of the country's infrastructure was destroyed and many people were displaced.2007Although reconstruction efforts have been underway since around 2006, the effects of the disaster still linger. In particular2007In 1949, due to the devastation of the land, the country had no choice but to rely on imports of rice and other staple foods. We focused on rice as a crop for export.coffeeCultivation of the year by year itsproduction outputbut still not enough to replace oil and gas resources. Thus, Timor-Leste has not been able to "develop" the country as much as it would like.

Abundant oil and gas resources have been the foundation for Timor-Leste to promote economic development despite its political and economic difficulties. In addition, the more natural resources a country is rich in, the harder it is for diverse industries to grow and for economic growth and democracy to take root, the so-calledThe Curse of Resources" (note (supplementary information) symbol2) To avoid,NorwayIt is noted above that the oil fund has been established and funded in the same way as the However, in the first place, oil and gas extraction is a capital and technologicalforeign-owned enterpriseMany of the wealth derived from these resources is being spent out of the country because it is being done by theeffluenceThe fact is that the oil and gas industry has been doing this for a long time. Furthermore, although the country has been able to generate income from oil and gas, the use of this income has been problematic. In fact, the capital gained from natural resources has been used to help Timor-Leste'sApprox. 66households are engaged in the agricultural sector, education for the children who are the future of the country, and health.It hasn't been pitched.The following is a list of the most common problems with the

What, then, does the government spend the revenues generated by its natural resources? The first is the construction of a port, roads, and public facilities in the Oecussi Special Administrative Region, an enclave where the former prime minister, Alkatiri, has political power, and the second is the construction of a port, roads, and public facilities in the Oecussi Special Administrative Region, an enclave where Alkatiri has political power. the Oecussi Special Administrative Region, an enclave in which former Prime Minister Alkatiri has political power.large-scaleThe second is the Tasimane project, promoted by Guzman, who is also a politically powerful figure. The second is the Tashmane project, also promoted by the politically powerful Mr. Guzman, which is a large-scale onshore natural gas processing plant and the associated port and road improvements,US$18 billionis required.

Workers working on infrastructure (ILO Asia-Pacific / Flickr [CC BY-NC-ND 2.0])

These two projects have one thing in common: the amount of money invested is not accompanied by real benefits.criticismThere are In addition, there are several problems with the Tasimane project. First, economic and technical difficulties related to the development of pipes to transport natural gas onshore arepointing outThe development of these products requires skilled workers, but Timor-Leste lacks such human resources. In addition, the development requires skilled workers, but there is a shortage of such workers in Timor-Leste, and employment in Timor-Leste is not expected to increase because these workers will be sourced from outside the country. Furthermore, compensation for the residents who will be disadvantaged by the development is also insufficient.testimonyThe project is being undertaken. Another problem is that the funds needed for both the Oecussi Industrial Zone project and the Tasimane project cannot be covered by the Petroleum Fund or Timor-Leste's national budget alone. Therefore, the Timorese government is trying to raise the necessary funds for development from overseas, mainly Chinese banks, but this has led to the country's "debt-ridden" economy.opinionThere are also For this reason, these projects are the result of the vanity of politicians and are doomed to failure.how to look at something (e.g. noh, train schedule)is strong.

In order for Timor-Leste to stabilize its future without relying on oil and gas, the country needs to grow other sectors, i.e., diversify its economy, but this is not currently happening. There are several reasons for this. One of them is political. This is due first and foremost to political disharmony. Since independence18In a little over a year.8Three different regimes exist in sequence, none of whichshort timeThe two administrations have ended up in the same situation. In addition, since each of these administrations has little prospect for a long and stable period of time, they have taken short-term measures to maintain their administration, rather than long-term strategic investments, during their time in office.be takenFurthermore, the government's policy has been to invest in large-scale infrastructure and other projects that show the public how the government is working. And the large sums of money that have been spent have come from the oil and gas sector, which continues to be profitable even today. Because of the immediate benefits of oil and gas, investment in other sectors, which take time to monetize, tends to take a backseat. This is most evident in the large-scale projects mentioned above, and at the same time is a factor in Timor-Leste's continued dependence on oil and gas. In addition, the political structure of the country, as discussed earlierCNRTand Fretelin, the two main political parties, disagree on policies to address national priorities. The main thrust of the nation's development plan is the Strategic Development Plan (SDP), but the ways in which this is accomplished vary widely among the parties. For example,CNRTGusmao and Alkatiri, who have influence in Fretelin, separately, as noted above.large-scaleThe second reason for Timor-Leste's lack of economic diversification is the country's long-standing problem of poverty. A second reason for the lack of economic diversification is Timor-Leste's long-standing problem of poverty. Political instability, unbalanced redistribution of resources, and other factors have caused Timor-Leste to45.8%people in multidimensional poverty (note (supplementary information) symbol3). Therefore, it is difficult to create a situation in which citizens invest their personal capital to start new businesses.

A boy pushing a cart (Asian Development Bank / Flickr [CC BY-NC-ND 2.0])

As we have mentioned, Timor-Leste's financial resources are heavily dependent on the oil and gas sector, which has been an obstacle to economic growth. The economic problems resulting from this dependence have, of course, had a negative impact on the population in the form of poverty. In fact, in 2016, approximately40%are living on less than US$1 a day, and by 2020, children under 5 years of age47%.are malnourished, and as mentioned above, there is also the problem of multidimensional poverty. In terms of GDP per capita, by 2020US$1,359The country is not well-off, ranking 160th out of the 194 countries surveyed. Furthermore, the unemployment rate for those aged 15-34 isApproximately 60The number of workers in the company's workforce is only about 1,000, and it is difficult to say that stable employment is ensured.

Where Timor-Leste is headed

2020counter for years (following a number in the hito-futa-mi counting system)8In May, the government of Timor-Leste,COVID-19The report details measures to minimize further stagnation of economic activity and to restore the economy in the medium to long term due to theEconomic Recovery Plan (ERP)The report. In addition to proposing improvements in the productive sector to diversify the economy, the report emphasizes human development as the centerpiece of economic policy and recommends improved education as a core long-term strategy for economic development.

Every country has developed by taking advantage of its geographical and historical conditions, climate, and resources. East Timor, in particular, was invaded by neighboring Indonesia even after Portuguese rule ended, and even after gaining independence it had to face Australia, a regional power seeking its own interests. Despite this historically disadvantaged position, the country has sought development by drilling for and exporting oil and gas, resources that are needed globally. However, the global energy sector is undergoing a major transition, as evidenced by the "decarbonization" movement, and Timor-Leste needs to make a change in its national industry. However, internal political factors and external factors such as intervention by other countries have hindered this transformation, which should have been aimed at reconciling different opinions and promoting the country's short- and long-term development and stability. Timor-Leste's future does not lie merely at the bottom of the sea. We will pay close attention to where Timor-Leste's eyes will turn in the future.

People walking in downtown Dili, the capital city (Asian Development Bank / Flickr [CC BY-NC-ND 2.0])

1 In Timor-Leste, the president iscourteousThe prime minister, who is elected by the parliament, is considered to have the real power.

note 2 (supplementary information)The Curse of ResourcesThe term "natural resources" refers to the tendency of countries with abundant natural resources to have more pronounced problems such as poverty and slow economic development than those with less abundant natural resources. The main reason for this trend is that the concentration of a country's capital and labor in the productive sectors of its abundant natural resources results in an unstable economy and a lack of development in other sectors.

3 Multidimensional poverty: The overlapping of three dimensions of poverty: health, education, and income. The percentage of household levels of multidimensional poverty and its severity,Multidimensional poverty index (MPI)is the United Nations Development Programme (UNDPIt has been reported from

Writer: Yosuke Asada

Graphic: Mayuko Hanafusa

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