From http://www.theaustralian.com.au/news/world/gusmao-shift-signals-thaw-for-timor-ties/story-e6frg6ux-1226281968825

Gusmao shift signals thaw for Timor ties

by: Gordon Peake      The Australian     February 27, 2012

HAS a change in attitude to Australia suddenly come over Xanana Gusmao?

In the past few years, East Timor's Prime Minister has consistently snubbed visiting ministers from Canberra and sometimes resorted to fiery language about Australia. In 2010, he went so far as to assert that Australia was responsible for up to 60,000 Timorese deaths during World War II.

The root of much of this rancour is a dispute over how to develop the Greater Sunrise gasfield that sits in jointly managed Australian-Timorese waters. The operating company Woodside has stated a floating platform would be the most profitable option but Gusmao's government rejects this on the grounds that, if Darwin already has a pipeline from the other shared field, Bayu-Undan, then Timor should have this one.

His government refuses to approve any development that does not include a pipeline to East Timor, thus potentially derailing the entire project. Bitter history between the two nations over the oil and gasfields complicates today's standoff.

Given this context, the apparent turnaround in both rhetoric and approach displayed during Gusmao's recent visit to Australia -- his first in three years -- is noteworthy.

He laid a wreath at a memorial to Australian commandoes who served in East Timor in World War II and described "bonds of friendship and honour" between the two countries. He met Julia Gillard and senior ministers to discuss his ambitious 20-year development plan, which he plans to pay for largely from the oil and gas reserves. In an unexpected move, he sat down for the first time with Woodside chief executive Peter Coleman in Darwin to discuss resolving the impasse between his government and the company.

These meetings generated few immediate breakthroughs. The major outcome from the meetings between the two prime ministers was reported as being the gifting of archival film footage. However, Canberra will see the fact that Gusmao has chosen to re-engage with Australia and Woodside as progress. No significant issues get decided in his government without his direct intervention.

Gusmao's apparent change in attitude comes as East Timor prepares for presidential polls next month and parliamentary elections slated for June. According to the constitution, the presidency is a largely ceremonial post but the text is sufficiently vague to allow many of the 13 candidates to make expansive claims as to what they would do if they won.

President Jose Ramos-Horta is running again, on the back of what he claims are more than 100,000 signatures urging his participation. Other frontrunners include Francisco Guterres from the opposition Fretilin party, Fernando Araujo, Speaker of the national parliament, and Taur Matan Ruak, former chief of the armed forces who is running as an independent. Gusmao's CNRT party is not running a candidate of its own but announced on Friday that it had decided to back Ruak. In the absence of opinion polls it is extremely hard to know how the candidates stack up against one another but Gusmao's backing for Ruak will be a huge boost for his former resistance comrade-in-arms.

The presidential polls are a prelude to the main event a few months later: parliamentary polls and the prize of controlling East Timor's significant resources wealth for the next five years.

During his recent visit to Australia, Gusmao confirmed that he would run again and hopes to gain enough seats to govern outright this time. He faces strong competition from Fretilin, which has effectively been in campaign mode ever since the last election.

In a recent report, the International Crisis Group suggest that neither party is likely to win an outright majority and that some sort of coalition is likely. A period of intense jockeying among the parties is likely after the elections, just as UN police and Australian-New Zealand military peacekeepers prepare to withdraw.

An important item on the agenda of any new government will be to get resolution on Greater Sunrise. Both CNRT and Fretilin claim they want to see a pipeline to East Timor. If a development plan is not approved by next February, either country could terminate the existing arrangements, with implications for Timor-Leste, Australia and Woodside.

A resolution to the deadlock cannot come too soon. East Timor's future depends on it. Despite the oil wealth, many development statistics about the country are still grim. According to a report published this month by UNICEF, child malnutrition rates in East Timor are 54 per cent, one of the world's highest. The country is reportedly on track to meet only a few of the Millennium Development Goals (the government disputes this). The IMF has warned about high levels of inflation.

Australia remains Timor's largest aid donor, with programs in governance, health, education, policing and defence. To make these programs work requires engagement from senior levels of the Timorese leadership, which has sometimes been lacking. With the UN due to downsize by the end of the year, Australian programs will be under a stronger spotlight. Canberra must be hoping that Gusmao's changed approach is not just a one-week thing but the start of something more permanent.

Gordon Peake is a Visiting Fellow at the State Society and Governance in Melanesia Program, Australian National University