Australia, E. Timor agree on treaty

Australia, E. Timor agree on treaty

CANBERRA (AP): After almost a year of negotiations, Australia and East Timor have agreed to the terms of a new treaty dividing royalties from oil under the Timor Sea, Prime Minister John Howard said Tuesday.

Howard said Foreign Minister Alexander Downer and Industry Minister Nick Minchin reached agreement this week with representatives from East Timor and the United Nations authority administering the territory during its transition to independence.

"There was an agreement concluded between Sen. Minchin and Mr. Downer negotiating on behalf of the Commonwealth, and people negotiating on behalf of the new emerging state of East Timor," Howard told reporters.

Howard said on Monday night he had given the go-ahead to Downer and Minchin to travel to East Timor this week to formally sign the treaty.

In East Timor's capital, Dili, Nobel Peace laureate Jose Ramos-Horta, who acts as the territory's foreign minister, welcomed the agreement and said the deal would guarantee the tiny, nascent nation US$400 million a year from 2004.

"This was the best possible outcome for East Timor," he said.

Canberra and the U.N. Transitional Authority in East Timor have been negotiating the treaty since October last year to replace an earlier treaty between Australia and Indonesia that divided up the royalties on a 50-50 split.

UNTAET and East Timor's new leadership have argued for a 90-10 split favoring the fledgling state, but Australia was initially reluctant to be so generous.

According to an Australian official who spoke on condition of anonymity, the breakthrough came with Canberra relenting to East Timor's position during talks last Thursday. Both countries were eager to have the treaty signed as the impasse was holding up investment by oil companies.

The UNTAET and East Timorese negotiators have taken the draft agreement back to Dili where it will be considered next Tuesday by the transitional Cabinet.