East Timor will face foreign policy frustrations

Subject

East Timor’s foreign policy.

Significance

The election of President Francisco ‘Lu’Olo’ Guterres in March and parliamentary elections in July are expected to result in continued support for East Timor’s primary foreign policy aims of ASEAN accession and the resolution of its maritime boundary dispute with Australia. East Timor’s termination of the Treaty of Certain Maritime Arrangements in the Timor Sea (CMATS) with Australia in April threatens a key source of revenue from the Greater Sunrise natural gas field. If Dili ultimately loses access to these revenues, it could leave the hydrocarbon-dependent country insolvent within a decade.

Impacts

• Should a Labor government be elected in Australia in 2018-19, East Timor would benefit from a more conciliatory counterparty.
• Dili’s demand for onshore hydrocarbon processing is unlikely to see corporate interest due to low prices and technical complications.
• Qatar’s plan to ramp up liquified natural gas exports and new Australian production will squeeze East Timor.