2. This presentation will discuss experiences, successes and challenges in managing oil and gas revenues and companies in Timor-Leste. We hope it will help Myanmar decide what to do and what to avoid. 1.Timor-Leste and Myanmar compared: petroleum dependency, petroleum wealth, poverty. 2.Are we cursed by our nonrenewable natural resources? 3.Timor-Leste’s Petroleum Fund: goals, implementation and experience to date. 4.Transparency in Timor-Leste: promise and reality.

4. Timor-Leste is the second-most petroleum-export dependent country in the world. This dominates our history, our government, our economy … and our future.

5. In 2011 Timor-LesteMyanmar Population1.2 million, 15% urban50 mill., 34% urban Land area 15,000 km 2 8% arable, 1% irrigated 654,000 km 2 15% arable, 3% irrig Land borders260 km5,876 km Coastline783 km1,930 km GDP/capita$3,950 ($960 non-oil)$830 ($770 non-oil) State revenues$3.4b$2.0b State expenditures$1.1b$4.3b Foreign debt0 (no longer)$8.1b All Exports Non-petrol. exports $3.0b $0.02b $9.5b $5.5b Imports$1.3b$5.5b Population in poverty50%33% Children under 5 underweight 41%30%

6. In 2011 Timor-LesteMyanmar Oil reserves remaining520 million bbl50 million bbl Oil production30 million bbl8 million bbl Reserve/production ratio176 Gas reserves remaining1,050 mmboe1,870 mmboe Gas production32 mmboe76 mmboe Reserve/production ratio3325 Oil and gas revenues$3.0b$3.7b (?) SWF earnings$0.28b-- Non-oil revenues$0.11b$0.25b (?) State oil dependency97%92% Economy oil dependency76%7%

7. BP lists Timor- Leste’s 5 tcf as part of Australia. Source: BP World Energy Review 2012

8. Data (most from 2009)Timor-LesteMyanmar HDI rank out of 187 (and index) 147 (0.495)149 (0.483) Life expectancy (years) 6265 Mean years of schooling 2.84.0 Expected years of schooling 11.29.2 Gross National Income (GNI) per capita $3,005$1,535 Non-income HDI rank 156144 Maternal mortality (per 100,000 births) 370240 Fertility rate (per adult woman) 62 Multidimensional poverty index.360.154 People in multidimensional poverty 68%32% People in severe poverty 39%9%

10. People have lived in Timor-Leste for at least 5,000 years. People have lived in Timor-Leste for at least 5,000 years. Portuguese colonized nearly 500 years ago. Portuguese colonized nearly 500 years ago. –They brought Catholicism but little development or education. –Onshore oil exploration started in 1890s. Australia, then Japan, invaded in 1941-45. Australia, then Japan, invaded in 1941-45. –40,000-60,000 Timorese killed in WWII, which didn’t involve them. Portugal’s military dictatorship resumed control in 1945. Portugal’s military dictatorship resumed control in 1945. –Offshore oil exploration began in the 1960s. Portugal began decolonizing in 1974. Portugal began decolonizing in 1974. –After Carnation Revolution brought down Portuguese dictatorship –TL declared independence 28 November 1975 … but 10 days later Indonesia invaded on 7 December 1975. Indonesia invaded on 7 December 1975. –Indonesia killed 100,000-200,000 Timorese in 24-year occupation. –Timor-Gap Treaty 1989; oil production started 1998. Referendum in 1999, then 2-½ years of UN rule. Referendum in 1999, then 2-½ years of UN rule. Finally independent on 20 May 2002. Finally independent on 20 May 2002. –Oil income got much larger since 2005-2007.

12. About 50% of people live below the poverty line. About 50% of people live below the poverty line. 80% live in rural areas, largely by subsistence farming. 80% live in rural areas, largely by subsistence farming. Two thousand children under age 5 die from preventable conditions every year … fifty times as many as people of all ages are killed by violence (39 in 2010). Two thousand children under age 5 die from preventable conditions every year … fifty times as many as people of all ages are killed by violence (39 in 2010). In 2010, TL exported $16 million (coffee). In 2010, TL exported $16 million (coffee). In 2010, TL imported $288 million (everything). In 2010, TL imported $288 million (everything).

13. State expenditures in 2012:………………………………….$1,674 million $1,495 million (89%) will come from the Petroleum Fund. State expenditures in 2012:………………………………….$1,674 million $1,495 million (89%) will come from the Petroleum Fund. Non-oil GDP in 2012:..……………………………………………$930 million Non-oil GDP in 2012:..……………………………………………$930 million GNI in 2012:…………………………………………………......$3,751 million $2,497 million is from exporting nonrenewable oil and gas. Together with $ 324 million from Petroleum Fund investments, this is 75% of our entire economy and 97% of state revenues. It is declining and could end by 2024. GNI in 2012:…………………………………………………......$3,751 million $2,497 million is from exporting nonrenewable oil and gas. Together with $ 324 million from Petroleum Fund investments, this is 75% of our entire economy and 97% of state revenues. It is declining and could end by 2024. State activities paid with oil money are about half of Timor-Leste’s “non-oil” economy as they are recycled through the local economy. State activities paid with oil money are about half of Timor-Leste’s “non-oil” economy as they are recycled through the local economy. Petroleum income doesn’t provide jobs or money for people – it all goes to the State. Petroleum income doesn’t provide jobs or money for people – it all goes to the State. Although the Petroleum Fund can improve equity between generations, it does not guarantee good governance or eliminate corruption, and will not last long if current policies continue. Although the Petroleum Fund can improve equity between generations, it does not guarantee good governance or eliminate corruption, and will not last long if current policies continue. South Sudan is the only country which depends more on oil and gas exports than Timor-Leste.

15. Oil income flows easily (for a while), but comes with damaging consequences, policies and practices.

16. Seeing money as the solution to every problem It’s easier to buy a scholarship than to build a university. Seeing money as the solution to every problem It’s easier to buy a scholarship than to build a university. Spending without thinking Real state expenditures are growing 28% every year. Spending without thinking Real state expenditures are growing 28% every year. Lack of realistic long-term planning The Strategic Development Plan is but a dream. Lack of realistic long-term planning The Strategic Development Plan is but a dream. Import dependency Timor-Leste has a billion-dollar non-oil trade deficit. Import dependency Timor-Leste has a billion-dollar non-oil trade deficit. Inflation from little local productive capacity (“Dutch disease” -- prices went up 17% in Dili in 2011.) Our economy cannot absorb the cash in circulation. Inflation from little local productive capacity (“Dutch disease” -- prices went up 17% in Dili in 2011.) Our economy cannot absorb the cash in circulation.

17. Ignoring non-oil development and revenues Ignoring non-oil development and revenues Acting as if the oil money will last forever Both producing fields will be emptied by 2024. Acting as if the oil money will last forever Both producing fields will be emptied by 2024. Borrowing today, to repay tomorrow TL will borrow a half-billion dollars in the next five years and billions more after that. Borrowing today, to repay tomorrow TL will borrow a half-billion dollars in the next five years and billions more after that. Wealth goes mainly to the urban elite. Most people won’t benefit from highways, airports and oil processing, but will feel the burden of loan repayments. Wealth goes mainly to the urban elite. Most people won’t benefit from highways, airports and oil processing, but will feel the burden of loan repayments. Petroleum sector “captures” decision-making. Few creative ideas to develop agriculture, education, tourism, small industries, food processing, etc. Petroleum sector “captures” decision-making. Few creative ideas to develop agriculture, education, tourism, small industries, food processing, etc.

18. The State Budget goes up 28% per year more than inflation, faster than the economy and faster than every nation except Zimbabwe.

21. Spending the money as fast as it comes in. The Petroleum Fund separates state revenues from oil income. Spending the money as fast as it comes in. The Petroleum Fund separates state revenues from oil income. State budgets go up and down with world oil prices and field production. State budgets go up and down with world oil prices and field production. Money disappears before it gets to the State. Companies deposit oil revenues directly into the Fund. Money disappears before it gets to the State. Companies deposit oil revenues directly into the Fund. When the oil is gone, nothing will be left. If invested and spent wisely, Fund earnings will continue. When the oil is gone, nothing will be left. If invested and spent wisely, Fund earnings will continue. Invasion, occupation and war Australia steals via negotiations, companies cheat on taxes, but this is much less bloody than before 1999. Invasion, occupation and war Australia steals via negotiations, companies cheat on taxes, but this is much less bloody than before 1999.

22. We have $10 billion in the bank, but how long can it sustain us after the oil and gas is gone?

23. Decouple oil revenues from state spending. Decouple oil revenues from state spending. Stabilize against oil market price variations. Stabilize against oil market price variations. Earn investment return for sustainability when oil and gas are used up. Earn investment return for sustainability when oil and gas are used up. Improve transparency and management of oil revenues, prevent corruption. Improve transparency and management of oil revenues, prevent corruption. Ensure spending decisions are open and democratic. Ensure spending decisions are open and democratic.

25. $150 $100 $50 $0

26. Intended to maintain a steady flow of revenue to the state budget. Intended to maintain a steady flow of revenue to the state budget. 3% of (Fund Balance + NPV of future oil and gas revenues) 3% of (Fund Balance + NPV of future oil and gas revenues) Could provide constant revenues forever. Could provide constant revenues forever.But Investment real return has been less than 3%. Investment real return has been less than 3%. Population, prices and expectations grow. Population, prices and expectations grow. Overspending is too tempting and easy. Overspending is too tempting and easy.

27. In 2010, Petroleum Fund withdrawals exceeded spending. They may again in 2012, as the entire budget will not be executed.

29. A Sovereign Wealth Fund and transparency are not enough to prevent the resource curse. A Sovereign Wealth Fund and transparency are not enough to prevent the resource curse. It’s easy to make rules before oil money pours in, but hard to follow them after it comes. It’s easy to make rules before oil money pours in, but hard to follow them after it comes. People expected too much from the Fund. People expected too much from the Fund. Laws are not strong enough. Laws are not strong enough. Temptation to overspend is very powerful. Temptation to overspend is very powerful. Non-Government actors need to be stronger. Non-Government actors need to be stronger.

30. Timor-Leste officials are proud of transparency, including EITI and other aspects. How well does it work?

31. 1. Best practice Petroleum Fund and revenue management 2. EITI + PWYP, global standards 3. Transparency portal  Budget Execution  Procurement  Foreign Assistance  Government results 4. Broadcast Parliamentary budget debates 5. Publish Council of Ministers decisions These are Government claims. Practice is not consistent.

32. Oil production contracts must be public. Oil production contracts must be public. Standard PSC – no bonuses or other special payments. Standard PSC – no bonuses or other special payments. Open, transparent bidding rounds. Open, transparent bidding rounds.But It does not apply to contracts signed before 2005, which cover the two largest fields.

33. Transparency portal Transparency portal Central Bank Petroleum Fund Reports Central Bank Petroleum Fund Reports ANP, IAB and MoF reports on Petroleum revenue management ANP, IAB and MoF reports on Petroleum revenue management Budget documents & execution reports Budget documents & execution reports EITI reports EITI reports IMF, World Bank, ADB and oil company reports IMF, World Bank, ADB and oil company reports Televised budget debates Televised budget debates Unofficial sources and leaks Unofficial sources and leaks But the new National Oil Company TimorGAP is less transparent and accountable.

34. 2003: Prime Minister Alkatiri speaks at founding EITI conference in London, commits Timor-Leste. 2003: Prime Minister Alkatiri speaks at founding EITI conference in London, commits Timor-Leste. 2005: Petroleum Act and Petroleum Fund Act passed, with good transparency provisions. 2005: Petroleum Act and Petroleum Fund Act passed, with good transparency provisions. 2007: EITI qualification process starts; after July elections new government continues it. 2007: EITI qualification process starts; after July elections new government continues it. 2008: MSG active, workplan published 2008: MSG active, workplan published Jan. 2010: first EITI report published, covering 2008 Jan. 2010: first EITI report published, covering 2008 July 2010: EITI certifies T-L as the third compliant country in the world (after Azerbaijan and Liberia). July 2010: EITI certifies T-L as the third compliant country in the world (after Azerbaijan and Liberia). March 2011: EITI report for 2009 published. March 2011: EITI report for 2009 published.

35. Sharing information from EITI Multi- Stakeholder Working Group discussions Sharing information from EITI Multi- Stakeholder Working Group discussions Disaggregation by time, project, and revenue stream Disaggregation by time, project, and revenue stream Truly independent certification Truly independent certification After 2009, La’o Hamutuk decided not to continue in the MSWG, as we preferred an “outside” strategy, rather than simply to publicize EITI as the final transparency standard.

36. But EITI reports for 2010 and 2011 are not yet published. EITI reports for 2010 and 2011 are not yet published. Civil society input mostly ignored. Civil society input mostly ignored. Too aggregated. Too aggregated. Doesn’t show company cheating or penalties. Doesn’t show company cheating or penalties. Won’t show state-company collusion. Won’t show state-company collusion. No truly independent audit until 2012. No truly independent audit until 2012.

40. Rapid budget escalation to unsustainable spending levels Rapid budget escalation to unsustainable spending levels Denial that the oil and gas will run out soon Denial that the oil and gas will run out soon Poor planning Poor planning Preference for showy mega-projects Preference for showy mega-projects Neglect of human resources and non-oil sectors Neglect of human resources and non-oil sectors Inflation, increasing gap between rich and poor Inflation, increasing gap between rich and poor Greed, corruption, mismanagement. Greed, corruption, mismanagement.

41. Accessing and analyzing public information to understand and influence policies. State leaders, public servants, journalists, civil society and citizens need to use the information. Accessing and analyzing public information to understand and influence policies. State leaders, public servants, journalists, civil society and citizens need to use the information. Resisting the temptation to overspend. Resisting the temptation to overspend. Ensuring that children, rural poor, women and other vulnerable people’s rights are respected. Ensuring that children, rural poor, women and other vulnerable people’s rights are respected. Preventing the oil companies from stealing. Preventing the oil companies from stealing. Making the national oil company transparent and responsive to public needs. Making the national oil company transparent and responsive to public needs. Developing a sustainable economy. Developing a sustainable economy.

42. You will find more and updated information at La’o Hamutuk’s website http://www.laohamutuk.org La’o Hamutuk’s website http://www.laohamutuk.org http://www.laohamutuk.org La’o Hamutuk’s blog http://laohamutuk.blogspot.com/ La’o Hamutuk’s blog http://laohamutuk.blogspot.com/ http://laohamutuk.blogspot.com/ Timor-Leste Institute for Development Monitoring and Analysis Rua Martires do Patria, Bebora, Dili, Timor-Leste Mailing address: P.O. Box 340, Dili, Timor-Leste Telephone: +670 7234330 (mobile) +670 3321040 (landline) Email: info@laohamutuk.orginfo@laohamutuk.org

43. You will find more and updated information at La’o Hamutuk’s website http://www.laohamutuk.org La’o Hamutuk’s website http://www.laohamutuk.org http://www.laohamutuk.org La’o Hamutuk’s blog http://laohamutuk.blogspot.com/ La’o Hamutuk’s blog http://laohamutuk.blogspot.com/ http://laohamutuk.blogspot.com/ Reference DVD-ROM available. Reference DVD-ROM available. Timor-Leste Institute for Development Monitoring and Analysis Rua Martires do Patria, Bebora, Dili, Timor-Leste Mailing address: P.O. Box 340, Dili, Timor-Leste Telephone: +670 7234330 (mobile) +670 3321040 (landline) Email: info@laohamutuk.orginfo@laohamutuk.org The following slides include additional information

44. A local organization founded in 2000 A local organization founded in 2000 Initiative of Timorese civil society and international solidarity to improve communication with and information about international institutions and systems in TL. Initiative of Timorese civil society and international solidarity to improve communication with and information about international institutions and systems in TL. Main research and advocacy areas: Main research and advocacy areas: –Non-renewable resources/oil dependency/economy –Agriculture/food sovereignty/land rights –Democracy/governance/justice

47. Countries on track to meet the MDGs spend 28% of their budgets on health and education. Timor-Leste will spend 10.4% in 2012.

49. Human security is health care, food, education, employment, housing, etc. Human security is health care, food, education, employment, housing, etc. 50 times as many children under five die from avoidable conditions as people are killed by violence. 50 times as many children under five die from avoidable conditions as people are killed by violence. These children are not helped by police, soldiers or judges, but the UN and donors see everything through a conflict lens. These children are not helped by police, soldiers or judges, but the UN and donors see everything through a conflict lens. We must diversify our economy to prepare for when our oil runs out and we cannot pay for imports. We must diversify our economy to prepare for when our oil runs out and we cannot pay for imports.

50. CategoryImportsExportsBalance Goods $289 (DNE reports) $17 (96% coffee) -$272 Other goods (extra-legal) $200 (LH est.) $0.3 (LH est.) -$200 Services $505 (2009, from BPA) $3 (LH est. remittances) -$502 Total excluding oil and gas $994$20-$974 Petroleum receipts (to state) -- $2,016 (incl. $294 Petrol. Fund interest) $2,016 Total$994$2,036$1,042

51. Ships bringing thousands of tons of imported rice wait to unload at Dili Port, November 2008.

52. Timorese agriculture products

53. The Petroleum Fund shall contribute to a wise management of the petroleum resources for the benefit of both current and future generations. The Petroleum Fund shall be a tool that contributes to sound fiscal policy, where appropriate consideration and weight is given to the long-term interests of Timor- Leste’s citizens.

54. “The Timor-Leste Transparency Model was the first to go beyond the Extractive Industries Transparency Initiative with a five-pillar 360° transparency modality across government. What we lacked in structure, we made up for in innovation, leading global good practice even by international standards.” -- Finance Minister Emilia Pires, May 2012

55. Inter-generational equity is forgotten in the rush to spend.

57. Petroleum revenue has been higher than expected, due to higher oil prices. Petroleum revenue has been higher than expected, due to higher oil prices. The Petroleum Wealth will not last for ever. Thus, it is important to save some of the money in order to allocate resources both to the current and future generations. The Petroleum Wealth will not last for ever. Thus, it is important to save some of the money in order to allocate resources both to the current and future generations. That is the reason why the Petroleum Fund was established in 2005 and the decision of limiting the annual spending to 3% of the Petroleum Wealth. That is the reason why the Petroleum Fund was established in 2005 and the decision of limiting the annual spending to 3% of the Petroleum Wealth. The fiscal envelope of the Government’s budget is limited by the domestic revenue (taxes, fees and charges) and the Estimated Sustainable Income. The fiscal envelope of the Government’s budget is limited by the domestic revenue (taxes, fees and charges) and the Estimated Sustainable Income. The Estimated Sustainable Income has been more than 90% of the revenue on the State Budget – it actually determines the whole budget and what the Government is able to spend on social services, infrastructure etc. The Estimated Sustainable Income has been more than 90% of the revenue on the State Budget – it actually determines the whole budget and what the Government is able to spend on social services, infrastructure etc.

58. Petroleum revenue is not income in the usual sense – it is a conversion of wealth from one form to another. Petroleum revenue is not income in the usual sense – it is a conversion of wealth from one form to another. Government petroleum revenue is different from other tax revenues. Government petroleum revenue is different from other tax revenues. Revenue from the petroleum sector shows greater variations over time. Revenue from the petroleum sector shows greater variations over time. Sustainable expenditure benefiting both current and future generations Spending of petroleum revenue (real terms) Time Value of the petroleum wealth (Petroleum Fund + petroleum reserves) Time Petroleum reserves Petroleum Fund

59. Petroleum revenues + return on investments Petroleum Fund Sustainable Income Domestic revenues Expenditures State Budget The saving rule Over time spend an amount that is sustainable for the Fund to eternity

60. Last year, we thought we were richer: ESI =.03 * (Balance in FP + expected future petroleum revenues) Includes only projects with approved field development plans. Uses prudent assumptions for oil production and prices. Anticipated revenues “discounted” to Net Present Value. Withdrawn above ESI 321 928.9 923.3 971.2 593.6 550.7 Total withdrawal from Petroleum Fund 1,055 1,594.2 1,564.5 1,588.3 1,185.0 1,127.8

61. 2012 $665m The ESI was increased in 2011 because the Government used less prudent oil prices. It fell in 2012 because oil production predictions dropped, and because withdrawals in 2011 were $321m more than ESI. It has been exceeded every year since 2009, and the 2012 budget will spend $1,494m from the Fund, more than twice ESI.

62. Population is increasing 2.4% per year, doubling in less than 29 years (the post-war “baby boom” will become parents). Population is increasing 2.4% per year, doubling in less than 29 years (the post-war “baby boom” will become parents). Inflation According to the National Statistics Department, consumer prices in Dili increased 17.4% from December 2010 to December 2011. Inflation According to the National Statistics Department, consumer prices in Dili increased 17.4% from December 2010 to December 2011. People’s needs and desires will increase as the country develops.

63. 11.2%

64. Timor-Leste is struggling to find jobs for 15,000 people who will enter the work force in 2012. In 2024, it will be around 30,000 each year, and the oil will be gone. Today’s youth will have children of their own.

65. Laws passed since 2009 have paved the way for Timor-Leste to take out foreign loans. Laws passed since 2009 have paved the way for Timor-Leste to take out foreign loans. The 2012 Budget starts borrowing with $160 million, including $43.1 million to be spent this year. The 2012 Budget starts borrowing with $160 million, including $43.1 million to be spent this year. The Government recently signed $103 million in loan contracts with Japan and the ADB. The Government recently signed $103 million in loan contracts with Japan and the ADB. During the next four years, the Government plans to borrow nearly half a billion dollars. During the next four years, the Government plans to borrow nearly half a billion dollars.

68. What will the money be used for? What will the money be used for? How much needs to be repaid? When? How much needs to be repaid? When? Do we have to use the money to buy things from the country which gave the loan? Do we have to use the money to buy things from the country which gave the loan? If we can’t repay, what are the consequences? If we can’t repay, what are the consequences? Do we have to make payments before meeting our people’s needs? Do we have to make payments before meeting our people’s needs? In many countries, money from borrowing gives benefits mainly to rich people, but the repayments impact on the poor. In many countries, money from borrowing gives benefits mainly to rich people, but the repayments impact on the poor.

69. Implementing the SDP will require billions of dollars more in loans, probably at commercial rates. Implementing the SDP will require billions of dollars more in loans, probably at commercial rates. Even at concessional rates, repaying a loan will permanently reduce money in the Petroleum Fund. The yen loan makes us hostage to a strong dollar. Even at concessional rates, repaying a loan will permanently reduce money in the Petroleum Fund. The yen loan makes us hostage to a strong dollar. TL’s oil and gas are small and non- renewable, and future oil prices are unpredictable. TL’s oil and gas are small and non- renewable, and future oil prices are unpredictable. TL will have to make loan repayments before spending money on people’s needs or developing other sectors. TL will have to make loan repayments before spending money on people’s needs or developing other sectors. Our children and grandchildren will inherit our debt. Our children and grandchildren will inherit our debt.

70. In 2010, TL began working on the South Coast Petroleum Corridor. In 2010, TL began working on the South Coast Petroleum Corridor. During 2011, TL spent $19 million, and total project costs will be more than $2 billion (much more if Timor-Leste pays to build the refinery, gas pipeline or LNG plant). During 2011, TL spent $19 million, and total project costs will be more than $2 billion (much more if Timor-Leste pays to build the refinery, gas pipeline or LNG plant). The 2012 budget allocates $164 million (including for the Supply Base and highway). The 2012 budget allocates $164 million (including for the Supply Base and highway).

71. It makes TL more dependent on the oil and gas sector. It makes TL more dependent on the oil and gas sector. It neglects sustainable sectors (agriculture, tourism, small industries and others). It neglects sustainable sectors (agriculture, tourism, small industries and others). Nearly all the money spent will go to foreign companies, providing hardly any local jobs or contracts. Nearly all the money spent will go to foreign companies, providing hardly any local jobs or contracts. It will create social conflict, take up valuable land, displace people, worsen health and degrade and endanger the environment. It will create social conflict, take up valuable land, displace people, worsen health and degrade and endanger the environment. We wonder if it will provide a reasonable return on investment. We wonder if it will provide a reasonable return on investment. The Government has made many unrealistic promises to local communities about jobs and other benefits.

72. 1989: Australian and Indonesian foreign ministers toast the signing of the Timor Gap Treaty while flying over the Timor Sea.

73. Australian companies began exploring Sunrise in the early 1970s, after Australia and Indonesia divided our maritime resources without involving Portugal. In 1989, they closed the “Timor Gap” to share illegally occupied resources in the Joint Development Area. Australian companies began exploring Sunrise in the early 1970s, after Australia and Indonesia divided our maritime resources without involving Portugal. In 1989, they closed the “Timor Gap” to share illegally occupied resources in the Joint Development Area. The 2006 CMATS treaty bans maritime boundaries discussion for 50 years. It divides Sunrise upstream revenues 50-50. The 2006 CMATS treaty bans maritime boundaries discussion for 50 years. It divides Sunrise upstream revenues 50-50. Australia put its greed for oil before respect for its sovereign neighbors or international law. Australia put its greed for oil before respect for its sovereign neighbors or international law. Based on UNCLOS, TL owns everything north of the median line. Based on UNCLOS, TL owns everything north of the median line.

75. The project is stalled because Timor-Leste and the companies do not agree on how it should be developed. The project is stalled because Timor-Leste and the companies do not agree on how it should be developed. Woodside and its partners Shell, ConocoPhillips and Osaka Gas believe a floating LNG plant in the sea is the most profitable. Woodside and its partners Shell, ConocoPhillips and Osaka Gas believe a floating LNG plant in the sea is the most profitable. Timor-Leste wants a pipeline from Sunrise to Beaçu, to get more tax revenues and anchor the Tasi Mane project. Timor-Leste wants a pipeline from Sunrise to Beaçu, to get more tax revenues and anchor the Tasi Mane project. Under contracts and treaties, the companies can choose the path, but both governments need to approve it. Under contracts and treaties, the companies can choose the path, but both governments need to approve it. TL can cancel CMATS next year if the parties haven’t agreed yet. TL can cancel CMATS next year if the parties haven’t agreed yet.

77. No history of democracy or self-government  Tradition of resistance -- not constructive criticism, coalition-building, alternatives of compromise -- with decisions handed down from above. New public service with little experience of honesty, good governance or accountability  Limited number of skilled people requires dual roles, reducing oversight and increasing appearance of nepotism.  Just-invented government structures lack adequate oversight and separation of powers, with unclear and conflicting responsibilities.

78. TL has lived through bad examples  Inefficient Portuguese bureaucracy; corrupt and violent Indonesian occupation  History of confusing government services with personal favors (corruption, patronage, nurturing local contractors)  UN missions focused on short-term fixes, with inexperienced and unqualified “experts”  Donors and advisors promote private-industry, “free trade” economic model  The UN, WB, ADB and IMF are not transparent or accountable Few effective checks and balances  Weak mechanisms to control corruption  Political parties are weak and inexperienced, few alternatives or compromises offered  Media don’t do independent research or question officials  Civil society has limited education and experience

79. Can learn from the mistakes and successes of other oil-producing countries. People are nationalistic and ready to defend national sovereignty, unity and independence.  Many NGOs and civil society groups Use of U.S. dollar reduces inflation risk.  But surrenders control of exchange rates

80. Post-colonial Post-colonial –Language controversy –Land ownership in chaos –Illiteracy –Underdevelopment –People never lived under rule of law –Never had power to make decisions for ourselves –“To Resist is to Win” – lobbying and persuasion useless –Internalized Portuguese and Indonesian traditions –Bureaucracy, corruption, “entitlement,” military companies –Incorporating returned exiles, collaborators –Public officials all just learning their jobs –Skilled people gone: education, health, governance –Getting neighboring countries to respect sovereignty

81. Post-conflict Post-conflict –Pandemic Post-Traumatic Stress Disorder –Infrastructure and property destroyed –No experience of predictability or long-term planning –Poverty –High birth rate –Domestic violence –Respecting veterans; dealing with collaborators –Police and military come from different sides. –Leading in peacetime requires a different skill set. –Differences of opinion are personalized. Loyalty and betrayal paramount; long memories

82. Domination by patriarchal and political systems Domination by patriarchal and political systems Responsible for household: water, fuel, food. Responsible for household: water, fuel, food. Berlaki (Bride-price) Berlaki (Bride-price) Colonial and Church traditions Colonial and Church traditions Domestic violence Domestic violence Many children in each family Many children in each family 2012 election law: ¹ / 3 of new MPs are women 2012 election law: ¹ / 3 of new MPs are women

83. Many mechanisms, little success. Many mechanisms, little success. ¾ of those indicted by SCU safe in Indonesia ¾ of those indicted by SCU safe in Indonesia 99% of crimes (those committed between 1975 and 1998) have not been investigated 99% of crimes (those committed between 1975 and 1998) have not been investigated Gap between leaders and population Gap between leaders and population “Transitional justice” doesn’t touch major perpetrators “Transitional justice” doesn’t touch major perpetrators Continuing impunity has lasting consequences Continuing impunity has lasting consequences Long work to achieve an international tribunal Long work to achieve an international tribunal