SVM:

This is a near verbatim transcript of the press briefing by Hansjoerg Strohmeyer, Principal Legal Adviser to the SRSG Sergio Vieira de Mello, on Timor Gap Treaty

Strohmeyer: Good morning, I’m yet one more time here to brief you on some legal matters, on the Timor Gap Treaty. As you know, from Saturday until Tuesday, the Australian government had organized a work-shop on the Timor Gap, the exploitation of the Timor Gap and the organization of the treaty. We had members of the Australian government, the Northern Territory government, petro-chemical companies exploiting the oil in the Timor Gap, and UNTAET and CNRT representatives at this work-shop.

It was a fully successful workshop. It goes back to an initiative that the CNRT had taken several months ago, which was meant to inform CNRT members, the East Timorese, about the implications of the previous treaty, the possibilities of the gas and oil exploitations in the area of the Timor Gap treaty, the possible revenues, or the projected revenues and it’s implications on the future East Timorese budget.

From a technical point of view, the oil companies have to take important decisions in the next few months. The exploitation of gas and the opening of new oilfields have to be started, and that is why it is important to regulate the new composition of the joint authority.

When I say new composition of the joint authority in the Timor Gap, as all of you know, the Timor Gap Treaty goes back to a treaty that was concluded between Indonesia and Australia. And since the 25th of October 1999, with the adoption of the Security Council resolution (1272) the opinion of the United Nations, of the Australian government, is that Indonesia does no longer have any role to play in this treaty and that a new arrangement has to be found between East Timor, represented for the time being by UNTAET, and the Australian government.

The workshop marks the final point in a series of four meetings that we previously had. I can tell you that we have agreed with the CNRT representatives and the Australian government representatives on a Memorandum of Understanding. We also agreed that letters will be exchanged early or in the middle of February panding the procedures of scrutiny and checking within the Australian government which is due to the federal structure of Australia and they have to feed it through their own procedures.

We have actually agreed to continue the practical arrangements of the treaty, the terms of the treaty for the transitional period, the period of UNTAET’s mandate here in East Timor. What this means, and that is a very important legal aspect, that this is not a case of succession to a treaty. East Timor will not simply replace Indonesia in the treaty, this will basically be a new legal instrument, through the exchange of letters and memorandum of understanding.

The reason why I am stressing this is, of course, that we do not want to retroactively legitimize, or give any legitimacy to the conclusion of the treaty, which was done by Indonesia over what is part of the territory of East Timor. So this is not a case of succession, it is a new legal instrument that we will create.

But for planning security of the investors and, in view of important technical decisions that need to be made, all of us decided that we will continue the practical arrangements spelled out under the treaty. That leaves the options open that to a certain extent, some of the questions, the practical arrangements can, be revisited once East Timor is fully independent.

I’m happy to take questions.

Q: Will the treaty include room for the CNRT through UNTAET to renegotiate?

A: As I said, the CNRT has been part of this consultative process right from the beginning. In effect, the initiative for this workshop went back to an initiative of the CNRT. We have agreed to continue the practical terms for the transitional period for as long as UNTAET will be here. Now, my feeling is that it is declared opinion of the CNRT to give the investors the planning security that they need. And security means beyond one or two years, since some of the decisions that need to be taken by the petroleum companies will trigger investments of more than a billion US dollars.

Q: (inaudible)

A: The legal instrument itself regulates some practical aspects of the transition, of the disengagement from Indonesia to East Timor, the new staffing of the joint authority and the ministerial counsel, to administer what was before the Timor Gap Treaty. But as you rightly said, the practical arrangement, basically the terms of the treaty remain unchanged. This is what the memorandum of understanding and the exchange of letters determine.

Q: (inaudible)

A: Let me make this very clear. This is not a question of succession. So this whole process does not need the consent or the agreement of Indonesia. By virtue of Security Council Resolution 1272, East Timor will continue a relationship that will formalize with this memorandum of understanding and the exchange of letters with Australia. Since part of the Timor Gap is sovereign territory of East Timor, Indonesia does not have a role to play in the seminar.

Q: Australia acknowledges that they need to get a signature of Indonesia to release the existing joint authority funds, in order to make those funds available to East Timorese. Do they estimate any difficulties in doing that? Did they give you any guarantees before you signed the memorandum of understanding that these funds will be channeled to East Timorese?

A: As you rightly said, this is the question on the general fund that had been established between Indonesia and Australia. That requires two signatures to release the funds. Australia just can’t release the funds to us and cannot guarantee that the funds be given to us. Australia will have disengagement discussions on the first and second of February with the Indonesians and we will take it from there, whatever comes out of these negotiations will then be a matter to be dealt with.

Q: (inaudible)

A: This is not that easy. What Indonesia used to get, depends first on how much oil had been produced. The production in the present oil field has gone down, to something I believe, around 13 – don’t quote me on that – I think 13 thousand barrels. And 12 thousand is sort of the level of where it starts to not be cost effective anymore. So that is why the decision to open the Bayu Undang(?) oil field, the new oil field, is crucial. But the revenues that the oil companies then have to pay on the oil that is produced depends exactly on the tax regime of the two countries. And the Indonesian tax regime is not one coherent tax regime, it’s a little bit more complicated. So I cannot give you a concrete figure.


Q: Will East Timor operate under the same (tax) regime than Indonesia?

A: Regulation No.1 says that the law that was previously applicable, and that includes the tax laws of Indonesia, will be applied, in so far, as not repealed or superceded by UNTAET regulation. As the spokesperson before announced, there will be new tax regimes for East Timor soon. Pending the establishment of this new tax regime, pending the promulgation of new regulations, yes, in fact, the Indonesian tax regime is applicable to East Timor.

Thank you very much.

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