In lieu of an abstract, here is a brief excerpt of the content:

  • Timor-Leste
  • Michael Leach (bio)

From 25 January, when the president announced an early election for 12 May, it was clear that 2018 would prove an eventful political year in Timor-Leste. The May election followed a nine-month fretilin-led minority government, which proved unable to steer its program and budget through Parliament because the opposition parties formed a majority bloc a month after the government was installed (fretilin is the acronym for one of Timor-Leste’s major political parties, the Revolutionary Front for an Independent East Timor). The election brought the Xanana Gusmão–led Alliance for Change and Progress (amp) coalition back into office. Having returned to power, the new government soon found itself mired in a standoff over ministerial appointments with the president, fretilin’s Francisco Guterres, in the first genuine experience of cohabitation under Timor-Leste’s semi-presidential system. The year also saw a historic agreement between Timor-Leste and Australia that fixed maritime boundaries at the median line in the Timor Sea (Leach 2018), ending a long-running dispute between the two nations. The year was capped off by the government outlining its bold vision for resource sovereignty, and its plan to purchase a majority share in the Greater Sunrise joint venture, to advance its ambitious goal of downstream processing oil and gas on the East Timorese south coast.

The July 2017 election saw the opposition fretilin party emerge narrowly ahead of the National Congress for Timorese Reconstruction (cnrt) in terms of seats but unable to establish the alliances necessary to form a majority. With no alternative majority coalition then being proposed, in September President Guterres appointed the first minority government in Timor-Leste’s short constitutional history: a thirty-seat minority coalition with the Democratic Party. But events moved rapidly, and a political standoff emerged in October when three opposition parties—the cnrt, the Popular Liberation Party (plp), and Enrich the National Unity of the Sons of Timor (khunto), together controlling thirty-five of Parliament’s sixty-five seats—rejected the government’s program.

Having failed to pass a budget rectification measure needed to fund new programs, the state reverted to a duo-decimal system based on a monthly allocation of one-twelfth of the previous year’s budget. The extended use of this reserve budget system lasted until a new budget was passed in September 2018, and it depressed the national economy, which remains heavily reliant [End Page 563] on government-led expenditures. Rather than installing the opposition amp coalition as the government, President Guterres instead announced a new election, with the fretilin– Democratic Party executive acting as a caretaker government in the meantime.

Meanwhile, in the realm of international relations, maritime boundary negotiations with Australia continued under the aegis of a United Nations Convention on the Law of the Sea (unclos) compulsory conciliation process, which was triggered by Timor-Leste. Following twelve months of negotiations that saw “confidence-building measures” enacted—including the termination of the Certain Maritime Arrangements in the Timor Sea treaty, which purported to delay maritime boundary determination for fifty years, and Timor-Leste’s cessation of a separate espionage case against Australia—Timor-Leste and Australia jointly declared that they had reached an agreement on “central aspects” of a maritime-boundary determination in late 2017 (Permanent Court of Arbitration 2017).

Once ratified by both parties, the agreement, which was finally revealed on 6 March 2018 (Permanent Court of Arbitration 2018), will create permanent maritime boundaries and revised resource-sharing arrangements in the yet-to-be-developed Greater Sunrise oil and gas field. Timor-Leste secured a median-line boundary in the Timor Gap, creating a permanent maritime boundary for the first time. The median-line boundary will place 100 percent of the existing Joint Petroleum Development Area in Timor-Leste’s waters, where current treaties divided the revenue 90 to 10 in its favor. As these fields are nearing the end of their life, far more financially significant is the renegotiated revenue split over the as-yet-untapped Greater Sunrise field, worth in excess of us$40 billion, which straddles the eastern lateral (or side) boundary of the Joint Petroleum Development Area.

The renegotiated agreement...