East Timor’s government confirmed on 30 January 2025 that it is reviewing every defence, trade and infrastructure agreement signed with Canberra since 2018 and will open parallel talks with Beijing later this month. Prime Minister Kay Rala Xanana Gusmão told parliament the shift is driven by “unfinished sovereignty business” – a pointed reference to stalled negotiations over the Greater Sunrise gas field, a $50 billion project whose revenue Timor-Leste insists must be piped to its south coast rather than to an Australian-run plant in Darwin. The move places Australia’s closest northern neighbour at the centre of a fresh contest between Western allies and an increasingly assertive China.
a gas field that decides alliances
Greater Sunrise, 450 km north-west of Darwin, holds 5.1 trillion cubic feet of gas and at least 226 million barrels of condensate. A 2018 treaty split upstream revenue 80-20 in Timor-Leste’s favour, yet left the downstream route open. Canberra favours a floating LNG platform tied to Australian supply chains; Dili demands an onshore plant at Beaçu to create local jobs. Woodside Petroleum, the field’s operator, has warned that the Timor option adds $5 billion in cost and could sink returns. Speaking on 30 January, Gusmão rejected that logic. “We did not fight 24 years for independence only to become a passive tax collector,” he said. “If Australia will not bend, we will find partners who will.” Those partners, officials admit, are almost entirely Chinese state banks and contractors already active in Timor-Leste’s ports and highways.
Beijing’s chequebook diplomacy returns
Chinese Foreign Minister Wang Yi visited Dili in December 2024, offering a $1.8 billion package for the Beaçu industrial zone, a deep-water port upgrade and a fibre-optic cable to Singapore. The proposal dwarfs Australia’s $330 million annual aid budget and comes with no governance conditions, a point repeatedly praised by Timorese ministers. “China listens to what we need, not what they want us to be,” Finance Minister Rui Augusto Gomes told Radio Timor-Leste on 29 January. Analysts note the pattern: concessional loans, Chinese labour and eventual equity stakes that give Beijing strategic use over critical infrastructure. The port at Tibar, financed by Exim Bank in 2019, is already operated by state-owned China Harbour Engineering. A similar fate for Beaçu would place a Chinese-controlled facility 650 km from Australia’s northern air and naval bases.
Canberra’s aid dilemma
Australia remains Timor-Leste’s largest donor, funding health posts, police training and the Timor Sea maritime patrol boat program. Yet the aid is tied to procurement rules that require Australian suppliers, inflating costs and delaying projects. A 2024 review by the Australian National Audit Office found 38 percent of infrastructure grants were returned unspent because local firms could not meet compliance standards. “We are effectively subsidising our own contractors while Timor shops elsewhere,” said former foreign minister Alexander Downer, speaking to ABC Radio on 30 January. Defence planners worry that any erosion of Australian influence could complicate access to the deep-water channel leading to Darwin, a logistics hub for US Marine rotations. Washington has urged Canberra to finalise the Greater Sunrise terms quickly, fearing another Solomon Islands-style security pact with Beijing.
Washington watches from the sidelines
The US reopened its embassy in Dili in 2023 after a 30-year absence, but staffing remains at 12 officers and USAID programming is capped at $15 million annually. At a Senate hearing on 28 January, Assistant Secretary of State for East Asian and Pacific Affairs Daniel Kritenbrink warned that “predatory lending risks undermining the rules-based order in the Pacific.” He stopped short of offering new funds, citing congressional gridlock. Timorese officials privately dismiss American lectures. “They arrive with slideshows about debt traps; China arrives with bulldozers,” one adviser to Gusmão told reporters on background. With elections due in 2026, the government needs visible growth, not sermons. The opposition Fretilin party, while wary of Beijing’s opacity, concedes that Chinese cranes are more photogenic than Australian consultants’ spreadsheets.
what happens next
Gusmão has set a 90-day deadline for Canberra to concede on the Timor pipeline route or watch Beijing finance a feasibility study that locks in Chinese engineering standards. Australian Foreign Minister Penny Wong responded that “any change to the 2018 treaty must be mutually agreed,” diplomatic code for no unilateral shifts. Behind the scenes, officials float a compromise: Australia could underwrite part of the Beaçu plant through export credits, preserving some procurement for its own firms while denying China a monopoly. Time is short. Timor-Leste’s petroleum fund, which finances 90 percent of the budget, will be depleted by 2034 unless Greater Sunrise flows. The arithmetic is brutal: accept Australian terms and keep the West onside, or take Chinese money and risk a debt trajectory already haunting Fiji and Tonga.
Dili’s choice will reverberate far beyond its half-island shores. A tilt toward Beijing places Chinese workers, loans and potential dual-use facilities within sight of Australia’s northern approaches. A patched-up deal with Canberra preserves a Western-aligned buffer but postpones the industrialisation Timorese voters crave. Either way, the era of automatic Australian primacy in Timor-Leste is over; the only question is whether Canberra can still write the closing chapters, or must watch China draft them instead.
