Australia’s pathway to middle-power maturity starts with Timor-Leste

Christopher Hogan

Image sourced from Janina M Pawlez via Flickr

Introduction

Timor-Leste’s ascension to ASEAN is a major milestone and time for celebration in the young nation’s history. For Australia, it represents a welcome added voice for democratic values and peace in the region and a valuable collaborator coming into its own.

For a historically contentious bilateral relationship, this milestone presents opportunity for a fresh start. The Australian Prime Minister’s first visit to Dili in January was met by the welcome announcement of a new bi-lateral agreement. Embedded within this was an infrastructure fund for Timor-Leste to be created from Australia’s share of future oil and gas revenue from the Greater Sunrise basin.

These recent developments represent a maturation for both countries individually and in their bi-lateral relationship. For Dili, it’s a transition from a young post-conflict nation into a key member of the region’s major grouping. For Australia, it represents the possibility of finally emerging from the shadow of its past foreign policy failures.

However, as Australia continues to build its middle-power credentials in courting its ‘Pacific Family’ and ASEAN neighbours, the question remains whether it can continue building meaningful momentum or whether it will fall into an era of lost opportunity.

A complicated history

These recent developments are welcome given the challenges the relationship has faced throughout its history.

Canberra’s  appeasement prior to the 1975 Indonesian invasion, and reluctant intervention in 1999 are major blights on its post-WW2 engagement with Dili. The diplomatic relationship was further marred by spying during bi-lateral boundary negotiations over the Timor-Sea where Australia deliberately sought to gain unfair advantage on earnings from natural resources, despite Timor-Leste’s recent emergence from devastating conflict.

These foreign policy failures in turn overshadowed the important contribution Australia’s defence forces made in leading the 1999 intervention and 2006 peacekeeping operations.

Challenges such as these demonstrate a historically immature approach to bi-lateral engagement, prioritising short-term gains at the expense of the relationship and regional stability. These have meant that a more amiable relationship has at times gone wanting.

Shifting gears

The Australian Prime Minister’s recent visit to Timor-Leste represents an important opportunity to turn the corner and develop a deeper relationship based in shared interests and common interests. This comes at a time of global and regional transition, with the rules-based order under-threat, international institutions under-funded, and pressure mounting on middle powers. At the same time, Australia’s strategic geography in the Indo-Pacific offers opportunity to become a major actor at a time where global leadership is required on a range of issues.

The signing of the auspiciously named Parseria Foun Ba Era Foun (New Partnership for a New Era) between Timor-Leste and Australia is not only welcome in signalling intent on the bi-lateral relationship, but for its renewed commitment to regional development.

To truly deliver on the promise signalled by this agreement, Australia will need to work with Dili to overcome its fiscal challenges and support sustainable development. This includes growing support for human development as, even twelve months later, the loss of USAID funding continues to have wide-reaching impacts for Timor-Leste’s population.

Australia’s promise of an infrastructure fund is a welcome way to deepen the relationship and right past wrongs. It also provides a useful vehicle to complement existing development programmes building capacity and human capital throughout Timor-Leste.

At the same time, protests in 2025 demonstrate that inequality, unemployment, and economic opportunity remain challenges for Dili. Australia can play its role in helping Timor-Leste overcome these if it can deliver meaningful progress on breaking ground in the Greater Sunrise basin.

Future Outlook

Strengthening the relationship in the years ahead will require several key commitments from Australia, including on capacity building, strategic development, and a deeper respect for Dili’s sovereign decision‑making. Achieving this will demonstrate confidence in Timor-Leste, while falling into old habits may only help realise Australia’s fears of driving neighbours into the arms of perceived competitors.

Australia can work with Timor-Leste to build capacity and diversify its economy beyond natural resource extraction. It can do this by showing tangible progress on extraction in the Greater Sunrise basin, as well as working with Dili and ASEAN partners to fast-track its integration and economic opportunities.

This will require developing creative solutions to targeted problems through collaboration with ASEAN and the wider region. Meaningful steps to address strategic gaps can encourage other regional middle powers, such as Japan and Korea, to step up their engagement and ensure a thriving geopolitical neighbourhood through increasingly uncertain times.

Promoting shared democratic ideals and a strong desire to work for the region’s future development presents the best option for Australia’s international development policy.

Australia’s opportunity in the 21^st century

Developing the bi-lateral relationship with Timor-Leste is a demonstration of growing maturity in engaging with our Indo-Pacific neighbours. However, it remains a moral challenge for Australia given its past foreign policy failures.

If Canberra can continue to be a partner of choice for Dili through its ASEAN integration journey and on development, it will be a step towards a stronger region. This latest agreement joins a growing list of commitments to regional cooperation, including with Tuvalu, Nauru, Papua New Guinea, and Indonesia under the Albanese government.

This foreign policy agenda has demonstrated Australia’s growing maturity and commitment in its regional relationships. However the stalled Nakamal agreement also provides a timely reminder of the importance of doing so collaboratively amid the geopolitical pressures of great power competition.

Repeating the foreign policy failures and acrimony of the past would reaffirm Australia’s struggles in its relationship with Timor-Leste and regional engagement, risking its middle-power identity and isolation as the Indo-Pacific becomes  central to global affairs.

Christopher Hogan is a PhD Candidate in Geography at Flinders University. He has a keen interest in development in the Indo-Pacific, with ongoing research including projects on Pacific labour migration and family planning access in Timor-Leste. He also works as a Statistical Analyst for the Australian Bureau of Statistics.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect those of Young Australians in International Affairs. The claude.ai was used by the author for organising and structuring notes and ideas in preparing an earlier draft and for providing critical feedback.