Australia and Indonesia: Finally, a new era?

Australia and Indonesia: Finally, a new era?

Jeremy Webb, Brisbane

Not many Australians will realize how significant President
Susilo Bambang Yudhoyono's agreement to hold a summit with John
Howard in Australia is. Few would be aware that apart from
President Wahid's fleeting visit in 2001 no Indonesia President
has made an official visit to Australia since 1975. Soeharto's
visit in 1975 was equally brief and was the first of an
Indonesian President since independence.

This gesture from Susilo follows Australian Prime Minister
John Howard's extraordinary billion dollar aid package to
Indonesia in the wake of the Tusnami disaster. There seems little
doubt therefore that the two leaders are setting the scene at the
Australian summit to try and engineer a fundamental upgrade of
the bilateral relationship.

The magnitude of the task should not be underestimated. That
can be confirmed by scanning Australian newspapers where the
Tsunami disaster has been replaced by concerns about the trials
of Abu Bakar Ba'asyir and that of an Australian woman charged
with drug smuggling in Bali are center stage in Australian
newspapers.

These issues are, of course, but several in a long procession
of bilateral disputes which have frustrated the forging of closer
economic and security linkages between Australia and Indonesia.
To make matters more difficult the economic relationship has yet
to take off.

But there are grounds for optimism that the stop start
diplomacy which has characterized the bilateral relationship
since Indonesia's independence can be put on new and solid
foundations. It would seem East Timor -- by far the most
troublesome bilateral issue over the past 30 years -- has at last
been removed from the friction list.

The defense and security relationship is however, complex.
Moore than any other issue in the near term they could make or
break the process of rejuvenating the bilateral relationship.
Former Australian Prime Minister Paul Keating's creation of a
bilateral security treaty with Indonesia illustrated the folly of
moving too quickly when other parts of the relationship were
insufficiently stabilized.

Equally John Howard' more recent intemperate launch of his
Asian pre-emptive strike policy is the sort of issue that could
derail the relationship. The key here will be for the two leaders
to initiate progressive and carefully measured steps to increase
cooperation on a wide front in such areas as counter-terrorism
with the promise of a more formal arrangement down the track.

This process has already started. Australian Police assistance
in investigation of the Bali bombing is a case in point. Prime
Minister Howard's carefully crafted bilateral delivery system for
the $1 billion aid package to Tsunami victims also fits into this
mould. It forges an ongoing program of cooperation at multiple
levels -- which has already included the military -- with a
substantial Australian presence on the ground.

On the economic side the problem has been a stagnating
bilateral trade relationship. Between 1998 and 2001 total exports
and imports actually fell. Since then however growth has returned
with a 15 percent increase between 2002 to 2003 and the $5
billion plus total in 2004 also represents a climb of over 15
percent. That has been backed by higher economic growth in
Indonesia and the prospect under the economically skilled
Susilo, of moving Indonesia's economy into self sustaining
takeoff. Economic interdependence in the form of substantive and
growing trade and investment will be an essential glue to the
bilateral relationship needed to underpin bilateral defense and
security cooperation.

Progress on the economic front will be helped when, as
expected, Asean and Australia complete negotiations on a free
trade agreement . That is possible now that Malaysia's former
Prime Minister Mahathir's effective veto on closening Australian-
Asean relations has been dropped with his departure from office.
For his part, President Susilo has been seen as sympathetic to
creating closer Australian-Asean ties. (No doubt Howard will also
be keen to advocate a place for Australian at ASEAN summits where
in the past only three dialogue partners -- China, Japan and
Korea have been invited).

On the personal level, in Australian eyes President Susilo is
seen as qualitatively different to his more recent presidential
predecessors. The latter incumbents failed to make inroads on
crucial economic policy issues Susilo's credentials are seen as
ideal for this job. He is well traveled, and has held a number of
economic portfolios. Importantly for Australia He speaks English
well, has visited Australia on a number of occasions and has had
a son studying in Australia. And finally, by all reports, he gets
on well with John Howard.

The Australian press have already noted that Susilo has begun
to deliver on the economic front -- in the form of the sizeable
reductions to the substantial subsidies on gasoline. The skill
need to achieve this is, however, not fully recognised. It is a
formidable feat which Susilo's predecessors were unable to
achieve..

Given this favorable environment Susilo and Howard have got
their summit timing right. But they will need to ensure that the
bilateral building block priorities are observed. Building the
economic relationship should take priority. For this task there
is confidence that both leaders are the right people at the right
time. By bringing his trade minister Hasan Wirayuda, Susilo
appears to be sending a strong signal that he believes this.

The writer is president of the Australian Institute of
International Affairs in Queensland, and as a former diplomat has
served in Indonesia.