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 That can be confirmed by scanning Australian newspapers where the Tsunami disaster has been replaced by concerns about the trials of Abu Bakar Ba'asyir and that of an Australian woman charged with drug smuggling in Bali are center stage in Australian newspapers.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.