Lowy Institute Paper 19 Australia and Indonesia CURRENT PROBLEMS, FUTURE PROSPECTS Jamie Mackie Lowy Institute Paper 19 Australia and Indonesia CURRENT PROBLEMS, FUTURE PROSPECTS Jamie Mackie First published for Lowy Institute for International Policy 2007 PO Box 102 Double Bay New South Wales 2028 Australia www.longmedia.com.au [email protected] Tel. (+61 2) 9362 8441 Lowy Institute for International Policy © 2007 All rights reserved. Without limiting the rights under copyright reserved above, no part Jamie Mackie was one of the first wave of Australians of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted in any form or by any means (including but not limited to electronic, to work in Indonesia during the 1950s. He was employed mechanical, photocopying, or recording), without the prior written permission of the as an economist in the State Planning Bureau under copyright owner. the auspices of the Colombo Plan. Since then he has been involved in teaching and learning about Indonesia Cover design by Holy Cow! Design & Advertising at the University of Melbourne, the Monash Centre of Printed and bound in Australia Typeset by Longueville Media in Esprit Book 10/13 Southeast Asian Studies, and the ANU’s Research School of Pacific and Asian Studies. After retiring in 1989 he National Library of Australia became Professor Emeritus and a Visiting Fellow in the Cataloguing-in-Publication data Indonesia Project at ANU. He was also Visiting Lecturer in the Melbourne Business School from 1996-2000. His Mackie, J. A. C. (James Austin Copland), 1924- . publications include Konfrontasi: the Indonesia-Malaysia Australia and Indonesia : current problems, future prospects. dispute 1963-1966 (1974), Problems of Indonesian inflation 1st ed. (1967), Bandung 1955: non-alignment and Afro-Asian Bibliography. solidarity (2005), The Chinese in Indonesia (editor and ISBN 9781921004308 (pbk.). part-author, 1976), Indonesia: Australian perspectives (co- editor and part-author, 1981) and Balanced development: 1. Terrorism - Australia. 2. Terrorism - Indonesia. 3. National security - Australia. 4. National security - Indonesia. 5. Australia - Foreign relations - Indonesia. 6. Indonesia East Java under the New Order (co-editor and part-author, - Foreign relations - Australia. I. Lowy Institute for International Policy. II. Title. 1992) as well as various articles. (Series : Lowy Institute paper ; no. 20). 327.940598 Executive summary Australia’s relations with Indonesia have fluctuated sharply from time to time since Indonesia declared its independence in August 1945. They reached a high peak of cordiality and optimism during the Indonesian- Dutch struggle over independence from 1945-59 and again in the boom years of the early 1990s, a time of unprecedented economic growth which saw the first big surge in Australian investment into Indonesia. The close personal relationship that developed between Prime Minister Paul Keating and President Suharto also contributed greatly to that rapport. But acute political tensions developed between the two countries in 1999 over Australia’s part in East Timor’s struggle for independence, soon after the East Asian ‘financial meltdown’ of 1997-8 which had led to a collapse in Australian investment in Indonesia (apart from the mining sector) and a shift in our foreign capital flows towards China. Australian commercial interest has waned since then, but could again be on the brink of reviving now that Indonesia is returning to its earlier level of economic momentum. Relations between the two countries remained chilly in the aftermath of our East Timor involvement, with new tensions developing over Muslim terrorists and the global ‘war on terror’ until a sharp turn for the better came in 2004 with the election of Susilo Bambang Yudhoyono (SBY) as president and a prompt, generous Australian response to the tsunami disaster in Aceh. Then a new crisis arose in early 2006 over Australia’s acceptance of Papuan asylum seekers. This created acute vi vii AUSTRALIA AND INDONESIA EXECUTIVE SUMMARY tensions that eased only when the Treaty of Lombok was negotiated in the foreseeable future. (Problems arising from environmental ‘wild in November, bringing the relationship back towards a more normal card’ scenarios may be another matter.) The reasons why Indonesia footing. Whether the next few years will bring an improvement in the matters to us and why good relations with Jakarta are so important relationship or a recurrence of tensions — over, for instance, problems to have little to do with such threats or security considerations but are do with Papua, or the global ‘war on terror’, or local Islamic extremists, primarily political in nature. or environmental problems like forest fires — is simply unforeseeable The dominant political imperative we must keep in mind is that at present. we need to be able to count on Indonesia’s cooperation with us, not This past pattern of recurrent volatility in the relationship is bound opposition, in matters of regional international politics and also on to influence any assessments we may try to make about how it will problems arising from our contiguity in the Timor-Arafura Sea area, develop in the future. There will undoubtedly be further disagreements such as fisheries, quarantine, border protection, the maritime boundary and tensions between us from time to time; so the main concern of the etc. If Indonesia were to adopt an antagonistic attitude towards us on governments in Canberra and Jakarta must be to ensure that these can either front, its opposition could give rise to serious difficulties for us. be handled in such a way as to keep them within bounds and avoid Australia’s most vital national interests with reference to Indonesia dangerous rifts. may be roughly summarised along the following lines. Australian national interests regarding Indonesia • We must of course take care to avoid sliding into military conflict with or serious antagonism towards Indonesia, except The question of what Australia’s national interests really are, and in situations where the most compelling imperatives apply. We how they can best be advanced, has rarely been closely analysed in must also seek to ensure its cooperation with us on issues of Australia. Because there is no one over-riding national interest that regional international politics as well as those arising from our imposes clear policy guidelines upon us (apart from the obvious need to contiguity, since the alternatives are likely to prove extremely avoid finding ourselves in open conflict with such a large and regionally costly in broader political as well as financial terms. In particular, influential neighbour) and in fact a diversity of policy objectives that we need to guard against any recurrence of the tensions that have we are constantly seeking to achieve in our dealings with Jakarta, the arisen between us in the past over East Timor and Papua, which Australian Government will always have to strike a balance between have at times had very damaging effects on the relationship them. We need a better framework for public understanding of the basis between us by giving rise to deep-seated suspicions throughout upon which the relevant policy decisions have to be made, as well as Indonesia about the motivations behind our policies, actions and how they bear upon on our various national interests. attitudes there. They have also had adverse effects on Australian Much Australian thinking about Indonesia is dominated by inchoate attitudes to Indonesia generally. fears about the possibility of a future military attack by Indonesian military forces or of an infiltration into Australia by Muslim terrorists • We have a basic national interest in assisting Indonesia to or a flood of refugees from Papua, or elsewhere in Indonesia. These fears become a stable, prosperous and steadily developing nation, since underlie many of the more erroneous ideas in circulation in Australia an impoverished, stagnant or unstable Indonesia could result in about the security aspect of our national interests vis-à-vis Indonesia. Yet severe problems for us. We might wish to see (and help create) there is little likelihood that any of these things will pose serious threats a well-functioning system of representative government there, viii ix AUSTRALIA AND INDONESIA EXECUTIVE SUMMARY along with strong judicial structures, the rule of law, abolition Islam and the future state of the relationship of corrupt practices and adequate property rights and civil and political liberties, not least because these are goals that most No other country has a larger Muslim population than Indonesia and Indonesians also want to achieve. But whether these can be the future development of Islam there could have a significant influence regarded as vital national interests or merely preferred outcomes on the course of its relations with Australia, directly or indirectly. So and how they should best be achieved are endlessly debatable long as the ‘war on terror’ focusing on Al Qaeda and its followers questions. continues, most notably Jema’ah Islamiyah, and intense turmoil persists in the Middle East, the Islamic heartland, especially in Palestine and • It is also in our national interest to uphold the maintenance Israel, the sympathies of Indonesians and Australians are likely to be of a unified Indonesia, provided it is in accordance with the pulled constantly in opposing directions. That does not necessarily wishes of the majority of Indonesians