Sour times with a big neighbour

The Australian
Wednesday, September 19, 2012
Alan Oxley

Sour times with a big neighbour

THE sooner the federal government produces the Asian Century paper the better. On the eve of its release, Australia's relations with Indonesia are souring, and all because of our actions. The relationship needs urgent attention.

If the report analyses developments in the Asian region correctly, it will point out Australia is facing an entirely new circumstance; not a change in the regional power balance, nor the rise of a new Asian power. These have been experienced before. For the first time in its history Australia will have a large and increasingly powerful, close Asian neighbour -- Indonesia.

Australians have unknowingly enjoyed the benefits of being an island state without large powers as close neighbours. That is about to change.

Australians have recently been reminded that Indonesia, just as close a neighbour as New Zealand and Papa New Guinea, now has a population of 240 million. It has a wealthy middle class that is probably bigger than our total population. Its economy has grown an average of 6 per cent for the past seven years and is likely to continue to grow. The major driver is rising consumption in Indonesia, not Chinese growth which drives most markets in Asia.

Indonesia is now our biggest beef and grain market. It is a natural market for other major exports such as education and tourism. And as Indonesia grows, it will offer important opportunities for Australian construction and infrastructure industries.

Of perhaps greater significance, its military capacity will expand as the economy and its revenue base increase.

Australia is going to have to come terms with this fact -- Indonesians are not terribly interested in Australia. It is we who will have to build and foster an amicable relationship.

It is not that Indonesia thinks less of Australia than other countries, it simply has "large country syndrome". It is a nation with a very strong sense of self.

It has temples and monuments dating back 1500 years and its culture carries values and concepts, symbols and myths which root from the great, ancient Indian civilisations. Islam has been a significant religion in the area for 800 years.

Anybody who leaves an impression with an Indonesian that it is a lesser country in any respect is asking for it.

Australia has recently created severe offence in Indonesia. The relationship is in danger of souring.

First, there was the ban on exports of live cattle. Australia resumed the trade, but the unilateral action in blocking the exports of an important food product offended Indonesian sensibilities. Indonesian agricultural officials are primed to retaliate. They are happy to limit imports, even if it increases prices.

Second, Canberra disregarded both Indonesia's request the government defer its bill to ban imports of illegal timber and its polite warning it will challenge the measure in the World Trade Organisation if enacted.

Indonesia has taken significant action to reduce illegal logging. Little of the product gets into Australia and Jakarta pointed out that even the EU went to the trouble to sit down with Indonesian officials to work out agreed measures to enable timber exporters to demonstrate their product is not illegal. Australia made no such effort.

The Indonesians note as well the ban is being pushed by an Australia-based paper company which unsuccessfully sought anti-dumping duties on paper imports from Indonesia. Australian officials have made clear the illegal logging bill will be used to regulate imports of paper.

As Jakarta sees it, Canberra is co-operating with protectionists and Greens to impose import controls that breach international trade law. Incredulously, Australia at the same time is seeking a bilateral trade agreement and co-operation to deal with the boatpeople transiting Indonesia.

There is more. Recently, ABC's 7.30 program ran a story evidently stimulated by Australian anti-Indonesian activists that an Australian-trained anti-terrorist unit killed a Papuan independence activist. Bob Carr was quoted as supporting an inquiry, giving credence to the activists' claims. This is tricky territory.

An official of the West Papua provincial government observed the Papua independence movement was violent. He was giving a little reality lesson about Indonesia. Subsequently a ranking member of a security committee of the Indonesian parliament said he didn't notice Australian politicians complaining when security forces killed Islamic militants.

Ever since the tragic killing of the Australian journalists in Balibo 35 years ago, local civil rights activists have concentrated on Indonesia. Yet how often do our activists criticise Singapore for controlling its justice system and Malaysia for its policies that discriminate in favour of Malays? Where is the commendation for Indonesia's dramatic, successful transition to democracy?

It is fashion in European diplomacy these days to attempt to dictate to developing countries on human rights, social and environmental standards. Aid is regularly conditioned to advance those interests. That's all very well for Europe. It is remote from those countries.

We are not remote and Canberra has started to emulate this European model. That is why there is an illegal logging bill. Not only that, we are veritably the green mouse that roared, as senator Joe Ludwig declared the ban would contribute to global efforts to halt illegal logging. Nonsense. Australia's share of global timber imports is tiny. The only effect is likely to be lasting resentment and trade retaliation.

Australia needs a successful and co-operative relationship with Indonesia. We cannot achieve that using European perspectives. Only a highly pragmatic, sympathetic and rational approach will deliver the sort of relationship we need as Indonesia emerges as a large, economy and power in Southeast Asia.

That is the major political challenge for Australia in the Asian Century.

Alan Oxley, principal of ITS Global studied Asian history and politics at Monash University and is a former Australian ambassador to the GATT, predecessor of the WTO.

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