Will bite if provoked

Photo by Phil Deschamp

New posts this week: what the budget means to Indo-Aus relations, asymmetrical committments to the relationship, and good times to be had on an Indonesian exchange

Please enjoy reading these new posts:

"Abbott spurning Indonesia's invite confirms relationship trouble," by Tim Lindsey, May 2014.

"First look at the Budget: DFAT Aid and defence," by Alex Oliver, May 2014.

"Grab an exchange of pace," by Iona Main, May 2014.

"Australia needs Indonesia more than it needs us," by Ross Tapsell, May 2014.

And more must reads:

What were the real reasons PM Tony Abbott backed out of a BBQ over at our neighbours' palace?

Local government doesn't always have local's best interests at heart. If you haven't been to Bangka yet, go now before mining makes its irreversible mark.

Abbott spurning Indonesia’s invite confirms relationship troubles

By Tim Lindsey, University of Melbourne

Australian prime minister Tony Abbott’s decision not to accept Indonesian president Susilo Bambang Yudhoyono’s invitation to meet at the Open Government Partnership forum Yudhoyono is chairing in Bali this week leaves the bilateral relationship where it has been since November – stuck.

While the Australian government claims all is well between Canberra and Jakarta, the reality is different. Under Yudhoyono, Australia enjoyed extraordinary access for years. Now it is on the outer.

The relationship has not been severed but it is officially downgraded. Australia is regularly caned in the Indonesia media in a way that hasn’t happened since the East Timor crisis in 1999. Access to senior politicians is far more difficult and there are plenty of cases of bureaucrats making things hard for Australians.

Close co-operation between police and military in both countries was a feature of the relationship in the post-Soeharto era. It is now, at best, much trickier. At worst, it is on ice.

Boats policy the sticking point

To a great extent the impasse reflects fundamental contradictions in Coalition policy on Indonesia. “More Jakarta, less Geneva”, Abbott promised before his election, reiterating the fundamental importance of Indonesia to Australia. Every prime minister from Paul Keating onwards has now expressed this view.

Unfortunately, Abbott’s promise has proved irreconcilable with the Coalition’s decision to go it alone on asylum seeker policy. Australia would do whatever it wanted to “stop the boats”, regardless of Indonesian opinion. And Indonesia could take it or leave it.

Indonesia clearly sees people smuggling as a regional problem that needs a multilateral solution. Its repeated warnings against unilateral action have, however, been ignored.

For a long time, Yudhoyono contained Indonesian frustration with Australia on boats. Often described in Canberra as “fundamentally decent” and “our best friend” in southeast Asia, he has been more enthusiastic about Australia than any previous Indonesian leader.

Unfortunately, Abbott’s handling of Edward Snowden’s revelations that Australian intelligence had tapped the phones of Yudhoyono, his wife and inner circle ended that. Yudhoyono is notorious in Indonesia for sensitivity on any issue involving his family.

What should have happened is not rocket science. Yudhoyono would have expected a private call from Abbott in the first 48 hours before any public statements were made in Australia. The call didn’t come in time. The Australian government decided instead to tell our parliament and media that Indonesia would again have to take it or leave it. That provoked Jakarta to angrily withdraw its ambassador, formally downgrade the relationship and suspend military, intelligence and people smuggling co-operation.

While Yudhoyono may now be more sanguine about the wiretaps, these decisions cannot be reversed until Australia complies with a “roadmap” set by Jakarta and since agreed by Canberra. This is complex and involves developing new protocols for co-operation – including on intelligence – that the president himself must approve.

US Secretary of State John Kerry visited Jakarta in February to sign bilateral agreements on human rights and the environment. The Snowden leaks seem no longer a major problem for the US relationship with Indonesia. Australia, however, is still negotiating – and just lost another chance to get things back on track.

Onus on Australia to repair ties

On July 9, Indonesia will hold its presidential election. The successor to Yudhoyono (constitutionally prohibited from a third term) will be sworn in on October 20. On current polling, the likely winner will be the popular governor of Jakarta, Joko “Jokowi” Widodo.

Regarded as a competent and principled administrator, Jokowi has a reputation for good governance – unlike his nearest rival, the aggressively nationalist Prabowo Subianto. A cashiered former general and former son-in-law of Soeharto, Prabowo has been denied a US visa because of human rights abuses, including admitted torture of students in the late 1990s.

Jokowi has little experience of foreign policy. His party leader, former president Megawati Sukarnoputri, was not an easy partner for Australia during her time in the palace and will be influential if Jokowi wins. Jokowi’s election would nonetheless offer Australia a chance to reset the bilateral relationship – which will be much harder if Prabowo wins.

Megaphone diplomacy must be avoided, and Australia should take the first step, but if handled sensitively, a reset is do-able. The problem is that any defrosting is unlikely to be sustainable for long if the Coalition remains inflexible on its boats policy.

It is symptomatic of the fundamental contradictions in Australia’s policy on Indonesia that the reason Abbott pulled out of the Bali meeting is, reportedly, because Australian authorities were about to intercept another boat. If so, and if this involves returning asylum seekers in orange lifeboats, that will add to the tensions with Indonesia. Indonesians have repeatedly indicated displeasure with this approach.

Put simply, we cannot have it both ways. So long as Australia’s policy on boats remains unilateral, it will be very difficult to restore the relationship with Indonesia to its former state. Just as things start warming up, something will happen: another boat will appear or the Australian navy will find itself straying into Indonesian waters again.

Regional power on the rise

Indonesia is rising, and knows it. For all its problems, ratings agencies forecast it will be the seventh largest economy in the world by 2030 and fourth by 2050. It has 250 million people and a middle class growing by around nine million every year.

Indonesia has the world’s largest Muslim population and Muslim leaders played a key role in brokering Indonesia’s successful transition to stable multi-party liberal democracy. It is the superpower of the Association of South East Asian Nations (ASEAN) and the strategic key to security in Southeast Asia. How important are we in the region by comparison?

No regional arrangement on asylum seekers can be effective unless Indonesia leads it, but Australia seem to be drifting away from its most important international relationship. Is it sensible for Australia to keep trying to go it alone?

Tim Lindsey is chair of the Australia Indonesia Institute in DFAT, but this article is based entirely on his personal views. Tim;s article originally appeared 7 May in The Conversation.

First look at the Budget: DFAT, aid and defence

By Alex Oliver

So here I am at the budget lockup, deep in the bowels of Treasury, with the idea of getting a much-anticipated preview of the Foreign Affairs and Trade budget for this, the Coalition Government's first federal budget. Only, there is no Portfolio Budget Statement for the Foreign Affairs and Trade portfolio. It hasn't arrived (it's on its way; according to the budget official on duty, there was a last-minute hitch. These things happen, she says).
So to give you an overview of the foreign affairs and trade budget, there are just the overall budget papers themselves, which give a high-level summary.  Here are the highlights:

• The aid budget has been dramatically shaved. We knew this was coming, and there will be more on this later in the week from development experts, but the top line is that Government will save $7.6 billion over five years 'by maintaining official development assistance (ODA) at its nominal 2013-14 level of $5.0 billion in each of 2014-15 and 2015-16'. From then, it will be pegged to CPI, as foreshadowed by the Minister early this year. This will cut particularly deeply in 2017-18, where the savings will amount to more than $3.5 billion. These are deeper cuts than previously  thought.
• As expected, the Australia Network, Australia's international broadcasting service to the region, has been axed, saving $196.8 million (or around $22-23 million a year for the remainder of the contract made by the previous government). There goes a significant contributor to Australia's voice to the region, leaving Radio Australia to struggle on manfully, shouldering the burden of providing a broadcasting service and source of independent news in a region severely starved of it (and that means the Pacific, including some of the world's most impoverished nations, and not just the Chinese cash-box to our north). It is not, according to the Government, a 'cost effective vehicle for advancing Australia's broad and enduring interests in the Indo-Pacific region'. It remains to be seen what the Government thinks will replace it as a vehicle for Australia's soft power, for engaging with the diverse populations in our region and building enduring relationships.
• The Department of Foreign Affairs and Trade will be subjected to even further efficiency demands. Having endured over 20 years the euphemistically-named efficiency 'dividends', there will be further savings of $397 million over four years, flowing from the absorption of AusAID into DFAT and finding more efficiencies, including in the administration of Australian aid. 
• The Australian embassy in Baghdad will be co-located with the British Embassy (presumably delivering considerable savings, though the overall commitment to Iraq is $35.6 million in this budget).
• There are some sundry small measures for tourism and Australia Week in China, amounting to around $12 million.
• On the plus side, there is a $748 million replenishment of the World Bank's International Development Association (IDA), which provides interest-free credit and grants for programs that boost economic growth and alleviate poverty. Some of it is a loan component (and so has no impact on the fiscal balance). 

Because of the AusAID integration into DFAT and the addition of tourism and climate change functions and responsibilities, it's hard to divine the exact impact of this budget on departmental fortunes. In terms of the cost of running the department (taking out the big-ticket administered expenses such as aid and the Australia Network), before the merger the combined appropriations from government for both organisations was around $1.34 billion.

This year, the amount is around the same. What the budget papers don't state, though, are the measures already introduced in December's mid-year economic forecasts, which saw commitments to the Foreign Minister's signature 'New Colombo Plan' ($100 million over five years) and the scrapping of the proposed new post in Senegal. What is stated in the budget papers is the overall staff reduction for DFAT, which amounts to a substantial 550 positions, presumably across both the foreign affairs and aid functions. It is hard to imagine the impact of a 10% staff reduction on a department so recently disrupted by a major merger and which has made only tentative steps towards rebuilding itself after decades of under-resourcing and bipartisan inattention.
Now to defence. Once again, this is one for the experts later this week, but here's a brief preview:

• The Treasurer has consolidated the commitment foreshadowed by the Defence Minister last year to lift defence spending to the 'magic' 2% of GDP 'within a decade.' Last year it was 1.6%. This year's appropriation of $26.8 billion is a 5% increase on 2013-14, around the same proportion (1.64%) of GDP and 6.5% of general government expenditure. Over the forward estimates, this will lift to $32.6 billion and around 6.8% of government expenditure. The Minister's press release commits the government to 'lay down a credible path to achieving our target following completion of the 2015 (Defence) White Paper.'
• $191.8 million has been committed over four years to 're-establish the Australian Defence Force Gap Year Programme', delivering on a Government election commitment.
• Defence Materiel has not been re-integrated into Defence (contrary to the Audit Commission recommendation).
• There is $1.4 billion over four years to improve the indexation of payments under the Defence Forces Retirement Benefits Fund and super schemes. Again, delivering on the election promise. There will also be better CPI and tax treatment of benefits. New members of the defence forces will join a different super scheme, reducing the Government's super liability by $126 billion by 2050.
• Finally, the Audit Commission's call for efficiency gains and defence bureaucracy reductions have been partially heeded for Defence: $1.2 billion over four years in efficiency gains, to be reinvested in Defence capability and so with no impact on overall funding. There will be cuts of 1200 public service positions and some changes to living allowances and benefits. This is nothing like the return to Canberra staffing levels of 1998 sought by the Audit Commission, but cuts nonetheless.

The Treasurer's budget speech outlines many of the budget and agency cuts which have been discussed in the last few weeks. Seventy government bodies are to be axed and the public service will be cut by 16,500 positions, as already announced. However, while the Audit Commission recommended abolishing Austrade and EFIC, this is not in the budget. Austrade lives another day, having absorbed responsibility for tourism in October 2013. EFIC will be given $200 million in capital for export assistance to small and medium-sized businesses.

For DFAT, this is a difficult and probably disappointing budget. The argument that Australia's diplomatic service has been chronically under-resourced for several decades has now reached a level of received wisdom. It has been cited by the previous prime minister, the Asian Century White Paper, the former DFAT secretary Dennis Richardson, the current foreign minister, and has been integrated into her party's formal foreign policy, which noted concerns about 'Australia's relatively low diplomatic presence around the world' and promised to review diplomatic resources and put 'in place a long-term policy to ensure Australia's global diplomatic network is consistent with our interests.'
It might have been too much to expect of the new foreign minister to deliver this year on her 'plan to expand our diplomatic footprint overseas' in this austere, deficit-reducing, bottom-line repairing budget.

However, Australia urgently needs a diplomatic service and an overseas network to meet the demands of an international environment which is undergoing rapid and profound transformations. Our international engagement increasingly fuels our prosperity: exports account for around one fifth of our GDP, one in five jobs is trade-related, Australian investment abroad has reached around $1.3 trillion, foreign investment has doubled over the five years to 2012 to more than $US231 billion, and the Australian dollar was the world's 5th most traded currency last year.

This is a government which has committed (as the Foreign Affairs and Trade Ministers reiterate in their budget release today) to 'strengthen our relationships with key partners and refocus foreign policy on the advancement of Australia's core strategic and economic interests'. It came to government with a promise to refocus Australia's diplomacy on economic diplomacy.  

To do this, Australia's foreign affairs capability and its overseas network need to grow so it can deliver on the Government's ambitious promises, and follow up on its important initiatives in deepening engagement with our neighbours and trading partners. But with just 95 embassies and consulates in 77 nations to service Australia's needs spanning 200-plus nations of the world — far short of the OECD average of around 130 posts — DFAT, as currently resourced, will struggle with the task. It has only one post in booming inland China. It has no post in eastern Indonesia, the location of Indonesia's second largest city. It is under-represented in Africa and Central Asia despite our significant investment interests there and abundant mining opportunities. Add to that the massive consular drain on the Department from the ever-increasing numbers of Australians travelling overseas every year, and the urgency for rebuilding the overseas network becomes even clearer.

Politicians on both sides of Parliament have acknowledged this 'diplomatic deficit' since we first coined the term in 2009.  After five years of talk, it's time to start addressing it.

This article originally appeared  13 May in the Lowy Interpreter.

Grab an exchange of pace

By Iona Main

Amid the cries of “turn back the boats” and “spying scandal” shouted out at any mention of Indonesia last year, I found myself one of a small cohort of Australian students studying there on exchange.

I was persuaded by my university lecturer to turn my back on the temptations of college life in the US, and the glamorous campuses of Britain and Europe. I ignored friends’ shrieks of “You’re going where on exchange?” and prepared to knuckle down for what I hoped would at least be a worthwhile learning experience.

Ten months later I emerged from Indonesia having spent twice as long there as planned, and with more stories than could fill any shabby travel blog. I enjoyed the most ridiculous and incredible year of my life and wondered why on earth I ever thought twice.

Indonesia is our nearest neighbour, a country tipped to enter the world’s top 10 economies in the next 15 years, with a population 10 times our own and an economy still in its early steps on to the global stage.

I don’t pretend my exchange to Indonesia was all smooth sailing, but it is a place where the right attitude will get you everywhere. Dreams I didn’t know I had were achieved as I had my photo plastered on the side of a bus, and pretended to be Ke$ha in a sound bite for a Yogyakarta radio station. I was lucky enough to have an article published in the Jakarta Post, the country’s main English-language newspaper. Once-in-a-lifetime experiences became day-to-day, but the novelty is still yet to wear off. The challenges of navigating Indonesian bureaucracy and enough “hello miss” to last a lifetime pale in comparison to the wealth of weird and wonderful experiences I have gained.

I didn’t realise that everyone I met, even briefly, would remember my name and always stop for a chat, often oblivious to me racking my brains for who they were or where I’d met them in the head-spinning humidity and Kretek cigarette smoky air. I discovered space could always be made for one more on a packed table at the campus canteen — especially for an exotic Aussie. Over spicy 70c lotek salads we complained about exams and made plans for the weekend.

My Australian housemates and I were delighted to be made “celebrity guest judges” at a neighbourhood games day and to be invited to weddings and religious ceremonies (where I wore a hijab for the first and possibly last time). I became a valued contributor to tutorial discussions — not for the standard of my poorly worded comments in Indonesian but because my lecturers and classmates were always so keen to hear the thoughts of the foreigner in the class.

I was impressed by the standard of knowledge among Indonesian students, including that many of them possessed a better understanding of Australian foreign policy than a lot of Australians, myself included. And they thought they were the ones learning something.

Any Australian student with a modest bank balance can have an exchange in Indonesia filled with tropical holidays, nights out and delicious meals without a second thought for the budget, a far cry from baked beans on toast and $15 beers elsewhere in the world.

While the traditional exchange destinations remain as appealing as ever, Indonesia is rocketing forwards at an incredible and exciting pace. Our northern neighbour offers opportunities and experiences unique to both the country and the visitor, and at the very least makes for some pretty incredible Instagrams. An exchange in Indonesia may strike you as a crazy idea, but anyone brave enough to have taken the plunge can tell you that you’ll be in for the ride of your life.

Iona Main is in her final year of an arts/commerce degree at the University of Sydney. Her article originally appeared 7 May in The Australian.