Back to the future
It is now just over 30 years since then Prime Minister Paul Keating declared, to some frisson in the international relations community, that “no country is more important to Australia than Indonesia”.
So, what should we make of his successor several times removed, Anthony Albanese, arriving in Jakarta last week to declare somewhat grandiloquently:
“I am here in Indonesia because no relationship is more important to Australia than this one.”
That hierarchical language has changed over the years as the relationship has been hit by various squalls. So, it is certainly positive that it is now embedded in Australia’s diplomatic lexicon. Former opposition leader Peter Dutton demonstrated this at the Lowy Institute before the election when he declared Indonesia to be “sacrosanct”, even though he challenged the hierarchy by suggesting he would visit Washington before Jakarta if elected prime minister.
However, the fact that Albanese still had to paraphrase Keating after all this time says something about how the idea is still not so widely held.
Indeed, uncanny similarities are revealed by comparing Keating’s words inspired by two visits to Indonesia in 1994 with Albanese’s precedent-setting second term first overseas visit to Jakarta.
Here’s Keating talking up more economic contact:
“Three months ago, I launched the Australia Today Indonesia 94 program … Today we launch the centrepiece of the program this Trade and Investment Forum which in time may well be seen as a turning point in the relationship between our two countries”
And here’s the modern version from Albanese:
“It is no accident that I launched “Invested: Australia’s Southeast Asia Economic Strategy to 2040” here in Jakarta two years ago. This is the fastest growing region of the world in human history and Indonesia is central to that growth.”
Indeed, Keating was really pushing the envelope in the relationship with his inimitable style. But he was also taking risks. This became obvious when his 1996 security agreement between Australia and Indonesia quickly came unstuck amid the 1999 Timor tensions. Albanese seems more cautious, despite being in office during one the most stable and productive periods of bilateral diplomatic relations. This perhaps reflects some of the dashed hopes and tough lessons from the Keating period.
A contradiction lies between there being far more opportunities for bilateral cooperation these days, but Indonesia also has more potential partners.
Here’s Keating on security, declaring portentously, “the emergence of the New Order government of President Suharto … was the single most beneficial strategic development to have affected Australia and its region in the past 30 years.” Meanwhile Albanese simply says the relationship is “important for our defence and security, important for our economic future, and important for the region.”
But the caution is more marked on the prime ministerial efforts to foster more economic integration. Where Keating spruiked:
“The relationship is growing in all directions. For Australia’s part at least, it’s hard to think of any single bilateral relationship where so much is going on.”
Yet, after sundry reports, delegations, and ministerial initiatives in the years since then, it was left to Albanese to warn:
“To convert extraordinary potential into concrete progress, then all of us – government, business, civil society – need to demonstrate greater engagement and ambition.”
All for one
There is one obvious cause for the changing prime ministerial rhetoric. A contradiction lies between there being far more opportunities for bilateral cooperation these days, but Indonesia also has more potential partners as it rises the global economic league ladder. Indonesia overtook Australia by the purchasing power parity GDP measure several years ago and is now getting closer to being bigger in market terms also. This will mark a symbolic tipping point for Australia in Asia.
Indonesia’s last three presidents have embraced various formulations of the idea that the country aspires to having many friends and no enemies. And Australia has had to accommodate itself to this rhetoric being played out in three different ways over the past year.
First in security. Regardless of exactly what conversation took place between Russia and Indonesia over Russian warplanes having access to the country, Indonesia (like India) has maintained normal relations with Vladimir Putin’s Russia at a time Australian prime ministers have been stepping up their critical language targeting Moscow.
Then, in economics, the Albanese government was quick to place itself at the frontline of the support for Indonesia to join the rich country club in the Organisation of Economic Cooperation and Development last year, in effect trying to nudge Indonesia towards the Western end of the geo-economic fragmentation paradigm. However, faced with the OECD’s lengthy and bureaucratic entry requirements, Indonesia, under foreign policy activist President Prabowo Subianto, has instead first leapt into the ranks of the notionally anti-Western BRICS (Brazil, Russia, India, China and South Africa plus others) group.
Then, last week, Albanese seemed to have a swift change of mind about how to deal with Indonesia’s latest quest to use its growing economic clout to demand a place at another high table with erstwhile tough open market entry requirements in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) trade deal. Arriving in Jakarta last Thursday, the prime minister played a distinctly dead bat to Indonesian membership of the free trading CPTPP, declaring that “the way the CPTPP works is it needs to be by consensus. Countries can apply and then it is worked through as part of a process.” That’s the sort of language Australia uses to avoid being caught in the China/Taiwan campaign to join the group.
But moments after meeting Prabowo that same day, Albanese was a rules-unbound fellow traveller. The Prime Minister declared enthusiastically: “And I assure you Mr President of Australia’s support for your joining the OECD as well as your accession to the CPTPP.”
Curiously, this CPTPP support didn’t however make it into the presumably pre-prepared Joint Communique by the leaders.
Hospital passes
One of the most striking aspects of that joint statement was the particularly anodyne language about the cooperation that electrified Albanese’s first meetings in Jakarta with former president Joko Widodo in 2022 – battery supply chains and electric cars.
Back then, Widodo made an audacious bid for privileged access to Australian lithium to supplement his country’s huge reserves of nickel and thus underwrite Indonesia’s electric vehicle (EV) industry ambitions. This came to be seen as a perfect example of what Indonesians call a “powerhouse” bilateral economic relationship, where Indonesia converts Australian resources into consumer products, However, it collided with the then new Labor government ambitions for its own ambitions for reprocessing critical minerals like lithium and manufacturing batteries. Indonesia’s nickel market interventions made cooperation even more difficult.
As Lowy Institute analysts Robert Walker and Hilman Palaon have observed, critical mineral cooperation is “fast becoming central to how Indonesia imagines future economic engagement between the two countries”. But the joint statement from the leaders suggests progress is still very modest after some years of hyperbole on both sides, telling officials to “continue working together to strengthen mutually beneficial cooperation”.
One of the most striking aspects of that joint statement was the particularly anodyne language about the cooperation that electrified Albanese’s first meetings in Jakarta with former president Joko Widodo in 2022.
There was also little or no reference during this visit to the Labor-aligned industry superannuation funds playing a leading role in underwriting in some way Australian investment into Indonesia. That was a key theme of Albanese first visit in 2022, when the newly powerful prime minister, in effect, ordered the funds on a trade mission to Jakarta to start investing. As we have previously noted here, that has now been apparently sidelined as the same funds have signed on to an alternative economic diplomacy public relations initiative to woo the Trump administration instead.
And in another demonstration that Indonesia is really the price setter in this relationship, the Australian government has switched to aligning with Indonesia’s new dalliance with sovereign wealth funds. It is backing Danantara to join the global sovereign fund club and linking up with Australia’s Future Fund.
Despite these twists, it says a lot about the opportunities for more integration that the higher education breakthroughs of the past few years – epitomised by the Monash University campus in Jakarta – are rapidly being overshadowed by healthcare ventures. And so, the statement notes Australian hospital ventures in Kalimantan and Bali as a contribution to Indonesia’s health transformation agenda, which Prabowo has made his own.
Keating’s evocative August 1994 language about “the compelling logic of our geography and our economic development” continuing “to open up more and more areas for cooperation” rings truer than ever today.
But the twists and turns in that cooperation just during Albanese’s short administration underline the wisdom of former President Susilo Bambang Yudhoyono’s observation about his country’s good relationship with Iceland: “We’re so far away we have nothing in common and therefore our relationship is perfect.”
