Sunday 24 Feb 2019 | 08:28 | SYDNEY
Sunday 24 Feb 2019 | 08:28 | SYDNEY

Dealing with Indonesia in 2050



19 February 2015 10:10

Mike Callaghan writes that, according to a new PwC study, 'Indonesia will likely be the fourth-largest economy in 2050'. By that time, Australia will rank 28th. How would a diplomatic dispute, such as the one occurring now over the impending execution of two Australians, play out if Australia was by far the weaker power?

It's far from an unthinkable scenario. In fact right now, Australia ranks 19th on PwC's same scale, with Indonesia in ninth place.

That Indonesia is already a larger economy than Australia may itself surprise many Australians, who tend not to think of Indonesia as an equal or even as a normal country. When Indonesia impinges on the Australian consciousness at all, it is either as a source of trouble (drugs cases, beef exports, boat arrivals) or as a charity case which ought to be grateful to us (Indonesia is budgeted to get $605 million in Australian aid in 2014/15). 

Given Indonesia's economic weight, that attitude already looks out of step with reality. But it is probably sustained by the fact that Indonesia remains much poorer than Australia in per-head-of-population terms, and also because the Indonesian state, including its military forces and foreign-policy apparatus, is so weak.

If the Indonesian state is not reformed, then even a much larger 2050-era Indonesia would punch well below its weight in diplomatic and strategic terms. In fact, without a more capable state sector that provides better health care, education, economic regulation, and infrastructure, Indonesia may not even achieve the projections made by PwC.

But Indonesia has come a long way already, so we would be wise to bet that it can overcome such challenges. That means, instead of dealing with an economy more than twice Australia's size, as we do now, we could be dealing in 2050 with an economy roughly four times as large as ours, and overall the fourth-largest in the world behind the China, India and the US (again, using PwC's scale).

That's a very different world to the one Australia is used to living in; we would have a bona fide world power on our doorstep.

Yesterday Prime Minister Abbott unwisely suggested that Andrew Chan and Myuran Sukumaran ought to be shown mercy as a form of reciprocity, given Australia's generous aid in the aftermath of the 2004 Boxing Day Tsunami. Presumably this was a piece of political theatre designed for domestic consumption, because as could easily have been predicted, it has gone down badly in Jakarta. In thus playing to a domestic audience with little apparent regard for how Jakarta might respond, Abbott is echoing his Government's approach to 'stopping the boats', an approach whose confident nationalism was first defined by John Howard's boast that 'we will decide who comes to this country, and the circumstances in which they come.' It was meant to suggest to Australians that the Government would have complete control over Australia's borders, but that has never been accurate; Australia under Labor and Coalition governments has had to cooperate intensively with Indonesia to implement its policy.

As Indonesia grows, it is becoming harder for Australia to maintain the pretense of control in our relations with Jakarta. The 'we will decide' era is over. Jakarta won't necessarily be hostile to Canberra's interests in future, but when the Indonesian government oversees the fourth-largest economy in the world, it will be much harder to sway, and it will have many more tools at its disposal to influence and constrain Australia's foreign policy choices. What of our confident nationalism then?

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