Monday, August 6, 2012

Indonesia and Australia Should Go Hand in Hand Into Asian Century

The Asian Century, driven by the unprecedented transfer of wealth and influence from the West to the East, offers opportunities to Indonesia and Australia to enhance their cooperation to their mutual advantage. This seminal change in the global balance is driven by the spectacular rise of China, in particular, but also by the rise of India, reinforced by the developed economies of Japan, South Korea and Australia, in addition to the increasing potential of Indonesia and Vietnam.

Asia Pacific is where the world’s major power relationships closely intersect. It is where the template for the US-China relationship will largely be shaped. It is the crucible in which the interrelationships on Asian issues involving China, the United States, Japan, India, Russia, South Korea, Vietnam, Australia, Indonesia and the other main Asean economies will be worked out. In the 21st Asian Century, Australia needs to change its national psyche. It needs to focus less on its 20th century links with Europe and the United States and more on its neighbors in the region.

Regional countries need to determine a current and appropriate balance in their relations with the United States and China. While Australia is an ally of the United States and has some different values than China, it should welcome the rise of China and oppose policies based on its “containment.” There is no intrinsic reason why China, under its system of authoritarian capitalism, in which it will seek to overcome the economic and political problems it faces, cannot rise peacefully, unless provoked. It is for China to decide its policies and the pace of change without advice from other countries, including Australia. As former Prime Minister and Foreign Minister Kevin Rudd said last month in Chicago, “China will continue to entrench its credentials as a global power.”

All countries in the Asian region, and the United States and China, have a shared interest in continuing economic growth, peace and stability. Attitudes toward China, especially in the lead-up to the US presidential election, could become a self-fulfilling prophesy. China will resist American attempts, some unfortunately echoed by Australia, to shape attitudes about China, and other regional countries.

Australia should not be afraid of change. It should respond to it by looking ahead. The emphasis must be on cooperation. Activities that undermine that and could lead to a new Cold War in the Asia-Pacific region would be disastrous.

Indonesia and Australia are members of the G20. They are both at the top table dealing with global financial and economic issues. The G20 also provides opportunities to discuss the corridors of political and strategic issues.

What is sad is how little these two countries know of each other. Australia has a long history of involvement in Asia and specifically Indonesia. It supported Indonesian independence in 1947 and the Colombo plan. This has been obscured by issues like the deaths of five Australian TV journalists in Balibo in 1975, allegedly at the hands of Indonesian special forces, Indonesia’s invasion of East Timor, arrests of Australian drug traffickers, and Australia’s attitude, regrettably exaggerated for domestic political reasons, toward refugees and asylum seekers.

Many Australians are not aware of the changes in Indonesia in recent years. Democracy is now virtually institutionalized in Indonesia. Both countries have agreed on bilateral annual head of government-level meetings, the most recent of which was held in Darwin last month. There are also annual 2+2 meetings of the ministers of foreign affairs and defense from both countries.

The growth in the two economies also provides opportunities. Indonesian economic growth is at 6.3 percent. Although inflation was 4.45 percent in May, it is still within Bank Indonesia’s target. Although some political initiatives could deter future economic growth, capital inflows are continuing. For Indonesia to reach higher but inclusive growth, the government will need to reduce subsidies and increase spending on poverty reduction.

The crisis in the European Union, the weak recovery of the United States and the ongoing weakness in Japan will affect the Indonesian and Australian economies but both are relatively sound. In Indonesia, private consumption accounts for 59 percent of GDP, which will help reduce the impact of a depressed global economy.

The IMF lists Australia’s economy, in nominal terms, as the world’s 13th largest ($1.488 trillion) while Indonesia is 16th ($846 billion). Indonesia is expected to be among the Top 10 world economies by 2030 and in the top five by 2040. Unfortunately, public attitudes toward Indonesia in Australia are out of date, as indicated in recent Lowy Institute surveys of Australians. Only 54 percent of Australians have a “positive attitude” toward Indonesia and other polls suggest 30 percent see Indonesia as a security threat.

On the Indonesian side, some members of government see Australia as a threat to its territorial integrity because of support for the independence of Papua.

Australia needs to build a habit of regular and improved consultation, not only with Indonesia but with the main Asian countries, especially China, Japan and India, on a range of policy issues, in advance of announcing major policy decisions, especially those that affect them, as Foreign Minister Bob Carr argued. An example of its failure to do this, was the decision, subsequently rescinded, to ban live cattle exports to Indonesia. Another was the decision to rotate 2,500 US marines through Darwin. It also needs to avoid any perception that racism and religious intolerance are present in political and public attitudes.

We should remember that Indonesia’s religious environment is different from Australia’s. Indonesia is, by population, the largest Islamic country in the world with the overwhelming majority of Indonesian Muslims being moderates.

Indonesia is Australia’s most complex, populous and influential neighbor. Seeking to build bridges between the very different societies must be a priority. If Australians and Indonesians succeed in this endeavor both countries and indeed the region will benefit in the Asian Century.

Richard Woolcott is former head of Australia’s Department of Foreign Affairs and Trade. He was also Australia’s ambassador to Indonesia and chairman of the Australia-Indonesia Institute.

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