SBY slaps Abbott

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Tony Abbott’s foreign policy L-plates are swiftly turning a diplomatic bingle into a more serious head on collision. After playing down the new spygate allegations, the PM is today Tweet-flamed by SBY:

‘‘I regret the Australian Prime Minister’s statement, which regards the phone-tapping of Indonesia as insignificant and lacks a sense of wrongdoing,’’ he wrote.

“The actions of America and Australia have severely damaged their strategic relationship with their fellow democracy, Indonesia.

“We will also re-examine a number of aspects of our bilateral cooperation agenda, which has been damaged by Australia’s treatment.”

From Sam Roggeveen at the Lowy Interpreter:

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This will no doubt cause a diplomatic storm, and already Teuku Faizasyah, a senior spokesperson for President Susilo Bambang Yudhoyono, has told the ABC that the ‘Australian Government urgently needs to clarify this news, to avoid further damage.’ A tweet from Australian journalist Ben Packham notes that ‘turning the boats around just got a lot harder.’

It sure did, and that may not be the full extent of it. If the impact of the last lot of revelations is any guide — andFairfax’s article of 31 October had fewer specific facts than this one and was a lot less personal for Indonesia’s leaders — then we should expect weeks, if not months, of cold-shoulder treatment.

Once again, this ought to prompt questions about the costs and benefits of intelligence collection. Is the information Australia gathers important enough to risk such diplomatic damage?

Of course, we shouldn’t overstate that damage. The fundamentals of the Australia-Indonesia relationship will eventually re-assert themselves. It is simply not in the interests of either country to create a long-term breach.

But having said that, it is easier to weather diplomatic storms like this one if there is ‘ballast’ in the relationship. Where both sides see an obvious down-side to a prolonged breach, they will act to avoid or minimise it. Yet Australia’s two-way trade with Indonesia is currently less than that with New Zealand, and although the political relationship is routinely described by experts as being close, they also point out that people-to-people ties are extremely thin. As for the asylum seeker issue, it seems Australia needs Indonesia more than the other way around.

In fact, given Indonesia’s size and sustained economic growth, that might be the motif for the overall relationship in years to come: Australia as the suitor to an ever larger and more influential regional power. That’s a world in which the risks of a diplomatic breach fall much more heavily on Canberra than they do on Jakarta.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.