On Monday, Alex Thursby from ANZ took to The Interpreter to make the case that Australia needs to turn around its perceptions of Indonesia, and think about developing a relationship as mutually rewarding as the one we have with the US.

It's fair to say that Thursby's position is a variation on a view that's pretty consistent in the foreign policy community in Australia. Some would doubt that Australia could ever have ties with Indonesia that compare to those with the US, but the underlying proposition — that Australia's relationship with Indonesia is severely underdone — is pretty uncontroversial.

I tend to agree with this position too, and in fact it is difficult to find anyone who disagrees. All the more reason, then, to question some of the premises behind this argument and dig down for some details. To start this discussion, which I hope others will take up, I want to pose two questions:

  1. What specifically should we do to improve our relationship with Indonesia?
  2. What's wrong with the status quo? What harm would be caused if we did nothing?

Below the fold, some context for both questions:

1. What specifically should we do to improve our relationship with Indonesia?

Last year, my colleague Fergus Hanson recommended a 'major leadership gesture' in order to kick the relationship into a higher gear, and proposed a big increase in aid funding going towards Indonesian education (a 'Colombo plan' for Indonesia). More recently, Hugh White and Josh Frydenberg have recommended funding boosts for Australians studying in Indonesia and elsewhere in the region.

There's something to be said for this approach, especially given the direct (though long-term) national interest pay-off for Australia, as demonstrated by the Lowy Institute's research on Pacific leadership.

But aid funding of Indonesian students would be the action of a donor toward a client, and although that still defines part of the Australia-Indonesia relationship, it's not the world we're heading into, with Indonesia growing so fast. So is there some major initiative the two countries could launch together that would create a step-change in the relationship?

2. What's wrong with the status quo? What harm would be caused if we did nothing?

Those who want a more substantive relationship have to overcome the inherent problem that human beings (and perhaps especially politicians) are biased towards loss aversion. It may be true that there are untold gains to be made from closer ties with Jakarta, but that doesn't motivate action in the same way as averting losses. And really, what are we losing by just keeping things roughly as they are with Indonesia?