Sam has provoked a nice discussion on the relationship with Indonesia, which I recently argued in The Australian 'must rank as one of our greatest foreign policy failures'.

I agree with what Malcolm Cook, Stephen Grenville and David McRae have suggested. These ideas all contribute towards Stephen's 'spiderweb of ties'. While this is critical, I think two there are two other crucial requirements: a jolt to accelerate a shift towards closer ties and a long-term framework to help keep progress on track.

A lot of evidence shows how bad relations are: whether it is trade, investment, government-to-government relations, or public attitudes (although interestingly, Indonesians are now more positive towards Australia than we are towards Indonesia). This is not to criticise the excellent work of Australia's impressive diplomats in Jakarta. But there is only so much they can do. Making serious gains in this situation requires political leadership.

So, to answer Sam's first question: 'What specifically should we do to improve our relationship with Indonesia?' In March 2010 I made four suggestions: (1) negotiate a multi-decade vision for the economic relationship; (2) use the projected increase in Australia's aid program to fund a new Colombo Plan for Indonesia; (3) rethink public diplomacy and (4) develop an outward-looking and positive agenda of cooperation with Indonesia.

My thinking remains mostly the same. Economic enmeshment – following Stephen's 'spiderweb of ties' concept – is the most critical. But to achieve this, Australia and Indonesia need to set ambitious goals (like making Indonesia one of our top trading partners in 10-20 years) and map a course to get there. Getting an agreement to get us there and overcoming the many barriers to the free flow of goods and services will require serious political commitment and engagement.

On the new Colombo Plan idea, I was almost persuaded by Hugh White's recent argument that treating our region as a 'charity case' shows how little we understand the Asian Century. The fact we give aid to Indonesia does create the wrong dynamic in the relationship in plenty of circumstances, but given poverty rates in Indonesia and Indonesia's critical importance to us, I think on balance it is still better to give in a big way, particularly towards higher education. And to perhaps address Hugh's concerns, it is not as though rich countries limit their higher education scholarships to developing countries. 

On the public diplomacy front, there needs to be an inversion of the current approach. Politicians need to stop trashing the relationship for purely domestic political advantage and instead promote a more realistic and accurate image of Indonesia, similar to the way we treat that other giant, the US.

Other ideas: perhaps we could look at a joint peacekeeping force that would deploy together on UN missions. Our soldiers could also look to build a joint regional emergency response team. This might help move perceptions of Indonesia as a security threat.

Onto Sam's second question, 'What harm is done by doing nothing?'

I'd say a lot. Indonesia's future matters a lot to us. Just think of the many different trajectories it could take: disintegration into several smaller states (East Timor has about a million people and look how hard it has been managing its transition; Indonesia has over 200 million) or return to autocracy or military rule. Then there's the possibility of the election of a president who whips up anti-Australian sentiment and perhaps does nothing about the small group of extremists. Or how about economic malaise and resulting increases in extremist sentiment? Or what about continued 6%+ economic growth and tens of millions joining the middle class that we can trade with? It's a no-brainer.

Of course, Australia only has limited influence, but why not use what influence we have to push for the outcome most clearly in our interest?

Photo by Flickr user Agianda.