Four observations on the excellent debate on our relations with Indonesia and especially on Sam's most recent post, which takes us into some deep water.

A favourable environment

Sam is on to something with his analogy with multiculturalism. It goes to the heart of our approach to the region around us; an approach that works well for Australia in ways that directly support the security and prosperity of everyone who lives here. We take this for granted, not noticing it because it works so well. As Joseph Nye said in a similar context, our favourable international environment is like oxygen in the air, essential but unrecognised until it's not there. 

But Australia's favourable international environment is far from hard-wired into our nature as a country. Indeed, it is the result of very specific circumstances: we are secure and prosperous because throughout our history our close allies have been the richest and most powerful countries in Asia, shaping the Asian order in ways that have suited us very well and keeping Asia safe for us. Our relations with our neighbours have worked for us because we have always been richer and stronger than they are.  

The biggest crises of our history, and our biggest wars, have been the moments when these fortunate circumstances were most challenged: the two world wars and the Cold War in Asia.

Each time our position was preserved. But now this is coming rapidly to an end thanks to the inexorable shift in economic weight as the great convergence erases the West's productivity advantage. This challenge is more formidable than those we have seen off before. 

This is one of the greatest shifts in our history and how we respond is indeed one of the great national tasks we have faced. One can see it as a phase, like multiculturalism, of the adaptation of a society transplanted from the northwest corner of Europe to the southeast corner of Asia. This phase has been delayed because Anglo-Saxon primacy in Asia has been prolonged for so long. But now we have to work out how to live in an Asia in which Anglo Saxons no longer wield preponderant power. It is going to be very different.

Why relations with Indonesia matter

The difference is not just about the US and China. Last week, I argued that Australia has to rethink its relationship with Indonesia precisely because Indonesia is going to be much richer and stronger than Australia within a few decades. We have always been richer and stronger than any of our neighbours. We do not see how profoundly the relationship has been shaped by the relative power balance between us, because it has worked our way and the stronger party is usually less aware of how power affects a relationship. 

Our foreign policy now has to focus very seriously on how we best preserve our interests in the relationship as power shifts from us to them. This is no abstract exercise in diplomacy; a good relationship with Indonesia when it is three or four times richer than us will be critical to our security and prosperity. A powerful Indonesia will not necessarily be threatening, but we will need to work hard to do whatever we can to make sure it isn't. This idea makes people edgy, but that is what weaker states have to do in managing relations with stronger neighbours. Lots of countries do it all the time. We've just never had to do it before.

What do we need to do?

Well, to put it most broadly, we need to start building the kind of relationship we want to have with Indonesia when Indonesia is a great power and we are, at best, a middle power. There are three obvious priorities. First, wind back the role of aid: we cannot buy a good relationship with Indonesia. Second, move on from our obsession on third order issues such as people-smuggling, live cattle and Schapelle Corby. Third, start building a sense of shared interests in the big questions about Asia's future and start resolving issues which might cause us problems in future. Above all, recognise that we are not going to be able to dictate the terms of this relationship. We need to take Indonesia's views of us seriously: Indonesia's President Susilo Bambang Yudhoyono spelled them out in a speech to the Australian parliament in 2010. There will need to be give and take, and as the weaker power we will do more of one than the other. We should not expect to like that, but we should get used to it.

Who is responsible?

In the end, as I argued back in 2010, it is our political leaders' job to understand how our place in the world is changing, to work out how to respond and to explain to the rest of us why this is necessary. We are seeing a major failure of political leadership on this at present. The Asian Century White Paper is a major opportunity for the government to change that and much depends on that opportunity being taken.