“The Indonesia and Australia relationship has blown hot and cold over the years . . . . It has been like a rollercoaster, sometimes you scream and sometimes you laugh,” Athiqah Nur Alami, the head of the Political Research Center at the Indonesian National Research and Innovation Agency (BRIN) told Al Jazeera, just before the newly elected Prime Minister Anthony Albanese undertook his maiden three-day visit to Indonesia from June 5.

 The Canberra- Jakarta relationship is sensitive and very important underlined by the fact that not even two weeks have passed since the new prime minister took office and he decided to make a dash to Jakarta to ‘reset’ the relationship, in his own words. Albanese wants to bond with Jakarta—a sentiment that is warmly reciprocated in Indonesia by President Jokowi, who has visited Australia four times since 2014.

Despite the aspirations of the two leaders, the reality is that the government-to-government relationship between Australia and Indonesia is a fragile one, easily broken when tensions arise. There are many differences – from history, religion, ethnicity, and language, to legal systems, political systems, global alliances, and strategic interests. Despite the occasional problems in the government-to-government relationship, there are strong people-to-people links in the arts, education, academic, and community sectors that create cohesion in the relationship. Indonesia is Australia’s largest neighbour, and while Jakarta lies more than 5,000 kilometres (3106 miles) west of Canberra, the closest part of the archipelago is only a few hundred kilometres off the tip of Western Australia. The country represents “one of Australia’s most important bilateral relationships”, according to the Australian Government Department of Foreign Affairs and Trade (DFAT), which adds that the two countries “enjoy extensive cooperation including on strategic, economic, security, development and education issues”.

Notwithstanding that, in fact, very few Australian governments in recent years have made it to the end of their term without a bust-up with Indonesia of some kind. In 2013, relations soured when a number of media organisations published allegations that the Australian Signals Directorate had tried to monitor the private phone calls of the then Indonesian President Susilo Bambang Yudhoyono, his wife Kristiani Herwati, and other senior Indonesian officials.

 A diplomatic rift between the two countries emerged again in 2015 as Indonesia prepared to execute Australian nationals Myuran Sukumaran and Andrew Chan after they were found guilty of masterminding a nine-person drug smuggling ring trying to carry 8.3 kilograms of heroin from the Indonesian island of Bali to Australia in 2005. The Australian government lobbied for the men’s lives to be spared, with then Prime Minister Tony Abbott referring to the aid Australia sent to Indonesia following the devastating 2004 tsunami – estimated at 1 billion Australian dollars ($780m) – and implying that the country owed Australia for the financial support.

Indonesians are too proud a people and their country pursues an independent foreign policy and obviously do not like aid to be a leverage in foreign relations. Then in January 2021, Australia was upset after Indonesia announced it would free Islamist preacher Abu Bakar Bashir from prison because he had completed his jail term. Scot Morrison, who was then prime minister, called the release “distressing” for the families of those Australians who had died in the Bali Bombings. “It’s sometimes not a fair world,” he said. Bashir was spiritual leader of Jemaah Islamiyah, the hard-line group behind the 2002 bombings, which killed more than 200 people, including 88 Australians. Indonesia did not like the interference and sermons from Australia.

Security concerns could have been a cementing force between the two countries, as both face major pressures from China with its assertive claim on the South China Sea in its entirety. Neither Australia nor Indonesia have claims in the South China Sea, but both governments are closely watching developments there. The waterway is of strategic and economic importance – one third of the world’s shipping passes through the sea each year – and Indonesia, as an archipelago, has longstanding concerns about the security of its waters. China’s claim that the waters around the Natuna Islands, which are in Indonesia’s exclusive economic zone, are part of its “traditional fishing grounds” have also caused anger in Jakarta. Canberra’s relations with Beijing is also fraught in recent years over a variety of issues- from its criticisms of China’s crackdowns in Hong Kong and Xinjiang to the origins of the coronavirus pandemic. More importantly, Beijing has also been reaching out to Australia’s traditional allies in the Pacific, alarming Canberra.

Both are concerned about China’s growing power and the threat it poses to peace, security and stability in the Indo-Pacific region, yet their differences in the approaches to deal with it have already caused some friction. Last September, tensions flared after Australia, the United Kingdom, and the United States announced a trilateral security agreement known as AUKUS, under which Australia would acquire nuclear-powered submarines. Jakarta was one among a number of countries that expressed concern about the deal, and Morrison’s planned visit to Jakarta was cancelled. When Widodo and Morrison did finally meet – at a virtual meeting with leaders of the Association of Southeast Asian Nations – the Indonesian president “repeatedly and forcefully” raised concerns about the AUKUS deal, according to Australian media. The Indonesian Ministry of Foreign Affairs also blamed Australia for what it termed “a continuing arms race” in the region.

Still, while Indonesia and Australia have historically found common ground on a number of security issues – working together on issues such as people smuggling, intelligence cooperation, and counter terrorism. The two countries have worked well together in areas including maritime security, military training, and education, While doing that Canberra has to take into account Jakarta’s sensitivities, as it is proud of its long cherished “non-aligned status” under which it has traditionally sought to navigate a middle path with the world’s larger powers. The latest example of this neutrality and independence is that it has already indicated – despite pressure from other members of the grouping and to the chagrin of Canberra– that it will invite Russian President Vladimir Putin to the G20 Summit despite the invasion of Ukraine. To placate its critics, Jakarta has also extended an invitation to Ukrainian President Volodymyr Zelenskyy who has indicated that he will attend via video link. Albanese did well by informing Jakarta that he would be present at the upcoming G-20 Summit 2022 in Bali.

Indonesia, which holds the rotating #G20 presidency, said it will not close the grouping to #Russia, amid pressure from some member countries to exclude Moscow, a report of The Straits Times said. https://t.co/ZSwPRFC7t9 pic.twitter.com/CjNVwZUfOU

— Zhang Meifang张美芳 (@CGMeifangZhang) March 25, 2022

Economic areas are the ones where there is plenty of opportunity to reset the relations with Indonesia. The prime minister’s new A$200 million “climate and infrastructure partnership” with Indonesia is a good start – improving Indonesia’s patchy infrastructure is a project close to Jokowi’s heart. Climate change is also a pressing concern for Indonesia. However, its record on efforts to reduce deforestation and emissions means there will be challenges. For example, in 2021, Indonesia terminated a US$1 billion (A$1.4 billion) deal with Norway aimed at preserving its forests.

A longer-term challenge is implementing the long-awaited free trade agreement with Indonesia, the Indonesia-Australia Comprehensive Economic Partnership (AI-CEPA), which Albanese has made a focus of his visit, bringing with him a large delegation of Australian business leaders and Trade Minister Don Farrell.

While IA-CEPA is a comprehensive agreement based on four pillars of interest including economics, people, security and maritime cooperation, “there is still room for improvement”, particularly with regards to trade. But the problem is that Indonesia trades less with Australia than its Southeast Asian neighbours: Vietnam, Thailand and Malaysia. As of 2020, Indonesia is Australia’s 13th biggest trading partner, worth $17.8 billion in two-way trade. Almost 2,500 Australian businesses export goods to Indonesia. But in many ways Indonesia is still underdone as an economic partner – not just when compared with China and India, and Australia’s long standing partners in Japan and South Korea, but also with Southeast Asian neighbours, Singapore and Thailand.

More Australian small and medium sized companies export goods to Fiji than Indonesia. And despite Indonesia’s massive population, just 250 Australian companies have a presence in Indonesia. This compares to more than 3,000 in China. There are no easy solutions here, as Australian businesses are wary of investing in Indonesia. Even while big profits are possible, setting up in Indonesia is complex and expensive, and Australians don’t trust the Indonesian legal system to protect them, especially against Indonesia’s powerful oligarchs.

While Australian businesses are perhaps too cautious, Indonesia also has a lot of work to do to reform its systems before it can expect Australian businesses to help it meet its ambitious and elusive foreign investment targets. Free trade agreements need to be a priority for both countries. Indonesia hasn’t attracted manufacturers looking for low-cost opportunities like China, Vietnam and Bangladesh. Foreign companies have mainly gone there for its massive domestic consumer market, especially the urban middle class in cities like Jakarta, Yogyakarta and Surabaya. So, there is still a great potential for Australian trade and foreign investment to help build capacity way beyond boats, beef and Bali, the three things Australians are more familiar with Indonesia.

Loved this capture from downtown Jakarta. #NewYearEve pic.twitter.com/aacqridmOo

— MH (@Hussaynnn) December 31, 2017

Despite all these challenges Indonesia sees that the dimension of cooperation with Australia, which previously focused on defence and security, has now covered other issues, including economic cooperation and people-to-people relations, which appear to dominate cooperation between the two countries. Educational cooperation is one area which has been successful and promotes cooperative relations and goodwill. The Australia Awards programme has provided more than 11,500 scholarships to Indonesians to study at a tertiary level in Australia since 1953, with more than 17,000 Indonesians studying in Australian institutions in 2020. While Indonesians are more enthusiastic about going to Australia for a generous scholarship, Australians might not be that much interested in coming to Indonesia for higher studies. Still, Indonesia remains one of the most popular destinations for students under the New Colombo Plan – an Australian government initiative to encourage young Australians to study and undertake internships in the Asia Pacific region. Since 2014, more than 10,700 scholarships and grants for students to study and enjoy work-based experience in Indonesia have been awarded.

All in all, Australia-Indonesia relations still have chances of turning fragile if care is not taken. To convert them into a more stable and solid foundation, Albanese would have to be much more serious than his predecessor to reset it securely.

Also Read: The Changing Profile of Islam in Indonesia – from syncretic and inclusive to orthodox and exclusive