Australia – Indonesia Relationship


Since Indonesia gained its independence in 1945, relations between the two countries have fluctuated over time. This relationship peaked during the Indonesian and Dutch independence wars, which lasted from 1945 to 1959, and in the early 1990s boom years, when Indonesia enjoyed an extraordinary economic boom and saw the first significant increase of Australian investment in the country. Political tensions that arose between these two nations in 1999 when Australia took part in East Timor's independence movement put a strain on their amiable ties. This state had been preceded by a financial meltdown in East Asia between 1997 and 1998 which had seen the collapse of the Australian investment in Indonesia, making Australia channel its investments to China. More tensions were experienced with the declaration of global war on terror over Muslim terrorists. Then was then a sharp turn in 2004 with the election of Susilo Bambang Yudhoyono as the president of Indonesia and a generous Australian response to the tsunami disaster in Aceh. Then arose a new crisis in early 2006 concerning Australia’s acceptance of Papuan asylum seekers. This move resulted in tensions which were only eased with the negotiation the Treaty of Lombok in November 2006. This seemed to bring back the relationship between these two countries to a more normal footing. These occurrences form a pattern that shows the volatility that exists in the relationship between these two countries. This essay aims at analyzing the characteristic of this relationship, as well as determine whether there is a need for change.

Volatility in the Relationship

One of the significant characteristic dominating this relationship is volatility. Fluctuations have been experienced between cordial relations and periods of tension. For instance, during the early years of Indonesia's struggle for independence (1945-1949), there was a friendly relationship, steered by Jakarta and Canberra. This association was severely strained between 1950 and 1966 during the Sukarno-Menzies period arising from West Irian and Konfrontasi episode, and then relatively smooth during the reign of Suharto from 1966 to 1998. The mid-1990s were exceptionally good but then seemed to deteriorate after 1998 following Suharto's fall. Susilo's rise to presidency brought a ray of hope to the reinstatement of a cordial relationship between these two countries. This on and off relationship between these two nations is evidence enough that they need each other time and again. With the current developments and improved relations between them, it can only be hoped that the volatility will lessen and a more solid relationship established.

Fragility of the Relationship

Considering that pattern of historical rise and fall, the Australia-Indonesia relationship could be termed as fragile. This is to say that if subjected to unfavorable conditions, it can result in an enormous and even permanent fallout. The leaders who come to power have played a part in boosting or threatening these relations. For example, between 1950 and 1966, the countries were consistently at odds with each other under the leadership of Sukarno and Menzies over West Irian and Konfrontasi. However, these leaders held the countries interest and were careful not to let their personal differences escalate into serious conflict that would cause significant harm. The initiative taken by Australia in the war against terrorism campaign increased the fragility of the relations. Australia's John Howard comment claiming that the country had a right to take preemptive action against terrorists in the neighboring countries if the deemed it necessary stirred up intense irritation from the Indonesians.

Uncertainty in the Relationship

Australia-Indonesia relationship is also characterized by uncertainty. This conclusion is especially so with Australia expressing doubts on Indonesia in matters concerning business and culture. The Australian culture is seen to undermine the Indonesian trust making them reluctant with engaging in business deals. The Indonesian business environment does not produce returns as fast as that in countries like China, and Australia is advised to understand this and deal with the risks and uncertainties like the other Indonesian investors. According to Danny Burrows of the Asian trade and investment firm known as Trade-worthy, Australia is seen as extracting as much and as soon as they can, rather than allowing other models with more flexibility to deal with issues as they arise to operate. Burrows argues that if Australia is going to make its mark, then it will need to make a huge adjustment in thinking and usual business practice. The uncertainty also lies in future relations as the relationship between these two countries is not solidly founded to this day, and therefore, holds the potential of collapsing if not correctly upheld.

Dependence in the Relationship

The nature of the relations at any given period depended on the ties between the leaders of these countries. For instance, the election of Yudhoyono as president of Indonesia sparked hope, and as anticipated resulted in a more cordial relationship between these two countries. Some tension that was experienced periods before him were as a result of personal differences between the leaders who were in power in those times. It was feared that after Yudhoyono it would be difficult to find a leader who would treat Australia the way he was treating it in his reign. This, therefore, means that if leaders who have the countries’ interests first and take their personal differences aside came to power, the relationship between these two countries would be smoothened and a solid one established.

Interdependence between Australia and Indonesia

On the bright side, the relationship between these countries can be termed as interdependent. Throughout their history, they have interacted on political, economic, and social bases. They have been engaged in each other affairs, and this probably explains why they always get together even after experiencing a fallout. As earlier mentioned, the countries signed the Treaty of Lombok, a security agreement which improved their official relations and helped in relatively repairing the damaged relationship between them. In 2016, the two countries through the representation of the Australian Trade Minister Steve Ciobo and his Indonesian counterpart Engarrtiasto Lukita engaged in talks concerning ongoing negotiations on free trade between the two countries. According to Ciobo, they had made substantial progress on the Australia Indonesia Comprehensive Economic Partnership Agreement which is scheduled to be concluded by the end of 2017. In 2015, trade between these countries was valued at approximately $15 billion. This deal is aimed at reviving trade relations and raising that number by exploiting the potentials available in these two countries. According to the Australia-Indonesia Business Council president Debnath Guharoy, the economic relationship between these two countries has room to expand.


Australia and Indonesia are neighboring countries which means their relationship is crucial. This, therefore, poses the need for the strains evidenced in the history of these countries to end and a solid foundation laid for the benefit of both countries. The volatility, fragility, and uncertainties built between them should be addressed and current leadership to implement policies that would see a strong relationship established in the present and for the future. The implementation of the Australia Indonesia Comprehensive Economic Partnership Agreement (IA – CEPA) together with the upholding or improvement of the Treaty of Lombok should be strongly guarded such that their importance helps in cementing the relationship between these two countries. Current leaders should also engage in talks concerning potential threats to cohesion presently and in the future and seek ways of solving them amicably. For example, in cases of asylum seekers, the war on terrorism, and the live cattle trade. It is only if these issues are solved that the threat of future fallouts will be eliminated and a lasting relationship will be established.


In summary, the Australia-Indonesia relationship is one faced with several fluctuations of good and bad phases. This pattern traces way back into the time before Indonesia acquired independence to the present day. The relationship is characterized by volatility, fragility, uncertainty, and doubts. On the bright side, however, there exists an aspect of interdependence between the two countries which plays a critical role in connecting them back together even in times of crises. Amidst the shaky relationship, the two states have attempted to undertake some measures aimed at fostering a positive and stronger partnership in areas of economic empowerment through trade and foreign investments. Although it is difficult to predict the possible direction, this relationship would take, efforts from the leaders of these two countries would result in a stable relationship being established, presently and in future.

Works Cited

Mackie, Jamie. Australia and Indonesia: Current problems future prospects. Lowy Institute for International Policy, 2007.

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