A Long Term Commitment: Australia And East Asia

A Long Term Commitment: Australia And East Asia

Speech by the Hon Alexander Downer, MP, Minister for Foreign Affairs, to the Indonesian Council on World Affairs and the Indonesia-Australia Business Council, Borobodur Hotel, Jakarta, 9 July 1998.

Introduction - our commitment to the region, then and now

Before coming here today I launched a collection of historical documents, entitled Australia & Indonesia's Independence: The Transfer of Sovereignty: Documents 1949, prepared by my Department's Historical Documents Project Section.

The book describes Australia's efforts to assist the Indonesian people to end the fighting in the Indonesian archipelago and create a new and great member of the world community. It is an interesting aspect of Australian and Indonesian history that is, unfortunately, not well known in either of our countries.

What struck me about the book was that many of the Australian policies of that time remain highly relevant today. One of the documents from 1949 notes that Australia's "security and prosperity is bound up with the security and prosperity of all Asian countries, and this depends on mutual cooperation and respect in the area". Nearly half a century later, this judgment is more pertinent than ever.

Today I would like to talk to you about Australia's ties with Indonesia, and to state quite clearly and unambiguously that we intend to remain fully committed to the development of our relationship.

Indonesia and Australia - strong ties and a common future

At the outset I should say, as the first Minister of the Australian Government to visit Indonesia since the installation of the new Government, that we congratulate President Habibie, and we welcome the manner in which the transition of power was handled.

Indonesia is of fundamental and enduring importance to Australia. It is our largest and most populous neighbour. Our prosperity, stability and security will always be influenced by Indonesia's and it is logical, therefore, for Australia to stand by Indonesia in these troubling times.

We are encouraged by the steps the Indonesian Government has taken towards political reform.

It is up to the Indonesian people themselves, and not foreigners, to determine the precise format and content of reform.

That is a view that the Australian Government has put robustly, and often, to governments and international institutions around the world.

The Australian Government is committed to work with the Indonesian Government in its process of change. It is clear that economic and political reform must go hand in hand - one leads inevitably to the other. The Australian Government is encouraged by the commitments the Indonesian Government has already made to reform its economy to meet the challenge of the financial crisis, and will assist in any way it can to move the process of reform forward.

We have, for example, already led international opinion by arguing forcefully in Washington in favour of the economic reform agenda Indonesia has agreed with the IMF. At those meetings I said that the reform program needed to be implemented flexibly and sensitively, bearing in mind the impact on those most vulnerable in society and recognizing Indonesia's individual circumstances. The IMF has understood this imperative and this is reflected in the latest IMF program.

Australia is aware that the international markets are looking for continued implementation of the IMF program in a steady, thorough and credible manner. For our own part, Australia will maintain its commitment to the second tier funding support for the IMF program, including the early advance of US$300 million from our total US$1 billion commitment.

The links between Australia and Indonesia are enduring and valuable to both sides, despite the inevitable effects of the financial crisis.

The latest statistics for the 11 months to May 1998 indicate that our total exports to Indonesia have fallen by 14 per cent. However, Indonesia's exports to Australia grew by 45 per cent, to $2.46 billion, reflecting the increased export competitiveness which is one of the few benefits from the sharp depreciation of the rupiah. The imbalance in trade between Australia and Indonesia, which we always argued was less important than global balances, is now firmly in Indonesia's favour.

Investment links have grown strongly in recent years. Australia is currently the 8th largest foreign direct investor in Indonesia. I expect that Australian investment will increase sharply once Australian companies have factored the new investment opportunities available in Indonesia into their business plans.

At the government level, links in economic cooperation are also strong. The Australia-Indonesia Ministerial Forum, which meets every two years, provided a forum for our governments to coordinate economic policies in order to provide a better environment for bilateral business. This mechanism has proved its value in the last four years.

Links between eastern Indonesia and Australia have been the special focus of the Australia-Indonesia Development Area (AIDA), which Minister Hartarto and I launched in Ambon in April 1997. We are funding several studies into the investment environment, which is undoubtedly changed in some positive ways on the Indonesian side, by economic reform and the increased competitiveness of export industries. We are also assisting with training in key industries in the AIDA region.

Australia is opening six honorary consulates in Indonesia (including four in the AIDA region) to facilitate increased people-to-people contact between Australia and Indonesia.

Australia continues to assist Indonesia through our Development Assistance Program. We have been a development partner with Indonesia for more than 30 years and believe we contributed substantially to the great progress made in that time. We are adjusting our development program to reflect changing needs, in close cooperation with Indonesian authorities. To use an Australian vernacular expression, we are doing this in the spirit of "regional mateship".

Australia's humanitarian response to help Indonesians disadvantaged by drought and the financial crisis now totals around $50 million. This is in addition to our US$1 billion commitment to Indonesia's IMF package, and our contribution so far of approximately $900 million in trade insurance cover. Our total budgeted aid flows to Indonesia will increase from $89 million in 1997-1998 to $108 million in 1998-99.

Just before this dinner I signed with Foreign Minister Alatas a General Agreement on Development Cooperation. I have also announced a program of activities designed to promote economic management capacity and reform. The program, which will involve assistance of up to $70 million over three years, will cover such issues as the reform of state-owned enterprises, bankruptcy and commercial law, foreign investment, trade policy and capital market development.

Before I turn to Australia's broader commitment to and engagement with the region, I would like to make some specific comments on East Timor.

As you know, Australia has for many years recognised the integration of East Timor into Indonesia. That said, we would like to see an early reduction in the military presence, a dramatic improvement in human rights, and a situation in which the East Timorese people manage their own internal affairs. We welcome the emergence of a dialogue as illustrated by the meeting between President Habibie and Bishop Belo. There is a long row to hoe. However, constructive dialogue can lead to a solution to these painfully difficult issues. You have in Ali Alatas a world class diplomat. He needs the opportunity to achieve a solution in East Timor. We stand ready to help him, the Government of Indonesia, and the people of East Timor.

A natural engagement with Asia

When people question the nature of our engagement with this region - and this happens just as much abroad as in Australia - I am puzzled. Why do they see our presence here as something remarkable or strange?

People never comment about U.S. engagement with Canada, Mexico or South America. They don't see France's ties with Germany, the United Kingdom or Spain as unusual. And I've never come across anyone who wondered why China was engaged with Japan or ASEAN.

And rightly so - such views would be absurd. It is natural for any country to be most engaged with the nations closest to it, just as we as individuals are most concerned with what happens in our street, our neighbourhood, and our town.

It was that kind of consideration that led to the conclusion of last year's White Paper on Australia's Foreign and Trade Policy in relation to East Asia that "in both security and economic terms, there is no region where more significant Australian interests are engaged".

To those who still have doubts, look at a globe and see how Australia is located in relation to Asia. You will discover that, from Jakarta, the closest foreign country is Australia - Christmas Island is less than 500 kilometres south. Jakarta is closer to Canberra than to Tokyo. Indeed, at its closest point the distance between Indonesia and Australia is shorter than the distance between Canberra and Sydney.

I say look at a globe, because maps in atlases do not allow you to see easily how Australia relates to Asia. This is not for any inherent geographical logic, but simply because map-makers put Asia on one page, and Australia on another. When people argue endlessly - and quite pointlessly, in my view - about whether we are or are not part of this or that region, I simply note the irony of the fact that those who wish to exclude Australia rely on European geographical constructs. Before the Second World War our then Prime Minister, Sir Robert Menzies, noted that people in Europe referred to Asia as the "Far East", while for Australians it was the "Near North".

The fact is, and will always remain, that the same seas that wash our shores wash yours, that the majority of our trade routes pass this way, and that our future is irrevocably bound up with that of the region that surrounds us.

The One Nation Party - policy formation in a vacuum

Australian involvement in the region has been challenged most recently by the One Nation Party. The paramount importance of closer engagement with Asia should be obvious to anyone who spends even a few minutes considering the reality of Australia's economic and strategic circumstances. You may wonder, therefore, why the One Nation Party appears to have support, and what effect this may have on Australia's foreign and trade policies.

Some Australians, as is the case around the world, are finding rapid change brought about by the irresistible force of globalisation, disconcerting. Yet we cannot close our eyes and wish globalisation away - technology makes that impossible. The great challenge for all our countries is to make globalisation work for us.

It is a basic rule of politics, cynically exploited by One Nation in Australia and its xenophobic counterparts elsewhere, that it is much easier to tear people down and oppose, than explain and create. One Nation proposes no realistic ideas about Australia's future - only a desire to return to an era that no longer exists anywhere else in a world which is looking forward, not to the past. One Nation cannot even claim to be nostalgic in outlook. It is divisive, regressive and heartless. In a world where we must as nations and cultures increasingly work together, One Nation's offensive comments on race would, if implemented, set people against people and culture against culture. For the last half century so much of international diplomacy has tried to bury policies such as these so we can all live together in greater harmony. That, too, must continue to be our aim in the 21st century.

One Nation promotes an insular Australia - inward looking, narrow-minded, protectionist and separated from the region and the world. Down that path lies disaster for Australia, and the Government will not take it.

Mrs Hanson's thoughtless comments and policies also endanger our export earnings, and Australian jobs. It is sad that she is willing to risk the future of Australian families for the sake of ambition and fleeting notoriety. The Australian Government will not compromise the fundamental interests of Australia for short-term political expediency.

Conclusion - greater regional, and national, maturity

The real test of a relationship, the real test of commitment, comes not when times are good, but when they are most difficult. By that standard, Australia has proven its commitment to the region.

It is now just over a year since the region's financial crisis began with the first jolts to the Thai economy. The downturn hit the region hard, coming as it did after many years of unprecedented economic growth and increasing regional confidence. But after the inevitable recovery, I believe that we will be able to look back on this period as the time the region came of age.

Australia, too, has gained a new stature in response to the regional crisis, though our challenges are different. The Government has been determined - through timely and well-focused assistance, and robust advocacy on the region's behalf - to play its part in the recovery. That is mirrored by Australian business, which sees the downturn not as a signal to pull out, but rather one to make even greater efforts in regional markets.

Australian companies who stay the course in Indonesia and don't pull out will be rewarded in the longer term. In Indonesia, in particular, I believe the prospects for eventual economic recovery and long term growth are excellent. This is a great country with a large pool of highly talented people.

There is a new maturity in our attitude to our neighbours. Since taking office in 1996, the Government has made the expansion and strengthening of our bilateral relationships in Asia its primary foreign and trade policy task. The results are now apparent. We have ceased being the region's "demandeur", badgering our neighbours for attention and recognition. Australia is now a genuinely close partner and regional friend, a country that can be relied on in good times and in bad.

In the midst of all the understandable concern about the current situation, I believe some genuine fundamentals are often forgotten by outside observers, and perhaps even by some Indonesians. Indonesia is the world's fourth most populous country. Its natural resource base is huge and diverse, ranging from mineral resources, to forestry and fisheries. Its location on global shipping routes and near other major economies gives it great potential for foreign trade. Moreover, the economic reform program, one of the most ambitious ever attempted, is likely to improve greatly the efficiency and competitiveness of the economy.

Indonesia is, of course, no stranger to the world spotlight. The success it achieved in its struggle for nationhood in 1949 captured the world's admiration and inspired many other countries. The current process of political and economic reform is no less a process of nation-building, and requires no less courage and resolve. The Australian Government is absolutely confident that Indonesia will succeed in this endeavour and will, as a result, fill its proper place, in every sense, as one of the world's biggest and most important countries.

In the years since Australia assisted Indonesians as they fought for independence, our relationship has had its problems and its successes - as in any relationship, there are occasions on which we will differ. But our commitment to Indonesia - and to Asia - cannot, and will not, alter. We will certainly be doing whatever we can to help Indonesia, and to encourage others to do the same.

I look back with pride at the role we played 50 years ago, as Indonesia took its rightful place in the community of nations. And I look forward, with equal pride and confidence, to working with Indonesia to meet the challenges of a new millennium in which both countries play an even more prominent and cooperative role in Asia and the world. You are a great people - you will succeed.

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