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JIM MIDDLETON: Stephen Smith is Australia's Foreign Minister. Foreign Minister, welcome to the program.

STEPHEN SMITH: Pleasure Jim.

JIM MIDDLETON: Japan remains very important economically and strategically to Australia. How concerned are you about the consequences of the decision of Prime Minister Hatoyama to resign?

STEPHEN SMITH: We have a comprehensive economic, strategic and security partnership with Japan. It's one of the relationships we have, which is of a nature where it doesn't matter much who's in power, which political party's in power in Tokyo or in Canberra.

The strength of the relationship is such that it is long term, enduring and marches on. We regret, of course, that Prime Minister Hatoyama has indicated his intention to stand down. He's been a very good friend of Australia. While Prime Minister, the depth of our strategic and security relationship has improved, has got better.

Before he became Prime Minister, he was a friend of Australia and known to a range of our Ministers and Members and we certainly wish him well for the future. I saw him very recently in Tokyo together with Defence Minister Faulkner after the 2+2 Foreign Affairs and Defence Ministers meeting with our counterparts in Tokyo.

So he's certainly been a friend of Australia. We will miss him in that respect but once his replacement has been chosen, we look forward very much to working with him and the strength of the nation-to-nation relationship will endure irrespective of who leads our respective Governments in Canberra or in Tokyo.

JIM MIDDLETON: Given the passage of time and Japanese sensitivities though, do you think it might be wise for the United States to start to rethink whether it should base so many troops on Okinawa?

STEPHEN SMITH: Well, that's a matter that I will leave to our Japanese and United States friends. What is very important and this was a point that I made both privately and publicly in Tokyo recently, that just as Australia has an alliance with the United States and that's very important, indeed the bedrock of our strategic and security arrangements, so Japan has an alliance with the United States.

We regard that as very important. The United States' ongoing active involvement in the Asia-Pacific region is very important. That includes North Asia. So we regard the US-Japan alliance as important.

As you know, we engage in a Trilateral Strategic Dialogue between Australia, the United States and Japan and we find that a very useful forum to jointly consider important strategic issues.

So I will leave the debate issue to our friends both in Japan and the United States. But certainly the importance of the Japan-United States alliance is of considerable importance to security and stability in our region.

JIM MIDDLETON: To another issue in North Asia, Australia and China have been negotiating a prisoner exchange agreement. Once it's ratified, would you like it used to enable Australian mining executive Stern Hu to serve the rest of his prison sentence in Australia?

STEPHEN SMITH: Well, such an arrangement is not done on the basis of individual prisoners. We agreed with China a couple of years ago to enter into such an arrangement. Because it's a treaty status agreement it's subject to ratification procedures both in China and Australia.

Our procedures in Australia are ongoing. It involves an exhaustive consultative process with the States and the Territories amongst others.

So once the ratification process has been effected, and that may well take a bit more time, then it opens up to individual prisoners, it potentially does.

But I think we've got to take this very much step by step. Stern Hu has just been sentenced to a 10 year term of imprisonment and one very obvious factor will be whether he himself wants to contemplate such an arrangement.

He may, for personal and family reasons, want to serve his term out there. So it's very important just to take it step by step and also important to understand that this is not a matter solely or exclusively for the Australian Government. There are personal considerations at play as well.

JIM MIDDLETON: Turning to the Middle East, is the Australian Government content with the treatment of Australians among the hundreds of people from the protest convoy. Are you content with their treatment by the Israelis since they've been detained?

STEPHEN SMITH: Well we have four Australian citizens and one Australian permanent resident who have been caught up in this matter; one of course suffered a gunshot wound. He's been treated in hospital and he has been visited by Australian officials in hospital. So we're happy about the treatment that he's received and our access to him.

So far as the Australian permanent resident is concerned, he's an Irish citizen travelling on an Irish passport and Irish officials have been providing consular assistance to him. We have also been granted access to him and our officials have seen him. And that's a good thing, we welcome that.

And the three other Australian citizens, we've had consular access to. So we believe that's very important and we are happy to date with the access that we have been given. And it's now a matter of staying in very close contact with Israeli officials who see the ultimate exit from Israel of the Australian citizens and the Australian permanent residents concerned.

JIM MIDDLETON: Prime Minister Kevin Rudd has spoken with Binyamin Netanyahu. Was there any sign from Mr Netanyahu that Israel would conduct a credible and transparent inquiry into the flotilla incident, as many countries, including Australia, have been demanding, or indeed countenance international appeals to ease the Gaza blockade?

STEPHEN SMITH: Well I wouldn't be proposing to detail the conversation between the two Prime Ministers any more than the Prime Minister has himself during our parliamentary sitting today. He indicated to Parliament today that he's spoken to the Israeli Prime Minister, that's a good thing; that he had made in general terms the same points that he and I had made yesterday about this matter. And certainly indicated to Prime Minister Netanyahu that, to use the phrase that I've used in the last couple of days, that what is certainly required is a transparent and credible investigation so that the full facts can be known to and subject to scrutiny by the international community.

But that is a matter for Israel. Of course we now have the statement from the Security Council which speaks in comparable or similar terms and we would want Israel to very quickly move to such a credible and transparent investigation.

JIM MIDDLETON: More ships are now heading for Gaza intent on busting the blockade. Isn't there a danger then of more violence, of more fatalities?

STEPHEN SMITH: We would hope that all interested parties would have learnt from the terrible and tragic experience of the last couple of days and we would want to see restraint exercised in all quarters. And this is certainly something which in terms of fatalities, in terms of injuries, we don't want to see repeated.

Australia has made the policy point that one way to make progress is to ease the restrictions on the blockade so far as humanitarian assistance is concerned. That's been a view that we've put to the international community and to Israel over the last couple of years. And indeed as Prime Minister Rudd made clear in the Parliament today, a point that he made to Prime Minister Netanyahu in their phone call last night.

But we would want everyone, particularly in light of the terrible experience that we've just gone through, to be sensible about these matters and exercise restraint.

JIM MIDDLETON: Foreign Minister, thank you very much.

STEPHEN SMITH: Thanks Jim. Thanks very much.

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