Pearls and Irritations

When, as prime minister, Paul Keating secured the 1995 security agreement with Indonesia, he ensured Australia would be surrounded by allies as China rose.

Paul Keating remembers exactly where he was when he first started thinking about Indonesia. He was on a Sydney suburban train. It was 1965, and he was 21.

“I was on a red rattler from Bankstown, in that tunnel going towards St Peters, and stopped … where the train was half in the light and half in the darkness, halfway in and out of the tunnel. And I was reading a newspaper article about how Suharto had knocked over the Indonesian Communist Party.” It was a crystallising moment. “I was in this railway carriage — and there you have the foundation of the Keating government’s foreign policy.”

Thirty years later, as prime minister, Keating pulled off what remains one of the most stunning diplomatic coups in Australian strategic history: the signing of a security agreement with Indonesia, the country’s largest and most important neighbour. A nation that had struck fear in the Australian imagination throughout much of the Cold War was now tied formally into the arc to our north, a collective strategic bulwark against the unpredictability of an evolving regional environment.

The deal not only laid to rest some ghosts of the past; it was also prophetic, foreseeing the potentially destabilising effect of China’s rise on the region. In a contested Asia, Australia would be surrounded by allies.

Ultimately, the agreement lasted only until 1999, when it was torn up in the wake of the East Timor crisis. Yet to this day, its formulation — especially the intense secrecy surrounding its negotiation — remains a crucial illustration of a period when a more outward-focused and conceptual Australian foreign policy was in play. It was the capstone of Keating’s approach to the region, in which the nation sought to find its security “in Asia, not from Asia”. In essence, the 1995 agreement changed Australia’s strategic view of Indonesia.

In Canberra, Indonesia was no longer seen as a source of expansionism and caprice. With the release to this author of new archival and policy documents, the story of the 1995 Australia–Indonesia Agreement for Maintaining Security can now be told in detail. These documents contain briefs from the departments of Prime Minister and Cabinet, Foreign Affairs and Defence, along with records of conversations Keating had with the two emissaries he selected to undertake the secret negotiations, the former chief of the Australian Defence Forces, General Peter Gration, and Keating’s principal foreign policy adviser, Allan Gyngell. They also contain accounts of the prime minister’s talks with ministers and officials, and, of course, his formal encounters with the Indonesian president.

If Australia’s engagement with Asia was Keating’s “magnificent obsession”, Indonesia was its lodestar. In April 1992, Keating made Jakarta his first international visit as prime minister. He had told Hawke in their contest for the Labor leadership throughout 1991 that the country was more important than Africa or the Commonwealth, and in an interview with journalist Laurie Oakes in the middle of that year he was clear that strengthening ties with Indonesia would be his foreign policy priority. It was the country “with which we are yet to put the full constellation of foreign policy instruments in place”.

Keating was as good as his word, telling an audience in Jakarta during a major speech there in April 1992 that Indonesia was in “the first rank of Australian priorities”. As a result of the address, the Indonesian government and business elite, according to then Australian ambassador Allan Taylor, would come to “welcome Australia’s participation in the region spiritually and psychologically, as well as physically”.

During a private leaders’ meeting, Keating also made much of the stability provided by Suharto’s New Order government, calling it “one of the most significant and beneficial events in Australia’s strategic history”. For his part, Suharto made it clear Indonesia had “no territorial designs on its neighbours”. Yet he stressed that while wanting closer defence links with Canberra through high-level visits and consultations, joint military exercises, shared training and staff college exchanges, “there should be no bilateral defence pact”. Keating did not sidestep the issue of East Timor, telling his host that it was a “great pity for Indonesia since it detracted from what Suharto had achieved”, pressing him on the need to find a “basis for long-term reconciliation in the province”.

Suharto is reported to have been impressed by his first discussion with Keating, telling his advisers that he admired the Australian’s patriotism and praising his readiness to promote an Australia more engaged with its own region.

The groundwork, then, had been laid. There was mutual respect between the two leaders. The question now for Australia was how to channel that connection into a formal agreement: how to make a shared concern for strategic equilibrium overcome Indonesia’s outlook on the world, which had traditionally favoured non-alignment.

A second hurdle would be the Indonesian armed forces (Angkatan Bersenjata Republik Indonesia, ABRI), which had traditionally been “averse to the notion of defence commitments”.

The challenges in getting the Indonesian political establishment on board was one thing; domestic approval was quite another. The proposal for a defence agreement faced considerable opposition in Canberra. Keating’s handwritten annotation on the first substantial briefing on the topic he received from his own department neatly encapsulated the local bureaucratic reaction: “the empire strikes back”.

It had fallen to Michael Thawley, then first assistant secretary in the Department of the Prime Minister and Cabinet International Division, to summarise the criticisms he was hearing from around the bureaucratic traps. They were that an agreement would “be vulnerable to a new regime in Indonesia which would pose a threat to Australia (a Defence worry)“, “provide a free kick to an Indonesian government which might want to have a go at us in a bilateral downturn”, “link Australia with ABRI’s internal security agenda and human rights abuses”, and “diminish or blur Australia’s commitments to ANZUS and the Five Power Defence Arrangements (FPDA)“.

Thawley had relayed what was in essence a two-pronged assault led by the departments of Defence and Foreign Affairs. Their reactions, as Gyngell warned him at the time, were as much about protecting their own turf as a certain nervousness about Indonesia. Defence minister Robert Ray wanted instead the power to negotiate a memorandum of understanding (MoU) with Jakarta, while foreign minister Gareth Evans, though not opposed to a defence agreement, lent towards a Joint Declaration of Principles (JDP).

Not unreasonably, both ministers may have thought that Keating was overreaching. But Keating would not be deterred. He saw an MoU and a JDP as being of token value and insufficient to achieve region-wide strategic objectives. And both ministers, perhaps, underestimated his determination to reach a serious agreement between the two countries.

What the documents detailing these extraordinary events reveal is just how much this security initiative was about establishing a strong relationship with Indonesia for the future. Keating not only wanted to bury the old fears of Indonesia; he was looking ahead to the possibility of a new threat, in the form of a potentially more aggressive China. He was doing what any prudent leader should do — thinking broadly about the nation’s geopolitical future and preparing for any worst-case scenario.

This raises the question of whether fear of China, despite the growing economic, people-to-people and educational links that had sustained the bilateral relationship throughout the 1990s, still lurked close to the surface of Australian regional anxieties.

In the 1993 White Paper, Defence officials found “strong grounds for optimism” about the likely benign trajectory of China’s growing strategic influence, but they still identified “residual grounds for concern”. A year later, Keating was adamant that Australians had “nothing to fear from China”, but his rider spoke to the very concerns that would come to animate the strategic debate 20 years later: “Do we want to be in the Chinese orbit … and feel the pull of gravity of China? No, of course we don’t.”

And in his last major foreign policy speech as prime minister, delivered in Singapore in early 1996, it was as if Keating was setting up for the China challenge to come. He voiced anxiety even as he sought to assuage it in others. China would be a “great uncertainty” in the coming decades, he said, and “the sheer size of its population and economy raise questions for the rest of us about how we deal with it”. The answer, in this era, was not to reanimate the Cold War policy of containment: rather, it was to “help China find a place for itself” through APEC and a wider security dialogue.

But this was the public message. It was impolitic, even then, to explicitly finger China as a contingent threat, to voice the kinds of anxieties about Chinese intentions that started to become second nature to Australian political leaders from 2008. While Keating believed — and still does — that China would never make a territorial assault on neighbouring states, Suharto had a different view. The Indonesian leader was suspicious of China, and it was this Keating leveraged to convince his Indonesian counterpart to enter into the agreement.

As Department of the Prime Minister and Cabinet officials argued to Keating, both Indonesia and Australia had “an interest in keeping the United States engaged in the region” and both had “concerns” that US engagement couldn’t “be taken for granted”. Australian officials agreed that Indonesia would suffer similar consequences to Australia if US nuclear deterrence was not effective and “if Chinese power were not offset”.

Thus, when Keating spoke to Gration before handing him the negotiator’s baton, he stressed that he and Suharto, in their initial meeting, had agreed that “the region was changing fast with many uncertainties: China’s growing power, the durability of Japan’s strategic client relationship with the US, the outcome on the Korean peninsula, the role of Vietnam”. A declaration of mutual strategic trust, he added, would “transform the regional strategic outlook and make the entire region stronger”.

It was this future, Keating told Suharto in their September 1995 meeting in Bali, that he “worried about”. The final Cabinet submission continued this theme, underlining the reassurance a security arrangement would bring, since “both are in a region undergoing very large and uncertain strategic change”.

Although Australia was not “trying to contain or confront China”, the Department of the Prime Minister and Cabinet did include a mock question for Keating in assisting his preparation for press questions. “Prime Minister,” it read, “isn’t this directed at China?” Evidently, in one sense, it was.

The treaty was signed by the respective foreign ministers, Gareth Evans and Ali Alatas, at a ceremony at the colonial-era Istana Merdeka building in Jakarta on December 18 1995, witnessed by the two leaders and a pack of media.

The agreement — which had treaty status and took much of its language from the ANZUS Treaty — committed the two governments to consult at ministerial level on a regular basis about matters affecting their common security, to consult each other in the case of adverse challenges to either party or to their common security, and, if appropriate, to consider measures to defend their security, which might be taken individually or jointly.

Keating’s proposal was a rare instance of Australian grand strategy in practice. Although “grand strategy” is not a phrase often heard in the diplomatic lexicon of a middle power — it might be said that Australia, in lacking omnipotence, has no claims to omniscience — the story of the Australian–Indonesian security agreement shows a national leader focusing on geopolitical coordinates that were yet to be fully mapped. “You get your chances with history,” Keating said in an interview for this article, “your chances at the window of opportunity.”

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