Australia is struggling in ever-deepening waters as it tries to find a formula that will soothe Indonesian outrage over its spying activities without compromising its intelligence operations.
Prime Minister Tony Abbott was yesterday attempting to find an acceptable path following his receipt of a letter from Indonesian President Susilo Bambang Yudhoyono demanding an explanation for the tapping of his mobile phone and those of his wife and eight senior politicians.
Yudhoyono has suspended cooperation on intelligence, people smugglers and asylum seekers' boats, and cancelled military training including an air force exercise in Darwin and another testing anti-hijacking tactics by the SAS and Indonesia's elite Kompassus unit in West Java.
The ceremonial handing over of a C-130 Hercules aircraft, the first of four refurbished ex-Australian Air Force transports gifted to Indonesia by the former Labor Government, was also called off.
The severity of Indonesia's retaliation, directly striking at the areas most sensitive to Abbott, and the possibility of flow-ons affecting important trade and business negotiations, has pushed the spy scandal well to the front of Australia's political agenda. There is no serious suggestion from any quarter that electronic eavesdropping be curtailed, and there is equally no way Abbott can expand upon the operations in his response to Yudhoyono.