Canberra seals closer ties with Indonesia

CANBERRA - Australia and Indonesia have announced new moves to boost security, economic and other key relations during a three-day state visit by President Susilo Bambang Yudhoyono.

The often troubled relationship between the two countries will now be tightened by increased co-operation on people smuggling and terrorism, and greater political contact - including annual meetings between the two nation's leaders, and between their defence and foreign ministers.

The two nations will also set up a leadership dialogue of politicians, business leaders, academics and opinion makers, similar to those already operating with the United States and New Zealand.

These initiatives came as Jakarta announced a further success in the campaign against terrorism, which has developed as one of the most successful recent measures of co-operation between Australia and Indonesia.

Yudhoyono confirmed to a state luncheon in Canberra yesterday that Dulmatin, a senior member of the Jemaah Islamia terror group, had been killed by police during a raid near Jakarta on Tuesday.

The al Qaeda-trained Dulmatin, 39, was a key figure in the in the 2002 Bali bombings that killed 202 people including three New Zealanders and 88 Australians.

"For the safety of our people, for the safety of Australians and Indonesians and the rest of the world, let us continue our co-operation to fight terrorism," Yudhoyono said.

But ahead of yesterday's meeting between Yudhoyono and Rudd, and the Indonesian president's address to the joint houses of parliament, two further boatloads of asylum seekers were intercepted off Australia's west coast.

They brought to 20 the number of boats intercepted this year, rubbing a frequently raw nerve in relations with Indonesia and stoking a growing political row within Australia over a renewed surge that now threatens to overwhelm detention facilities on Christmas Island.

During their talks, Rudd and Yudhoyono launched a new framework agreement on co-operation to combat people smuggling and trafficking in persons, adding to Australian relief that Jakarta will finally criminalise people smuggling this year.

Few details have been provided on the agreement, which was finalised on Tuesday night by Foreign Minister Stephen Smith and his Indonesian counterpart, Marty Natalegawa. But Smith told ABC radio that the agreement would extend co-operation.

In his speech to Parliament, Yudhoyono reflected on 60 years of diplomatic highs and lows between the two countries, from Australia's support for independence from Dutch rule and help during the 2004 Boxing Day tsunami - "an emotional turning point in our relationship" - to the "all-time low" of East Timorese independence.

He said that since then the two countries were looking at each other differently in political, cultural, economic and security terms.

Yudhoyono agreed with Rudd that the relationship was now solid, but said there was no room for complacency and that the two countries had to earn each other's trust.

He said people in each country still tended to see the other as stereotypes: a Lowy Institute for International Policy survey last year reported that 54 per cent of Australians did not trust Indonesia, and an earlier study showed Indonesians felt similarly about Australia.

Yudhoyono said Canberra and Jakarta needed to learn to manage an increasingly close relationship that would inevitably create its own new tensions, and that economic co-operation and trade needed to expand.

The two countries had completed a free trade agreement feasibility study, but another study by Lowy researcher Fergus Hanson said Indonesia accounted for less than 1 per cent of Australia's foreign investment - and despite the size of its economy, two-way trade with Indonesia was half of that across the Tasman.

Yudhoyono said Indonesia and Australia had a great future together.

"We are not just neighbours. We are not just friends. We are strategic partners. We are equal stakeholders in a common future, with much to gain if we get this relationship right, and much to lose if we get it wrong."