Greg Ansley: Neighbours, everybody needs ...

There is another big question rumbling beneath the diplomatic crisis sparked by revelations Australia had tapped Indonesian President Susilo Bambang Yudhoyono's mobile phone: what else will American whistleblower Edward Snowden pull from his massive bag of secrets?

The tiny proportion of documents the former National Security Agency contractor has released so far have been shattering enough, revealing the depth of United States intelligence operations against German Chancellor Angela Merkel and other European leaders.

Yesterday, the New York Times dropped another bombshell with a leaked memo showing that regardless of commitments to the contrary, the US will spy on its partners in the Five Eyes intelligence network if it considers this necessary.

The partners in the network are the US, Britain, New Zealand, Australia and Canada.

Australia is now facing massive problems with its closest neighbour, Indonesia, which it regards as crucial to its future in Asia. A friendly Indonesia acts as a bulwark to the northwest, a helping hand with other Asian countries less impressed by Australia, a vital partner in combating terrorism and people smuggling, and an increasingly important trade and economic partner.

For the moment at least, Indonesia has shut the door on Canberra because of revelations of the tapping of the private phones of Yudhoyono, his wife and eight senior political colleagues.

Snowden documents had previously confirmed secret electronic listening posts in Australian missions throughout Asia had intercepted radio, telecommunications and internet traffic, and fed them into the Five Eyes network.

The missions included embassies in Jakarta, Beijing, Bangkok, Hanoi and Dili, and high commissions in Kuala Lumpur and Port Moresby. The reaction to this was muted: it is widely accepted that all embassies spy on their hosts to some degree.

In May it was revealed that Chinese hackers had stolen the blueprints of the new, super-secret headquarters of the Australian Security Intelligence Organisation in Canberra. Indonesia has admitted it has spied on Australia, and Jakarta is at present beefing up the nation's electronic eavesdropping capabilities.

But given the fury over the Indonesian debacle, any further disclosures of Australian intelligence operations in Asia could trigger an entirely new diplomatic ballgame.

Many Asian countries in the arc from Beijing to Southeast Asia are suspicious of Australia and its close ties to the US. Former Liberal Prime Minister John Howard's depiction of the nation as the region's "deputy sheriff", and his advocacy of the right to launch pre-emptive strikes against terrorists in other countries still rankle.

Australia's image has not been helped by the white boys' club of the Five Eyes agreement, and the increasing presence of US forces in Australia - most recently the phased build-up of the Northern Territory as a training ground for a 2500-strong Marine task force with ships and aircraft.

Canberra has yet to dig its way out of the latest spy hole.

Prime Minister Tony Abbott says his priority is a close and friendly Indonesia. Foreign Minister Julia Bishop and US Secretary of State John Kerry, after talks this week in Washington, praised Indonesia's regional leadership and said they wanted to increase defence co-operation with Jakarta.

But Yudhoyono, deeply offended by the phone intercepts, has suspended co-operation in a raft of intelligence, military and people-smuggling operations. His foreign affairs spokesman, Teuku Faizasyah, told Fairfax Media the President had said in his letter to Abbott that much more than an apology was now needed.

The Australian Prime Minister's handling of the crisis has so far fallen flat. He has been attacked by prominent Indonesians and by critics at home.

The deputy chairman of the Indonesian Foreign Affairs Commission, Tebagus Hasannudinsays, said Abbott "lacked diplomacy skills" and his response was not in accordance with the standards expected by Indonesians.

Abbott had also damaged trust: "That's the basic principle of Asians. Once you're unfaithful, you will no longer be trusted."

Meidyatama Suryodiningrat, editor-in-chief of the Jakarta Post, said in an article in yesterday's Australian newspaper that Australia had lost its best friend in Asia.

"For a country that proclaims to invest so much in bilateral ties with its closest neighbour to the north and considers it to be the highest priority tier, Canberra's response has been a colossal misjudgment of diplomacy, an utter failure to understand the psyche of the President and character of the Indonesian people," he wrote.

Demonstrators burned Australian flags in the streets.

Daniel Baldino, senior lecturer in international relations at Notre Dame University, said Abbott needed to "better filter his natural bulldog political instincts" and should apologise to Indonesia.

"The clear-eyed combative stance that served him well as Opposition leader can do more harm than good when dealing with the intricacies and complexities of foreign affairs," he wrote in The Conversation.

Former Prime Minister Julia Gillard told CNN that Abbott should follow US President Barack Obama's example with Merkel by apologising and promising not to tap the phones of Indonesian Presidents in the future.

Late yesterday, Abbott was still pondering where to go next.