Patrick Walters – A strange paradox continues to afflict Australia's bilateral relations with Indonesia.
While people-to-people links strengthen year-by-year, opinion polls show a steadily increasing proportion of Australians now nominate Indonesia as our principal long-term security threat.
A recent study by the Australian Strategic Policy Institute on public attitudes towards security issues shows 31 per cent of respondents considered Indonesia to be "very likely" to pose a threat compared with nine per cent for China.
They demonstrate that Australian governments still need to address lingering popular perceptions about the long-term direction of Indonesia.
The number of Indonesian students studying in Australia has more than doubled in the past decade to 25,000, says Imron Cotan, Indonesia's ambassador to Australia – an indicator that augurs well for long-term ties between the two countries.
Yet by contrast, the number of Australians studying Indonesian at schools and universities continues to fall in the wake of government funding cuts for the Asian language teaching program in our schools.
Indonesia's political elite now have a genuine stake in the relationship. They routinely send their sons and daughters to study in Australian universities and are now significant property investors.
At the government-to-government level, Australia's intervention in East Timor in 1999 fuelled critical perceptions in Jakarta about Australia's long-term strategic ambitions.
Australia's critics in Jakarta now accuse Canberra of aiding secessionist sentiment in West Papua – a claim consistently denied by the Howard Government.
Ironically, the October 2002 Bali bombings, in which 88 Australians died, and the threat posed by Islamic terrorist groups such as Jemaah Islamiah, marked a turning point in government-to-government ties after the low point in 1999-2000 when the two countries came perilously close to conflict. Imron Cotan describes the official bilateral relationship as "excellent" after the nadir experienced in the wake of East Timor.
"We have started to trust each other again," says Imron. Much of the credit for the upswing in relations must go to Australian Federal Police Commissioner Mick Keelty, whose expert team played a fundamental role in the arrest of the Bali bombers.
Keelty worked painstakingly over a decade to build a strong rapport with his counterparts in the INP. "When the Bali bombings occurred, all the groundwork had been laid to allow us to go in and work seamlessly with the INP."
Australia and Indonesia co-hosted a regional counter-terrorism ministerial meeting in February and a huge effort has gone into improving counter-terrorism co-operation.
The key intelligence agencies from both sides, including ASIO, ASIS and the INP and Indonesia's state intelligence agency BIN, recently met in Australia and bilateral military ties have resumed after being suspended in the wake of the East Timor crisis.
A further sign of the strength of the AFP-INP relationship is the $38 million Canberra is spending on the Jakarta Centre for Law Enforcement Co-operation, which will provide training in a whole range of policing functions including intelligence, forensics and prosecutions.
Indonesia is Australia's 10th-largest trading partner with two-way trade worth $8.3 billion last year. Services trade is estimated at another $1.5 billion a year with education now a major export driver for Australia.
Around 400 Australian companies have investments worth $2.6 billion in Indonesia, with significant presences in the mining, construction, banking, food and beverage and transport sectors.
Indonesia remains Australia's second-largest aid recipient after Papua New Guinea, with aid flows this year totalling $160 million.
Megawati Sukarnoputri is yet to pay an official visit to Australia while John Howard travelled to Jakarta twice last year.
[Patrick Walters is The Australian's national security editor.]