Ioannis Gatsiounis, Kuala Lumpur – The last news to come from Malaysia and Indonesia was that the two countries were working hard diplomatically to resolve a border row in the Sulawesi Sea in which both sides sent warships to the contested area to stake their claims. There's good reason to believe they'll find a way. Both nations are economically dependent on each other – Malaysia on Indonesia largely for migrant labor, Indonesia on Malaysia for capital investment – and waging war over two putatively oil-rich islands isn't thought to be in the long-term interest of either country.

Conversely, this outlook neglects to consider the resentment and mistrust that have quietly been building between the two nations in recent years, especially among the citizenry, and the danger that could arise should both governments ignore public sentiment in their attempts to defuse the matter.

Many observers point to the Malaysian government's recent decision to send packing an estimated million-plus illegal Indonesian migrant workers as a catalyst to noisy public protests in Indonesia over the territorial dispute, which saw flag-burning and calls to "crush Malaysia".

But some Indonesians were responding to much more: what they feel is a persistently callous and disrespectful attitude of economically stable Malaysia toward its "big brother" Indonesia. Indonesians haven't forgotten the last go-round, in 2002, when then-Malaysian leader Mahathir Mohamad sent back 400,000 Indonesian workers (many to the country's poorest and most volatile regions), and threatened to jail and cane those who stayed behind. Hundreds died during the journey. More recently, the Malaysian government has refused to accept refugees from the war-torn Indonesian province of Aceh. Meanwhile, in race-sensitive Malaysia there is a widely held belief that Indonesian migrant workers pose a criminal threat, which the state-controlled media have routinely played up to divert attention from government abuse and mismanagement surrounding other domestic issues.

"All this talk that Malaysians and Indonesians share a common identity [linguistically, racially, religiously] doesn't add up to that much," said K S Nathan of the Institute of Southeast Asian Studies in Singapore.

In Malaysia, the public has been known to acquiesce to the government's draconian legislation and press machine in the name of "national interest"; thus the government here looks to have more leeway in how it deals with the border row. Indonesians, on the other hand, have a long tradition of standing up for causes. For instance, they fought for their independence from the Dutch (whereas the British handed Malaysians theirs). And recent history shows that Indonesian dissidents can be a thorn in the side of the ruling elite. Public outcry helped end despot Suharto's 32-year rule in 1998, pressured Abdurrahman Wahid to step down from the post in 2001, and caused the Indonesian government to think twice about aggressively prosecuting convicted Islamic terrorist Abu Bakar Ba'asyir for fear of retaliation.

"The young in Indonesia know what they can achieve," said Nathan. And in the time since September 11, 2001, more and more dissidents have found convenient, efficient and potent means of bypassing their governments to get their message across. The border dispute, for instance, has seen Malaysian and Indonesian hackers damage some 80 websites in the two countries.

This invariably raises the question: To what extent are nationalists willing to go? Might they employ terrorist means to weigh in on the border row?

Morten Hansen, a military and security analyst with the Institute of Defense and Strategic Studies (IDSS) at Nanyang Technological University in Singapore, considers the possibility "highly unlikely, because this crisis is simply territorial and very traditional in essence". But, he warned, "regional conflicts can resurface if these are not addressed through confidence-building measures and bilateral and multilateral cooperation."

Confidence-building is lacking between Indonesia and Malaysia, despite attempts by leaders to play down the border dispute. Indonesia plans to build 25 lighthouses on remote islands bordering neighboring Malaysia, Singapore and the Philippines in an effort to assert its control over outlying islands, while the Malaysian navy recently confirmed that it had dropped elite troops from an aircraft into the Sulawesi Sea.

In Indonesia suspicion is particularly high and far-reaching.

"There is a genuine belief on the part of key elements in the army, some politicians in Jakarta, and a substantial part of the Indonesian public that Indonesia's territorial integrity is in danger, from separatists within and from foreign parties without," Sidney Jones of the International Crisis Group noted in a speech in 2003.

Malaysian and Indonesian leaders began negotiations on Tuesday in Jakarta to settle the maritime dispute, but few predict quick results. "There will be many more meetings until both parties are able to agree [to a solution] through diplomatic means," Malaysian Foreign Minister Syed Hamid Albar was quoted as saying.

Finding a diplomatic solution would be in keeping with the Association of Southeast Asian Nations (ASEAN) way. But what might make it tricky in this instance, said Ralf Emmers of IDSS, "is public pressure on both sides not to make any concessions to national sovereignty". As well, Emmers said, ASEAN diplomacy has usually entailed managing rather than resolving disputes.

Management isn't necessarily easy when oil is involved, particularly at a time when global competition for oil is ever more fierce and Indonesians have been protesting almost daily over a government-imposed fuel-price hike. Management also becomes less certain considering that both countries are under new leadership.

In the past, relations between Malaysia and Indonesia were aided by the rapport between strongmen Suharto and Mahathir. And while newly elected Indonesian President Susilo Bamabang Yudhoyono and Malaysian Premier Abdullah Badawi don't have the iron-fisted reputations of their predecessors, their relationship is a work in progress. Moreover, their assumed positive attributes haven't always worked in their favor, as most had predicted. The soft-spoken Abdullah for one was tagged as "gentle but tough" when he took over from Mahathir in late 2003, and it was widely thought that this would help Malaysia patch up relations with neighboring countries, which Mahathir had left undone. But dealings with at least two of Malaysia's neighbors, Thailand and Indonesia, have arguably gotten worse under Abdullah's leadership. In recent months, Thai Prime Minister Thaksin Shinawatra has vociferously charged the Abdullah administration with negligence in pursuing in northern Malaysia Islamic terrorist elements that Thaksin said were fueling unrest in Thailand's restive south. Now comes the border row with Indonesia. Could it be that Abdullah's soft style is indirectly encouraging Malaysia's neighbors to test his mettle and see what they can get away with?

Abdullah does seem to possess a spirit of compromise, and that can't hurt at the bargaining table. Nor will Yudhoyono's calls for "self-restraint". But neither gesture will necessarily help these countries, unless both sides address their entrenched wariness of each other and discuss how that wariness will dictate official policy, from the ground up.

[Ioannis Gatsiounis, a New York native, has worked as a freelance foreign correspondent and previously co-hosted a weekly political/cultural radio call-in show in the US. He has been living in Malaysia since late 2002.]