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Peter Costello says Australia feared Indonesian economy would collapse and cause boat exodus

The Guardian - January 1, 2020

Gay Alcorn – Australia leading an international peacekeeping force in East Timor after the territory voted for independence in 1999 was a turning point in Australia's role in the region, according to former treasurer Peter Costello.

Costello, at a briefing ahead of the release of cabinet records by the National Archives of Australia, said the handling of the crisis was among biggest achievements of John Howard's government.

"It was a great achievement. It marked a turning point in how Australia saw itself," he told Guardian Australia. "Up until then, the view had been that the Asian tigers are going to dominate our economy, Australia is the poor white trash of Asia.

"All of a sudden we get to 1998 [the Asian financial crisis]. All of Asia's going down – Thailand, Korea, Indonesia. Our economy's strong, we can actually show some regional leadership."

Australia's role in East Timor, now known as Timor-Leste, remains contentious, with critics such as the former defence department deputy secretary Hugh White arguing it was far from a triumph but a series of accidents and missed opportunities, even though the peacekeeping efforts were a success.

Costello acknowledged that East Timor was of little interest for major political parties in the two decades after 1975, when the territory declared independence from its colonial masters Portugal. Indonesia took advantage of the turmoil by invading and annexing East Timor.

"The thinking was people who worry about human rights in East Timor were soft heads," he said. "This is realpolitik. We have a northern neighbour which is a very powerful country. It is a fait accompli that they are exercising military control over East Timor. We don't want to antagonise this very powerful, potentially hostile neighbour.

"Point two, what's the alternative because this state will not be self-sufficient, couldn't possibly be an independent nation and that just means it could be penetrated by various malevolent people."

The cabinet records of 1998 and 1999 deal with the fast-moving East Timorese crisis but are short on detail. On 17 March 1998, they record that the national security committee "noted its concerns at recent actions by the Indonesian government detrimental to restoring international confidence in the Indonesian economy".

This is a reference to the 1997/1998 Asian financial crisis, which hit Indonesia hard and led to humiliating bailouts by the International Monetary Fund. The second bailout, in January 1998, marked the beginning of the end of Suharto's 32-year rule and, Costello says, provided the unexpected momentum towards East Timorese independence. Suharto was forced to resign in May and the unpredictable BJ Habibie took office.

At the time, the worry was the Indonesian economy collapsing and "you would have mass evacuations, people taking to boats trying to get into Australia".

No mention is made in the cabinet records of Howard's famous letter to Habibie in December 1998 in which he restated the government's position that East Timor remain part of Indonesia, but suggested a long period of autonomy before a possible act of self-determination. How important or otherwise that letter was remains unclear but Habibie blindsided Canberra the following month, announcing a snap referendum in East Timor on independence.

Howard briefed cabinet about his meeting with Habibie in Bali in April 1999 but the details of it – or how hard Howard pushed the Indonesian president to accept an international peacekeeping force before the referendum, and thus contain violence – is not mentioned.

In August, the East Timorese voted overwhelmingly for independence. What followed was a brutal campaign of violence, instigated by pro-integrationist militias and aided by the Indonesian military. Hundreds died and 250,000 people crossed the border into West Timor.

By late September, with Indonesian government approval and United Nations backing, the Australian-led International Force East Timor (Interfet) began deployment.

By October, cabinet discussed paying for the operation, with the defence budget to be supplemented by $550m in 1999-2000. In the same month, it was noted that the foreign affairs minister, Alexander Downer, was engaged in a "new round of intense lobbying", particularly towards his counterparts in European countries, to contribute funds for the efforts.

Interfet under the command of Major General Peter Cosgrove and 5,500 Australian personnel did its job to end the violence and offer humanitarian aid to a traumatised people. Command was handed over to the United Nations in February 2000.

But the cabinet records give only scant insight into the thinking of the government before and after the referendum, and what strategic or political errors were made.

Those assessments might be ones for historians but sensitivities remain.

It was reported in November that an official history had been stymied by resistance from the Department of Foreign affairs and Trade, which demanded major changes to the draft to water down revelations about Australian officials and the Indonesian military. The fear was the book would upset Indonesia authorities. Twenty years on, some things have not changed.

Source: https://www.theguardian.com/australia-news/2020/jan/01/peter-costello-says-australia-feared-indonesian-economy-would-collapse-and-cause-boat-exodus