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Indonesia’s response to the spying imbroglio last week – when president Susilo Bambang Yudhoyono recalled his ambassador and suspended security co-operation with Australia – reflects a political history of constant foreign intervention in Indonesian affairs that few Australians are aware of.

Battle for independence

Indonesia emerged as a modern nation in the wake of World War Two, when Japanese troops ousted the Dutch, who had subjugated and exploited the country for centuries. After the Japanese surrender in August 1945, Indonesia’s founding president Soekarno (also known as Sukarno) declared independence.

The new republic lay within the American-dominated South West Pacific Area and was soon handed to the British-dominated South East Asian Command. Allied soldiers arrived in Jakarta in September 1945 and began to occupy major Indonesian cities with the aim of returning Indonesia to its pre-war status as a Dutch colony.

Soekarno led Indonesia’s struggle for independence. Government of Indonesia

Thousands died in the bombing of Surabaya. Dutch soldiers and administrators returned, led by Hubertus Johannes van Mook, who had run the Dutch East Indies government-in-exile from Brisbane during the war. Dutch POWs, released by Indonesia, were armed and sent back on rampages against Indonesian civilians and police. Australian troops participated in the occupation of the outer islands, including Bali, and were involved in massacres.

The British have since apologised for this cruel attempt to stifle the young nation’s struggle for freedom and sovereignty. Australia has not.

The Soekarno government also clashed with the British when the latter shaped its own former colonies in the region into another modern state. The north of the vast island of Borneo was annexed into the new state of Malaysia despite its cultural and historical ties to Indonesia and contested political status, and amidst protests by the local population.

An undeclared war (the “Confrontation”) began, and Australian troops participated. Covert operations into Indonesian Kalimantan began in 1964 under the code name Operation Claret. Attempts to assassinate Soekarno failed.

In 1965, Indonesia witnessed one of the greatest genocides of the 20th century, as army general Suharto led a military coup against the left-leaning but essentially nationalist and non-aligned Soekarno government.

Up to one million innocent Indonesian civilians were butchered over the following year at a rate of 1,500 people per day, to the applause of western powers including Australia.

Suharto became Indonesia’s second president in 1967. Republic of Indonesia

The pretext was a fake coup attempt, falsely attributed to the Indonesian Communist Party (PKI). The deep involvement of British and American intelligence in staging this bloody military coup, similar to the Pinochet takeover of Chile, is beyond reasonable doubt.

The victors were soon able to convene in Switzerland to divide the spoils – Indonesia’s enormous wealth in natural resources – thanks to foreign investment legislation introduced by the military dictatorship. Countless blogs in Indonesia ensure this history is more widely known there than it is in Australia.

The lack of an apology for such consistent unneighbourly behaviour may seem astonishing in the context of the “Asian Century” and needs to be understood as a direct consequence of the ongoing nature of these operations.

In West Papua, for example, the Indonesian military continues to provide the means of violent coercion required to facilitate vast foreign-owned mining and other ventures not set up primarily to benefit Indonesia, but for which Indonesia’s military will one day be asked to take the political blame.

Continuity, as well as profound ambivalence, is evident in the personal histories of members of today’s Indonesian elite. Looking back to the military coup, for example, we discover that on 19 November 1965:

Indonesian president Susilo Bambang Yudhoyono is married to his daughter.

What then is the meaning of the current spying scandal? Why would Australian agencies spy on Sarwo Edhi’s daughter?

Why, for that matter, should Australia spy on Yudhoyono, who has earned himself a bad name in Indonesia precisely for selling out to the interests of western investors and governments? Yudhoyono’s Democratic Party and coalition partner the Prosperous Justice Party (Partai Keadilan Sejahtera or PKS) have been devastated recently by the discovery of corruption involving Australian cattle imports.

Yudhoyono may be hoping that the political theatrics might help to restore his nationalist credentials sufficiently to enable him to serve as kingmaker in the next year’s presidential election. But given that Edward Snowden was the source of the leak, it seems more likely to have been an afterthought.

Rather, the ambiguities in the relationships are such that Australian distrust is easy enough to understand. It is not that Indonesia is actually a threat to us. In more than 20 years of research, I have never seen the slightest indication of hostile Indonesian ambitions toward Australia. Instead, the potential threat is that this local elite might turn around, become genuinely nationalistic, and bring the feeding frenzy to an end.

Indonesians increasingly see Australia as a small and recalcitrant neighbour. AAP/Eka Nickmatulhuda

Feelings among the Indonesian elite – even those who have collaborated with Australia in the past – are deeply ambivalent. On his deathbed, Yudhoyono’s father-in-law is said to have repented of his role as a key engineer of the killings. Some of Yudhoyono’s own relatives in the East Javanese city of Blitar suffered in the violence Sarwo Edhi had helped to orchestrate.

Similar patterns emerge when we look at other dynasties, such as the very prominent family of current presidential candidate Prabowo Subianto. Again, we see repeated reversals in Indonesian powerbrokers' relationships with the Dutch and subsequent foreign powers, oscillating between collaboration and strong opposition.

These ambiguities are now becoming explosive for two reasons. First, Indonesia is a rising power and this is slowly dawning on the national psyche. A new assertiveness can be seen occasionally in political posturing, and there is a new sense in Indonesia of Australia as a small and recalcitrant neighbour that does not want to see the writing on the wall.

Some members of the Indonesian elite also realise Australia is itself a victim of colonial history, and is disadvantaged in the Asian Century by a set of traditional alliances that are difficult to re-negotiate.

Second, after the fall of the Suharto dictatorship in 1998, Indonesians are increasing becoming aware of their nation’s sad post-colonial history. Even the truth about 1965 – long buried by the Suharto regime – is now being openly discussed and acknowledged.

Considering Australia’s position as a white settler nation in southeast Asia and being newcomers to the neighbourhood, we need to consider urgently whether we should loudly and formally distance ourselves from this imperial legacy.

How long until it is too late to apologise to a country whose economy is now larger than Australia’s? Indonesia’s leaders, whether Australia deserves it or not, are still receptive to a genuine offer of friendship. I cannot think of any action that would give a greater boost to Australian sovereignty, regional security and prosperity.

It is Australia’s great fortune to be part of Asia, and there is nothing to fear in this neighbourhood but our fear itself. It’s time to say “sorry”, and “never again”.