Morrison’s possible embassy move to Jerusalem upsets Indonesians

Has Scott Morrison derailed the Indonesia-Australia comprehensive economic partnership agreement, and eight years of difficult negotiations, by floating the idea of moving Australia’s Israeli embassy from Tel Aviv to Jerusalem?

Officially, Indonesia is denying ABC reports citing an unnamed government figure saying the embassy relocation would be a deal-breaker for Jakarta, a steadfast supporter of a separate Palestinian state, though it has made its displeasure to Canberra clear.

Behind the scenes, discussions are under way over how to respond to an Australian shift.

One senior Indonesian official told The Australian yesterday: “Some impact to CEPA is certainly being discussed internally as a possible response to moving the embassy”, though any move would have to be measured and proportionate.

Indonesia’s Foreign Minister Retno Marsudi relayed Jakarta’s unhappiness during a phone conversation with Marise Payne on Monday night, though a spokesman insisted the trade deal was not discussed.

She repeated Jakarta’s “strong concern” over the embassy move at a press conference yesterday with visiting Palestinian Foreign Minister Riyad al-Maliki, who warned that Australia was “risking trade and business with the rest of the world’’.

“Indonesia asks Australia and other countries to support the peace process between Palestine and Israel in accordance with the principles agreed and not take steps which could threaten the peace process and the stability of the world,” Ms Retno said.

So far, that is as far as it goes.

Trade Minister Enggartiasto Lukita insisted yesterday both countries were still on track to sign the deal this year.

Indonesia’s senior trade negotiator Deddy Saleh said: “There has been no direction given by our government relating to the matter.”

How long that remains the case is now a key question, given there are plenty of hardliners, including within Jokowi’s own administration, pushing to punish Australia over this.

Mr Morrison scored an early foreign policy goal when he visited Indonesia in his first week as Prime Minister and cemented a trade agreement that could bring huge benefits to Australia’s beef, dairy, grain, horticulture and education sectors.

But his ruminations on the embassy issue this week could not have come at a worse time for his “great friend”, President Joko Widodo, who is campaigning for re-election and happens to be hosting a Palestinian delegation in Jakarta this week to mark Solidarity Week for Palestine.

The biggest challenge to Jokowi’s bid for a second term in April comes from the economic nationalists who oppose free-trade deals, and Islamic hardliners for whom the Palestinian cause is a heartland issue, just as it has long been for Indonesian politicians.

A shift in Australia’s position on Israel would hand Jokowi’s enemies all the firepower they need to make the free-trade deal an issue ahead of the presidential election. The populist and pragmatic politician will not risk the opprobrium of key voter groups for the sake of a politically sensitive trade deal that could be quietly put on ice.

“In Indonesia and Australia, there are political forces pushing back against this agreement,” ANU Indonesian politics professor Greg Fealy said. “Islamic groups will be fiercely critical of any government that talks of relocating its embassy to Jerusalem. Jokowi wants these people on side and they will press him to denounce Morrison’s statement.’’

Additional reporting: Nivell Rayda