When US Deputy Defense Secretary Paul Wolfowitz announced recently that “going after al Qaeda in Indonesia is not something that should wait until after Al Qaeda has been uprooted from Afghanistan”, a shiver must have gone up the collective spine of Australia’s foreign policy elite.

At a time when the Howard Government is trying to build new bridges with Jakarta after three tense and unproductive years, the last thing Canberra wants is the so called ‘war against terrorism’ – to which it is a party – extended to the Indonesian archipelago.

It seems clear that Al Qaeda has active cells in Indonesia, with reports of training camps in Sulawesi and links between Al Qaeda and local Islamic militias such as Laskar Jihad and Laskar Mujaheddin.

As one senior US official conceded, “Indonesia offers practical jihad experience you can’t get in too many other places.” It also possible that senior AL Qaeda officials – perhaps Bin Laden himself – have fled to Indonesia from Afghanistan.

With long standing military ties between Washington and Manila, the US may find that destroying anti-Western terrorist groups such as Abu Sayyaf is comparatively straighforward in its former, predominantly Christian, colony. However, Indonesia will be a very different challenge to the Philippines, and one that would present Canberra with a series of invidious choices.

Will the Bush Doctrine, which states that Washington makes no distinction between terrorists and states which harbour terrorists, be applied to Indonesia?

While President Megawati may want to cooperate with the US in shutting down her most troublesome Islamic militants, can she afford to antagonise their supporters both inside and outside the Indonesian parliament? And can she promise the cooperation of Indonesia’s armed forces (TNI), which her two predecessors could not guarantee?

Indonesia’s intelligence chief, Lieutenant-General A.M. Hendropiyono, has already warned Washington that the presence of terrorists in his country “does not mean the United States can make the area of Indonesia part of its war.”

Until recently, the West paid scant attention to Indonesia as a base for international terrorism. Groups such as Laskar Jihad were associated with communal violence and viewed in the context of ongoing secessionist struggles. Because its in-country intelligence is comparatively weak, the Pentagon would find the task of destroying AL Qaeda facilities and cadres very difficult without the assistance of the TNI.

However, as things currently stand, laws passed by the Congress after the East Timor crisis in 1999 prohibit Washington from providing most forms of military assistance to Jakarta – much to Secretary of Defence, Donald Rumsfeld’s ire.

In its current mood Washington has little patience for such legal niceties, despite warnings by former national security adviser Brent Scowcroft that Indonesia was “still barely a country” and should be able to declare itself neutral in the ‘war against terrorism.’

If it believes senior al Qaeda leaders are hiding out on one of Indonesia’s 17,000 islands, the Bush Administration won’t hesitate to pursue them. However, the consequences for Megawati’s government, the cohesion of Indonesian society and the country’s relationship with the West would be enormous, especially for Australia.

Having invoked ANZUS in fulsome support of the Bush Administration’s war in Afghanistan, the Howard Government would find it impossible to back away if the ‘war against terrorism’ came to South East Asia. An extension of the war to this region would, after all, make it relevant to Australia’s national interests for the first time. Neutrality isn’t an option.

However, Canberra would pay a significant diplomatic price for supporting US-led military assaults on the Indonesian archipelago, even if Australian SAS forces weren’t directly involved.

It would almost certainly bring an end to any nascent rapprochement between Canberra and Jakarta. Cooperation on people smuggling, piracy, regional security and a range of other rissues would cease. And anti-Australian groups within the Indonesian polity who are still angry about Canberra’s leading role in East Timor’s liberation would be handed yet another stick with which to club the relationship back to square one.

Canberra will be praying that Washington doesn’t openly ask it for any help in this new chapter of the war and that it takes Australia’s interests into account before it launches any attacks on its northern neighbours. It knows the rest of South East Asia will be watching to see how Australia responds and that the very future of the nation’s regional engagement is at stake.

All of this must be keeping Australia’s diplomats and strategic planners up late into the night. Every possible scenario looks bleak. It’s their worst nightmare and it may come true – very soon.