Updated: 08/19/2014 18:51 | By Agence France-Presse

Australia, Indonesia agree to bury spy row

Australia and Indonesia have agreed to put a damaging spy row behind them, officials said Tuesday, paving the way for the resumption of full cooperation on issues such as defence.

Australia, Indonesia agree to bury spy row

Indonesian President Susilo Bambang Yudhoyono gestures as he deliveres a statement in Jakarta on July 18, 2014 - by Romeo Gacad

Ties between the neighbours sank to their lowest point in years in November after reports that Australian spies tried to tap the phones of President Susilo Bambang Yudhoyono and his inner circle.

Jakarta recalled its ambassador from Canberra and suspended cooperation in several areas over the incident, including efforts to stop people-smuggling boats reaching Australia.

Yudhoyono called for a code of conduct to govern behaviour and Australian Foreign Minister Julie Bishop said Tuesday an agreement between both sides was now ready to be signed.

"We have reached agreement on the joint understanding and we are currently arranging a time to sign it," Bishop said Tuesday.

Bishop told Fairfax Media the agreement was a "concise statement of our commitment to respect each other's sovereignty... and not to harm each other's interests".

"This means we will not be using our intelligence resources to harm Indonesia's interests," she said, adding that full defence, border security and intelligence cooperation would be restored.

- 'No magic wand' -

Indonesian Foreign Minister Marty Natalegawa said the code of conduct was "essentially a no-spying agreement" but warned that "it will not be a magic wand".

"What we have reached between the two sides is a very succinct yet profoundly important document," he told AFP.

"It really reflects the commitment by both sides not to undertake surveillance activities that will compromise the interests of each other."

Natalegawa said that not all bilateral cooperation that had been suspended would be resumed immediately, but noted the document also included a commitment to carry out intelligence cooperation between the two countries.

Allegations that Australian spies tried to tap the phones of Yudhoyono, his wife and several top officials in 2009 sparked one of the worst diplomatic crises between the two strategic allies in years.

Reports at the time said that Australia's electronic intelligence agency tracked Yudhoyono's activity on his mobile phone for 15 days in August 2009, when Labor's Kevin Rudd was prime minister.

The list of tracking targets also included his wife Ani, former vice president Jusuf Kalla, the foreign affairs spokesman, the security minister and the information minister, the reports said.

Jakarta responded furiously to the reports, which were based on documents leaked by US intelligence fugitive Edward Snowden, by suspending bilateral cooperation in key areas.

Ties were further strained by Australia's policy of pushing people-smuggling boats carrying asylum-seekers back to Indonesia when it was safe to do so.

Natalegawa said he hoped the alleged surveillance was "an aberration" given the strong and positive relationship between Australia and Indonesia over the past decade.

"The experience of the past few months has illustrated that while there may have been some short-term advantages of benefits that one side feels they have obtained, the discovery of these activities does damage far beyond the advantages initially enjoyed," he said.

"But we've had this episode -- the surveillance, only made worse by the people-smuggling issue -- and by having this code of conduct, hopefully we'll get back to where we should have been, in a close and mutually beneficial relationship."

Indonesia and Australia are close strategic and trading partners and have traditionally worked together in many areas, including on anti-terrorism initiatives and on the sensitive issue of asylum-seekers.

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