Australia should prepare for Indonesia trying to assert itself as a great regional power in coming years, but the posturing won't be aimed at its southern neighbour.
A research paper from the Lowy Institute says the country will pursue a more ambitious role on the world stage, but it won't translate into greater diplomatic or military clout in the near term.
Lead author Dave McRae, a visiting fellow at the Australian National University, says even though Indonesia's economic growth has been impressive, it will still lack the resources to flex its muscles.
"As a foreign policy actor, Indonesia is not quite the next big thing," he writes in More Talk Than Walk, to be released on Thursday.
"It will project the image of a great power despite its middle-power abilities."
The report found that Indonesia's military spend in absolute terms is just one-third of Australia's annual budget and slightly less than tiny but wealthy Singapore.
It can't yet dictate an agenda to regional forums like ASEAN, despite being the only Southeast Asian nation in the G20 and the largest by size and population.
Indonesian finance minister Muhammad Chatib Basri told a forum in Canberra recently he was confident his country could remain the second-fastest-growing economy in the Asia region, despite fiscal challenges.
But it's unclear what impact a more assertive Indonesia would have on bilateral ties with Australia, which are on shaky ground after disputes over spying and asylum seekers.
Dr McRae said Indonesia wasn't likely to elevate its relationship with Australia to a top foreign policy priority any time soon because of its larger trading partners and strategic challenges to the north.
"Outside of periodic bilateral spats, Australia can appear invisible in Indonesian foreign policy discussions," he said.
ANU professor of strategic studies Hugh White said the recent diplomatic crisis had been caused in part by Australia's belief that it could dictate the terms of its relationship with Indonesia.
But those days are over, and Australia will have to shift its mindset as Indonesia ultimately emerges as a strong power in the region.
"Indonesia, in order to keep its own interests, is going to have to conduct itself differently in our region," Prof White told a recent forum at ANU.
Dr McRae said the "great uncertainty" in Indonesia's foreign policy would be the 2014 presidential election.
The frontrunner is an enormously popular local leader who is inexperienced on the world stage, while the next most likely candidate is a controversial former Suharto strongman who is banned from travelling to the US.
