Indonesian and Australian intelligence officers have agreed to discuss new spying protocols amid a warning from Jakarta of further sanctions if Canberra fails to sign up to a proposed code of conduct.
It has also become increasingly clear Indonesian President Susilo Bambang Yudhoyono was less than satisfied with Prime Minister Tony Abbott's response to the spying scandal that has seen relations between Jakarta and Canberra sink to their lowest in more than a decade.
The head of Indonesia's State Intelligence Agency (BIN) Marciano Norman has confirmed Australian intelligence officials have agreed to discuss new rules around spying that will be included in a code of conduct Dr Yudhoyono says is needed to re-define bilateral relations.
"We will later submit these to the foreign minister to include them in the government's overall concept of the COD (code of conduct)," Mr Marciano said on Friday.
The development comes amid increasing signals out of Jakarta that the Indonesian president is angry Mr Abbott's letter, delivered to him on Saturday, did not contain an apology over claims his mobile phone, his wife's phone and those of his inner circle, were targeted by Australian spies in 2009.
Indonesian Foreign Minister Marty Natalegawa also warned that there could be further repercussions if Australia does not sign up to the code of conduct.
"Of course we have contingencies for such a possibility, but it would not be wise to reveal them now," Dr Natalegawa said late on Thursday following a five-hour hearing of the Indonesian parliament's foreign relations and defence committee.
Dr Natalegawa has refused to speculate on an exact time-frame for a return to normal relations with Australia but also suggested the letter from Mr Abbott had done little to quell Indonesia's anger over the spying scandal.
"The first step in this process is establishing communications and addressing those issues which still left unanswered in the communication from the prime minister," Dr Natalegawa said.
He warned the return to normal relations between Jakarta and Canberra - including lifting suspensions on military and police co-operation, and intelligence gathering - would remain contingent on Australia first signing up to a code of conduct, including protocols on spying.
But he also reiterated that the return to normal relations would only come following an "evaluation" period which would assess Australia's compliance with the new framework.
With the next bilateral leaders' meeting not scheduled until mid-2014, it could be almost 12 months before the code of conduct - which at Mr Yudhoyono's insistence must be signed by himself and Mr Abbott - is even ratified.
It would take even longer, Dr Natalegawa warned, for Indonesia to evaluate Australia's response and compliance.
"The sixth step (is) that there is a re-establishment or revival of a sense of trust before we can proceed to look at the bilateral co-operation between the two countries," he said.
An official present at the hearing of the foreign relations and defence committee, known as Commission I, said Dr Natalegawa had told the closed-door meeting the president was angry about the lack of an apology in the letter received from Mr Abbott on Saturday.
Commission I deputy chairman Tubagus Hasanuddin said it was clear Dr Yudhoyono had been disappointed Mr Abbott's letter did not contain an apology or even sentiments that could be regarded as an apology.
"I think because in the letter doesn't imply the existence of regrets that would be close to an apology," Mr Hasanuddin said.
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