THE SETTINGIn July 1997, John Howard's conservative government honoured an election promise and issued In the National Interest, Australia's first ever white paper on foreign and trade policies. Election promises, like pie-crusts, are made to be broken, but 1996 was such a turbulent year in Australian politics - an ephemeral populist racist movement, Hansonism, exploited some of the domestic discontents of globalization - and such an error-filled year in foreign policy that there was a strong compulsion on the government to retrieve some ground by setting out its international philosophy.It was a risky move. Howard's record did not suggest a keen interest in foreign affairs. In the tradition of bipartisanship in this area, his party's programme seemed to contain few, if any, convincing differences from its Labor predecessors. Predictions in international affairs are always hazardous. Australia's longest-serving foreign minister, Richard Gardiner (later Lord) Casey, an artist of aphorisms, used to say that 'diplomats, unlike the money market, don't deal in futures.' Technological advances have aided the professionals' preference for making policy on the run, for foreign policy as the art of the skilful fumble. By 1997 the Department of Foreign Affairs and Trade (DFAT), in the tenth year of its merger, had survived serious teething problems and severe downsizing largely by giving economic and financial issues precedence over traditional broad politico-security concerns.Mercantilism shaped the white paper. In the words of the foreign affairs minister, Alexander Downer, in an address to the National Press Club in Canberra on 31 March 1999: 'a fifteen year perspective ... identified globalisation and the economic rise of Asia as defining trends.' These themes were not novel. They would have been acceptable to Labor's Prime Minister Paul Keating, who had reined in his roving foreign minister, Gareth Evans, and demanded a focused (or niche) foreign policy giving priority to trade, Indonesia, and Japan (to which the white paper added the United States and China). The validity of the white paper's second focus was widely questioned because it appeared just after the economic crisis broke in Asia. However, in his speech Downer expressed the government view that the crisis was all but over and reaffirmed the white paper: 'we have no reason to change those medium- to long-term trends.'This was surprising because it appeared to misjudge the damage the crisis would do to political, security, and social superstructures and, consequently, to under-estimate change in the hierarchy of challenges facing the Asia-Pacific region - not to mention the inevitable pain still to be suffered, especially by Indonesia where crony capitalism remains largely intact.THE EMERGENCE OF EAST TIMOR IN 1999Downer's introductory observations set the scene for a speech on 'Indonesia, East Timor and Australia: New Challenges, Enduring Interests.' The rest of 1999 has been the story of how the tiny territory of East Timor (area just under 15,000 square kilometres, population perhaps 800,000) turned out to be the catalyst for change in Australia's immediate regional environment and present the greatest challenge for Australian foreign policy.It is not possible in this article, which looks forward, to retrace the history of East Timor, a Portuguese colony from 1524-1975, and of Australia's peripheral involvement in it. Suffice it to say that during the Second World War, it was the locus of a major Australian guerrilla war against Japanese invaders, at whose hands some 40,000 Timorese died, and its tragic history over the last quarter of a century since its incorporation into Indonesia by force has involved fatalities in the range 100,000-200,000. Geography and humanitarianism have put East Timor and the perceived shortcomings of Australian policy under continued scrutiny, and the ensuing controversy has split public and political opinion across parties. …