SYDNEY — As an Australian-led multinational rescue mission landed at burned-out Dili on Monday, a shocked nation is asking: How could Indonesia have permitted such horror? And could we have done more to prevent this Asian holocaust?

Nobody here is looking for an answer from Jakarta. Rather, Australians are agonizing over the knowledge that Canberra and Washington knew in advance what would happen and could have done more, a lot earlier, to thwart the planned genocide in East Timor.

As U.N. troops led by Sydney-born Maj.-Gen. Peter Cosgrove fan out from Dili, all Australia is praying for a speedy rehabilitation. In Darwin, Prime Minister John Howard and opposition leader Kim Beazley farewelled the first sea lift of 2,500 Australian troops. Not since World War II have Australians been so much at one.

Also in Darwin, Xanana Gusmao is setting up an East Timorese government-in-exile. The resistance leader was smuggled out of the British Embassy in Jakarta at the weekend as anti-Western violence there worsened. Expatriate Australians working in Java have also been targeted, as Islamic fundamentalists call for a jihad, or holy war.

For the Asia-Pacific region, current events will shape attitudes for decades to come. Certainly, Australian-Indonesian relations can never be the same.

The mood here is growing for swift, strong justice for hundreds of thousands of East Timorese victims. Evidence smuggled into Darwin of atrocities perpetrated by the Indonesian Army and militias is already under scrutiny, and U.N. human-rights chief Mary Robinson has been in the refugee camp and empathized with the misery there.

The refugees, who are being steadily rehoused across Australia, tell the same story: army-backed mayhem by the militias, villagers deported to other islands, whole families slashed with machetes, raped, forced from burning homes. Seared in the collective memory are the threats: “Blood will run. You keep the land, but there will be no people.”

The promises have materialized. Now Australians are demanding to know why Canberra politicians and their advisers, who heard these same warnings months ago, were so slow to rally world concern.

So far, Howard is getting full credit here as the prime mover behind international support for the U.N. rescue. Publicly reviled by Jakarta street gangs, Howard has total support within Australia. Not since the threat of Japanese invasion in World War II, has the country been so united.

How long our shock-induced vigor lasts as the East Timor cleanup continues remains to be seen. Certainly a new mood of realism concerning self-defense and Indonesian instability is sweeping Australia.

Most people here agree that both Canberra and Washington, complacent after decades of dealing with Jakarta military dictatorships, ought to have foreseen and forearmed.

Yet wishful thinking has been the Canberra line ever since Indonesia won independence from the Dutch. Through the Sukarno and Suharto military regimes, we behaved nicely toward the big guy next door. Under then Prime Minister Gough Whitlam, we were one of the first of the few countries to recognize the 1975 annexation of East Timor.

The collapse of this foolish policy was highlighted last week when Indonesian President B.J. Habibie tossed out our bilateral military deal. That agreement was a cruel joke anyway. Secretly signed at an APEC meeting in Kyoto with then President Suharto, it was former Australian Prime Minister Paul Keating’s brainchild. Never ratified by Parliament, it allowed Kopassus, the shock troops of the Timor campaign, to train in Australian Army camps.

We got it wrong, catastrophically wrong. So what do we do now? The nation’s soul-searching reassessment calls first for a revision of discredited defense policies. Clearly, Canberra must dip into its healthy budget — there goes promised tax cuts — to drag a ludicrously small armed force into the 21st century. No more of this derisory spending on defense, 1.7 percent of GDP.

Since the Vietnam War undermined the political acceptability of forward defense, Canberra has spent largely on updating air and sea forces technology. Our U.N. peacekeeping support in the Persian Gulf War cut available funds. East Timor will affect budgets for years to come.

Australian public opinion, meanwhile, is united behind U.N. Secretary General Kofi Annan’s call for a humane resolution of what is now generally accepted as a bloody betrayal. The murder of Australian priests and nuns has galvanized public support here like nothing in recent memory. The burning of the Australian flag by a rent-a-crowd mob inside the Australian Embassy in Jakarta has simply brought to the surface an antipathy till now held in check.

Memories of East Timorese help in World War II are being revived. Then, 300 Aussie commandos hiding in the Timor hills kept 15,000 Imperial Japanese Army troops busy. They could not have held on without local support.

Old alliances were sorely tested as the Dili massacre was beamed daily into Australian homes — none more so than the U.S.-Australian alliance.

As a consistent supporter of U.S. sorties since the Korean War, Australia looked first to Washington. President Bill Clinton’s early response sounded grudging.

Only when Howard pressured Clinton before the Auckland APEC meeting did U.S. reluctance change. A strong Clinton response made all the difference. He warned Jakarta of possible financial sanctions. Habibie quickly backflipped and let the United Nations in, complete with U.S. logistical support.

What future price will Australia have to pay Washington? The Sydney-based Bulletin expects Canberra “will find it much more difficult to distance itself from the U.S. in any confrontation between Washington and Beijing over Taiwan.”

A more urgent worry in Canberra is the political turmoil in Jakarta. If Habibie’s political career is, by all accounts, “clinically dead,” post-Timor anger ahead of the November presidential election bodes ill for regional stability. From this distance, no other candidate, opposition leader Megawati Sukarnoputri included, appears capable of containing the volcano.

Assuming that army chief Gen. Wiranto is indicted by a U.N. tribunal on charges of crimes against humanity, it appears likely that some newcomer from within the military ranks could push to the top.

But in Canberra, the foreign-affairs mandarins don’t even want to contemplate the consequences of that scenario.

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