Australia enters 2013 reconsidering its place in a strategically shifting world. Issues close to home have stabilised and, increasingly, considerations further from Australia are being written off as a lost cause.

Australia’s peacekeeping commitment to East Timor has ended, with that country now charting an independent and, for the medium future at least, stable course. East Timor’s relations with its giant and once problematic neighbour, Indonesia, are now so positive that it has been mooted that East Timor’s defence forces might start training with Indonesia’s army.

Australia’s peacekeeping commitment to the Solomon Islands will also end this year, bringing to a close engagement in what was once referred to as the “arc of instability”.

Plus, 2013 will also see the draw down of Australian forces in Afghanistan ahead of direct involvement ending in 2014. As with Iraq, the principle purpose of Australia’s involvement was to demonstrate its loyalty as an ally of the United States. The alternatives rationales were always overwhelmingly rhetorical.

The US has more recently shifted its principle focus of concern to the Asia-Pacific sphere, coincidentally the part of the world in which Australia resides and does most of its business. China’s economic rise has been a boon for Australia’s resources export economy, but its highly questionable assertion of sovereignty in the South China Sea has been of increasing concern.

Similarly, China’s more recent claims to Japan’s Senkaku Islands — Diaoyu Islands to China — have also been expressed in increasingly assertive terms, if with a stronger historical and geographic claim. Australia will continue to develop good economic and diplomatic relations with China, but will also seek to broaden and deepen alternative strategic, economic and diplomatic friendships.

“What is clear is that as far afield as Australia might have sometimes cast its strategic gaze, its critical interests always have been — and increasingly are — closer to home.”

Long neglected, India will play an increasingly important role for Australia: as a growing trade partner, as a counterbalance to China and as a valuable partner in maintaining the security of the Indian Ocean. Australia and India share broad political values and can have a potentially more comfortable relationship than some others.

More immediately, last year Foreign Minister Bob Carr tried to scotch rumours of a possible alliance between Australia and Indonesia, only highlighting such that the idea had been floated in Canberra. Carr correctly noted that such an alliance is not being considered in Jakarta, and it would be a political hot potato in Australia.

However, as East Timor moves closer to Indonesia and Australia seeks to ensure longer term stability in East Timor — as well as continue strong relations with Indonesia — there is some scope for a sub-alliance treaty between the three countries. Such an alliance would make explicit Australia’s commitment to East Timor as well as help cement relations between East Timor and Indonesia.

Australia’s relationship with Indonesia is currently very good but has had a troubled history and may again become strained. A closer strategic relationship, leavened by East Timor’s inclusion, might provide further “ballast” to the relationship.

Australia’s engagement with Indonesia’s notorious special forces, Kopassus, has been a good example of Australia’s strategic reasoning and rhetoric not matching. Military links are important, but this relationship has not successfully imparted human rights or “professional” values to the Indonesian army. But a careful re-ordering of such engagement within a wider context might add some benefit in desired areas while reducing contributions to less benign aspects.

What is clear is that as far afield as Australia might have sometimes cast its strategic gaze, its critical interests always have been — and increasingly are — closer to home. That this now fits with the US’s focus will therefore see this confluence of interests reflected this year in Australia’s rapid strategic reorientation.

Professor Damien Kingsbury is Director of the Centre for Citizenship, Development and Human Rights at Deakin University.