Australia's Prime Minister, Kevin Rudd, tells Jim Middleton that under his Government's foreign policy Australia can have a strong relationship with all of the major powers in Asia. Prime Minister welcome to NewsHour.

Thanks for having me on the program Jim.

First to an issue of the day, Kosovo, Australia rushed to recognise the independence of this Balkan state, now Serbia's retaliating by pulling its ambassador out of Australia. It doesn't augur particularly well for Kosovo in particular or the Balkans in general does it?

I wouldn't say that we rushed; we were just quite determined to act early and decisively. The recent history of Kosovo has been a very sad one and we've seen what's happened in terms of the loss of life, we've seen also what's happened in terms of the deprived economic opportunities available to the Kosovars themselves. So we took a principle decision this was the right way to go. We did so in consultation with our friends and allies around the world. As for the actions in response by the Serbian government well, nothing that's happened here that's not happening in the United States, in the United Kingdom, in France and elsewhere. But I'm sure we'll get through these things, political transitions like this they happen, they cause some friction on the way through, but for the people of Kosovo this is an important step forward. And we wish those people well in carving out a future for themselves in the community of nations.

Mr Rudd relations with Indonesia are of paramount importance for Australia. The Indonesians have been saying that the recently signed Lombok treaty requires Australia to return any Papuans should they turn up on Australian shores. Would you comply with that condition?

Well the Lombok treaty is one which has been signed by our Foreign Minister and by his Indonesian counterpart, Hassan Wirayuda, and I spoke with the Indonesian Foreign Minister just after that ceremony when he came to Sydney. We'll honour fully the terms of that agreement and because we respect Indonesia's sovereignty over West Papua or Irian Jaya as some have called it. When it comes to the handling of individual cases that will be done in full conformity with Australian law, international law and our undertakings under the treaty.

So you would be prepared to send back Papuans regardless of the domestic outcry, which there would undoubtedly be?

No what we're prepared to do is to act fully in conformity with Australian domestic law, our international legal obligations under the convention and the specific undertakings we've made to our friends in the Indonesian republic. I think the big challenge with West Papua, this is a dialogue I intend to have with my good friend SBY when I next have the opportunity in Indonesia, is to work out together how we can assist as Australians of the long term economic development of West Papua to provide real opportunities for people there, because if that's going well and if the local administration of West Papua's going well, the push factors for people to leave West Papua then decrease. And that's why I want to have a real positive productive dialogue and cooperative relationship with President Yudhoyono on in the future.

Still on Indonesia, the Indonesian ambassador to Canberra has gone out of his way to suggest that Australia's travel advisories should be scrapped. Is it time to consider ditching them?

Well I know the ambassador very well, he's a good friend of mine, I've known him for some time and his predecessor and his predecessor. They're fine representatives of their country. But my job and the job of the government on behalf of Australians is to take the best considered advice on what are the security circumstances on the ground in various parts of the world, various parts of the Indonesian republic. And I understand that causes friction from time to time, but the core thing here is that we have a consular responsibility for the million Australians who in any one year are offshore, and a slice of those are in Indonesia. And we have a responsibility to ensure that they know to the best extent that we can provide information about the security circumstances of where they are travelling or living abroad, and we'll continue to do that.

So that's a no really isn't it?

Well it's one of those things that you just suck it and see on the way through.

Your emissions trading expert, Ross Garnaut's about to deliver his interim report I understand. The suggestions are that he will recommend interim targets for Australia but wait to see what China and India for example do before committing any further. Is that an approach that takes your fancy?

Well Ross Garnaut was commissioned by us in opposition in the middle of last year to undertake a study about the economic impact of climate change on Australia, if we were to act on climate change or if we were to fail to act on climate change. The idea came from earlier work done by Sir Nicholas Stern for the government of the United Kingdom when he produced the Stern Report on the impact of action and inaction on climate change for the global economy. This is our Australian Stern report in that respect. On the policy side of what Professor Garnaut's working on, he'll be one of many sources of advice to the government about how we move forward with a new regime on targets, how we design emissions trading and the rest. I look forward to receiving his report, but his is an independent report. We will deliberate on it, we may accept some of it, reject other bits, but we're very keen to go through it and go through it thoroughly.

But there does seems to be some sense doesn't there in Australia having something up its sleeve if countries like China and India don't act in good faith, don't take sufficient steps towards reducing greenhouse gas emissions?

I've been very plain to our friends in Beijing and New Delhi that we need to see People's Republic of China and India full partners in the global cooperation which is now necessary to bring greenhouse gas emissions down. If you look at it quantitatively you cannot have an effective long term compact on this unless you have as participants the United States of America, People's Republic of China and India, the mass speaks for itself in terms of emission quantums. Therefore the problem we face at the present is the United States isn't on the cart, China and India we need to have more on the cart in order to produce a real global outcome.

And to East Timor, a couple of days ago East Timor's Foreign Minister told me that Jose Ramos Horta would be out of commission for up to six months, that's a bit of a worry, creates a bit of a power vacuum possibly doesn't it?

I think the remarkable thing about events in Dili so far and more broadly across Timor Leste is that despite this huge assault on the body politic with an attempt to assassinate the political leadership of the country that the institutions of state and government have worked remarkably well. We had the Prime Minister, Xanana Gusmao effectively take control using constitutional provisions available to him. We had an acting president appointed, who was president of the national assembly, and of course an acting president of the national assembly appointed from the constitutionally provided position there. So the processes, including the declaration of siege, or what we would call martial law, have all been adhered to constitutionally. As for the future, let's watch and pray that Jose has a good recovery. I was up in Darwin the other day, he wasn't conscious, but the doctors for the first time are starting to sound ok on this question. He's a good friend of mine and I look forward to his speediest recovery. But I'm confident the information I have at hand so far the government in Dili is performing well in these very challenging circumstances.

Earlier this week you foreshadowed plans to go to China and fairly soon. Is there any chance that will coincide with this year's Bo'oa forum, which Hu Jin Tao has indicated that he will attend?

Well I am going to go to China sooner rather than later. In terms of the precise details of the timing I think we're still trying to bed that down with our friends in Beijing. I look forward to the opportunity of catching up with President Hu Jin Tao, whether it's in Bo'ao or elsewhere, we'll sort that out in due course. The important thing is to take our current relationship with China to a new level, and I believe that the economic opportunities between us are significant. There's enormous resource and energy relationship between our two countries, and we need to have a strategic discussion about that long term; China's interests, our national interests. But beyond that Australia also has enormous opportunities to pursue if we can get proper trade access. For example the financial services market, what we do in the area of bio-technology, what we do more broadly in the sale of Australian education services. This wider services market is what I'm keen for Australian businesses to have a greater access to. And in terms of our political relationship with the Chinese government I look forward to catching up with some old friends and talking about the future.

In Mandarin no doubt.

Maybe, maybe, it depends on whether I've had a mai tai or two.

Indeed, China reacted sharply to John Howard's decision last year to ratify a security agreement with Japan. He suggested at the time that it could eventually be upgraded to a treaty. Is that reaction from Beijing the reason that you won't take that additional step?

My attitude about trilateral relationships between Washington, Tokyo and Canberra haven't changed, they've not changed since the year dot, and that is I welcome the current level of dialogue and cooperation between those three governments. But I believe that's where it most appropriately should stand into the future. When it comes to other proposals I've seen which is to somehow quadrilateralise this and involve India. I've also been very plain and blunt about the fact I don't think that's an appropriate direction for us to go at this stage.

Why not?

I don't think our friends in New Delhi would particularly welcome that as well.

But it's the Chinese who are particularly antagonistic to it describing it as encirclement and containment?

Well there are a range of views in Beijing on this question. My view is how do you unfold a future relationship with China, which has got great economic opportunities in it on both sides of the ledger, for us and for the Chinese, develop further political dialogue with the Chinese in a whole range of areas, and become genuine partners with China in the course of the 21st century? Big challenges; climate change, us working with China, access to the Chinese services market, huge opportunity for Australian business, working with the Chinese on some of our common challenges in the wider Asia Pacific region, including the South Pacific. I think these are big things that we need to work together on. But is that enhanced or helped in any way by some sort of quadrilateral relationship with New Delhi? I don't think so. But I say at the same time that I am absolutely determined to take our relationship with New Delhi from here to here through injecting an enormous amount of effort into expanding our relationship with the sub-continent. It's the relationship which many governments in the past have tried to accelerate and expand, and I don't make any particular criticism of predecessor governments. I think we can do much better and I intend to do so.

You'd be aware of the talk in Tokyo of you as the Manchurian candidate, in other words ...

No, my Japanese is rotten, I'm unaware of that.

Being closer to Beijing than John Howard was. Surely you can see that your decision not to countenance upgrading the security agreement to a treaty, also to end the four-way dialogue that's not going to ease suspicions in Tokyo is it?

Well I believe the quadrilateral arrangement, the four-way dialogue is not being formally advanced by anybody, it isn't a question of cancellation, it wasn't there to cancel. So it's not an active proposal from the Indian government, not an active proposal as I understand from the United States government, not an active proposal from the Japanese government. So it's been kicked around a bit but I'm simply indicating quite firmly I don't think it's a productive way to go given our current strategic circumstances. As for our friends in Japan, Japan has been a longstanding partner with Australia. I'm an enormous respecter of what Japan has done in its engagement with the rest of the world, a force for stability in East Asia, the fact that you've got Japanese official development assistance out there assisting developing countries right across the region and beyond. We're partners with Japan in many projects around the world, this is a very good bilateral relationship. And I look forward to it expanding in the future as well. You know something, foreign relations in East Asia, it's not a zero-sum game, you can have a good relationship with Beijing, have a very good relationship with our friends in Tokyo and in India and these don't cancel each other out. I think that's kind of like 19th century von Clausivites at work, it's not the way in which I think. I don't think it's the way mature nation states should think in the 21st century.

US Defence Secretary Robert Gates will be here shortly in Australia. The United States has F-22 raptors but says they aren't for sale to foreigners. There are clearly problems with the last government's plan to buy super hornets to fill the gap until the joint strike fighters up and running. Would you consider asking Mr Gates whether Washington would sell the raptor to Australia?

What I've learnt through long experience of defence policy questions is to take the proper and considered advice of the experts. When it comes to the particular capabilities of the raptor or any other category of American or other aircraft on the market at present I'd much prefer to take the considered advice of the experts against the capability needs for the Royal Australian Airforce into the 21st century. Bob Gates is coming to Canberra, I'm looking forward to catching up with him, we're going to put a prawn on the barbie and have him round at the lodge. I think the Deputy Secretary of State Negraponte is travelling with him for the Aus-Min talks. They'll be very welcome guests in Canberra, very welcome guests at the lodge, I promise the cat and dog will behave.

Do you think though that Australia's done enough in terms of support for the United States in the war on terror etc., etc., that if we needed the raptors, if the super hornets cant do the job that the United States would have come to the party?

Again your question's based on a hypothetical premise about a particular defence acquisition, one not proceeding or an alternative then proceeding. This has been handled by us in a very considered way. I've got to say unlike our predecessors.

Prime Minister thanks for breaking into a very busy schedule to speak to us on NewsHour.

Pleased to be here.