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n a move to repair bilateral ties damaged in a spying row last year, Indonesia and Australia signed an agreement on security cooperation on Thursday.

In the much-anticipated pact, which takes the form of a code of conduct (CoC), both countries agree that intelligence activities should be mutually beneficial and not harm the interests of either.

'€œThe basic message with the signing of this code of conduct is that we are back to where we have been,'€ Foreign Minister Marty Natalegawa told a press conference after the signing ceremony in Bali between him and Australian Foreign Affairs Minister Julie Bishop, witnessed by President Susilo Bambang Yudhoyono.

The CoC is also part of the existing Lombok Treaty '€” an agreement between Australia and Indonesia on the framework for security cooperation '€” that was signed in 2006.

Marty said the CoC also ensured enhanced intelligence cooperation between the two countries.

'€œWith the signing of the CoC, there will be a full restoration of communication between the armed forces of the two countries, and they will be able to ascertain the kind of cooperation that is needed in the future,'€ he said.

A leak from former US National Security Agency contractor Edward Snowden revealed that Australia had tapped the phone conversations of Yudhoyono, his wife and eight Indonesian ministers and officials
in 2009.

Australia has yet to confirm or deny the allegations, but with the agreement is ready to move forward.

Bishop stated that the CoC would serve as a basis to enhance intelligence cooperation between the agencies of the two countries.

'€œWe both believe that a strong intelligence partnership is vital for both countries and is the most effective way of defeating those who want to harm the people of Australia and Indonesia,'€ Bishop said.

She continued that the joint understanding would serve as guidelines for regular, high-level contact between the respective heads of the intelligence agencies and institutions, as well as promote dialogue and mutual understanding to meet challenges and respond to security threats.

Bishop said the joint understanding was important to enhancing the relationship.

'€œThis context is so important as we work together increasingly to meet the challenges and respond to security issues we face in our countries, the region and the globe. This includes the threat of homegrown extremists returning from conflict in the Middle East and we look forward to gaining the benefit of working more closely to meet these challenges in the intelligence field,'€ she said.

She also praised President Yu-dhoyono for his leadership of Indonesia.

'€œPresident Yudhoyono is, indeed, a great friend of Indonesia. And we look forward to welcoming him to Australia as a dear and trusted friend. He has been a consistent supporter of the idea that cooperation between our two countries, the largest in our region, can bring benefit to both communities in the region,'€ she said.

'€œDespite some recent challenges in our relationship, which can happen between neighbors, even strategic partners as close as Australia and Indonesia, we have proven that our two countries can keep on working together. Australia and Indonesia have a very close and constructive partnership,'€ Bishop added.