By Colin Packham and Bernadette Christina Munthe
SYDNEY/JAKARTA (Reuters) - Indonesia and Australia sought to calm tensions on Thursday after Indonesia's military suspended ties because of "insulting" teaching material found at an Australian base that questioned Jakarta's sovereignty in Papua province.
Papua, where a separatist movement has simmered for decades, is a sensitive issue for Indonesia, which took over the former Dutch colony after a widely criticized U.N.-backed referendum in 1969.
Australian Defense Minister Marise Payne expressed regrets and promised a thorough investigation of the row, which highlighted the sometimes prickly relationship between the neighbors.
Indonesian President Joko Widodo said ties with Australia were "still in a fine condition" and that his defense minister and military chief had been asked to investigate.
"We have agreed, Indonesia, Australia, to respect each other, to value each other and not meddle in each other's domestic affairs," Widodo said.
Military cooperation between the two countries ranges from countertenors programs to border protection.
But the neighbors have had a rocky military relationship in recent years. Australia stopped joint training exercises with Indonesian special forces (Kopassus) after accusations of abuses by the unit in East Timor in 1999, as the territory prepared for independence.
Ties resumed when counter-terrorism cooperation became imperative after the 2002 nightclub bombings on the resort island of Bali that killed 202 people, including 88 Australians.
Australia's defense minister said an investigation into the teaching materials, found at Campbell Barracks in the west Australian city of Perth, would be concluded "imminently".
"We have indicated our regret that this occurred and that offence was taken. I think that's appropriate when a significant counterpart raises their concerns with you," Payne told reporters in Sydney.
Australia would present the findings of the report to Indonesia's government and military, Payne said.
She denied allegations, reportedly made by Indonesia's Armed Forces Chief Gatot Nurmantyo in a lecture last year, that Australia had tried to recruit Indonesian soldiers as agents during training.
Gatot said on Thursday that "unethical" teaching material had been found by an Indonesian officer who had been sent to Australia to teach.
The material "discredited the Indonesian military (TNI), the nation of Indonesia and even the ideology of Indonesia," he said, referring to material concerning East Timor and "Papua needing to be independent", as well as mocking the country's founding principles, known as Pancasila.
"That curriculum had been used for a long time," he said, noting it had now been removed.
Training with Australia had been suspended and other areas of cooperation were being re-evaluated, Nurmantyo said, adding that the suspension did have presidential approval.
Presidential spokesman Johan Budi said Widodo had ordered the defense minister and military chief to brief him on the situation "so as not to give rise to misunderstandings that can heat things up".
On Wednesday, Budi said the military had not discussed the suspension with the president.
The Australian defense minister said all training documents would now be "culturally appropriate" and that Australia recognised "Indonesia's sovereignty and territorial integrity."
Indonesia most recently suspended military ties in 2013 over revelations that Australian spies had tapped the mobile telephone of then president Susilo Bambang Yudhoyono.
Indonesian and Australian officials said on Thursday that the bilateral relationship had not stalled, unlike in 2013.
Australia needs Indonesia's help to enforce its controversial immigration policy, which includes turning back boats carrying asylum seekers. Payne said Jakarta has given no indication of any change.
(Reporting by Colin Packham and Tom Westbrook in SYDNEY and Bernadette Christina Munthe and Agustinus Beo Da Costa in JAKARTA; Writing by Fergus Jensen; Editing by Paul Tait and Bill Tarrant)