Indonesian and Australian leaders scheduled for talks to try to mend damaged ties

The leaders of Indonesia and Australia will meet Wednesday for the first time since relations between the countries were damaged over spying allegations.

Outgoing President Susilo Bambang Yudhoyono will host Prime Minister Tony Abbot on the island of Batam, in a brief stopover for the Australian leader on his way to Europe.

The relationship is important for both countries, but comes with historical, cultural and political sensitivities that bring with it periods of volatility.

In November, Indonesia downgraded relations with Canberra over reported Australian phone-tapping of Yudhoyono, his wife and eight Indonesian ministers and officials in 2009.

Indonesia has been demanding a code of conduct on intelligence issues before full ties can resume.

Australia needs Indonesian cooperation on stopping asylum seekers from the Middle East and South Asia arriving on its shores.