Talking about a big Australia and waging a desperate struggle to salvage a tough border protection strategy may appear a contradiction, yet as Rudd knows and John Howard proved, border protection and Australia’s high immigration program have always gone together. This compact, pivotal to Australia’s progress, is at risk. An unpredictable mix of events on the water, in Indonesia, and worry about Rudd’s hard line from within his own constituency has created a diabolical dilemma for Rudd and Stephen Smith. Faced with a limited array of unpalatable options the government’s tough border protection stance is at risk. The political centre, it seems, may not hold with Rudd under aggressive assault from opposite positions on the Right and Left.

There are two boats in Indonesia with Sri Lankan asylum-seekers refusing to disembark, the first intercepted by the Indonesians within their own waters with 250 people aboard and the Oceanic Viking, an Australian boat that rescued 78 asylum-seekers at Indonesia’s request in Indonesia’s rescue zone.

Rudd and his Foreign Minister are standing firm. The plight of the Oceanic Viking has become the most difficult test of Rudd’s resolution. The claim that he cannot take a hard decision offensive to his own side will now be determined. Does Rudd have the nerve and patience to prevail or will he crack before the political blackmail of the asylum-seekers and reluctance of local Indonesian authorities?

This week the Australian media seemed unable or unwilling to describe what was happening before its eyes: the Oceanic Viking asylum-seekers, by refusing to disembark in Indonesia, exploited their moral plight as a device to intimidate the Rudd government into a retreat and re-direction of the boat to Christmas Island where they could be processed.

As Smith signalled, this is a case of asylum-seekers trying to decide what country will process their claims and what country will become their new home if those claims are upheld. Asylum-seekers have no such rights under the 1951 Refugee Convention. The situation is exactly the reverse of the interpretation given wide currency this week. Far from Australia ignoring its obligations under the convention, the asylum-seekers are insisting on rights they do not possess under the convention. It is obvious what should happen: if the Sri Lankans are serious about being refugees they should leave the boat immediately and claim refugee status from the UN High Commissioner for Refugees.

Their real purpose, however, is different. It is to self-select Australia and to resist any effort to have the UNHCR process their claims outside Australia. “It’s not their choice,” Smith told the AM ABC radio program. “It’s not a matter for the Sri Lankans on board to choose where they make their application for refugee status. We absolutely defend their right to make that application.”

The spectre of an ignominious retreat now overhangs Rudd and Smith that would see them forced to bring the asylum-seekers to this country. Such a move would destroy Rudd’s credibility on border protection and represent an Australian submission to the campaign by boatpeople to self-select Australia as their home.

The government has no legal obligation to bring these people to Australia. As Rudd said, Australia took two decisions in relation to the Oceanic Viking asylum-seekers: it engaged in rescue when a vessel was in distress and, having collected the people and in consultation with Indonesian authorities, it decided to take the people for processing in Indonesia.

There is no credible case that Australia should have done otherwise. Rudd and Indonesia’s President Susilo Bambang Yudhoyono agreed that the people be processed in Indonesia. The problem is that Yudhoyono is struggling to enforce the agreement in the teeth of provincial hostility and resentment against Australia seems to be rising.

On Wednesday Smith was unequivocal about the result. “The President has already made that decision,” he insisted. “Now that (going to Indonesia) is what will occur.” He was confident the Rudd-Yudhoyono agreement would be honoured. On Thursday, Smith told radio station 2UE that Australia wasn’t setting any timetable. “These things always take time,” he said. Asked if the government would back down and bring them to Australia, Smith said: “We don’t have that in contemplation.”

Indonesia’s Foreign Minister Marty Natalegawa told ABC1’s Lateline on Wednesday that Indonesia would not use force to remove the asylum-seekers and said: “We have an abundance of patience”. Yet he intensified the pressure, saying if the people won’t budge then the Rudd government must take that into account. The next day Rudd followed by saying that Australia also had an abundance of patience. It is a polite way of describing a stalemate in which Rudd and Smith hope they can prevail but have limited leverage and only marginal control over a situation vital to their policy.

It is a game of political poker for high stakes. The more the Sri Lankans believe that Rudd may retreat, the more they will stay the course. In the meantime, Rudd will be under growing criticism at home for his inhumanity and hypocrisy.

The deadlock highlights the agonising nature of asylum-seeker policy. There is little doubt the Sri Lankans are genuine refugees yet the Indonesian and Australian authorities have met their obligations and are fully entitled to insist the boatpeople disembark.

Rudd and Smith know they must ensure the one-off Oceanic Viking event does not disrupt the substantial and permanent regional co-operation they seek with Indonesia that will be canvassed at the next Asia-Pacific Economic Co-operation meeting. In this sense the resilience of the Rudd-Yudhoyono concord is being tested. It must survive that test for Rudd to have any prospect of salvaging his asylum-seeker policy.