In the Woodside decision, the national interest was an intangible, gut feeling of public support for keeping in Australian hands the nation's last major gas and oil producer. The national interest issues surrounding SingTel's bid on C&W Optus are much more tangible: Australia's national defense.

At the heart of the issue is the Singapore government's 78 percent shareholding of SingTel. By buying C&W Optus, SingTel gains control of the C1 defense satellite that is being launched to enhance Australian's defense communications network. The issue has been further clouded by claims that Singapore has been actively engaged in spying on Australia for the best part of 20 years.

Indeed, a person faced charges, which were subsequently dropped, for actively spying at one of Australia's most sensitive communications bases in Queensland. Defense specialist Ross Babbage said that as Singapore has spied previously on Australia, there is no reason to stop it from doing so in an even more efficient manner via the Optus C1 satellite.

Costello made the decision on the day that media boss Kerry Stokes said that the deal could prompt a massive electoral backlash. "If the government approves this it will cost them the election," he said in the Bulletin magazine. To further the point, Stokes pledged to lead the campaign himself.

The treasurer has attached three conditions to his approval to the takeover, of which the final one is the most important. It effectively requires the deal to be to the satisfaction of the US Department of State. But as the United States endorsed SingTel's bid for Britain's 51 percent share of C&W Optus, there is little chance it will block a similar arrangement involving Australia.

Communications Minister Richard Alston said that the government is satisfied with the national security issues surrounding the deal. "We would not just give something carte blanche without very carefully addressing the national security implications and those matters have been exhaustively gone through," he said Wednesday night.

The Labor Party agrees, saying as long as the security questions are adequately answered, it has no problem with the deal. But that may not be good enough for the Australian defense and communication sectors which are uneasy with a foreign power having so much control of C&W Optus, and with it, such an important defense satellite.

In the background is the signing of a free trade agreement between Australia and Singapore later this year, and the fight over Ansett, Qantas, Air New Zealand and Singapore Airlines.

But just as Woodside was a boost to the government, and to Costello's standing in the wider community, the Optus decision may have the reverse effect.