Strategic Indonesia – USA Gov Policy

Indonesia’s growing economic power is often understated in discussions about the future of Asia. Yet by 2045, it is likely to become the world’s fourth largest economy. It already is the world’s largest Muslim-majority state. President Joko Widodo, known as Jokowi, points out that his cabinet not only estimates that the economy will continue growing, but that his country’s population will also expand from its current 273 million to reach 309 million within the next two decades. In comparison, demographers at the Global Coalition on Aging predict China’s population will dramatically age during the same period, with those over age 50 increasing by 250 million as its working-age population simultaneously shrinks. The Coalition on Aging concludes that this presages the end of China’s era of “heroic economic growth.” Some analysts suggest this is also a strong indicator that Indonesia could become an emerging superpower within the next 25 years.

Today Indonesia is a middle-income nation and a member of the G20. In 2022 it logged its strongest economic record in the last nine years, growing by 5.31%, and supported by a record-high number of exports. Last November the country’s Coordinating Ministry for Economic Affairs announced that Indonesia is targeted to become a developed country by 2043. “While Beijing has pulled back its overseas BRI lending—and Xi has exhibited some notable reticence toward hosting a third Belt and Road Forum—Indonesia challenges the broader narrative that the BRI is somehow fading away,” according to William Yuen Yee of the Jamestown Foundation.

China has invested heavily in the country and intends for Indonesia to serve as an economic cornerstone for its BRI. The CCP leadership touts its megaprojects in Indonesia as a win-win for both countries. That leaves Jakarta caught precariously between leaning on China and standing with the democratic West. The government in Jakarta needs the development funds, although the Indonesian population is not favorable toward China’s involvement in the country.

Understanding Indonesia’s experience with the BRI, says Yee, requires a closer examination of the history behind infrastructure cooperation, major projects beyond the oft-discussed Jakarta-Bandung High Speed Railway and their impacts on the Indonesian public, and the extent of economic engagement between Jakarta and Beijing. Indonesia is the third-largest recipient of Chinese investments at about $560 million, behind only Cambodia and Pakistan. Jokowi created the Global Maritime Fulcrum (GMF) in 2014. It is a strategy to leverage Indonesia’s strategic location in the Indo-Pacific and status as the world’s largest archipelagic state in order to prioritize maritime connectivity and infrastructure development, says Yee. Both Xi’s BRI and Jokowi’s GMF highlight infrastructure development. Since 2008, China has used the BRI in Indonesia as a type of “infrastructure diplomacy” to strengthen cooperation and the development of economic corridors. In 2019 the two governments reaffirmed in writing that there is a “strategic alignment” between the BRI and Indonesia’s GMF. Last year marked ten consecutive years of Beijing being Indonesia’s largest trading partner.

Jakarta needs Beijing to continue on its path to becoming a developed nation, despite tense people-to-people relations and extensive corruption. Yee points out that nine of Indonesia’s BRI projects, worth a total of $5.2 billion, involve scandals, controversies, or alleged violations. Earlier this year escalating racial tensions among employees at a nickel smelter in Morowali turned deadly, causing the deaths of one Chinese and one Indonesian worker, with many more injuried. The joint project enabled Indonesia to become the world’s second-largest, stainless-steel producer, churning out 3 million tons each year. It is ironic that the project also transformed the nation into a primary rival for domestic-made products in China. Last summer, ten years after Xi launched the Maritime Silk Road in Indonesia, Jakarta’s commitment to Beijing’s Belt and Road Initiative is steadfast, suggests Yee. Jusuf Wanandi, a Sino-Indonesian politician who co-founded the Jakarta-based Centre for Strategic and International Studies think tank noted last year that “…Indonesia-China cooperation is not only beneficial to Indonesians and Chinese, but also to all the peoples of East Asia.”

Bilateral relations have continued expanding since Chinese leader Xi Jinping came to power in 2013. Although Indonesia is not permanently locked in a Chinese “debt trap,” Jakarta’s debt is rising. It is, in part, a consequence of Jikowi’s vision for large infrastructure projects to help Indonesia to emerge as the world’s fourth or fifth largest economy in the coming decades. What is uncertain is the destabilizing impact of Indonesians who view themselves as distinct from China, although racially similar. They may not tolerate Beijing’s growing influence in the country as Indonesia’s economy matures and China faces unsurmountable demographic challenges at home.

Daria Novak served in the U.S. State Dept.

Illustration: Indonesia National Emblem (Pixabay)

Quick Analysis

Ukraine’s Frozen Conflict

As we approach winter in the northern hemisphere, the war in Ukraine is beginning to resemble a “frozen conflict” from many perspectives. Ukrainian President Volodymyr Zelensky recently told the media he hopes the war will end faster once President-elect Trump takes over in January. Opinions in Moscow, however, differ from that of the Ukrainian leader. Russian President Vladimir Putin argues that the North Atlantic Treaty Organization (NATO) needs to exclude Ukraine from joining in “exchange” for peace. If it does not, he says, then no end to the war is in sight. So far there is no Christmas solution. Several NATO countries, according to Vladimir Socor of the Jamestown Foundation, are tentatively considering “coalitions-of-the-willing” to provide security for Ukraine outside of the formal NATO framework. There is, however, no collective mechanism today under which such an arrangement is viable. According to the NATO Charter, while Ukraine is a NATO partner country, it may not join as a full member since it has not fulfilled the requirements for membership. That has not stopped NATO and allies from continuing “to provide Ukraine with unprecedented levels of support, helping to uphold its fundamental right to self-defence,” according to the organization. Socor says that keeping Ukraine out of NATO will not advance peace with Russia. Waiting for a peace settlement, he suggests, would only serve to encourage Moscow to continue the war indefinitely. Although the Biden Administration officially withdrew its support for Ukrainian membership in 2021, NATO maintains an “open door” policy toward membership-seeking countries. The current White House position led the way for European states to oppose Ukraine’s membership saying that a decision should be delayed until “conditions are met.” Biden pushed for changing “open door” to a “bridge” metaphor. It is not intended as an across-the-board NATO policy and has been implemented in the past on a case-by-case basis, says Socor. “The alliance’s open-door policy was not fully insulated from Russia’s non-statutory blocking power, and NATO-aspirant countries’ path toward membership was not always irreversible.” Russia has successfully blocked states like Georgia from joining, first in 2008 and again after the war in Ukraine began in 2014. Russia recognizes the value add of Ukraine to NATO is enormous and that Kyiv has a better case than some other nations. Putin’s invasion was, in part, intended to foreclose that option. By 2021, Moscow was pushing hard to maximize its war objectives, which included further annexations of Ukrainian territory. A main goal for Putin was, and is, to ensure there is no Ukraine left to join NATO. As President-elect Trump prepares to assume office in January, he is faced with the historical challenges presented by the war. Post-conflict security guarantees were the center of several proposals made during the 2023 military stalemate. The incoming Trump Administration has yet to outline how it intends to handle the Russia-Ukraine war. Analysts in Washington believe that the new Administration will expect its European allies to guarantee the majority of Ukraine’s security needs. As we approach 2025, several European nations have acknowledged that they do not view Ukraine as eligible for NATO membership as it would draw the organization into the middle of the conflict. Others want to wait until the war is over or pending a “peace” settlement before considering Ukrainian membership. Socor reports that some “influential voices” are suggesting that “Kyiv should join NATO after “freezing” the war along a stable armistice line, de facto accepting Ukraine’s partition, with NATO security guarantees applying de jure to the government-controlled territory only.” This would mean starting accession talks soon with the actual talks to commence only after a ceasefire is in place. Trump arrives in Washington at a time when Putin’s hybrid strategies of war in Ukraine have eviscerated commonly-held differences between war and peace. “Absent a political consensus in NATO over Ukrainian membership, certain European allies, including France’s President Emmanuel Macron, are holding informal consultations about post-conflict security guarantees to Kyiv by NATO members outside of NATO’s framework,” according to the Jamestown Foundation. The Biden Administration downplayed the discussions on possible forms of military assistance and defense industry cooperation by sending only an Assistant Secretary of State. For a European peace to hold the Trump Administration would need to formally extend the United States’ nuclear deterrence to Ukraine. Options under discussion in Europe include a “coalition of the resolute” to deploy forces to Ukraine as part of a possible armistice package, deterring further Russian attacks, says Secor. European officials are also debating, without any agreement, whether its military forces could perform non-combat logistical roles to free Ukrainian forces to fight. None of the possible courses of action has moved forward as all eyes are waiting on the incoming Trump Administration for clues about its intended level of support for a NATO framework and other non-NATO proposals. Daria Novak served in the U.S. State Dept.