Indonesia, for decades a natural partner to the US because of similar defence priorities and democratic values, has in recent years drifted more toward China, drawn by its economic support.
A potentially more insular American foreign policy under President-elect Donald Trump is pushing Jakarta even closer to Beijing. The world’s fourth most-populous country would be wise to keep its options open.
Newly elected President Prabowo Subianto made a strategic blunder during his first foreign visit since his inauguration in October. He and Chinese President Xi Jinping spoke about shared ambitions and mutual trust—a signal to Washington on this growing partnership.
Beijing wants to position itself as a natural ally of countries in the Global South, competing with US influence with its cheque-book. Southeast Asian nations like Indonesia have played it smart, balancing the two to ensure local interests remain paramount.
On his trip, though, Prabowo broke with decades of careful foreign policy by reportedly agreeing to joint development with China in the South China Sea, potentially legitimizing Beijing’s claims to almost all of the contested waterway.
This sets a dangerous precedent. Chinese coastguard ships have entered waters disputed by other nations—most recently Indonesia—to show who’s in charge. In the past, Jakarta has responded by expanding its military bases to better control who traverses its seas.
The South China Sea is home to huge reserves of oil, gas and fish. About 60% of maritime trade passes through the Indo-Pacific and Indonesia strategically straddles the gateway between the two oceans. Freedom of navigation is essential to regional security.
The Indonesian ministry of foreign affairs has attempted to backtrack on Prabowo’s agreement, issuing a vague statement saying it doesn’t officially back China’s ownership claims. But the damage has been done.
“Prabowo didn’t really have to sign on to all of those clauses to convince China to keep assisting Indonesia economically,” Evan Laksmana, senior fellow with the International Institute for Strategic Studies, told me. “Based on what’s in the public domain, Indonesia has agreed to many of the points that Beijing wants, which his predecessor, President Joko Widodo, never needed to do.”
The economy is a big driver of the Beijing-Jakarta relationship. Under Jokowi, as the former leader is commonly known, China became Indonesia’s biggest trading partner, and a major source of investment. Indonesia has benefited from the Belt and Road Initiative, with Chinese money building key infrastructure projects.
The nickel industry has also enjoyed the largesse of Chinese firms helping to turn the country into a global player in the sector. Prabowo is keen to build on Jokowi’s success, but relying on funds from Beijing comes with strings attached.
Jakarta may feel pressured to soften its stance on Chinese workers by letting more in, despite the new president’s complaints during his campaign that there were too many of them.
It could also end up overtly siding with China, diluting Jakarta’s opposition to its growing presence in the South China Sea. That will lead to tensions with claimants like the Philippines and Vietnam, which oppose China’s buildup of military infrastructure and increasing confrontation.
Prabowo is also courting the US, but it isn’t clear how much and what kind of engagement Trump will have with Southeast Asia’s largest economy, under what is likely to be a haphazard foreign policy approach. Prabowo had congratulated him in a phone call, publicizing the conversation on social media.
Prabowo would be wise to be patient— and remember he doesn’t need to take sides. During the first Trump presidency, Jakarta and Washington shared an underwhelming relationship, something the new leader could improve, given historical military links.
Prabowo should also leverage Indonesia’s strategic importance by continuing to seek economic benefits from China, while pushing back on territorial and sovereignty issues. There is strength in unity; working with partners in Asean like Manila and Hanoi would help.
Elevating Jakarta’s strategic partnership with the US without becoming a proxy for American interests in Southeast Asia is possible even in what is likely to be an ill-defined American foreign-policy environment. It will require deft diplomacy, but also a clear message the archipelago is not in anyone’s pocket.
Indonesia’s voice carries weight. For decades, the bedrock of Jakarta’s approach to international affairs has been to pursue a self-reliant and independent foreign policy. Changing that would risk not only the nation’s sovereignty, but also stability across Southeast Asia. ©BLOOMBERG
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