The international community now taking shape in these turbulent years is finding itself in new situations and positions. The last of these was seen in the vote for the final declaration of the inconclusive (and reduced in its originally planned prior participation) conference on Ukraine, held in Switzerland in mid-June. A conference that sadly recalls the concept of that of Versailles (and the ones for Austria, Hungary, Bulgaria and Turkey after WWI) where the culprit of the moment is not present for pointing out all the responsibilities. This brief, and as mentioned, inconclusive, meeting saw a significant percentage of states that distanced themselves, with only 78 actual participants (including France, Germany, UK, Japan, Italy, Poland, Argentina, Ecuador, Kenya and Somalia). It is easy to imagine that the members of the BRICS (Brazil, India, South Africa, Saudi Arabia, UAE) abstained; and/or who have a position distant from the Western bloc (such as Turkey), or those that are still in an ambiguous position (Armenia, Colombia, the Holy See, Indonesia, Libya, Mexico, Thailand) joined to confront the gathering at Brussels and Washington.
Among these ambiguous nations is Indonesia, a country of great current importance and of even greater potential for the years to come, which however appears very rarely in the international media mainstream and which remains little analyzed in studies of the political-military dynamics that affect the enormous maritime basin of the Indo-Pacific.
Indonesia is the main economy of South East Asia, targeted to house the fourth largest democracy on the planet (after India, EU and USA) and the world largest Muslim populated country (88 percent of its 277 million inhabitants profess the Muslim faith); this country is now claiming greater leadership in the Indo-Pacific region (it just assured the rotational chairmanship of ASEAN, Association of South East Asian Nations, for 2023) and on the global scale. In this vein, Jakarta is full member of the G-20 and is negotiating to join the OECD, as well as being a remarkable and historical member of the Non-Aligned Movement.
In a decade of social and economic modernization driven by President Joko Widodo, the country of more than 17,000 islands looks forward to continue to push its social economic development with the aim of building one of the four largest economies in the world, which will include India, China and the US, for 2045, when the centenary of its independence from occupying Japan (and previously, the Netherlands) will be celebrated. To achieve this goal, Indonesians elected Prabowo Subianto, a former general and defence minister, under the presidency of Joko Widodo, as president in February of this year.
Subianto is a controversial figure, because of his iron fist in the campaigns in West Papua, Timor Leste, Maluku Islands and Aceh (and because of his ties with the Suharto era). It is widely hoped that the armed forces, which are looking for an impressive rearmament drive, will maintain the policy of neutrality that has characterized Indonesia now since the return of democracy in late 1990s and the nation will be capable of maintaining a balanced relationship with US, China, India, Australia and ASEAN partners; There is now an ongoing (and bitter) scramble which seeks to control the whole of the Indo-Pacific; this, while Indonesia looks to be a regional power, at least in the critical subregion of South East Asia.
After the turbulent years of the Sukarno presidency and the brutal coup of General Suharto, the country was again submerged into silence, re-emerging as the center of global attention. It was in 1997, when the Asian financial crisis began in Thailand, sapping the stocks of an Indonesian economy that was poorly prepared to deal with a situation of extreme volatility. These were months in which the weakness of the country’s financial system, the collapse of the rupee and the collapse of food prices led to a climate of general protests throughout the country, which culminated in May 1998 with the collapse of the regime of Suharto, in power since 1966.
Now, Indonesia enjoys growing attention in the international scene. Rich in oil, gas and other natural resources, as well as being a key geostrategic country in regards to the drive that pits China and the US for global leadership. A status validated by the fact that this country, made up of more than 17,000 islands, has low control over the waters of the Indian and Pacific oceans, through which the main maritime routes of international trade pass.
This silent rise of Indonesia during the last decade has its origins in the management developed by its President Joko Widodo, popularly known as “Jokowi.” He pushed the social and economic modernization of the country and placed it on the path to increasing its international influence in significant ways for the next twenty years. Currently, it is the first South East Asian economy, the largest emerging market for its PIB, and the country has grown more rapidly in the last decade, surprisingly more than India and China. This success is driven by the export of oil and natural gas, as well as by the exploitation of palm oil and the main global reserves of nickel, a raw material that is found in Indonesia and is key to its future mobility.
All this gives importance greater than expected to Prabowo Subianto, who won the presidential elections February 14th, 2024. At a stage in which the largest archipelago of the world could be converted into one of the ten largest economies of the planet, the new president Subianto will have to overcome the enormous challenges, internal and external, that confront the country.
As witnessed by the abstention of Indonesia on the adoption of the final document on the conference on Ukraine in Switzerland, other recent developments in the international arena, represented a shift towards the prevalent multipolar positioning of middle-size powers; especially the Gaza crisis, particularly due to the Muslim faith, which represented a significant shift in the perception of the country’s population. While Indonesia has not singled out specific countries, its foreign minister has expressed deep disappointment over the seeming double standards, especially of the so-called “Global North” in dealing with the so-called “Global South.” At the EU-Indo-Pacific Ministerial Forum (held last February in Brussels), Retno Marsudi called for consistent respect for international law, highlighting that this should also applied to Palestine. Indonesia has repeatedly called for a ceasefire, in bilateral, regional, and international fora. It has sent multiple aid shipments to Gaza. Indonesians widely support their government’s position, while one-third believe that the international community should support a ceasefire and prioritize the provision of humanitarian aid and support Palestine’s right to self-determination and statehood.
As stated, Indonesia is a country that generally receives little attention in the West, although this is not the case in Washington or Beijing. Given the struggle that the US and China maintain for world leadership and the strategic position of Indonesia, the rivalry of the two superpowers to get more influence over Jakarta is evident. A logical ambition is that the Indonesian archipelago has a length of more than 5,000 kilometers (a distance equivalent to that which separates Lisbon from Tehran) and it controls access to the waters of the Indian and Pacific oceans as much as possible out to the South China Sea, with the geostrategic importance that this will assume in the event of a conflict in the Taiwan straits between the two superpowers.
Despite the nationalist orientation of the new president, everything suggests that his ascension to the country’s supreme magistrature would be marked by continuity in external relationships; but nothing can exclude sudden turns in relations with Jokowi’s decade. However, since Jakarta confirmed its traditional policy of balanced neutrality, a line of leadership that it has not abandoned since it gained independence in 1945 and which is based on the doctrine of “independent and active,” as defined by Muhammad Hatta (the father of Indonesian independence) and that the non-aligned movement was born during conference in the Indonesian city of Bandung in 1955. Like other countries in the subregion, Indonesia will try to keep a delicate balance between the two major powers, privileging a relationship in matters of security with the US and economic ties with China (with prudence), it also aims to promote a growing regional space, free from the pressures of big powers.
The reality is that for Washington, Indonesia is a growing challenge. The US is worried that Jakarta has the potential to develop an independent and active foreign policy, while cultivating more than friendly relations with both Washington and Beijing. US leadership fears that this exercise in political tightrope walking will end up breaking down and Indonesia will fall into the Chinese orbit. There are reasons for this kind of concern: since 2020, for every dollar that the US has invested in that country, the companies of the Asian colossus have disbursed four; worst, and in the event of a war over Taiwan, there is concern that Jakarta would maintain its neutrality, despite repeated statements. Thus, it can be stated that Prabowo’s accession to the Indonesian presidency suggests both opportunities and challenges for American diplomacy. There is the possibility of deepening the Comprehensive Strategic Partnership that both countries signed in 2023, which includes technological cooperation in semiconductors, an area that both parties are equally interested in promoting. Security and defence are other areas where cooperation between the two countries is considered solid; from the time when he was still Minister of Defence, Subianto signed a cooperation agreement with his peer Lloyd Austin, in addition to highlighting the deepening of collaboration in maritime security. Further, during the long Suharto-led regime, the anti-communist drive of the armed forces set up a series of contacts and ties still effective with US forces. A collaboration that is supposed to be reinforced once Subianto, has assumed the presidency of the country.
On the other hand, that frustrations remain in the bilateral dialogue, especially in the economic dimension, such as the impossibility of Indonesia accessing the US market through the new Indo-Pacific Economic Cooperation Framework (IPEF), launched by President Joe Biden in 2022 to counter the influence of China, confirms the limits of this initiative or the impossibility of closing a bilateral agreement for the free trade of key minerals due to the fact that they are products manufactured by Chinese companies in Indonesian territory, under sanctions regimes.
Such situations certainly bother the authorities in Jakarta, who criticize the tendency of US diplomacy to promise too much and then impose conditions and then fail to fulfil what was promised, especially in economic matters. An attitude inverse to that of China, which usually fulfils its investment promises, even if late and with a clear predatory approach. In Washington, on the other hand, the trust in matters of security and defence with Indonesia is not complete. For the White House, the Indonesian opposition to AUKUS, the trilateral security pact established by the US, Australia and the UK, in 2021, with Jakarta alluding to its non-proliferation policy, was a cold shower. And the criticism of the QUAD, the quadrilateral security dialogue comprising the US, India, Japan and Australia, which the Indonesian authorities consider a threat to the central role of ASEAN in the institutional architecture of South East Asia (and in a wider perspective, also the ARF, the ASEAN Regional Forum, established in 1994), receive a similarly critical judgement from Jakarta.
The cold approach of Indonesia vis-à-vis the two most important architectures set up by Washington to counter Chinese pressure in the Indo-Pacific is a bad sign for the long-term project to merge these two in a broader one, something between SEATO and a new “Eastern NATO” and including new participants, like New Zealand, South Korea, Philippines, Thailand, France, Germany, and the EU. A model, if it will be successful, which will reduce the profile and impact of ASEAN/ARF, an architecture that Jakarta considers key to preventing the hegemony of any external power to influence the Indo-Pacific region.
The Chinese authorities, like the US, also consider Indonesia as a key strategic partner in the Indo-Pacific region, and critical as well. It is essential for China to have Indonesia as a friend in regional disputes, as well as to have a strategic ally crucial in the area and which also guarantees access to its natural resources. Jakarta, however, like most South East Asian countries, has traditionally followed an equidistant, non-alignment policy towards the two superpowers—a strategy aimed at avoiding confrontations with both China and the US, while trying to obtain benefits from both sides. In this sense, Subianto’s rise to the Indonesian presidency should not entail major changes, since he is expected to be pragmatic in his foreign policy, which may represent new opportunities for Beijing, but also risks, induced by the nationalist temperament of the former general, which will face sooner or later the expansionist drive of Beijing.
In its favor, China plays with the advantage of having become Indonesia’s main trading partner and its second foreign investor—behind Singapore—over the last decade, and an approach that is supposed to consolidate Subianto’s position, to the extent that Indonesia needs the injection of foreign capital to continue its development. And China has become, in this sense, the essential partner to promote the industrial transformations highlighted by the Indonesian government as a springboard to generate employment, modernize the country to become the fourth largest economy on the planet in 2045—goals that it will only achieve if foreign capital flows in and the Indonesian economy grows at an annual rate of 7 percent of its GDP in the coming years. This growth has also led Chinese companies to control the exploitation of the nickel industry, a fundamental metal for electric vehicle batteries and of which Indonesia has the main deposits in the world, as well as other raw materials such as bauxite, a mineral used to produce aluminium. A confluence of interests for both countries that began with the coming to power of Xi Jinping in China and Jokowi in Indonesia, to the extent that the latter made the construction of infrastructure one of the emblematic policies of his mandate and Xi opted for investments in infrastructure as the backbone of China’s diplomatic strategy. This convergence of interests has made Jakarta a key partner of the “new Silk Roads” (or “Belt and Road Initiative”) promoted by Beijing, which in turn is building and investing in various infrastructure projects throughout Indonesia.
But the good harmony between Indonesia and China is not without challenges. There is a latent anti-Chinese sentiment that could explode at any moment and ruin these apparent good relations. There is growing mistrust in Indonesia of China caused by its growing assertiveness in South East Asia, as well as Beijing’s alleged mistreatment of the Uyghurs, the Muslim minority living in the Xinjiang/East Turkestan region. Although on this last issue, Jakarta has tried to maintain a prudent approach so as not to impact negatively the dialogue with Beijing, nor provoke retaliations that may jeopardize China’s investments in the Indonesian archipelago.
Added to this, on the other hand, is the mistrust that persists in both capitals after the dispute between the Indonesian Coast Guard and the Chinese fishing militia in the Indonesian Exclusive Economic Zone (EEZ) of the Natuna Sea at the end of 2019, a region of the Pacific Ocean Located between the islands of Borneo and Sumatra, considered a traditional Chinese fishing region by Beijing, which was on the verge of becoming the scene of a war between the two countries if the Chinese government had not ordered the withdrawal of its militia. After that confrontation, Sino-Indonesian relations have improved significantly, to the point of carrying out joint naval maneuvers. However, the Indonesian authorities continue to look with concern at the Chinese and monitor their waters, trying to avoid the re-proposition of the prolonged and incandescent stand-off between Chinese and Philippines coast guards in South Chinese Sea (and with the US, Australian, Japanese navies all around). And this climate of good understanding between the two countries could be clouded at any moment in the event of a hypothetical clash in the South China Sea, given the ardent nationalist spirit of Subianto—a situation that would test the new Indonesian president, since he would measure his pragmatism, when it comes to assessing the importance of Chinese investments to boost the country’s economy, with the nation’s sovereign inclination and its good relations with the US in terms of security and defence.
Other two countries which monitor with attention the trend of Indonesia policies, especially vis-à-vis China, are India and Australia. With both, bilateral relations are much better, although Jakarta remains cold in regards to the AUKUS and the QUAD.
India and Indonesia, united by historic cultural ties, have signed a strategic partnership agreement to enhance cooperation in national and maritime security and safety, trade connectivity, infrastructure and economic development. In the post-war years, Indonesia with Sukarno and India with Nehru, together with Tito and Nasser, contributed to founding the Non-Aligned Movement. This bond came close to breaking when in one of the recurring crises with Pakistan, in 1965, India faced a possible threat from Suharto who carried out an action against the Andaman and Nicobar Islands, controlled by New Delhi, to ease the unstoppable Indian pressure against Pakistani forces, and Suharto eventually mobilized submarines to help Islamabad.
A maritime boundary agreement between the two countries was issued in New Delhi on 14 January 1977, which shows the relevance for New Delhi of its southernmost territory of Andaman and Nicobar Islands, which lies close to the Aceh province of Indonesia, an area which is an important global trade route.
In May 2018, the “Shared Vision of Maritime Cooperation in the Indo Pacific” agreement was signed, when Indian PM Narendra Modi visited Indonesia. Subsequently, the Indian and Indonesian Navies have been hosting bilateral “Samudra Shakti” naval exercises, since November 2018 including in the Java and Andaman Seas. These exercises are a significant enhancement of operational engagement between these two navies after their 2002 “Ind-Indo Corpat” agreement.
India and Indonesia are also jointly developing the Sabang Deep Sea Port, and Indian Navy ships have been regularly visiting this port after the signing of the agreement. India monitors with attention and caution Indonesia for two main reasons, both related with China-related dynamics. One is to expand its economic expansion with another important partner, producer and deliverer of raw materials; the other is to stop any infiltration of Beijing that may block Indian expansion, not only in the economic dimension but also in the strategic one, and put a serious limit on the freedom of movement of New Delhi in the Indian Ocean.
The other power which monitors and follows the developments of Indonesia is Australia. Although Jakarta is often presented as one of Canberra’s most important neighbors and strategic allies, the relationship has not always been smooth. Last February, Indonesia and Australia held high-level talks in Jakarta as the neighboring countries sought to strengthen security ties by signing a defence cooperation agreement. The then Defence Minister Subianto, who was set to become Indonesia’s next president, said that he and his Australian counterpart, Richard Marles (who was also the Deputy PM of Australia), discussed ways of maintaining and enhancing the good relationship between the two nations. That meeting came less than a week after the ADF (the Australian Defence Force) Chief Gen. Angus Campbell met with Prabowo. The back-to-back visits by two top Australian security officials that week reflected the importance of Indonesia, the world’s third-largest democracy, to Australia. During the meeting sensitive issues were discussed, such as the support of Australia for the separatist movements of West Papua (which look to join the independent Papua New Guinea, which paradoxically is worried by the potential support by Canberra for the independence of Bougainville); and Marles reiterated that Australia recognizes the territorial integrity and sovereignty of Indonesia. Recent disagreements include allegations of wiretapping by the Australian Signals Directorate in 2013 to monitor the private phone calls of then Indonesian President Yudhoyono, his wife and other senior officials; Indonesia’s use of capital punishment for Australian drug smugglers; and cases of people smuggling.
In 2017, Indonesia temporarily suspended military cooperation with Australia, including joint training, education, exchanges of officers and visits, over an alleged insult of the Indonesian state ideology of “Pancasila” and against the Indonesian military dispatched in Australia. In September 2021 Indonesia filed a diplomatic protest against Australia for being slow to provide information about its activities in the AUKUS trilateral pact involving the US and the UK, including plans for Australia to acquire nuclear-powered submarines. Since 2022, Australia, along with Japan and Singapore, has been part of the annual Indonesia-US joint combat exercise called the “Super Garuda Shield,” making it the largest, since the drills began in 2009; and Indonesia is a regular participant in the “Talisman Sabre” (the massive multinational exercise organized and hosted by ADF). These expanded drills are seen by China as a threat. Chinese state media have accused the US of building an Indo-Pacific alliance similar to NATO to limit China’s “legitimate and peaceful” growing military and diplomatic influence in the region.
As stated, the regional dynamics are very important for Indonesia, and the ASEAN (and its enlarged step-brother ARF) is pivotal for the broader security of the South East Asia in the view of Jakarta. Indonesia, along with Vietnam, Philippines and Malaysia is among the leading group of states of organization (another important member like Myanmar/Burma has been frozen following the coup of 2021). Indonesia works not only to create political, economic, but also social, and cultural agreements.
Indonesia is also strongly committed to keeping the South East Asia a nuclear-free zone, under the Southeast Asia Nuclear-Weapon-Free Zone (SEANWFZ) agreement. Indonesia’s seriousness in realizing the SEANWFZ is evidenced by the ratification of Law 9/1997 on the Ratification of the Treaty on the South East Asia Nuclear Weapon-Free Zone.
But it also contributes to several peace efforts aimed to maintain ASEAN regional security and create a peaceful, just, and prosperous region. In this light, Indonesia has played a role in several various conflicts and important issues in the subregion. In 2023, replacing Cambodia, Indonesia chaired the ASEAN (for the fifth time since the establishment of the organization in 1967) and focused its action on several files. One the most important was the situation in Myanmar/Burma.
At the 42nd ASEAN Summit meeting in Labuan Bajo, Indonesia, and other ASEAN member countries, besides Myanmar/Burma, initiated the Five-Point Consensus (5PC), which aims to help Myanmar/Burma out of its political crisis. Jakarta was also chosen as the mediator in the Philippines conflict. It is because of Indonesia’s neutrality and the assumption that Indonesia comprehends the conflict between the Philippines and the Moro National Liberation Front (MNLF). Cambodia’s chairmanship of ASEAN, which was very controversial because it was considered as a longa manus of Beijing, was at the center of other mediation efforts of Indonesia, considered as re-balancing the work of the organization. Thus, Jakarta played an important role in resolving the conflict between Vietnam and Cambodia (1988-1989). As an initiator of conflict resolution, Indonesia mediated between the two countries to return to peace. Indonesia’s efforts paid off as Vietnam agreed to withdraw its remaining troops from Cambodia. Finally, Indonesia promoted the development, from an initial coordination (and related maneuvers) of military assets in humanitarian and disaster relief, to be the first steps of joint exercises among the armed forces of the member states of the organization.
But Indonesia faces not only external challenges. The domestic situation, despite overcoming the problems of the recent past, is not fully stable. As stated, Indonesia has always been a country with vast potential, but unfortunately since it achieved independence, the country has oscillated between an ineffective democratic system to dictatorships, para-communists with Sukarno, followed by the “New Order” regime (in reality fully conservative) of President Suharto, that remained in power for almost 31 years until May 1998, after which came the first steps towards real democratic governance.
The Netherlands had Indonesia as a colonial possession from 1602; then in December 1941 Japan invaded it and took the full control in March 1942. During the Japanese occupation Indonesian nationalist forces emerged, and after the Tokyo’s defeat, these nationalist forces, led by Sukarno and Mohammad Hatta, declared Indonesian independence on 17 August 1945. However, the Netherlands attempted to restore its control, leading to a post-colonial conflict which ended with the recognition of Indonesian independence in 1949, at which point Sukarno became the first President of Indonesia.
One of the critical points is the security architecture, dominated firstly by the complex geographical situation. Indonesia is an archipelagic nation, which consists of 17,508 islands, of which 922 are permanently inhabited. Indonesia occupies a strategic position, since it includes the Straits of Malacca, the Lombok and Sunda Straits that link the Indian Ocean and the Java Sea, among the most important oil chokepoints globally. Also, Indonesia is right on top of critical sea lines of communication, since oil from the Middle East heading towards China, Japan and Korea must pass through Indonesian waters. This situation requires a robust military capability (the Indonesian military has a conventional tri-service structure and consists of the Indonesian Army (TNI-AD), the largest and most important part of the Indonesian military, the Indonesian Air Force (TNI-AU) and the Indonesian Navy (TNI-AL), which include the Indonesian Marine Corps (KORMAR RI); the latter three components have seen important growth).
The fortunes of the Indonesian military have oscillated consistently since independence. At one stage Indonesia had the most powerful military in South East Asia, and at that time, at least on paper, it was arguably one of the most impressive forces in the whole of Asia. This was followed by a long period of decline. More recently, improvements in Indonesia’s economy have brought international recognition (and self-awareness) of the nation’s importance, and this has led to improvements to the military with significant purchase campaigns. Upon independence, the new Indonesian military was equipped with a mix of equipment, Japanese Dutch, British and US. Indonesia, despite describing itself as a non-aligned country, after President Sukarno’s visit to USSR in 1956, links between Jakarta and Moscow started to become closer. Indonesia then became the second largest recipient of Soviet military aid in the early 1960s, transforming Indonesia’s military into one of the best-equipped in South East Asia. Then Sukarno fell from power, Major-General Suharto cut off the links with the USSR. Consequently, much of Indonesia’s Soviet equipment became unusable due to lack of spare parts and support.
Once Suharto turned away from the Soviets, Western nations started supplying some equipment; and over the years, Indonesia would receive a lot of second-hand military equipment. There were occasional purchases of equipment, primarily from Europe or the US, but even though Indonesia had a military-dominated government, in the Suharto era they were not big spenders on defence equipment. One area where there was some emphasis during the Suharto era was in indigenous defence production, classified as the “Strategic Industries” at that time. This saw local development and production of defence equipment, as well as upgrade and modernisation of existing systems and the local production of defence systems under license. Technology gained in license production was then applied to new programs, with the eventual aim being the ability to meet a substantial amount of Indonesia’s defence needs domestically.
The fall of Suharto in 1998 ushered in a new democratic era, but was also a time of political and economic turmoil in Indonesia. Matters were not helped by the chaotic situation in East Timor surrounding the independence referendum of the occupied former Portuguese colony, where violence led to a wave of arms embargoes against Indonesia from September 1999 onwards. The US embargo lasted until 2005, the British embargo until 2012; but the EU embargo was much shorter, imposed in September 1999 and lifted in January 2000.
Political and economic uncertainty added to the impact of the embargoes and created serious problems for the effectiveness of armed forces and the country’s security. As stop-gap measure, there was a short-lived resurgence in Moscow-produced defence systems.
Gradually, Indonesia achieved political stability; the democratic system largely began to work, and in turn the national economy started growing. With its large population, the country had tremendous potential as a marketplace; equally important, this large population could provide a more educated workforce that could produce goods for foreign companies in a cost-effective manner; and then there were the Indonesian natural resources to consider. Added to this is Indonesia’s strategic position in South East Asia and suddenly, rather than seeking to exclude Indonesia from the international system, everybody was interested in doing business with Indonesia.
Indonesia’s population numbers 277.329 million, the fourth-largest in the world and the largest Muslim population. According to the CIA World Factbook, it is estimated that the Indonesian population will reach 320 million by 2045.
This large population presents many challenges, first and foremost being the need for economic growth to provide jobs for all of these people. Then comes trying to find solutions to overpopulation; for example some 150 million live on Java, the most densely-populated island on the planet. A third, related issue is the environment and issues such as air and water pollution, deforestation, industrial waste, clean water supply, and wastewater management. There is a profusion of human-made environmental issues to deal with, but these are supplemented by natural environmental issues. Indonesia contains more volcanoes than anywhere else in the world, 76 of which are historically active. Indonesia is located along what is called the “Ring of Fire,” this being a belt of active volcanoes and earthquake epicentres bordering the Pacific Ocean. According to the CIA World Factbook: “up to 90% of the world’s earthquakes and some 75% of the world’s volcanoes occur within the Ring of Fire; [with] 80% of tsunamis, caused by volcanic or seismic events.”
Inevitably, like any emerging nation, Indonesia has had to overcome numerous challenges, but in the post-Suharto era, as stated, after 1998, the country has achieved significant economic development and deep changes. Today agriculture accounts for between 13 percent and 14 percent of Gross Domestic Product (GDP), with manufacturing and services each accounting for over 40 percent of GDP. Now, Indonesia’s economy is credited with being the 17th largest in the world, and it continues to receive substantial amounts of Foreign Direct Investment (FDI). FDI and internal economic growth allow Indonesia to move further up the industrial value chain and allow it to sustain growth, with GDP growth per annum remaining in the region of 5 percent. However, the Indonesian government must become more efficient at all levels and there needs to be significant expenditure on infrastructure to continue economic growth.
There are a lot of questions for the country at present, about its prospects and the incumbent leadership. The reality is that the electoral victory of Subianto, with 58 percent of the votes, has also aroused concern in a large part of Indonesian society, which fears that the country’s democratic trajectory will be distorted due to a possible increase in influence of the armed forces, both nationally and internationally, a concern that is based on the fact that a large part of his advisors and trusted personnel also belong to or come from the military establishment; and during his administration as Minister of Defence, the country’s military strategy was marked by a policy of strengthening and modernization of the armed forces.
Subianto has defended the development of the national defence industry and has promoted substantial investments for the modernization of the Indonesian armed forces, reaching military spending at 10.2 billion dollars in 2022. Unlike Jokowi (also from the military establishment), who was known for his low profile and who had little interest in geopolitical issues, Subianto has a more informal and temperamental style, which leads him to be interested in international affairs and not shy away from controversial topics. Proof of this was the presentation of a peace initiative for war in the Ukraine at the beginning of the year or the harsh criticism of the West for restrictions on the export of palm oil, a product whose main producer and exporter in the world is Indonesia. Another thing is whether he can carry out his promises, due to the complexity they may entail.
His economic strategy has the ultimate goal of turning Indonesia into one of the four largest economies on the planet, along with India, China and the US, by 2045, when the country’s centenary of Independence is celebrated. He promised to the transfer of the capital from Jakarta to Nusantara, a newly created city on the island of Borneo that has already begun to be built, by Jokowi, and which is estimated to have a total cost of around $30 billion and will be ready by the year 2045.
There is nothing to suggest that Subianto will modify the course of the natural resources policy that Jokowi had launched and which basically consists of prohibiting the export of natural resources considered strategic and promoting a national processing industry for these raw materials and forcing global companies to build factories in Indonesia, generate employment and increase the purchasing power of the population. A fundamental action plan for the industrialization of the country, which Indonesia has begun to apply to bauxite and nickel, a material for which this country is the main producer and exporter on the planet.
Everything leads one to think that Indonesia is on the verge of a new era under the presidency of Subianto that will begin next October. It is foreseen that this country will consolidate itself as the first economy in South East Asia and will be among the most powerful economies of the world.
Everything leads one to think that the so-called “independent and active doctrine” will be maintained, launched by Muhammad Hatta, one of the founding fathers, in 1948, which stressed that Indonesia should look after its interests first and be an active participant in world politics, and to defend the interests of the country before anything else. This will be the line of action that Subianto is expected to apply, as well as maintain a balance in his relations with the US and China, while trying to obtain benefits for his country.
For the US, the new Indonesian president will surely try to deepen relations in terms of security and defence, in order to protect himself from China’s assertiveness in South East Asia and more especially in the South China Sea. With China, on the other hand, more complex relations are expected. Everything points to a dialogue marked by close economic cooperation beneficial to both parties, to the extent that Indonesia needs foreign investment and Beijing needs that country’s raw materials. But on the other hand, Subianto will have to skilfully handle the suspicion generated by China’s voracity and obstinacy to extend its control over the region.
Among these ambiguous nations is Indonesia, a country of great current importance and of even greater potential for the years to come, which however appears very rarely in the international media mainstream and which remains little analyzed in studies of the political-military dynamics that affect the enormous maritime basin of the Indo-Pacific.
Indonesia is the main economy of South East Asia, targeted to house the fourth largest democracy on the planet (after India, EU and USA) and the world largest Muslim populated country (88 percent of its 277 million inhabitants profess the Muslim faith); this country is now claiming greater leadership in the Indo-Pacific region (it just assured the rotational chairmanship of ASEAN, Association of South East Asian Nations, for 2023) and on the global scale. In this vein, Jakarta is full member of the G-20 and is negotiating to join the OECD, as well as being a remarkable and historical member of the Non-Aligned Movement.
In a decade of social and economic modernization driven by President Joko Widodo, the country of more than 17,000 islands looks forward to continue to push its social economic development with the aim of building one of the four largest economies in the world, which will include India, China and the US, for 2045, when the centenary of its independence from occupying Japan (and previously, the Netherlands) will be celebrated. To achieve this goal, Indonesians elected Prabowo Subianto, a former general and defence minister, under the presidency of Joko Widodo, as president in February of this year.
Subianto is a controversial figure, because of his iron fist in the campaigns in West Papua, Timor Leste, Maluku Islands and Aceh (and because of his ties with the Suharto era). It is widely hoped that the armed forces, which are looking for an impressive rearmament drive, will maintain the policy of neutrality that has characterized Indonesia now since the return of democracy in late 1990s and the nation will be capable of maintaining a balanced relationship with US, China, India, Australia and ASEAN partners; There is now an ongoing (and bitter) scramble which seeks to control the whole of the Indo-Pacific; this, while Indonesia looks to be a regional power, at least in the critical subregion of South East Asia.
After the turbulent years of the Sukarno presidency and the brutal coup of General Suharto, the country was again submerged into silence, re-emerging as the center of global attention. It was in 1997, when the Asian financial crisis began in Thailand, sapping the stocks of an Indonesian economy that was poorly prepared to deal with a situation of extreme volatility. These were months in which the weakness of the country’s financial system, the collapse of the rupee and the collapse of food prices led to a climate of general protests throughout the country, which culminated in May 1998 with the collapse of the regime of Suharto, in power since 1966.
Now, Indonesia enjoys growing attention in the international scene. Rich in oil, gas and other natural resources, as well as being a key geostrategic country in regards to the drive that pits China and the US for global leadership. A status validated by the fact that this country, made up of more than 17,000 islands, has low control over the waters of the Indian and Pacific oceans, through which the main maritime routes of international trade pass.
This silent rise of Indonesia during the last decade has its origins in the management developed by its President Joko Widodo, popularly known as “Jokowi.” He pushed the social and economic modernization of the country and placed it on the path to increasing its international influence in significant ways for the next twenty years. Currently, it is the first South East Asian economy, the largest emerging market for its PIB, and the country has grown more rapidly in the last decade, surprisingly more than India and China. This success is driven by the export of oil and natural gas, as well as by the exploitation of palm oil and the main global reserves of nickel, a raw material that is found in Indonesia and is key to its future mobility.
All this gives importance greater than expected to Prabowo Subianto, who won the presidential elections February 14th, 2024. At a stage in which the largest archipelago of the world could be converted into one of the ten largest economies of the planet, the new president Subianto will have to overcome the enormous challenges, internal and external, that confront the country.
As witnessed by the abstention of Indonesia on the adoption of the final document on the conference on Ukraine in Switzerland, other recent developments in the international arena, represented a shift towards the prevalent multipolar positioning of middle-size powers; especially the Gaza crisis, particularly due to the Muslim faith, which represented a significant shift in the perception of the country’s population. While Indonesia has not singled out specific countries, its foreign minister has expressed deep disappointment over the seeming double standards, especially of the so-called “Global North” in dealing with the so-called “Global South.” At the EU-Indo-Pacific Ministerial Forum (held last February in Brussels), Retno Marsudi called for consistent respect for international law, highlighting that this should also applied to Palestine. Indonesia has repeatedly called for a ceasefire, in bilateral, regional, and international fora. It has sent multiple aid shipments to Gaza. Indonesians widely support their government’s position, while one-third believe that the international community should support a ceasefire and prioritize the provision of humanitarian aid and support Palestine’s right to self-determination and statehood.
As stated, Indonesia is a country that generally receives little attention in the West, although this is not the case in Washington or Beijing. Given the struggle that the US and China maintain for world leadership and the strategic position of Indonesia, the rivalry of the two superpowers to get more influence over Jakarta is evident. A logical ambition is that the Indonesian archipelago has a length of more than 5,000 kilometers (a distance equivalent to that which separates Lisbon from Tehran) and it controls access to the waters of the Indian and Pacific oceans as much as possible out to the South China Sea, with the geostrategic importance that this will assume in the event of a conflict in the Taiwan straits between the two superpowers.
Despite the nationalist orientation of the new president, everything suggests that his ascension to the country’s supreme magistrature would be marked by continuity in external relationships; but nothing can exclude sudden turns in relations with Jokowi’s decade. However, since Jakarta confirmed its traditional policy of balanced neutrality, a line of leadership that it has not abandoned since it gained independence in 1945 and which is based on the doctrine of “independent and active,” as defined by Muhammad Hatta (the father of Indonesian independence) and that the non-aligned movement was born during conference in the Indonesian city of Bandung in 1955. Like other countries in the subregion, Indonesia will try to keep a delicate balance between the two major powers, privileging a relationship in matters of security with the US and economic ties with China (with prudence), it also aims to promote a growing regional space, free from the pressures of big powers.
The reality is that for Washington, Indonesia is a growing challenge. The US is worried that Jakarta has the potential to develop an independent and active foreign policy, while cultivating more than friendly relations with both Washington and Beijing. US leadership fears that this exercise in political tightrope walking will end up breaking down and Indonesia will fall into the Chinese orbit. There are reasons for this kind of concern: since 2020, for every dollar that the US has invested in that country, the companies of the Asian colossus have disbursed four; worst, and in the event of a war over Taiwan, there is concern that Jakarta would maintain its neutrality, despite repeated statements. Thus, it can be stated that Prabowo’s accession to the Indonesian presidency suggests both opportunities and challenges for American diplomacy. There is the possibility of deepening the Comprehensive Strategic Partnership that both countries signed in 2023, which includes technological cooperation in semiconductors, an area that both parties are equally interested in promoting. Security and defence are other areas where cooperation between the two countries is considered solid; from the time when he was still Minister of Defence, Subianto signed a cooperation agreement with his peer Lloyd Austin, in addition to highlighting the deepening of collaboration in maritime security. Further, during the long Suharto-led regime, the anti-communist drive of the armed forces set up a series of contacts and ties still effective with US forces. A collaboration that is supposed to be reinforced once Subianto, has assumed the presidency of the country.
On the other hand, that frustrations remain in the bilateral dialogue, especially in the economic dimension, such as the impossibility of Indonesia accessing the US market through the new Indo-Pacific Economic Cooperation Framework (IPEF), launched by President Joe Biden in 2022 to counter the influence of China, confirms the limits of this initiative or the impossibility of closing a bilateral agreement for the free trade of key minerals due to the fact that they are products manufactured by Chinese companies in Indonesian territory, under sanctions regimes.
Such situations certainly bother the authorities in Jakarta, who criticize the tendency of US diplomacy to promise too much and then impose conditions and then fail to fulfil what was promised, especially in economic matters. An attitude inverse to that of China, which usually fulfils its investment promises, even if late and with a clear predatory approach. In Washington, on the other hand, the trust in matters of security and defence with Indonesia is not complete. For the White House, the Indonesian opposition to AUKUS, the trilateral security pact established by the US, Australia and the UK, in 2021, with Jakarta alluding to its non-proliferation policy, was a cold shower. And the criticism of the QUAD, the quadrilateral security dialogue comprising the US, India, Japan and Australia, which the Indonesian authorities consider a threat to the central role of ASEAN in the institutional architecture of South East Asia (and in a wider perspective, also the ARF, the ASEAN Regional Forum, established in 1994), receive a similarly critical judgement from Jakarta.
The cold approach of Indonesia vis-à-vis the two most important architectures set up by Washington to counter Chinese pressure in the Indo-Pacific is a bad sign for the long-term project to merge these two in a broader one, something between SEATO and a new “Eastern NATO” and including new participants, like New Zealand, South Korea, Philippines, Thailand, France, Germany, and the EU. A model, if it will be successful, which will reduce the profile and impact of ASEAN/ARF, an architecture that Jakarta considers key to preventing the hegemony of any external power to influence the Indo-Pacific region.
The Chinese authorities, like the US, also consider Indonesia as a key strategic partner in the Indo-Pacific region, and critical as well. It is essential for China to have Indonesia as a friend in regional disputes, as well as to have a strategic ally crucial in the area and which also guarantees access to its natural resources. Jakarta, however, like most South East Asian countries, has traditionally followed an equidistant, non-alignment policy towards the two superpowers—a strategy aimed at avoiding confrontations with both China and the US, while trying to obtain benefits from both sides. In this sense, Subianto’s rise to the Indonesian presidency should not entail major changes, since he is expected to be pragmatic in his foreign policy, which may represent new opportunities for Beijing, but also risks, induced by the nationalist temperament of the former general, which will face sooner or later the expansionist drive of Beijing.
In its favor, China plays with the advantage of having become Indonesia’s main trading partner and its second foreign investor—behind Singapore—over the last decade, and an approach that is supposed to consolidate Subianto’s position, to the extent that Indonesia needs the injection of foreign capital to continue its development. And China has become, in this sense, the essential partner to promote the industrial transformations highlighted by the Indonesian government as a springboard to generate employment, modernize the country to become the fourth largest economy on the planet in 2045—goals that it will only achieve if foreign capital flows in and the Indonesian economy grows at an annual rate of 7 percent of its GDP in the coming years. This growth has also led Chinese companies to control the exploitation of the nickel industry, a fundamental metal for electric vehicle batteries and of which Indonesia has the main deposits in the world, as well as other raw materials such as bauxite, a mineral used to produce aluminium. A confluence of interests for both countries that began with the coming to power of Xi Jinping in China and Jokowi in Indonesia, to the extent that the latter made the construction of infrastructure one of the emblematic policies of his mandate and Xi opted for investments in infrastructure as the backbone of China’s diplomatic strategy. This convergence of interests has made Jakarta a key partner of the “new Silk Roads” (or “Belt and Road Initiative”) promoted by Beijing, which in turn is building and investing in various infrastructure projects throughout Indonesia.
But the good harmony between Indonesia and China is not without challenges. There is a latent anti-Chinese sentiment that could explode at any moment and ruin these apparent good relations. There is growing mistrust in Indonesia of China caused by its growing assertiveness in South East Asia, as well as Beijing’s alleged mistreatment of the Uyghurs, the Muslim minority living in the Xinjiang/East Turkestan region. Although on this last issue, Jakarta has tried to maintain a prudent approach so as not to impact negatively the dialogue with Beijing, nor provoke retaliations that may jeopardize China’s investments in the Indonesian archipelago.
Added to this, on the other hand, is the mistrust that persists in both capitals after the dispute between the Indonesian Coast Guard and the Chinese fishing militia in the Indonesian Exclusive Economic Zone (EEZ) of the Natuna Sea at the end of 2019, a region of the Pacific Ocean Located between the islands of Borneo and Sumatra, considered a traditional Chinese fishing region by Beijing, which was on the verge of becoming the scene of a war between the two countries if the Chinese government had not ordered the withdrawal of its militia. After that confrontation, Sino-Indonesian relations have improved significantly, to the point of carrying out joint naval maneuvers. However, the Indonesian authorities continue to look with concern at the Chinese and monitor their waters, trying to avoid the re-proposition of the prolonged and incandescent stand-off between Chinese and Philippines coast guards in South Chinese Sea (and with the US, Australian, Japanese navies all around). And this climate of good understanding between the two countries could be clouded at any moment in the event of a hypothetical clash in the South China Sea, given the ardent nationalist spirit of Subianto—a situation that would test the new Indonesian president, since he would measure his pragmatism, when it comes to assessing the importance of Chinese investments to boost the country’s economy, with the nation’s sovereign inclination and its good relations with the US in terms of security and defence.
Other two countries which monitor with attention the trend of Indonesia policies, especially vis-à-vis China, are India and Australia. With both, bilateral relations are much better, although Jakarta remains cold in regards to the AUKUS and the QUAD.
India and Indonesia, united by historic cultural ties, have signed a strategic partnership agreement to enhance cooperation in national and maritime security and safety, trade connectivity, infrastructure and economic development. In the post-war years, Indonesia with Sukarno and India with Nehru, together with Tito and Nasser, contributed to founding the Non-Aligned Movement. This bond came close to breaking when in one of the recurring crises with Pakistan, in 1965, India faced a possible threat from Suharto who carried out an action against the Andaman and Nicobar Islands, controlled by New Delhi, to ease the unstoppable Indian pressure against Pakistani forces, and Suharto eventually mobilized submarines to help Islamabad.
A maritime boundary agreement between the two countries was issued in New Delhi on 14 January 1977, which shows the relevance for New Delhi of its southernmost territory of Andaman and Nicobar Islands, which lies close to the Aceh province of Indonesia, an area which is an important global trade route.
In May 2018, the “Shared Vision of Maritime Cooperation in the Indo Pacific” agreement was signed, when Indian PM Narendra Modi visited Indonesia. Subsequently, the Indian and Indonesian Navies have been hosting bilateral “Samudra Shakti” naval exercises, since November 2018 including in the Java and Andaman Seas. These exercises are a significant enhancement of operational engagement between these two navies after their 2002 “Ind-Indo Corpat” agreement.
India and Indonesia are also jointly developing the Sabang Deep Sea Port, and Indian Navy ships have been regularly visiting this port after the signing of the agreement. India monitors with attention and caution Indonesia for two main reasons, both related with China-related dynamics. One is to expand its economic expansion with another important partner, producer and deliverer of raw materials; the other is to stop any infiltration of Beijing that may block Indian expansion, not only in the economic dimension but also in the strategic one, and put a serious limit on the freedom of movement of New Delhi in the Indian Ocean.
The other power which monitors and follows the developments of Indonesia is Australia. Although Jakarta is often presented as one of Canberra’s most important neighbors and strategic allies, the relationship has not always been smooth. Last February, Indonesia and Australia held high-level talks in Jakarta as the neighboring countries sought to strengthen security ties by signing a defence cooperation agreement. The then Defence Minister Subianto, who was set to become Indonesia’s next president, said that he and his Australian counterpart, Richard Marles (who was also the Deputy PM of Australia), discussed ways of maintaining and enhancing the good relationship between the two nations. That meeting came less than a week after the ADF (the Australian Defence Force) Chief Gen. Angus Campbell met with Prabowo. The back-to-back visits by two top Australian security officials that week reflected the importance of Indonesia, the world’s third-largest democracy, to Australia. During the meeting sensitive issues were discussed, such as the support of Australia for the separatist movements of West Papua (which look to join the independent Papua New Guinea, which paradoxically is worried by the potential support by Canberra for the independence of Bougainville); and Marles reiterated that Australia recognizes the territorial integrity and sovereignty of Indonesia. Recent disagreements include allegations of wiretapping by the Australian Signals Directorate in 2013 to monitor the private phone calls of then Indonesian President Yudhoyono, his wife and other senior officials; Indonesia’s use of capital punishment for Australian drug smugglers; and cases of people smuggling.
In 2017, Indonesia temporarily suspended military cooperation with Australia, including joint training, education, exchanges of officers and visits, over an alleged insult of the Indonesian state ideology of “Pancasila” and against the Indonesian military dispatched in Australia. In September 2021 Indonesia filed a diplomatic protest against Australia for being slow to provide information about its activities in the AUKUS trilateral pact involving the US and the UK, including plans for Australia to acquire nuclear-powered submarines. Since 2022, Australia, along with Japan and Singapore, has been part of the annual Indonesia-US joint combat exercise called the “Super Garuda Shield,” making it the largest, since the drills began in 2009; and Indonesia is a regular participant in the “Talisman Sabre” (the massive multinational exercise organized and hosted by ADF). These expanded drills are seen by China as a threat. Chinese state media have accused the US of building an Indo-Pacific alliance similar to NATO to limit China’s “legitimate and peaceful” growing military and diplomatic influence in the region.
As stated, the regional dynamics are very important for Indonesia, and the ASEAN (and its enlarged step-brother ARF) is pivotal for the broader security of the South East Asia in the view of Jakarta. Indonesia, along with Vietnam, Philippines and Malaysia is among the leading group of states of organization (another important member like Myanmar/Burma has been frozen following the coup of 2021). Indonesia works not only to create political, economic, but also social, and cultural agreements.
Indonesia is also strongly committed to keeping the South East Asia a nuclear-free zone, under the Southeast Asia Nuclear-Weapon-Free Zone (SEANWFZ) agreement. Indonesia’s seriousness in realizing the SEANWFZ is evidenced by the ratification of Law 9/1997 on the Ratification of the Treaty on the South East Asia Nuclear Weapon-Free Zone.
But it also contributes to several peace efforts aimed to maintain ASEAN regional security and create a peaceful, just, and prosperous region. In this light, Indonesia has played a role in several various conflicts and important issues in the subregion. In 2023, replacing Cambodia, Indonesia chaired the ASEAN (for the fifth time since the establishment of the organization in 1967) and focused its action on several files. One the most important was the situation in Myanmar/Burma.
At the 42nd ASEAN Summit meeting in Labuan Bajo, Indonesia, and other ASEAN member countries, besides Myanmar/Burma, initiated the
Five-Point Consensus (5PC), which aims to help Myanmar/Burma out of its political crisis. Jakarta was also chosen as the mediator in the Philippines conflict. It is because of Indonesia’s neutrality and the assumption that Indonesia comprehends the conflict between the Philippines and the Moro National Liberation Front (MNLF). Cambodia’s chairmanship of ASEAN, which was very controversial because it was considered as a longa manus of Beijing, was at the center of other mediation efforts of Indonesia, considered as re-balancing the work of the organization. Thus, Jakarta played an important role in resolving the conflict between Vietnam and Cambodia (1988-1989). As an initiator of conflict resolution, Indonesia mediated between the two countries to return to peace. Indonesia’s efforts paid off as Vietnam agreed to withdraw its remaining troops from Cambodia. Finally, Indonesia promoted the development, from an initial coordination (and related maneuvers) of military assets in humanitarian and disaster relief, to be the first steps of joint exercises among the armed forces of the member states of the organization.
But Indonesia faces not only external challenges. The domestic situation, despite overcoming the problems of the recent past, is not fully stable. As stated, Indonesia has always been a country with vast potential, but unfortunately since it achieved independence, the country has oscillated between an ineffective democratic system to dictatorships, para-communists with Sukarno, followed by the “New Order” regime (in reality fully conservative) of President Suharto, that remained in power for almost 31 years until May 1998, after which came the first steps towards real democratic governance.
The Netherlands had Indonesia as a colonial possession from 1602; then in December 1941 Japan invaded it and took the full control in March 1942. During the Japanese occupation Indonesian nationalist forces emerged, and after the Tokyo’s defeat, these nationalist forces, led by Sukarno and Mohammad Hatta, declared Indonesian independence on 17 August 1945. However, the Netherlands attempted to restore its control, leading to a post-colonial conflict which ended with the recognition of Indonesian independence in 1949, at which point Sukarno became the first President of Indonesia.
One of the critical points is the security architecture, dominated firstly by the complex geographical situation. Indonesia is an archipelagic nation, which consists of 17,508 islands, of which 922 are permanently inhabited. Indonesia occupies a strategic position, since it includes the Straits of Malacca, the Lombok and Sunda Straits that link the Indian Ocean and the Java Sea, among the most important oil chokepoints globally. Also, Indonesia is right on top of critical sea lines of communication, since oil from the Middle East heading towards China, Japan and Korea must pass through Indonesian waters. This situation requires a robust military capability (the Indonesian military has a conventional tri-service structure and consists of the Indonesian Army (TNI-AD), the largest and most important part of the Indonesian military, the Indonesian Air Force (TNI-AU) and the Indonesian Navy (TNI-AL), which include the Indonesian Marine Corps (KORMAR RI); the latter three components have seen important growth).
The fortunes of the Indonesian military have oscillated consistently since independence. At one stage Indonesia had the most powerful military in South East Asia, and at that time, at least on paper, it was arguably one of the most impressive forces in the whole of Asia. This was followed by a long period of decline. More recently, improvements in Indonesia’s economy have brought international recognition (and self-awareness) of the nation’s importance, and this has led to improvements to the military with significant purchase campaigns. Upon independence, the new Indonesian military was equipped with a mix of equipment, Japanese Dutch, British and US. Indonesia, despite describing itself as a non-aligned country, after President Sukarno’s visit to USSR in 1956, links between Jakarta and Moscow started to become closer. Indonesia then became the second largest recipient of Soviet military aid in the early 1960s, transforming Indonesia’s military into one of the best-equipped in South East Asia. Then Sukarno fell from power, Major-General Suharto cut off the links with the USSR. Consequently, much of Indonesia’s Soviet equipment became unusable due to lack of spare parts and support.
Once Suharto turned away from the Soviets, Western nations started supplying some equipment; and over the years, Indonesia would receive a lot of second-hand military equipment. There were occasional purchases of equipment, primarily from Europe or the US, but even though Indonesia had a military-dominated government, in the Suharto era they were not big spenders on defence equipment. One area where there was some emphasis during the Suharto era was in indigenous defence production, classified as the “Strategic Industries” at that time. This saw local development and production of defence equipment, as well as upgrade and modernisation of existing systems and the local production of defence systems under license. Technology gained in license production was then applied to new programs, with the eventual aim being the ability to meet a substantial amount of Indonesia’s defence needs domestically.
The fall of Suharto in 1998 ushered in a new democratic era, but was also a time of political and economic turmoil in Indonesia. Matters were not helped by the chaotic situation in East Timor surrounding the independence referendum of the occupied former Portuguese colony, where violence led to a wave of arms embargoes against Indonesia from September 1999 onwards. The US embargo lasted until 2005, the British embargo until 2012; but the EU embargo was much shorter, imposed in September 1999 and lifted in January 2000.
Political and economic uncertainty added to the impact of the embargoes and created serious problems for the effectiveness of armed forces and the country’s security. As stop-gap measure, there was a short-lived resurgence in Moscow-produced defence systems.
Gradually, Indonesia achieved political stability; the democratic system largely began to work, and in turn the national economy started growing. With its large population, the country had tremendous potential as a marketplace; equally important, this large population could provide a more educated workforce that could produce goods for foreign companies in a cost-effective manner; and then there were the Indonesian natural resources to consider. Added to this is Indonesia’s strategic position in South East Asia and suddenly, rather than seeking to exclude Indonesia from the international system, everybody was interested in doing business with Indonesia.
Indonesia’s population numbers 277.329 million, the fourth-largest in the world and the largest Muslim population. According to the CIA World Factbook, it is estimated that the Indonesian population will reach 320 million by 2045.
This large population presents many challenges, first and foremost being the need for economic growth to provide jobs for all of these people. Then comes trying to find solutions to overpopulation; for example some 150 million live on Java, the most densely-populated island on the planet. A third, related issue is the environment and issues such as air and water pollution, deforestation, industrial waste, clean water supply, and wastewater management. There is a profusion of human-made environmental issues to deal with, but these are supplemented by natural environmental issues. Indonesia contains more volcanoes than anywhere else in the world, 76 of which are historically active. Indonesia is located along what is called the “Ring of Fire,” this being a belt of active volcanoes and earthquake epicentres bordering the Pacific Ocean. According to the CIA World Factbook: “up to 90% of the world’s earthquakes and some 75% of the world’s volcanoes occur within the Ring of Fire; [with] 80% of tsunamis, caused by volcanic or seismic events.”
Inevitably, like any emerging nation, Indonesia has had to overcome numerous challenges, but in the post-Suharto era, as stated, after 1998, the country has achieved significant economic development and deep changes. Today agriculture accounts for between 13 percent and 14 percent of Gross Domestic Product (GDP), with manufacturing and services each accounting for over 40 percent of GDP. Now, Indonesia’s economy is credited with being the 17th largest in the world, and it continues to receive substantial amounts of Foreign Direct Investment (FDI). FDI and internal economic growth allow Indonesia to move further up the industrial value chain and allow it to sustain growth, with GDP growth per annum remaining in the region of 5 percent. However, the Indonesian government must become more efficient at all levels and there needs to be significant expenditure on infrastructure to continue economic growth.
There are a lot of questions for the country at present, about its prospects and the incumbent leadership. The reality is that the electoral victory of Subianto, with 58 percent of the votes, has also aroused concern in a large part of Indonesian society, which fears that the country’s democratic trajectory will be distorted due to a possible increase in influence of the armed forces, both nationally and internationally, a concern that is based on the fact that a large part of his advisors and trusted personnel also belong to or come from the military establishment; and during his administration as Minister of Defence, the country’s military strategy was marked by a policy of strengthening and modernization of the armed forces.
Subianto has defended the development of the national defence industry and has promoted substantial investments for the modernization of the Indonesian armed forces, reaching military spending at 10.2 billion dollars in 2022. Unlike Jokowi (also from the military establishment), who was known for his low profile and who had little interest in geopolitical issues, Subianto has a more informal and temperamental style, which leads him to be interested in international affairs and not shy away from controversial topics. Proof of this was the presentation of a peace initiative for war in the Ukraine at the beginning of the year or the harsh criticism of the West for restrictions on the export of palm oil, a product whose main producer and exporter in the world is Indonesia. Another thing is whether he can carry out his promises, due to the complexity they may entail.
His economic strategy has the ultimate goal of turning Indonesia into one of the four largest economies on the planet, along with India, China and the US, by 2045, when the country’s centenary of Independence is celebrated. He promised to the transfer of the capital from Jakarta to Nusantara, a newly created city on the island of Borneo that has already begun to be built, by Jokowi, and which is estimated to have a total cost of around $30 billion and will be ready by the year 2045.
There is nothing to suggest that Subianto will modify the course of the natural resources policy that Jokowi had launched and which basically consists of prohibiting the export of natural resources considered strategic and promoting a national processing industry for these raw materials and forcing global companies to build factories in Indonesia, generate employment and increase the purchasing power of the population. A fundamental action plan for the industrialization of the country, which Indonesia has begun to apply to bauxite and nickel, a material for which this country is the main producer and exporter on the planet.
Everything leads one to think that Indonesia is on the verge of a new era under the presidency of Subianto that will begin next October. It is foreseen that this country will consolidate itself as the first economy in South East Asia and will be among the most powerful economies of the world.
Everything leads one to think that the so-called “independent and active doctrine” will be maintained, launched by Muhammad Hatta, one of the founding fathers, in 1948, which stressed that Indonesia should look after its interests first and be an active participant in world politics, and to defend the interests of the country before anything else. This will be the line of action that Subianto is expected to apply, as well as maintain a balance in his relations with the US and China, while trying to obtain benefits for his country.
For the US, the new Indonesian president will surely try to deepen relations in terms of security and defence, in order to protect himself from China’s assertiveness in South East Asia and more especially in the South China Sea. With China, on the other hand, more complex relations are expected. Everything points to a dialogue marked by close economic cooperation beneficial to both parties, to the extent that Indonesia needs foreign investment and Beijing needs that country’s raw materials. But on the other hand, Subianto will have to skilfully handle the suspicion generated by China’s voracity and obstinacy to extend its control over the region.
