How long can Indonesia balance between the PRC and the US?
by Dmitry Bokarev on 10 Oct 2022 0 Comment

The global confrontation between the superpowers, the PRC and the US, affects every country in the world in one way or another. However, it primarily affects countries within the direct sphere of influence of competing giants. While the US sphere of influence is geographically fragmented and may include African and Asian countries alongside all Western states, China’s sphere of influence is primarily confined around China’s borders and gradually becomes weaker as it moves further away from China.


This demonstrates the difference in “influence” between the two superpowers: although China is about to become the world’s economic leader and is actively building up its economic and political presence around the world, the US still has “the longest arms”. Washington therefore prefers to fight Beijing as close to its borders as possible: the Chinese-US confrontation is taking over Taiwan and Southeast Asia, with Japan and South Korea as active participants on the US side. The PRC, on the other hand, is not yet able to boast of such successes in the immediate vicinity of the US, for example in Latin America. This also shows us which side is currently in the attacking position and which side is in the defending position.


As mentioned above, one of the main arenas of the Chinese-US confrontation is Southeast Asia (SEA), a resource-rich and populous region with strategic access to the Indian and Pacific Oceans, directly bordering the PRC. For both the PRC and the US, SEA is an extremely attractive target that could bring a strategic victory to one of the rival powers if one of them can finally gain control of the region.


However, the countries of SEA also have their own will and do not want to end up under the influence of a single superpower. It is much more profitable to maintain freedom and receive gifts from both superpowers for their loyalty. However, as the Chinese-US confrontation intensifies, so does their pressure on regional states. And how long the independent countries of SEA will be able to balance between the two poles of a multipolar world, and in which direction they will eventually “fall”, is difficult to predict.


One of the richest, most developed, and therefore most self-sufficient countries in SEA is Indonesia. It has a population of almost 276 million, is one of the top 20 oil exporters, controls part of the strategically important Strait of Malacca (through which about a quarter of all world maritime traffic passes) and claims regional leadership in SEA. Of course, such a country faces special scrutiny from China and the United States, which want to win it over.


Indonesia has a long and close relationship with China, if only because of geographical proximity. Back in the 1950s, the communist PRC and President Sukarno’s socialist Indonesia were trying to build a bloc as independent of the West as possible. But then Sukarno’s opponents came to power in Indonesia, launching the country’s exit from the socialist camp and moving towards rapprochement with the US. In 1967, even diplomatic relations between the PRC and Indonesia were suspended. In the decades that followed, China’s economy blossomed and mainland China emerged as a power not to be ignored. As a result, relations were restored in 1990, and in 2005 the PRC and Indonesia had already formed a strategic partnership.


However, in 2010, Indonesia entered into a comprehensive partnership with the United States. A “comprehensive partnership” is considered to mean more cooperation, as a “strategic partnership” is made to achieve specific strategic goals, while a “comprehensive partnership” means cooperation on all issues. Over the next decade, Washington repeatedly proclaimed that Indonesia was the “third democracy of the world” (in terms of population) and the leading state of SEA.


An important factor playing in Washington’s favour are China’s claims to Indonesian oil and gas fields around the Natuna Islands in the South China Sea (SCS). The steady increase of Chinese military presence in the SCS makes Jakarta perceive Chinese claims as a serious threat, and this binds it more tightly to the US.


Nevertheless, economic cooperation with Indonesia these days is led by China, which has become its main trading partner. In 2021, Indonesian-Chinese trade has once again shown impressive growth, exceeding $124 billion, while Indonesia’s trade with the US was just over $37 billion (though this still gives the US a respectable second place in the list of Indonesian trading partners).


It can be concluded that Indonesia, as mentioned at the beginning of this article, skilfully balances the PRC and the US in order to maximize the benefits of cooperation with both sides and, while maintaining a balance between the two, maintain its own autonomy. It also gives the impression that Indonesia emphasizes economic cooperation with Beijing and political cooperation with Washington.


However, as we know, politics is a superstructure of the economy, and material interests always come first in politics. As mentioned above, Indonesia’s trade with China in 2021 was $87 billion higher than its trade with the US. Such a significant bias towards the PRC is very interesting, especially given how rapidly it has grown. After all, Chinese-Indonesian trade in 2020 was just over $78 billion, and in 2021 it increased by more than 58%.


It can be assumed that this rapid growth is related to the suspension of Chinese imports of Australian coal, which occurred in 2020-2021 due to the prolonged deterioration in Chinese-Australian relations. As a result, China had to look urgently for other suppliers, and Indonesia was among them. It was mineral fuels that became the main item for Indonesian exports to the PRC in 2021. Perhaps this explains such rapid growth in Chinese-Indonesian trade.


As is known, the rejection of Australian coal created an energy crisis in China, which other suppliers helped to solve, as did the re-commissioning of previously mothballed Chinese coal mines. The PRC seems to be the dependent party in this situation, while coal suppliers such as Indonesia are the objects of dependency. Nevertheless, the kind of money that Indonesia received in 2021 is also bound to create some dependency. There is a view that the sharp and major bias towards the PRC that occurred in Indonesian trade in 2021 could lead to a similar movement in Indonesian politics. Unless, of course, the US can offer Indonesia comparable amounts of money.


So far, however, Washington has not made any particularly lucrative offers to Jakarta, and Beijing continues to pour more money into the Indonesian economy. In January 2022, for example, the People’s Bank of China extended a $40 billion currency swap agreement with the Indonesian central bank.


It is interesting that media reports on PRC activities in the Natuna Islands region have begun to decline against the backdrop of these events. Meanwhile, the number of Chinese ships sailing in the disputed area has not decreased, but it is as if Indonesia has “stopped noticing” them. Whether Indonesia is ready to cede its oil and gas-bearing seabed areas to Beijing for informal use, or whether it is mustering the strength to fight back decisively against China, it is hard to say.


In June 2022, the Indonesian and Indian navies conducted joint patrols in the Strait of Malacca. The two countries actively cooperate in various fields, and their common maritime border contributes to active maritime security cooperation. It is worth remembering that India is a strategic partner of the US and a major Asian competitor of the PRC, and the importance of the Strait of Malacca has been discussed above. The anti-Chinese focus of the patrol was not directly reported, but its very fact is a message to Beijing that the Strait of Malacca remains under the control of countries friendly to the US and that Indonesia is willing to participate in maintaining this state of affairs with arms in its hands.


In August 2022, the Indonesian island of Sumatra hosted another international exercise, Garuda Shield, where Indonesian troops annually hone their cooperation with US forces.


The status quo seems to remain the same: Indonesia, as before, is teetering on a fine line between China and the US. But the stakes are much higher: an excessive bias towards the PRC risks losing rich deposits in the Natuna Islands region and military cooperation with the US, while an excessive bias towards the US risks losing strategic amounts of money and becoming involved in US military adventures. Given the general radicalization of sentiment that is taking place nowadays, one can assume that Indonesia will still have to opt for one of the superpowers, but neither option will bring an unambiguous benefit.


Dmitry Bokarev, political observer, exclusively for the online magazine “New Eastern Outlook”. Courtesy 

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