Strategic courtship in Southeast Asia
The rise of the People’s Republic of China in the last three decades has been nothing short of a miracle. China has gone from struggling to feed its people to being a great power with ever increasing global ambitions. From the remotest corners of Africa to South America, China has emerged as a major political and economic actor. However, as one would expect, the Chinese presence is felt with even greater intensity in its own neighborhood. In Southeast Asia, China is an important if not the most important economic actor, being a key trading partner with all 11 countries in the region.
China’s economic power has enabled Beijing to build and expand its diplomatic and political influence in Southeast Asia. This new economic and political power is being steadily complemented by the rapid modernization of the Chinese military, especially the People’s Liberation Army Navy.
A powerful China poses both challenges and opportunities for Southeast Asia and for Indonesia in particular. Indonesia is of significant political, diplomatic, strategic and economic interest to both China and the reigning superpower, the United States. The world’s largest archipelagic nation, Indonesia sits astride vital sea lines of communication between three continents. A huge portion of the world’s trade passes through Indonesian waters or very close to its territory.
While a secular state, Indonesia has the world’s largest Muslim population, and is a vibrant young democracy that is rich in natural resources. As such, one can only expect China, the US and regional powers such as Australia, Japan and India to increase their presence in the country. Managing this great-power interest is likely to become Jakarta’s main diplomatic and political challenge in the coming years. Indonesia is already being actively courted by China and the US, and American ally Australia, with major interests in the region, is pursuing an even more extensive courting offensive.
China's links to Indonesia date back to the 14th century, when Chinese traders reached the archipelago in search of precious commodities such as spices and timber. Through the centuries, thousands of Chinese settled in Indonesia, and today they constitute around 4 percent of the population. In 1967, Indonesia severed diplomatic relations with China after President Soeharto consolidated power. Soeharto’s new military-backed regime suspected that China had been supporting the Indonesian Communist Party (PKI), including the abortive coup in 1965, allegedly backed by the PKI, which was crushed by Soeharto and his allies. Jakarta didn’t re-establish ties with Beijing until 1990, making Indonesia the last country in the region to do so. Since then, however, bilateral ties have blossomed. Cooperation has increased significantly, with the two countries signing dozens of agreements on issues ranging from agriculture to defense and security. Senior officials from both countries regularly make visits, including President Susilo Bambang Yudhoyono visiting China in March 2012. During that visit, the sides signed various agreements worth $17 billion.
Trade between the nations has grown rapidly since the restoration of diplomatic ties. In 1990, Sino-Indonesian trade was a mere $1.5 billion but reached $49 billion in 2011, while Indonesia’s trade with the US was only $29 billion that year. Today, China is Indonesia’s second-largest trading partner after Japan, importing vast quantities of thermal coal, palm oil, timber, pepper and other primary commodities. PetroChina and the China National Overseas Oil Company have established a strong presence in Indonesia, while several major manufacturing companies have set up plants in the country. China has also provided hundreds of millions of dollars in soft loans to Indonesia.
Perhaps more significant, considering the history of tensions between the two countries, is the growing cooperation in defense and security-related areas. In recent years, Jakarta and Beijing have signed several agreements relating to defense cooperation, and a growing number of Indonesian defense and security officials have gone to China to study. In early January, the countries set up a naval dialogue mechanism. The most important development is perhaps growing cooperation in military technology research. In early 2012, the countries signed an agreement on transferring Chinese missile technology to Indonesia. Under the agreement, China will assist Indonesia in the production of C-705 anti-ship cruise missiles. The C-705, a variation of the land attack C-704 missile, has a reported range of 135 kilometers and a good degree of accuracy.
Given that it is an archipelago, anti-ship missile technology is important to improving Indonesia’s naval capabilities. And the fact that China is willing to transfer such sensitive technology to Indonesia shows Beijing is determined to build goodwill with Jakarta. Indonesia has long sought to develop its own defense industries, with limited success. A major obstacle for developing countries to build their own indigenous military industries is reluctance by Western powers to share technology. In many instances, Chinese weapons sales and technology transfers are not motivated by profit but rather by political and diplomatic considerations. By selling sensitive technologies, China hopes to gain political points that translate into economic and diplomatic benefits, such as sympathy for Beijing’s positions in international forums.
This strategy has also been carried out in Latin America and elsewhere. China has assisted Brazil with its satellite and missile programs, while selling sophisticated electronic warfare equipment to Venezuela at friendly prices. A brief survey of Sino-Indonesian relations clearly shows that the two countries have come a long way since 1965. Many point to Beijing’s interest in Indonesia’s vast natural resources and markets. These are no doubt of great interest but strategic and political considerations are emerging as equally important. Indonesia has a growing international reputation and is a major influence within ASEAN. The fact that Indonesia lies astride several strategic maritime chokepoints is of major interest to China, especially as the Chinese Navy continues to expand. A China with power projection capabilities would want its interests in the region taken into account.
While China has made substantial inroads into Indonesia, Beijing's ability to influence policy in Jakarta remains uncertain. Indonesia is willing to expand economic and trade relations and cooperate in military affairs, but one should not interpret that as a sign of a close political relationship. Jakarta is well aware of Beijing’s appetite for raw materials and the benefits it can bring to the Indonesian economy. In a time of economic crisis in the West, China has been a major source of trade and investment. As such, Indonesia will continue to engage China in a strictly pragmatic manner. China seems to be aware of this and does not seem to mind. On several occasions, Chinese and Indonesian authorities have stressed “the pragmatic nature of their relations.” When referring to its ties with Africa, Beijing always stresses equality and mutual respect. When it comes to Indonesia, however, the word pragmatism is often used.
During former Brazilian President Lula Da Silva’s first term in office, official statements on Sino-Brazilian ties were replete with slogans about South-South cooperation, an alliance of third world giants, a strategic partnership and so forth. No such pretenses are even attempted in Sino-Indonesian relations. Indonesia is likely to follow its traditional policy of nonalignment, while having close ties with certain Western powers, chiefly the US and Australia, and maintaining close relations with regional powers including Japan and South Korea, who also happen to be close American allies. But since the mid-1960s, Indonesia has maintained a policy of avoiding overt alliances.
Throughout its history as an independent nation, Indonesia has coveted an international role, hosting the Bandung Conference in 1955 and playing an important part in the Nonaligned Movement, even as the Soeharto regime remained close to the West. Indonesia’s continued engagement with Iran and North Korea, and public comments on their disputes with the US and international community, shows that Jakarta still aspires to a major role in international affairs. Indonesia’s engagement with China needs to be seen in this historical context. Jakarta will continue to seek close ties with Beijing while also consolidating its relationships with its traditional partners. That does not mean an alliance, however. Expectations of Indonesia “aligning” with the US and Australia may be misplaced. With the exception of countries having maritime territorial disputes with China over the South China Sea, most Southeast Asian countries would prefer neutrality. This could change if China continues its recent confrontational posture.
Having said this, it’s important to note that Indonesia is a bit different than smaller ASEAN states. Due to its population and size, Indonesia has always tended to see itself as the grouping’s natural leader. As such, Indonesia cannot easily adopt a position of neutrality on the South China Sea issue, particularly when its fellow ASEAN members are perceived to be exercising their rightful claims. While Indonesia is not a claimant to the disputed islands, China’s claims, if successful, would give it territory right next to Indonesia’s maritime boundaries. In other words, Indonesia and China would border each other at sea. This is why, despite not having any claims, Jakarta looks at Beijing’s territorial ambitions and its naval expansion with some concern.
Indonesia is well aware that if China continues on its current economic trajectory, the military balance in the region will steadily move in Beijing’s favor, and there
is very little that smaller Southeast Asian countries can do about the fact. There would be two options available in such a situation: accommodation with Chinese interests in ways that may not be favorable to small states, or engage in balancing. Any serious attempt to balance China has to involve the United States. America’s military power in the region is without rival and will remain so for the near future. While Jakarta publicly expressed some concern about the American deployment of Marines to Darwin in Northern Australia, it is well aware that it is not aimed at Indonesia. Jakarta worries more about possible friction between the US and China, which would have the potential to destabilize the region. While Indonesia certainly does not oppose an American presence in Southeast Asia, it is trying to determine what nature and level it would be comfortable with.
Indonesia and the US have enjoyed close relations since the 1960s, and the country was a vital American partner during the Cold War. Relations were strained in the 1990s and early 2000s due to human rights abuses, in particular Indonesia’s actions in the former East Timor. However, in recent years military ties have been re-established, and defense and security cooperation have increased significantly. Decades of interaction created much deeper ties between the US and Indonesia than decades of no diplomatic relations did for Sino-Indonesian ties. A look at the backgrounds of Indonesian government ministers shows a large number of them were educated in the US, Britain or Australia. President Susilo Bambang Yudhoyono studied at both civilian and military colleges in America, as have numerous other Indonesian military officers and diplomats.
The United States enjoys the advantage of being geographically separated from the Asia-Pacific, it has no territorial disputes with any country in the region and
its military presence in Southeast Asia, such as basing ships in Singapore, was encouraged by the host countries. While a lot has been said about American military power in the region, there is a dimension to it that is often overlooked. America has an extensive network of defense alliances and close arrangements with several regional countries. Australia, Japan, South Korea, the Philippines and New Zealand have formal alliances with the United States, while countries such as Singapore have close ties that amount to a de facto alliance.
China, on the other hand, does not have comparable military alliances. While Myanmar and Cambodia have close ties to China, in particular economic relations, this is more a result of geography. In the case of Myanmar, until recently it was due to Western sanctions. This has clearly been demonstrated by Myanmar’s recent efforts to attract investment from Western nations and other powers such as India. It’s very unlikely that the growing defense and security ties between the United States and Indonesia will evolve into a formal alliance similar to US agreements with Australia or Japan, or even a de facto one such as with Singapore.
One thing seems likely, however: Indonesia’s future relations with the United States are likely to be stronger than its ties with China, particularly in defense and security. This is not to suggest that Indonesia-US relations are free of tensions, but the world’s second and third-largest democracies have much more in common today than they once did. Washington needs to be aware that a democratic Indonesia with a rapidly expanding economy wants a greater role in international affairs and to be taken seriously in the Asia-Pacific region. China realizes this and has gone out of its way to improve relations with Indonesia. The Americans’ neglect of Asia, in particular Southeast Asia, in the years following 9/11 created some resentment toward the United States and came at the time when China’s “smile diplomacy” was at full speed.
Certainly the US enjoys some advantages over China in the region, but it should not take anything for granted. As argued above, in the aftermath of the wars in Afghanistan and Iraq, US prestige reached a low point while China’s aid and investment dollars were being praised in most Southeast Asian capitals. The US is disengaging from its adventures in the Middle East and South Asia, and refocusing on the Asia-Pacific at a time when China’s assertive posture on the South China Sea and elsewhere is seriously undermining the effectiveness of its soft power. It seems that American and Chinese popularity has reversed, but that could flip again if Beijing is able to deal with its territorial disputes in a more acceptable manner.
Australia, due to its proximity to Southeast Asia and close alliance with the US, will form an important element of the growing strategic dynamic involving Indonesia, China and the US. These relationships are vital for the stability of the region. Australia is arguably the closest American ally there, sharing a common language, culture and political system. Australia, the US, Canada, Britain and New Zealand also control the most sophisticated global signals collection and analysis network, known as Five Eyes. Australia will host thousands of US Marines in Darwin, while American unmanned aerial vehicles (UAVs) may operate from the Cocos Islands, one of the closest Australian territories to Indonesia and Southeast Asia.
Australian and US officials claim the UAV deployment is to fight terrorism and other nontraditional threats including piracy and people smuggling. However, several observers have pointed out that the craft are likely to be used to monitor the Chinese Navy in the South China Sea. Indonesia has expressed concern about the UAV deployment, fearing that its air space maybe be violated as the Americans monitor China. Regardless of these concerns, military cooperation between Australia and Indonesia has recovered to levels attained prior to the 1999 East Timor crisis. Indonesia’s concerns about the UAVs can be mitigated by intelligence sharing and keeping Jakarta informed on the aerial operations.
Canberra has always given top priority to its relations with Indonesia and for decades they were cordial, until Australia’s 1999 military intervention in what is now Timor-Leste. The intervention was the biggest challenge to Indonesian-Australian diplomatic and security relations, and some resentment and suspicion remains among Indonesian officials, particularly within the Armed Forces. However, stable and cordial relations between Indonesia and Timor-Leste since the territory’s independence in May 2002 have facilitated the normalization of relations between Jakarta and Canberra. Issues such as Indonesia’s restive Papua region and traffickers using Indonesian territory to smuggle boatloads of illegal asylum seekers to Australia occasionally cause ripples in bilateral relations, but they can be managed. Australia’s relations with Indonesia and the US are likely to continue to grow, with special emphasis on defense and security, and Australian policy towards China will be very similar to that of Indonesia. China has been Australia’s largest trading partner for the past few years and exports of raw materials to China have been vital for Australia’s economy given crises in the West and Japan.
As such, Australia will be extremely careful not to offend China and jeopardize its economic relationship. On the other hand, Canberra will want to strengthen defense and security cooperation with the US and encourage a greater role for America in the Asia-Pacific. The Australian-American alliance is one of the oldest in the region, and this is unlikely to change in the foreseeable future. This strategy of close and lucrative economic ties with China and close defense and security ties with the US is being adopted by several countries in the region.
It’s also worth noting that the concept of an alliance today is not what it was during the Cold War, when two rigid antagonists faced off. Today, some of America’s closest allies also enjoy China as their main trading partner. It remains to be seen what effect China’s growing economic power will have on the long-term choices of Southeast Asian nations. Indonesia will continue to avoid any overt alliances, while cooperating with the US and Australia on multiple security issues. A rising and prosperous China will be handled with respect and above all pragmatism. China may turn out to be the rich neighbor everybody must deal with, but the US and Australia could be the ones we like to invite over for a beer.
