US-Indonesia Relations: From Aspiration to Achievement

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US-Indonesia Relations: From Aspiration to Achievement

How to avoid illusions and achieve gains in the U.S.-Indonesia relationship.

US-Indonesia Relations: From Aspiration to Achievement

U.S. President Donald Trump (left) poses for a photo with Indonesia President Joko Widodo (center) and IMF director Christine Lagarde during the 2017 G20 summit in Hamburg, Germany (July 8, 2017).

Credit: Official White House Photo by Shealah Craighead

During the two terms of former President Susilo Bambang Yudhoyono, and the initial portion of the presidency of Joko “Jokowi” Widodo, the United States and Indonesia have attempted to build a much closer bilateral relationship. In 2010, the two nations signed a comprehensive partnership designed to provide a framework for closer security and economic links, and people-to-people ties. The Obama administration followed this with the U.S.-Indonesia Strategic Partnership in 2015. U.S. officials hoped to use these partnerships to prod Indonesia to assume an even larger regional role on major security challenges, including pushing other states to democratize. They also hoped for a new era of bilateral ties – one in which U.S.-Indonesia relations became as close as Washington’s links with other regional partners like Malaysia and Singapore.

But the bilateral strategic relationship has not met these lofty goals; the annual high-level strategic dialogue, established in 2015, between the two states has not even met yet. Yudhoyono built deeper ties with the United States, but Jakarta still remained committed essentially to a policy of building friendships while not choosing any sides in regional power struggles. Jokowi came into office less interested than Yudhoyono in being seen as a global and regional leader. A closer economic relationship has remained generally stalled as well. Yudhoyono’s second term was clouded by corruption scandals and some attempts at economic nationalism, while under Jokowi foreign investors often remain uncertain about whether Jokowi intends to encourage foreign investment or retreat into nationalist policies.

Jokowi further has expressed reticence on rights issues, a stance that now coincides with the approach of the Trump administration, which has focused on an interests-based and sovereignty-oriented foreign policy. Instead of broad attempts to gain global leadership and promote a values-based foreign policy, the Jokowi administration initially focused on protecting narrow national interests, such as maintaining Indonesia’s exclusive economic zone in the South China Sea waters surrounding its Natuna archipelago.

However, in the past two years, the Jokowi administration has begun to take three major security threats more seriously: potential conflict in the South China Sea, the growth of militant groups linked to the Islamic State, and maritime piracy. China’s increasing assertiveness in the South China Sea has become far more apparent to Indonesian opinion leaders, as has Indonesia’s lack of modern maritime vessels. With this encroachment, Beijing is threatening waters near the Indonesian Natuna Islands. But Indonesian officials are also more generally worried that China will soon be able to completely control boat traffic in the South China Sea. And Indonesian security specialists and military officers have watched as some Southeast Asian nations — most notably, the Philippines under President Rodrigo Duterte — appear to have largely accepted that China will eventually dominate the South China Sea. Meanwhile, militant groups — those involved in popular politics as well as those carrying out violent attacks — have re-emerged as potent forces within Indonesia, after the Yudhoyono administration cracked down on the threat from the al-Qaeda-linked organization Jemaah Islamiah. In the past two years, militants have used social media to organize large rallies that influenced elections within Indonesia – most notably, the 2017 Jakarta governor’s race – while the Jokowi administration also has faced a possible growing threat of Islamic State-inspired attacks. Finally, the Jokowi administration has attempted to take a tougher approach to piracy and other transnational crime in Southeast Asia. Jokowi often speaks of Indonesia’s need to be more effective in combating illegal activities in Southeast Asian waters, including piracy, people smuggling, drug smuggling, and illegal fishing.

In preserving freedom of navigation on the South China Sea, combating militant Islamists, and fighting piracy, Washington and Jakarta share significant common interests, creating the potential for joint action — joint action that suits the transactional style of both the U.S. and Indonesian presidents. These shared security interests will only get stronger during the Trump administration’s term. Since the Islamic State has lost its territory in the Middle East, some of the foreign fighters who took part in battles in Syria and Iraq could flee, taking their views home or seeking new bases in Southeast Asia. Consequently, the threat of Islamist militancy could increase throughout Southeast Asia in the coming years. During that time, disputes over the rapid militarization of the South China Sea also will likely grow, as Washington and Beijing have both signaled increasing naval assertiveness. And despite Jokowi’s stated focus on piracy and other illegal maritime activities, Indonesia and other Southeast Asian nations still struggle against these nontraditional security threats.

As I note in a new CFR Council Special Report, Keeping the U.S.-Indonesia Relationship Moving Forward, transactional, issued-based cooperation on these shared security interests — rather than talk of lofty goals — could move the bilateral strategic relationship forward substantially. To improve strategic ties, Washington and Jakarta — assisted by Australia and other regional powers — should take several steps. For one, the United States should encourage Indonesia to take the lead in facilitating a joint ASEAN position on a code of conduct for the South China Sea. The Trump administration also could utilize the proposed U.S.-Indonesia high-level ministerial dialogue to focus on common interests, and threats, in the South China Sea. The White House also should offer, in the long-term, to hold joint exercises with Indonesia in waters close to the Natuna Islands. The United States has held joint exercises in the South China Sea with other regional partners. Holding a joint U.S.-Indonesia exercise near the Natunas would strengthen the U.S.-Indonesia security partnership and demonstrate to China that Indonesia will no longer adopt a passive approach to South China Sea concerns. Washington also could encourage Indonesia to meet its goal of increasing defense spending while also pushing Jokowi to upgrade Indonesia’s navy and air force.

Meanwhile, to combat the threat of Islamic State-linked attacks, the United States should help Indonesia enact more aggressive measures to locate, track, and vet returnees from Islamic State-held territory in the Middle East and identify more Indonesian militants linked to the Islamic State. For its part, the U.S. Department of the Treasury should continue to identify Indonesian militants as terrorists and impose sanctions on them by placing them on the Specially Designated Nationals and Blocked Persons List. Many more could come to Southeast Asia now that the Islamic State has been driven out of its strongholds in the Middle East.

In addition, the United States should offer to occasionally take part in the joint Indonesian, Malaysia, and Philippine patrols in the Sulu-Celebes Sea, patrols that help combat both militant groups and pirates. These waters have been critical for both pirates and militants and are known historically for transnational crime and lawlessness; without sea patrols, Islamic State-linked groups will be able to move people through Southeast Asia easily. Indonesia agreed in May 2016 to begin coordinated patrols of border waters in the Sulu-Celebes Sea, along with forces from Malaysia and the Philippines. However, the patrols are irregular, and their scope remains unclear. The three Southeast Asian countries, with the help of the United States, should make it easier for vessels from one nation to track pirates (or pirate/military hybrid groups) in “hot pursuit” into other nations’ territorial waters.

Finally, Jokowi should use the power of the presidency to rally public support against both violent and nonviolent militants. However, he can do so without banning nonviolent but radical groups outright, a measure that would, if he continues down this path, seriously restrict freedom of speech.

The security relationship between Jakarta and Washington indeed has great potential, and could become more robust in the next three years. The same probably cannot be said about the bilateral economic relationship, as economic nationalism is blossoming in both the United States and Indonesia. The best to be done, in Jakarta and Washington, is for the two sides to simply stall any further deterioration of the bilateral economic relationship – a deterioration that could occur via new restrictions on foreign investment in Indonesia or U.S. tariffs on Indonesian exports.

Simply preventing the economic relationship from getting worse is a worthy goal, and could help U.S. investment into Indonesia keep growing. This can be accomplished in several steps. For one, the two sides should work to negotiate a bilateral investment treaty in order to maintain the economic relationship. Greater investment might give U.S. firms more influence over the Jokowi administration. Increased investment might also help reduce popular economic nationalism in Indonesia, if Jokowi also touted the new investment and linked it to growth, improved infrastructure, and jobs.

The White House also should offer a clearer public definition of abusive trading behaviors than simply running trade surpluses with the United States. Finally, the two states should actually hold their planned high-level ministerial dialogue. They should include the U.S. Department of Commerce in the strategic dialogue, and use the discussions to air concerns about the bilateral trade balance. The dialogue itself could help ward off deterioration in the economic relationship.

A U.S.-Indonesia strategic and economic relationship that avoids illusions and focuses on three discrete security goals would advance both countries’ interests. While leaders in Washington and Jakarta reshape the relationship to focus on security, the two nations should work to ensure that economic relations do not deteriorate. Any long-term U.S. economic strategy toward Southeast Asia needs to recognize that Indonesia is the largest economy in the region and still a relatively untapped market for U.S. firms, given the size of Indonesia’s middle class and its projected population growth over the next two decades.

This piece is excerpted from the new CFR Council Special Report, Keeping the U.S.-Indonesia Relationship Moving Forward.

Joshua Kurlantzick is Senior Fellow for Southeast Asia at the Council on Foreign Relations.