Trans-Pacific View | Diplomacy | Southeast Asia

A New Era of US-Indonesia Relations?

Under President Joe Biden, relations between Indonesia and the United States have proceeded apace.

A New Era of US-Indonesia Relations?

Indonesian Foreign Minister Retno Marsudi welcomes U.S. Secretary of State Antony Blinken during his visit to Jakarta, Indonesia, on December 14, 2021.

Credit: Twitter/Menteri Luar Negeri Republik Indonesia

Indonesia’s “free and active” (bebas aktifforeign policy doctrine has long prompted it to pursue a stance of neutrality and non-alignment in its dealings with regional and global powers. However, recent Indonesian engagements with the United States have ushered in a new era of bilateral cooperation between the two nations and raised an important question: does the increased engagement represent an actualization of Indonesia’s foreign policy doctrine? If yes, how has Jakarta managed it?

In August 2021, Indonesian Foreign Minister Retno Marsudi met with U.S. Secretary of State Antony Blinken, during which Retno declared that “a new era” of Indonesia-U.S. relations would be central to the establishment of a secure and prosperous Indo-Pacific region. Indonesia is indeed regarded as a vital U.S. strategic partner in Southeast Asia, as previously stated by President Joe Biden. Indonesia and the U.S. are now developing their bilateral relationship through partnerships on a variety of global issues, including the COVID-19 pandemic, climate change, green energy, and democratic development.

Personal interactions between the top leaders of Indonesia and the U.S. have intensified since 2020. Biden has incorporated Indonesia into his Build Back Better Framework and his re-pivot to Asia strategy. He has also engaged with President Joko “Jokowi” Widodo on multiple occasions, from the Global COVID-19 Summit and the United Nations COP-26 Summit in Glasgow to the virtual Summit for Democracy convened by the Biden administration in December. In Jokowi’s case, establishing these key personal relationships with foreign partners like the U.S. is a key indicator of his administration’s growing focus on bilateralism, in which his personal engagements have helped Indonesia to better navigate diplomatic relations with the United States.

These growing connections are slowly rebuilding Indonesian confidence in global American leadership that was lost due to the polarizing nature of the Trump presidency. Restoring this confidence is critical to establishing stronger ties between Indonesia and the U.S., with Indonesia previously known for remaining pragmatically neutral in the midst of great power competition.

U.S.-Indonesia relations have seen particular growth in the strategic sectors of military cooperation and technological development, highlighting both nations’ commitment to deepening their partnership out of shared concerns about a rising China.

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Increasing bilateral military cooperation can be dated back to the lifting of the Leahy ban on military contact between U.S. military forces and the elite Indonesian Kopassus special forces unit in July 2010. Since then, the U.S. and Indonesia have pursued significant partnerships in the military realm. Conventional bilateral exercises like Garuda Shield have brought together traditional American military units and the recently-developed U.S. Security Force Assistance Brigade to help train, advise, and assist Indonesian military forces, with the latest and largest-ever Garuda Shield concluding in September.

On the special operations front, joint combined exchange trainings (JCETs), among other events, have occurred as recently as June, highlighting Indonesia as a region of focus for both conventional and special operations military forces. Additionally, military student exchanges of Indonesians to courses like the U.S. Army’s famed Ranger leadership course occur on a regular basis, further showcasing the ever-closeness of relations between the U.S. and Indonesia.

Civil-military relations between both countries also indicate that the bilateral relationship is closer than ever. The groundbreaking of the partially U.S.-funded Batam Naval Base in Indonesia’s Riau Islands, designed to train Coast Guard personnel, occurred in June, and the U.S. provided previous assistance in the construction of a smaller maritime training center at Ambon Naval Base in Maluku that was unveiled in 2018.

A wide variety of military engagements in the new era of Jakarta-Washington ties is expected to grow further, with Secretary of Defense Lloyd Austin and Minister of Defense Prabowo Subianto meeting as recently as November, during which Austin reaffirmed the United States’ deep ties with Indonesia as its “largest military cooperation partner.”

The two nations have also seen their relationship grow in the economic realm. Indonesia’s economy offers an immense opportunity for U.S. foreign direct investment (FDI), particularly in the technology space. For context, American FDI in Indonesia totaled over $18.5 billion in 2020, predominately focused in the mining, professional, scientific, technical services, and manufacturing industries.

Indonesian technology and American economic investment are also achieving new heights. Indonesia’s Ministry of Communications and Informatics hosted a virtual networking event aimed at bringing American investors to Indonesia in December 2021. American technology companies like Google, Tesla, and Amazon are increasingly investing in Indonesia, with e-commerce, electric vehicle manufacturing, and data centers being among the most significant areas of investment.

While the U.S. has traditionally led FDI in Indonesia, this increased intensity of investments, along with a clear focus on technological growth, is a primary indicator of the closer relationship between the U.S. and Indonesia. Indonesia’s digital potential is considerable given the size of its growing market, and the U.S. must boost its economic penetration and presence in order to compete with China to satisfy this growing demand.

This recent developments in U.S.-Indonesia ties suggest a bright future for the bilateral relationship. Marty Natalegawa, Indonesia’s former top diplomat, has expressed hopes that engagement will evolve beyond commercial foreign policy to focus on larger regional strategic issues. Similarly, others believe that Biden’s approach must be to bring “tangible economic and political options” to Indonesia, better highlighting the benefits of cooperation with the U.S. in contrast to the alternative of China.

However, the increasing ties between Indonesia and the U.S. do face several limitations. Domestic political dynamics, when combined with a lack of understanding among relevant actors, can potentially affect cooperation at both ends. Moreover, since President Xi Jinping took power in 2012, Beijing and Jakarta have seen advances in their bilateral ties, and Indonesia still sees China as a vital economic partner.  As a result, it is reluctant to join up to an “anti-China” coalition and Indonesian leaders will not appreciate any attempt to push them into such a partnership.

While the two nations expect to increase sector-based levels of interactions in the coming years, consistent interaction regardless of domestic politics will be necessary to ensure continued progress in the U.S.-Indonesia relationship.

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Indonesia’s increasing closeness with U.S. highlights both countries’ recognition of the critical role Indonesia plays in Asia-Pacific affairs, especially in an era of rising great power competition. But to address the growing U.S.-China rivalry, Indonesia must continue to pursue some version of its “free and active” foreign policy doctrine. For several years, Indonesia was seen to be leaning toward China, particularly due the close personal relationship between Jokowi and Xi. Apart from the economic pragmatism that prompted this shift, Indonesia needs to use the increased engagement with the United States to counterbalance the risks of political overdependence on  China.