Indonesia: The New Pride Of The Far East – Analysis


The world of the 21st century is changing unstoppably, dramatically and dynamically from day to day in every aspect, especially in geopolitics. The previous 20th century in terms of geopolitics, apart from the two world wars, was mostly marked by the process of decolonization in which European powers such as Great Britain, France, Portugal, the Netherlands, Spain and others definitively lost their colonial empires.

In the current 21st century, the rise of former colonies is in effect, which finally got the opportunity to “breathe at full speed” and use their potential in an optimal way. Although most of the decolonialization process took place four or five decades ago, only in the 21st century, thanks to the multipolar global order, new young nations are beginning to become important political, economic, and military factors in their regions and beyond. One of such new regional powers with extraordinary potential is certainly the Republic of Indonesia.

When someone mentions Indonesia, many average observers would at first glance conclude that it is some distant country in Asia on the oceans that has no global significance except perhaps in Asia. Despite its increasing importance in the international community, the world public pays attention to Indonesia mainly when it comes to extraordinary events such as the 2002 Bali bombings that killed 202 people or natural disasters such as the 2004 tsunami that killed more than 200. thousands of people.

Islam, democracy, strategic position and resources

Flat assessments that degrade the importance of Indonesia should be rejected at the start. It is a very important country in international relations. With a population of 274 million, Indonesia is the fourth most populous country in the world, the third most populous democracy and the first country in the world with a Muslim majority. It has seven and a half times more Muslims than Saudi Arabia, the country from which Islam originated. Thanks to Indonesian Muslims, South Asia is the most populous Muslim region in the world with 31% Muslims, while 13% of the world’s Muslims live in Indonesia itself. In comparison, 20% of Muslims live in the Middle East and North Africa.

Apart from its status as the first Muslim country in the world, Indonesia stands out for its geographical location. It is located on one of the most strategically important sea routes in the world, the Malayan Strait that connects the Indian and Pacific oceans. Most of the oil and gas transport routes to China, Japan, South Korea and Australia pass through the Malay Strait.

Because of its geographical location, Indonesia has become a location where American and Chinese interests collide. It is a member of the most important geopolitical multilateral organizations, the founder of the Non-Aligned Movement, a member of the United Nations, the World Trade Organization (WTO), the G20, the Association of Southeast Asian Nations (ASEAN), the East Asian Summit, the D-8 and the Organization of Islamic Cooperation. Indonesia is the world’s largest producer of nickel and could become the second largest producer of cobalt – two minerals needed to make batteries for electric vehicles, showing its importance in the global economy.

Historical development – from colony to democracy and dictatorship

The Indonesian archipelago in the Middle Ages was mostly under the control of Buddhist and Hindu rulers. Around the 7th century, a Buddhist kingdom emerged in Sumatra that spread to Java and the Malay Peninsula until it was defeated by the Hindu Majapahit Empire of Java in the late 13th century.

The Majapahit Empire united most of today’s Indonesia and Malaysia. Traders from the Middle East and the Levant brought Islam to the trading ports around the 11th century, and Indonesians gradually embraced Islam over the next five centuries. The Portuguese conquered parts of Indonesia in the 16th century, but were pushed out by the Dutch (except in East Timor), who began colonizing the islands in the early 17th century. However, it was not until the beginning of the 20th century that Dutch colonial rule was effectively established over the entire area that would become the borders of the modern Indonesian state as we know it today.

Japan occupied the archipelago from 1942 to 1945. The Indonesian leadership led by Sukarno and his associate Mohammad Hatta declared their independence just before Japan’s surrender on August 17, 1945, but it took four years of fierce fighting, peace negotiations and mediation by the UN- and before the Netherlands agreed to recognize Indonesian sovereignty in late 1949.

Sukarno was Indonesia’s first president from 1945 until 1967. Under his rule, the country transformed from a loose democracy to authoritarianism and maintaining power by balancing the opposing forces of the military, political Islam, and increasingly powerful Communist Party of Indonesia (PKI). In 1957, classical democracy was abolished and Sukarno introduced a state of emergency and “managed democracy”. Tensions between the military and the communists culminated in an attempted coup in 1965. The military, led by Major General Suharto, responded by instigating a violent anti-communist purge in which between 500,000 and 1 million people were killed and an estimated 1 million more imprisoned in concentration camps. Sukarno was gradually overthrown from power.

From 1968 to 1998, the new President Suharto ruled Indonesia sovereignly with his “New Order” government. Suharto’s administration was supported by the US which greatly helped to create three decades of strong economic development where direct US investment was particularly prominent.

Promising democratic entry into the 21st century

In 1998, President Suharto was forced to step down in the middle of the Asian financial crisis that had erupted the previous year and fueled popular discontent due to corruption and repression. Suharto was overthrown by the street and mass protests.

The following 1999, East Timor seceded from Indonesia, after Jakarta invaded in 1975 and established an occupation regime condemned by the international community for human rights violations. That year, the first free multi-party elections were held. Democratic processes were characterized by the strengthening of regional autonomy and the introduction of the first direct presidential elections in 2004. The following year, the Indonesian government reached a historic peace agreement with armed separatists in the westernmost province of Aceh. Indonesia continues to face low-intensity armed resistance in Papua from the separatist Free Papua Movement.

Contemporary Indonesia faces a number of challenges, including efforts to reduce poverty and improve education, prevent terrorism, consolidate democracy, implement economic and financial reforms, combat corruption, and combat climate change and various diseases. Freedom House rated the country as only a “partially free” country, and Transparency International claims that corruption is getting worse. However, Indonesia has retained its pluralistic democratic character and has not succumbed to military dictatorships like Myanmar and Thailand.

God-given geographical location

Nature or higher forces have endowed Indonesia with an excellent geographical position in Southeast Asia at the border between the Indian and Pacific oceans, that is, Indonesia is the link between Asia and Australia and wider Oceania. It is the largest island archipelago country in the world. It stretches 5,120 kilometers from east to west and 1,760 kilometers from north to south. With an area of 1.9 million square kilometers, it is the 14th largest country in the world.

According to government data, the country has more than 17,000 islands, 16,056 of which are registered in the UN, and about 6,000 of them are inhabited. The largest are Sumatra, Java, Borneo (shared with Brunei and Malaysia), Sulawesi and New Guinea (shared with Papua New Guinea). Because of its many islands, the government has a demanding task of managing the country, which is not at all easy even in the times of the 21st century. However, orientation towards the sea and navigation can be a great opportunity for the country to impose itself as a maritime power, which automatically strengthens its status in the international arena.

Ethnic, religious and cultural diversity

Since the length of the territory from the extreme western to the extreme eastern point is more than 5 thousand kilometers (which is a distance greater than the distance between Lisbon and Moscow), the country is rich in ethnic, religious and cultural wealth. Few foreigners have visited any part of the vast archipelago except Bali, one of the world’s most popular tourist destinations.

The capital Jakarta is a huge sprawling city that is home to 10 million people and suffers from terrible traffic jams. In the central part of Java is Borobudur, the largest Buddhist temple in the world, located in a rural area. Indonesia is an extremely diverse country: it has 1,300 ethnic groups that speak 700 languages. Although nearly 90% of Indonesians are Muslim, the nation also has 245 indigenous religions. Nevertheless, the state is secular. With a few exceptions such as the secession of East Timor, Indonesia has remained a single country since breaking free from Dutch rule after World War II.

Vibrant economy

Although Indonesia did not experience an economic miracle like some other Asian countries such as South Korea, Japan, Singapore, stable economic growth has been recorded for decades. Over the past decade, Indonesia’s economy has grown faster than any other trillion-dollar economy except China and India.

The country is no longer poor. With a GDP per capita of around USD 5,000, it currently meets the status of an upper-middle income country according to World Bank criteria. The nominal GDP according to estimates in 2023 is $1.39 trillion, which is the 16th place in the world, while according to GDP, PKM Indonesia is in the 7th place with the amount of 4.39 trillion. GDP is composed of services (45.4%), industry (41%) and agriculture (13.7%). In addition to nickel and cobalt, the main exports are coal, palm oil, natural gas, iron alloys, stainless steel, chemical products, textiles, cars, etc.

Indonesians mainly import oil, machinery, vehicle parts, telephones, industrial equipment, steel, electronics. It is mostly imported from China, ASEAN countries, Japan, EU, South Korea, while the main export partners are China, ASEAN, USA, EU and Japan. Public debt amounts to about 40 percent of GDP. About 9% of the population lives below the poverty level, and the unemployment rate is below 4%. Indonesia’s growing prosperity is visible in Jakarta, the city of skyscrapers. Of course, the population in the countryside is still poor.

Non-Alignment movement

A large population, strategic location and growing prosperity provide the conditions for Indonesia’s regional and even global influence. That is, Indonesia can certainly become an important regional and perhaps global power. Regional power is already in a certain degree.

During the 1950s, Indonesia’s founder, Sukarno, made the country a pillar of the Non-Alignment Movement, made up of countries that refused to align themselves with either the West or the East in the Cold War. After the trauma of colonialization carried out first by the Dutch and then by the Japanese, most Indonesians decided to stay away from the great powers.

In 1955, the Javanese city of Bandung hosted a conference of 29 Asian and African countries and became one of the places where the Non-Alignment Movement was founded. Third World countries agreed on ten principles, including an obligation to refrain from serving leading global powers and a desire to resolve international disputes peacefully and diplomatically. Since then, Indonesia has largely managed to jealously maintain its independence through the Non-Alignment Movement and other organizations such as ASEAN and the Organization of Islamic Cooperation.

Multidimensional foreign policy

Today, like most other Asian countries, Indonesia is trying to position itself between Beijing and Washington. China is its biggest trade partner, but also its biggest security threat. Like other countries in Southeast Asia, Indonesia disputes China’s claim of almost the entire South China Sea.

In June 2020, Jakarta rejected Beijing’s offer to negotiate maritime boundaries and the following month conducted a military exercise near the Natuna Islands, near waters claimed by the Chinese. The Chinese have demanded that the Indonesians stop exploiting oil and natural gas in the area, but the Indonesian government has doubled down on plans to turn Natuna Island into a special economic zone. It remains to be seen how China will respond.

As protection against the Chinese, the Indonesians use the Americans as valuable allies who will protect their territorial integrity if necessary. That is why Jakarta implements a multidimensional foreign policy of maneuvering between the two superpowers. However, Indonesian-Chinese relations are not so bad when looking at the bigger picture.

In fact, China increased its investment in Indonesia by 11% in 2021, becoming the second largest foreign investor after Singapore. Since the end of the coronavirus pandemic, about 80% of the vaccines used in the country have been produced in China. At the same time, China is investing billions of dollars in infrastructure projects such as the new high-speed rail line between Jakarta and Bandung that is an integral part of China’s New Silk Road. Although relations with China are not rosy, Beijing has made a major contribution to Indonesia’s economic development in a way that the US has not.

Between the US and China

Nevertheless, relations with the USA are on an upward trajectory. From December 2021 to November 2022, Indonesia chaired the G20 group of the world’s 20 most developed economies. In this honor, in December 2021, US Secretary of State Antony Blinken visited Jakarta to support US-Indonesian cooperation. On that occasion, the Indonesian Minister of Foreign Affairs, Retno Marsudi, emphasized the shared value of democracy between the two nations along with continuous security and economic cooperation.

In August 2022, the Indonesian military joined the US-led Super Garuda Shield military exercise involving 5,000 troops from 14 countries. The Biden administration is aware of the importance of Indonesia and is working to establish better relations. Both Biden and Defense Secretary Lloyd Austin visited the country in November 2022 for the important G20 summit in Bali. The war in Ukraine, US-China relations and the green transition of Indonesia’s economy were discussed there as part of efforts to achieve sustainable development of the planet and combat climate change. The holding of the summit is an indication of the growing importance that Indonesia enjoys in the world.

As for bilateral relations, the Americans want to expand cooperation in all areas, from the fight against terrorism to maritime security to green energy and cyber security. While Indonesia is reluctant to join alliances to contain China such as QUAD, it is working closely with Washington on other priorities, such as restoring democracy in Myanmar. America is hated by many in Indonesia because it supported the authoritarian regime of the dictator Suharto, who is responsible for the death of hundreds of thousands of people. However, Indonesians love Barack Obama more than Americans because he spent part of his childhood in Jakarta.

While Indonesians aren’t in love with the United States, it’s hard to say they’re fans of China. Local Chinese are often criticized for being richer than other citizens, China’s communist system is sacrilegious to the devout Muslims who make up the majority of the population, and Indonesians resent the Chinese for treating Uyghur Muslims badly.

Climate change, Nusantara and sustainable development

An indented coastline and millions of inhabitants living at low altitudes just above sea level make Indonesia one of the most vulnerable countries to sea level rise. It is also vulnerable to other disasters such as fires, landslides, storms and droughts that destroy infrastructure and degrade forest and coastal ecosystems, leading to loss of life, property, ecosystems and livelihoods.

As Indonesians deal with the burden of climate change, plans are underway to change the capital. On August 17, 2024 (Independence Day), the government intends to move its capital from Jakarta to a new city called Nusantara, on the east coast of Borneo, in a $35 billion project. A large part of this cost will be borne by public-private partnerships and foreign investors. The nearby planned green industrial area is already mainly financed by Chinese and Emirati investors. The city was constructed to be an example of urban sustainability and to protect the surrounding Kalimantan forests. The goal is that 80% of urban mobility is achieved by public transport, cycling or walking, and that all energy is used from renewable sources. 10% of the city area is dedicated to food production.

Nusantara is the brainchild of current President Joko Widodo. Although the country is still heavily dependent on coal, the Nusantara project and the establishment of emission reduction targets suggest that the government has recognized the need for change.

Indonesia must get more serious about solving the problems of unsustainable development such as illegal deforestation, overexploitation of marine resources, accelerated urbanization and overcrowding, air pollution, traffic congestion, poor waste and wastewater management. In order to be a strong regional factor in South and Southeast Asia and Asia in general, the Indonesian government will need to promptly address the aforementioned problems. Indonesia is getting more attention from the international public because last year it chaired the G20, and this year it chairs ASEAN and has great importance in other multilateral organizations. Either way, Indonesia will play a big role in determining the future of Asia. The fact that it belongs to the group of MINT countries (there are also Mexico, Nigeria and Turkey) that will develop rapidly in the future speaks volumes for how grandiose the nation’s demographic, geographic and economic potentials are.

Matija Šerić

Matija Šerić is a geopolitical analyst and journalist from Croatia and writes on foreign policy, history, economy, society, etc.

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