Prabowo’s US-China Balancing Act – OpEd

November 13, 2024November 13, 2024 Saahil Jayawant 0 Comments

Indonesia is on the rise. As ASEAN’s largest country and economy, with a growing domestic consumer market and a large supply of natural resources, its economic potential is clear. Sitting in the South China Sea surrounded by its fellow ASEAN nations and encircled by India, China, Japan, and Australia, it also commands great geopolitical importance. It is no wonder that over 30 ministers and world leaders attended President Prabowo Subianto’s recent inauguration.

An ex-military general and oligarch, Prabowo is taking the reins on foreign policy, appointing his long-time follower Sugiono as foreign minister. This is not surprising. With his foreign education at The American School in London and knowledge of several languages, Prabowo is a natural statesman. As president-elect, he has already made visits to China, Japan, Malaysia, Singapore, the Middle East, Europe and Australia, displaying a more active, centralized and personalized approach to foreign policy than his predecessor, Joko Widodo. But the difference in personality has not meant a difference in policy. Prabowo has reaffirmed Indonesia’s non-alignment stance and has committed himself to the same “good-neighbour foreign policy” as Widodo did.

However, Indonesia’s neutrality is under pressure as the competition between the United States and China intensifies and the world becomes more fragmented. The United States and its allies in Asia, notably the Philippines and Japan, expect Prabowo’s support in resisting China’s aggression in the South China Sea, where China continues incursions into Indonesia’s exclusive economic zone. Global conflicts are also testing Indonesia’s non-alignment. The wedge between the pro-Palestinian Indonesia and the pro-Israeli United States over the war in Gaza has grown. There is clear cooperation between China, Russia, and North Korea in opposing the United States and NATO in Ukraine. Prabowo personally felt this divide when his plan for ending the war in Ukraine was denounced as “Russian-made” by Ukrainian and European officials. Although he will not formally end the policy of non-alignment, Prabowo is aware that his ability to simultaneously maintain ties with the United States, China and their respective allies is at risk. If push comes to shove, which way will he lean?

A Fragile Friendship: Prabowo and the U.S.

Prabowo has a strained relationship with the United States. Despite studying there in his youth, he was banned from entering the United States until he became defense minister over his role in the invasion and occupation of East Timor during the Suharto regime. As dictator Suharto’s son-in-law, he ran the Kopassus, Indonesia’s special forces, which allegedly committed human rights abuses against activists in East Timor and Papua.

Furthermore, Prabowo’s election represents a trend towards authoritarian nationalist populism after decades of democratic regression under Widodo and Bambang. His ex-military strongman persona and ties to Suharto lead scholars to believe that Prabowo represents a challenge to Indonesian democracy. Although the United States wants to increase collaboration with Indonesia to counteract China’s aggression in the South China Sea, Prabowo is a partner who may not represent basic U.S. values and principles—and Prabowo knows this.

U.S.-Indonesia defense ties, however, have flourished. Indonesia and the United States announced a new defen s e cooperation agreement in 2023 and hold over 220 defen s e engagements annually, including Exercise Super Garuda Shield, which builds U.S.-Indonesia military interoperability and jungle warfare capabilities. To modernize the Indonesian military, Prabowo is looking to the United States for fighter aircraft upgrades and sales, such as the $14 billion sale of 36 advanced fighter jets in 2022 (although the United States may limit these, given Prabowo’s human rights record). There are other restrictions to the relationship. It is built around the joint rejection of China’s aggression in the South China Sea, which Indonesia has back-pedaled on following criticism from China. Being economically reliant on your biggest security threat is a tightrope to walk.

An Increasing Dependency: Prabowo and China

China has no qualms about Prabowo’s past or leadership. China is Indonesia’s largest trading partner, with bilateral trade reaching $128 billion in 2023, over double that of the United States. China funded the $7.3 billion Jakarta-Bandung high-speed railway through the Belt and Road Initiative and pledged a further $67 billion of investment in 2023. These investments are a combination of loans and exports rather than traditional foreign direct investment (FDI). Prabowo, given his pragmatism and bullish attitude to taking on debt, is looking to China for further investment. Indonesia pitched three major railway projects during a rail expo in Shanghai this June.

Chinese businesses are making crucial FDI into Indonesia’s most forward-looking industries, with BYD planning a $1.3 billion plant to grow the Indonesia EV market and Xinyi Glass Holdings building a $11.5 billion quartz sand processing plant necessary for solar panel production. These deals, along with those from Chinese mining firms like Tsingshan, are crucial to Prabowo’s aim of increasing downstreaming projects in Indonesia’s lucrative commodities sector, especially in nickel mining where Indonesia has gained 40 percent of the global market share. China’s grip on Indonesian growth is tightening and Prabowo will look to China, not the United States, to reach his ambitious target of 8 percent annual GDP growth.

Although it announced an economic partnership with Indonesia in 2023, the United States has fallen behind China on Indonesian economic ties.But Japan, too, is also competing with China in Indonesia. Japan is Indonesia’s second largest trading partner with a similar value of trade as the United States. After losing out on the Jakarta-Bandung railway project to China, Japan has leveraged its historical and cultural ties to Indonesia to increase its investment into rail modernization projects in Jakarta, Bogor ,and Depok. In a 2023 economic agreement, Japan agreed to consider investment in geothermal and waste management plants in Muara Laboh and West Java. China is ahead of both the United States and Japan, but together they represent an economic alternative for Prabowo to consider.

Prabowo’s Tough Choices

China represents Indonesia’s largest security threat. Indonesia maintains it has “no territorial dispute with China” in the South China Sea. However, China’s “nine-dash line,” which denotes its territorial claim, overlaps with Indonesia’s exclusive economic zone near the Natuna Islands. China continues to send coast guard and fishing ships to patrol the area, in particular to the Tuna block where Indonesia is exploring an offshore natural gas opportunity. As recently as October 2024, the Indonesian navy had to turn away another Chinese coast guard ship.

As defense minister, Prabowo had been building up new air and naval bases in the Natuna Islands, which host three Indonesian frigates and corvettes. It is clear that Prabowo expects friction with China. Given his reputation for being tough on national security and his history of modernizing the military, any engagement with China will weaken his position. It is therefore confusing that Prabowo is also expanding Indonesia-China defense ties, with reports that Indonesia is looking to buy, of all things, coastal defen s e missiles from Beijing. However, this defense partnership remains underwhelming in the face of tensions in the South China Sea and Jakarta’s reliance on Western military training and education.

Given these increasing security tensions with Beijing, Prabowo might consider reducing Indonesia’s economic dependency on China in favor of strengthened relations with the United States and Japan. But in the current environment, given Prabowo’s strongman personality and his ambitious economic targets, China is the closer and more valuable partner. Prabowo thinks that he can deter China in the Natuna Islands by building up military capabilities. The Indonesian public seems to agree, with surveys showing in the absence of neutrality they would lean towards China over the United States. Prabowo’s push to join the BRICS bloc also supports this. But if China were to step up its aggression, there is little doubt that Indonesia would choose security over economic ties and look toward the United States and its allies for support. If the U.S.-China rift enlarges, Prabowo may have to make that shift sooner than he thinks.