Indonesia’s Ascent

As Indonesia’s economy grows, it is increasingly being referred to as a rising middle power, and there is mounting speculation that Indonesia might eventually join the ranks of Asia’s great powers. Regardless of just how far Indonesia will rise, its government and the will of its people will become increasingly influential in terms of its regional leadership and the values and the norms Jakarta espouses. Such speculation raises questions as to the domestic opportunities and constraints that inform Indonesia’s rise, and how various domestic contexts affect Indonesia’s foreign policy and the values it espouses. Meanwhile, the image of Indonesia as an increasingly stable and democratic nation has contributed to its significant deepening of security ties with other nations such as Australia and the United States. But how might these ties be perceived across East Asia, and how might East Asian perceptions affect relations with those countries? Within Southeast Asia, what will the rise of a more independent and potentially assertive Indonesia mean for the future of the Association of Southeast Asian Nations (ASEAN)? Will it serve to strengthen this body as Indonesia strengthens what many regard as its natural leadership role within ASEAN, or will it threaten ASEAN’s continued viability and strategic centrality as a more assertive and independent Indonesia opts increasingly to forge its global path independent of other regional nations? And what will Indonesia’s rise mean for the Asian balance of power more generally? Will the Indonesian archipelago, with its vital sea lanes for instance, become a theater for great power competition? Will a rising Indonesia substantially influence the Asian balance by allying with either the United States or China?

Despite turbulent times, Indonesia has been a rising power in Asia since independence, and has become increasingly prominent on the world stage. Many scholars have highlighted Indonesia’s large population and its abundance of strategic resources—which was the focus of government, business and the military—as the reason for its prominence in regional and global affairs.² Some have also emphasized Indonesia’s strong sense of nationalism as a legacy of its long struggle for independence from Dutch colonialism,³ while others have stressed the importance of international relations during the Cold War.⁴ Stemming from these three perspectives are considerations of the extent to which Indonesian leaders have influenced their nation’s future, and the degree to which outside powers have shaped the development of Southeast Asia’s most populous country. Indeed, primary source material shows that Indonesia’s regional position has been the result of various factors. Internationally and historically, Indonesia has been strategically and economically significant: the close ties between the Suharto government and consecutive United States (US) governments reveal the increasing influence that Jakarta is capable of exerting globally, despite its dependence on foreign support.

The 2014 presidential election in Indonesia was a celebration of 15 years of democracy.¹ During that time the country had recovered from economic crises following the Asian Financial Crisis of 1997–98,² multiple natural disasters, separatist movements, and the occasional terrorist attack.

Conceptualizing Indonesia’s ascent toward great power status in Asia requires consideration of the role Islam will play in shaping Indonesian politics. Although the identities of Islam in Indonesia remain as varied as ever, since the final decade of Suharto’s rule there has been a general increase in the level of religiosity expressed in the public sphere. How these dynamics will shape Indonesia’s ascent is a source of concern to some observers. Some cite the rise of the transnational jihadist movement and probable Indonesian connections as a threat to both the secular Indonesian constitution, and to regional and international order.¹ Others are more worried about governments of Muslim majority nations compensating for economic and political weaknesses through a rhetorical depiction of themselves as ‘defenders of the faith’, appealing to crass populist sentiments of xenophobia, intolerance, and authoritarianism.² Since the discontent of the Asian Financial Crisis swept away the institutions of dictatorship, ushering in demokrasi and reformasi, the political culture of Islam in Indonesia has not embraced the revolutionary Islamic movements that have arisen, nor has this political culture of Islam acquiesced to the temptation to cloak aggressive and violent politics of the state in the language of Islam.

For the purposes of this book ‘security fault lines’ are defined as political cleavages that have the propensity at the extremes to be expressed violently. The focus is on the use of premeditated and systematic violence for political ends while acknowledging that criminality is an inevitable companion. Outbreaks of cathartic violence, such as that following regime change in Indonesia, are mentioned only peripherally as they flow primarily from frustration or grievance rather than from a willful attempt to overthrow a government or split the nation.

Indonesia has experienced an astonishing transformation over the last 15 years. Once among the political laggards of Southeast Asia under the regime of Suharto, it has turned itself into the best-functioning democracy in the region. Compared with Malaysia and Thailand’s political logjams and one-party rule in Cambodia, Vietnam and Singapore, Indonesia is a home for vigorous and healthy political competition. Indonesia has experienced four peaceful transfers of power in mostly well-organized and fair elections, and free expression and the media are flourishing; nongovernment organizations and social movements such as organized labor are increasingly prominent. Furthermore, there are signs of growing political awareness and assertiveness on the part of the electorate, exhibiting a number of interesting examples of the use of new media to campaign around issues and grievances.¹

Indonesia is likely to face a complex and dynamic strategic environment in the future. Despite the country’s political reforms and economic development, domestic security problems including communal tensions, religious radicalism, and terrorism continue to pose dangers to the wellbeing of the Indonesian people. Meanwhile, the rise of China and changing relationships among great powers have been the dominant theme in East Asia in recent years. In this regard, Indonesia is concerned with the implications of long-standing territorial disputes, their attendant military threats to regional stability, and cohesion within the Association of Southeast Asian Nations (ASEAN).

Indonesian foreign policy has changed substantially since the fall of Suharto in 1998. Early post-Suharto governments were preoccupied with the business of democratic transition—establishing democratic institutions, withdrawing the military from politics, and resisting the various threats to reform. In more recent years, however, foreign policy has become a higher priority; the government has tried to improve Indonesia’s international image, and to enhance its role in Southeast Asia and in the world. Its foreign policy goals emphasize peace, prosperity and stability—in both the immediate region and globally—and Indonesia’s role in pursuing these goals. What explains the evolution of Indonesia’s foreign policy?

Since gaining national sovereignty in 1949, Indonesia has been actively engaged in international institutions. It joined the United Nations (UN) in 1950 and was an early and instrumental participant in its provision of peacemaking forces. It was a founding member of the Non-Aligned Movement (NAM) in 1961, and in 1992 chaired the NAM Summit in Jakarta, which was credited for revitalizing the Movement.¹ In 1967, Indonesia was a founding member of the Association of Southeast Nations (ASEAN), created to maintain security and stability in Southeast Asia, with the ASEAN Secretariat headquartered in Jakarta. In the post-Cold War period, Indonesia was a founding member of Asia-Pacific Economic Cooperation (APEC) in 1989 and hosted the APEC Summit in 1994, which resulted in the Bogor Goals, that measured objectives for reducing barriers to trade and investment. In 1999, after the onset of the Asian financial crisis of 1997–98, Indonesia was invited to join the Group of Twenty (G-20), a select assembly of advanced and emerging economies that has become a critical forum for global economic governance.

The Australia-Indonesia relationship has often been characterized by both sides as a roller-coaster ride.¹ As Colin Brown put it, ‘… nothing so characterizes the phenomenon [of Australia-Indonesia relations] as a car on a roller-coaster. Any rise is followed inevitably by a fall. The ride is never boring, and in a bizarre kind of way it is predictable. But sometimes you might wish for a little more stability, a few more moments of calm.’² However, as argued by Jamie Mackie,³ looking back at the history of Australia-Indonesia, it was in fact quite stable for long periods of time, even though fluctuating sharply at certain points, such as the early high point in 1948–49 when Australia supported the independence of Indonesia against the Dutch, and a low point during Indonesia’s Konfrontasi (confrontation) during 1963–66 against the United Kingdom and Malaysia. Nonetheless, since the post-New Order reformasi (reform) period, and its relatively high turnover of presidents, fluctuations in the relationship have been more evident.

Middle powers have suddenly become fashionable again. The economic and strategic problems currently being experienced by the United States (US) and China’s still limited ability to shape the international system, suggest that there are currently opportunities for non-great powers to influence international affairs.¹ Indeed, there is a growing literature that focuses on the role that might be played by those states that are neither superpowers nor failing, but which are seeking to play a more prominent role in the international system. Australia has been at the forefront of this process, but its most immediate neighbor and the principal focus of the following discussion—Indonesia—is also increasingly described as a significant regional middle power. Just as important, Indonesia has been experimenting with some aspects of middle power diplomacy, even if it does not always use this term widely. It is an opportune moment, therefore, to revisit middle power theory, explain its recent resurgence and see whether Indonesia actually measures up.

As the ‘first among equals’, Indonesia has been a critical player in managing intra-ASEAN relations, thereby shaping a role and identity for itself that has increased its leadership status in the region and beyond. This chapter examines the opportunities and challenges for security cooperation between Indonesia and three of its significant ASEAN neighbors: Malaysia, Singapore, and Vietnam. As the three countries differ in important aspects ranging from size, economic development, religion, ethnicity, and the timing of their entry into ASEAN, an examination of Indonesia’s policy toward these three countries will shed much light on how Indonesia intends to approach its fellow ASEAN member-states.

Indonesia has long been said to be the ‘natural born leader’ or ‘first among equals’ within the Association of Southeast Asian Nations (ASEAN). The ‘leadership’ role of Indonesia dates back to the establishment of ASEAN in 1967. The end of konfrontasi (confrontation) and Indonesia’s willingness to join ASEAN were critical to ASEAN’s creation. This, in turn, served President Suharto’s goal to portray Indonesia as a constructive neighbor.¹ As Dewi Fortuna Anwar argues, following ASEAN’s formation, ‘Indonesia’s restraint, plus its substantial contribution to the regional cooperation, … earned the country the respect and recognition of the other members as a primus inter pares’ or ‘first among equals’.² However, the establishment of ASEAN has also been interpreted as an effort to constrain Indonesian hegemony in Southeast Asia. Therefore, as a form of consent to this, Suharto’s policy towards the organization was also influenced by a desire to reassure its regional partners.³ While Indonesia became somewhat introverted following the 1997–98 East Asian Financial Crisis and associated collapse of President Suharto’s New Order regime, the consolidation of stability, economic growth, and democratic values saw Indonesia once again emerge as an active leader in ASEAN.

Recently, within Indonesia’s strategic circles there has emerged a growing perception—and with it, a sense of frustration—over the Association of Southeast Asian Nations (ASEAN), long a cornerstone of Indonesia’s foreign policy, as an impediment to Indonesia’s evolution from a regional power to becoming a major player in global affairs. With episodes such as the border dispute between Cambodia and Thailand, which erupted in violence in 2011, and ASEAN’s first-ever failure to produce a joint communiqué at its annual ministerial meeting in Phnom Penh in July 2012, denting ASEAN’s internal cohesion and hampering the organization’s efforts to become a ‘political-security community’ by 2015,⁵ Indonesia has worked valiantly, if at times in vain, to mediate between the offending parties and salvage the reputation of ASEAN. Yet such experiences have led some Indonesians to question the viability of their country’s longstanding regional policy, not least when it appears as if Jakarta’s position as the de facto leader of ASEAN is no longer accepted, in practice at least, by all of the organization’s member-states. Moreover, that all this has occurred even as Indonesia is being courted by and included among the world’s most economically and diplomatically influential powers has only exacerbated Indonesia’s sense that its fellow ASEAN states neither acknowledge its regional leadership nor appreciate its contributions to regional conflict management sufficiently.

As the pivotal state¹ in Southeast Asia, Indonesia seeks to use maritime diplomacy to establish cooperative regional relationships as a means of achieving two objectives: first, to ensure its security wellbeing, and second; by actively resolving its border disputes—demonstrating its leadership credentials to mediate in interstate boundary disputes in the region.

Why should we view Indonesia as an emerging power? There are a range of indicators supporting Indonesia’s status in international affairs. In the late 1990s analysts referred to Indonesia as a pivotal state.¹ The McKinsey Report on Indonesia in 2012 predicted that by 2030, it will become the world’s seventh largest economy.² In the aftermath of the 2008 global financial crisis, Indonesia even outperformed the BRIC countries, attracting investors searching for new emerging investment markets. A report released on 6 March 2013 by the Boston Consulting Group³ made a case for the archipelagic state of 242 million people as a prime investment destination. Memorable excerpts from the report noted that: 1) Indonesia’s middle income and affluent classes will double by 2020 from 74 million to 141 million people and more than half the population (53 per cent) will qualify as middle class or richer; 2) Indonesians feel more financially secure than people in other BRIC countries (Thirty-one per cent of Indonesians surveyed reported feeling secure, compared with only 14 per cent of Chinese, 19 per cent of Indians, 15 per cent of Russians and 13 per cent of Brazilians); and 3) Indonesia’s middle class will become more dispersed and consequently, new cities will emerge beyond Jakarta as centers of wealth. Here, the total number of cities with more than a million middle-income earners will roughly double, from 12 cities to 22 in seven years (see Chapter 3). A further expectation is that Indonesia will enjoy a demographic dividend during 2020–30 when its productive age group—people between 15 and 64 years of age—maximizes their economic productivity, and dependency ratios are at their lowest levels.⁴