Rising Tide: Strengthening the U.S.-Indonesia Partnership Against PRC Aggression Published July 1, 2024 By Lt. Col. Kevin P. Peel Wild Blue Yonder--Maxwell AFB -- The U.S. and Indonesia have many things in common: both are democratic nations, with populations in the hundreds of millions; both display levels of diversity within their citizens across multiple demographics; and both are confronted with the problem of China’s aggressive expansion into the South China Sea. For Indonesia, these actions by the People’s Republic of China (PRC) directly threaten its sovereignty, and call into question the regional order in Southeast Asia. Indonesia’s response to this potential crisis has thus far been muted due to internal and external political and economic circumstances. Politically, maintaining its own internal security is the primary focus, all while having to navigate the complex international relationships within ASEAN. Economically, Indonesia aspires to achieve and maintain a 7% GDP growth rate, but is largely reliant on the PRC for trade, and mineral processing. To help abate this growing problem, the U.S. should take actions in the diplomatic, economic, and information arenas to help strengthen its relationship with Indonesia and transform Indonesia into a strong regional leader. Background: According to members of the U.S. Embassy staff in Jakarta, Indonesia is the “busiest bi-lateral relationship” maintained by the U.S.[1] While relations between the two nations are positive overall, the U.S. sees opportunities to grow and enhance it, and has thus taken on a strategic message of “Democracy, Diversity, Prosperity.”[2] Whether in the diplomatic realm, among militaries, or in the economic sphere, the opportunities for expanded partnership between the U.S. and Indonesia are many, and the U.S. seeks to capitalize on every opportunity possible. While Indonesia views the U.S. as the security partner of choice, it maintains a staunch non-aligned stance, wanting to remain neutral in great power competition and potential conflict between the U.S. and the PRC. While it is a willing partner to the U.S. in many areas, Indonesia is resistant to external powers interfering in regional affairs.[3] Politically, Indonesia faces internal and regional concerns. First, it is a large, diverse country. Indonesia spans over 17,000 islands in an area that is slightly wider than the U.S. These islands contain wealthy and poor populations across urban and rural areas, from a strict Muslim semi-autonomous region in the west, to a Hindu population in a rich central tourist area, to a Christian population in a volatile area in the east.[4] Ensuring that the entire population is satisfied and supports the government at any given time is a challenge in itself. Each day, the Indonesian government’s main question must be “is the country still unified today?” Coming in a very close second, their next question is “what do we need to do to ensure the country is still unified tomorrow?” This internal pressure to lead surely both overshadows and colors Indonesia’s foreign affairs, inherently placing the priorities of other nations, e.g. the U.S. and the PRC, on the back burner. It is Indonesia’s size and diversity that have likely driven it to adopt a non-aligned approach to great power competition even before it became a democracy with the 1998 transition away from the authoritarian Suharto regime through the policy of Reformasi.[5] Indonesia has taken on the role of “quiet leader” within the Association of Southeast Asian Nations (ASEAN). While ASEAN nations mutually prosper under various trade agreements, there are a number of challenges they face as a collective that directly impact Indonesia and its position within the region. Myanmar’s continued human rights abuses continue to raise questions among the international community, but ASEAN’s position is one of non-interference in the internal affairs of member states.[6] As Indonesia is arguably the strongest member of ASEAN, but is reluctant to take formal action, the strength and legitimacy of ASEAN as a formal political body is called into question. Similarly, ASEAN continues to advance a code of conduct for Southeast Asia, including the PRC, continually stalls. While part of the code would address the PRC’s expansion into the South China Sea, China has been able to bi-laterally engage ASEAN nations and compel them to withdraw support for the agreement.[7] This calls into question the unity of ASEAN nations to address regional problems, and again casts doubt on its legitimacy as a collective body. As Indonesia is partially reliant on ASEAN for its continued prosperity and indirectly its continued security, a weak ASEAN is a political anchor around the neck of the nation. Economically, Indonesia faces similar predicaments. Indonesia has set an ambitious goal of 7% gross domestic product (GDP) growth in order to achieve the status of a developed nation.[8] While this goal is not unattainable, it requires the nation to rapidly increase modernization, self-reliance in areas such as manufacturing and energy production, and diversification in imports and exports. Though Indonesia is geographically positioned in two areas of high economic trade (Malacca Strait, South China Sea), it needs to develop and upgrade infrastructure to actualize its trade potential, or it will not be able to achieve and sustain its GDP growth objective. These infrastructure projects require capital, mainly in the form of foreign investment. However, given Indonesia’s non-aligned stance, and its tepid “leadership” of ASEAN, western nations are likely to be somewhat hesitant in committing the level of investment needed to improve Indonesia’s trade capacity. The PRC is the largest trading partner of both Indonesia and ASEAN as a whole.[9] The practical result of this reality is that Indonesia is almost coerced into maintaining positive relations with the PRC, which could easily suspend trade should Indonesia take unfavorable actions, as the PRC has done with other nations.[10] Additionally, the PRC, through the Belt and Road Initiative, has demonstrated that it is willing to invest in nations regardless of stability, adherence to human rights values, and even the ability to repay investments.[11] Put simply, the PRC is very easy to see as an economic partner of choice for Indonesia. It would be equally as easy to overlook, or excuse continued minor incursions into the South China Sea, even those that bump up against Indonesian sovereign territory. The question then becomes: where is the line for Indonesia? Where is the tipping point between beneficial economic engagement with the PRC versus the PRC’s continued aggression in the region? Compounding the second economic point, Indonesia is largely reliant on the PRC for processing and refining its cache of natural resources, mainly nickel.[12] While Indonesia sits on an enormous cache of nickel and other natural resources, it lacks the ability to refine those minerals at scale. As mentioned before, in order to build capacity to process natural resources, Indonesia requires large amounts of capital. Not just to build sophisticated processing facilities, but also to train workers in the complicated practices involved. While the PRC may be willing to provide that capital, along with assistance in facilities construction and training, its investment almost always comes with conditions that are lopsided against the recipients of the money.[13] Thus, directly or indirectly, the easiest path for Indonesia to increase its ability to harvest, refine, and export its own natural resources heavily involves the PRC. Implications On multiple fronts, Indonesia can be satisfied with the status quo: robust economic trade with and assistance from the PRC, both bi-laterally and multi-laterally through ASEAN, while enjoying security cooperation from the U.S. and Australia. Coupled with a tradition of being non-aligned, and an ongoing desire to stay out of great power competition, it is difficult to convince Indonesian political and military leadership that PRC aggression is a worsening problem. During a recent Air War College engagement at the Lembaga Ketahanan Nasional (National Resilience Institute, an Indonesian Non-Ministerial Government Agency tasked with carrying out government duties in the field of education for national leaders, strategic assessment of national resilience and strengthening of national values), an academic relayed the sentiment from his colleagues across Asia that the PRC has no desire to replace the U.S. as the leader of the world order, noting that it would have “nothing to gain in doing so.”[14] This shows that there is a competing, and likely deep-rooted narrative being presented to Indonesian military and political leaders already, and that narrative will be difficult to counter. Politically, Indonesian leaders need to be assured of internal and regional security. Its democratic institutions must take steps to ensure prosperity for its people, thereby assuaging fears of internal rebellions or schisms within national regions. This is a difficult task, given the size, diversity, and geographic makeup of the country, but not an impossible one. Once internal security is achieved, Indonesia needs to work to make Southeast Asia regionally secure through as strong ASEAN, which will require confronting tough issues like the humanitarian situation in Myanmar, and the South China Sea Code of Conduct. With these two objectives, Indonesia will find itself in a stronger position to confront PRC aggression, unilaterally or with neighboring states. Economically, Indonesia needs a viable source of trade and investment from nations other than the PRC. In order to achieve stated GDP goals, become a “developed nation,” and maximize its economic power, Indonesia needs the ability to fully develop its own natural resources, and export those national resources around the globe. Metaphorically, Indonesia already sits on a global economic superhighway; it simply needs onramps and offramps in order to thrive. Once achieved, Indonesia will be less reliant on PRC trade and investment, and therefore less susceptible to economic consequences from the PRC for actions deemed unfavorable. Recommendations: First, the U.S. must increase investment in Indonesian modernization efforts. While U.S. investment, much like that from the PRC, comes with “strings attached,” the conditions needed to be met from the U.S. are arguably more altruistic versus utilitarian requirements from the PRC. U.S. investment must not be a zero-sum game, but rather endeavors of mutual benefit. Second, the U.S. must look for additional opportunities for military cooperation. In addition to the existing Garuda Shield and Super Garuda Shield exercises, the U.S. should seek to expand exercises into multi-domain operations, and to include more nations in the region. Further, the U.S. needs to continue exploring areas to cooperate in non-combat operations like non-combatant evacuation operations, and humanitarian aid/disaster relief. Third, the U.S. needs to encourage Indonesia to take a more overt, vocal, and active role in leading ASEAN. Though leadership rotates through member nations, Indonesia is primed to lead ASEAN in establishing and maintaining order in Southeast Asia, even in the face of robust PRC aggression. Support from the U.S. would give political leadership the backing it needs to make this a reality. Finally, the U.S. should engage in an overt information campaign to extol the similarities between it and Indonesia, and to amplify how further partnership with the U.S. across the DIME would help Indonesia meet its security and economic objectives. This campaign would need to be framed by a blunt depiction of PRC aggression, and the negative impacts its progression will have. Additionally, such a campaign could cast Indonesia as a leader of liberal democracy in Southeast Asia and beyond. Alternatively, the U.S. could also continue down the path of the status quo by not attempting to expand cooperation and partnership with Indonesia. The associated risk is Indonesia becoming a domino in Southeast Asia, eventually caving to the pressure of PRC aggression in the region and getting engulfed by PRC hegemony. Were that to happen, the whole of the South China Sea region would likely be impenetrable physically, economically, or socially for decades. Indonesia presents the largest opportunity for a strong, stable regional partner for the U.S. in countering PRC aggression and Chinese attempts at reshaping regional and world order. In order to posture Indonesia for success, the U.S. must be the economic partner of choice, both via trade and investment; it must continue to be the security partner of choice, and expand that partnership into non-combatant operations; it must lend its diplomatic support to Indonesia’s rise as a capable regional leader; and it must ensure that bi-lateral, regional, and global messaging make clear that a partnership between the two nations is beneficial for all. Lieutenant Colonel Kevin Peel wrote this while assigned to the Air War College, Air University, Maxwell AFB, AL. He serves as an Intelligence Officer in the U.S. Air Force Reserve, and previously commanded the 512th Intelligence Squadron, Fort Meade, MD. He is a graduate of the University of Scranton where he attained a Bachelor of Science degree in psychology, the University of Delaware where he attained a Master of Education degree, and the Army Command and General Staff College where he attained a Master of Military Art and Science degree. This research was originally conducted as part of the Air War College Regional Studies Seminar and Field Study [1] U.S. Embassy in Indonesia Staff Member, “Engagement with Air War College Delegation,” (Meeting, U.S. Embassy in Indonesia, Jakarta, Indonesia, March 4, 2024) [2] U.S. Embassy in Indonesia Staff Member, “Engagement with Air War College Delegation” [3] Kishore Mahbubani, “Asia’s Third Way: How ASEAN Survives—and Thrives—Amid Great-Power Competition,” Foreign Affairs, March/April 2023, [4] Academic and Verve Institute Staff Member, “Engagement with Air War College Students,” (Meeting, Midnight Hotel, Canberra, Australia, March 1, 2024) [5] Retno L.P. Marsudi, “Indonesia’s Non-aligned Foreign Policy Is Not Neutral,” The Diplomat: Asia, November 28, 2023. [6] “What We Do,” ASEAN, n.d. [7] Felix K. Chang, “Uncertain Prospects: South China Sea Code of Conduct Negotiations,” Foreign Policy Research Institute, October 6, 2020. [8] Timothy Cheston, “Indonesia and the Quest for 7% Growth: Overpromise or Underperformance?” Atlas of Economic Complexity – Center for International Development at Harvard University, n.d. [9] Shay Wester, “Balancing Act: Assessing China’s Growing Economic Influence in ASEAN,” Asia Society Policy Institute, Nov 8, 2023. [10] Jacky Wong, ”How Chinese Tariffs Soured Australia’s Wine Industry,” The Wall Street Journal, Feb 10, 2024 [11] “How China’s Belt and Road Initiative is Changing,” The Economist, Oct 17, 2023. [12] Brurce Mecca and Azhania N. Siswadi, “How Indonesia Can Win the Global Race on Critical Minerals,” The Diplomat, Feb 2, 2024 [13] James McBride, Noah Berman, and Andrew Chatzky, “China’s Massive Belt and Road Initiative,” Council on Foreign Relations, Feb 2, 2023, [14] Lemhannas Resilience Institute Academic and Instructor, “Engagement with Air War College Delegation,” (Meeting, Lemhannas Resilience Institute, Jakarta, Indonesia, Mar 6, 2024)