Why China and US must both court Indonesia

Presidential candidate and Indonesian Defence Minister Prabowo Subianto and vice-presidential candidate Gibran Rakabuming Raka at a rally in Jakarta. Picture: AFP

When 16th-century Portuguese explorers first sailed to Malacca they were intent on making fortunes from the spice trade, but realised soon enough that they had stumbled on a bigger prize: the gateway to mysterious Cathay.

Now Cathay, still a puzzle, is modern communist China and control of the Strait of Malacca is largely in the hands of Indonesia.

Little wonder then that Indonesia, a complex archipelago, is of geopolitical interest – it sits astride a strategic choke point, a stretch of water that links the Indian and the Pacific oceans. As the rivalry between China and Russia has intensified, so too has military planning around the strait.

Block access to the South China Sea and you can interrupt 80 per cent of Chinese oil imports. Liquefied natural gas travels along this route to Chinese ports; so does Beijing’s supply of rare metals and minerals from Africa.

It would need a dramatic turn of events – President Xi Jinping’s forced annexation of Taiwan, say – and a risk-hungry US president to take such a step. So who knows?

One thing is for sure, though: it really matters who rules Indonesia. In the past decade of fraying tensions between the US and China, Indonesia has been governed by President Joko Widodo, known as Jokowi.

He has made a good fist of it: the economy is growing fast, poverty rates are down, infrastructure projects are giving the country a modern sheen.

The US should take great interest in the Indonesian elections given their control over major shipping lanes.

Jokowi himself still seems to be popular and although his “man of the people” brand – he was originally a furniture salesman – is wearing thin, he has at least stepped down after two terms in accordance with the constitution.

His foreign policy, a form of non-alignment between the US and China, was conducted nimbly. China is Indonesia’s top trading partner but Jokowi managed to leverage the relationship to his country’s advantage. Its most valuable natural resource is nickel, essential in the energy transition and for China’s ambitions to be the leading producer of electric vehicles. Jokowi started off by banning raw nickel exports in 2014.

China understood that if it wanted a slice of Indonesia’s nickel it would have to plough money into processing the metal in Indonesia. Result: Indonesia has become the world’s largest processed nickel exporter, 70 per cent of which goes to China.

At home Jokowi is credited with having successfully managed the commercial relationship at a time when other countries are falling into Beijing’s debt trap.

But Wednesday’s presidential and legislative elections are likely to throw up a less deft leader. All three candidates for the presidency claim that they will stay neutral in the great power contest, but all will find it hard to navigate around Beijing’s political demands. China wants a friend at the helm of a country that controls its maritime approaches. Having a well-mannered trading partner as a near-neighbour is no longer enough.

Just as NATO is scrambling to adjust to the prospect of a second Trump presidency, so China too is gearing up for new leadership in Washington. The assumption that Beijing would prefer a Trump victory seems less and less applicable as the candidate reheats his rhetoric on tariffs against Chinese imports. China’s evolving line is that it will demand of its partners, especially its neighbours, a him-or-us choice. Indonesians know this. The time of strategic ambiguity is passing.

Indonesia's presidential candidates Ganjar Pranowo (C), Prabowo Subianto (L) and Anies Baswedan speaking during the first presidential election debate in Jakarta.

Jokowi’s obvious favourite as successor in the three-horse election race is a hard-nosed former general, Prabowo Subianto, no friend of America or Australia (both banned him because of claims of involvement in atrocities).

Prabowo has had a makeover (he’s promising free school milk) and has chosen Jokowi’s son, Gibran, as a running-mate. Analysts say he comes from the genus of genuflecting strongman: that is, likely to crack down on any hint of separatism but eager to accommodate Beijing. Indonesian voters seem to think that makes him credible. He is polling at more than 50 per cent.

The most plausible rival is Anies Baswedan, a former Fulbright scholar and former governor of Jakarta, who argues that the country’s foreign policy has become too transactional and passive and promises a “value-based” world view.

Western investors like him because of his economic expertise. That doesn’t amount to an anti-China position but it does suggest that he wouldn’t, as leader, rush into a position of subservience towards Beijing.

Polling shows him significantly behind. His best hope this week is to force Prabowo into a second-round run-off.

Across the so-called Global South, similar choices are taking shape. In some ways it resembles the competition between the Soviet Union and the US-led West in the Cold War. That involved a great deal of influence-buying, the sponsorship of rebel groups, handouts to friendly politicians, the shaping of a binary choice between East and West even for those not keen to align.

The current climate has those elements too but is rendered more acute by the increasingly unstable world order. The maritime choke points – not only Malacca but also the Red Sea, the Black Sea and the Taiwan straits – highlight everyone’s vulnerability to interrupted supply chains, to the military option of blockade.

China, a great exporting power, is as nervous as its Western rivals. It is investing heavily in a naval build-up and satellite tracking, and in land routes that can help it to sidestep dangerous shipping lanes.

Elections come and go, some more flawed than others, but the defining power of geography is a constant. Indonesia’s vote is not only about free school milk but also about the stewardship of the strait at a time when the world is all at sea.

The Times