Why the EU should become more pragmatic towards Indonesia
Why the EU should become more pragmatic towards Indonesia
WRITTEN BY DR DENIS SUARSANA
24 January 2024
On 14 February more than 200 million voters in Indonesia will head to the polls for the first round of their country’s presidential elections. After two terms in office the incumbent Joko Widodo, commonly referred to as Jokowi, is barred from running again. Defence Minister Prabowo Subianto, a 72-year-old former general under the autocratic Suharto regime and a political foe-turned-ally of Jokowi, looks most likely to become his successor. He is leading the race with a margin of more than 20 percentage points ahead of his two rivals and might even win the presidency in the first round. Prabowo styles himself as being tough on Europe, frequently lashing out against the EU and its unjustified demands in trade and climate policy. Instead of being put on the back foot, the EU should seize the opportunity and adopt a more pragmatic approach to its strained relationship with Indonesia.
Indonesian elections promise continuity in foreign policy
As a founding member of the Non-Aligned Movement, Indonesia traditionally pursues a predominantly neutral foreign policy under the motto "Bebas dan Aktif" (free and active). Indonesia regularly assumes the role of a mediator, such as during its G20 presidency in 2022 and the Russian invasion of Ukraine or concerning its ASEAN chairmanship in 2023. During the latter, Indonesia advanced diplomatic efforts to resolve the conflict in Myanmar and facilitated negotiations on a Code of Conduct between China and ASEAN in the South China Sea. Indonesia also maintains a neutral stance in the escalating rivalry between China and the United States, and fosters good relations with both countries.
This neutral approach aligns with prioritising economic development over foreign policy under President Jokowi. The president is said to have little personal interest in foreign policy matters. Indonesian diplomats abroad primarily act as economic representatives, seeking to open new markets and attract investments. Indonesia under Jokowi rarely engaged in foreign policy beyond its own interests, except during its G20 presidency or ASEAN chairmanship — and even then, always also aiming to derive economic benefits.
A quick and successful conclusion of trade negotiations with Indonesia would not only significantly strengthen Europe's role in the region but would also be an important step in the European strategy of de-risking from China.
From the perspective of most Indonesians, this relatively transactional approach has proven successful. Little wonder then, that none of the candidates is really aiming to revise Indonesia’s foreign policy. Prabowo as well as one of his rivals Ganjar Pranowo, Governor of Central Java Province and the second candidate from the government camp, have vowed to continue Jokowi’s foreign policy. And even though Anies Baswedan, the former Governor of Jakarta and the only real opposition candidate, is promoting a more value-based foreign policy approach during his campaign, he is not making any substantial suggestions to shift away from the current administration’s strategy. Thus, whoever will be Indonesia’s new president will most likely ensure a high level of continuity regarding the country’s foreign policy.
Indonesia is increasingly frustrated by Europe’s moral finger-wagging
For the European Union, this continuity of Indonesia’s “Bebas dan Aktif” foreign policy approach constitutes an opportunity to strengthen its influence in and its relationship with the country as well as the whole Southeast Asian region. Indonesia, like some of its fellow ASEAN members, needs to diversify politically and economically to avoid being dragged onto one side in the US-China rivalry. As an economic and trade superpower with a limited role in the great power rivalry in the Indo-Pacific — mostly due to its lack of diplomatic and military clout — the EU could provide a promising ‘third way’ for Indonesia and other countries in the region. ASEAN is already the EU’s third biggest trading partner behind China and the US. Although Indonesia is by far the largest economy within ASEAN it is only the EU's fifth largest trading partner in the region leaving an enormous potential for growth.
To seize these opportunities, however, the EU needs to address obstacles to its relations with Indonesia, which it partly has to blame on itself. The EU’s image has suffered significantly in recent years in Indonesia. In fact, according to the State of Southeast Asia Report by Singapore-based ISEAS-Yusof Ishak Institute, Indonesia is the only ASEAN country alongside Myanmar where distrust outstrips trust towards the EU. The EU's complaint to the WTO against the Indonesian nickel export ban and its restrictions on palm oil imports are perceived as an attack on Indonesian interests.
Concerns are also growing in Indonesia regarding the protracted negotiations for a trade agreement with the EU, accompanied by impatience and incomprehension concerning certain European demands. Negotiations on the Indonesia-EU Comprehensive Economic Partnership Agreement (IEU CEPA) had been launched already in 2016. Both sides have repeatedly underlined their commitment to finalise the agreement until the end of 2023, but after the most recent 16th round of talks in December last year not even half of the targeted 20 chapters have been concluded. With Indonesian and EU elections taking place this year, a swift conclusion of the talks seems far off. Behind closed doors in Jakarta senior officials express their frustration about Europe’s moral finger-wagging and their bewilderment about the fact that the EU seems willing to block a successful conclusion of the talks over seemingly minor issues like public procurement or the role of state-owned enterprises.
The leading presidential candidate, Prabowo, emphasised in a prominent foreign policy speech last November, "We don’t really need the European Union anymore". This echoes a strengthening EU-sceptic sentiment among the Indonesian elite, as President Jokowi had already highlighted during his speech at the EU-ASEAN Summit in 2022: "If we want to build a good partnership, the partnership must be based on equality, not coercion”.
The EU needs to become more pragmatic to stay relevant
Indonesia, with its economic development and its leadership role within ASEAN, exudes confidence. Its geopolitical and economic significance is enormous and will continue to grow in the coming years. Indonesia is not only the third-largest democracy but is on its way to becoming one of the world's largest economies. Just like other countries in Southeast Asia, Indonesia is shopping around for partners in the region and beyond. China, the US, Australia as well as many Asian states like Japan, South Korea, and other ASEAN members, are currently strengthening their political and economic ties with Indonesia. Additionally, the country is a member of the Regional Comprehensive Economic Partnership (RCEP), the world's largest free trade zone. In fact, Europe is becoming just one of many partners for Indonesia.
To remain a relevant and respected partner for Indonesia and the region, the EU should adapt its approach. A policy of equality must not remain mere rhetoric from the European side. Expecting Indonesia to simply align with EU views on trade or climate policy would be naive. Instead, the EU should learn from the example of Japan, which is using a pragmatic policy strategy to massively expand its political and economic influence in the region. In contrast to what is perceived as Europe’s moral arrogance, Japan has positioned itself as the most trusted foreign partner in Southeast Asia by establishing equal partnerships with the countries in the region and focusing on addressing their economic interests and needs.
The EU must understand its trade policy with Indonesia as a tool of geopolitics. A quick and successful conclusion of trade negotiations with Indonesia would not only significantly strengthen Europe's role in the region but would also be an important step in the European strategy of de-risking from China. Indonesia with its huge consumer market, labour force, and natural resources (the country is one of the biggest exporters of nickel ore, copper, tin and bauxite) could become a crucial factor in European companies’ China+1 efforts. At the same time, by facilitating trade and investment ties, the EU could help Indonesia in its attempt to hedge against the US-China rivalry.
The same applies to finally getting its Global Gateway initiative going at scale or actively supporting Indonesia's current application to join the OECD. Among the Indonesian foreign policy and business establishment, the EU is still the most preferred hedging candidate (narrowly beating Japan). However, to fulfil this potential role, Europe needs to stop being preachy and start accepting Indonesia as an equal partner. Or as one senior foreign policy advisor for the Indonesian government has put it recently, the reason why it is much easier to deal with China than the EU is because of the latter’s “conditionality”.
A new president in Indonesia provides a good opportunity for a reset in European-Indonesian relations. Prabowo is styling himself as a hardliner towards the EU. Successfully concluding trade negotiations early in his presidency would help him to present himself as a dealmaker capable of handling even a difficult partner like the EU. And the EU could finally prove that it is serious about stepping up its engagement in the region. Because neither Indonesia nor the rest of the region is waiting for Europe — there are plenty of other trading partners in line behind it.
DISCLAIMER: All views expressed are those of the writer and do not necessarily represent that of the 9DASHLINE.com platform.
Author biography
Dr Denis Suarsana is the Country Director Indonesia & Timor-Leste for Konrad Adenauer Foundation (KAS) in Jakarta. Image credit: European Commission Audiovisual Service.