IN THE JOURNAL | INDONESIA 360
Why Indonesia matters
October-December 2014
By: Amitav Acharya

Indonesia is an emerging power of the 21st century, in both Asia and the world, but it is not moving that way in the traditional manner of other powers. The term “emerging powers” recognizes the growing status – primarily economic but also political and strategic – of a specific group of nations. Most, if not all of them, were once categorized (and in some cases still are) as part of the “third world” or “global south.”

Indonesia belongs in this category. It is the fourth-most populous country in the world, after China, India and the United States. It is also the world’s largest Muslim-majority country and the third-largest democracy. Its economy is currently the 16th largest in the world (although one more recent estimate puts it at number 10), and McKinsey & Company, the global consulting firm, has estimated that it could become the seventh largest by 2030. Since the fall of the Soeharto dictatorship in 1998, Indonesia has held three direct presidential elections, all of which were judged to be free and fair. Between 2000 and 2010, its economic growth surpassed all other emerging economies except China and India, and was ahead of Russia, Brazil, and South Africa, which make up the other BRICS countries.

But the Indonesian story suggests it is taking a different path to emerging-power status than other nations. This path is not based so much on military strength or economic resources; rather, it lies in the ability of a country to develop a positive, virtuous correlation of three factors: democracy, development and stability, while pursuing a foreign policy of restraint toward neighbors and active engagement with the world at large. This is the key lesson from the story of Indonesia that this essay seeks to present.

Indonesia has achieved its growing status in global affairs in a very different manner than other emerging powers in the developing world, including the BRICS (Brazil, Russia, India, China and South Africa). Two things set Indonesia apart. First, while the rise of other BRICS countries was related to, first and foremost, economic growth and military spending, Indonesia came in on the back of democratization and regional engagement. Each of the BRICS is a significant military power, some regionally and others such as China and Russia globally.

Even non-BRICS emerging powers such as South Korea, Nigeria and Saudi Arabia had acquired significant regional economic and military clout before their diplomatic and political contributions came to be recognized. Indonesia is sometimes compared with the Scandinavian countries of Norway, Sweden and Denmark, or with Australia and Canada, which are called “middle powers.” But these are wealthy Western nations, and some, such as Sweden and Australia, possess significant military power.

By contrast, Indonesia is still militarily and economically a weak state, in particular compared to some of its neighbors. Yet it enjoys comparable or even greater regional leadership and clout than any of the other emerging powers in the developing world. For a country that is neither the strongest military nor economic power even in its own immediate region, (even tiny Singapore scores better on both counts), Indonesia has done more as a mediator and facilitator of Asian conflicts than the region’s major powers – China, Japan and India – combined.

The second point of difference relates to the position of an emerging power within its own region. The Indonesian story suggests that the key to global status and recognition lies in good regional relations. Marty Natalegawa, Indonesia’s foreign minister, likes to describe Indonesia as a “regional power with global interests and concerns.” We can modify this description slightly to say that Indonesia pursues a “regionalist path to its global role.” According to Natalegawa, many rising powers suffer from a “regional trust deficit” with their neighbors. Indonesia is different.

There is much truth to this. Relations between powers such as India, China, Japan, South Africa and Brazil with their respective neighbors are marked by considerable mistrust and conflict. Indonesia, on the other hand, is universally acknowledged as a regional “elder” and enjoys far more cordial relations with all its neighbors. Thus, a distinctive feature of Indonesia’s role as an emerging power is that while it is not the dominant military or economic power in its own region, it is respected and expected to play the role of mediator and facilitator in regional crises and conflicts.

Some have argued that the BRICS should be expanded to include Indonesia. But one does not find too much enthusiasm within Jakarta’s foreign policy circles for this idea. As Hassan Wirajuda, who served as Indonesian foreign minister from 2001 to 2009 and is Strategic Review’s editor-in-chief, told me: “We don’t bother much about it ... We have our own game, ASEAN, [and] East Asia.” He pointed out that while Indonesia is not part of the grouping, “the growth of BRICS has declined, while Indonesia’s is growing more rapidly. What is the meaning of BRICS, or not being included in the BRICS?” Noting that Indonesia was projected to have the world’s seventh-largest economy by 2030, Wirajuda said that “it is more important to be part of East Asia – the center of gravity of the world; the region of the 21st century.”

Although pitched at the global level, Indonesia’s focus has remained very much on developments in Southeast Asia. Not all emerging powers are counted as regional powers, however. Are South Korea and Argentina, while recognized as emerging powers, true regional powers? These uncertain and contested categorizations are important, as they affect discussions about the global order.

Managing great-power relations

While Indonesia does not see itself as a global power, it does seek to influence the relationships among the major global powers through its role in the Asia-Pacific region (now being extended to the Indo-Pacific, which signifies the inclusion of India). This is because the region is home to some of the most materially powerful actors in the contemporary international system.

But how can Jakarta approach strategic relationships in this region? Obviously, it cannot do this as an individual actor. But being a regional multilateral player gives it an advantage that great-power status would not. Multilateralism would be fruitless if it simply gave primacy to great powers. That would marginalize ASEAN, and thus Indonesia as ASEAN’s anchor. Indonesia’s preferred approach to this issue is “dynamic equilibrium.”

The idea of dynamic equilibrium is a powerful example of Indonesia’s regionally based approach to the global order. The term is of recent origin but has been frequently mentioned in speeches by President Susilo Bambang Yudhoyono as well as Natalegawa. In a speech in Tokyo in December 2013, Natalegawa described the idea in these words:

“Dynamic,’ because change is a constant and indeed inherent in the region. The region’s architecture must therefore be constantly adaptive. ‘Equilibrium,’ because such a state of constant change does not suggest a permanent state of anarchy or the uncertainty common to a diffuse multipolar system. Nor, on the other hand, of the imposed order of an unchecked preponderance of a single power. Instead, countries of the region develop norms and principles, codes of conduct and as the case may be, legal frameworks, to build a spirit of partnership and cooperation in addressing issues of common interest.”

Natalegawa, who is generally associated with the “dynamic equilibrium” idea, said it was inspired by acute tensions within the relationships among the major powers, especially the United States and China, and China and Japan. In addressing such tensions, the approach not only rejects hegemony by any single power in the region, be it the United States or China, it also departs from the conventional balance of power approach. Unlike policy makers in neighboring Singapore, Indonesians do not like to use the term balance; equilibrium is their preferred concept. The goal is not to create order through military buildups, alliances and arms races, but by keeping ASEAN in the middle, like the “conductor in an orchestra.”

Democracy and foreign policy

Any framework to understand and explain Indonesia’s foreign policy and role in the world has to appreciate the impact of its democratization. Indonesia also offers an important and reassuring example of how democratization can affect and reshape a country’s foreign policy. As Natalegawa put it, democracy’s impact on Indonesia’s foreign policy has been in both process and substance. In terms of process, he said, foreign policy decision-making is now “more diffuse, there is a more diverse constituency for foreign policy, a sense of public ownership and participation in the policy-making, even in the post-decision [implementation] phase. It is much more important for foreign policy makers during the dissemination phase to earn the support of the public, to get feedback, sell the policy. So overall, the system is much more inclusive.”

In terms of substance, the impact of democratization can be seen in Indonesia’s support for democracy and human rights, including placing support for and recognition of democracy and human rights within the ASEAN Political-Security Community and the ASEAN Charter. Indonesia was a main backer of the ASEAN Intergovernmental Commission on Human Rights, and the creation of the Bali Democracy Forum.

Ketut Erawan, executive director of the Institute of Peace and Democracy at Udayana University in Bali, which is the implementing agency for the Democracy Forum’s agenda, said democracy has two main functions in foreign policy: “It can be instrumental, and it can also promote identity change.” A country’s democratic credentials can be used to address foreign policy and security challenges. For Indonesia, this has been important in persuading the United States to remove sanctions against its armed forces for human rights abuses during the Soeharto era, which in turn has normalized defense relations with the US and enabled the purchase of advanced weapons systems to help modernize the Indonesian military.

Democratization can furthermore attract more international development assistance and support for economic programs. At the same time, being a “democratic country” has dramatically altered Indonesia’s image in the world, according to Wirajuda. “Democracy has made Indonesia accepted by the international community, both developed and developing countries – especially with the developed world.”

 

Indonesia’s future challenges

Why does Indonesia matter to the world? Why does the rest of the world care about Indonesia? To be sure, the country’s size, population, strategic location and economic potential are important. Also important is its traditional reputation as a society that tolerates and accommodates religious and ethnic diversity (recent indications of growing intolerance notwithstanding). Yet the nature and purpose of its political system, which informs and shapes its foreign policy, is also crucial. That foreign policy and role – Indonesia’s participation in international affairs, in ASEAN, and in the Asia Pacific – has a major bearing on how the world looks at Indonesia and how much it matters in regional and world affairs.

Despite its promise and achievements, Indonesia faces crucial challenges in realizing its role as an emerging power, especially its “dynamic equilibrium” approach. First, Indonesia’s external environment is becoming more complex and challenging. The early post-Cold War sense of optimism about the regional order has dissipated, and China’s recent assertiveness in the South China Sea has sparked anxieties in Asian capitals, including Jakarta. Indonesia now accepts that China’s with Indonesia’s Natuna Islands chain, thereby setting the stage for a more confrontational relationship with China. While Indonesia continues to stress its role as a moderator and facilitator in the South China Sea disputes, a further deterioration of the Natuna situation would negatively affect this role.

 

Another challenge to Indonesian’s position as a regional mediator comes from the US policy of rebalancing, also known as the “pivot,” toward the Asia-Pacific. The US has been careful in seeking defense ties with Indonesia, partly because there are plenty of other countries willing to provide it with military access. Moreover, the Obama administration has been careful to not force its agenda on ASEAN and in ASEAN-led regional forums, where Indonesia plays a central role. Washington continues to adhere to the principle of ASEAN centrality. But if relations between America and China deteriorate further, it will test Indonesia’s stance. Hence, much depends on Jakarta’s ability to secure a code of conduct in the South China Sea, which is by no means assured. If it is unable to do so, it will call into question the viability of Indonesia’s “million friends and zero enemies” policy, which its critics already regard as “only dreaming.”

A third challenge relates to foreign policy capacity and leadership. Natalegawa admitted to this challenge, saying disarmingly: “I fear we are not firing on all cylinders.” With democratization, and the consequent advent of multiple domestic stakeholders, ownership and participation in foreign policy-making, the instantaneousness of social media, and a 24-hour news cycle, he said he has little time to think and has gotten use to “making policy on the run.” The Indonesian Foreign Ministry needs more than diplomats; it needs broader expertise on complex transnational issues that increasingly confront the country and Southeast Asia.

Fourth, Indonesia’s role as an emerging power is affected by domestic politics. Until now, a good deal of the country’s international reputation and credibility has rested on its ability to make progress on three fronts: democracy, development and stability. Indeed, Indonesia serves as a striking example of how these three elements, which are often in conflict in developing countries, can be made into a virtuous cycle. But none of the three can be taken for granted. It is possible that Indonesia under the guidance of a future leader will go from strength to strength, or it might become less active and more inward looking in its foreign policy and its domestic politics might take an authoritarian turn.

 

There are many domestic challenges that can potentially derail the country’s recent achievements, including its democratic vitality, economic performance, domestic stability and international role. Corruption remains a major problem, although there has recently been growing vigilance and prosecution of corrupt officials. There remain pockets of internal strife in regions such as Papua, as well as the potential for terrorist attacks.

 

A fifth challenge is leadership style. Western nations not familiar with Indonesia’s low-key and impartial approach are sometimes exasperated by its refusal to speak loud and clear and tendency to take a balanced position on contentious issues such as humanitarian intervention. As one senior Western diplomat, who did not want to be identified, told me: “To play a global leadership role, you sometimes need to take sides.” This was in reference to Indonesia’s overly cautious approach to Western military intervention in Libya. In this view, Indonesia’s neutral approach can sometimes be a handicap in global governance.

A related issue is presidential leadership. There are concerns within the country, but perhaps more internationally, about how leadership change will affect Indonesia’s foreign policy and regional role. It can only be expected that some presidents of Indonesia will be more active in foreign policy than others. This may not only be due to domestic preoccupations and constraints, as happened immediately after the fall of Soeharto, but also a matter of personal preference and interest. But President Yudhoyono’s very active engagement in foreign policy makes the issue more moot. Will Joko Widodo, who will be sworn in as Indonesia’s seventh president on Oct. 20, be as interested and involved in foreign policy, and in pushing Indonesia’s profile around the world? Much depends on the team the president will assemble, including his foreign minister, to run and conduct foreign policy.

Indonesia’s ability to avoid collapse and rebuild itself is one of the most impressive stories of the early 21st century. Its journey since Soeharto resigned is all the more inspiring at a time when the world was witnessing failing nations, recurring economic crises and growing radicalism and terrorism. The course charted by Indonesia in foreign policy seems well set to continue to guide its regional and global roles.

Observing Indonesia at different levels does create the sense, however, that while there were too few expectations for the country in 1999, now there are too many. No one can dismiss the possibility that Indonesia might not be able to live up to them. But it also seems reasonable to believe that Indonesia’s leadership is likely to continue to receive international recognition and support as long as its democracy continues to progress alongside development and stability. Ultimately, these domestic factors will decide Indonesia’s regional and global role as an emerging power.

 

Armitav Acharya is a professor of international relations at American University in Washington. This essay was adapted from his new book, "Indonesia matters: Asia's Emerging Democratic Power.''  

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