THE IMPLICATIONS OF A RISING INDONESIA FOR AUSTRALIA IN THE ASIAN CENTURY.
Bradley Wood - 22 November 2016
SYNOPSIS
Decision-makers in Jakarta will be more of a threat to Australia than those in Beijing in the
decades ahead. Indonesia’s rise matters far more to Australia’s security than any other
country, including the United States (US). Indonesia will continue to grow in significance to
the US at the expense of Australia’s interests in the region. Australia needs to recognise the
growing strategic threat posed by a rising Indonesia so it can adequately plan and offset this
challenge independently of its allies. A newly democratic Indonesia at Australia’s doorstep
does little to mitigate the strategic threat posed to Australia. Indonesia is currently
experiencing increased nationalism, an upcoming presidential election in 2019, and a
defence re-posture to West Papua – a historical potential flashpoint between Australia and
Indonesia. The two countries also share two controversial seabed agreements that could
cause future diplomatic tensions. Any one of these could cause Indonesia to look south and
exert its growing strength. When it comes to dealing with the challenge of a rising Indonesia,
Australia is likely to be alone.
INDONESIA’S RISE
Over the next two decades, Indonesia’s military strength will match Australia’s for the first time
Indonesia’s defence force currently consists of 396,000 active, 400,000 reserve, and 281,000
paramilitary personnel. As Indonesia becomes the world’s fourth largest economy by 2050, this
economic heft will underpin a substantial rise in national power, driving Indonesia’s military
modernisation ambitions. Indonesia’s 10 to 15 year modernisation plan includes a 274-ship
‘green-water navy’, 10 fighter squadrons and 12 diesel-electric submarines. A modernised military
capability will provide Indonesia with the power to project force south and is likely to challenge
Australia’s control over the “Air-Sea Gap” – the important region between Australia and Indonesia
that provides Australia with a defensive buffer zone. Separating capability and intent is difficult.
However, Indonesia’s rising capabilities will increase the capability side of threat calculation
influencing Australia’s threat perception. The Indonesian archipelago will increasingly become a more
important region for future considerations of force posture and acquisition, at the expense of
periphery interests in Asia.
Indonesia’s military procurement diversification has resulted in increased weapons systems
procurement, technology transfer arrangements, and closer defence relations with new defence
partners. Since 2009, Russia, South Korea and China have been the dominant arms suppliers to
Indonesia. Indonesia’s ongoing acquisition and technology transfer arrangements such as the Chinese
C-705 anti-ship missile is an indication of its ambitions to improve and develop an indigenous anti-
access/area-denial (A2/AD) capability. Indonesia’s enhanced A2/AD capability will allow Indonesia to
secure its maritime borders and strategic sea-lanes at a time when they become increasingly vital to
Australia’s future economic prosperity. Indonesia’s modernised capabilities will also provide it with
the option to exert its strategic policy more effectively, probably at the expense of Australia’s
economic interests in the region. Indonesia could use its increased military capabilities to secure
important offshore petroleum and gas deposits in the Arafura and Timor Seas along the contestable
borders of its 1972 seabed agreement with Australia. Likewise, Australia’s growing natural resource
exports such as liquefied natural gas (LNG), must traverse Indonesia’s deep water straits to access
customers in north Asia, and these exports are exposed to significant supply chain risks with choke
points within the Indonesian archipelago. Indonesia could exert its newfound strength by delaying or
limiting exports through its straits, or prevent the vital petroleum and oil imports that sustain
Australia’s economy and the Australian Defence Force.
THE AUSTRALIA-INDONESIA RELATIONSHIP
While Australia’s defence policy has long realised the importance of Indonesia to Australia’s security
– as a potential ally and adversary – its adversarial status has been overlooked in recent defence
policy. The 2013 Defence White Paper described by Stephan Frühling as “the first post–Indonesia
guidance document since the early 1950s” fails to mention Indonesia as a potential threat. Australia’s
2016 Defence White Paper, does no better at appreciating Indonesia as a strategic threat to Australia.
Instead, the White Paper actively encourages Indonesia’s defence modernisation, viewing it as an
asset to regional security. This perspective is held despite the recognition that Indonesia’s defence
spending is likely to eclipse Australia’s by 2035.
Although Australia has developed a strong security relationship with Indonesia, the relationship will
be tested by hard power that Indonesia will become accustomed to over the next 20 years. The 2016
Defence White Paper argues that the strength of the bilateral security relationship is currently built
on the framework of the 2006 Lombok Treaty, the 2012 Defence Cooperation Arrangement and the
2014 Joint Understanding on Intelligence Cooperation. This framework is underpinned by strategic
dialogue including Ministerial talks, the Chief of the Defence Force-led High Level Committee, and the
Indonesia-Australia Defence Strategic Dialogue. But if faced with challenges to the relationship, either
party could easily disengage, as has happened in the past.
Australia needs to advocate for the best possible relationship, but also plan for the worst. Due to
democratisation, Indonesia’s policymaking process is now subject to increased influence by a wide
range of interest groups throughout the country. This process makes the relationship far more
challenging to manage compared to an Indonesia under authoritarian rule, where domestic and
foreign policy remained separate from wider public participation. Australia’s policymakers and
defence planners need to remember that the relationship will always risk being crisis-prone and
volatile. Crises and tensions will not be solved by purely diplomatic means over the coming decades.
Indonesia will eventually be able to escalate through the credible threat of force and this threat will
need to be deterred by Australia.
AUSTRALIA’S LOSING ADVANTAGE
Technological superiority and capability over its neighbours has remained the cornerstone of
Australia’s defence policy since the late 1980s. Australia has managed to remain technologically and
operationally superior compared to Indonesia due to its close relationship with the US. This
relationship has allowed unprecedented access to state-of-the-art military and intelligence
capabilities, albeit at a significant cost. But Australia’s technological superiority will increasingly
become less of a factor as Indonesia modernises its much larger military.
A rising Indonesia will also become more important to US interests over the next few decades
because of: Indonesia’s strategic location adjacent to important sea lines of communication; its
proximity to the South China Sea; its growing consumer economy; its abundance of natural resources;
and its leadership role in the Association of Southeast Asian Nations. Together these factors will
continue to make Indonesia the significant player in Southeast Asia. The US will have to constantly
maintain or increase its relationship with Indonesia as its primacy in the Asia-Pacific is challenged by
China. The Sino-Indonesia relationship has recently been boosted by the Jokowi administration’s
proactive efforts developing strong links in defence and economic sectors on the back of the
Sino-Indonesia comprehensive strategic partnership.
A stronger Jakarta-Beijing economic-axis will put increased pressure on the US to avoid supporting
Australia’s interests over Indonesia’s in the region, as it could push Indonesia further towards China’s
growing influence. The US is unlikely to intervene over the next 20 years due to the growing
importance of Indonesia to its own interests. As Indonesia will be the only major power facing
Australia in its primary operating environment, Australia needs to be able protect its interests
independently of its allies.
Indonesia’s recent defence modernisation has seen its acquisitions diversified between several Asian
and Western suppliers in line with its long-term goal of an ‘independent and active’ (bebas aktif)
foreign policy. Indonesia will be able to avoid reliance on any one defence supplier to achieve its
modernisation ambitions. The 2012 Defence Industry Law was designed to make Indonesia more
self-reliant by requiring offset provisions for foreign procured defence technology through local
production arrangements. Indonesia aims to minimise the strategic risks of potential arms embargoes
and supply chain vulnerabilities by foreign defence suppliers. Punitive actions such as the
enforcement of defence export embargoes by Western suppliers to modify Indonesia’s strategic
behaviour towards its neighbours will no longer carry the same weight.
POLICY IMPLICATIONS
Indonesia will forever be Australia’s gatekeeper to Asia – Australia’s most important sea and air
routes go through and over Indonesia – and this will continue to grow in significance as Australia’s
economic prosperity is underpinned by trade with Asia’s growing economies. Increasing the bilateral
relationship through trade and security cooperation have proven to reduce strategic tension.
Economic interdependence and non-traditional security assistance, however, will become less
effective mechanisms as Indonesia rises economically and militarily, independently of its neighbours.
Australia needs to avoid living dangerously by only advocating and planning for the best possible
relationship in defence policy. Indonesia has proven willing to risk bilateral relationships over
domestic policy issues, and its perception of territorial integrity continues to be the primary concern
influencing its strategic and defence policy – both conditions are applicable to Indonesia’s perception
of Australia. Current bilateral mechanisms have done little to mitigate these developments, and a
rising Indonesia will force Australia to accept the enduring reality that dealing with Indonesia
independently of its allies will remain Australia’s most significant strategic challenge going forward.
The rise of Indonesia deserves more attention than the lucrative China choice debate. Australia has
no choice when it comes to the challenge of a rising Indonesia.
Bradley Wood is a Master of Strategic Studies student at the Strategic and Defence Studies Centre in
the ANU Coral Bell School of Asia Pacific Affairs. He tweets @bradleywoodAU and his main research
interest focuses on Indonesia. His previous work can be found on his Academia profile.
Source (PDF) : www.regionalsecurity.org.au/resources/Files/20162211Wood.pdf
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