World Politics Review

January 27, 2009

U.S.-Indonesia Comprehensive Partnership: Will It Work?

Fabio Scarpello

DENPASAR, Indonesia -- Under the leadership of President Susilo Bambang Yudhoyono, U.S.-Indonesia ties have progressively strengthened since he first took office in 2004. Yudhoyono earned a masters degree in the U.S. and has never hidden his liking for the States. So it came as no surprise when, in November 2008, the former general-turned- president called for a U.S.-Indonesia strategic partnership, later renamed a comprehensive partnership.

The move was in turn welcomed by U.S. President Barack Obama, who himself is sentimentally attached to the archipelagic nation where he spent a part of his childhood. Soon after Obama's inauguration, U.S. Secretary of State Hillary Clinton stated the administration's commitment to work toward such a partnership, guided by a concrete agenda.

While the two leaders share a mutual fondness for each other's country, the partnership itself is based on rational foreign policy objectives, and is designed to frame U.S.-Indonesia bilateral relations for the next decade. As such, it is meant to cover issues of importance to both nations -- including educational exchanges, trade and investment cooperation, climate change policy, food security and non-traditional security issues, such as the fight against terrorism, trans-national drug syndicates and people smuggling, among others.

For Indonesia, the partnership is part of a broader initiative that has seen the country inking similar agreements with the major regional powers -- China, India, South Korea and Japan -- as well as with the European Union. It is also an attempt to move the bilateral agenda beyond the limited security issues that dominated Jakarta-Washington relations during the Bush administration.

For the U.S., on the other hand, closer ties with Indonesia, the world's largest majority-Muslim country and a key player in Southeast Asia, fit perfectly with Obama's outstretched hand towards the Islamic world as well as his administration's attempt to regain some of the terrain the U.S. has lost to China in the region over the last few years.

Southeast Asia figures prominently in some of Washington's global preoccupations, including transnational crime, energy and food security, and climate change. It is therefore likely that Washington also sees the partnership with Indonesia as a means to channel its concerns, and desired solutions, for the region.

However, although the rationale to seal the deal is strong and the partnership is expected to be inked when Obama travels to Indonesia sometime during 2010, questions remain about whether it will have any real effect on the ground.

A key problem is Indonesia's capacity to follow up on agreements, which was recently highlighted once more by the desire, among some in Jakarta, to reassess the China-ASEAN Free Trade Agreement, on the basis that it could negatively impact the country's manufacturing sector.

The trade deal, which took effect on Jan. 1, will scrap import duties on thousands of Chinese products, a fact that has led Indonesian industry groups to call for parts of the deal to be renegotiated. The Ministry of Industry initially submitted a letter to the coordinating economic minister in late December 2009 to request that scheduled tariff reductions on 146 products be delayed by one year.

This weekend, Trade Minister Mari Elka Pangestu ultimately declared that Indonesia would not seek to postpone the deal's implementation. Still, the China-ASEAN deal was signed in 2005, after years of negotiations and Jakarta's preliminary studies have shown a lack of depth that should also serve as a warning signal for Washington.

Another question mark is the level of participation of the various Indonesian and American constituencies targeted by the agreement. Obama and Yudhoyono will sign the partnership, but for it to have an impact, it needs the support, supervision and enthusiasm of large segments of the two countries' civil societies and political establishments.

Currently, Indonesia remains off the radar for U.S. civil society, while the U.S. Congress remains wary, due to sensitive issues such as Indonesia's efforts to reform its abuse-tainted army, the Tentara Nasional Indonesia (TNI).

In Indonesia, on the other hand, public opinion regarding the U.S. is split, with the Obama effect mitigating, but not eliminating, the reservations of those who see America as a neoliberal, imperialistic power. This segment of society, which partly coincides with radical Islamic groups, is very active and has a noticeable influence on the political discourse.

Some Indonesian lawmakers as well as senior members of the TNI also remain guarded about the U.S., who they accuse of being a volatile partner. The description refers mostly to Washington's decision to impose a ban on military-to-military relations after the TNI and its militias went on a rampage in the aftermath of East Timor's 1999 vote for independence.

Under the Bush administration, the U.S. lifted restrictions limiting military training and financing as well as weapons sales. But other restrictions remain, particularly regarding U.S. training of Kopassus, the notorious Indonesian special forces.

Moreover, while there seems to be a good chance of improving education- related exchanges -- currently at a historic low, according to the Unites States-Indonesia Society -- it is debatable whether the partnership will lead to any increase in bilateral trade and U.S. investment in Indonesia.

With regards to the latter, U.S. firms have traditionally been interested in Indonesia's natural resources, but that enthusiasm has lately been dampened by Jakarta's nationalistic approach. Despite Yudhoyono's commitment to an open economy, in fact, Indonesia remains cautious in matters of foreign ownership.

More broadly, U.S. investors have often been put off by Indonesia's high level of corruption, red tape and lack of infrastructure. The comprehensive partnership envisages U.S. support for Indonesia's drive towards good governance, but analysts agree that this is mostly an internal battle that must be fought by Jakarta, and which needs time to be won.

In the end, while most observers agree that the partnership is a step in the right direction, few are ready to celebrate it just yet.

Fabio Scarpello is the Southeast Asia correspondent for the Italian news agency Adnkronos International. He is based in Denpasar, Indonesia.

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