Indonesia’s“Confidence”Diplomacy under the Yudhoyono Government

Jiang Zhida

Since Yudhoyono Bambang Yudhoyono took office as president in 2004, Indonesia has gradually emerged from the shadows of the collapse of Suharto regime, as well as the economic and financial crisis. Its economy has now maintained a high growth rate for years, and its social and political situation has altogether remained stable. Given these circumstances, Indonesia has put forward“confidence”diplomacy, and it has become active in the regional and international arenas, in pursuit of reestablishing its great power status in the Southeast Asia.

I. Practice of Indonesia’s“Confidence”Diplomacy

Since Yudhoyono assumed office as president,“confidence”diplomacy has mainly manifested itself in the following four areas:

1. Strengthening its role in ASEAN affairs

The successive Indonesian governments in the post-Suharto era have been committed to strengthen relations with ASEAN in order to raise the country’s regional influence.

First, Indonesia is actively leading the building of the ASEAN Community. At the 36th ASEAN Ministerial Meeting held in Cambodia in June 2003, Indonesia proposed building an Economic, Security, Social and Cultural Community by 2020,which was approved in the 9th ASEAN Summit in October 2003.Pushed by the Yudhoyono government, in November 2007,the 13th ASEAN Summit approved the ASEAN Charter, which clearly defines the strategic objectives of ASEAN Community,and adopted the AEC Blueprint, which will translate ASEAN into a single, unified market.

Second, Indonesia is enhancing relations with neighboring countries. There are ongoing territorial dispute in the Sulawesi Sea between Indonesia and Malaysia, and they have been involved in conflicts many times. In 2010, Indonesia and Malaysia set up a joint working group, holding foreign ministerlevel talks to expedite the settlement of maritime borders. In September of the same year, the two sides, at a joint commission for bilateral cooperation, stressed that the jurisdiction disputes between the two countries in the southern Strait of Malacca, the Singapore Strait and part of Sulawesi Sea should be resolved through diplomatic channels. Indonesia has maritime boundary disputes with Singapore, and in 2005 the two sides launched negotiations on extending the maritime boundary line. They reached agreement in 2009 on the demarcation line of the western waters. In 2010, Indonesia and Singapore exchanged instruments of ratification on the maritime boundary line in the West Singapore Straits. Through the efforts of President Yudhoyono, Indonesia has properly handled its maritime disputes with Malaysia and Singapore. Since 2004, the three counties have been carrying out joint patrols in protection of transportation security. In addition, Indonesia is also strengthening cooperation with neighboring countries in the field of anti-terrorism. Indonesia’s bilateral relations with its neighbors through the above ini-tiatives have improved, and their political mutual trust has been strengthened.

Third, Indonesia has helped mediate internal conflicts within ASEAN. In February 2011, boundary dispute between Thailand and Cambodia escalated and finally resulted in the most severe conflict between ASEAN member states since the founding of ASEAN, causing anxiety among other ASEAN member states.Indonesia soon mediated between the two disputing sides,dispatching observers to supervise the ceasefire, urged the two sides to peacefully resolve the dispute through negotiations, and eased the conflict finally. In July 2012, the 45th ASEAN Foreign Ministers Meeting held in Phnom Penh failed to publish the Joint Communiqué for the first time in the history of ASEAN due to diverging opinions on the South China Sea issue. President Yudhoyono directed foreign minister Marty Natalegawa to immediately engage in mediation diplomacy. Marty embarked on a 36-hour“shuttle diplomacy tour”to the Philippines, Vietnam,Cambodia, Malaysia and Singapore, and preserved the solidarity of ASEAN by coordinating ASEAN members to publish a joint declaration that did not involve the sensitive issue.

Fourth, Indonesia is playing a constructive role in the South China Sea issue. Indonesia has always safeguarded the peace and stability of the South China Sea and larger Asia Pacific region, supported China’s position of resolving South China Sea disputes through bilateral channels, while ASEAN member countries also anticipate that Indonesia will play a constructive role in the issue. Indonesia pushed the China-ASEAN Foreign Minister Meeting in July 2011 to reach consensus on the guidelines to implement the Declaration on the Conduct of Parties in South China Sea (DOC). On the sidelines of the 45th UN Assembly in September 2012, Indonesia circulated the selfdrafted Code of Conduct in the South China Sea (COC) among ASEAN member countries.

2. Enhancing relations with great powers

Due to its unique geographic location and state-governing tradition, Indonesia attaches great importance to developing relations with all major powers, maximizing its interests by maintaining neutral positions.

In 2005, President Yudhoyono and the visiting Chinese president Hu Jintao signed a joint statement declaring that the two countries would establish a strategic partnership.Since then, the bilateral relations become been engaged in fullswing, rapid and healthy development. High-level exchanges are increasing, and the political mutual trust is deepening. In the economic field, bilateral trade volume has witnessed an annual growth rate of over 10%, with the bilateral trade value in 2011 surpassing US$60billion. China is Indonesia’s largest source of imports, excepting oil and gas products, and its second largest export market and trading partner. China takes an active role in infrastructure construction in Indonesia, and it has increased its investment in Indonesia. Moreover, the two countries conducted close cooperation in advancing the China-ASEAN relations and in addressing the international financial crisis.

Indonesia-U.S. international relations were frustrated by the U.S. Congress’accusation that Indonesia was violating human rights in Timor-Leste and other regions. In the wake of the 9/11 incident, the bilateral relations improved rapidly, mostly because of Indonesia’s assistance to the U.S. in their fight against terrorist forces. Bilateral relations saw further development after Yudhoyono assumed office in 2004. Yudhoyono proposed to establish a comprehensive cooperative partnership between the two countries when he visited the United States in 2008, which was warmly received by the Americans. In November 2010, the two sides signed the comprehensive partnership agreement during President Obama’s visit to Indonesia, consolidating cooperation in the economy, trade, education, military, climate change and democratization areas.

In November 2005, during his state visit to India, President Yudhoyono signed the joint declaration on establishing an Indonesian-Indian strategic partnership together with Indian Prime Minister Manmohan Singh. In January 2011, Yudhoyono paid a second state visit to India with an entourage of 10 government ministers and 140 entrepreneurs. Both countries signed US$15 billion deals on investment and trade, as well as over 30 cooperative agreements.

The Yudhoyono government has also established partnerships with Australia, the United Kingdom, Japan, France and Germany.The country’s great power diplomacy has gained more flexibility for Indonesian diplomacy, providing more opportunities for Indonesia to play a bigger role on the international stage.

3. Carrying out multilateral diplomacy

Indonesia has regained confidence on the international stage and is engaging actively in multilateral diplomacy as a result of the enhancement of its comprehensive strength. Indonesia is the sole ASEAN member in the G20, through which Indonesia participates actively in the reforms of international economic governance institutions, pushing the international political and economic order to move in a more just and reasonable direction. In the G20 London Summit and Pittsburg Summit held in 2009, President Yudhoyono put forward a number of proposals, including reforming the existing international financial institutions, stressing the recovery of the global economic balance, raising the economic growth rate, improving the economic, trade and investment environment, and advancing sustainable economic development. He demanded that developed countries open up markets (especially the agricultural market)to developing countries, increase technological transfers and direct investment. At the same time, he also called for the developing countries to fight corruption, establish better government, and increase education input to create a favorable environment for overseas investment.

Indonesia is taking an active part in the global governance and is playing a positive role in climate change, sustainable development, disaster relief, peacekeeping and other major international issues. Indonesia wishes to play a leadership role in the global effort to address climate change. In December 2007, more than 11,000 people attended the 13th Conference of the 192 Parties to the United Nations Framework Convention on Climate Change (UNFCCC) and the third meeting of the 176 Parties to the Kyoto Protocol, making it the largest UN climate change meeting ever held. The conference finally adopted a resolution known as the“Bali Roadmap.”As the host and president of the conference, Indonesian President Yudhoyono urged more“synergic action”to best implement the concept of“common but differentiated responsibilities”in addressing climate change. Indonesia is the most vulnerable country to tsunamis, earthquakes, volcanic eruptions, floods, landslides,droughts and forest fires, and President Yudhoyono called on the international community to strengthen cooperation on disaster mitigation and relief. Yudhoyono also pushed forward the establishment of an ASEAN Coordinating Center for Humanitarian Assistance on Disaster Management, in order to coordinate the cooperation in disaster rescue.

4. Shaping the national image of“democracy, pluralism and peace”

To turn Indonesia into a great power, President Yudhoyono has attached great importance to the cultivation of soft power while elevating the country’s hard power, such as its economic strength. Promoting Indonesia’s national image of“democracy,pluralism and peace”is an important part in the building of Indonesia’s soft power influence, and it is regarded as Indonesia’s strategic interest.

Under the initiative of President Yudhoyono, the first Bali Democracy Forum was held in 2008, which was designed to transform ASEAN with democratic principles and provide useful experiences for other countries in their democratization process. Ten ASEAN member countries as well as other Asian countries participated in the forum, while the United States, Canada and other Western countries were invited to attend as observers. From the beginning,the Bali Democracy Forum has been open to all Asian countries,rather than being an exclusive forum only open to democratic nations. The purpose of the forum is to share experiences and practices of democratic development, and to promote the regional and international cooperation in the field of peace and democracy.Thus far, the Bali Democracy Forum has been held for five consecutive years. It is getting more and more influential in the world, earning praises from Asian countries including China and Western countries including the United States.

Indonesia has actively participated in UN peacekeeping missions with the aim of building an image as a peacemaker in the world. In 2008, a second batch of Indonesia’s mechanical infantry battalion arrived in southern Lebanon; a small contingency executed a mission in Congo; and an Indonesian police force contingency was sent to Darfur to help provide services.Indonesia therefore became the largest contributor in Southeast Asia to UN peacekeeping missions. When meeting with the visiting UN Secretary General Ban Ki-moon on March 20, 2012,President Yudhoyono declared that Indonesia will dispatch up to 10,000 soldiers to carry out overseas peacekeeping missions,making Indonesia one of top ten peacekeeping contributors in the world.

II. Background of“Confidence”Diplomacy

The goal of the Yudhoyono government’s“confidence”diplo-macy is to get ride of the shadows cast by the economic crisis and carry out diplomatic work as a major power. The implementation of“confidence”diplomacy has its respective domestic and international foundations.

1. Sustained and rapid growth of the Indonesian economy lays material foundation for“confidence”diplomacy.

In July 1997, the Asian financial crisis swept across Southeast Asia. Under the impact of the financial crisis, the Indonesian economy was hit especially hard. In 1998, a large amount of foreign funds were withdrawn from Indonesia, and the Rupiah was devalued by roughly 80%. In 1998, the inflation rate in Indonesia was over 40%, the unemployed population surpassed 15 million, foreign debt increased to US$136.1 billion, and the national economy contracted by 14%. In 2002, the Indonesian economy began to recover. After Yudhoyono took office as president in 2004, the Indonesian economy began to develop on a faster track: Indonesia’s average annual economic growth rate increased to more than 6%. In 2011, Indonesia’s economic growth rate decreased in the face of the U.S. economic downturn and the European debt crisis, but it still achieved a growth rate of 6.5%, and its GDP reached US$820 billion, with per capita income jumping to US$3,716. The total import and export value in 2011 reached US$380.92 billion, while the export value was US$203.62 billion, up 29.05% from the previous year, exceeding the government target of US$200 billion; the trade surplus was US$26.32 billion, and the national foreign reserve sum was US$110.1 billion. In terms of overall economic strength, Indonesia is the largest economy in ASEAN and the sixteenth largest economy in the world. According to OECD forecasts, in the next five years (2012-2016), Indonesia will be the fastest growing economy in ASEAN, with an average annual growth rate of 6.6%. Indonesia’s growing economic might is providing important support for the country’s diplomacy. In the course of ASEAN integration, the role of Indonesia as the largest member state has become increasingly conspicuous.In global governance mechanisms such as the G20, Indonesia also voices its unique views. In June 2012, to jointly overcome current economic difficulties, Indonesia agreed to provide a US$1 billion loan to the IMF when the latter’s liquidity was weak, a move that demonstrates Indonesia’s profile as a regional power and testifies to Indonesia’s growing economic strength.

2. The success in Indonesia’s democratic transformation provides political foundation for“confidence”diplomacy.

The Asian financial crisis caused the fall of the Suharto regime that had ruled Indonesia for more than 30 years. Indonesia was forced to endure a painful transitional period. In the past dozen of years, Indonesia has taken great strides in its democratic transformation. It has undertaken profound reforms in the areas of politics, society, law and the economy; established effective mechanisms on mutual supervision and balance between legislature, administration and judiciary; protecting freedom of press and independence of public opinion; abolished discriminatory laws and passing new the Law on Citizenship(2006) and the Elimination of Racial and Ethnic Discrimination(2008); and taken revolutionary reforms in election system, the professionalization of the military, self-rule of locality. Without producing great social turbulences, Indonesia’s democratic transformation has been successful on the whole.

“Free Aceh Movement”has long been an issue perplexing Indonesia’s domestic politics and diplomacy. After assuming office, President Yudhoyono viewed the settlement of the Ache issue as the top priority of his administration. In 2004, Aceh was heavily hit by the Indian Ocean tsunami, and President Yudhoyono adopted a mollification policy by sparing no efforts in disaster relief and the rebuilding of Aceh after the disaster.The two sides made substantial compromises and finally signed a peace agreement in Helsinki, Finland in August 2005. In 2006, the Indonesian Congress approved the Aceh self-rule law,endowing Aceh local government with more rights to self-rule,thus putting an end to the division of the nation and realizing peace.

The al-Qaida affiliated group“Jemaah Islamiyah”has orchestrated several terrorist attacks in Indonesia. When he took power in 2004, President Yudhoyono vowed to eliminate terrorism. In addition to launching international cooperation efforts, his government improved the law provisions on counterterrorism and formed a special police force to accelerate the pace of anti-terrorism policies. After years of fighting against terrorism, even though the terrorist shadows have not been removed completely, the terrorist network of“Jemaah Islamiyah”has been destroyed, and terrorist threats have been reduced substantially. Indonesia’s social order was restored,and Indonesian politics have been more stable than any time since the Suharto regime was overthrown.

3. The rising importance of Southeast Asia in Asia Pacific lays the regional foundation for“confidence”diplomacy.

With the advance of the regional integration process, Southeast Asia has become one of the fastest growing markets in the world.In Southeast Asia, there are some countries experiencing rapid developing economy, for example, Indonesia, the Philippines and Vietnam, which collectively have been praised as“Next-11.”In the past six years from 2004-2010, the aggregate GDP of ASEAN countries increased from US$715 billion to US$1.8 trillion, and the total trade volume surpassed US$1.44 trillion.Former U.S. Ambassador to Indonesia Paul Wolfowitz said at a U.S. Congressional hearing:“The strategic significance of Southeast Asia is changing and increasing… Southeast Asia is an important part of the Asia-Pacific region, and the increasing strategic significance of Southeast Asia comes from the soaring development of the economy of Asia Pacific.”

After 9/11, the United States deemed the“New Crescent,”ranging from the Philippines, Indonesia, Singapore, Malaysia and Thailand to Myanmar, as having been penetrated by terrorism, thus posing grave challenge to the regional security.The United States attaches increasing importance to the antiterror fight in Southeast Asia. After Obama assumed office, the United States began to focus more attention on the Asia-pacific region, especially Southeast Asia.

Southeast Asia centers around one of the most busy maritime traffic lines in the world: the East-West traffic line connects the Indian and the Pacific Oceans, and the South-North traffic line connects Australia, New Zealand and Northeast Asia. The two traffic lines are both economic lifelines through which China,Japan and Korea import crucial oil and other natural resources and export manufactured goods to the rest of the world. Almost all the shipping from the Middle East to the Pacific region must go through the Malacca, Sunda and Lombok-Makassar Straits.

By virtue of its important geographical location and the fact that it is the largest country in ASEAN in terms of population and economy, Indonesia is increasingly becoming the target of competition with great powers, which offers favorable conditions for Indonesia to implement its“confidence”diplomacy.

III.Restraints of Indonesia’s“Confidence”Diplomacy

The Indonesian government has accomplished extraordinary achievements since it began carrying out“confidence”diplomacy. However, it should not be ignored that Indonesia is still facing many problems and challenges - some which are structural in nature. If not properly addressed, these problems and challenges could severely affect and restrain the implementation of Indonesia’s“confidence”diplomacy.

1. Economic development still faces many bottlenecks.

First, Indonesia’s progress in industrialization is so limited and the economic structure has not yet been transformed.As Asia Weekly pointed out, in recent years the Indonesian economy’s high growth rate was obtained by attracting investments, obtaining foreign loans, consumption and the export of natural resources such as oil, gas, minerals and different vegetations. Other economic measures, such as government input in public affairs and investment in high-tech industries, have failed to become the main tools to boost the economy. The truth is that Indonesia has failed to improve its economic structure or achieve industrial modernization, and at the same time economic development cannot effectively reduce the population currently in poverty. Most of the accumulated wealth flows to the few rich consortiums and the high-income population. Economic prosperity is confined to some large cities like Jakarta and Surabaya, but the economy has grown very slowly in most small and medium-sized cities and villages. As a consequence of its long-term reliance on the export of natural resources and raw materials, Indonesia lacks competitiveness in industry, especially the service industry. According to the latest international competitiveness rankings released by the World Economic Forum, Indonesia ranks 46th among the 142 countries, far behind Singapore (2nd place) and Malaysia (21st place). Due to its low level of industrialization and its relative weakness in competitiveness, the forces against free trade in Indonesia have always remained strong. At present, Indonesia has only signed one bilateral FTA - the Indonesia-Japan Economic Partnership Agreement, while all other FTAs are under the framework of ASEAN. Indonesia is the only country clearly expressing that it will not participate in the TPP negotiation temporarily, negotiations that are vigorously advocated by the United States. In the view of World Bank economist William Wallace, despite the high growth rate of Indonesian economy,poverty, weak infrastructure, a worsening environment and systemic defects have all hindered Indonesia’s ability to give full play to the potential of its economic development. Indonesia will find it difficult to pursue“confidence”diplomacy if its economy lacks momentum.

2. Domestic politics causes trouble for“confidence”diplomacy.

Corruption in Indonesia is deeply rooted. As early as in the Suharto era, Indonesia was famous around the world for the grave state of its corruption. Corruption and the resulted imbalance between the rich and poor destroyed the basis for the sustained development of the Indonesian economy,and corruption was not basically eliminated when Habibie,Wahid and Megawati were in power. Although the Yudhoyono government committed to crack down on corruption in a heavy-handed manner, the problem has not been addressed on a fundamental level. In the past, corruption cases mostly erupted in governmental and enforcement agencies, but at present, more and more corruption cases have occurred within the Congressional system. Corruption is prevalent in all state organs, including the legislature, administration and judiciary. Several ministers in the Yudhoyono government and senior officials of Yudhoyono’s political party - the Democrat Party - were involved in corruption scandals, which gave rise to the landslide dip in popularity, causing great damage to Yudhoyono’s prestige. The numerous corruption cases have not only led to the declining credit of Indonesian government, but also shaken the public’s faith in democracy.

Ethnic and religious conflicts are intensifying in some areas of Indonesia. According to statistics compiled by the Wahid Institute of Indonesia, religious intolerance, including violent threats, acts of arson and religious discrimination increased by 16% from 2010 to 2011. In July 2012, a series of violent attacks were launched by a group of Aceh extremists and unidentified gangsters against many of the countries Christian groups.

The corruption and religious conflicts have severely harmed Indonesia’s national image, undermining its ability to develop soft power. Democratization also makes Indonesia’s efforts to seek stable and sustained foreign policy more and more difficult,largely because the Congress and public opinion are playing increasing roles, making the process of foreign policy decisionmaking increasingly complicated.

3. Challenges from other ASEAN members.

Indonesia was once the political center of ASEAN. But it lost this position in the wake of the Asian financial crisis in 1997,as the crisis ruined its economic and financial sectors and domestic stability. Without proper leadership, it was difficult for ASEAN to survive the crisis. In July 2007, the ASEAN Foreign Ministers Meeting decided to establish the“troika”mechanism- formed by last, present and next presidencies of ASEAN -to handle all imperative issues. However, this mechanism is difficult to manage, despite the good purpose of ASEAN. On the surface, ASEAN is under a collective leadership structure,but in fact it is void of leadership. With geopolitical changes and regional economic development, ASEAN countries are in the process of a strategic reshuffle. In addition, Indonesia,Malaysia, Thailand, the Philippines, Vietnam and Singapore are all striving for the leadership position and play a bigger role in ASEAN. Indonesia is the largest country in ASEAN in terms of population, land size and economic scale, but its economy is less advanced and its economic mode is less competitive when compared to other ASEAN powers. As such, there exists strong economic nationalism in Indonesia. To be a leading country, it should shoulder the cost of regional cooperation and provide public goods in the region, which is quite beyond the capacity of Indonesia at the present time. In the view of Singapore, ASEAN needs a guide in the process of economic development, especially economic integration, and only Singapore is entitled to act as this guide, so Singapore defines its role as the low-profile leader of ASEAN. The Philippines and Vietnam have frequently stirred troubles in the South China Sea in recent years, disclosing their ambitions to kidnap ASEAN and dominate ASEAN affairs.As a result, to become a regional power, Indonesia will face challenges from other ASEAN powers and must balance the power of other regional countries.

4. The uncertainties of balance of power

On its course to a great power position, Indonesia needs the support of the Southeast Asian countries, as well the great powers outside the region. Indonesia intends to realize its national interests and maintain regional peace and stability while obtaining a regional leadership position by carrying out functional cooperation with great powers and keeping a dynamic balance among them. But this may be a case of Indonesia’s wishful thinking. Since its forceful return to the Asia-Pacific region, the United States has attended the East Asia Summit as a formal member. The United States intended to make the East Asia Summit a forum to discuss security issues, thus destroying the pleasant atmosphere of the East Asian cooperation. Economically, the TPP initiative will give rise to competing regional cooperation mechanisms in East Asia. It will weaken the cohesion and solidarity of ASEAN, impacting the dominant position of ASEAN in East Asian cooperation.Yang Razali Kassim, Senior Fellow at the S. Rajaratnam School of International Studies (RSIS) of the Nanyang Technological University of Singapore, said that the more closely ASEAN members cooperate, the more rapidly ASEAN grows, the more prominent the importance of Indonesia in ASEAN will be.Indonesia is now on course to develop into a regional power,and it is all the more necessary for Indonesia to take advantage of ASEAN’s overall strength to protect its peaceful development.Therefore, the Yudhoyono government should focus on how to handle ASEAN centrality and develop ties with extra-regional great powers, how to speed up economic development and achieve great power status while leading the building of the ASEAN Community and maintaining the leadership role of ASEAN in East Asian cooperation.

IV. Conclusion

Since Yudhoyono assumed office as president in 2004, especially during his second term, Indonesia has pursued“confidence”diplomacy with the objective of reshaping its international image and obtaining big-power status. After several years of practice, Indonesia’s“confidence”diplomacy has achieved huge successes. Indonesia’s role on regional and international arenas is acknowledged and its international position has been greatly enhanced. However, the development of the Indonesian economy is faced with many bottlenecks, and its domestic politics are in the process of a transformation that has revealed many defects. These factors have restrained the Indonesian economy’s capability for long-term growth, affected the stability of domestic politics, and have also impacted the implementation of Yudhoyono’s“confidence”diplomacy. In general, the Indonesian government is still faced with the arduous task of readjusting its economic structure and consolidating the fruit of its democratic transformation. There are uncertainties ahead for Indonesia’s national development.