Indonesia’s Inward Turn
The country’s focus on domestic priorities is a loss for ASEAN and the world.
The profile of the Association of Southeast Asian Nations (ASEAN) profile has risen dramatically over the past decade, including in the Washington, D.C. foreign policy community. Once derided as a talk shop, U.S. policymakers have now generally accepted the importance of keeping ASEAN at the center of regional affairs, and senior administration officials spend vast amounts of time at ASEAN meetings. While it is unlikely President-elect Donald Trump will follow in President Barack Obama’s footsteps with as much presidential-level engagement with ASEAN, robust cabinet and sub-cabinet level interaction has been institutionalized and will continue under the Trump administration.
ASEAN’s newfound prominence and centrality has also exposed its weaknesses in dramatic fashion, particularly its consensus-based decision-making processes. Cambodia’s willingness to protect Chinese interests has made ASEAN unable to tackle the region’s most vexing challenge – the South China Sea dispute. Looking ahead to the Philippines’ 2017 chairmanship under the combustible President Rodrigo Duterte, ASEAN’s relevance to solving regional problems appears to be increasingly bleak.
Although these dynamics have all been widely reported, a recent visit we made to Jakarta drove home another major challenge for ASEAN in the near term that has received comparatively little scrutiny: that Indonesian President Joko “Jokowi” Widodo cares little about foreign policy and, when he does, ASEAN is an afterthought. As a result, under Jokowi’s watch, Indonesia has retreated from its traditional leadership role in ASEAN, leaving the bloc leaderless and fragile.
This is not to say that Jokowi is an ineffective leader or has the wrong priorities for his country. Just over two years into his five-year term as president, Jokowi’s approval rating stands at 66.5 percent, he sits comfortably atop a broad coalition of political parties, and the economy is showing signs of life. This is a stark contrast to what many feared when he entered office – a political neophyte entering a lion’s den of personalities and entrenched interests, with a deposed opponent threatening impeachment and a scorched earth campaign to oppose his presidency.
Jokowi has also demonstrated a strong commitment to achieving more equitable economic growth for the people of Indonesia, including infrastructure initiatives that prioritize integrating the relatively poor eastern part of the country with the more prosperous western islands of Java and Sumatra. Energy projects in eastern Indonesia are also a priority. For instance, in October, Jokowi inaugurated six electricity projects in Papua and West Papua, regions often neglected in the past. At the micro-level, a major accomplishment early in his administration was to scrap inefficient fuel subsidies to instead subsidize health care and education.
However, these sensible domestic priorities have also impacted Indonesian foreign policy, making it both bigger and smaller at the same time. On the one hand, Jokowi has elevated relations with major non-ASEAN powers such as China and Japan. But, on the other hand, its foreign policy objectives have become quite narrow – essentially, foreign policy must provide immediate economic gains to Indonesia. This tendency manifests itself in prioritizing ties with wealthy non-ASEAN powers, which are seen as potential sources of foreign direct investment, particularly in infrastructure and manufacturing. This approach appears to be achieving its objectives. For instance, Jokowi’s five meetings in two years with Chinese President Xi Jinping have coincided with a doubling of Chinese investment in Indonesia.
With this intense focus on economic diplomacy, ASEAN has receded in importance. Even rhetorically, once the centerpiece of foreign policy under former Indonesian President Yudhoyono, ASEAN has been demoted to one policy cornerstone among many.
More broadly, while Yudhoyono was an evangelist for Indonesian soft power, boldly promoting lessons from Indonesia’s democratic reforms since 1998, Jokowi has done little to burnish Indonesia’s credentials on the world stage. He frequently skips global summits – most recently, the UN General Assembly and Lima APEC summit this year. Parliament agrees: Fadli Zon, Indonesian House of Representatives deputy speaker, described Jokowi’s foreign policy record as “lower profile” compared to Yudhoyono’s.
As foreign policy has become focused on delivering economic gains, defense policy has also increasingly been used as a way to achieve domestic goals. While the Indonesian military (TNI) became more focused on international security missions under Yudhoyono, who saw the TNI as a tool to burnish Indonesia’s internationalist credentials, the TNI now is rapidly turning inward, aided and abetted by Jokowi.
Today, rather than international peacekeeping or disaster response, top priorities are domestic counterterrorism (despite this nominally being the National Police’s job) and domestic infrastructure building and agriculture. As resources are redirected toward these priorities, which are overseen by the Army, they are effectively siphoned away from modernizing naval and air forces — despite the fact that it is these two military branches that Indonesia would most need to protect its vast archipelago. Although defense officials refer to Jokowi’s Global Maritime Fulcrum (GMF) as the defining strategy for Indonesia’s military, the GMF is again primarily a domestic policy initiative, focused on developing Indonesia’s blue economy, including enhancing port infrastructure and connectivity.
International defense diplomacy has also been highly correlated with domestic priorities, particularly the development of an indigenous defense industrial base. On our recent visit, a cabinet member told us concisely that in defense, “relationships are transactional, not political.” Such is the case of a burgeoning defense relationship with South Korea — a partner willing to transfer technology at mid-range prices.
Indonesia’s foreign policy drift should be worrying for anyone concerned with the relevance of ASEAN, including U.S. policymakers. ASEAN is a more effective entity when Indonesia is actively engaged and the region is more stable when ASEAN drives the agenda for the region – rather than the potentially dominant powers. But ASEAN needs a strong leader to take initiative and break stalemates in order to remain relevant – and only Indonesia has the heft to fill this role. Beyond ASEAN, the world also is a dimmer place when democratic, pluralist Indonesia punches below its weight. Unfortunately, this is likely to be the Indonesia we continue to see under Jokowi as he intensely focuses on domestic priorities. ASEAN – and the world – will suffer as a result.
http://thediplomat.com/2016/12/indonesias-inward-turn/
Churchill Mining's $1bn claim against Indonesia struck off
A tribunal has struck out a claim by Churchill Mining for damages after Indonesia’s government revoked its licence for a coal project.
The AIM-listed miner said it was “extremely disappointed” by the decision by a tribunal from the International Centre for Settlement of Investment Disputes that ruled that the Indonesian government could dismiss its claims over the Kutai coal project in East Kalimantan, after its licenses were taken away.
The tribunal said that the 34 documents that the company presented were not authentic and the forger of the documents was “most likely a person or persons acting for or on behalf of Churchill's Indonesian partner, the Ridlatama group, in collusion with a person inside the East Kutai Regency”.
However, it also found that neither the company, nor any of its officers, had been involved in any forgery.
It also said the company’s due diligence assessments at the time of acquiring the licenses were “insufficient”.
The tribunal dismissed the company’s claim for $1bn compensation and ordered it to pay $9.45m for costs and arbitration fees. The company said the suspension of shares on AIM will remain until it could clarify its financial position.
In 2010 Isran Noor, East Kutai's local government regent, revoked the company's license to mine alleging the outfit and its Indonesian partners had cut down a protected forest in the region.
Churchill chairman David Quinlivan said: "We are obviously extremely disappointed by the tribunal's decision and the fact that the tribunal drew no adverse inferences against Indonesia following the refusal by Mr Isran Noor to attend the August 2015 hearing so that he could be cross-examined and the refusals by Indonesia to provide documents that the tribunal itself considered prima facie relevant.
“While we are still reviewing the reasons, the tribunal appears to have accepted that Mr Noor was deceived into signing the exploitation licenses despite his non-appearance and his witness statement having been struck from the record. Indonesia has always conceded that the East Kutai coal project exploitation licenses were validly issued and signed and it is difficult to understand how the tribunal found otherwise on the evidence available."
The company is considering requesting the ICSID annul the award and is working with law firm Clifford Chance to establish the best way to move forward.
ICSID's process allows for the award to be annulled if it is found that the tribunal was not properly constituted, that it “manifestly” exceeded its powers, that there had been a serious departure from the fundamental rule of procedure, or that the award failed to state the reasons on which it is based.
http://www.digitallook.com/news/aim...im-against-indonesia-struck-off--2347056.html
They wanted $1 billion but instead ended up paying $9.45 million
