Why should Indonesia become EU’s strategic partner

PAWEŁ BIEŃKOWSKI, Asian Programme

Despite economic uncertainty which currently drives overall European policy making and diverts attention from issues of strategy and foreign policy of the Union, the EU finds itself in a need to recapitulate its concept of strategic partnerships in order to make it compatible with the changing reality of global power centres and conducive to fulfillment of EU’s future interests. Here comes an opportunity for such countries as Indonesia to be co-opted.

Reason 1: Geopolitical reality

Recently unveiled US Defense Strategic Guidance is one of the latest and most ground-breaking examples of global power shift towards Asia. United States decided to limit their engagement in Europe, did not place too much of an emphasis on the effects of the Arab Spring, but instead unequivocally began to turn their military muscle to the Asia Pacific. Of political and economic necessity, the US extends its hands to the “emerging partners” throughout the region: a home to majority of global seaborne trade and a key to the international economic exchange. The EU, nevertheless, does not come out badly regarding an emphasis it puts on Asia, at least from the perspective of a current structure of strategic partnerships. Out of the ten strategic partners (Canada, USA, Mexico, Brazil, Russia, South Africa, India, China, Japan and South Korea) four are Asian countries and all BRICS states are included. However, geographical distribution of these partners remains uneven and the whole bloc of ASEAN, or a geographical region of South East Asia is not yet represented.

The US has already appreciated the role of South East Asia in maintaining freedom of navigation between Indian and Pacific Oceans, ie. where the majority  of global trade goes through. 30% of world trade on board of 23 000 oil tankers and 90 000 ships with a displacement exceeding 100 tones pass through Indonesian straits each year. Indonesian authorities willfully point out their efforts to prevent the “Somali scenario” occurring in their archipelago waters by actively fighting piracy. However, a relatively small Indonesian navy (11 frigates and 66 patrol vessels, out of which only about 25 are operationally capable at any given moment, according to the Military Balance) struggles with procurement of new equipment. At the same time, the attention of European academia, professionals and politicians directed towards maritime security in South East Asia remains unsatisfactory, as my experience in Brussels-based conferences, seminars and policy events undoubtedly illustrates. If the EU truly cares of the security of navigation and tonnes of cargo that sails between Europe and Asia, it should significantly invest in multitiered security cooperation with Indonesia.

Reason 2: Increasing economic significance

Asian Development Bank’s report Asia 2050 lists Indonesia in the group of countries that will lead Asia’s rise in the 21st century, among China, India, Japan, Republic of Korea (already EU strategic partners) and Malaysia together with Thailand. With over 245 million inhabitants and a steady economic growth ratio (estimated at 6.3% in 2012 in IMF’s latest World Economic Outlook), Indonesia will certainly belong to the group of countries to be observed in the incoming decades. Moreover, in terms of age structure, Indonesia represents so called “young Asia”. In view of ADB experts, Indonesia’s population will begin to shrink only after 2050 and this effectively extends this country’s demographic dividend. Similarly, the current EU-Indonesia trade figures are already significant. Indonesian exports to the EU amounted to EUR 12 bln in 2009 (12% of total Indonesian exports). Although this number is still below expectations, it makes the EU Indonesia’s primary recipient of its non-oil and non-gas exports. The EU exported to Indonesia goods worth EUR 5.3 bln in the same period (8% of all Indonesian imports – fourth place after Singapore, China and Japan). However, disparity remain huge: while the EU is responsible for 10% of total Indonesian trade, Jakarta has only a 0.7% share in the total EU external trade. This figure originates from the structure of Indonesian exports which consists mainly of agricultural products, fuels and mining products. Nevertheless, with Indonesia’s unavoidable move up the value chain, the structure of its exports is very likely to change over the next decades.

Reason 3: Rising political clout

Indonesia lies in the heart of South East Asian economic and political integration. Although the EU has developed numerous forms of cooperation and exchange with ASEAN, it still lacks effective political engagement with one of its key players. If the EU is ever to be regarded as an actor in global security, it should become actively involved in ASEAN Regional Forum. This could be facilitated by closer ties with Indonesia and would have a chance to serve as a balancing factor to regional and global rise of China. A specific Partnership and Cooperation Agreement (PCA) between the EU and Indonesia was signed not earlier than on November 9, 2009, after a prolonged diplomatic exchange over the European civil aviation authority’s ban for Indonesian airlines to operate in the territory of the EU member states. From the political perspective, the Agreement includes provisions for strengthened cooperation in the field of counterterrorism and WMD non-proliferation. Indonesia is also a natural partner when it comes to addressing wider global challenges, including climate change, deforestation, extremism and radicalisation – in all these domains both sides share an approach of “effective multilateralism”. Moreover, Indonesia actively seeks European assistance in building and strengthening of its relatively young democratic institutions and civil society.

An existing EU-Indonesia political dialogue is exercised by annual Ministerial Meetings and Senior Officials Meetings. According to the European External Action Service (EEAS), the EU “considers Indonesia a priority country”, while EEAS’s head C. Ashton has designated Indonesia as one of the possible future strategic partners (among Egypt, Israel, Pakistan and Ukraine). A quick look at this group shows that Jakarta represents decisively the biggest geopolitical and economic significance among all countries listed. Characteristically for EU messy foreign policy, European Commission’s President Jose Manuel Barroso has already confirmed a “strategic” nature of EU-Indonesia partnership during his meeting with Indonesia’s head of state back in November 2007.

The contemporary shape of EU strategic partnerships by no means constitutes a concise entirety. If some partnerships were established on the basis of shared values (USA, Canada, Japan), economic and social proximity (Russia), pure economic reality (China, India, South Korea and to some extent Brazil), strategic partnership with Indonesia would represent Europe’s opening to the young, rising Asia together with a fresh, prospective thinking towards EU’s place in a post-crisis world in which Asia will be a front runner.