CHAPTER I

INTRODUCTION

1.1 BACKGROUND

The Republic of Indonesia, won her independence in 1945

immediately after World War II was one of the countries in

Southeast Asia that fought fiercely to gain independence

from the colonialism. The fought for the independence and

the struggle to free Indonesia from the control of the

Dutch for more than 300 years has shaped Indonesia as a

nation that cautious of being dominated by great powers. At

the same time, the struggle also has inculcated the pride

of nationalism in every soul of Indonesian and in all

aspects including its governance to break away from any

domination (Kahin 1953). Indeed, under the first paragraph

of 1945 constitution of the Republic of Indonesia has

stated that ‘whereas independence is the natural right of

every nation, colonialism must be abolished in this world

because it is not in conformity with humanity and justice’

(MFA 2013).

On the same echo, the notion of Indonesian nationalism

from the very beginning itself was rooted in the commitment

to the liberation movement against colonialism (Korjadi

1990). In fact, the Indonesian nationalism was inspired by

a sense of solidarity to struggle for independence against

colonialism, which broke all over the world. This can be

observed under the international orientation of Indonesian

nationalism stated in paragraph four (4) of the 1945

constitution ‘…. and to contribute in implementing an order

in the world which based upon independence, abiding peace

and social justice’ (MFA 2013). The very strong commitment

of Indonesian nation towards liberation struggles against

any kind of colonialism or foreign domination by then

automatically becomes a basic principle for the government

of the Republic of Indonesia to conduct a ‘free and active’

foreign policy dedicated to the national interest (Korjadi

1990).

For Indonesia, the ‘free and active’ foreign policy

conveyed a significant meaning. The ‘free’ component means

that Indonesia should chart its own course in foreign

affairs independent of the diktats of the great powers.

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Meanwhile, the active component means that Indonesia should

play a prominent role in shaping international affairs, not

merely respond to external pressures (Ann 2009). As a

matter of fact, the ‘free and active’ foreign policy

principle formulated during the Cold War was indeed a

response to the political situations in international

society. Based on this doctrine of ‘free and active’,

Indonesia since Sukarno until Susilo Bambang Yudiyono, has

engaged with so many challenges, ups and down in

manifesting her foreign policy with various countries

including the major power such as the United States, Russia

and especially with China which has significant

relationship with Indonesia. This is because China was the

first communist country with which Indonesia sought

diplomatic relations immediately after the transfer of

sovereignty from the Dutch in December 1945 (Rizal 2011).

Diplomatically, the relationship between Indonesia and

China was established officially on April 13, 1950. The

initial establishment of diplomatic relations with China

was part of Indonesia strategies to get recognition from

international society for its sovereignty to serve

Indonesia’s objective in developing the relationship with

other countries based on the ‘free and active’ policy.

Historically, Indonesia’s relationship with China has

embarked through a very dynamics relation whereby both

countries relations have a long and rich history. Monks

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from ancient China studied in Sumatra and Java as early as

the first century, Chinese merchants traded with ancient

kingdoms in maritime Southeast Asia and mosques were built

by Chinese Muslim navigator Zheng He in Indonesia during

his legendary voyages in the 15th century (Parameswaran

2012). Over the years, the nature of these relationships

developed into various stages with full of colors.

Unfortunately, the good relationship between both

countries did not last long as the diplomatic relations was

suspended on October 30, 1967 due to the famous abortive

coup d’état or ‘Gestapu’ in 1965 which Indonesia accused

China’s involvement in the coup. Since then, Indonesia-

China relationship was put on freezing mode until the early

1980s. Nevertheless, in 1989 bilateral relations between

both countries gradually improved after Foreign Minister

Qian Qichen of China met with President Suharto and State

Minister Moerdiono of Indonesia to discuss the resumption

of diplomatic relations of the two countries (Novotny

2010). In December 1989, both countries held talks on the

technical issues regarding the normalization of bilateral

relations. Since then, there were series of efforts has

been conducted to resume back the cut off relations

especially by the business community. After several efforts

had been initiated, on August 6,1990, Premier Li Peng of

China visited Indonesia on the invitation of Suharto.

During the visit and talks between two leaders, the two

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sides expressed their willingness to improve relations

between the two countries on the basis of the Five

Principles of Peaceful Co-Existence and the Ten Principles

of the Bandung Conference (Rizal 2009). On 8 August 1990,

Foreign Ministers of China and Indonesia on behalf of their

respective governments, signed the Memorandum of

Understanding on the Resumption of Diplomatic Relations.

Finally, the two sides declared the formal resumption of

the diplomatic relations between China and Indonesia.

1.2 PROBLEM STATEMENT

Indonesia-China relationship was unimaginable before 1990s

especially during the cold war. This is due to the fact

that, the relationship between the two countries since the

establishment of diplomatic relations in 1950 has undergo

series of uncertainties characterized by a history of a

good beginning and cordial friendship especially during the

Sukarno era to suspicious and suspended diplomatic tie.

Indeed, the suspension of diplomatic ties on October 30,

1967 was the trigger point of the troubled relationship

between Indonesia and China. During the suspended period,

Indonesia remains skeptical and mistrusts China as a threat

to Indonesia’s internal security. It is because Indonesia

still believed and accused China to be involved in the

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abortive coup d’état launched by Parti Komunis Indonesia on

September 30, 1965 to overthrow Indonesian democratic

government. In the aftermath of the attempted coup,

Indonesia-China relations deteriorated severely because of

the anti-communist momentum that arose in Indonesia. At the

same time, the deteriorating relations also were subject to

pressure from Indonesia’s domestic political arena

especially from the political and military leaders, student

movements, elites and majority of the public on Indonesia’s

foreign policy towards China. For them, Indonesia’s

bilateral relations with Beijing need to be suspended, as

China obviously has becomes a threat to Indonesia. As a

matter of fact, from the beginning, especially in the late

1960s Indonesia has gradually sensed suspicious on China’s

behavior of actively seeking the political and financial

support of the ethnic Chinese reside in Indonesia and of

providing political and financial support to the PKI.

Despite all these troubled relationships with China,

Indonesia by then started to reconsider her foreign policy

to face the challenge of appropriate response to the rise

of China especially during the early 1980s. This is because

during the suspended period, due to the differences of

political ideology and mistrust, Indonesia seemed to ignore

the emergence of China as a major power. Only in late 1980s

to early 1990s as many Southeast Asian states saw China as

a potential hegemon and strategic threat, Indonesia too

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realizes that the emerging of China demonstrates the most

important strategic development throughout the entire

world. Indonesia at the same time also realizes that the

emerging China is potential gold mine and a platform of

benefits to Indonesia in many ways. Instead of continuing

the troubled relationship, Indonesia by then decides that

her foreign policy stance towards China needs to be

changed. The best changed would be to pursue the policy of

reengagement with China beginning with the resumption of

bilateral relations on August 8, 1990.

Following this on, off, and reengagement relationship,

this research aims to examine Indonesia’s policy of

reengagement with China from the period of mistrust to a

stronger and growing political and economic relationship

between the two countries.

1.3 RESEARCH QUESTIONS

Jakarta resumes its bilateral relationship with China

on August 8, 1990. Thus, this research examines a few

research questions on this study, which are:

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a. How domestic issues including political and

military elites craft Indonesia’s foreign policy

with China?

b. Why Indonesia’s reengagement policy with China is

at odd during the early years of diplomatic

resumption and to what extent does this

relationship benefits Indonesia?

c. What are the implications to Indonesia’s

diplomatic affairs with China?

1.4 RESEARCH OBJECTIVES

This study then determines to achieve three objectives

as outlined below:

a. To explain domestic issues including political

and military elites roles and

involvement that craft Indonesia’s foreign policy

with China.

b. To identify the odd’s of Indonesia’s reengagement

policy with China in

the past and present and the benefits Indonesia

gained.

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c. To analyze the implications of Indonesia’s

diplomatic affairs with China.

1.5 LITERATURE REVIEW

The literature review is categorized into a few themes

including a general theme on reading of small state to big

state responses and it narrows the reading to another theme

that is Indonesia’s foreign policy with variety of contexts

and Indonesia’s foreign policy towards China.

Relations, policy and strategy of small state against big

power

The first theme is the small states and big states

relationship. Baker Fox (1959) in her classical review ‘The

power of small states’ explained that the main indicator of power

and strength of a country is through military power. She

argued that though a state's ability to get what it wants

through violence is a type of political power generally

reserved for large states, both large and small states can

use economy, ideology, and diplomatic methods to achieve

their goals as well. In order to understand the influence

of small powers, Baker Fox examined the cases of five

neutral states, Turkey, Finland, Norway, Sweden, and Spain-

during World War II. She argued that the main objective of

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the governments of these states was to wait out World War

II while convincing the combatants that neutrality was

beneficial to all. In other words, these neutral states had

to convince the combatants that the cost of using force

against them would outweigh any gains. Baker Fox (1959)

concluded that the small states were likely to remain free

of pressure if one or more of the following were true: the

demanding great power would be deprived of necessary goods

and services that the neutral country controlled; the

opposing enemy would retaliate for the invasion of the

neutral country; or the neutral country would join the

other enemy's cause.

Robert Keohane (1969) appears to share same views with

Baker Fox for small states to use diplomatic methods in his

writing Lilliputian’s Dilemmas: Small States in International Politics .

Keohane sees that using the international platform such as

United Nations as a forum and a force, and claiming

"nonalignment" as an important diplomatic innovation, small

states have risen to prominence if not to power. Small

states also use the international platform as one way to

unite and as a diplomatic strategy to counter the influence

of the big power. He also provides a definition to

differentiate between big powers, middle powers and small

states from the psychological dimensions as such:-

“A Great Power is a state whose leaders consider that it can, alone,

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exercise a large, perhaps decisive, impact on the international

system; a middle power is a state whose leaders consider that it

cannot act alone effectively but may be able to have a systemic

impact in a small group or through an international institution; a

small power is a state whose leaders consider that it can never,

acting alone or in a small group,” (Keohane 1969).

As Keohane defines middle and small states cannot act

alone effectively, Ciociari’s (2010) in his article The

limits of Alignments: Southeast Asia and the Great Powers since 1975 argued

that a developing countries such as those in Southeast Asia

have options beyond the “tricotomy” of what specialists in

the field of international relations call neutrality,

balancing, and bandwagoning when it comes to relations with

external powers. Ciorciari (2010) then, explained the terms

limited alignments – a middle path between tight alliance

and genuine non-alignment that allows states to maximize

the security benefits provided by external powers while

minimizing the costs and risks. Ciorciari concludes that,

arguing that limited alignments are not only beneficial to

the developing countries concerned, but also help promote

regional peace and stability.

Wang (2010) in his article, Evolving Asian Power Balances and

Alternate Conceptions for Building Regional Institutions, seemingly share

similar options with Ciociari that, in response to an

increasingly strong and potentially threatening power,

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balancing and bandwagoning have long been assumed by

theories in international relations as the only two broad

reactions of states against that power. Indeed, in the mid-

1990s, “Realist made prediction about how smaller states in

East Asia would have to choose between “balancing” China

for brevity, by joining the US-led coalition, or

“bandwagoning” with the PRC (Wang 2010).

However, scores of debates have taken place on how

Southeast Asia was responding to the rise of China.

According to Chwee (2008) in his article, Rising Dragon,

Crouching Tigers, lately most scholars seemed to share opinion

that this simple balancing versus bandwagoning did not

describe exactly well the response of Southeast Asian

states in the post cold war. Southeast Asian countries

clearly do not want to choose between the two major powers,

the United States and China. Instead, in the case of the

original member countries of the Association of Southeast

Asian Nations (ASEAN) they have taken a middle position

that is now widely described as “hedging”.

Borrowed originally from finance, “hedging” is brought

into international relations to refer to an alternative

state strategy distinguishable from balancing and

bandwagoning. It has been used not only to describe smaller

states’ reactions to a major power but also big power’s

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strategies in dealing with one another. Interestingly, more

scholars now share a consensus that Southeast Asian states

have not balanced against or bandwagon with China as

expected by realist. Ross (2006) points out that smaller

East Asian states are generally accommodating the China’s

growing economic and especially military prowess, and it is

only those that are less directly vulnerable to the China’s

military power that are strengthening alignment with the

US. Most scholars are redefining regional states’ response

to the China’s rising as mixed engagement and hedging

strategy.

For the first theme of the small states and big states

relationship related to China, I incline to agree with

Chwee’s opinion. On the relationship, Indonesia does not

need to choose China or US, but simply reshape its foreign

policy to build relationship based on the best interest of

the Indonesia’s people.

Indonesia’s Foreign Policy

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The following literatures provides descriptions of the

Indonesia’s foreign policy which could give better

understanding on how certain elements engages with the

formulations of foreign policies in the Indonesia’s

setting.

Jafri (2011) in his article National Security and Foreign Policy

in Developing Countries suggest that the foreign policy of small

states can be best explained by simply examining structural

and systematic rather than domestic level factors. However,

Elman’s article The Foreign Policy of Small States: Challenging Neorealism

in its Own Backyard (1995) argued that to explain small state

foreign policy, scholars should look to domestic

institutional choices rather than international

determinants. Domestic institutions, she claims are more

important than international or individual forces because

they define the paths of available options open to a

government in a foreign policy situation. Stremlau (1982)

share the same argument with Elman, when he wrote that:

“Among many variables that may be salient in shaping a developing

country’s foreign policy the following checklist is suggested. At the

domestic level the analyst needs to consider: political/ethnic/religious

cleavages; economic disparities; resources endowment; the stage of

industrial development; the effectiveness of governmental institutions

– civilian and military; the country’s size and locations; and the

personal characteristics of key members in the ruling elite”.

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Franklin B. Weinstein in his book Indonesian Foreign Policy

and the Dilemma of Dependence: From Sukarno to Soeharto (1976)

explained that for Indonesia, country’s internal politics

provides an important insight which domestic factors such

as economic and social have influenced Indonesia’s role in

international affairs. By interviewing with the foreign

policy elites, Weinstein sees that Indonesian leaders have

been affected by the pressure of indigenous political

competition in their attempt to resolve the dilemma of

securing outside resources for their country’s development

without compromising its independence.

In his study, Weinstein discussed that during the

Sukarno era, in the first half of 1960’s, Indonesia’s

foreign policy formulated by Sukarno’s ambition to lead

Indonesia as an international anti-imperialist front and

condemning international system as an exploitive order.

Meanwhile during Suharto era, since 1966, Indonesian

foreign policy has oriented itself to the search for

western economic aid and capital investment (Weinstein

1976). The anti-imperialist crusade during Sukarno has been

abandoned and confrontation has been replaced by passivity

and talk or regional cooperation. Weinstein concludes that

if the Indonesian elites perceives that the world is

hostile, their tendency to formulate foreign policy will

emphasize to secured independence first.

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Indonesian in ASEAN: Foreign Policy and Regionalism by Dewi

Fortuna Anwar (1994) share similar views with Weinsten,

which, she explains that generalizations on Indonesia

foreign policy stood on three particular aspects. Firstly,

it has generally been accepted that Indonesian foreign

policy is largely determined by domestic factors. Secondly,

it involves with Indonesian nature of strength and

weakness, confidence and insecurity. Dewi argues that

Indonesia decision makers have throughout the independence

period has been plaque by a sense of vulnerability on the

one hand and a sense of regional entitlement on the other.

Indonesia’s sense of vulnerability has been caused by its

geographical fragmentation and economic underdevelopment,

while regional entitlement is due to huge physical size of

the country and vast population. Thirdly, it has also been

argued that Indonesia’s policy towards Southeast Asia has

been influenced by a single overriding objective, to

exercise its primacy in the region in whatever form or

manifestations. Dewi concludes that although Indonesia

whole-heartedly support the existence of ASEAN, its support

for ASEAN cooperation was qualified by the general

recognition that ASEAN had only limited functions for

Indonesia.

Rizal Sukma (1995) in his article The Evolution of Indonesia’s

Foreign Policy: An Indonesian View provides more interesting study,

which he emphasizes on the subject of democracy as dominant

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features of Indonesia’s foreign policy. He analyze that

Indonesia together with Singapore, Malaysia, and China

strongly resisted the democracy-promotion agenda present in

the foreign policies of Western countries, arguing that

democracy was unsuitable for Asian societies. However,

Indonesian position came to an end with the collapse of

authoritarian rule in 1998 and the rise of democracy.

Indonesia began to incorporate its democratic identity into

foreign policy. Rizal concludes that Indonesia’s desire to

establish its credential as a regional proponent of

democracy in Southeast Asia, however, is still sought

within the limits imposed by the precarious nature of

Indonesia’s own democracy and the reality of regional

politics.

Most of the scholars share similar findings that

Indonesian foreign policy linked with the domestic scene.

Derek Mcdougall (2007) in his books, Asia Pacific in World Politics

provides the same explanations where he analyze Indonesia’s

international significance is very much related to domestic

situation. The differences on his study are, he looks on

from the perspectives of domestic conflicts can spill over

into the international arena, which may invite foreign

interference or involvement. Indonesia in his study, were

unable to contain the foreign involvement, as Indonesia

requires the assistance from foreign actors to deal with

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some of its problems. He further explains that this

situation complicates the state-to-state relations,

including the involvement of the major powers such United

States and China. For Indonesia, the United States plays

crucial role in assisting Indonesia’s economy, particularly

through the influence exerted in the major international

economic institutions. While China relationship with

Indonesia is also important not just because of Beijing’s

interest in the position of the ethnic Chinese, but also

because of China’s emerging role in Asia. He concludes that

while the domestic situation in most Southeast Asian states

has significant international implications, it is in

Indonesia that the impact is greatest.

Ann Marie Murphy (2008) in her article, Indonesia Returns

to the International Stage: Good News for the United States provides a good

analysis about the returns of Indonesia in the

International stage. Ann analyzed that most Indonesians

believe that their country’s size, strategic location, and

revolutionary history entitle it to a leadership role in

global affairs. This belief is propagated in the “bebas dan

aktif”, or “free and active doctrine”, that was declared by

Prime Minister Mohammad Hatta in 1948 and remains the

guiding principle of Indonesian foreign policy. Anne too

analyze that Indonesian foreign policy has always been

tightly linked with its domestic politics. Sukarno (1945-

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1965) and Suharto (1965-1998) dominated the country’s

political scene for Indonesia’s first five decades. They

pursued the country’s primary national interests to

maintain the territorial integrity, building social

cohesion out of its heterogeneous population, and promoting

economic prosperity, different from each other in very

different ways, producing different strategy of policy.

Indonesia’s foreign policy towards China

Leo Suryadinata (1990) in his book, Indonesia-China Relations: A

Recent Breakthrough explains that Indonesia under Sukarno was

on good terms with the China, especially in the mid-1960s

when the two governments attempted to set up the Conference

of New Emerging Forces (NEFO) with headquarters in Jakarta.

However, the relations becomes problematic when end on

September 30, 1965, a failed communist coup took place. The

coup resulted in the abolishment of the Parti Komunis

Indonesia, the downfall of Sukarno and the rise of Suharto.

Leo explains that the coup changed the direction of

Indonesian foreign policy whereby the first target was the

People's Republic of China, which was believed to have been

involved. This has resulted diplomatic relation suspended

until end of 1980’s. Leo concludes that relations between

both countries began to stabilize when several issues such

as Indonesia’s domestic economic problems, China’s new

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development under Deng Xiaoping in 1977 and Indonesia’s

role in the international stage become a factors

contributing to Indonesia's decision to normalize relations

with the PRC.

Rizal Sukma (2009) in his article Indonesia-China Relations:

The Politics of Re-engagement explains that Indonesia’s relations

with China compensate each other. Rizal analyzes that the

creation of an atmosphere of trust and comfort in Jakarta’s

re-engagement with China is primarily because of changes in

Indonesia’s domestic politics and China’s policy toward

Southeast Asia. Although diplomatic relations resumes in

1990s, it was only after 1998 that Indonesia- China

relations began to show significant signs of improvement

and closer cooperation. Rizal concludes that Indonesia has

been very appreciative of China’s “charm diplomacy” toward

Southeast Asia and now sees China more as an opportunity

than a threat. China’s policy toward Indonesia during the

1997 Asian financial crisis and May 1998 riots, and also in

providing emergency aid during the tsunami disaster, has

contributed to the growing perception in Indonesia that

China can be trusted as a partner.

Novotny (2010) in his book Torn Between America and China:

Elite Perceptions and Indonesian Foreign Policy explains the dynamics

of Indonesia’s foreign policy by employing the balance-of-

threat theory with China and the United States from the

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Indonesian elites perspectives or perception. For Novotny,

elites perception is vital to determine selection of

policies and define the criteria in which decision-making

is executed. He discusses on how threat perception has

influence and construct Indonesia’s foreign policy

especially towards United States and China. In fact, the

elite perceives both the United States and China as the two

most potent state-based external factors with the potential

to endanger Indonesia’s national interests and security

(Novotny 2010). However, China is seen as the principle

danger in the long run and a number one external factor to

be considered. Novotny concludes that in light of

uncertainty about how China will use its power in the

future, it is absolutely vital for Indonesia to hedge its

relations with China. The study by Novotny was among

several studies that have looked into hedging as strategy

for Indonesia to positioning with China. However, he did

not discuss the hedging strategy thoroughly, rather than

concentrate only on the balance-of-threat theory.

Though Rizal studies sees China-Indonesia’s relations

compensate each other, Jessica Brown (2011) in his article,

Jakarta’s Juggling Act: Balancing China and America in the Asia Pacific

instead, argues on how Indonesia tries to juggle and

balance between China and US. Jessica’s assessment is that

Indonesia’s overriding security concern is the rise of

China. Jessica argues that Indonesia is in desperate need

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of foreign investment to update its inadequate

infrastructure. But while Indonesia wants to associate on

China’s economic rise, it does not want China to dominate

the region politically. Thus, this is where the United

States coming into the picture. She argues that Indonesia

believes that the existing US-led security order and

continue to play a central role is the best way to ensure

rising China does not become a threat and the predominant

security actor in the region. Jessica concludes that

managing relations between these two great powers is

something of a balancing act that Jakarta has to juggle.

Jakarta does not want to choose sides between the United

States and China rather than, it wants to continue pursuing

a fruitful economic relationship with China, while

cultivating the United States as its most important

strategic partner.

Based on the literature review presented, there are

various studies on Indonesia relations with China, but none

really focus on the process and the evolvements of

Indonesia’s behavioral changes towards China especially

during the cold war up to post-cold war. Further, domestic

issues and the role of political and military elites that

influence Indonesia’s reengagement policy and diplomatic

affairs between Indonesia and China are not thoroughly

studied. Thus this research is being conducted to fill a

gap that the other past studies has not been done.

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1.6 HYPOTHESES

For this research, the following hypotheses are built

to investigate Indonesia’s foreign policy towards China.

H1. The domestic issues including politics, security,

economic instability and underdevelopment are determinants

that shape Indonesia’s foreign policy towards China.

H2. The elite influences including political and military

elites contribute to the Indonesia’s strategic approaches

of reengagement with China.

1.7 THEORETICAL FRAMEWORK

In order to understand Indonesia’s foreign policy behavior

towards China, this paper applies constructivism theory.

The objective of using constructivism theory is because it

fits to explain Indonesia’s foreign policy behavior in the

international relations based on several core

constructivism elements. Among those core elements, first,

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constructivism focuses on human awareness or consciousness

and its place in world affairs. Constructivist, like

critical theorists and postmodernist, argue that there is

no external, objective social reality as such. The social

and political world is not a physical entity or material

object that is outside human consciousness (Robert, Georg

2003). Second, in terms of approach to the international

relations, constructivism theory postulates several

important elements namely, (i) human relations, including

international relations, consist essentially of thoughts

and ideas and not of material conditions or forces. (ii)

The core ideational element upon which constructivists

focus are inter-subjective belief (ideas, conceptions and

assumptions) that are widely shared among people. (iii)

Those shared beliefs compose and express the interests and

identities of people: e.g. the way people conceive of

themselves in their relations with others. (iv)

Constructivists also focus on the way those relations are

formed and expressed: e.g. by means of collective social

institutions, such as state sovereignty, ‘which have no

material reality but exist only because people collectively

believe they exist and act accordingly (Robert, Georg

2003).

Third, constructivists focus in inter-subjective

belief such as ideas, conceptions and assumptions that are

widely shared among people. In international relations,

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such beliefs include a group of people’s notion of

themselves as a nation or nationality, their conception of

their country as a state, their notion of their state as

independent or sovereign, their idea of themselves as

different from other peoples in cultural or religious or

historical terms, their sense of their history and

traditions, their political convictions and prejudices and

ideologies, their political institutions and much else

(Robert, Georg 2003). To narrow it down, constructivists

focus not only differences among people and the way that

people institutionalize and regulate their differences but

also on the way that people manage to create and sustain

social, economic, and political relations in spite of their

social differences. In fact, this is one of the

constructivism elements that fit to explain Indonesia’s

foreign policy behavior. Indonesia was able to accept China

despite differences of political ideologies, communist. At

the same time, both countries agreed on how they can mold

their bilateral relations from dormant to active

relationship again in spite of the social differences,

belief and ideas.

Based on the core elements of constructivism above, in

order to understand clearly the elements of constructivism

that fit into Indonesia’s behavior on the international

arena, Alexander Wendt as one of the best known advocate of

constructivism argues that the structure of international

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system ‘does not predict whether two states will be friends

or foes, will recognize each other’s sovereignty, will have

dynastic ties, will be revisionist or status quo powers,

and so on’ (Mingst 2003). On the same line, Acharya also

agreed with Wendt in which he has stated that,

From a constructivist’s standpoint, conditions such as anarchy,

security dilemma and power politics are not permanent or ‘organic’

features of international relation, but are socially constructed.

International relations are shaped not just by material forces, such

as power and wealth, but also by inter-subjective factors, including

ideas, culture and identities (Acharya 1999).

On the aspects of Foreign Policy Analysis (FPA), Wendt

(1999) comes out with a notion that constructivists’

assumption emphasizes the phenomenological tradition of

FPA. As a constructivist, Wendt (1999) argues that foreign

policy is what decision makers (agents notably national

leaders) ‘make of it’. Decision makers are responsible for

interpreting and creating the social reality, which stems

from their foreign policies. They do this when acting,

reacting and interacting with other states. State leaders

and elite groups are influenced by their ‘historical,

cultural norms, values and identities’, which are learned

through socialization and have an effect on the character

of the foreign policies they create (Davidson 2004).

Aside from decision makers, another major theoretical

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proposition is that all constructivists subscribe that the

states’ behavior is shaped by ‘non-material factors’ such

as ‘elite beliefs, identities and social norms’ (Mingst

2003). At the general level, Davidson (2004) argues that

constructivists regard a society’s culture, nationalism,

ideology and religion as critical in determining foreign

policy responses. In addition, constructivists emphasize

the importance of national identity, arguing that identity

plays ‘a relatively stable role’ and generates ‘specific

understanding and expectations about the self and the

other’, so that when a state engages in the project of

identity building it largely indicates what it defines as

its national interest (Wendt 1999). On the same echo, Gray

(1981) stated that historical dimension to international

relations is also very important to constructivists. In the

case of Indonesia, the leaders puts their self-perceived

importance of their country since ancient times had a role

to play in the formulation of their foreign policy. They

believed that, as a populous nation with an ancient and

rich culture, Indonesia should play a pivotal role in the

region. They also continue to insists that Indonesia should

be consulted by other Southeast Asian countries on

bilateral or regional matters, especially those that may

have any bearing on Indonesia’s national security.

Based on the constructivist’s arguments above,

constructivism is not a theory like the balance of power

27

theory in realism or the democratic peace theory in

liberalism. Constructivism, in the broadest sense, expands

the scope of international relations by embracing actors

and factors that realism/neo-realism and liberalism/neo-

liberalism do not entail. Constructivists indicate their

openness to consider that states are not unitary actors. At

the same time constructivists also believe that culture,

ethnicity, elite and leadership, national identity, and

religious beliefs are among the main factors which should

be examined in order to better understand a state's

behavior in relation to other states in the international

arena. In other words, constructivism is more concerned

with the state’s identity and how such identity shapes, and

is shaped by, domestic and international norms, cultures,

and histories and how these collectively influence the

state’s foreign policy

Those non-state factors, which are ignored or under-

studied in the leading international theories which mostly

focus on military/economic power and the international

system underpinned by balance of power, provide a useful

interpretive framework to understand the cases of

Indonesia’s foreign policy towards China. Those non-state

factors are also interesting to be studied in this

research. Thus the political and military elites including

other domestic issues fit in the constructivism approach to

explain Indonesia’s foreign policy towards China.

28

Furthermore, changing social structures in Indonesia’s

politics will provide a better understanding of the

reengagement relationship between Indonesia-China when such

relation was at odd in the past.

1.8 RESEARCH METHOD

This study uses qualitative method to provide clear

description and analyses of the Indonesia’s foreign policy

towards China. The research initially collected through

primary references such as state and government’s

CAUSES

DOMESTIC ISSUES - economic

- internal security- political stability

ELITIST INFLUENCE

- Politicians- Military

IMPACT

INDONESIA'S REENGAGEMENT POLICY

TOWARDS CHINA

- Advantages to Indonesia : Economic

developments and investment,

international image & defence

cooperation.- Advantages to

China : Economic, natural resources & defence cooperation.

INDEPENDENTVARIABLES

DEPENDENTVARIABLES

29

documented policies, agreements, and documents gather that

relate to the two countries as well as Indonesia’s relation

with the ASEAN countries.

Also, the primary sources include interviews. I

managed to interview Mr. Shahriman Lockman, Senior Analyst

from the Institute of Strategic and International Studies

(ISIS), which has an extensive engagement with Indonesian

issues. An interview was conducted in semi-structured way,

and statements from interviews has be taped and

transcribed. Other secondary sources such books, published

articles, journals, newspaper, magazines and doctoral

thesis pertaining to the subject matter. The researcher

also uses seminar proceedings relevant to the study. These

data are all collected and carefully examined to extract

its importance and relevance to the research. Combining and

integrating both primary and secondary data would provide

solid sources for understanding the subject matter.

1.9 SCOPE OF STUDY

This study focuses on Indonesia’s reengagement policy

towards China after 23 years suspension of diplomatic ties.

The time frame is from the cold war (1945) until post cold

war (1990). The study discusses the change of Indonesia’s

30

foreign policy behavior, the evolution of the changes

because of the domestic and elites factors and the

implications of the reengagement policy towards Indonesia.

1.10 SIGNIFICANCE OF THE STUDY

The Indonesia as well as other policy analysts from the

result of this study would somehow and to some extent have

insights that may be relevant in the formulation of

official positions and corresponding actions plans in

dealing with China. This is due the fact that the

international politics has been affected by the re-

emergence of China and on the world stage. How this ancient

civilization shape and reshape the Southeast Asian in the

coming decades will be very important. This thesis

ultimately demonstrates that by understanding the role of

domestic issues and political elitist influence in foreign

policy-making, we can actually predict more accurately

future tendencies in inter-state relations.

At the very least, this study also would provide a

picture of how small states posture or behave towards a

bigger state in the complex structure of international

system. This, in various ways would provide analysts,

researchers and student alike better understanding of

Indonesia’s policy of reengagement with China and factors

31

that contributes to the policy. Finally, this study would

serve as a reference for understanding Indonesia’s

diplomatic relationship with China and the evolution of the

re-engagement process.

1.11 ORGANIZATION OF CHAPTERS

The thesis is divided into five (5) different chapters. The

summary of the following chapters is described below:

Chapter 1: Introduction.

Chapter 2: Indonesia - China policy.

This chapter examines the historical relationships between

Indonesia and China particularly during the cold war up to

post-cold war. It also discusses the international

environment especially the emergence of bipolar power

during the cold war and the rise of China.

Chapter 3: Indonesia - China policy: - Domestic factors

towards the reengagement.

This chapter discusses the factors that influence

Indonesia’s behavior towards the adoption of reengagement

policy towards China during the cold war up to post-cold

war.

32

Chapter 4: Reengagement and diplomatic strategy: - The

implications.

This chapter highlights the implications from the

reengagement relationship. Additionally, Indonesia’s

diplomatic strategy towards China is analyzed and its

reflect Indonesia’ foreign policy behavior.

Chapter 5: Conclusion

This final chapter recaps the discussions and findings.

CHAPTER II

INDONESIA-CHINA RELATIONSHIP DURING THE COLD WAR (1947-1990)

2.1 Introduction

This chapter illustrates the background of Indonesia-China

relationship during the Cold War era that began in April

13, 1950 when both countries signed a diplomatic relation.

It discusses the background of international system during

33

the Cold War that involves the United States of America and

Soviet Union that played a global dominant role.

Subsequently, it describes China’s position in the Cold War

and the emergence of China in the midst of bipolar system

and her relationship with Southeast Asia countries. In

order to have a good foundation of the study, this chapter

examines Indonesia’s position and posture during the Cold

War especially after her independence in 1945. Accordingly,

this chapter then narrates the development of Indonesia-

China’s relationship during the whole duration of Cold War,

which is divided into two phases, 1950-1967 under the first

President, Sukarno and 1969-1989 during the presidency of

Suharto. In this duration, it is worthy to highlight that

diplomatic ties between Indonesia-China was suspended in

1967 due to the accusation of China’s involvement in the

abortive coup in Jakarta in 1965. From then on,

relationship between both countries remains frozen for 23

years until it was resumed in 1989.

2.2 China’s position in the Cold War era: reasons for

finding alliances

During 1945 to 1990, two centers of power emerged in the

world politics – one was the “American – dominated Western

bloc which espoused the cause of democracy and capitalism”

34

(Thekhan 2007), while the other one was the “Russian

dominated Communist bloc with its socialist ideology”

(Thekhan 2007). As the world was divided into two armed

camps led by the United States and the Soviet Union, global

politics was likewise shaped by these two spheres of

influence that resulted to a balancing game of power and

bipolar character of the international system.

At the end of the Second World War, both the Soviet

Union and the US remained at the top of the world’s

hierarchy of power. As leading world powers, both the US

and Soviet Union had too many at stakes should one of them

fall behind of the other. For one, they did not share the

same political ideologies and secondly, they had

conflicting political interest. As for the US, the Soviet

Union’s political ideologies and economic principles were

threats to the free-market economy and democratic way of

life, which the former advocated. On the end of the Soviet

Union, the United States was a hindrance to its political

ambition to establish hegemonic niche in Europe, to

maintain its superpower status and eventually spread its

communist ideologies.

In order to prevent the other from gaining potential

global leadership, each side tried to win friends and

create spheres of influence (Rourke, Boyer 2004). Hence,

35

the Cold War battle space reached far beyond the very

realms of the USSR and US, extending to other regions

particularly among the new rising nations of Asia and

Africa (Thekhan 2007). In fact, it was suggested that key

elements of the Cold War era was great power rivalry

through intervention in the Third World Countries (Wade

2009). Because of this great power rivalry, majority of the

third world countries and developing states or small states

especially in Asia and Africa was put under difficult

position. This is due to the fact that after the Second

World War, these countries were largely attached on their

need to survive as sovereign nations. Many countries

particularly the developing states had already been left

devastated after the Second World War and were in the

process of rehabilitation and nation building at the time

of the Cold War commenced. The pressure to survive then put

the countries become very vulnerable to the threats of the

world powers whereby “smaller powers were drawn into the

ambit of Super-Powers” (Thekhan 2007). In order to counter

the threat of the world powers, the small Asia and African

states had the tendency to create alliances among them to

prevent from falling into the strong political and

influences of the United States or Soviet Union.

For Soviet Union, their political and influences

towards the smaller states was mostly to spread the

36

communist ideology throughout the world especially within

Southeast Asia countries. During the Cold War, Soviet

Union’s interest in Southeast Asia were driven more by

communist ideology and the notion of fighting an

international struggle against capitalism in general, and

the US in particular, wherever it might be fought (Symon

2007). In order to proliferate the spreading of communist

ideology in Southeast Asia countries, Soviet Union launched

various action to demonstrate its significant present in

the region such as opening an embassy in Bangkok in 1947

and conducted a Communist Youth Conference at Calcutta in

February 1948. Following these actions, the influence of

communist ideology becomes huge and resulted the emergence

of left-wing organizations and led to the outbreak of the

Southeast Asian communist insurgencies later in 1948. These

left-winged Southeast Asian communist insurgencies broke

out almost simultaneously and indeed suggested that it was

a response to instruction that came from Moscow.

Predictably, both the United States and Great Britain

immediately assumed insurgencies were Soviet directed

(Mason 2006).

2.2.1 The rise of China’s influence

37

While the Soviet Union was seen as the force behind the

communist uprisings in the region, there were evidences

that these insurgencies were hugely influenced more by

China than by the Soviet Union. At the end of 1949, the

power and influence of the Chinese Communist Party (CCP)

grew especially after CCP managed to take over Beijing from

the Nationalist and Mao Zedong declared the establishment

of the People's Republic of China on October 1, 1949. As amatter of fact, the British government admitted that there

was nothing that could be done about the growing power of

the party in China. However, there was a need to strengthen

the struggle of Southeast Asia countries to resist the

influence of China’s communist influence. This is because

communist victory in China would make communist in

Southeast Asia more supported and daring towards the

communist uprising (Wade 2009). Because of the immense

influence of the Communist movement in China, it then gave

the idea that almost all of the insurgent movements in

Southeast Asia, arguably the main organized threat to the

government in power, were pro-Beijing in orientation (Singh

2004).

This idea was supported by China’s political ideology

within the party, which the China Communist Party has

taught that each individual party had to observe closely

its own situation and decide its own course of action

38

(Mason 2007). Thus, this ideology by then had greatly

influence each communist armed struggle in Indonesia,

Malaysia, Vietnam, the Philippines and other Southeast

Asian nations to take on a different character according to

the actual condition prevailing in each country (Mason

2007). Aside from being a key player of the Communist

movements in the Southeast Asian Region, China was also a

key player in the East Asia and the Indian Subcontinent

(Southern Asia). China was a driving force in the perennial

tensions across the Taiwan Straits since 1949 and the

attack on India in 1962 (Nathan, Ross 2001). This has made

China as not only the propagator of Communist influence,

but also a major source of insecurity in the Southeast Asia

region.

Not only in Southeast Asia region, within in the

international system during the Cold war, China was the

only major country that stood at the intersection of the

two superpowers camps, a target of influence and enmity for

both (Nathan, Ross 2001). China, with its enormous size,

has the largest population and occupying the third largest

territory in the world. This factor has made neither

superpowers, the Soviet Union and the US could ignore the

threat of China (Jian 2001). The threat of China’s

supremacy in Southeast Asia was further compounded by the

“Domino Theory” promoted by the US. In the late 1940s and

39

early 1950s, when Mao’s China entered a strategic alliance

with the Soviet Union, the United States immediately felt

seriously threatened (Jian 2001). China’s motives and

activities were deeply suspected by the United States,

especially with its large base of support from relatives

residing in Southeast Asian countries. Beijing public

support of the communist insurgents in the region only

reinforced the United States perceptions and heightened

their fears (Yuan 2006). Thus, the promotion of the Domino

Theory stating that the fall of a non-communist state to

communism would precipitate the fall of non-communist

governments in neighboring states (Encyclopedia Britannica

2013).

And while the Communist China was deemed to be a

powerful ally Russia had during the Cold War period,

China’s position and political decisions were not

influenced by the alliances it had. In the late 1960s and

early 1970s, the situation, i.e. the balance of power,

reversed completely following China’s split with the Soviet

Union and rapprochement with the United States (Jian 2001).

Due the rapprochements between the United States and China,

the Soviet Union suddenly found itself confronting two

powerful countries. This exhausted the Soviet Union’s

strength resulting to its collapse in the early 1990s.

40

Apart from China’s political relevance in the shaping

of Asia’s participation in the Cold War, China has also

been the dominant economic power in Asia for most of

recorded history (Huisken 2009). Nonetheless, when the

relations between the two powers began to normalize in the

70s until 90s, there had already been strong suspicious and

concerns among Association of Southeast Asian Countries

members over China’s growing power and intentions towards

Southeast Asian (Yuan 2006). Being small states vis-à-vis

China, they have always harbored suspicion of their giant

northern neighbor for two reasons. One was due to Beijing’s

history of support to the insurgent movement in most

communist Asian countries. The other one was because of

some uncertainties about how China was going to use its

power in regional affairs. Historically, Beijing was

consistently aggressive in its claims over the South China

Sea, which has direct and indirect impact to all Southeast

Asian countries. China’s military buildup and the

occasional uses of force will become pertinent matters to

be looked upon.

Alongside China’s growing political significance,

China was also emerging as key economic player in the

world. China, inheritor of 5,000 years of civilization, is

also the world’s fastest developing economy in the present

age, having grown an average of 9.9% annually for the past

10 years beginning from 2001 to 2011 (China Org 2011). As a

41

matter of fact, during the Mao Zedong era, the Chinese

economy already shows tremendous achievement when China

achieved 7-8 percent average annual growth over the 40-year

post-war period. China’s inflation remained low over the

three decades to 1978, budget deficits were small, and

external imbalances were minor (Gautam 1996). As a result

of which, Association of Southeast Asian Nation felt

insecure over the rising power of China and the dampening

influence of the West in the region. On this note, Acharya

(2003) remarked that:

“China’s rise as an economic and military power in the Asia Pacific region

has significant implications for Southeast Asia’s strategic and economic future. It

is reshaping the balance of power and posing an economic challenge of

considerable magnitude to a region that had been ahead of China in terms of its

economic development until the 1990s”.

Following the growing power of China, Association of

Southeast Asian Nation countries including Indonesia,

recognized that given their limited capabilities, they need

to live with China (Acharya 2003). However while China’s

emerging influence and growing power had already been

acknowledged by the Association of Southeast Asian Nation

nations, Indonesia also recognized the need to still

maintain amicable ties with the US. As with the thinking of

China, Indonesia had to adopt strategic approach in the

face of the changing external security and political

42

system. This is important to ensure that Indonesia move to

project a non-aligned posture in the face of the changing

Balance of Power in the global setting.

2.3 Indonesia during the cold war

After the Second World War, majority of the Southeast Asia

nation were in the process of rehabilitation and nation

building due to disastrous impact of the war. This process

has made Southeast Asia nation prioritized primarily on

issues of national development and capacity building rather

than issues of security. Majority of their national budget

will be allocated to national development programs,

infrastructure and state rehabilitation. Allocation for

upgrading military capabilities and armaments procurements

to safeguard the country from internal and external

security threats was not part of their top priorities.

Because of this policy, weaker Southeast Asia countries

gradually become vulnerable to China’s threat of communist

ideology that would create internal and external menace. As

these countries were under threats of being bullied by

China, they had secured alliances with their former Western

43

colonizers. The alliances did not only assure the weaker

countries gained diplomatic leverage but also free-riding

benefits in terms of economy and external defense.

Following this arguments, Tekhan (2007) explained that:-

“States founded in the post-World War II era were secured from military

conflicts with other states, and could exploit Cold War interest of developed

nations to secure funding from abroad. This freed them from the necessity of

creating property rights commitments for the purpose of fostering economic

development to procure the resources for survival”.

The alliances at the same time provided the weaker and

dependent states benefits such as the choice to ally

themselves with any of the superpower and use it to their

advantage (Thekhan 2007). It also provides the assurance of

protection from any exploitation by the other superpower,

as the other superpower will come to rescue. (Thekhan

2007).

2.3.1 Foundation of Indonesia’s foreign policy during

the Cold War

44

In the case of Indonesia, the most well known aspect of her

relationship with any superpower is stated on the

Indonesian foreign policy, which is adherence to the free

and active principle. Vice President Mohammad Hatta first

introduced this principle or doctrine in 1948, as a

response to the bi-polarism of the Cold War (Woo 1967). As

a newly independent country Indonesia refused to be

directly drawn into the Cold War and to be subordinated

within one or the other of the superpower dominated by bloc

(Woo 1967). During the Cold War, this stance was formalized

in the Non-Aligned Movement that Indonesia co-founded in

1961 with several like-minded states such as India and

Yugoslavia.

Although created as a response to the Cold War, the

free and active foreign policy doctrine is considered to be

right doctrine for Indonesia to follow for all time. In

fact, the free and active doctrine has become part of

Indonesia’s national identity. This doctrine states that

Indonesia must all time pursue independence of action in

international affairs, based on its calculations of its

national interest or principles, instead of simply

following the dictates of stronger power. As matter of

fact, during the Cold War, this doctrine had already

reflected Indonesia’s strong sense of nationalism and has

also given birth to the concept of national resilience. In

45

other words, Indonesia is concerned that the meaning of

national resilience is that Indonesia must not rely on any

foreign power for its defense and security. Thus, Indonesia

is strongly opposed to being part of military alliances.

At the same time, this doctrine also contributes to

the strong sense of nationalism, which were created by

Indonesia’s revolutionary experience. Indonesia’s sense of

nationalism was then demonstrated in the behavior of

distrusting the major power especially during the period of

struggling for independence. The founding fathers of the

Republic were mostly staunch anti-communist and they had

hoped that United States, which professed to be anti-

colonialism, would provide assistance to Indonesia during

the Dutch occupation (Dewi 1994). Instead, Washington

hesitated to support Indonesia against its Dutch ally. It

was only after the non-communist Indonesian leaders

defeated an attempted communist coup backed by Moscow in

1948 that the United States threw its weight behind the new

independent Indonesia. Based on this event, Indonesia

learned that major powers do not help other countries out

of sheer altruism (Dewi 1994). Instead, these powers would

offer assistance to weaker countries only if it is in their

interest to do so, and only to the extent deemed necessary

to these interest.

46

For the later part of active policy, like other

states, which came into being after the Second World War,

Indonesia also needed international recognition as a

sovereign and independent nation. It needed to register its

national identity and legitimacy within international

society through diplomatic ties. After the transfer of

sovereignty from the Netherlands in December 1949,

Indonesia’s government led by Sukarno begins actively to

seek wider international recognition. Indonesia’s decision

to establish diplomatic relationship with China in 1950 was

part of the Republic’s attempt to register herself as a

newly established free and independent state (Rizal 2003).

Through the establishing diplomatic ties with China,

Indonesia sought to register its rightful place in

international affairs and to strengthen its legitimacy as a

member of international society. Hence, diplomatic ties

were formally signed on April 13, 1950 that begins the ups

and down of bilateral relation between Indonesia-China,

which undergo two important phases: from 1950 to 1967 and

from 1967 to 1989.

2.4 Indonesia-China relations: 1950 – 1967

47

Before the independence, during the time of revolution,

Indonesia did not have much time or inclination towards

China. However, there was strong resentment of the fact

that a substantial number of Indonesian Chinese supported

the Dutch, but most of the Indonesian leaders recall being

only dimly aware of progress of the Chinese civil war

(Franklin 1976). Only then after the revolution, the

Indonesian started to grow regards for the China’s

government’s achievement, and in most cases outweighed by

heightening concern about Chinese activities and ambitions

in Jakarta.

2.4.1 The establishment of diplomatic and cordial

relationship

The Indonesia-China relations formally started in 1950 when

the two countries establish official diplomatic

relationship. Following the signing of diplomatic

relations, there were signs of cordiality especially during

the early 1950s. Jakarta supported China’s admission to the

United Nation from 1950 onward and abstained from voting on

the American sponsored resolution on branding China as an

aggressor in Korea. On the part of China, the Chinese made

significant concessions in 1955 to the Indonesian position

in concluding a dual nationality treaty under which China

48

abandoned its traditional claim that all overseas Chinese

were citizens of China and agreed to let Chinese living in

Indonesia choose to be citizens of either country (Franklin

1976).

The cordial relations between both countries

compounded further through continuous visit of Indonesian

leaders to China. As a matter of fact, the visits to China

played an important role in making the Indonesian leaders

aware of Chinese accomplishments. In contrast to those who

visited the United States and the Soviet Union, Indonesian

leaders especially Sukarno and other politician,

technocrats, army generals and leaders, were generally

favorably impressed by what they saw (Franklin 1976). Most

of the Indonesian leader made one trip either between 1955

and 1957 or between 1963 and 1965, though some of the

leader visited more than once. Most of the post-visit

feedback commented on how much conditions had improved from

one visit to the next, especially the success of China in

providing basic life necessities for the people and

eliminating starvation, unemployment and stealing.

Based on the continuous visit by Indonesian leaders,

Ide Anak Agung Gde Agung, Indonesia's Minister of Foreign

Affairs in 1955, argues that Sukarno's 1956 trip to the PRC

was the real milestone in Indonesia's political development

49

both in the domestic field and in the conduct of its

foreign policy. When Sukarno first visited China in 1956,

he was already familiar with China's political and social

development. He had long recognized the importance of

China, and he remarked in 1930, "Whoever holds the environs

of China will control the affairs of the entire Eastern

world” (Liu 1997).

As a matter of fact, the recognition of Sukarno

towards China has developed prior to 1956 based on three

major characteristics. First, Sukarno saw China was

instilled with a strong nationalistic attentiveness, which

became a source of inspiration for Sukarno. Sukarno

considered Indonesia's nationalist movement to be an

integral part of "Eastern Nationalism (Liu 1997). China

served as one of the major models of Asian nationalism and

Dr. Sun Yat-sen was at the centre of this nationalist

symbol of China. Sukarno's first knowledge of Pan-Asianism

concept also gained from Sun Yat-sen. The ideas were found

in Sukarno’s 1928 essay, title "Indonesianism and Pan-

Asianism", was similar to article written by Sun Yat-sen,

with both highlighting the common fate of Asian peoples and

nations.

Second, Sukarno believed that Indonesia and China had

identical goals and common aspirations in their struggles

for national independence. This conviction was an extension

50

of his Pan-Asianism, which he wrote in the newspaper Suluh

Indonesia Muda in 1928:

“People are beginning to be conscious of a sense of unity and a feeling of

brotherhood between the Chinese people and the Indonesian people, that is,

that both are Eastern people, both are people who are suffering, both are people

who are struggling, demanding a free life.... Because the common lot of the

people of Asia is certain to give birth to uniform behavior; a common fate is

certain to give birth to a uniform feeling” (Liu 1997).

Third, the post-1949 China remained as nationalistic

and populist state in Sukarno's mind. Like many Indonesian

intellectuals of his time, Sukarno viewed Mao Tse-tung's

theory of New Democracy as a genuine expression of Chinese

nationalism and an extension of Sun Yat-sen's Principles of

“Three Peoples” (Liu 1997). Since Sukarno had acknowledged

earlier that these Principles constituted one of the major

intellectual foundations of Indonesia's state ideology,

there seemed to be a real prospect that he would develop a

sense of affinity with the PRC and with Mao Tse-tung, whom

he saw as a successor of Sun Yat-sen. Sukarno even

suggested in 1954 that Indonesia should establish a

People's Congress similar to the one in China (Liu 1997).

As the result of Sukarno’s affections towards China

and increasingly pleasant relations, during much of 1963-

1965, Indonesia becomes as front man for the Chinese

51

Communist Diplomatic and political offensive in the

African-Asian world as a whole. Indeed, from 1963,

Indonesia and China also seemed to be collaborating toward

the creation of a number of African-Asian special interest

groups, like the African-Asian journalist Association,

which functioned as numerous megaphones for the Maoist

ideology and strategy in the developing countries (Justus

1971). Since early 1963 and the end of confrontation with

Malaysia, Indonesia and China appeared to move steadily

toward a closer cooperation (Justus 1971).

2.4.2 The growing of suspicion relationship

Basically, relations with China remained cool and pleasant

until late 1950s. However, Indonesia on the different

window, also reasonably concerns about the China embassy

influence within the Chinese-Indonesian community. A few

Indonesian leaders, mainly Moslem and Catholics, saw China

simply as a Soviet satellite and backer of the PKI

(Weistein 1976). But for most, distrust of Chinese-

Indonesian and of other overseas Chinese living elsewhere

in Southeast Asia continued to be the most important source

of their concern about China. Yet, none of the Indonesian

leaders during that time perceived China as a serious

threat. For them, China seemed too weak and too preoccupied

52

with the internal problems (Franklin 1976).

In the late 1950s and early 1960s, gradually the

Indonesian leaders became concerned about China. Though

China fully backed Jakarta in its campaign for West Irian

and its opposition to the rebellions, this was offset by

the resentment at Chinese interference in Indonesian

affairs (Justus 1971). The focal point of this was the 1959

Indonesia regulation that in effect prohibited Chinese

resident from engaging in retail trade in rural areas. The

China embassy first protested the regulation and then

encouraged the local Chinese to display it (Justus 1971).

China’s action was viewed as an unacceptable intrusion into

Indonesia domestic affairs.

This concern subsequently getting more heightened in

the early 1960s due to several developments about the way

China behave in an aggressive manner. One was the increase

in Chinese funds channeled to the PKI. Another was the

increasing dependence on China for diplomatic backing after

the 1963, coupled with growing isolation from alternative

sources of support. Also cited was China’s invasion of

India in 1962, its encouragement of Communist rebellions in

a number of Southeast Asian countries (Justus 1971). The

breakpoint event in the evolution of Sino-Indonesian

relations was the 30 September 1965 abortive coup. The

53

coup’s responsibility was attributed to the Indonesian PKI

that allegedly received support from Beijing and the

overseas Chinese community in Indonesia.

The abortive coup by then, slowly brought an end to

the collaboration in which Indonesia and China in the early

1960s attempt to forge a radical political alignment

expressed mainly in the form of a united front against the

West. In the aftermath of the attempted coup, Indonesia-

China relations deteriorated sharply as an inevitable

consequence of the anti-communist momentum that arose in

Indonesia. In fact, because of the abortive coup, it

increasingly inflames the sense of anger of Indonesians

towards China and the sense of anger was then directed

toward the Chinese community in Indonesia generally.

Following the abortive coup, popular rumors and official

report of continuing Chinese subversive burrowing in

Indonesia stimulated such anger ever higher throughout

1966-1967. Early in March 1966, for example, student

demonstrators, ransacking the Foreign Ministry offices in

Jakarta, reportedly discovered documents revealing an

agreement between Indonesian Foreign Minister, Subandrio

and Chinese Premier Chou En-lai, signed at an unspecified

time well after the coup affairs (Justus 1971).

According to the agreement, a new attempt will be

taken by the Indonesian progressives to eliminate anti-

54

Communist military leaders in Indonesia. In return, Beijing

will continue to give support to Sukarno’s favorite

project, the Conference of New Emerging Forces, which

Sukarno hoped would rival the United Nations. The

Indonesian press also, in the second half of 1966, began to

carry a steady stream of reports describing how Beijing had

been giving refuge to and was in fact fast becoming the

center of dissidents Indonesia’s who were said to be

plotting and training for a new Communist drive in

Indonesia (Justus 1971).

Unfortunately, the new attempt did not succeed because

the leadership of Sukarno slowly deteriorates since the

abortive coup. The politically weakened Sukarno was then

outmaneuvered and forced to transfer key political and

military powers to General Suharto, who had become head of

the armed forces. In March 1967, the Indonesian parliament

named General Suharto as the acting president. He was

formally appointed president one year later (Dewi 1994).

Since the fall of Sukarno, Indonesian diplomacy has

undergone some radical changes but it also has repeatedly

affirmed the previous policy principles especially after

the diplomatic relations between two countries suspended.

Generally, the concept of free and active foreign policy,

which during most of the Sukarno era guided Indonesia’s

international relations, has been retained in the “Orde

55

Baru” period under President Suharto (Justus 1971).

2.4.3 The frozen of diplomatic ties

In the middle of June 1967, the Indonesian Parliament

passed a resolution urging that firm and positive steps be

taken concerning Sino-Indonesian diplomatic relations

including the severance of diplomatic ties. In his message

to the nation on the occasion of the 17 August 1967

Independence Day, Suharto accused Beijing’s involvement in

the abortive coup and of continuing subversion in

Indonesia. However, at the same time, Suharto advised

patience and requested understanding for the pressure on

the part of those seeking an end to diplomatic ties with

Beijing (Justus 1971).

The pressure from the Parliament and people at large

to end the relation had been strained for a while, whereby

sequential incidents already occurred such as a group of

mob gradually attacking Chinese embassy in Jakarta and

attacking Chinese dissidents in Indonesia. To make things

worse, reciprocally on the Chinese part, in April 1967,

several hundred Chinese youths led by the Red Guards

launched anti-Indonesia demonstrations and carried posters

condemning Indonesia to the Republic’s embassy in Beijing

(Rizal 2003). The breaking point of this continuous

56

pressure comes to an end when another mob stormed Chinese

Embassy in Jakarta on October 1, 1967, which resulted the

height of diplomatic tense. Diplomatic tensions reached

their peak on 9 October 1967 when Indonesia’s government

after a special cabinet meeting declared officially that

diplomatic relations between Indonesia and China would be

‘frozen’ from the 30th of the month (Rizal 2003). On the 28

October, Beijing formally announced a suspension of its own

ties with Indonesia. The breakdown of diplomatic

relationship then reflected changes in Indonesian domestic

politics and changes in foreign policy.

2.4.4 Development of bilateral economic relations

On the account of economic relations, China and Indonesia

finally became nation state after World War II, but

followed different social systems, which put strong

influence on economic relations between them. Together with

the influence of international political regimes in the

period of Cold War, the economic relations between China

and Indonesia had not been smooth. Economic relations

between Indonesia and China are closely related to the

political relations between the two countries. As the

political relations have gone through up and down, so were

the economic relations.

57

In terms of economic relations, China and Indonesia

first signed their bilateral trade agreement in 1953. Since

then, the trade between both countries had increased and

the total trade value between them increased from US$ 7.38

million in 1954 to US$ 129 million in 1959. The bilateral

trade relations developed progressively until 1965 when

China became the second trade partner of Indonesia.

Indonesian import and export value from China occupied 11

percent of the total value of Indonesian import and export

(Lin Mei 2007). However, following the ‘30 September’

incident in 1965, the diplomatic relations between two

countries were suspended in 1967. This resulted a

significant negative impact on the economic relations

between Indonesia and China. Direct trade link was stopped

and indirect trade had been taken through Hong Kong and

Singapore (Lin Mei 2007).

The development of economic relations between the two

countries during 1950 to 1966 can be considered as slow

economic development and were characterized as small volume

and simple structure of trade. The development of economic

ties between Indonesia and China are reflected in table 1.

The figures show that bilateral trade increasing in a

58

slower pace from 1950 up to 1965.

Table 1 - Chinese trade with Indonesia during 1950-1966

(Unit: US$ ten thousand)

YEAR 1950-1955 1956-1960 1961-1965 1966

Export 11.75 206.28 236.99 0.33

Import 22.56 191.98 225.20 16.39

TOTAL 34.31 398.26 462.19 16.72

Source: Almanac of China’s Foreign Economic Relations -

Trade 1984. No official data of 1967-1976.

2.5 Indonesia-China relations: 1967 – 1989

Immediately after the diplomatic cut-off in 1967,

Indonesia’s foreign policy towards China has undergone some

radical changes. Under the leadership of new President

Suharto beginning from 1967 onwards, Indonesia-China

relations have embarked on different course. In contrast to

Sukarno pleasant relationship with China, Suharto’s “Orde

Baru” regime put more cautious and suspicious approach to

relations with China because of the abortive coup incident.

Moreover, by the China threat rhetoric. This is off course

59

in contrast to Sukarno’s proposal to establish Jakarta –

Beijing Axis’. Under the leadership of Suharto with the

army dominated ‘New Order’ elite, they has made clear that

it was considered communism in general and communist China

in particular, as the main threat to Indonesia’s national

security (Daniel 2010). The army leaders, including Suharto

himself, had developed a strong anti-communist mindset from

the early days of the republic. Suharto even repeatedly

asserted that the greatest threat to national stability and

economic development stemmed from communist subversion at

the hands of the remnants of the PKI, the Indonesia ethnic

Chinese and Communist China (Justus 1976).

In order to deter the communist influence and

strengthen the legitimacy of New Order regime, Suharto by

then immensely promoted Indonesia’s state ideology, the

‘Pancasila’. Pancasila is the official philosophical

foundation of the Indonesian state comprises of five

principles namely belief in one supreme God, nationalism,humanitarianism, democracy through representative

deliberation, and social justice (Ward 2011). In order to

prevent communist threat, Suharto has learned that the

Pancasila should not be just a device or an umbrella to

bring together all ideologies, such as communism,

socialism, liberalism and religion. If Pancasila were no

more than an umbrella, those ideologies would imitate the

PKI and exploit their position of shelter under the

60

Pancasila umbrella. And at the same time, protecting and

keeping their own separate ideological identities, which

could jeopardize Indonesia domestic politics and led to

internal conflict (Ward 2011). The only solution was for

Pancasila to be the sole ideology or basis for Indonesian

political and social organisations, replacing all other

ideologies. Although under Suharto, Pancasila successfully

become one of deterrence strategy against communist

influence, yet it does not become a stumbling block when

Indonesia decided to pursue reengagement policy towards

China.

Besides focusing towards China as the main threat, the

anti-communist factor of Suharto’s New Order regime also

became an important source of its domestic political

legitimacy and an excuse for repression of dissent and

denial of ethnic Chinese their basic rights (Greta 2011).

Dissemination and declaration of internal security threats

by the New Order, including the triangular threat found in

the connection between Indonesia’s ethnic Chinese

population, the PKI and Beijing’s communist government,

became a useful tool for preserving the legitimacy of the

New Order regime and an excuse for ongoing authoritarian

and repressive measures (Greta 2011). Although the extent

of direct Chinese involvement in the 1965 coup attempt

remains unclear and has been repeatedly denied by Beijing,

there is no doubt that China had actively supported the PKI

61

through funding, coerced and leveraged its influence

through Indonesia’s ethnic Chinese community, and indicated

its willingness to arm an Indonesian PKI (Rizal 2009).

2.5.1 Initiatives of diplomatic resumption

Although the foreign policy under the new President Suharto

embarked on radical changes there were initiatives by

civilian leaders to resume back the diplomatic cut-off.

During the late 1969, there were some debates on the

significance of resuming diplomatic ties between China and

Indonesia especially within the civilian foreign policy

elite. Adam Malik, Indonesian Foreign Minister, in late

November 1969 stated that Indonesia would welcome the

restoration of relations as long as China stopped its

subversive activities in Indonesia and no longer carried

out anti-Indonesia propaganda (Rizal 2003). In February

1970, Malik again indicated that Indonesia had always be

open to any talks about the possibility of resuming

diplomatic relations with China. In October 1970, Adam

Malik indeed began to probe the possibility of restoring

ties with China by assigning his secretary, Aboe Bakar to

establish contact with China through Indonesia’s Consulate

in Hong Kong. The justification was that, it was intended

to get first-hand information of China’s position on

62

various international issues, especially in Southeast Asia

since the establishment of ASEAN (Rizal 2003). However,

Adam Malik’s initiatives were criticized by the military

leaders who did not agreed with such measures. They claimed

that China still posed a serious threat to Indonesia’s

domestic security because it still maintained links with

the banned PKI and continued to support the Party’s attempt

to overthrow the Suharto government.

On the same echo with Adam Malik’s initiatives, in the

1970s, there were significant positive changes in the

regional and international environment especially in the

nature of Beijing’s relations with non-Communist states.

In fact, China has already abandoned its Maoist

revolutionary foreign policy and replaced it with a

peaceful foreign policy of promoting four modernizations.

However, these changes failed to alter Indonesia’s

perceptions and Indonesian leaders were not impressed. The

importance of domestic politics continued to prevail in

Indonesia’s policy towards China (Rizal 2009). The dynamics

within Indonesia’s domestic politics, which required the

preservation and the employment of anti-communist ideology

as the basis of regime legitimacy, continued to underline

the paramount importance of domestic political requirements

over other considerations in Indonesia’s foreign policy

(Rizal 2009).

63

2.5.2 The suspension of direct economic trade

During the suspended diplomatic relationship, economics

relations between the two countries carried a negative

impact. As a result, direct trade link stopped and indirect

trade had been taken through Hong Kong and Singapore in the

period of 1967-1984. The normal economic relations between

China and Indonesia had been stopped for nearly 23 years

because the diplomatic relations between two countries

suspended in 1967 (Lin Mei 2007). In 1970s, about 30

percent of Indonesian import goods from Hong Kong were made

in China and 14 percent of Indonesian export goods to Hong

Kong had been transferred to China at the same time (Lin

Mei 2007). The indirect trade between Indonesia and China

through Hong Kong are reflected in Table 2.

Table 2 - Chinese indirect trade with Indonesia via Hong

Kong during 1967-1984 (Unit: million US dollar)

YEAR 1978 1979 1980 1981 1982 1983 1984 1985

Import

8 28 45 33 42 34 - -

Export

9 134 203 238 256 227 195 165

64

Total 102 162 248 271 298 261 195 165

Source: Hong Kong’s Foreign Trade 1978, 1979, 1980, 1982,1984 & 1985.

2.6 Conclusion

The discussion in this chapter demonstrates that since

the Cold War period, China had played a significant role in

influencing the changing pattern of relationship among

powerful and small states. To Southeast Asian countries,

the rise of China was seen inevitable and her growing power

had been viewed as a source of both opportunity and threat.

For Indonesia, since the formal establishment of diplomatic

ties in 1950, the relation was considered as pleasant and

cordial relation. During the early years of relationship,

President Sukarno viewed China as a role model and partners

in the international arena.

However, the cordial relationship was broken because

of the abortive coup in 1965, which China has been accused

as getting involved in the incident. PKI was disbanded

after the abortive coup. Most importantly, Sukarno’s

leadership was slowly deteriorated followed by power

transfer to General Suharto. Following Suharto’s emergence

65

to power after 1965, China and domestic communists were

viewed as the principal threats to Indonesia’s cohesion.

The collapse of the PKI in the late 1965 and the rise

of Suharto in power led to the breakdown of diplomatic

relations. China’s alleged involvement in the 1965 coup was

regarded as the main reason for the government to severe

diplomatic ties added by continuous domestic pressure.

Furthermore, China’s subsequent hostile behavior provided

further justifications for Indonesia’s government to frozen

its diplomatic relations in October 1967. Since then,

Indonesia-China relations were kept silent until late

1980s.

66

CHAPTER III

INDONESIA’S REENGAGEMENT POLICY TOWARDS CHINA

3.1 Introduction

This chapter analyses the Indonesian behavior into the

adoption of reengagement policy towards China during the

end of the Cold War up to the post-Cold War. It begins with

the discussion on Indonesia-China relations during the end

67

of Cold War towards the post-Cold War in order to explore

the general overviews of Indonesia’s policy towards China.

Subsequently, it discusses two pertinent questions of my

research on the changes of Indonesia’s behavior towards

China. The first part examines the odds of Indonesian

reengagement policy with China after Indonesia had

suspended it relationship with China for 23 years. The

second part analyses the domestic issues that contribute to

the pursuance of reengagement policy with China especially

after a diplomatic tie was resumed on 8 August 1990. This

chapter addresses several aspects namely political

stability, diminishing of communist threat, ethnic-Chinese

minority, economic development, military elites and

leadership which become the determinant factors in shaping

the policy of reengagement towards China.

3.2 Indonesian’s behavioral change towards China during

the end of cold war up to post cold war

As has been discussed in the previous chapter, the

relationship between Indonesia and China during the early

stages of Indonesian independence was growing positively

especially under President Sukarno. The overall relations

between the two countries in the first decade of Cold War

68

period were stable and close in terms of security, economy,

politic and diplomatic. However, the positive relationship

gradually diminished due to several factors especially the

accusations of China’s involvement in Indonesia’s domestic

issues and the threat of communism in Indonesia.

The tragic of Indonesia-China relations was the 30

September 1965 abortive coup launched by Indonesia PKI to

overtake the government. This event was the definite

starting point for the breakup of relationship when

Indonesia publicly accused China was involved with the coup

and Indonesian PKI allegedly received support from Beijing

and the ethnic-Chinese community in Indonesia. Consequences

from this event led to the freezing of diplomatic ties on

October 23, 1967 until it was resumed back in the late

1980s during the end of Cold War.

Following the end of Cold War in 1989, Indonesia had

already decided that diplomatic ties with China would

resume after 23 years of suspended relation. The decision

was in tandem with Indonesia’s action to launch a higher

profile foreign policy and reaffirm its commitment to the

free and active doctrine during the end of Cold War. The

new international focus on economic development and

cooperation, replacing the earlier focus on ideological

conflicts, gave Indonesia a new opportunity to pursue free

and active foreign policy principles.

69

3.2.1 The new environment of post-Cold War

The post-Cold War era is the period in world history from

the collapse of the Soviet Union in the early 1990s (James,

Michael 1995). It has mostly been dominated by the rise of

globalization and the interconnecting relationship among

countries in the world. The end of Cold War has seen the

United States becomes the most powerful country in the

world by far and the rise of China from a relatively weak

third world country to a fledgling superpower (James,

Michael 1995). Indeed, the rise of China already started

when it moved towards capitalism in the early 1970s and

moved even more quickly towards free market economics in

the 1990s. The move to capitalism has increased the

economic prosperity of China and the change of China’s

policy gained tremendous effect throughout the world (Zhao

2001). Beijing’s drive for modernization and its desire for

regional stability have significantly contributed to the

transformation of China’s relations with the nations of

Southeast Asia, demonstrating the shift from an

ideologically rigid, isolationist policy under Mao Zedong

to a less doctrinaire, more pragmatic and cooperative

70

approach favored by Deng Xiaoping (Zhao 2001). Whereas for

Mao Zedong isolationism was necessary, for Deng Xiaoping

the threat of international isolation was adequate to

inspire a rapid improvement in China’s relations with its

Southeast Asia neighbors.

As China begins to transform especially during the

Deng Xiaoping eras, Indonesia too was looking closely on

China’s development. Indeed, as it has been discussed in

Chapter II, as early 1970s, some elements in the Indonesian

government, especially within the Foreign Ministry began to

raise the possibility of restoring diplomatic relations

with China (Rizal 1996). After Indonesia’s domestic

politics returned to normalcy, it began to promote an early

restoration of diplomatic relations with China. Foreign

minister during that time, Adam Malik even raised the hoped

that Indonesia would welcome the restoration and he

indicated that Indonesia has always been ‘open’ to any

talks about the possibility of resuming diplomatic

relations with China (Rizal 1996). However, the Angkatan

Bersenjata Republik Indonesia (ABRI) and other anti-

communist forces vehemently denied the resumption of this

diplomatic tie and hindered this effort.

3.2.2 The beginning of diplomatic restoration

71

Although the effort to resume back diplomatic relations was

hindered during the early 1970s, as years goes by, the

intent of resuming back relations becoming more visible. By

late 1980s, there was indication for the restoration of

diplomatic ties when the issues of the resumption of direct

trade relations between Indonesia and China was

substantially discussed. It was perceived within the

business community in Indonesia especially Kamar Dagang dan

Industri that the resumption of direct trade would bring

advantages for Indonesia and China, since both sides had in

fact traded through a third party with a value already

worth hundreds of millions of dollars (Lin Mei 2001).

Though at the initial stage, the government resisted the

direct trade resumption especially the military leaders

dominated the New Order Government, yet Suharto finally

agreed to it. On 5 July 1985, Indonesia and China

officially resumed direct trade relations when KADIN and

China’s Council for Promotion of International Trade

(CCPIT), signed an Memorandum of Understanding in Singapore

without any reference to the official names of both

countries (Rizal 1996).

The signing of direct trade relations as a matter of

fact becomes the initial point of the resumption of

diplomatic ties. It was more than two decades until

72

diplomatic ties were finally restored in 8 August 1990 when

Suharto finally agreed to resume the relations. Indeed,

there were signs of significant change of Indonesia’s

attitude towards China in the early February 1989 when

Foreign Minister Ali Alatas revealed to the Dewan

Perwakilan Rakyat (DPR) that President Suharto had

instructed him to normalize diplomatic relations with

China. According to Alatas, President Suharto also restated

that security risk factor should be considered in any

attempt of normalization (Lie 1990). However, efforts to

normalize back the relations were not highly publicized and

were kept undisclosed until late February 1989.

On 22 February 1989, during Suharto’s visit to Japan

to attend the funeral of Japan’s Emperor Hirohito, there

were already efforts behind the door to normalize the

diplomatic ties will be revealed. And this effort, which no

one expected will change Indonesia-China relations to enter

a radical new phase. On the evening of 23 February 1989,

Indonesia’s Minister for the State Secretariat, Moerdiono

broke the news of a restoration of diplomatic relations at

a press conference at the Imperial Hotel in Tokyo (Rizal

1996). Moerdiono disclosed to the press that Indonesia and

China had reached an agreement to take necessary measures

towards normalizing diplomatic relations. The agreement had

been reached during a meeting between President Suharto and

China’s Foreign Minister Qian Qichen, who was also in Tokyo

73

to attend the funeral of Emperor Hirohito.

After President Suharto’s decision to restore

diplomatic relations with China, there were mixed reactions

from the foreign policy elite in Indonesia. Much of the

reactions from the civilian leader such as the DPR, GOLKAR,

business community and bureaucrats strongly encourage the

decision and expressed their support to the government. For

majority of them, the normalization of diplomatic relations

would be advantages to provide the stability in the Asia-

Pacific region and at the same time beneficial for

improving trade and economic relations between the two

countries (Rizal 1994). However, resistance towards

normalization also ignited especially from the military

elites, the ABRI. Some generals and even ministers in

Suharto’s cabinet still demanded that Foreign Minister

Alatas postpone or delay the normalization process (Rizal

1994). Notwithstanding such calls from prominent ABRI

figures such as General Subiyakto and General Sugomo,

Indonesia government determined to proceed from its early

decision to restore diplomatic ties with China. On 8 August

1990 in Jakarta, the prolonged debate among Indonesians on

the question of restoring diplomatic ties with China was

officially ended when Foreign Minister Ali Alatas and

China’s Foreign Minister, Qian Qichen signed a Memorandum

of Understanding on the Resumption of Diplomatic Relations

between Indonesia and China.

74

3.2.3 Odd relationship between Indonesia and China

during the early process of restoration

Although the official diplomatic relations was successfully

resumed, yet, in the immediate years of restoration,

Indonesia-China relations did not improve significantly.

Both suspicions and sensitivity continued to describe

Indonesia’s attitude towards China (Zhao 2013). On this

note, there are several issues that still harbors

Indonesia’s odd attitudes towards China which Indonesia

tended to choose for wait-and-see approach in developing

its newly restored relations with China. As other

Association of Southeast Asian nations countries began to

expand their relations with Beijing in the early 1990s,

Indonesia pretty much sat on the sidelines (Greta 2011).

Such a cautious attitude has been demonstrated in

Indonesia’s indirect approach to strategic engagement with

China. In spite of developing its political-security

relations directly, Indonesia favored to deal with China

within a multilateral framework, either through ASEAN or

the ASEAN Regional Forum (ARF). It has been noted that for

Indonesia, ASEAN has been considered as likely to be a more

effective instrument for managing relations with China

(Greta 2011). Similarly, the ARF also has been seen by many

75

Indonesian policy makers as an instrument to secure China’s

respect for international norms of inter-state relations

(Greta 2011).

Likewise, Indonesia at the same time tries to delay

any immediate improvement in bilateral relations by the

persistent uncertainty in Indonesia’s perceptions towards

China (Leifer 1999). Although Indonesians began to

recognize the importance of China, the problem of their

country’s ethnic Chinese minority continued to affect

perceptions of China. Indonesia is still worried about the

possible link between China and the ethnic Chinese

minority. The perceptions of the general public and

political elite also continued to be highlighted by various

stereotypes as associated with the minority (Leifer 1999).

As a matter of fact, the Indonesian suspicious towards

ethnic-Chinese was then become evident when labor unrest

broke out in April 1994 that led to the anti-Chinese riot.

In the wake of the labor unrest, which spreads into an

anti-Chinese riot in North Sumatra, China’s Ministry of

Foreign Affairs, issued a statement of “concern” and called

upon Jakarta to defuse the situation. Indonesia’s

government replied angrily to the Chinese and accused China

of interfering in Indonesia’s internal affairs. China was

warned that it had better mind to take care its own

affairs. Worse, there was a new element in Indonesia’s view

76

that concern about China’s regional role and policies in

Southeast Asia, especially on China’s behavior in the South

China Sea and the growing of its military capability (Greta

2011).

In a nutshell, it took 23 years for Indonesia to

finally resume back its diplomatic relations with China.

The decision to reengage, however, did not mean that China

was forcing Indonesia to immediately forge better ties. The

years since the resumption of ties continued to be

tarnished by uneasy management of the bilateral

relationship. It was only after 1998 that Indonesia-China

relations began to show significant signs of improvement

and closer cooperation. Such positive developments

coincided with dramatic changes in Indonesia’s domestic

politics since May 1998 and China’s changing policy towards

Southeast Asia, especially on the ethnic Chinese issue

(Zhao 2013). Equally important, China’s “good neighbor”

policy towards Southeast Asia as demonstrated in the

aftermath of 1997 crisis has further consolidated the

bilateral relationship.

By looking from this perspective, on the background of

the chronological events and issues that led to the

diplomatic break off between both countries, seemingly the

77

resumption of diplomatic ties is something that is hard to

achieve. Yet, after 23 years, the normalization of

diplomatic relations was able to resume via the signing of

Memorandum of Understanding. This resumption by then poses

a pertinent question on the justification of Indonesia’s

behavior attitude towards China and what are the domestic

factors that contribute to the reengagement policy. It is

essential to highlight that during the leadership of

Suharto and Abdurrahman Wahid, contributing factors to the

adoption of reengagement policy towards China was very

strong compared to the next generation of leaders whereby

the diplomatic relationship was already intensified. Thus,

the pursuance reengagement policy will be greatly at focus

during the period of Suharto and Abdurrahman Wahid

especially during Suharto era when the relations still

unstable. During the Megawati and Susilo period, the

pursuance of reengagement policy with China has already

contributed significant implications to the development of

Indonesia.

3.3 Domestic factors for reengagement policy with China

After nearly 23 years of strained relationship, diplomatic

ties was finally resumed after deliberate considerations

were taken into account to pursue back the normalization

78

with China. As a matter of fact, it might be argued that

the personal traits of Suharto as the leader had shaped the

foreign policy of Indonesia particularly towards the

resumption of diplomatic ties with China. Yet, other

domestic factors indeed have played an important role

towards the adoption of reengagement policy with China.

If the “Old Order” Indonesian foreign policy towards

China tended to be ‘soft profile’ or more inclined towards

soft approach and pleasant, in contrast with the New Order,

the foreign policy was a “hard profile” with more hard and

hostile approach in its relations (Franklin 1976). The so-

called soft profile refers to the foreign policy model

adopted by President Sukarno in responding to the

development in China and to various international issues

that both countries try to collaborate. In contrast with

that, Suharto’s foreign policy towards China during the

Cold War period was very hostile. However, as year goes by,

Suharto then realized that the frozen relationship put

Indonesia on the losing side (Franklin 1976). Therefore,

Indonesian foreign policy needed to be shifted from total

frozen to the adoption of reengagement. The shift in

Indonesian foreign policy was the result of several

determinants domestic factors.

79

3.3.1 Political and security stability: The diminishing

Communist threat and the democratization process

During the early years after taking over from Sukarno,

Suharto’s principal objective of the New Order government

was to maintain political stability and internal security.

By the mid-1980s, Suharto succeeds to achieve the objective

and able to manage Indonesia’s domestic situation under

peace and stability. The position of New Order regime was

becoming more secure and there had not been any significant

challenges from its any local opponents (Rizal 1999). In

fact, the Suharto’s government had succeeded in restricting

and silencing such critics and exercising tight control

over political participation, thus removing potential and

actual challenges from among the military, students,

members of political parties and especially from the PKI

(Rizal 1999). In fact, government’s primary aim to manage

the possible revival of PKI and the threat of communist

insurgency was successful.

The communist insurgency, which had posed a threat to

the New Orders’ during the early years of Suharto’s rule,

had been wipe out by the 1970s. Moreover, despite

repetitive warnings by the security agencies in Indonesia

against China’s continued support for a communist revival

80

in Indonesia, there had been no signs or evidence of

China’s subversive activities (William 1987). Indeed, from

1985 up to the time when President Suharto decided to

normalize diplomatic relations with China in 1989, there

had not been any major social uprisings and communist

threat. From the early 1970s until the mid-1980s the

government managed to bring up the issues of communist

threat in coping with the challenges to its legitimacy, but

by the end of 1980s, such issues was not often heard. The

only challenges are no more from the communist but from

outside the regime, especially on the issues of

democratization and leadership (Rizal 1999). Thus, it has

make the perception doubtful of China’s supporting the PKI

was no longer relevant and Indonesia gradually begin to

trust China. The threat of communist that previously lead

to the domestic disorder was not becoming the primary

agenda for the New Order Government.

Aside from the threat of communist insurgency, another

domestic issues that previously become a stumbling block to

resume diplomatic relations was the ethnic-Chinese minority

problem. During the earlier years of President Suharto’s

leadership, it was commonly discussed that the ethnic

Chinese minority problem posed a great risk for Indonesia’s

internal stability if normalization were to be approved

81

before the ethnic problem being resolved (Rizal 1999).

Indeed, it is in line with the majority of Indonesian

leaders who believed and was suspicious that the domestic

Chinese would act as the main channel through which

Communist China might direct its subversive activities

especially to support the PKI (Rizal 1999). Since the

presence of the ethnic-Chinese was considered as serious

problem to internal security, the government then decided

to take suitable actions and policy to manage the issues.

The first policy was clarifying the citizenship status of

the ethnic Chinese minority. Secondly, promoting ethnic-

Chinese integration into the wider Indonesian society

(Charles 1983).

The first policy introduce by Indonesian government of

clarifying citizenship or mass naturalization was

successful whereby many foreign Chinese took the

opportunity to become Indonesian citizens. With regard to

the integration process, the policy of assimilation

implemented by the government had resulted to changes in

the perception, attitude and identity of the ethnic Chinese

in Indonesia. Majority of the ethnic Chinese had developed

a new identity more closely reflecting Indonesian rather

than Chinese cultural traits (Charles 1983). Besides these

two measures, another policy that contributes to the

changing perception of the ethnic Chinese minority was

denial of the minority from taking part in any direct

82

political role in the mainstream (Rizal 1999). As the

ethnic Chinese become more assimilated, there were no

longer perception and continued suspicious and will not

become a hindrance to the resumption of diplomatic

relations. This development by then had provided a solid

ground for the government to be more confident that the

ethnic Chinese community was under firm control and no

longer posed significant threat or political risk to

internal security. Thus, it resulted to reliable confidence

to Indonesian government to normalize her the relationship

with China.

The second policy is the process of democratization in

Indonesia after Abdur- rahman Wahid took over the

presidency in 1999, which was immersed. During Suharto,

Indonesia was considered as an authoritarian type of

governance. During Abdulrahman Wahid democratization’s

period, Indonesia’s transition from authoritarian to

democratic rule has enabled more growing pursuance of

reengagement policy with China emancipating Indonesia from

the ideological constructs of the New Order. And at the

same time, allowed Indonesia to take full advantage of

China’s concerted economic and diplomatic investment (Greta

2011). Although Indonesia has pursued a liberal normative

agenda in its relations with ASEAN, it seems that its China

policy is motivated more by pragmatic considerations, which

is under the democratization political system. Although at

83

the earlier stages, Wahid’s efforts to reform against

hardline New Order elements would resulted his downfall,

improved relations with China and Indonesia’s ethnic

Chinese community were considered as a necessary measure of

the Wahid administration’s democratic political legitimacy

based on economic recovery and the rehabilitation of

Indonesia’s tarnished international image (Greta 2011).

This is because during the 1998 riot, which saw the

downfall of Suharto, the main victims of the violence were

the ethnic Chinese community. During the violence,

intimidation often followed by the looting of Chinese-owned

stores and businesses. Chinese Indonesians were angered and

felt betrayed by this action and many of them fled to other

neighboring countries such as Malaysia, Singapore, or other

locations in Indonesia.

Aside from the discrimination towards the ethnic-

Chinese community during the 1998 riots, the

democratization process in Indonesia started after the

downfall of Suharto also become a resolution of the ethnic

Chinese problem that had often served as a significant

factor to Indonesia - China relations (Rizal 1994). While

prejudices and stereotyping against the Chinese remain

evident in Indonesia, explicit anti-Chinese attitudes in

Indonesia basically has become less obvious before the 1998

riots. The democratization process in Indonesia

84

significantly resolves the problem after Abdulrahman

Wahid’s government took over the presidency (Rizal 1994).

The government, for instance, has introduced a number of

significant political moves in order to address the problem

of discrimination against the Indonesian Chinese. Firstly,

the special mark in the identity card of Indonesian

Chinese, for instance, has been removed. Secondly, a new

law on citizenship, which banned discrimination against any

citizen regardless of his or her ethnicity, race, and

religion, was passed by the Parliament. With this kind of

significant moves, it then becomes more reliable factor to

pursue re-engagement policy with China, which in return

will bring advantages to Indonesia.

3.3.2 Economic development for stability and China’s

huge opportunity

For most of Indonesia’s leader, domestic political and

internal stability continued to be seen as the most top

priority and highly significant factor if the new order

regime was to strengthen its legitimacy. However, the

leaders also saw that domestic instability could no longer

be maintained only through controlling the internal threats

from various group, but it need to be in tandem with the

government’s capability to sustain economic progress and

85

development and improving people’s living conditions.

Although during the early period of his leadership Suharto

was able to maintain economic progress, in the early 1980s,

the government begins to confront serious difficulty in

sustaining the rapid development growth, which Indonesia

had experienced during the period of 1968-1981. During that

period, Indonesia’s economy experienced an average annual

rate of growth over 7 percent (Anne 1992). However,

beginning in 1982, the average rate of Indonesian GDP

growth began to drop considerably. One of the main factors

was a sharp decline in oil prices in the International

market from 1982, which seriously affected the government’s

revenues. This is because, during the 1980’s, Indonesia’s

economy was heavily dependent on oil and gas resources.

During the 1981-1982, this sector accounted for over 80

percent of Indonesia’s total export, and more than 70

percent of the government revenues. With the fall of oil

revenues, it was estimated that in 1983 – 1984, Indonesia

had suffered a loss of income of 2.9 percent of GNP (Anne

1992). To address this problem, Indonesia’s government was

under pressure to initiate policy adjustment in order to

restructure the country’s economy.

Thus, in order to resolve this problem, one of the

policies introduced in restructuring Indonesian economy was

to promote non-oil commodity export to reduce the

86

dependency on oil and gas to increase state revenue.

Initially, this policy was directed towards East European

countries’ market. However, as price of oil continued to

decline, China was seen as the potential market for

Indonesia’s non-oil export which government began to

consider the option (Rizal 1999). To tackle this problem,

an improvement of relations with China would enable

Indonesia to boost its non-oil and gas exports (Rizal

1999). By improving relations with China, Indonesia could

export many commodities to China such as fertilizer, wood,

rubber and pepper. From China, Indonesia in return could

import light industrial product such as light machinery,

building materials, small generators and other commodities

(Lien 2011).

Aside from the government’s considerations, the

Indonesian business community at the same time put the

pressure on the government to seize opportunities that

arose from China’s economic reforms and open door policy.

In fact there was a great of enthusiasm within Indonesian

business community to gain huge market access of China

(Rizal 1999). As a result of all the considerations, by

late 1984 Indonesia’s government began to accept China’s

economic development since the introduction of open door

policy would provide tremendous opportunities for

Indonesia, which needed new sources of national revenue in

87

order to maintain continuous economic development. On

October 1984, Indonesia Foreign Minister, Mochtar gave a

statement in the parliament that the time had come for

Indonesia to resume direct trade with China if it did not

want to be left behind by Malaysia and other countries to

benefit from the potential of China’s market (Rizal 1999).

As a matter fact, after deliberate considerations,

Indonesian government by then decided to resume the direct

trade relations in July 1985, which was heavily coordinated

by KADIN. When the official resumption of direct trade

begins to show its significant impact, China was finally

acknowledged as an important market in Indonesia’s attempt

to boost non-oil exports (Hadi 1992). Progress of direct

trade soon become the evidences of improving relations

between the two countries whereby trade played the

promotion of Indonesia-China relations in general (Hadi

1992). Even though Indonesia’s growing export to China

cannot be said to have fulfilled all of Indonesia’s needs

for foreign earning, they represented an important part of

Indonesia’s overall efforts to seek non-oil resources for

national revenue. More importantly, direct trade not only

served as a factor within which Indonesia’s government

could evaluate domestic views of future Indonesia-China

relations, but also helped both countries to begin the

process of building mutual trust.

88

Indonesia’s economic recovery

With regard to Abdurrahman Wahid’s leadership, the main

factor to pursue active re-engagement policy is due to the

impact of 1997/1998 global financial crises and 1998’s riot

which ethnic-Chinese community fled Indonesia with huge

portion of capital. During the crisis, Indonesia faced

severe multi-dimensional problems whereby Indonesian

economic decline to the lowest level since 1960s; Gross

Domestic Products (GDP) decreased dramatically, inflation

mounted and millions of people lost their job (Agus 2010).

After Wahid took over the presidency, he saw the need to

boost economic recovery through the strengthening of both

domestic and international confidence in his government,

especially among Indonesian Chinese which have a major

stake and influence on Indonesian economy and the Chinese

business community elsewhere (Rizal 2008). Wahid understood

that domestic economic recovery could be enhance if the

Indonesian Chinese brought back their money and started

doing business again in the country. Wahid also understood

that the overseas Chinese business community also had an

important role to play in that process and Chinese

investors are often interested by the way Chinese

Indonesians control large parts of the economy (Rizal

89

2008).

In his effort to restore their confidence, President

Wahid initiated a series of policies to abolish

discriminatory regulations imposed by the New Order

government against them. Such a changed policies on the

domestic Chinese was matched by the same policy towards

Mainland China. By implementing that policy, President

Wahid expected that the support from domestic Chinese would

soon increase if Indonesia forged better relations with

Beijing (Drajat 1999). While the assumption of the linkage

between Indonesian Chinese and Beijing might be unproven,

the efforts did send a significant message both to

Indonesian Chinese at home and abroad that Wahid and his

government had nothing against the Chinese. During the

crisis, Wahid indeed saw that China already become a

beneficial and responsible regional power, and Indonesia’s

greater receptiveness to closer relations around this

period can be understood in both pragmatic and normative

terms (Rizal 2008). Indonesia was in need for Chinese aid

and investment, including the capital of Indonesian Chinese

entrepreneurs who had fled the May riots in Jakarta during

1998.

3.3.3 The decline of Angkatan Bersenjata Republik

Indonesia

90

During Sukarno’s era, the Angkatan Bersenjata Republik

Indonesia (ABRI) or the Indonesian military had begun to

play a significant role and inserting major influences in

Indonesian politics. However, since 1966, when Suharto New

Order regime took over the power, ABRI has come to dominate

the country’s government almost entirely. Indeed, during

the New Order era, ABRI has emerged as the major political

institution and become dominant in the overall aspects of

government beginning from the administration, economy, and

governance up to the foreign policy. As a matter of fact,

ABRI was among the key players and the dominant actor

demanding government to break diplomatic relations between

Indonesia and China especially after the abortive coup

incident (Crouch 1978). Indeed, after the diplomatic

breakup, ABRI continued to instill fears that if Indonesia

try to resume the relation, Chinese subversion might lead

to renewed communist activity in Indonesia (Crouch 1978).

During the breakup relationship, the military elites or

ABRI was the main opponent to normalization process of

resuming Indonesia-China relationship. After the decision

to proceed with the normalization was taken by President

Suharto, military elites’ attitudes on the issues had not

changed and they still view that China remain as a

potential threat to Indonesia (Rizal 1999). In fact, there

were efforts by some ABRI leaders tries to delay the

91

process of normalization. However, the attempt failed and

official resumption of diplomatic ties between Indonesia

and China was signed on 8 August 1990.

The attempt failed because during the period since

mid-1980s, there was substantially declining of ABRI

influence towards the government and president Suharto

himself (Jenkins 1984). During the first two decades of New

Order, Suharto’s position in the political structure owed

much primarily to strong support from ABRI as an important

institution. However, by the end of 1980s, it became clear

that Suharto had achieved in building his own power base to

the extent that he had become of a political force quite

independent of ABRI in determining his preferred policy

(Rizal 1999). On this regards, David Jenkins (1984)

explains that “Suharto stood at the apex of the pyramid;

his appointees sat in each of the key executive,

legislative and judicial branches of government” and

“[ABRI’s] political activities are determined by the

President”. The growing power of Suharto became

unassailable and his role in foreign policy making also

becomes stronger.

In addition, ABRI’s role in the state’s policy making

had also suffered a gradual decline together with their

role in foreign policy influence. The decline in ABRI’s

92

role in the policy making was partly a result of Suharto’s

achievement in promoting his position above any other

political institution in Indonesia (Rizal 1999). Aside from

that, Suharto’s growing power and influence was

complemented by another significant change in the New

Order’s power structure by implementing the strategy of

“civilianization” (Max 1991). This strategy was implemented

by Suharto to legitimize his rule through civilian

mechanism such as general elections and the appointment of

more and more civilian politicians as member of his

cabinet. If there were still military men in the cabinet,

they were no longer retained on active service and had

retired before they were appointed to take any positions in

the cabinet. Subsequently, as Suharto gradually moved to

the top of the hierarchy of power, it become evident that

ABRI was no longer in the position to insert its

institutional influence over the President. By the end of

1980s, Max Lane (1991) observed that ABRI has become

increasingly just an instrument carrying out general

policies, which it has no greater say in formulating.

In a nutshell, the growing power of Suharto and

changing relationship between Suharto and ABRI in the power

configuration of the New Order by then had brought

significant repercussions for the foreign policy-making

process in Indonesia especially with regard to the decision

on normalization diplomatic relations with China. Despite

93

ABRI was the main opponent of resuming back diplomatic

relations with China, with the decline of power in policy

formulating, they were no longer strong and dominant to

influence the President and the government (Rizal 1999). In

fact, after the unexpected decision to normalize diplomatic

relations with China, two most senior ABRI leaders,

Commander of ABRI General Try Sutrisno and Minister of

Defence and Security, General Benny Moerdani straightaway

give their support that ABRI was ready to back up the

government’s decision and safeguard the normalization

process. Despite the fact that the majority of military

elite are still suspicious on China, there are none

expressing their direct opposition to the government’s

decision. Dr. Dewi Fortuna Anwar (1992) on this note

explained “those opposed to having closer ties with China

have generally voiced their criticisms in moderate tones,

since no one wanted to be seen as opposing the President”.

Only some dissatisfied ABRI leaders conveyed their

reactions on the possible risks of resuming diplomatic

relations with China without direct opposition, which shows

that they are powerless of influencing the government as

before.

3.3.4 The transformation of Suharto’s interest in

foreign policy and international issues

94

Aside from the above factors, among the most significant

domestic factors that contribute to the adoption of

reengagement policy towards China was Suharto’s leadership

idiosyncrasies. On this note, Suharto as the leading

powerful figure in Indonesian government has the strong

capability to decide on the aspects of foreign policy.

Although at the early stage of Suharto’s leadership, he saw

China and communist as the main threat, with the end of

Cold War, the perception was that communist threats become

less relevant. As a matter of fact, Suharto who labeled

himself as the ‘Father of Development’ saw that the

communist threat posed by China also diminishing. Suharto

in fact saw that the Chinese economic and international

factor as an attractive and potentially useful to his new

legitimacy in foreign policy aspect beside his main concern

on domestic issues (Smith 2003).

Based on the new interest and role played by President

Suharto in foreign policy making, it may be argued that the

significance of normalization with China began to receive

greater attention from President Suharto with his growing

interest in international issues. A change in Suharto’s

attitude towards the restoration of diplomatic ties with

China was in tandem with the change in his interest in

foreign policy matters (Rizal 1999). In contrast, around

95

the mid-80s, Departemen Luar Negeri (DEPLU) arguments in

favor of normalization based on Indonesia’s international

position were still less attractive than economic arguments

for Suharto. This is because, during that time, Suharto

primary concern was still on the domestic economic problems

rather than to pursue active foreign policy role, which is

not his priority (Rizal 1999). This concern has contributed

to his early decision only to resume direct trade relations

with China in 1985. Thus, it can be argued that Suharto’s

preferences clearly served as significant factor in

determining not only the outcome of foreign policy debate

but also the state of Indonesia-China relations.

Suharto’s preferences in foreign policy aspects in

fact can be observed beginning in the mid-80s when he

started to put more interest in international issues. This

can be noticed during his meeting with members of the

Cabinet whereby Suharto began to discuss foreign policy and

international issues actively with his minister. On this

note, Minister of Defense and Security, Moerdani remember

that if previously Suharto had devoted most of his time to

discuss various domestic problems especially in economic

development, it seemed that from the end of 1980s, the

President showed more interest in foreign policy issues

(Rizal 1999). President Suharto even shared his view that

Indonesia will have a say in the world only if it has

96

successfully addressed its domestic challenges. In an

address during Indonesian National Day on August 1990,

Suharto announced that domestic challenges had been met so

that it was the time for Indonesia to play greater

international role.

By this announcement, President Suharto’s interest and

influence on foreign policy grew along with the

developments in domestic politics and his new position in

international arena. In this regard, Suharto’s

considerations and involvement in the question of

normalization with China also grew stronger in accordance

with his growing interests and attention towards foreign

policy issues and the need for Indonesia to play a larger

international role (Agus 2010). Beside that, Indonesia’s

decision to restore diplomatic ties with China in 1990 also

in tandem with Suharto’s government attempt to increase

Indonesia’s credentials as a leading member of Non-Aligned

Movement (NAM) (Rizal 1999). For this reason, it can be

understood that President Suharto’s decision to normalize

relations with China will enhance its image as a truly non-

aligned country. This justification was that, with the

suspension ties with China, it will show to some NAM

members that Indonesia had taken side more with the West or

western oriented rather than the so-called non-aligned

country.

97

Nevertheless, bear in mind that Suharto’s views about

the significance of resuming diplomatic ties with China had

also undergone gradual change over time. The key factor

that influenced his changed on the issues was his own view

of the implications of such change for Indonesia and

Suharto’s legitimacy. For Suharto, such implications were

always measured within the context of Indonesia’s domestic

political situation, which Suharto put on high regard.

Indeed, the most significant change in Suharto’s view on

the merits of normalizing relations with China came in

early 1985 when Indonesia agreed to resume direct trade

relations with China (Hadi 2010). Suharto and his

government were extremely concerned with the domestic

economic problems especially on the account of sharp

decrease in oil prices on the world market and its

devastating impact on Indonesian economy and government’s

revenues.

Aside from the interest on international issues,

Suharto’s personal feeling also contributes to his

decision. After his meeting with Chinese Foreign Minister,

Qian Qichen in February 1989, Suharto revealed that he felt

he had received the assurance and guarantee that Indonesia

had been waiting for from China. It was claimed that Qian

98

finally promised that Beijing would not support the

communist movements in Indonesia and in other Southeast

Asian countries (Raymend, Arya 1999). Such an assurance

from China has made Suharto accepted the possibilities for

Indonesia to move forward by restoring diplomatic ties with

China after 23 years of troubled relationship. This has

resulted Suharto expedite and fully support the

normalization process to commence within one year from the

last meeting in Tokyo.

Transformation of Indonesia’s foreign policy under new

democratic governance

Since the downfall of President Suharto in 1998,

Indonesia’s foreign policy has endured changes based on the

new leadership and new democratic governance. The new

Indonesia’s foreign policy under the new president was

introduced by the Department of Foreign Affairs, in

achieving the goals stated in the 1999-2004 Broad Outlines

of State Policy (Dewi 2003). The goals are to restore

Indonesia’s international image by helping boost the

economy and public welfare, helping strengthen national

unity, stability and integrity and preserve the nation’s

sovereignty, develop bilateral relations, particularly with

99

countries that can support Indonesia’s trade and investment

and economic recovery and to promote international

cooperation that helps build and maintain world peace (Dewi

2003). With the background of this new foreign policy, it

strengthens the aspiration of Indonesia to pursue more

robustly the doctrine of active and free policy.

With the introduction of the new state policy,

Indonesia-China relations had begun to enter a new period

of active reengagement and cooperation. A newly

democratizing Indonesia began to have pursued a very

different attitude and policy course towards China. The

essential for improving relations with China had suddenly

become a matter of urgency in any foreign policy discourse

of the successive governments in Jakarta. Under President

Abdurrahman Wahid, he tried to rival Sukarno by pursuing

more frenetic foreign relations in an attempt to project a

higher profile for Indonesia (Dewi 2003). Instead of

following the concentric circles formula, under Wahid

presidency Indonesia carried out a so-called ecumenical

foreign policy, trying to be on close terms with as many

countries as possible (Dewi 2003).

To show his new approach, Abdurrahman Wahid, who

became the first democratically elected president in

October 1999, has made China as his first destination of

his state visit abroad. During the first year of Wahid

100

presidency, Indonesia-China relations improved

significantly. In fact, there were several reasons that led

to the new interest on the part of Wahid’s government in

forging closer relations with China. Firstly, Wahid’s

aspiration to work closer with China pointed to a degree of

Indonesia’s dissatisfaction with the dominant role played

by the West in international affairs (Drajat 1999). This is

because Wahid himself and many members of the Indonesian

elite felt betrayed by the West, especially Australia, over

the East Timor issue. They felt that instead of supporting

Indonesia’s territorial integrity, the West had taken

advantage of its troubled situation to separate East Timor

from the Republic. Even prior to the East Timor debacle,

there was also a sense of frustration among the political

elite over Indonesia’s “excessive” dependence on the West,

especially the US. In this context, by forging closer

relations with China, Wahid sought “to balance American and

Western influence” and “limit the scope for external forces

to undermine Indonesia’s sovereignty” (Rizal 2008).

3.4 Conclusion

The rise of China has influenced Indonesia to pursue the

reengagement policy, but it commenced only with the

101

resumption of direct trade relations not the official

diplomatic ties. This is because Indonesia’s domestic

attitude still perceives China as a potential threat.

Indeed, after the restoration of diplomatic relations,

which was finally agreed on 8 August 1989, was in odd mode

especially in the early years of normalization process.

Indonesia still maintains her suspicious towards China

especially on the issues of communist threat and China’s

interference in Indonesia’s domestic issues. However, the

issues of economic development, domestic politics and

security and the transformation of leadership policy focus

have become a push factor for Indonesia to change her

stance and attitude towards China.

At the same time, the declining of ABRI’s influence

and power also become vital to the Indonesia’s adoption

policy of reengagement. ABRI has played its major role in

state’s policy-making and becomes the major influence to

the government’s decision to break off its diplomatic ties

with China. However, as Suharto become more powerful,

ABRI’s traditional role in policy making has been affected

and no more influential towards the government. Aside from

that, the democratization process and new governance under

the new president also contributes to the declining of

ABRI’s influence in the decision-making process,

particularly at both domestic and international level. Such

opportunity is now leverage for the state leader to think

102

about state interest and benefits. The re-engagement policy

with China is one of them.

CHAPTER IV

IMPLICATIONS OF INDONESIA’S REENGAGEMENT POLICY TOWARDS

CHINA

103

4.1 Introduction

This chapter examines Indonesia’s reengagement policy that

is closely related to its diplomatic strategy towards China

during the post-Cold war up to the present day. In this

chapter, it will answer an imperative question on the

implications of Indonesia’s reengagement policy with China

especially after the resumption of diplomatic ties between

the two countries on 8 August 1990. This chapter primarily

analyzes various dimensions of implications which benefited

Indonesia namely on Indonesia’s economic growth, investment

and infrastructure development and Indonesia’s role in the

international arena especially in ASEAN, role between major

power and as the counterweight to China. Subsequently, it

analyzes additional implications of the reengagement

policy, which focus on Indonesia’s domestic issues and the

establishment of defense and military cooperation between

the two countries though it was once a sworn enemy during

the 60s. Further, this chapter then narrates how Indonesia

conducts her diplomatic strategy towards the rise of China

in the midst of the reengagement policy.

104

4.2 The implications of reengagement policy

The previous chapters argue that the transformations of

relationship between Indonesia and China during the end of

Cold War began to improve as the result of several

Indonesia’s domestic issues. During the early stage, the

efforts to resume the diplomatic ties were faced by

numerous difficulties. Certain groups in Indonesia

especially from the military elites and Indonesia’s

leadership still remain cautious on China’s actual motives,

the threat of communism and accusations of China’s

involvement in Indonesia’s domestic affairs. However, as

the result of economic problems and several internal

factors, Indonesia at last had to pursue a resumption of

diplomatic ties with China on 8 August 1990. Nevertheless,

the decision made by Indonesia, although seemingly hard for

them, in the short and long term has benefited Indonesia

tremendously. On this note, this chapter will dwell more on

the implications of Indonesia’s re-engagement policy with

China starting from the official resumption of diplomatic

relationship in 1990, the same year of the end of the Cold

War. Indeed, the end of the Cold War was a very crucial

and monumental for both Indonesia and China.

Since the transition to post-Cold War, Indonesia-China

relations had changed slowly beyond all domestics concerns

105

in Indonesia, resulting in a more cordial and productive

phase in bilateral relations (Jing 2006). The optimistic

shift in the Indonesia-China relations had produced

positive implications towards Indonesia in several areas.

As a matter of fact, after the diplomatic relations being

normalized, Indonesia and China tried to build a stronger

relation in various areas such as economic, politics, and

security. However, the normalization of the relations did

take a long process especially during Suharto’s era because

of the difference in the political ideology that regularly

raised the awareness of Indonesian political and military

leaders who are still suspicious with Chinese policies and

behavior towards Indonesia (Rizal 1999). But after certain

significant events, especially the Asian Financial Crisis

and May Riot 1998, the relations of both countries became

more moderate as Indonesia began to see China as a generous

friend (Rizal 1999). Indeed, during the aftermath of 1998,

the significant impact of Indonesia’s reengagement policy

with China is really a substance especially during the era

of Abdurrahman Wahid (October 1999 – July 2001), Megawati

Sukarnoputri (July 2001–October 2004), and Susilo Bambang

Yudhoyono (October 2004– present).

4.2.1 Economic implications - Indonesia’s economic

growth and the increasing of bilateral trade

106

As has been discussed in the previous chapter that among

the main factors of Indonesia’s reengagement policy with

China is due to the severities of Indonesian domestic

economic problem. The factors certainly have contributed a

major impact to the resumption of bilateral economic

relations between the two countries. Indeed, when Indonesia

decided to resume the diplomatic ties, the economical

effect of this resumption started to show a tremendous

result. Relations between Indonesia and China began to

improve in 1985 when the Indonesian government gave

approval to the business community to reopen direct trade

relations between the two countries (Christine 2003). This

has become an important first step towards normalization as

bilateral trade immediately flourished with the outcome

always in Indonesia's favor (Wu 2011). The first impact of

the outcome was that Indonesia had gained wider access to

the growing market in China, hence to promote Indonesia’s

non-oil exports (Rizal 1999). Various commodities from

Indonesia such as woods, timber and rubber managed to be

exported to China. This has resulted significant impact

whereby starting from 1985 onwards to 1998, Indonesia’s

non-oil and gas exports to China increased substantially

from around USD580 million to over USD1.32 billion, while

Indonesia’s imports from China grew from around USD800

million in 1991 to around USD1.27 billion in 1997. In 1997,

107

Indonesia’s total exports to China reached USD2.7 billion,

a significant jump from only USD834 million in 1990

(Raymond, Arya 1999).

As a matter of fact, not only Indonesia gained wider

access market in China but it also gained restoration of

bilateral economic relations which was already started in

1985 when both countries signed a memorandum to resume

direct trade relations. Due to the resumption, a remarkable

rising of bilateral economic relations between the two

countries prospered (Raymond, Arya 1999). As a result of

the memorandum too, the economic relations between the two

countries developed more rapidly after the normalization of

diplomatic relation in 1990. To show how significant the

impact of the resumption, the development of economic

relations between China and Indonesia beginning in 1985 as

shown in Table 3 below:-

Table 3: The trade balance between China and Indonesia

during 1985-2003 (Unit: US$ million)

YEARSINDONESIAN STATISTICS CHINESE STATISTICS

TOTAL EXPORT IMPORT TOTAL EXPORT IMPORT

1985 333.1 84.2 248.9 108.7 69 39.7

108

1986 476.1 139 337.1 285 102.2 182.8

1987 751 343 408 432.2 142.1 290.1

1988 930.5 491.8 438.7 522.7 170.4 352.3

19891,095.9

0568.5 527.4 441.9 141.9 300

19901,486.8

0834.4 652.4 545.7 220 325.7

19912,025.9

0

1,190.9

0835

1,884.5

0481.1

1,403.4

0

19922,147.9

0

1,396.4

0751.5

2,025.7

0471.4

1,554.3

0

19932,114.0

0

1,250.0

0864

2,160.3

0691.7

1,468.6

0

19942,690.7

0

1,321.7

0

1,369.0

0

2,640.1

0

1,051.7

0

1,588.4

0

19953,137.0

0

1,641.8

0

1,495.2

0

3,490.2

0

1,438.2

0

2,052.0

0

19963,655.1

0

2,057.5

0

1,597.6

0

3,708.4

0

1,428.0

0

2,280.4

0

19973,747.3

0

2,229.3

0

1,518.0

0

4,514.2

0

1,840.6

0

2,673.6

0

19982,738.2

0

1,832.0

0906.2

3,627.9

0

1,171.2

0

2,456.7

0

109

19993,251.1

0

2,008.9

0

1,242.2

0

4,829.8

0

1,778.9

0

3,050.9

0

20004,789.6

0

2,767.7

0

2,021.9

0

7,463.9

0

3,061.9

0

4,402.0

0

20014,043.4

0

2,200.7

0

1,842.7

0

6,724.6

0

2,836.5

0

3,888.1

0

2002 5,330 2,903 2,4277,928.3

0

3,426.9

0

4,501.4

0

2003 6,760 3,803 2,95710,229.

00

4,481.0

0

5,748.0

0

Source: Almanac of China’s Foreign Economic Relations Trade

(Different Years), Statistics Indonesia (BPS).

Based on the table above, bilateral trade volume has

rose rapidly since the two countries resumed diplomatic

ties beginning in the 1990s. The trade volume increased

from US$1.48 billion in 1990 to US$3.75 billion in 1997; an

increased by two fold. However, during the period of 1997

to 2001, it can be seen that the trade relations between

the two countries showed an inconsistent trend as the trade

volume dropped to $2.74 billion in 1998 due to the impact

of the Asian financial crisis, though the amount of

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bilateral trade reached $3.27 billion in 1999 (Wu 2011).

Trade volume between the two countries reached to 4.79

billion in 2000. In 2001, the value of Indonesia-China

trade stood at US$4.04 billion comprising of US$1.84

billion of imports and US$2.20 billion of exports, which

showed a decrease of 8.87% compared to that of 2000 due to

the global economic slowdown but China rose to become the

5th trading partner of Indonesia while Indonesia, the 17th

trading partner of China (Wu 2011). Overall, the balance of

trade between the two countries from 1996 to 2001

consistently showed a surplus for Indonesia. The largest

trade surplus was recorded in 1998 and amounted to US$925

million.

Besides the increasing trade values between both

countries, China has also become one of Indonesia’s key

major trading partners in recent years especially beginning

in the year 2000, serving as the country’s largest export

and import market (MOC 2010). In terms of total non-oil and

gas exports, China stood as the third-largest destination

for Indonesian export products in 2006 behind Japan and the

United States, a leaning that lasted until the end of 2009.

However, in 2010, China had managed to overtake the United

States as Indonesia’s second-largest trading partner

(Alexander, Lucky 2011). On the part of Indonesia, Jakarta

non-oil and gas exports to China more than doubled in the

period of 2006–2010. While in 2006 Indonesia’s non-oil and

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gas exports to China stood at USD 5.4 billion, in 2010 this

figure managed to reach USD 14.0 billion. Moreover, in

terms of the overall trend of non-oil and gas trade,

Indonesia’s exports to China have also showed a most

encouraging outlook, rising by about 24.4 percent, in

contrast to Japan and the United States, which increased by

only 5.28 percent and 3.72 per cent, respectively (Martina

2012). Similarly, China is also becoming Indonesia’s most

important source of imports. For instance, non-oil and gas

imports from China rose from USD 5.5 billion in 2006 to USD

19.6 billion in 2010.

Throughout the same period, the overall trend of non-

oil and gas imports from China to Indonesia also showed a

significant increase of around 36.04 percent, which is

higher in comparison to other major sources of Indonesian

imports, including Japan (30.56 per cent) and the United

States (23.42 percent) (Alexander, Lucky 2011). In fact,

within the increasing of trade relations, after the

restoration of the diplomatic relations, Indonesia and

China also enhance their economic relations via the signing

of various agreements. Both countries managed to sign the

"Air Transport Agreement", "Investment Protection

Agreement", "Sea Transportation Agreement", "Agreement on

Avoiding Dual Taxation", and the signing of memorandum for

understanding of cooperation in the fields of mining,

forestry, tourism, fishery, transportation, agriculture and

112

finance (Wu 2011). In fact, in 1990, the two countries have

already set up a joint committee for economic, trade, and

technological cooperation.

China’s huge investment in Indonesia

Another economic implications of Indonesia’s reengagement

policy are, China as one of the world’s economic powers is

pouring more investment in Indonesia especially into

resources-oriented and market-oriented investment. This

investment has resulted Indonesia gained enormous benefit

from its engagement with China. In fact, China’s swift

economic development has led to massive demand for natural

resources, leading to an economic boom in Indonesia.1 This

is because China views Indonesia as a natural resources

supplier with big potential market because of Indonesia

huge population with more than 230 million people.

Indonesia also at the same time is abundant with natural

resources such as oil and gas, mineral, wood, palm oil and

so on which are badly needed by China (Lin Mei 2010). As

compared to China, the country is facing shortage of

natural resources with rapidly economic growth. Petroleum,

in particular, is becoming a cause for concern. China's oil

1 Based on interviewed with Shahriman Lockman on 25 September 2013

113

consumption last year hit 245 million tones, making it the

world's second biggest consumer of oil after America. In

2020, it is expected to become the world's biggest oil

importer, with foreign oil resources making up 60 percent

of its total consumption (Stacy 2012).

To complement its diminishing resources, China is

looking towards South-East Asia, especially Indonesia,

which has rich mineral and forest resources, as well as oil

reserves, which amounting to about 120 billion barrels. In

resources-oriented investments aspect, China already spend

huge investment in oil and gas exploration. For instance,

in January of 2002, state-owned China National Offshore Oil

Corp (CNOOC), signed its largest overseas deal worth $585

million for the Indonesian oil operations of Spain's

Repsol-YPF. It makes CNOOC the largest offshore oil

producer in Indonesia (Monirruzaman 2013). In April of

2002, China's largest oil company, PetroChina made its

first overseas purchase in Indonesia worth $216 million for

American Devon Energy Corp.'s oil and gas operations in the

country. In February of 2004, CNOOC then succeeded in

buying 20.77 percent of British BG’s shares in Muturi Ltd.

at price of US$ 9.81 million and CNOOC became the biggest

stockholder of Muturi Ltd. whose share in Mutri Ltd rose

from 44.0 percent to 64.77 percent and whose share in

Tangguh LNG plant in Papua rose from 12.5 percent to 16.96

percent (Lin Mei 2010). The increase of Chinese investment

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in recent years has taken place in the oil and gas sectors,

worth about US$ 1 billion.

Aside from the oil and gas investment, based on the

data from the Indonesia's Investment Coordinating Board

(IICB) showed that beginning from 1997 to February 2008,

there are 360 China PMA projects in Indonesia, with a total

investment of USD7.0 billion engaging thousands of

Indonesian workers. In fact the investments in Indonesia’s

energy sector alone reaching US$1.2 billion (Martina 2012).

Chinese investments in Indonesia, excluding those in the

gas and oil sectors, reached US$170 million (38 projects)

in 2003, and it rose to US$205 million (80 projects) in

2005. The value of Chinese investments in Indonesia in

2001-2006 recorded an amount of US$600 million with 310

projects (Wu 2011). Based on the statistics, China is now

the fifth biggest investor country in Indonesia with an

investment worth US$7.4 billion.

1997 financial crisis

Since the resumption of diplomatic ties, economic relations

between both countries developed rapidly until it was

hindered by the financial crisis in the end of 1997.

Although the financial crisis affected the smooth trade

relations between Indonesia and China, yet, on the

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different facet, the crisis can be considered a blessing in

disguise. The economic crisis and the political turmoil in

Indonesia in 1998 has opened up the opportunity to develop

a much more cordial relationship between the two countries

especially for Indonesia that really in need for assistance

and helpful friend (Rizal 1999). The Asian financial crisis

in 1997 has provided an opportunity for China to pursue its

new diplomacy of friendship into concrete action, and

consequently boosted its positive image particularly in

Indonesia (Rizal 1999). China offered aid packages and low-

interest loans worth 400 million US dollars as part of an

IMF rescue package for Indonesia. China also provided

export credit facilities amounting to 200 million US

dollars and 3 million US dollars grant of medicines. As a

result Chinese endowment, the Indonesian government itself

was grateful for this help.

Indonesian leaders prioritize China as the catalyst for

Indonesia’s economic and infrastructure development.

Besides the domestic economic crisis as the push factor,

China’s huge potential also become the pull factor

especially for the Indonesian leaders. When Abdurahman

Wahid took over the presidency as the first democratic

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elected, he chose China for his first state visit in

December 1999 to boost bilateral relations with China and

to intensify the policy of reengagement. The prime

objective of the visit is that, Wahid hoped that his visits

would generate more financial aid and investment for

Indonesia, which were seen as key for Indonesia’s economic

recovery because of the financial economic and internal

political crisis (Rizal 1999). In this notes, Wahid realize

China’s huge economic potential is very essential to

Indonesia’s economic development. In fact, President

Megawati Sukarnoputri, who replaced Wahid in July 2001,

also realizes the same thing and continued to pursue the

policy of improving ties with China (Hadi 2003).

Similarly, President Megawati has chose and made China

as her first stop during her Asian tour in March 2002.

During Megawati’s visit, both countries agreed to expand

bilateral cooperation in all sectors, especially in

infrastructure, agriculture and energy, which become the

major focus in the relationship (FMPRC 2002). Indeed,

during Megawati’s tenure as the President, PetroChina

succeeded to acquire six oil fields from Devon Energy, and

China National Offshore Oil Corporation (CNOOC) had also

acquired assets in Indonesia’s oil and gas sector. (FMPRC

2002). As a matter of fact, under Megawati, Indonesia’s

exports to China increased by 232% from 2001 to 2003,

amounting to 12.6 billion US dollars (Hadi 2003).

117

Cooperation between the two countries has also rapidly

expanded to include other areas beyond trade such as

security and defense.

The policy of seeking active reengagement with China

continued under the foreign policy agenda of President

Susilo Bambang Yudhoyono who became Indonesia’s sixth

president in October 2004 (Hadi 2003). The most significant

enhancement of bilateral relations was intensified when,

Susilo and Chinese President Hu Jintao signed an agreement

to establish a "strategic partnership" between the two

countries on April 25 2005. The agreement of strategic

partnership laying the ground for a comprehensive

cooperation on a wide range of issues, including energy,

security, and defense (Wu 2012). In fact, under the

agreement, the two countries intended to increase their

two-way trade to US$30 billion by 2010 under the strategic

partnership frame. The target has been reached even before

2010 because the two countries’ trade value stood at $31.5

billion in 2008, up 25.9 percent year-on-year, which was a

new record and two years in advance to reach the goal of 30

billion US$ when the planned year is 2010. Both countries

are now set to have a bilateral trade target of $50 billion

in 2014.

Aside from the gleam of strategic partnership, Susilo

manage to persuade China's state-owned companies to

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participate in Indonesia's ambitious program to rebuild the

country's infrastructure (Wu 2012). This is another

milestone for Indonesia as Jakarta has a long wish list of

infrastructure projects that it wants to build over the

next five years, costing $145 billion. The private sector

is expected to fund 60% of the cost and China itself had

offered concessional loans totaling $800 million to

Indonesia for the development project. Half of that amount

was offered during the presidency of Megawati Sukarnoputri.

During his visit to Indonesia in April 2005, China's

President, Hu Jintao, offered another $300 million for

Indonesia's infrastructure program, and China even offered

a further $100 million during Susilo's visit to Beijing in

2006 (Zhao 2007). Based of the commitment from China, a

number of projects have been identified for the loans,

which will fund building of bridges, power plants, and

railway tracks.

China also at the same time offered soft loan to

Indonesia whereby the two countries signed two agreements

on soft loan cooperation for purchasing credit assistance

for the Jatigede Dam project. The soft loan for the

construction of the Jatigede dam project amounted to

US$239.7 million and an additional government facilities

loan of US$200 million (Zhao 2007). In general, all the

loans will contribute to necessity of Indonesia for the

development of public infrastructure, which Indonesia

119

really needed. Indeed, the significance of Chinese

infrastructure investment in Indonesia, particularly roads,

ports, rails, telecommunications and transport had made

China to become a major financier to mega projects in

Indonesia supplementing the role played by the World Bank,

Asian Development Bank, Europe, Japan and the United States

in the past (The Jakarta Post 2010).

4.2.2 Indonesia’s role in the international arena

Another implications of Indonesia’s reengagement policy

with China are the increasing of Indonesia’s role and image

in the international arena. This is due to the fact that

most of the Indonesian leaders believe that an improvement

in relations with China would provide Indonesia with

additional leverage and balance in dealing with the major

powers. Indonesian leaders gradually saw that in the

aftermath of the Cultural Revolution, China was actively

re-orienting its foreign policy, resulting in a tremendous

rise in its profile in international relations (Novotny

2009). This has made Indonesian leaders convinced that

China was an important emerging power in the Southeast Asia

that could not be ignored by Indonesia. Indonesia leaders

120

also believe that by restoration of diplomatic ties with

China, it would enhance Indonesia’s leverage in regional

and international contexts (Rizal 1996).

As a matter of fact, with the resumption of diplomatic

ties with China, Indonesia’s intention to play a more

confident international role as prescribed by the principle

of ‘bebas-aktif’ foreign policy become more robust. In a

hearing before the DPR in February 1990, Minister Moerdiono

argued that in accordance with the ‘bebas-aktif’ foreign

policy, there is no reason at present for the two

countries, which have experienced new developments during

this 23 years, not to have good relations (Rizal 1999).

Moerdiono also stated that because of the restoration of

diplomatic ties with China, Indonesia’s foreign policy

would be more energetic (Rizal 1999). This is because

Indonesia understands that China is the new emerging power

regionally and globally, and a bad relation between both

countries will bring more disadvantages to Indonesia. At

the same time, majority of the Southeast Asian countries

have intensified their relations with China and Indonesia

refuses to be left behind.

On this aspect, Indonesia too realized that during the

period of suspended relationship, her image in the

international scene has been dormant and indolent

121

especially Indonesia’s credibility as a non-aligned state.

This is because during the period of suspended relationship

with China, Indonesia’s foreign policy from 1966 was moving

closer to the West. Indonesia as the proponent of non-

aligned movement should act in neutrality rather than

moving towards certain countries or major powers. (Ann

2009). Thus, with the resumption of diplomatic ties with

China, Indonesia once a strong proponent of non-aligned

movement coming back into action under the direction of

‘bebas-aktif’ principle. The propagation of the ‘bebas-aktif’

principle serves still as the doctrinal basis of

Indonesia’s foreign policy, originated from the Hatta’s

government which attempt to seek compromise between

competing political forces over the ideal international

identity for Indonesia (Rizal 2009). The principle of bebas-

aktif proclaimed that Indonesia would not commit itself to

either bloc in the post-war rivalry between the US and

Soviet Union and the principle also continues during the

Cold War and post-Cold War. Within such context, the

restoration of diplomatic ties with China, even though such

move would not necessarily bring major international

benefits to Indonesia. vis-a- vis It also would not bring

disadvantages either. On the contrary, it would help

Indonesia’s attempt to seek a higher profile in

international affairs, which in turn could enhance the

credibility of Indonesia in the long run.

122

Indonesia’s role in ASEAN

From regional perspectives, Indonesia’s reengagement policy

with China also reflects strong appreciation of Indonesia’s

‘primus inter pares’ status within ASEAN and the sense of

regional entitlement.2 On this aspect Indonesia, which has

been the traditional critical veto actor in ASEAN and its

ambition for a more high profile international role has

really attracts China’s ongoing and open support. This can

be seen during Premier Wen visit to Jakarta in April 2010,

when he declared that Indonesia had made “an outstanding

contribution” to ASEAN and had played a major role in the

ASEAN development (Greta 2011). On the same echo, China’s

State Councillor Dai Bingguo once told Indonesia’s

President that “Indonesia and China are great regional

countries”, whose long-term relationship “benefits the

region and world peace and prosperity” (Greta 2011). In

this notes, China has sent a signal and clear message that

Indonesia is important to China in its ASEAN policies and

strategy, which is based on both developing country’s

solidarity and common desire to reform global financial

institutions and reflect the new power centers of Asia. On

the same sentiment, China’s recognition of Indonesia’s

influence in the region has benefited Indonesia as the

2 Based on interviewed with Shahriman Lockman on 25 September 2013

123

emerging of middle power that can greatly influence the

smaller countries in Asian such as Malaysia, Singapore and

Brunei.

Indonesia as counterweight to China

Thirdly, in comparison as the emerging middle power that

have great influence on ASEAN, Indonesia’s active

reengagement relationship with China is also highly

significant to ASEAN as a counterweight to the Chinese

assertiveness. In this regard, Indonesia’s traditional

mediation role and moderating country will be important to

balance the rise of China in the region (Ann 2009). In

fact, Indonesia possesses the ability to manage regional

stability and to ease against the possibility of regional

armed conflict between China and ASEAN states. This can be

understood through three interlinked and mutually

reinforcing factors surrounding closer Indonesia-China

relations.

Firstly, Indonesia's economic success and the rise in

diplomatic status over the last decade, means that

Indonesia has become a pivotal state in the ASEAN region.

This fact, supported by Indonesia's openly independent

foreign policy doctrine and repulsion to hegemonic power

dominance in Southeast Asia, puts Indonesia as an important

counter-balance to China (Greta 2011). Secondly, due to a

124

combination of Indonesia's strategic geographic location

and natural resource wealth, China is becoming increasingly

dependence on Indonesia both for its energy security and

resource necessities, and in Jakarta's support for its

regional foreign policy agenda (Greta 2011). On other

words, China needs Indonesia's trust and cooperation if it

is to achieve further economic and political integration

with ASEAN states. And the final one, the confluence of

these first two factors expands Indonesia's significance to

Beijing. Indonesia has proved a clever and intangible

subject of Chinese advances in the past. It is not beyond

“twisting the dragon's tail”, as one analyst characterized

it and Jakarta's ability to moderate China's "rough

diplomacy" has been enhanced by closer bilateral relations

since (Greta 2011).

At the moment, Indonesia is now a pivotal state in the

region and a key arbiter of that order. Jakarta's new

regional strategic approach now is based on a doctrine of

‘balance’ and ‘dynamic equilibrium’ or the 'Natalegawa

Doctrine', which seeks to avoid regional dominance and

undue interference by major powers (Ahmad 2011). The

difference is now that Indonesia is more powerful and

thereby more influential in the region. To support this

arguments, former Japanese Foreign Minister Takeaki

Matsumoto once stated that “we expect Indonesia to play a

125

major role”, in the context of the South China Sea which

can jeopardize the security scenario in the region (Japan

Times Online 2011). This is in relations with the issues of

South China Sea especially the increasing assertiveness of

China towards the other claimants and the potential of

military clashes. On this note, Indonesia, which can be

considered as the middle power in the region, can play an

influential role to tame China.

4.2.3 China’s support on Indonesia’s domestic issues

With regards to the domestic issues, Indonesia’s decision

to normalize relations with China reflected the domestic

requirements to maintain domestic political stability and

China’s support on the sensitive issues such as the East

Timor. On this note, it has been widely known that China’s

foreign policy behavior is not to interfere in the domestic

issues of any friendly countries. With the resumption of

diplomatic ties, Indonesia was able to gain China’s support

on her domestic issues. During President Abdulrahman

Wahid’s visit to China, Indonesian government managed to

secure China’s support for Indonesia’s attempt to overcome

separatist challenges to the Republic’s territorial

integrity, especially in Aceh (Rizal 2009). In Beijing,

President Wahid was told that China supported the

Indonesian government efforts to maintain national unity

126

and territorial integrity.

Similar support was also expressed by China in July

2000 in Jakarta by then Vice-President Hu Jintao. Hu

maintained that the Chinese government would always support

Indonesia’s government and people in maintaining national

integrity and sovereignty, especially in the face of

possible intervention by large powers (Rizal 2009). Within

regional context, China also joined ASEAN in expressing

their support for Indonesia’s territorial integrity, during

the ASEAN Plus Three Joint Statement issued in Bangkok in

July 2000. The support sent a clear message to the Acehnese

and Papuan rebels that their struggle would not receive

support from important countries in the Asia-Pacific (Hadi

2003). Indeed, the support from China is very important

because the Western country on the other hand, always

pressured on Indonesia on the issues of Acheh and Papuan.

For instance, the Western countries are continuously

compelling Indonesian government to focus on economic

reforms and human rights investigation over the Acheh and

East Timor violence (HRW 2011). However, as Indonesia

intensify her relations with China, it becomes as leverage

for Indonesia to balance up the pressure from the Western

countries with China as the global power support. This at

the same time contributes to reduce Indonesia’s domestic

pressure and vice versa to counter Western influence and

reduce dependency upon the West.

127

4.2.4 Defense and Military Cooperation

The existence of defense and military cooperation between

Indonesia and China as one of the main implications of the

active reengagement policy. Something that is unimaginable,

which become a reality considering what had happened during

the abortive coup, particularly the incidents of kidnapping

and assassination of seven Indonesian military generals

during the abortive coup. Because of the incidents, it

creates sense of severe hatred from the Indonesian military

leaders towards the communist PKI and the communist

ideology as Indonesia’s primary threat. Indeed, during the

height of the communism in 1960s, majority of Indonesian

military leaders believes in the real existence of the

Chinese threats especially on Beijing’s subversive

activities directed against Indonesia (Novotny 2009). On

this note, a former Indonesian military general describes

that:-

“We were very close to China ever since China proclaimed the People’s

Republic of China. And became closer during Sukarno to the effect that we were

its closest ally…. When 1965 came….. we found that China was behind (the coup).

The disillusion was so great; the disappointment was so great towards China,

who have always considered as friend, suddenly becoming our mortal enemy ….

that for years we did not want to have anything to do with China” (Novotny

2009)

128

Despite all the historical hostility towards China by

the Indonesian military leaders, when the diplomatic

relations were put back on track, the pursuance of

reengagement policy has change both countries into a

pleasant relations. China at present is now Indonesia’s

most important bilateral relationship partner including on

the defense sector. This is because Chinese engagement and

assistance in defense and military cooperation meets

precisely with Indonesia’s defense policy priorities.

According to the Act No. 3/2002 on State Defense, the main

objective of Indonesia’s defense policy is to “protect and

uphold state sovereignty, maintain territorial integrity of

the Unitary Republic of Indonesia, and to ensure the safety

of Indonesian people from all forms of threats and

disturbances. This objective, as specified in the Defense

White Paper issued in February 2008, is to be achieved

through the fulfillment of five main strategic goals. The

goals among others are to deter all forms of threats to

Indonesia and its people that undermine the existence and

interests of Indonesia and might have adverse impacts on

Indonesia’s sovereignty, territorial integrity, and safety

of the people (Yudhy 2013).

To attain the objective of this defense policy,

Indonesia by then has formulated the defense development

plan provided in the Law No. 17/2007 on Long-Term

Development Plan 2005–2025. This development plan envisions

129

a defense capability beyond minimum defense requirement

capable of upholding Indonesia’s sovereignty; and

protecting people’s safety and maintaining territorial

integrity with a respectable deterrent effect in order to

support Indonesia’s diplomatic position” (Yudhy 2013). This

development plan that is targeted during the period of

2005–2019, is aimed at achieving Indonesia’s defense

capability as “a minimum essential force,” namely a force

level that can guarantee the attainment of immediate

strategic defense interests, with the procurement priority

is given to the improvement of minimum defense strength and

or the replacement of outdated main weapon systems and

equipment (Evan 2009).

In order to support this development, China has

engaged Indonesia to offer assistance and cooperation that

meet precisely with Indonesia’s national defense policy

priorities based on defense self-reliance and global

diplomatic stature (Rizal 2011). Initially, the offers

began with the commencing of defense and military

cooperation between the two countries in 2005, when China

and Indonesia announced their "Strategic Partnership. The

cooperation under this strategic partnership aims to expand

the political, cultural and military-security aspects of

the bilateral relationship. Under the military-security

aspects, both Indonesia and China are committed to develop

each other's defense industries, establishing a defense

130

consultation mechanism and increasing cooperation between

their law enforcement and intelligence agencies in the

fight against transnational security threats (Fabio 2010).

The first collaboration under these aspects begun in July

2005, when Indonesian President Susilo Bambang Yudhoyono

visited Beijing and signed a memorandum of understanding on

defense technology cooperation for the development of short

and medium-range missiles. Under the memorandum, Jakarta

agreed to purchase YJ-82/C-802 anti-ship missiles worth

USD11 million3. In the subsequent year, in 2006, Indonesia-

China Defense Security Consultation talks were established

to increase the warming ties between Jakarta and Beijing.

Later, in 2007 two Chinese warships visited Indonesia in

March 2007, the first such visit in more than 12 years,

which send a good message of the increasing of cordial ties

between two military institutions (Fabio 2010). During the

same year, a draft agreement on defense cooperation was

then signed in the second Defense Security Consultation

Talks covering defense technology cooperation, exchange of

military students and the possibility of further arms sales

to Indonesia.

In January 2008, the two countries then further agreed

to cooperate in the joint production of military transport

vehicles and aircraft, to be developed by the two

countries' state-owned defense industries. The same year,

3 Based on interviewed with Shahriman Lockman on 25 September 2013

131

China's NORINCO and Indonesia's Pindad inked a deal to

jointly develop rocket launchers and accompanying

ammunition. An agreement was also reached on setting up a

TNI-PLA cooperation committee, with the objective of

arranging joint military and training exercises. To expand

further the growing of military relations, in 2010, China

has designated the year as, "The Year of China-Indonesia

Friendship," in order to mark the 60th anniversary of the

establishment of diplomatic relations. During the

celebration year, high-ranking Chinese military officials

traveled to Jakarta to propose the establishment of a joint

council to facilitate increased levels of joint military

production and offered additional C-802 anti-ship missiles

and a range of naval vessel (Jakarta Post 2010). At

present, Indonesia is currently in negotiations with China

for a production agreement that could potentially see the

transfer of technology associated with the Chinese C-705

anti-ship missile. Indonesia and China have also conducted

joint exercises between their special forces in 2011 and

2012. Indonesia’s defense engagement with China has

arguably been more intensive compared those of other

countries in the maritime of Southeast Asia, including

Malaysia4.

Besides Indonesia’s growing military relations with

4 Based on interviewed with Shahriman Lockman on 25 September 2013

132

China generates direct impact to Indonesia, this relation

also has created value-added advantage especially from

other major power such as the United States. The United

States, which has long been competing for Indonesia's

affections, try to expand their engagement and influence to

counter China by increasingly offers military hardware and

military cooperation to Indonesia (CDF 2011). The first

action by the United States to start the courtship began in

November 2005 when they removed an arms embargo against

Indonesia, ending a six-year ban on military aid to

Indonesia because of human rights issues (ODF 2013). After

the lifting of the U.S. military embargo, Indonesia had

received nearly USD1 million in FMF funds in 2006 that has

climbed to USD20 million in 2011. On the same event, Gates

also announced that Washington had lifted its ban on

cooperation with Kopassus, the TNI's controversial Special

Forces. The restriction had been the last remaining embargo

on bilateral military-to-military ties.

Since then, various military cooperation and

collaboration was offered to Indonesia. In March 2010, a

U.S. Air Force technical team carried out critical in-

country safety and maintenance reviews of the Indonesian

air force of U.S.-built aircraft. This was followed by the

signing of a wide-ranging agreement in early June 2010 on

the Framework Arrangement on Cooperative Activities in the

133

Field of Defense intended to integrate existing defense

collaboration between the two countries (Fabio 2010). The

same month in June 2010, United States Ambassador to

Indonesia Cameron R. Hume inaugurated a USD56 million

program to fund production of coastal and shipboard radar

systems at the Batam Regional Maritime Command Center. The

systems included 16 coastal radars, 11 shipboard radars,

one set of headquarters equipment and two regional command

centers (Fabio 2010). As the defence relations become more

pleasant, on July 2011 Indonesia Defense Minister Purnomo

Yusgiantoro expressed Jakarta's intention to buy U.S.-built

F-16 and C-130H Hercules aircraft during a bilateral

meeting with U.S. Secretary of Defense Robert Gates in

Jakarta. The purchase would be funded by the Foreign

Military Financing (FMF) program, a U.S. grant provided to

foreign governments to fund the purchase of U.S.-made

weapons, services and training (ODF 2013).

4.3 Indonesia’s diplomatic strategy towards China

Based on the discussion on chapter III and IV, Indonesia’s

diplomatic strategy in this thesis can be considered not a

torn between China and the United States where Indonesia

has to choose. This thesis is purely examined Indonesia’s

relationship with China, the evolution and significant of

such changes in the diplomatic behavior. In fact, this

134

thesis is in tandem with the arguments made by Chwee (2008)

where he stated that in response to the international

situation during the post-cold war, Southeast Asian

countries clearly do not want to choose between the two

major powers, the United States and China. Instead,

Southeast Asian states are applying the hedging strategy as

an alternative state strategy distinct from the balancing

and bandwagoning strategy. In this case, Indonesia’s

diplomatic strategy of hedging can be best described as the

reactions of small states against the big states by

accommodating China’s growing economic and military power.

On the same note, Indonesia’s diplomatic strategy can

be clearly seen whereby amid strengthening closer

cooperation with China as the result of the reengagement

policy, Indonesia at the same time remains cautious on the

steady relations between both countries. Reasonably,

Indonesia had experience the agony of China’s involvement

in Indonesian internal issues and the outcome of communist

ideology in Indonesia. On this note, it can be considered

that Indonesia’s cautious and response to the rise of China

can be categorized from the bilateral perspective and

within the wider context of regional implications of the

rise of China in East Asia (Rizal 2009). In the bilateral

context, Indonesia has become increasingly comfortable

dealing with China, a manifestation of which is evident in

the expansion of cooperation between the two countries

135

since 1998 and especially since 2004. On this issue,

Shahriman (2013) shared the same echo on Indonesia’s

comfortable relations with China: -

“Nonetheless, we should be careful not to exaggerate the extent of

Indonesia’s concerns about the rise of China. True, there are some

within the Indonesian military (TNI) who are deeply wary about the

growth of China’s military capabilities. Nonetheless – and as I have

previously noted – Indonesia has deliberately sought to enhanced its

military links with China through military procurement and joint

exercises. This is not the behavior of a country that is particularly

alarmed by the rise of China”.

However, within the East Asian (regional) context,

Indonesia’s attitude and policy are still shaped by a

degree of the feeling of uncertainty regarding the long-

term implications on the rise of China for the regional

order (Ann 2009). In this context, due to the perceptions

of uncertainty in China’s long-term intentions in East

Asia, Indonesia was seen to pursue a policy of hedging of a

kind towards China as the rising power (Rizal 2009). This

policy of hedging was pursued because the Indonesian

leaders and policymakers had the sense of wariness towards

China as a major power (Novotny 2004). For the leader and

policy makers, there is no guarantee that in the future a

powerful China, both in economic and military terms, would

136

continue to be a status quo power.

As a matter of fact, it is also not immediately clear

that China would not pursue a revisionist foreign policy

agenda in the future. The concern with China relates first

and foremost to the question of how China is going to use

its new stature and influence in achieving its national

interests and objectives in the region (Acharya 2009).

Besides that, an enduring element of Indonesian foreign

policy is a sense of regional entitlement. This element was

clearly presented during Sukarno and Suharto eras, and it

is arguably persists to this day. As a consequence of this

sense of regional entitlement, it has been Indonesia’s

policy to ensure that no single major power from outside

Southeast Asia dominates the region.5 While Indonesia has

welcomed the rise of China as a major power, it remains

guarded about the long-term potential of China to emerge as

a regional hegemon.

Thus, Indonesia, like any other ASEAN member states,

refuse to see China tries to dominate the region and

control its relations with ASEAN states in terms of its

competition with other major powers. In fact, in order to

contain China’s rising domination within ASEAN, Indonesia

has played some roles by exerting influence and affirm her

position in the East Asia Summit (EAS) membership issues.

5 Based on interviewed with Shahriman Lockman on 25 September 2013

137

Indonesia had opposed Malaysia’s initial proposal that the

EAS members should only be limited to the APT countries. In

Indonesia’s view, there was a need to expand the membership

to include Australia, India and New Zealand so that the EAS

could really function as an inclusive process of East Asian

regional community building.6 Wary of China’s potential

dominance in an EAS that only included the 13 countries of

the APT, Indonesia together with Singapore insisted to

include India, Australia and New Zealand in the EAS.

The additional reason was that, the more actors

involved in the EAC, the more difficult it would become for

any party to dominate the process. Many analysts then

interpreted Indonesia’s support for the inclusion of India

and Australia as an expression of its uncertainty regarding

the place and intention of China not only in the process of

regional community building but also in the region (Rizal

2010). Moreover, in dealing with the rise of China,

Indonesia together with ASEAN has also formed a “strategic

partnership” with China. at the same time, Indonesia has

also strengthened its relations with Japan within a

strategic partnership framework which moves beyond

traditional areas of cooperation (trade, ODA and industry

and technology) to include deeper political and security

cooperation. Besides Japan, India, and Australia, Indonesia

gradually has increased her relations with the US despite

6 Based on interviewed with Shahriman Lockman on 25 September 2013

138

Indonesia’s critical stand on the manner by which the US

has conducted its war on terror. This is due to the fact

that Jakarta still sees the US as a crucial power important

to the regional security, stability and prosperity. In

fact, Jakarta positively responds to the US engagement is

considered as an offsetting power against China’s influence

(Smith 2003).

On the other hand, Indonesia’s response towards the US

pivot policy (or rebalance) towards Asia has been

ambivalent. This is because as has been discussed in the

previous chapters, Indonesia’s foreign policy doctrine is

‘free-active’ and non-align, which guide Indonesia not to

take side with any specific major powers. Indonesia will

remain as an independent state and will not be dictated by

any major powers influence. On this note, the US pivot

policy primarily focus was the rise of China. If Indonesia

were truly concerned about China’s rise, it would have

enthusiastically welcomed the US pivot. Instead, Indonesia

– and particularly its Foreign Minister, Marty Natalegawa

had expressed strong reservations when Australia and the US

announced in late 2011 that US Marines would be deployed on

a rotational basis in Darwin.7 Dr. Marty has also regularly

invoked his concept of “dynamic equilibrium”, which views

the distribution of power in Asia as being in constant flux

and calls for accommodating the rise of new major powers,

7 Based on interviewed with Shahriman Lockman on 25 September 2013

139

including China.8 On the part of the Indonesian Foreign

Ministry, at least, there appears to be some level of

comfort with the rise of China.

Overall, Indonesia’s engagement with China and its

diplomatic strategy can be categorized as a kind of hedging

strategy with the objective to expand various relationships

especially with the major powers in order to balance their

influence and domination. In fact, this is also in tandem

with Indonesia’s basic policy of bebas-aktif, which can be

considered equivalent with the hedging strategy. Secondly,

Indonesia cannot help but being extremely cautious because

their strategic choices have greater direct effects to

their survival. Any wrong decision of Indonesia in dealing

with the major powers, may lead to a significant loss of

the national interests domestically and internationally.

Looking at the positive aspect, the Indonesia’s hedging

strategy also consists of engagement, accommodation and

soft balancing. Though there was skeptical attitude to

China right after the Cold War era, Indonesia has begun

active engagement accommodation after it received help from

China throughout several political and economic crises from

the last two decades. In dealing with tough challenges from

the riots in 1998, 1997 Asian Financial Crisis, and 2004

tsunami disaster, China had displayed “good neighbor”

8 Based on interviewed with Shahriman Lockman on 25 September 2013

140

policy and “charm diplomacy” with substantial support and

cooperation, and gradually succeeded to attract Jakarta.

4.4 Conclusion

Indonesia’s reengagement policy with China has produced

various implications to Indonesia. Although the

relationship was on a hostile mode for nearly 20 years, on

the day the resumption began, the relation has increasingly

become steady and cordial. The first impact of resumption

was the economic cooperation between both countries, which

has remarkably, leverages Indonesia’s economic growth and

development in terms of revenue to the government, foreign

direct investment, construction of public infrastructure

and social benefits. In fact, China’s investment and

assistance help to increase the local tax revenue and

create more job opportunities for Indonesians, improving

the education sector, health services, and increase its

people’s purchasing power.

Aside from that, the reengagement has resulted to

revitalize Indonesia’s role and image in the international

arena and subsequently followed by China’s strong support

on Indonesia’s domestic issues and the existence of

military and defense cooperation. To put in simpler terms,

a closer and more productive relationship between China and

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Indonesia are not a zero-sum game favoring China, but a

win-win cooperation, which could benefit both sides

especially Indonesia as the middle power. To conclude,

although seemingly Indonesia’s pleasant relations shows

that Indonesia becoming more intimate with China, it does

not meant that Indonesia subscribes to China. Indonesia

basically does not fully trust China and remains concerned

about Chinese assertiveness in the region. However,

Indonesia will maintain a measured rhetoric over China

publicly, since it stands to gain immense benefits from the

bilateral relationship in economic, military and diplomatic

terms. Indonesia will continue to hedge against China based

on its independent foreign policy doctrine and concerns

about China's longer-term politico-security intentions.

CHAPTER V

CONCLUSION

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5.1 INTRODUCTION

This concluding chapter highlights two major tasks. First

it sums up the key findings derived from the earlier

chapters based on the main question that this research is

trying to answer. Second, it provides the suggestion for

future research. This chapter concludes that the

reengagement policy has mutually benefited both Indonesia

and China despite the odd conditions they had faces in the

beginning of the resumption. It is clear that domestic

factors contribute in influencing and crafting Indonesia’s

foreign policy that is now rational to pursuit for the

national development.

5.2 SUMMARY

This study discusses Indonesia as a smaller state try to

behave and manage her foreign policy towards a bigger

country, China. As a smaller and newly independent country

began in 1945, Indonesia’s foreign policy is all about

pursuing the path of independence of peaceful development

and cooperation, which has been based on the ‘free and

active’ policy. For Indonesia, they believe that the need

for peaceful and stable environment will foster mutual

benefit and development. Indeed, it is in the spirit of

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‘free and active’ policy that guide Indonesia when it

establishes the official diplomatic relations with China in

April 13, 1950.

Based on the ‘free and active’ policy, during the

early beginning of diplomatic ties, Indonesia and China had

a pleasant relationship especially under Sukarno’s

leadership. After the signing of diplomatic relations,

there were developments of friendliness between both

countries especially during the early 1950s when Indonesia

supported China’s admission to the United Nation. Indonesia

also took a friendly stance towards China by refraining

from voting on the United States sponsored resolution

branding China as an aggressor in Korea. In fact, the

cordial relations between both countries become more

strengthen via continuous visit of Indonesian leaders to

China and vice-versa.

However, in the late 1950s and early 1960s, Indonesia

gradually became concerned about China. This is due to the

fact that China seemingly has a hidden agenda in its

relation with Indonesia. Although China fully supported

Jakarta in its campaign for West Irian and its opposition

to the rebellions, the Chinese interference in Indonesian

domestic affairs has created a sense of worrisome towards

China. The breakpoint event of this relation was the 30th

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September 1965 abortive coup. This event was the definite

starting point for the breakup of relationship when

Indonesia publicly accused China was involved with the coup

and Indonesian PKI allegedly received support from Beijing.

Consequences from this event led to the suspension of

diplomatic ties on October 23, 1967. At the same time, the

coup also resulted in the abolishment of the PKI, the

downfall of Sukarno and the rise of Suharto. In fact, the

coup changed the direction of Indonesian foreign policy

whereby the first target was the People's Republic of

China, which was believed to be involved in the coup.

Since the fall of Sukarno, Indonesian foreign policy

towards China has suffered some radical changes especially

after the diplomatic relations between two countries

suspended. Nonetheless, the policy of ‘free and active’,

during the Sukarno era which guided Indonesia’s

international relations, has been retained in the “New

Order” period under Suharto. Under the leadership of new

President Suharto, which began in 1967, Indonesia-China

relations cruised on different course. In comparison to

Sukarno pleasant relationship with China, Suharto’s “New

Order” regime put more cautious and suspicious approach to

relations with China, because of the abortive coup incident

and by the China threat rhetoric. In fact, under the

leadership of Suharto, Indonesia consider communism in

145

general and Communist China in particular, as the main

threat to Indonesia’s national security

However, as time goes by, Indonesia by then realized

that the suspended relationship with China proved to

produce disadvantages to Indonesia in many ways. When the

cold war ended in 1989, Indonesia then decided that

diplomatic ties with China would be resumed after 23 years

of suspended relation. Although on the initial stage, the

plan to resume the diplomatic relations was unfavorable to

certain fractions, on 8 August 1990, the prolong debate

among Indonesians on the question of restoring diplomatic

ties with China was officially end. On that day, Foreign

Minister Ali Alatas and China’s Foreign Minister, Qian

Qichen signed a Memorandum of Understanding on the

Resumption of Diplomatic Relations between Indonesia and

China, which can be considered as the starting point of

Indonesia’s reengagement policy with China.

Indonesia’s judgment to resume back the suspended

relationship was decided in a careful manner because of

several domestic factors. It involves with issues such as

economic and political stability, the diminishing of

communist threats, the decline of ABRI’s influence,

Suharto’s interest to launch a higher profile foreign

policy, and to reaffirm Indonesia’s commitment to the free

146

and active doctrine during the end of cold war. The new

domestic and international focus on economic development

and cooperation, replacing the earlier focus on ideological

conflicts, gave Indonesia a new opportunity to pursue the

free and active foreign policy principles. In fact,

Indonesia’s decision on the reengagement policy towards

China resulted various implications towards Indonesia in

many ways. It varies from the economic implications to

social, political, international relations up to defense

and military dimensions.

5.3 FINDINGS

This research highlights several major findings as outlined

below:

First, based on the discussion in chapter 2 and 3, the main

factor that drives the enduring changes of the Indonesia’s

foreign policy towards China is the national interest

especially the domestic interest. This is due to the fact

that foreign policy is basically an extension of domestic

policy. It is designed to defend and promote the country’s

national, political, security, economic and other vital

national interest. It is also designed to promote a

peaceful regional and international environment, which

would give certain countries space to achieve this entire

147

national objective without disruption from external threats

(MFA 2013).

The notion of foreign policy above is in line with

Indonesia’s foreign policy. Since the day of independence,

Indonesia has adhered to the ‘free and active’ foreign

policy that guides Indonesia to manage her own foreign

affairs independent from influence or control from any

major powers. This policy basically is to safeguard and

defend Indonesia’s domestic interest whereby as the result

of long war to achieve independent, Indonesia’s domestic

priorities has become the immediate concerns to Indonesia.

Various historical, social, political and economical

determinants contributed to shaping the nature of

Indonesia’s foreign policy and the conduct of the country’s

international relations with any countries. The most

important aspect is that the policy also guides Indonesia

on how to conduct her relations with China especially after

the resumption of diplomatic ties. For Indonesian leaders

and majority of Indonesians, they still believe that China

still possesses a communist threat that can affect domestic

security. This is due to fact of the historical incidents

especially the abortive coup and the communist threat,

which later become an odd factor to the relationship

between Indonesia and China during the early resumption of

diplomatic tie. In other words, because of the historical

148

issues, Indonesia still has the mistrust towards China

during the early process of Indonesia’s reengagement policy

towards China.

Second, by publicizing the notion of ‘free and

active’, Indonesia demonstrates the spirit of nationalism

and survivalist. In fact, the ‘free and active’ policy is

part of Indonesia’s national identity. This doctrine states

that Indonesia must all time pursue independence of action

in international affairs, based on its calculations of its

domestic interest such as political, social, security and

economic stability without any interference from outsiders.

This has been clearly shown in chapter 3 as the answer to

the factors of the reengagement policy. Based on the

calculations on the domestic interest, there are several

factors that led Indonesia to pursue reengagement policy

with China.

The first factor was that Indonesia started to pursue

the reengagement policy after having domestic economic

problem especially during Suharto era and even during the

latter president such as Abdulrahman Wahid and Megawati.

This is due to the fact that during the early 1980’s

Indonesia suffered domestic economic problems that can

affect domestic stability. Because of that, Indonesia

desperately needs to find a potential market for it

149

commodities and expand its trading activities to increase

the government’s revenue. China as the new emerging market

during that time was the best and most suitable country

that Indonesia needs to engage. Another domestic factors

that contribute to the reengagement policy were the

diminishing of communist threats, the improvement of

Indonesia’s internal security and political stability,

declining of ABRI’s influence and the leadership’s role in

shifting the Indonesia’s foreign policy to be more active.

Although the mode of reengagement policy during Suharto and

the latter part of president carried a different tune, the

main concern of national interest is still the top

priorities. During Suharto, the suspicious of communist

threat remains to cloud the leadership in pursuing more

intensive reengagement. However, starting from Abdulrahman

Wahid up to Susilo, the communist threat was no more

visible, thus a stable local politics was germane for

intensifying the reengagement policy with China.

Third, based on the discussion in chapter 3 and 4, it

was clear evidence that the importance of economic interest

appears to be the main factors of Indonesia’s reengagement

policy towards China. As a mater of fact, this has been

clearly shown through the neutralization process especially

in chapter 3 and the tremendous economic implications

towards Indonesia in chapter 4. At the initial stage, the

150

initiative to resume back the diplomatic relationship in

1985 is because of the constant pressure from Indonesian

entrepreneurs mainly the traders and business community. It

was perceived within the business community in Indonesia

especially KADIN that the resumption of direct trade would

bring advantages for Indonesia and China. Though at the

initial stage, the government opposed the direct trade

resumption yet Suharto finally agreed to it. The signing of

direct trade relations as matter of fact becomes the

initial point of the resumption of diplomatic ties.

Indeed, the issues of trades and economic continues to

push Indonesia to pursue the reengagement policy with China

especially during the 1980s when Indonesia having domestic

economic problems. This is because economic is among the

major factor that contributes to the domestic political

stability. Moreover, it is important for the ‘New Order’

regime to strengthen its legitimacy and enhance capability

of the government to sustain economic progress, development

and improving people’s living conditions. In fact the

economic interest become the crucial point of Indonesia-

China relationship especially after the Asian Financial

Crisis and May Riot 1998. China offered aid packages and

low-interest loans worth 400 million US dollars as part of

an IMF rescue package for Indonesia. Because of the events,

the relations of both countries became more moderate as

151

Indonesia began to see China as a generous friend. As the

economic interest has overcame the ideological issue,

states behaviors also changes to accommodate the new

strategies in pursuing their national interest. Even though

Indonesia and China had experienced both critical as well

as intimate era in their diplomatic relations, now they are

enjoying closer relation especially after both states

signed the Strategic Partnership Agreement in 2005. In

particular, economy and trade play an important role in

strengthening Indonesia-China relation, as both countries

started to put economic interest as the main driver of

their cooperation.

Fourth, the domestic factors that contribute to the

Indonesia’s reengagement policy proved to generate

significant implications towards Indonesia. The most

significant implications were the economical impact whereby

the resumption of diplomatic ties has increase and

strengthen the bilateral trade relation and huge investment

and financial aid from China. This impact by then generates

Indonesia’s economic which hunger for domestic development

especially the aim for infrastructure development and

eradication of poverty. Other significant impacts were

Indonesia’s international role and image being elevated and

Indonesia turn to be a counterweight to China’s influence

152

and assertiveness in the region. Such counterweight images

lead Indonesia and China to establish a mutual cooperation

in defense and military program. This cooperation has

resulted in a significant implication and geostrategic

advantages to Indonesia to become more influential in the

region.

This study also has confirmed that Indonesia’s foreign

policy towards China has demonstrated a constructivism

standpoint. This is because constructivism is more

concerned with the state’s identity and how such identity

shapes, and is shaped by, domestic, cultures and histories

and how these factors influence the state’s foreign policy.

The constructivism theory in this respects indeed in

parallel with Indonesia’s state identity of ‘free and

active’ policy, which shape Indonesia’s foreign policy

formulation. At the same time this policy also is shaped by

domestic issues such as politics, economic, security and

historical legacies, which contributes to Indonesia’s

foreign policy formulation towards China. Moreover,

constructivism also argues that foreign policy is what

decision makers especially the leaders tries to formulate

and design the foreign policy based on their understanding

and interpretation of the non-material factors such as

politics and economy. Decision makers are responsible for

interpreting and creating the social reality to formulate

153

the foreign policy. They do this when acting, reacting and

interacting with other states. State leaders and elites

groups are influenced by their cultural norms, values and

identities, which have an effect on the character of the

foreign policy they create. On this note, constructivism

theory is in tandem with Indonesia’s foreign policy

formulation whereby Indonesia’s foreign policy is hugely

decides by the political leaders and the elites. The

Indonesian leaders are the actors whom interpreting the

surrounding, norms, values and identities and decide which

is the best foreign policy that they can formulate to

manage the relationship with China.

Finally, the study has also confirmed both hypotheses

that the domestic issues configuration in Indonesia is

significant towards the pursuance of reengagement policy

with China. Several main domestic issues such as politics,

security and economic issues have become determinants

factors to shape Indonesia’s foreign policy towards China.

These factors are essential due to the fact that it was the

main criteria during the formulation of Indonesia’s foreign

policy. Moreover, the elites influences including political

and military elites also contributes to Indonesia’s

strategic approaches of reengagement with China. Former

President Suharto and the military elites, for much of the

last three decades, was a predominant influence in the

154

formulation of foreign policy. In fact, Suharto's decision

to restore diplomatic relations with China in 1990 was his

prerogative decision despite the military's hesitations. In

addition, the political elites influences remains strong in

deciding and formulating Indonesia’s foreign and

reengagement policy towards China which can be clearly seen

in chapter 2, 3 and 4.

5.4 SUGGESTIONS FOR FUTURE RESEARCH

This research identified a number of variables important

especially the intervening variables to examine Indonesia’s

reengagement policy with China as well as to analyze other

factors that have shaped Indonesia’s foreign policy towards

China. However, given the space and time limitations, this

research did not discuss the intervening variables and

external factors in details. Thus, future research should

examine these variables and analyze to what extent these

variables have effected Indonesia’s reengagement policy

with China.

For the external variables, the geopolitical factor

such as the big power interactions such as China, Russia

155

and the United States should be looked at in more details.

Besides China and the United States, emerging powers like

India, European Union, Australia and Japan should be

included in the future research as their interactions in

the region would invariably impact the pattern of the

Southeast Asian states’ foreign policy. For instance, the

power interactions between China, India, Australia and

Japan are always active in competition trying to influence

the smaller states in the Asian region. These inevitably

will directly and indirectly impacted Indonesia as the

‘rising middle power’. In these aspects, Indonesia needs to

manage well her relations with those countries and at the

same time with ASEAN countries in order to safeguard her

own national interest.

As for the intervening variables, the role of

neighboring countries or an institution such as ASEAN, ARF

and EAS might as well be examined to look at the issue from

another approach. This is due to the fact that based on the

study, it seems that the formulation of Indonesia’s foreign

policy is also based on her neighboring countries foreign

policy behavior and the role of ASEAN and other

institutions. The discussions on this variable are

important to be examined in the future research because

neighboring countries and these institutions continues to

play its significant role in encouraging and engaging all

156

the major powers so that regional peace and stability can

be maintained in the Southeast Asia region. Lastly, how’s

the neighboring ASEAN countries try to behave and manage

relationships with China is another crucial topic to be

explored, as these phenomena will likely affect the

integration of ASEAN community and Indonesia itself. It

seems that based on the recent ASEAN meeting and the South

China Sea’s issues have the potential to affect Indonesia’s

foreign policy towards China.

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APPENDIX A

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LIST OF INTERVIEW QUESTIONS

INDONESIA’S FOREIGN POLICY TOWARDS CHINA – THE PURSUIT OFREENGAGEMENT

1. During the cold war period, how would you

characterize Indonesia’s foreign policy in general?

2. During the post-cold war period, how would you

characterize Indonesia’s foreign policy in general?

3. How do you see Indonesia’s diplomatic relations with

China before the abortive coup incidents in 1965

which led to the suspended of diplomatic ties in

1967?

4. How would you describe Indonesia’s foreign policy

towards China during the so-called frozen

relationship (from 1967 until 1989)?

5. Why Indonesia’s re-engagement policy with China is

at odd and to what extent does this relationship

benefits Indonesia or China or both?

6. From your point of view, what are the domestic

factors that push Indonesia to pursue reengagement

policy (resume diplomatic relations) with China?

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(How domestic issues including political and

military elites define Indonesia’s foreign policy

with China).

7. What are the implications of Indonesia’s

reengagement policy with China? (The advantages or

disadvantages)

8. How do you see Indonesia’s diplomatic strategy in

dealing with China considering the rise of China

especially during the post-cold war?

9. From your point of view, did Indonesia able to

manage her relationship with China pleasantly from

the period of mistrust until both countries signed

strategic partnership in 2005?

10. In your understanding, how would you differentiate

the concept of bandwagoning, balancing and hedging

as small states response to a threatening powerful

state?

11. How would you describe Indonesia’s foreign policy

towards China in the post-cold war period using the

concept of balancing, bandwagoning and hedging?

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APPENDIX B

COMMUNIQUE OF THE GOVERNMENT OF THE PEOPLES REPUBLIC OFCHINA AND THE GOVERNMENT OF THE REPUBLIC OF INDONESIA ONTHE RESUMPTION OF DIPLOMATIC RELATIONS BETWEEN THE TWO

COUNTRIES

Beijing, 3 July 1990

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The Government of the Peoples Republic of China and theGovernment of the Republic of Indonesia, in conformity withtheir agreement reached in Tokyo on 23 February 1989 on thenormalization of relations between the two countries on thebasis of the Five Principles of Peaceful Coexistence andthe Ten Principles of the Bandung Conference, have decided,through friendly consultations, to resume diplomaticrelations between the two countries effective from 8 August1990.

Accordingly, the Government of the Peoples Republic ofChina and the Government of the Republic of Indonesia haveagreed to exchange Ambassadors and provide each other withfacilities for the reopening of their respective diplomaticmissions.

The two sides announce that upon the invitation of H.E.President Soeharto, H.E. premier Li Peng will make anofficial goodwill visit to Indonesia on the occasion of theresumption of diplomatic relations.

Minister for Foreign Affairs,                                 Minister for Foreign Affairs,

The Peoples Republic of China TheRepublic of Indonesia

APPENDIX C

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JOINT PRESS COMMUNIQUÉ OF THE PEOPLE'S REPUBLIC OF CHINAAND THE REPUBLIC OF INDONESIA

At the invitation of His Excellency Jiang Zemin, Presidentof the People's Republic of China, His Excellency KHAbdurrahman Wahid, President of the Republic of Indonesiapaid a state visit to the People's Republic of China fromDecember 1 to 3, 1999. During the visit, President JiangZemin and President Wahid held talks in which theyconducted useful discussions on bilateral relations andmajor international and regional issues of common interest,and reached broad agreement. Both sides believe thatPresident Wahid's visit to China is a complete success andis of important significance to deepened development ofChina-Indonesia relations in the future. The two sidesreviewed the progress of the bilateral relations followingthe resumption of diplomatic ties in 1990 and expressedtheir satisfaction with the progress made in all areas ofcooperation. The two sides maintain that the friendlyrelations and cooperation on a basis of equality, mutualbenefit, mutual understanding and respect conform to thefundamental interests of the two peoples and contribute tothe peace, stability and prosperity both in the region andthe world.

The two sides have come to the view that at the turnof the century, China-Indonesia relations are faced withimportant opportunities for further improvement and growth.The two sides reaffirmed their willingness to consolidatethe existing traditional friendship on the basis of theFive Principles of Peaceful Coexistence and the TenPrinciples of Bundung Conference, and reiterated their

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joint commitment to the establishment and development of along-term and stable relationship of good-neighborliness,mutual trust and all-round cooperation. To this end,foreign ministries of the two countries will work out andsign a framework document on the 21st century-orientedcooperation at an early date. The two sides believe thatfrequent exchange of high-level visits and contactsconduces to the sound and steady development of thebilateral friendly relations. The two sides agree to makefull use of the existing forums of bilateral consultations,strengthen the friendly exchanges between governmentdepartments, parliaments, political parties, militarycircles and non-governmental organizations of the twocountries, and intensify cooperation in such areas asculture, education, health, sports and tourism, so as topromote the all-round and in-depth development of thebilateral friendly relations and cooperation. The two sidesfully endorse the achievements the two countries have madein trade and economic cooperation, and are willing tofurther expand their mutually beneficial cooperation inareas such as trade, investment, science and technology,industry, agriculture, fishery, energy, mining,telecommunication and finance. The two sides will makeconcerted efforts to promote a more conducive environmentfor better trade and economic cooperation, increasetransparency and impartiality of trade related regulations,impel closer contacts and mutually beneficially cooperationof various forms between business communities of the twosides, and hold regular joint investment promotion. Inorder to materialize the intended cooperation agreed uponby leaders of the two countries, the two sides have decidedthrough consultation that the fifth Sino-Indonesian jointeconomic and trade commission will meet in the first halfof next year and that the Chinese side will send anentrepreneurs' delegation to Indonesia at the earliestpossible date. The two sides emphasize that they willadhere to the principle of mutual respect for independence,sovereignty and territorial integrity. The Chinese sidesupports the Indonesian Government in its efforts to

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maintain national unity and territorial integrity. TheChinese side holds that stability and prosperity inIndonesia is conducive to the regional peace anddevelopment. The Indonesian side reiterates that theGovernment of the People's Republic of China is the solelegal government representing the entire Chinese people,Taiwan is an inalienable part of the Chinese territory andthat Indonesia will continue to pursue the one Chinapolicy.

The two sides exchanged views on the current regionaleconomic situation. The Chinese side notes with pleasurethat thanks to their efforts, Indonesia and other countriesconcerned in the region are making positive progress intheir economic recovery. The Indonesian side appreciatesthe continuing support of China to Indonesia since theoutbreak of the Asian financial crisis. The two sidesbelieve that the Asian countries should uphold their ownvalues, choose their development path in line with theiractual national conditions, and conduct more extensivecooperation so as to jointly confront challenges brought bythe economic globalization. The two sides expressedsatisfaction over the continuous development and positiveresults of China-ASEAN friendly relations in recent years.The Chinese side appreciates Indonesia's positive role inpromoting the development of China-ASEAN relations andsupports Indonesia in its efforts to enhance ASEANsolidarity and cooperation and push for a bigger ASEAN rolein international and regional affairs. The Indonesian sidereaffirms its continued commitment to a China-ASEANfriendly and cooperative relationship of good-neighborliness and mutual trust. The two sides highlyevaluate the progress in the informal leadership meetingbetween ASEAN, China, Japan and ROK, and stand ready tocontribute to the further progress of the East Asiancooperation process. The two sides are of the view thatprofound changes are taking place in the internationalsituation and that multipolarization is a general trend in

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establishing a more just and balanced world order. The twosides emphasize that the United Nations Charter, the FivePrinciples of Peaceful Coexistence and the universally-recognized basic norms governing international relationsare the basis for a new international political, economicand security order, and should therefore be observed byall. No country has the right to interfere in othersovereign states' internal affairs under whatever pretext.

The two sides reaffirm their position that both theuniversality of human rights and the domestic conditions ofeach country should be respected. The two sides consider itessential to exchange views on the issue of human rights atthe international level based on the spirit of cooperation,dialogue and non-confrontation as well as respect for statesovereignty. The two sides maintain that the human rightsissues can not be solved by sacrificing the principle ofstate sovereignty and sovereign equality among nations asthere must be a solution that does not demolish a principleon which the United Nations itself was founded. The twosides support the endeavors of forging a universal andeffective compliance with the implementation of theprovisions of bilateral as well as multilateral agreementson the limitation and disarmament of weapons, in particularweapons of mass destruction. Failure to comply with thesetreaties will only threaten regional and global stability.The two sides agree that the Anti-Ballistic Missile (ABM)Treaty remains the cornerstone for the maintenance ofinternational peace, security and strategic stability. Thedevelopment of any Theater Missile Defense (TMD) system inthe Asia-Pacific region is not conducive to strengtheningthe regional security. On the contrary, it will only impelarms race and result in increased tension, which isdisadvantageous to regional peace, stability anddevelopment.

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The two sides reiterate that they will strengthentheir consultation and cooperation at UN, WTO, APEC, ASEMand other multilateral organizations, continue to supportthe solidarity and cooperation among the Third Worldcountries, and the Non-Aligned Movement, and that they arewilling to work together for the establishment of a fairand equitable new international political and economicorder and for the maintenance of world peace and stability.

President Wahid thanked the Government and people ofthe People's Republic of China for the gracioushospitality, and invited President Jiang Zemin to visit theRepublic of Indonesia at an early date. President JiangZemin accepted the invitation with pleasure.

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