Academic journal article Contemporary Southeast Asia

Indonesia's China Policy in the New Order and Beyond: Problems and Prospects

Academic journal article Contemporary Southeast Asia

Indonesia's China Policy in the New Order and Beyond: Problems and Prospects

Article excerpt

This article examines Indonesia's perceptions and policies towards China during the New Order era (1965-99) and the prospects for bilateral relations in the post-New Order period. For the first two decades of President Soeharto's rule, Indonesian policy towards China was marked by hostility, and stemmed from the 1965 Gestapu Affair. Bilateral relations remained frosty until the mid-to-late 1980s when Soeharto initiated a gradual policy of rapprochement with China. This led to the restoration of diplomatic relations in 1990 and Indonesia's policy of engagement with China. Despite improved economic relations, a number of obstacles stood in the way of closer Sino-Indonesian relations in the 1990s. The new government of President Abdurrahman Wahid must tackle these obstacles if bilateral relations are to move forward in the twenty-first century


Relations between Indonesia wad the People's Republic of China (PRC) were characterized by hostility and suspicion during much of the New Order era, and witnessed only a gradual improvement in the 1990s. In 1967, a year after Soeharto became President, Indonesia suspended diplomatic relations with the PRC in retaliation for Beijing's alleged involvement in the 1965 Gestapu Affair, an abortive coup attempt carried out by elements of the Indonesian Communist Party (PKI), and seen by the Indonesian Armed Forces (ABRI) as an attempt by Beijing to turn Indonesia into a communist client state. For the next twenty years, the Indonesian leadership spurned all contact with the PRC, believing China's ultimate ambition was to assert hegemony over Southeast Asia by supporting regional communist insurgency movements, or through overt military action. Because Chinese Indonesians were also implicated in the coup, the ethnic Chinese community suffered widespread discrimination and persecution during Soeharto's rule.

Bilateral ties improved gradually from the mid-1980s onwards, motivated by domestic factors in Indonesia and China's more pragmatic foreign policy under Deng Xiao-ping. Direct trade between the two countries was restored in 1985, and diplomatic relations in 1990. Jakarta's new policy of engagement with China encouraged greater economic and political ties, a policy seen as beneficial to Indonesia's economic development and regional stability. Indonesia's policy of engagement helped improve bilateral relations, but a number of obstacles lay in the path of closer Sino-Indonesian relations. Firstly, the Indonesian leadership remained opposed to the communist ideology and continued to warn of the dangers of communism and a revival of the PKI. Secondly, discrimination against the ethnic Chinese community remained rife in the 1990s. This occasionally strained relations with Beijing, especially when racial tensions turned to violence. Thirdly, Indonesia's suspicions of China's regional intentions were reinforced by the PRC's increasingly assertive behaviour in the South China Sea. The Indonesian leadership was particularly concerned at China's claim over the territorial waters surrounding the Natuna Islands. The prospects for an improvement in bilateral relations seemed bright following the election of President Abdurraliman Wahid in October 1999. However, the existence of racial tensions, the continuing influence of the armed forces, and the unresolved territorial dispute present significant obstacles in the path of improved Sino-Indonesian relations.

Background: Sino-Indonesian Relations, 1965-85

In order to understand Indonesian perceptions and policies towards the PRC during the New Order era, it is necessary to outline the strained relations between the two countries during the period 1965-85. During the latter period of President Soekarno's rule, relations between Indonesia and China had grown closer as both countries pursued radical anti-Western and anti-imperialist foreign policies. Domestically, Soekarno relied heavily on the support of the Indonesian Communist Party (PKI), which itself had close links with the Chinese Communist Party (CCP). This close relationship between Indonesia and the PRC on the one hand, and the PKI and the CCP on the other, was a major concern for ABRI. Anti-communist sentiment was already strong within the armed forces, and stemmed from the 1948 communist uprising in Medan when ABRI was fighting for independence from the Netherlands. The armed forces also considered communism inimical to the national ideology of Pancasila, the 1945 Constitution, and national developmen t. [1]

On 31 October 1965, elements of the PKI tried to seize power in an event which became known as the Gestapu Affair. ABRI took this opportunity to put an end to communist influence in Indonesia by striking decisively at the coup leaders. In the aftermath of the Gestapu Affair, Soekarno, who had been implicated in the coup, was forced to transfer power to Major-General Soeharto, who established the New Order regime with himself as President. The leaders of the PKI were arrested, tried and executed, and the organization was banned. Hundreds of thousands of PM members and supporters were massacred in a bloodbath which followed the coup. The New Order blamed the abortive coup on the PKI which, they alleged, had received its instructions from Beijing. According to the official view, China's aim in supporting the coup had been to turn Indonesia into a communist satellite of the PRC. Although no evidence was ever produced to prove China's complicity in the coup, Beijing's pernicious influence in the events of 1965 be came an established fact. In September 1967, against a background of rising tensions between the two countries, Indonesia suspended diplomatic relations with China. Another victim of the Gestapu Affair was Indonesia's ethnic Chinese community. Long a target for racial persecution, they were singled out by the government as being the mainstay of PM support, although again, no evidence was ever produced. Thus, the government looked on the ethnic Chinese as "tools" of the Chinese Government who had worked to establish communism in the country. As a result, the ethnic Chinese community received harsh treatment. Chinese schools were closed down, the use of Chinese characters and language was banned, and the observance of Chinese festivals forbidden.

In the New Order, ABRI, with Soeharto at its head, occupied the apex of power, allowing it to exert a decisive influence over the conduct of foreign policy decision-making. The New Order prioritized economic development, and pursued closer links with those countries able to provide Indonesia with foreign aid and investment, such as Western countries and Japan. [2] Indonesia did not see China as being able to contribute to the country's economic development. Moreover, China was perceived as a security threat, and ABRI opposed all further contacts with the PRC after 1967. The armed forces believed that China's ultimate ambition was to dominate Southeast Asia by supporting communist insurgency movements and direct military action. ABRI warned that a Sino-Indonesian rapprochement would lead to a resurgence of communism in Indonesia, resulting in internal instability which, in turn, would impede economic development. Although China ended its material aid to regional communist movements in the mid-1970s in an effo rt to gain ASEAN's support for its anti-Soviet policies, Beijing continued to provide moral support to these parties, including the PKI. As far as Jakarta was concerned, China had to sever all links with regional communist parties, promise never to interfere in Indonesia's internal affairs, and apologize for its involvement in the Gestapu Affair before relations could be normalized. ABRI's suspicions of China's regional intentions were reinforced by China's 1979 attack on Vietnam, which was interpreted as an indication that the PRC was willing to use force in pursuit of its national interests in Southeast Asia, and that it was ready to interfere in the internal affairs of its neighbours in matters relating to the ethnic Chinese. [3] In the 1980s, Indonesia opposed China's policy of "bleeding Vietnam white", as it saw Vietnam as a useful buffer against perceived Chinese expansionism in Southeast Asia. Indonesia's opposition to this policy found expression in the 1980 Kuantan Declaration. [4] ABRI's sympathy fo r Hanoi, and its hostility towards Beijing, introduced significant strains within ASEAN during the Cambodian crisis.

The Indonesian Ministry of Foreign Affairs (MFA), however, held that Jakarta should pursue a more realistic and constructive policy towards China during the New Order era. This was particularly true after the Sino-U.S. rapprochement of 1972, and China's establishment of diplomatic relations with Malaysia, Thailand, and the Philippines in the mid-1970s. The MFA had supported China's application to join the United Nations in 1971, but the military had opposed the move, forcing Indonesia's U.N. ambassador to abstain. [5] Indonesian Foreign Minister Adam Malik was willing to restore diplomatic relations with China in 1973. [6] However, in the first few decades of the New Order regime, President Soeharto allowed ABRI's views on Indonesian policy towards China to prevail over those of the MFA.

Indonesia's Engagement Policy with China

In the mid-1980s, Indonesia began a process of cautious engagement with the PRC which eventually led to the restoration of diplomatic relations in 1990. The decision to improve relations with China was not, however, the result of changing perceptions within ABRI towards China. In fact, right up to the restoration of Sino-Indonesian relations, ABRI continued to view China through the prism of national security, warning that closer relations between the two countries would lead to a revival of the PKI. The change in policy was made by President Soeharto, who came to see the merits of a more constructive relationship with China.

Soeharto's desire to improve relations with China was motivated by three

factors. First and foremost were economic considerations. By the mid-1980s, the Indonesian economy was experiencing a downturn caused by a slump in global oil prices. Indonesia was keen to find new export markets for its primary commodities, such as petroleum, palm oil, and timber. The government identified China as a market with tremendous potential. By 1985, China's economic reform programme was in full-swing, and many of Indonesia's ASEAN partners were already taking advantage of this situation by increasing their exports to the PRC. The Indonesian Government was keenly aware that it was in danger of losing out to Malaysia and Thailand in terms of commodity exports to China. As a result of economic necessity, and against the advice of ABRI, [7] Soeharto allowed Indonesia to restore direct trade with China in July 1985. Secondly, Soeharto wanted Indonesia to play a more prominent role in world affairs, and was especially keen for his country to become the leader of the Non-Aligned Movement (NAM). A greater role in Asian affairs, and especially among developing countries, would require normalized relations with China. Thirdly, although ABRI continued to warn of the dangers of closer links with China, the Indonesian Government as a whole became more relaxed about the national security aspect of Sino-Indonesian relations. During the latter part of the 1980s, the Chinese Government had substantially scaled back its relations with regional communist parties. This was a reflection of improved Sino-Soviet relations (Beijing had always held that it could not terminate its links with regional communist parties in case the USSR-Vietnam supplanted its role) and China's more pragmatic foreign policy which emphasized economic modernization. Moreover, Jakarta realized that China's growing economic and military power was transforming the PRC into a major player in the Asia-Pacific region, and one which could not be ignored, especially given Indonesia's regional leadership aspirations.

The restoration of direct trade in 1985 was the first step towards improved Sino-Indonesian relations. The next step was to begin normalization talks. These talks were made possible by concessions from both Jakarta and Beijing. In 1988, Jakarta dropped its demand that China apologize for its alleged role in the 1965 Gestapu Affair. In February 1989, Chinese Foreign Minister Qian Qichen met with President Soeharto in Tokyo and assured him that Beijing would not interfere in the internal affairs of Indonesia and that it would not support the PKI. [8] The path to normalization was open.

Sino-Indonesian diplomatic relations were restored in August 1990. During the ceremony in Jakarta, both sides were keen to demonstrate their good intentions. Chinese Premier Li Peng noted that the restoration of ties would not only "open up broad vistas for all round co-operation between us in the political, trade, scientific, technological, educational and cultural fields" but also "exert a positive impact on peace and common progress in Asia". [9] Indonesian Foreign Minister Ali Alatas declared that restored relations would enable Indonesia to play a greater role in Asian affairs, give Jakarta access to the Chinese market, and help foster regional peace and stability. [10] Under the terms of the agreement on the resumption of diplomatic relations, Jakarta agreed to maintain a one-China policy, although Indonesia would be permitted to maintain economic and trade links with Taiwan. On the subject of the ethnic Chinese, the two governments agreed not to recognize dual nationality.

Following the resumption of diplomatic ties, Sino-Indonesian relations showed a marked improvement, especially in the economic sphere. Both Jakarta and Beijing highlighted the complementarity of their two economies. Indonesia has rich natural resources and was eager to increase exports of plywood, petroleum, rattan, timber, paper pulp, and chemical fertilizers to China. In turn, China was interested in increasing its exports of primary commodities to Indonesia, including soybeans, cotton, fodder, coal, as well as industrial machinery, and manufactured goods. [11] During the August 1990 ceremony, the two sides signed a trade agreement designed to increase the flow of trade by granting each other most-favoured-nation status. [12] As can be seen from Table 1, Sino-Indonesian trade experienced sustained growth between 1990 and 1997, declined sharply during the Asian financial crisis, but began to recover in 1999.

During the Asian financial crisis, China offered Indonesia a range of bilateral aid to ease economic hardship in the country. This aid included a US$3 million grant aid to buy medicine and US$200 million in export credits over a two-year period. [13] Beijing also contributed US$500 million to the International Monetary Fund's (IMF's) US$43 billion bail-out package for Indonesia. The Indonesian Government was grateful for this help, and also for the PRC's decision not to devalue the yuan. [14]

The Asian financial crisis marked the beginning of the end of the New Order regime. In May 1998, Soeharto was forced to resign as President following riots in Jakarta, sparked by the state of the economy and his 1997 re-election. His successor, B.J. Habibie, held power between May 1998 and October 1999, and pushed through a series of economic and democratic reforms. However, as will be examined later, during

Habibie's rule, Sino-Indonesian relations experienced tension over the violent attacks against the ethnic Chinese community in the Jakarta riots.

Obstacles to Closer Relations

Although the 1990s witnessed an improvement in Sino-Indonesian relations, particularly in the economic sphere, relations were far from warm, as a number of obstacles existed which impeded the development of closer relations. These obstacles included continuing anti-communist sentiment among government officials, the ethnic Chinese problem, and Indonesian concerns at China's assertive behaviour in the South China Sea, and its implications for the Natuna Islands gas project.

Anti-Communism in Indonesia

One important impediment to closer Sino-Indonesian relations after the re-establishment of diplomatic ties was the strong anti-communist sentiment expressed by New Order officials. This was in stark contrast to Indonesia's ASEAN partners, who had gradually toned down their anti-communist rhetoric in the mid-1980s as Cold War tensions eased and China severed its links with communist insurgents in Southeast Asia. However, in Indonesia, the government continued to warn the population against the dangers of communism and a possible revival of the PKI. As the PKI was firmly associated with the PRC in the minds of the ruling [acute{e}]lite, relations with China could never be too close lest Beijing re-activated its support for the outlawed communist party.

Anti-communism remained strong in Indonesian Government circles for three main reasons. Firstly, there can be no doubt that the 1965 Gestapu Affair had left a profound impression on those who had witnessed the events. This was particularly true of the ABRI officers involved. Many of the junior officers involved in putting down the coup were, by the 1990s, in senior positions and opposed to communism because of the chaos it had caused in 1965. Secondly, the 1965 Gestapu Affair was a legitimizing factor for the New Order regime. The New Order had been born at a time of great political strife and, according to the official government line, Soeharto and ABRI had "rescued" Indonesia from the PRC-backed PKT. Therefore, no attempt could be made to reassess the events of 1965 without undermining the legitimacy of the New Order regime. As a result, during Soeharto's rule, there was no debate on the origins of the coup, nor any academic research. On the thirtieth anniversary of the coup, the government enforced a ban on the publication of memoirs written by former PKI members on the grounds that they contained "politically perverting information" which could "mislead future generations". [15] After the fall of Soeharto, Indonesian historians and political analysts called for a thorough reassessment of the events of October 1965. However, President Habibie's government made no attempt to do so as its legitimacy too rested on the thirty years of New Order governance.

Thirdly, the New Order used anti-communist rhetoric as a tool to silence government opposition and inhibit the growth of democracy. For example, it was reported that villagers who opposed government development projects were routinely arrested and charged with membership of the PKI. [16] The New Order also used the spectre of communism to tarnish the image of political parties which opposed the government, especially the Indonesian Democratic Party (PDI). In July 1996, security forces raided the headquarters of the PDI, sparking riots in Jakarta. ABRI claimed that the raid netted documents purportedly showing the PDI to have a similar organizational structure to the PKI and that it was employing similar tactics. [17] In early 1997, President Soeharto blamed communist groups for a series of riots that had taken place across the archipelago. [18] Soeharto accused the rioters of using Maoist tactics of seizing control of rural villages before launching attacks on major cities. [19] He warned that should these c ommunist groups spread their activities, the country's economic development would be jeopardized. [20] Intellectuals, political observers, and the liberal press periodically called for an end to the New Order's anti-communist witch-hunt, and for Indonesia to lay to rest the ghosts of the past and concentrate on tackling contemporary problems, such as corruption and social disparities.

These three factors account for the continuing persecution of PKI members and repeated government warnings on the perils of communism during the New Order regime. Former PKI members were barred from entering the armed forces, the civil service, state-controlled industries, teaching, and journalism. This restriction was extended to family members of the PKI, even if they themselves had no connection with the organization. In August 1995, the government announced that the eks tapol (ET) mark on identity cards, which identified the holders as former political prisoners, would be removed. [21] However, ABRI spokesman Brigadier-General Sowarno Adiwijoyo said that the replacement identity cards would still contain information allowing the security forces to identify former PKI members. [22] Susilo Sudarman, Co-ordinating Minister for Political and Security Affairs, said that the removal of the ET classification did not mean that the government was lowering its guard against "the latent dangers of communism". [23] As for those who had been imprisoned for their role in the 1965 coup, many remained incarcerated more than thirty years after the event. Under President Habibie, ten political prisoners arrested for their role in the Gestapu Affair were finally released in March 1999. [24] However, according to Amnesty International, a further ten elderly men associated with the events of October 1965 remained in jail. [25 During his eighteen months in power, President Habibie was not averse to playing the anticommunist card either, warning against a revival of communism and urging people to remember the events of 1965. 26]

The Ethnic Chinese Problem

During the 1990s, discrimination against the ethnic Chinese continued at both official and unofficial levels. Racially motivated attacks against Chinese Indonesians served to strain relations between Jakarta and Beijing, especially when the latter condemned such persecution. This reinforced the notion held in some quarters of the Indonesian Government that China was ready to interfere in the internal affairs of Southeast Asian countries when it came to the status of the ethnic Chinese, despite its assurances otherwise.

For ABRI, the status of the ethnic Chinese was an issue of national security. ABRI believed that Beijing had attempted to utilize the Chinese Indonesians to seize power through the PKI in 1965. Although this attempt had failed, the armed forces remained convinced that China might try to extend its influence again in Indonesia through its links with the ethnic Chinese. To prevent communist elements from "infiltrating" the government, the ethnic Chinese were barred from entering the armed forces, the civil service, and state-owned industries. As mentioned earlier, Chinese schools were closed down, Chinese characters banned, and the teaching of the Chinese language forbidden. In the 1990s, these restrictions remained largely in place. In 1995, the government did allow students who wanted to enter the tourism industry to learn Mandarin. However, licences to teach the language were controlled by the Indonesian intelligence agency, and issued under strict conditions -- namely, that language instructors could not t each Chinese culture, politics, or literature. [27] ABRI also remained sensitive to any actions taken by the Chinese Government which might be interpreted as interfering in Indonesia's internal affairs. One such incident occurred in the April 1994 Medan riots, during which ethnic Chinese shops and businesses were attacked, and one Chinese Indonesian killed. At the height of the trouble, the Chinese Foreign Ministry issued a statement urging the Indonesian Government to put an end to the anti-Chinese riots. [28] This statement came in for a good deal of criticism from Indonesian officials, many of whom considered it as interference in the internal affairs of the country.29 Theo Sambuaga, vice-chairman of the Parliament's Foreign Affairs Commission, called the PRC's comments "excessive", [30] whilst Justice Minister Utoyo Usman said: "China had better mind its own internal affairs[ldots] Events such as those that took place in Medan happen in many other countries". [31]

Deprived of the opportunity to enter government service, Chinese Indonesians turned their energies towards business, reinforcing their dominance over commercial activities in Indonesia. This served to create negative perceptions of the ethnic Chinese community on two levels. First, a small number of ethnic Chinese businessmen had established close connections with the Soeharto regime, and enjoyed great benefits from this political patronage in the form of tax breaks, easy credit, and near monopolies over some forms of trade. [32] As these ethnic Chinese grew richer, resentment towards them from indigenous Indonesians grew stronger. A common perception among Indonesians was that all ethnic Chinese were rich, even though most were not. Resentment manifested itself in several ways. One was the Indonesian bureaucracy's habit of using the ethnic Chinese as milch cows. Another, more violent manifestation was the anti-Chinese riots which broke out periodically across the Indonesian archipelago. Secondly, although C hinese Indonesians had contributed greatly to the country's economic development, ABRI considered their economic success as a national security concern. These concerns were based on two contradictory arguments. The first centred on the notion that Chinese Indonesian businessmen who invested in the PRC were being "disloyal" to their adopted country and were diverting resources away from national development. [33] The second concerned the domination of Indonesian commerce by the ethnic Chinese. According to ABRI's chief of staff for socio-political affairs, Lieutenant-General Hartono, this domination created resentment, which led to internal instability, which in turn slowed economic growth. [34]

The Indonesian Government's official policy towards the ethnic Chinese was one of assimilation. This assimilation policy was one of the rationales behind the continuing ban on Chinese characters and the observance of Chinese festivals. The ethnic Chinese were also required to adopt Indonesian sounding names. The government also tried to solve the problem of the more than 200,000 "stateless" Chinese in the mid-1990s (those Chinese Indonesians who had neither PRC/Taiwanese passports nor Indonesian citizenship). In December 1995, the government introduced a free naturalization service for the stateless Chinese. Previously, ethnic Chinese seeking to become Indonesian citizens had to pay Indonesian officials "administration charges" of between US$150 and US$400, a sum of money well beyond the means of most applicants. The Justice Ministry claimed that 76,000 ethnic Chinese had taken advantage of the free service between December 1995 and February 1996. [35] Another positive step was taken in July 1996 when Soehar to issued a presidential decree which waived the requirement for the dependents of naturalized citizens to obtain an official document stating they were Indonesian citizens. Under the new decree, the dependents of naturalized citizens were automatically granted citizenship. [36] Juwono Sudarsono, chairman of Bakom-PKB, the official body charged with encouraging greater assimilation, cited these two measures as evidence of the government's determination to pursue racial equality. He claimed that the New Order's policy of assimilation had yielded positive results, and that the majority of citizens now accepted the ethnic Chinese as fellow citizens. [37]

Despite Juwono's assertion, the discrimination and persecution of Chinese Indonesians continued unabated throughout the 1990s, and culminated in the Jakarta riots of 13-15 May 1998. During those few days, ethnic Chinese businesses and shops were looted and burned down by rioting Indonesians. Far more disturbing, however, was the rape of ethnic Chinese females. According to human rights groups, 170 ethnic Chinese females were subjected to horrific rapes and other acts of sexual torture during the riots. President Habibie ordered ABRI to investigate the rapes, and also appointed a commission to examine the causes of the riots -- the Joint Fact Finding Team (known by its Indonesian acronym TPGF). [38] The ABRI investigation found no evidence that any rapes had taken place. [39] The head of Indonesia's intelligence service, Lieutenant-General Moetojib declared that the reports of rapes were just "rumours" designed to defame Indonesia and divide the country. [40] The TPGF, however, identified 85 sexual assault vi ctims, including 52 rapes, the majority of whom were ethnic Chinese females. [41] The report concluded that the conditions for the unrest to take place had been created by the economic and political crisis following the devaluation of the rupiah and the re-election of President Soeharto in 1997, but that many of the riots had been instigated by elements of ABRI in an organized and systematic manner. The TPGF suggested that ABRI had provoked the riots to enable it to invoke "extra constitutional power" to restore order and save Soeharto's rule. [42]

During the May riots, the Chinese Government expressed concern at the attacks on the Chinese Indonesians and hoped the Indonesian Government would take measures to secure the safety of the ethnic Chinese. [43] However, following protests in Beijing, Hong Kong, Taipei, and other ethnic Chinese communities around the world, the PRC Government adopted a more hard-line approach, and urged the Indonesian Government to investigate the rapes of Chinese females. [44] Government-controlled Chinese newspapers called on Jakarta to arrest those responsible for the rapes, punish them, and ensure the protection of the ethnic Chinese community. [45] Foreign Minister Tang Jiaxuan declared that China "attached great importance" to the attacks on the ethnic Chinese and demanded those responsible be "seriously punished". [46] The Chinese media also expressed outrage at President Habibie's comments that the rapes had not been motivated by ethnic tension but by economic disparity, and that such events could have happened in Hong Kong or Beijing. [47] Following the publication of the TPGF report, the Chinese Government insisted that those responsible for the rapes be apprehended and punished, and that the government should take action to prevent similar incidents from occurring in the future. [48] President Jiang Zemin repeated this message when he met President Habibie in November 1998 at the APEC forum. [49]

During President Habibie's eighteen-month rule, some steps were taken to end discrimination against the ethnic Chinese. In March 1999, Habibie issued a decree to eliminate all forms of racial discrimination, and on 1 April 1999 Indonesia ratified the U.N. Convention on the Elimination of All Forms of Racial Discrimination. Moreover, following Habibie's announcement that democratic parliamentary elections would take place, the ethnic Chinese formed several political parties in order to have a say in the country's decision-making process. However, the ban on Chinese schools and the observance of religious festivals remained in place under Habibie.

Indonesia and the South China Sea Dispute

Another area of tension between Jakarta and Beijing concerned overlapping territorial claims in the South China Sea. The area in question concerns the waters surrounding the Natuna Islands, which lie 750 miles north of Jakarta, in Riau province. In 1947, China published a map indicating the extent of its claims in the South China Sea; the area claimed by China was represented by a dashed line and seemed to include the waters near the Natuna Islands. [50] These waters were also contested by Malaysia and Vietnam. In 1969, Malaysia and Indonesia signed a treaty delimiting their continental shelf boundaries, thus removing Kuala Lumpur from the Natuna dispute. [51] During the 1980s, Indonesia and Vietnam held several rounds of negotiations concerning the area, but failed to reach an agreement. However, given the close relations between the two governments, Indonesia's dispute with Vietnam over the area was not regarded by Jakarta as a major problem. From the Indonesian perspective, the only real outstanding territ orial issue was with China. Though the issue remained largely dormant, in 1980 Indonesian Defence Minister Jusuf warned Parliament that the overlapping claims near the Natuna Islands might one day result in military conflict because of the presence of natural resources. [52]

The most prominent issue in the South China Sea dispute concerns sovereignty of the Spratly Islands. [53] Indonesia is not a claimant to the Spratlys, but in the early 1990s identified the dispute as a source of regional instability and a potential military flashpoint. [54] Since 1990, Indonesia has tried to act as an "honest broker" in the dispute by hosting the annual workshop on "Managing Potential Conflicts in the South China Sea". The workshops are informal in nature and take the form of a confidence-building measure aimed at diffusing tensions among the disputants by exploring areas of joint co-operation. The workshops have avoided addressing jurisdictional or sovereignty issues. By putting aside sovereignty claims and pursuing co-operative ventures (such as environmental protection, navigational safety, and combating piracy) Indonesia hopes that a climate of trust can be created conducive to an eventual settlement of the dispute.

As the 1990s progressed, Indonesia became more and more concerned with China's behaviour in the South China Sea. In February 1992, China's National People's Congress passed the Territorial Law of the Sea by which the PRC claimed sovereignty over almost the entire South China Sea; in May 1992, Beijing awarded a contract to U.S. oil company Crestone to search for oil in waters claimed by Vietnam; and in July 1992 People's Liberation Army (PLA) forces occupied Vietnamese-claimed Da Lac Reef. ASEAN responded in July 1992 by issuing the ASEAN Declaration on the South China Sea. The Declaration urged all claimants to renounce the use of force, settle the issue peacefully through international law, and freeze the status quo, that is, desist from occupying other reefs and building new structures. Although China agreed in principle to some of the provisions in the Declaration, its expansionist policy continued unabated. In July 1993, at the fourth workshop held in Surabaya, the Chinese delegation produced a map indica ting the extent of PRC claims in the South China Sea. The Indonesian delegation was concerned to note that China's "historic claims" seemed to include the waters around the Natuna Islands. In early 1995, Chinese structures were discovered on Philippine-claimed Mischief Reef near Palawan Island, and Chinese survey ships continued to search for oil in maritime areas near Vietnam. In May 1996, China expanded its "baseline" claims to the Paracel Islands, thereby claiming a further 965,000 square miles of the South China Sea. [55]

China's policy of creeping assertiveness in the South China Sea worried Jakarta because of its territorial dispute with Beijing over the Natuna Islands. The importance of the Natunas to Indonesia had grown since the early 1970s, when large reserves of liquefied natural gas (LNG) had been discovered in waters to the north of the archipelago. With oil reserves running low in Sumatra, the government looked towards the Natuna gas reserves to help fuel Indonesia's economic development well into the next century. [56] The Natuna gas fields are estimated to contain 222 trillion cubic feet of natural gas, of which 75 per cent is believed to be commercially recoverable. [57] In January 1995, Indonesia's state-run oil company Pertamina signed a contract with Exxon of the United States to develop the Natuna gas field. [58] In the first ten years, US$20 billion would be spent on developing the field, with commercial production of LNG scheduled to begin in 2003-4. [59]

Indonesia Pursues Four Strategies

Indonesia has sought to consolidate its hold over the Natuna Islands by pursuing four simultaneous strategies; diplomacy, transmigration, the involvement of foreign companies in the extraction of LNG, and strengthening its military forces in and around the islands.

The Diplomatic Strategy

Following the 1993 Surabaya workshop, the MFA sent a note to the Chinese Government requesting it to clarify its claims in the vicinity of the Natuna Islands. In April 1995, during the Mischief Reef crisis, the Indonesian Government demonstrated its concern over Chinese behaviour in the South China Sea by admitting that a clarification request had been made to Beijing, but that no reply had been received. [60] In June 1995, the Chinese Foreign Ministry finally responded by stating that the PRC did not dispute Indonesia's ownership of the Natuna Islands, but that "the two sides [should] settle the existing issue of delimiting the sea border through bilateral negotiations and consultations". [61] Foreign Minister Ali Alatas was not satisfied with this statement; whilst it recognized Indonesia's sovereignty over the Natuna archipelago, it indicated that there was still an overlapping claim to the territorial waters around the islands and that Jakarta should negotiate with Beijing over the issue. Alatas rejected the notion that Jakarta had any need to negotiate the problem with Beijing, declaring, "China is far away at north". [62] In July, Alatas met with Qian Qichen in Beijing and discussed the Natuna issue. According to Alatas, Qian had told him: "Natuna belongs to Indonesia[ldots] China has never claimed the Natuna Islands", and that the PRC was committed to resolving the issue based on the 1982 United Nations Convention on the Law of the Sea (UNCLOS). [63] Alatas was satisfied with this explanation, as under UNCLOS there could be no "misunderstandings and misperceptions" that the Natuna gas fields fell within Indonesia's 200-mile Exclusive Economic Zone (EEZ). [64]

However, this was not the end of the dispute between the two countries over the islands. Following the extension of the PRC's baseline claims in May 1996, Jakarta was concerned that China might seek to extend this principle to the Spratly Islands, thereby bringing the Natuna Islands and their adjacent waters under Chinese sovereignty. Once again, Jakarta sent a formal note to Beijing seeking clarification on the matter. The MFA's Director-General of Political Affairs, Izhar Ibrahim said Jakarta had found China's move "unacceptable", considering "China's position as a continental and not an archipelagic state". [65] The Chinese Government did not, however, respond to this note. [66] The diplomatic strategy has thus yielded little progress in the dispute.

The Transmigration Strategy

Jakarta has sought to consolidate its hold over the Natunas themselves by increasing the population of the islands under the government's transmigration programme. In May 1993, the Ministry of Transmigration announced that 3,000 families would be resettled on the Natuna Islands and that the government would help provide plantations for the settlers. The government said that this decision had been taken "to help protect [the Natuna Islands] from any would-be rival claimants". [67] In 1994, the Ministry's director-general said that the government planned to develop the Natunas as one of Indonesia's largest population resettlement areas in accordance with the country's defence and security policies. [68] In February 1995, Minister of Transmigration, Siswono Yudohusodo declared that the government's primary considerations in resettling families on the Natuna Islands were "security and defence rather than commercial". [69]

The Involvement of Foreign Companies in the Extraction of LNG

As mentioned earlier, in January 1995 Pertamina signed a contract with U.S. oil giant Exxon to develop the Natuna gas field. Initially, Pertamina and Exxon held a 50 per cent stake each in developing the field. Later, Pertamina sold 26 per cent of its stake to another U.S. oil company, Mobil. It is reportedly looking to reduce its stake further by selling a 13 per cent stake to a consortium of Japanese oil companies. On the one hand, the choice of U.S. and Japanese investors makes economic sense, as U.S. firms have the advanced technology to extract the gas, and because Japan is Indonesia's largest consumer of LNG. On the other hand, it has also been suggested that Indonesia would like to Encourage the participation of U.S. and Japanese firms so that Washington and Tokyo would seek to protect their investments if China tried to occupy the area. [70]

The Military Response

ABRI has adopted a hard-line stance towards China's behaviour in the South China Sea. Underlying this approach is the armed forces commitment to the Wawasan Nusantara or Archipelagic Outlook. This doctrine was adopted by the military in 1969 and became a national policy in 1973. [71] According to Robert Lowry, Wawasan Nusantara is designed "to help give some coherence to the fragmented nation by insisting on its geographical and social unity" and "treating the entire national territory as a single entity". [72] The Wawasan Nusantara commits ABRI to the defence of all areas of the Indonesian archipelago, both on land and sea. [73]

In response to China's passage of the Law of the Sea and the Crestone contract, ABEI announced that it was stepping up air and naval patrols around the Natuna Islands. [74] At the same time, ABRI began strengthening its naval and air forces. In late 1992, Indonesia agreed to buy from Germany 39 warships which had previously belonged to the East German Navy. ABRI commander General Try Sutrisno said that the vessels had been purchased to help Indonesia patrol its territorial waters. [75] In June 1993, the Indonesian air force bought 24 Hawk ground attack jet fighters from Britain. [76] Three years later, Jakarta ordered 16 more. [77] General Feisal Tanjung said that the Hawks had been purchased specifically to safeguard the Natuna project. [78] The new Hawks were stationed at Pekanbaru in Sumatra and Pontianak in West Kalimantan to provide air cover over the Natuna Islands. [78] In August 1997, Indonesia announced plans to buy 12 Su-30 jet fighters from Russia and base them at Ujangpandang in South Sulawesi to provide further air cover over the Natunas. [80] However, the order was cancelled in early 1999 because of Indonesia's economic crisis.

ABRI has not been reluctant to send signals to Beijing that it intends to protect its territorial claims in the Natunas, by military force if necessary. In September 1996, several months after Jakarta had asked Beijing to clarify its baseline claims in the South China Sea, ABRI conducted large-scale military exercises in the area of the Natuna Islands. These manoeuvres, the largest combined naval, air and land exercises ever undertaken by ABRI, involved more than 19,000 troops, 40 aircraft, and 50 warships. [81] The ABRI officer in charge of the exercises, General Wiranto, denied that they were intended as a "show of force" aimed at meeting a "perceived threat from a particular country". [82] However, in fact the exercises were widely interpreted as sending a signal to China that Indonesia was prepared to defend its territorial claims in the South China Sea. [83] Since then, ABRI has been keen to reassure investors that the Indonesian military had made adequate preparations to safeguard the Natuna gas field. [84]

Indonesia Looks to Australia

China's assertive behaviour in the South China Sea during 1992-95 gave rise to concerns within the Indonesian Government, and particularly ABRI, about how an economically strong and militarily powerful China might assert itself in Southeast Asia in the future. For the first time since its independence, Indonesia looked to formalize its security relations with an external power, Australia. On 18 December 1995, after eighteen months of negotiations, Indonesia and Australia signed an Agreement on Maintaining Security (AMS).

The AMS represented a convergence of strategic thinking between Soeharto and the government of Paul Keating in Australia. The Keating government's 1994 Defence White Paper had identified the PRC as a potential threat to regional stability, warning that "China is likely to continue to pursue its strategic objectives by a combination of diplomatic, political and economic means underpinned by its growing military strength". [85] Negotiations for the AMS had begun in August 1994, and President Soeharto gave his blessing to the agreement in June 1995, a few months after China's occupation of Mischief Reef. [88] The terms of the AMS were left deliberately vague. The preamble to the agreement stated that Indonesia and Australia desired "to strengthen the existing friendship between them", recognized "their common interest in the peace and stability of the region", and wished to "contribute to regional security and stability in order to ensure circumstances in which their aspirations can best be realised for the eco nomic development and prosperity of their own countries and the region". [87] Article 1 requires the two countries to consult on a regular basis about matters "affecting their common security". [88] Article 2 enjoins the two sides to consult each other "in the case of adverse challenges to either party or to their common security interests", with a view to taking individual or joint action. [80]

The vagueness of the agreement invited a good deal of speculation as to the motivations of both Jakarta and Canberra. One observer saw the AMS merely as a mechanism to formalize existing security co-operation between the two countries. [80] Milton Osborne saw the importance of the agreement in its symbolic value, that "Australia had laid to rest any lingering perceptions that Indonesia [was] a potential if publicly unidentified enemy". [91] However, given Jakarta's longstanding suspicions of China's intentions in the region, and renewed concerns over Beijing's policy in the South China Sea and the implications for the Natuna gas fields, there can be little doubt that concerns over the PRC were Indonesia's primary motivating factor in signing the AMS. Confirmation of this view was to come in August 1997 when officials from the Australian Defence Department admitted that Australia was assisting Indonesia in developing a defence strategy for the Natuna Islands which included the provision of surface-to-air miss iles on board gas production platforms. [92]

The 1995 AMS was a victim of the 1999 East Timor crisis. Habibie's government cancelled the security agreement in September 1999, following growing anger and resentment in Indonesia over Australia's role in the East Timor peacekeeping force. [93] The new government of President Abdurrahman Wahid has vowed to mend relations with Australia, but given the deep sense of betrayal felt in Indonesia towards Australia, the security relationship between the two countries may have suffered irrevocable damage.

Indonesian Perceptions towards the Rise of China

As outlined earlier, Indonesia's rapprochement with China in the mid-to-late 1980s was motivated by economic considerations, Soeharto's desire for Indonesia to play a more prominent role on the world stage, a realization that China could no longer be ignored, and Beijing's more pragmatic foreign policy. Although ABRI and some Muslim groups opposed normalization with the PRC on national security grounds, Indonesia has stuck to a policy of engagement with the PRC -- expanding trade relations, developing political ties, and encouraging China to participate in the region's nascent security architecture. Indonesia recognizes that this policy is beneficial to China, the region and itself. Like the other ASEAN members, Indonesia hopes that engagement will encourage China to pursue co-operative policies with its neighbours, and help to reduce tensions in the South China Sea. Indonesia has thus supported China's membership of the ASEAN Regional Forum (ARF), APEC, and the World Trade Organization (WTO), and encouraged the annual ASEAN--China summits. Moreover, Indonesia believes that engagement helps to promote economic development in China, which in turn fosters internal stability. In the eyes of the Indonesian leadership, a stable China is more likely to co-operate with its neighbours, and one less prone to foreign adventurism. An editorial in the Jakarta Post on the death of China's paramount leader Deng Xiao-ping in February 1997, made this point quite clear:

The benefits of Deng's reforms went far beyond China's borders. The prosperity that the Asia-Pacific region -- including Indonesia -- has enjoyed these last 20 years could be attributed, indirectly but not insignificantly, to China's political stability and a rapidly growing economy under Deng. It was no coincidence that the greatest wars and turmoil in Asia occurred between the 1950s and mid-1970s when China was under Mao. An unstable China was a sure recipe for an unstable Asia, and still is. [94]

However, Indonesia's engagement with China has been a cautious one, and, as demonstrated earlier, inhibited by domestic factors, historical experiences and the Natuna Islands problem. Moreover, Indonesia in the 1990s still harboured concerns about China's role in Southeast Asia in the medium and long-term future. These concerns stem from two developments: China's defence modernization programme, and Beijing's behaviour in the South China Sea.

China's defence modernization programme began in the early 1980s and was designed to turn the PLA into a more credible defence force. At that time, Washington and Beijing had entered into a strategic alignment to contain the Soviet Union in Asia, and the United States had offered limited arms sales to China. The Indonesian Government was concerned that this help would enable the PRC to extend its influence in Southeast Asia through military means, particularly against Vietnam. [95] These concerns grew in the 1990s as the PRC sought to augment its air and naval power. ABRI commander General Feisal Tanjung opined that China's military modernization programme should be closely monitored. [96] He also said that the PRC's growing defence spending, coupled with its activities in the South China Sea could pose "a hegemonistic threat to the region" in the future. [97] In order to assuage regional concerns, in 1992 Defence Minister General Benny Murdani called on China to be more transparent regarding its defence mo dernization programme, otherwise "Southeast Asian countries [might] perceive [China] as a threat". [99]

Another area of concern for the Indonesian leadership in the 1990s was China's increasingly assertive behaviour in the South China Sea. This not only had implications for the Natuna Islands dispute, but was also interpreted as an indication of how an economically strong and militarily powerful China might act in the future. The 1995 Mischief Reef incident, in particular, had a significant impact on Indonesian perceptions of the PRC. Indonesian analyst Rizal Sukma argued that the event had reinforced the view that China had hegemonic intentions in the region, that it had undermined trust between ASEAN and China, and that some Southeast Asian countries might seek a "de facto alignment against China" with external powers. [99] With regard to the latter point, it has already been noted that Soeharto gave his approval to the AMS soon after the occupation of Mischief Reef. Other commentators were quick to criticize China over its actions in the South China Sea. Dino Patti Djalal, of the Indonesian MFA and a member of the organizing committee of the South China Sea workshops, commented:

The leadership in Beijing should avoid being impervious to the growing concern, real or perceived, felt among Southeast Asian circles. There are many ways to judge China's regional intentions, but in Southeast Asia it is now increasingly measured in terms of its overtures in the South China Sea. This is understandable: to countries in this region, China could well be transformed from a country a thousand miles away to becoming, with its offshore territorial interest, a country practically next door [ldots] [100]

Several Indonesian analysts have noted the potential for conflict between some ASEAN members and China over oil and gas resources in the South China Sea. Speaking at a seminar in Jakarta, Juwono Sudarsono, vice governor of the National Resilience Institute (and appointed Defence Minister under President Abdurrahman Wahid's government), warned: "My pessimistic projection is that barring the possibility that China can gain access to resources other than the South China Sea area, then ASEAN countries will have to face the possibility of imminent military confrontation with China". [101]

In view of these concerns, some observers in Indonesia have argued that economic and political engagement of China is a strategy which is not sufficient in itself to constrain China's behaviour. One school of thought posits that ASEAN should pursue a more assertive policy in its relations with China, and that the Southeast Asian countries should not be afraid to send definite signals of disapproval if China acts in a manner which is seen as damaging to regional stability. Dewi Fortuna Anwar, an analyst at the Indonesian Institute of Sciences, and later a special adviser to President Habibie, has argued in favour of such an approach. Speaking in 1996, Anwar said: "If we try to engage China more, then hopefully it will change its behaviour. But, on the other hand, I think it would be foolish for us to be completely naive." [102] Anwar went on to argue: "China respects strength[ldots] If they [the Chinese] see you are being weak they'll eat you alive".[103] In fact, the Indonesian Government pursued such a poli cy throughout the 1990s. The military exercises around the Natuna Islands held in November 1996 were an example of this policy. Although officially denied by ABRI, these manoeuvres were meant as a signal to China that Indonesia was prepared to meet any eventuality in the waters of the Natunas.[104]

Because of its colonial experience, Indonesia has always been suspicious of the involvement of external powers in Southeast Asia. Jakarta has sought to limit the influence of the great powers by promoting initiatives such as the ZOPFAN (Zone of Peace, Freedom and Neutrality) and SEANWFZ (Southeast Asia Nuclear Weapons Free Zone). However, Jakarta realizes that the role of external powers can never be removed completely. Instead, Indonesia sees multipolarity as the best way of accommodating the great powers. Multipolarity suggests a balance of power relationship between the United States, China, Japan, Russia, and India. Jakarta would not like to see a situation in which one of these powers became dominant. In order to maintain this multipolarity, Indonesia has supported the U.S. military presence in Southeast Asia. In 1992, Ali Alatas explained that the presence of such forces in the region did not contradict the ZOPFAN proposal. Alatas argued that whilst the U.S. Navy should retain a presence in the region, this presence should not take the form of military bases. [105] Indonesia has helped facilitate this presence by allowing U.S. naval vessels access to repair facilities at Surabaya. In 1997, ABRI Commander General Feisal declared that Singapore's decision to make maintenance facilities available to visiting U.S. naval ships would help maintain regional stability. [106]

Prospects for Sino-Indonesian Relations in the Post-New Order Era

The prospects for Sino-Indonesian relations under Indonesia's new President, Abdurrahman Wahid, seem much brighter than during the New Order era. Even before his election victory on 20 October 1999, Abdurrahman had signalled his intention to improve Indonesia's relations with China. He identified the PRC as one of Indonesia's most important partners, and said that better access to the Chinese market would help the Indonesian economy to recover. In terms of geopolitics, Abdurrahman said that Indonesia, China, and India should create an alignment to counterbalance the "lopsided power of the West". [107] His comments that Indonesia should pursue closer relations with other Asian powers were prompted by feelings of anger and betrayal towards the West -- especially the United States and Australia -- over East Timor.

The Abdurrahman government has also moved to mitigate other obstacles to improved relations with China. On becoming President, Abdurrahman appointed Kwik Kian Gie as Co-ordinating Economic Minister, the first ethnic Chinese to serve in an Indonesian government. Although Kwik's appointment was designed to encourage ethnic Chinese to repatriate their money back to Indonesia, it was also a signal that the Abdurrahman government was prepared to make a decisive break with the past on the status of Chinese Indonesians. Significantly, Abdurrahman's first state visit abroad was to the PRC in early December 1999. He used the visit to promote closer Sino-Indonesian trade co-operation, and to urge Chinese Indonesian businessmen to return home with their financial assets. Abdurrahman pledged that his government would make every effort to end discrimination against the ethnic Chinese and that they would be "given full guarantee of their lives". [108] In addition, the President indicated that the ban on Chinese schools in Indonesia would soon be lifted, and that a Chinese Institute would be established in Jakarta to help overcome the negative attitudes towards the ethnic Chinese community and to strengthen Sino-Indonesian relations. In another departure from the past, Abdurrahman said that Indonesians had no reason to fear communism. [109]

As argued earlier, the Indonesian armed forces viewed relations with the PRC, and the role of Chinese Indonesians, as matters of national security during the New Order era, thus impeding relations with Beijing. However, the image of ABRI (now renamed TNI) suffered badly during Habibie's rule, and stemmed from the shooting of students at Trisaki University in May 1998, the armed forces involvement in the May riots which followed, allegations of human rights abuses in Aceh and Irian Jaya, and the army's scorched earth policy following East Timor's independence vote. With the TNI on the defensive, Abdurrahman moved quickly to limit its influence in the new government. He appointed Admiral Adi Sutjipto Widodo as the new commander-in-chief of the Indonesian Armed Forces, demoting the former. incumbent, General Wiranto, to Co-ordinating Minister for Security and Political Affairs. Widodo is widely respected as a career military officer, untouched by human rights abuse allegations. Abdurrahman hopes that Widodo can transform the armed forces into a more professional fighting force, and one less inclined to involve itself in civilian affairs. In another move designed to scale-back the power of the military, Abdurrahman appointed Juwono Sudarsono as Defence Minister, the first civilian to hold such office in modern Indonesia.

Despite the prospects for improved Sino-Indonesian relations under President Abdurrahman, significant problems remain which should not be underestimated. Firstly, Indonesia still has outstanding territorial claims with the PRC over the gas-rich waters surrounding the Natuna Islands. President Abdurrahman has underscored the importance of protecting the country's maritime resources by creating a Ministry for Marine Affairs. He declared that Indonesia's maritime resources had been "stolen by outsiders", and that his government would enhance the country's naval power in order to protect them. [110] Thus, Indonesia's policy of rejecting China's territorial claims in the Natuna area, and strengthening its military forces to protect the valuable gas project seem set to continue.

Secondly, although Abdurrahman has sought to diminish the role of the Indonesian armed forces in government, their influence remains strong and their "dual function" (dwifungsi) in defence and politics remains enshrined in the constitution. Abdurrahman still needs the support of the armed forces, and in recognition of this fact, his government gave three portfolios to military officers. [111] The new Defence Minister, though a civilian, has close links with the armed forces and was former deputy governor of the ABRI-run National Resilience Institute. Moreover, overshadowing Abdurrahman's government is the possibility of a military coup, especially if the President allows other provinces to attain independence. [112] In the event of a military takeover, the armed forces' long established views on national security would once more influence Indonesian policy towards the PRC.

Thirdly, the discrimination and persecution of the ethnic Chinese community in Indonesia has strained relations between Jakarta and Beijing for more than thirty years. In order to remove that obstacle, the Indonesian Government must give serious attention to ending racial discrimination. Abdurrahman's appointment of Kwik Gian Kie was a step in the right direction, but much more needs to be done. Anti-discriminatory measures must be passed into law, allowing the ethnic Chinese community to open new schools, teach their own language, and observe traditional Chinese festivals. This will also encourage Chinese Indonesian businessmen to repatriate their money to Indonesia. However, changing government policy is one thing; changing public perceptions of Chinese Indonesians as rich and greedy is quite another. Associated with this is the historical legacy of the 1965 Gestapu Affair. A thorough reassessment of this event must be made, especially the alleged role of the ethnic Chinese in supporting the PKI. The ghosts of the 1965 coup attempt must be laid to rest before Indonesia can look to the future.

Finally, there remain suspicions within Indonesia's governing elite as to China's long-term intentions in Southeast Asia. These concerns are fuelled by the growth of Chinese military power and Beijing's assertive policy in the South China Sea. Security dialogue between ASEAN and China has yielded few positive results other than Chinese expressions of good neighbourliness and peaceful intent. Meanwhile, the PRC continues to augment its naval and air power, and shows no sign of willingness to compromise its claims in the South China Sea. If these trends continue, Indonesia's relations with China will inevitably suffer, and Jakarta may once more be forced to pursue security relations with external powers, such as the United States and Australia.


Indonesia's relations with China throughout much of the New Order era were dominated by national security concerns. Following the 1965 Gestapu Affair, the Indonesian leadership perceived China as both an internal and external threat. It was perceived as an internal threat because of its support of regional communist parties and its alleged links to the PKI and the ethnic Chinese community. In the decades which followed, the Indonesian Government warned of the dangers of a PRC-backed communist revival which would derail economic development. However, the communist spectre also provided the government with a useful tool for suppressing opposition to the New Order. Indonesia also perceived China as an external threat as Jakarta saw the PRC as having hegemonic ambitions in Southeast Asia.

A more mature relationship developed from the mid-1980s onwards as Soeharto began to recognize the PRC as an economic opportunity and less of an ideological threat. Trade relations were restored in 1985 and diplomatic relations in 1990. Although Indonesia pursued a policy of economic and political engagement with China, three obstacles impeded closer relations: anti-communist sentiment in Indonesia used to legitimize the New Order's rule, the ethnic Chinese problem, and the PRC's policy in the South China Sea. Jakarta was particularly concerned at Beijing's territorial claims near the Natuna Islands, and responded by rejecting Chinese calls for negotiation, and strengthening its military forces in the area. Indonesia was so alarmed by China's behaviour in the South China Sea that it took the unprecedented step of formalizing a security relationship with Australia.

The Asian financial crisis spelled the end of the New Order era. Newly elected President Abdurrahman Wahid has promised to improve relations with China, largely for economic reasons, but also to balance the perceived dominance of Western countries. However, significant problems remain before bilateral relations can improve. These include the continuing influence of the Indonesian armed forces in the sphere of national security and defence, discrimination against Chinese Indonesians, the territorial dispute over the Natuna Islands, and suspicions about China's long-term intentions in Southeast Asia.

IAN JAMES STOREY is a doctoral candidate in International Relations at the City University of Hong Kong.


(1.) Robert Lowry, The Armed Forces of Indonesia (St. Leonards, Australia: Allen & Unwin, 1996), p. 4.

(2.) Dewi Fortuna Anwar, "Indonesia's Relations with China and Japan: Images, Perception and Realities", Cotemporary Southeast Asia 12, no. 3 (December 1990): 230.

(3.) China had been very critical of Vietnam's treatment of ethnic Chinese citizens in 1978. China's 1979 border war with Vietnam was widely interpreted by ASEAN members as not only a "punishment" for the Vietnamese invasion of Cambodia, but also Hanoi's discriminatory policies against the ethnic Chinese. The latter was regarded by Jakarta as interference in the internal affairs of a sovereign state, According to Indonesian Foreign Minister Mochtar, "what happened in Vietnam with regard to the overseas Chinese did not reassure us". Quoted in "Old fears delay friendship", Far Eastern Economic Review [hereafter cited as FEER], 15 December 1978.

(4.) The Kuantan Declaration was issued by President Soeharto and Malaysian Prime Minister Hussein Onn in March 1980. In it, the two leaders expressed the hope that Vietnam would not come under the influence of either the USSR or the PRC. It suggested that China's military policy of "bleeding Vietnam white" was detrimental to the long-term stability of Southeast Asia, and would not lead to a resolution of the dispute. It also implied that China should not try to fill in any vacuum created by a Vietnamese troop withdrawal from Cambodia.

(5.) Leo Suryadinata, Indonesia's Foreign Policy Under Soeharto (Singapore: Times Academic Press, 1996), p. 43.

(6.) At the end of 1973, Malik stated: "with China we have no more problems. The question is only to normalize relations as soon as possible". See FEER, 24 December 1973.

(7.) In May 1985, General Yoga, the head of the Indonesian intelligence service, Bakin, told a parliamentary committee that Sino-Indonesian direct trade would "create an opening for communist activities". Cited in Justus M. van der Kroef, "Normalizing Relations with China: Indonesia's Policies and Perceptions", Asian Survey 26, no. 8 (August 1986): 926.

(8.) "China and Indonesia agree to heal rift and normalize ties", Reuters News Service, 23 February 1989.

(9.) "Li Peng on normalization of Sine-Indonesian relations", Xinhua News Agency, 9 August 1990.

(10.) "China and Indonesia friends again, let bygones be bygones", Reuters News Service, 8 August 1990.

(11.) "Resumption of Sino-Indonesian ties to promote bilateral economic, trade co-operation", Xinhua News Agency, 2 August 1990.

(12.) "Good prospects for Sine-Indonesian trade", Reuters News Service, 26 November 1990.

(13.) "China offers economically battered Indonesia aid", Reuters News Service, 12 April 1998.

(14.) President Soeharto thanked Chinese Foreign Minister Tang Jiaxuan for China's help and its decision not to devalue the yuan when Tang visited Indonesia in April 1998. "Indonesia pledges to push forward its co-operation with China", Xinhua News Agency, 13 April 1998.

(15.) Those comments were made by Major-General Syarwan Hamid, assistant to ABRI's chief for soclo-political affairs. See "Indonesia to remove ex-prisoner mark from ID card", Jakarta Post, 8 August 1995.

(16.) "Clear and present danger -- communism", Jakarta Post, 10 January 1995.

(17.) "ABRI again warns of communism", Jakarta Post, 30 September 1996.

(18.) "Maoist groups behind riots, says Soeharto", Jakorta Post, 18 January 1997.

(19.) Ibid.

(20.) Soeharto warned: "Those people want to disrupt stability. Our development is based on stability. Without stability there will be no development. Without development there will be no growth. Without growth there will be no parity". Ibid.

(21.) "Indonesia to remove ex-prisoner mark from ID card", Reuter News Service, 8 August 1995,

(22.) Brigadier-General Sowarno Adiwijoyo added: "Should [former PKI members] try to blend into the community in order to stealthily conduct communist-style activities again, we will have no difficulty in tracking them down". Ibid.

(23.) Ibid.

(24.) "Coup men freed after 33 years in jail", South Chino Morning Post [hereafter cited as SCMP], 27 March 1999.

(25.) See "Amnesty International Annual Report 1999: Indonesia and East Timer". A copy of this report can be seen on the World Wide Web at ar99/asa2l.htm.

(26.) "Warning on communism", SCMP, 29 April 1999.

(27.) "Teaching Mandarin okay for tourism", Jakarta Post, 4 March 1995.

(28.) "Indonesia reassures Beijing on ethnic Chinese", Reuters News Service, 23 April 1994.

(29.) "Indonesia MI' criticizes China reaction to riots", ibid., 24 April 1994.

(30.) Ibid.

(31.) "Visiting Chinese official affirms non-interference in Medan riots", Antara News Agency, as reported by BBC Monitoring Service: Asia-Pacific, 27 April 1994.

(32.) Adam Schwarz, A Notion in Waiting; Indonesia in the 1990s (St. Leonards, Australia: Allen & Unwin, 1994), p. 108.

(33.) "Indonesia concerned at outflow of capital", Nikkei Weekly, 19 April 1993.

(34.) Hartono said: "The success of ethnic Chinese businessmen in the economic sector, especially in the big cities, has caused a large material gap. The exclusiveness of Indonesians of Chinese descent who band together in enclosed groups, combined with the unaccommodating attitude of other Indonesians, create these tendencies [racial resentment]". Hartono made these comments at a seminar on Indonesia-China trade relations. "Indonesia army warns of unrest over ethnic Chinese", Reuters News Service, 29 August 1994.

(35.) "76,000 stateless people apply for naturalisation", Jakarta Post, 1 March 1996.

(36.) "Discriminatory citizenship law abolished", Jakarta Post, 17 July 1996.

(37.) "Most Indonesians 'accept Chinese as fellow citizens"', Straits Times, 18 July 1996.

(38.) The TPGF was formed on 23 July 1998 and included government officials, members of the armed forces, and officials from the National Human Rights Commission and other non-governmental organizations (NGOs).

(39.) "Indonesian army chief says no proof of rapes -- paper", Reuters News Service, 27 August 1998.

(40.) "Indonesia intelligence agency chief hits out at rumour mongers". Bernama Malaysian National News Agency, 24 August 1998.

(41.) Final report of the Joint Fact Finding Team on 13-15 May Riots. The full text of the report can be seen on the World Wide Web at,html/

(42.) In connection with this, the TPGF recommended that a full investigation be made into a meeting which had taken place on 14 May at the headquarters of the Strategic Reserve (Kostrad), and the role Soeharto's son-in-law, Lieutenant-General Prabowo played in the "whole process that created the riots". Ibid.

(43.) "China concerned about its citizens in Indonesia -- FM spokesman", Xinhua News Agency. 21 May 1998.

(44.) "Beijing raises concern about Chinese in Indonesia", Reuters News Service, 29 July 1998.

(45.) "Punish the guilty, Beijing urges Jakarta", Straits Times, 4 August 1998.

(46.) "China waiting for Indonesia's true action to protect ethnic Chinese -- FM", Xinhua News Agency, 3 August 1998.

(47.) "Jakarta urged to live up to riot pledge", SCMP, 5 September 1998.

(48.) "Response to TPGF report vital to recover confidence", Jakarta Post, 6 November 1998.

(49.) Jiang stated: "We hold that a proper solution of the issue of Chinese-Indonesians will not only serve the long-term stability of Indonesia, but also the smooth development of the relationship of friendly co-operation between us two big neighbouring countries". See "Jiang -- Chinese Indonesians should enjoy equal treatment", Xinhua News Agency. 17 November 1998,

(50.) Greg Austin, China's Ocean Frontier: International Law, Military Force and National Development (St. Leonards, Australia: Allen & Unwin, 1998), p.213.

(51.) Ibid., p. 207.

(52.) Cited in Guy J. Parker, "Indonesia in 1980: Regime Fatigue?", Asian Survey 21, no. 2 (February 1981): 244.

(53.) Composed of more than 200 rock formations of varying sizes, the Spratlys are claimed in whole or in part by six countries: China, Taiwan, Vietnam, the Philippines, Malaysia, and Brunei, Sovereignty is contested for two reasons: first, the area encompasses valuable fishing grounds and is believed to be rich in oil and gas deposits; and second, the islands occupy an important strategic position, straddling vital commercial sea-lanes linking the Indian and Pacific oceans, through which much of the world's trade passes.

(54.) In 1991, Ali Alatas commented: "The situation has the potential to be a flash point of conflict, which will not only involve Southeast Asian nations, but also other countries outside the region". "Indonesia makes Spratly Islands its next peace project", Reuters News Service, 4 January 1991.

(55,) "Manila rebuffs territorial claim by Beijing", Financial Times, 18 May 1996.

(56.) In 1994. Indonesia's Mines and Energy Minister declared that if the government's goal of eliminating poverty by 2004 was to be achieved, the economy would have to grow by 6 per cent every year, and that "one of the keys to that growth is energy, both as an export earner and for domestic use", See "Indonesia hopes gas will fuel its future", Reuters News Service, 7 November 1994.

(57.) "RI set to start development of Natuna project", Jakarta Post, 15 March 1996.

(58.) "Pertamina, Exxon seal pact on Natuna gas project", Business Times [Singapore], 10 January 1995.

(59.) "Natuna gas output to start in 2003-Indonesia", Reuters News Service, 29 September 1995.

(60.) "Indonesia sends note to China over Natuna case", Jakarta Post, 11 April 1995.

(61.) "No dispute over Natuna archipelago, spokesman says", Xinhua News Agency,22 June 1995, as reported by BBC Monitoring Service: Asia-Pacific, 23 June 1995.

(62.) "Indonesia says no sea border problem with China", Reuters News Service, 26 June 1995.

(63.) "Indonesia satisfied by China's Natuna explanation", Reuters News Service, 21 July 1995.

(64.) "Indonesia says China to use sea law in disputes", Reuters News Service, 27 July 1995.

(65.) "Beijing's sea baselines to be questioned", Jakarta Post, 21 July 1996.

(66.) "No reply from China over memo on South China Sea borders", Kompas, 22 September 1997; as reported by BBC Monitoring Service: Asia-Pacific, 23 September 1997.

(67.) "Indonesia sends families to safeguard islands", Reuters News Service, 15 May 1993.

(68.) "Indonesia eyes gas-rich Natuna as migrant area", Reuters News Service, 29 August 1994.

(69.) "Big plans for Natuna Islands", Jakarta Post, 28 February 1995.

(70.) The Australian quoted the Chairman of Indonesia's Centre for Strategic and International Studies, Jusuf Wanandi, as saying; "With the US, Japan and so many other international interests involved, Beijing will know there will be a powerful coalition against it if it tries to upset the status quo". See "Jakarta ready if balloon goes up at Natuna", The Australian, 2 September 1997.

(71.) Lowry, The Armed Forces, p. 8,

(72.) Ibid. For a more detailed examination of the doctrine, see Dine Patti Djalal, The Geopolitics of Indonesia's Maritime Territorial Policy (Jakarta: Centre for Strategic and International Studies, 1996), especially pp.63-70.

(73.) Lowry, The Armed Forces, p. 9.

(74.) "Indonesia steps up defence of Natuna Islands", Reuters News Service, 1 August 1992.

(75.) "Asian naval purchases spurned by power vacuum", Reuters News Service, 9 February 1993.

(76.) "British Aerospace gets large Indonesian order", Reuters News Service, 10 June 1993.

(77.) "Indonesia completes Hawk deal", Flight International, 3 July 1996.

(78.) "Military to shield Natuna gas", Jakarta Post, 19 February 1997.

(79.) See ibid., and John B. Haseman, "Navy has new aircraft and new hierarchy", Jane's Intelligence Review, 1 October 1997.

(80.) "Jakarta buys Russian fighter planes", The Australian, 6 August 1997.

(81.) "Armed forces to stage major military exercises", Jakarta Post, 21 August 1996.

(82.) "Indonesia calls Natuna exercises a test of readiness, not a show of force", Straits Times, 3 September 1996.

(83.) Indonesian political analyst Dewi Fortuna Anwar said that the exercises were aimed at sending a message to China that Indonesia was ready for any eventuality in the Natuna seas. C.P.F. Luhulima, a maritime expert at the Indonesian Institute of Sciences, said ABRI had included the China factor in planning their war games. He said: "My understanding is that exercises these days have features which make a more pointed reference to Chinese 'adventurism' in the area and its [sic] attempts to assert its sovereignty over the South China Sea Islands". See "Indonesian military exercises 'includes China factor'", Straits Times, 21 August 1996.

(84.) "Military to shield Natuna gas", Jakarta Post, 19 February 1997.

(85.) "Friend or Foe: Australia now sees Indonesia as ally, China as threat", FEER, 15 December 1994.

(86.) Bob Lowry, "Australia-Indonesia Security Co-operation: For Better or Worse?", Working Paper No. 299 (Canberra: Strategic Defence Studies Centre, Australian National University, August 1996), p. 10.

(87.) Agreement Between the Government of Australia and the Government of the Republic of Indonesia on Maintaining Security, 18 December 1995.

(88.) Ibid.

(89.) Ibid.

(90.) Juwono Sudarsono, Vice Governor of the National Resilience Institute, saw the AMS this way. See "Jury still out on value of treaty", SCMP, 19 December 1995.

(91.) Milton Osborne, "Canberra's new bond with Jakarta buries old fears", Jakarta Post, 25 February 1996.

(92.) "Australia, Indonesia develop defence plan for disputed gas field", Antara News Agency, 14 August 1997.

(93.) "Jakarta axes security pact with Australia", Straits Times, 17 September 1999.

(94.) "Deng Xiao-ping's legacy", Jakarta Past, 21 February 1997.

(95.) According to Foreign Minister Mochtar: "Sometimes the U.S. views situations too much in global, superpower terms, neglecting other aspects. For instance, the relationship with China is seen to counterbalance U.S. policy vis-a-vis the Soviet Union[ldots] This picture forgets about other nations in Asia to whom China means something else[ldots] Ultimately, the biggest threat is China" [emphasis added]. Quoted in Gordon R. Hein, "Indonesia in 1982: Electoral Victory and Economic Adjustment for the New Order", Asian Survey 22, no. 2 (February 1983): 188.

(96.) "Military chief downplays external, internal threats", Antara News Agency, 20 November 1995, as reported by BBC Monitoring Service: Asia-Pacific, 22 November 1995.

(97.) "China, India and Japan 'are new military powers'", Straits Times, 22 November 1995.

(98.) "Indonesia urges China to be open about arms -- paper", Reuters News Service, 13 November 1992.

(99.) Rizal Sukma, "A flicker of threat to region in the Spratly Islands", Jakarta Post, 23 February 1995.

(100.) Dino Patti Djalal, "Spratlys row calls for patience", Jakarta Post, 6 April 1995.

(101.) "ASEAN-China conflict possible over oil -- experts", Jakarta Post, 7 August 1996.

(102.) Ibid.

(103.) Ibid.

(104.) "Indonesian military exercise 'includes China factor'", Straits Times, 21 August 1996.

(105.) "ASEAN member states agree on US presence in region -- Alatas", Business Times [Singapore], 29 October 1992.

(106.) "US military presence good for region -- Feisal", Straits Times, 3 March 1997.

(107.) "Candidate hopes for China ties", SCMP, 12 October 1999.

(108.) "Indonesia's Wahid woos Chinese, warns separatists", Reuters News Service, 3 December 1999.

(109.) "Indonesian president in China wants better relations", BBC Monitoring Service: Asia-Pacific, 3 December 1999.

(110.) "Wahid pledges stronger navy", Sydney Morning Herald, 25 October 1999.

(111.) General Wiranto is Co-ordinating Minister for Security and Political Affairs, Lieutenant-General Susio Bambang Yudhoyono is Minister for Mines, and Lieutenant-General Agum Gurnelar is Communications Minister.

(112.) Defence Minister Sudarsono has alluded to the danger of a military takeover if the government fails to provide strong leadership. See "Military might return, minister warns", SCMP 23 November 1999.

                      Sino-Indonesian Trade, 1990-99
                             (In US$ billions)
Year     Indonesian Exports Indonesian Imports Total Trade
             to the PRC        from the PRC
1990           0.834              0.653           1.487
1991           1.191              0.835           2.026
1992           1.396              0.752           2.148
1993           1.249              0.936           2.185
1994           1.419              1.215           2.634
1995           1761               1.586           3.347
1996           2.057              1.598           3.655
1997           2.67               1.84            4.51
1998           1.83               0.91            2.74
1999 [*]       2.19               1.18            3.37

(*.)January-September 1999

SOURCE: For 1990-97, Asian Development Bank, Key Indicators of Developing Asian and Pacific Countries 24 (London: Oxford University Press, 1998); for 1998-99, Ministry of Foreign Trade and Economic Co-operation, PRC.

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