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Turning tides on Indonesia-US synergy

JAKARTA (ANN/THE JAKARTA POST) – In a landmark visit to the United States, President Joko “Jokowi” Widodo has not only strengthened diplomatic ties but also paved the way for an intensified bilateral relationship. 

The recent meeting at the White House in Washington, DC, marked a significant milestone, with pledges amounting to USD15 billion and early discussions laying the groundwork for a pivotal deal to boost Indonesia’s electric vehicle (EV) supply chain. 

This encounter between President Jokowi and US President Joe Biden, their first since the Group of 20 Summit in Bali last year, signifies a strategic step forward in collaboration between the two nations.

The two leaders announced that their partnership would be elevated from a strategic partnership to a comprehensive strategic partnership (CSP). A CSP, such as Indonesia’s partnership with China that was established a decade ago, usually entails cooperation at the highest level of government on a vast range of issues.

The new level of cooperation comes with 22 programs, ranging from economic cooperation supporting Indonesia’s emerging enterprises, climate and energy sectors, to defence cooperation and people-to-people collaboration. At least three new agreements were being planned under the CSP, revolving around sustainable energy and minerals, cybersecurity and cultural exchange.

“This will mark a new era in the relationships between the United States and Indonesia across the board, affecting everything,” Biden said in his opening remarks. “I’m of the view that our partnership is stronger than it’s ever been.”

Among other things, the CSP would see the US International Development Finance Corporation (DFC) provide USD131 million in financing for several Indonesian private banks, a decarbonisation investment worth up to USD15 billion by ExxonMobil and the US Agency for International Development’s (USAID) intent to funnel some USD7.5 million toward Indonesia’s waste management system.

The two countries, which celebrate 75 years of diplomatic ties next year, intend to “remain deep friends”, their leaders said in a joint statement, despite looming tensions in recent years sparked by political differences.

The leaders’ meeting comes amid unceasing Israeli attacks on the Gaza Strip, which the US has helped shield from international scrutiny, thus widening the political divide between the West and the rest of the world.

It also coincides with the imminent meeting between Biden and China’s President Xi Jinping, the leader of a country that has been key to Indonesia’s national interests but with which the US has kept a fierce strategic rivalry.

Despite the political unease, Jokowi set a clearly business-forward tone upon his arrival at the Oval Office, putting the economy at the forefront of the dialogue.

“The US is one of the most important partners for Indonesia,” Jokowi said ahead of the meeting. “We must give real meaning to [the partnership]. For [us], economic cooperation is a priority, including supply chain issues.”

In line with Jokowi’s critical minerals downstreaming ambition, the bilateral meeting saw the two leaders work to advance a potential partnership centred around the EV battery supply chain, noting the “[recognition of] Indonesia’s global leadership in the nickel, cobalt and other critical mineral value chains”.

A work plan is currently being drafted in preparation for negotiations on an eventual Critical Minerals Agreement (CMA), Foreign Ministry Retno LP Marsudi said in a statement issued separately by the ministry.

In recent years, the Jokowi administration has courted major EV players such as Elon Musk’s Tesla to open shop in Indonesia. The President has also resisted international pushback on his downstreaming plan, which is designed to capture the lion’s share of the EV battery supply chain by domestically processing Indonesia’s vast nickel resources and banning the export of raw minerals.

Some from the US private sector have expressed opposition to the plan, arguing that Indonesia’s weak labour protections, reliance on Chinese companies, negative biodiversity impacts and poor community engagement have marred the prospect of further cooperation between the two countries in the critical minerals sector.

“If [a critical mineral partnership] expansion is deemed necessary, it should be directed toward countries with strong labour, human rights and environmental standards,” an open letter signed by nine US Senators in late October said.

Addressing such concerns in their joint statement, Jokowi and Biden pledged their determination to “reduce supply chain dependencies”, apply internationally recognized labour standards and “work toward a low-greenhouse gas emission mineral supply chain”.

In her remarks, Minister Retno said that once the CMA was finalised, “Indonesia could be a sustainable and long-term supplier of EV battery demand in the US”.

Beyond Indonesia’s economic gains, Jokowi’s White House visit also saw him bringing Biden a message endorsed by one-third of the world’s leaders urging for an immediate end to Israel’s siege of Gaza.

Over the weekend, dozens of leaders endorsed at an extraordinary joint summit of the Organisation of Islamic Cooperation (OIC) and the Arab League a strongly-worded joint communiqué demanding Israeli accountability and their rejection of the forced displacement of Palestinians from their homeland.

“Indonesia appeals to the US to do more to stop the atrocities in Gaza. Ceasefire is a must for the sake of humanity,” Jokowi told Biden.

While the issue was raised during Tuesday’s bilateral meeting, there had been no clear statement to come out from Biden’s administration, apart from the agreement that the leaders “should work together and with other regional partners for a durable peace through a two-state solution”.

The Biden administration, which is also up for election next year, has previously rejected calls for a ceasefire and supported Israel’s continued bombardment of Gaza.

Indonesian President Joko Widodo disembarks his airplane at San Francisco International Airport in San Francisco, California, on November 14, 2023, as he arrives to attend the Asia-Pacific Economic Cooperation (APEC) leaders’ week. PHOTO: AP
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