Indonesia and Malaysia spar in the Sulawesi sea

Indonesia and Malaysia spar in the Sulawesi sea

Michael Vatikiotis, Singapore

Things were going so well between Indonesia and Malaysia, it
is hard to believe that one of ASEAN's most critical
relationships is foundering on a territorial dispute. The war of
words and dispatching of warships to a disputed area of the
Sulawesi Sea threatens the closest relationship the two countries
have enjoyed since either gained independence, and could
undermine a crucial investment lifeline that has helped Indonesia
emerge from years of economic sterility with the help of capital
from neighboring countries like Malaysia.

The new Indonesian-Malaysian bilateral relationship was built
around a personal chemistry established between newly elected
Indonesian president Susilo Bambang Yudhoyono and Malaysian Prime
Minister Abdullah Badawi. It was driven along by the desperate
need for investment in Indonesia and an almost equally desperate
need for Malaysian corporate players to expand into a friendly
market. The closeness of ties was demonstrated in the aftermath
of the Dec. 26 tsunami tragedy, when Malaysian volunteers were
the first to hit the ground in ravaged Aceh. Now Malaysian firms
are at the forefront of reconstruction plans in the province.

The relationship was tested over the expulsion of illegal
Indonesian workers from Malaysia. President Yudhoyono was able to
persuade Abdullah to extend the amnesty by several weeks, at some
risk to Abdullah's own standing with his civil servants.

It's also a relationship that feeds off similarities at the
top. Both men are sincere and value integrity in politics; both
are also accused of being slow and indecisive. That's no great
price to pay for the upside, which is prudence and moderation in
a region that has seen its fair share of demagoguery and
rhetoric.

More importantly, this meeting of minds between Southeast
Asia's two Muslim leaders is a constructive one for the region as
a whole. It is helping to rebuild the badly damaged image of a
tolerant Muslim society in Southeast Asia; it could also
contribute to more projection of moderate Islam in the wider
world.

So it is imperative that this dispute over oil-rich waters off
the island of Borneo be settled amicably and finally. This won't
happen so long as emotions on the Indonesian side run high and
the government in Jakarta stokes the issue, which has already
brought fighter planes and warships to the area in an unseemly
show of force. Nor is Malaysia helping with a show of magnanimity
and compromise following the decision by an international court
in 2002 to back its claim to the nearby islands of Sipadan and
Ligitan.

For now, both sides seem content to let the issue fester.
Kuala Lumpur perhaps because it wants to assert its
administrative rights over the area to cement a legal decision on
Sipadan and Ligitan that Indonesia was never happy with. Maybe
Jakarta's real aim is to deflect public anger away from a hefty
fuel price increase that has provoked almost daily demonstrations
against the government.

It's an old trick. With trouble at home, look for a foreign
bogey. Malaysian flags have been burnt outside the Malaysian
embassy in Jakarta, and mobs are mobilizing under banners that
recall the "Crush Malaysia" slogan Indonesia's first president
Sukarno deployed when he deflected domestic criticism by
launching a confrontation against Malaysia in the 1960s. The
speaker of Indonesia's parliament has even called for the use of
military force to assert Indonesia's claim.

Thankfully there are precedents and formulas deployed
elsewhere in the region that might help defuse the problem, for
this isn't the first overlapping claim in oil-bearing waters to
test relations in Southeast Asia.

In fact, Malaysia successfully defused a similar dispute with
Thailand more than twenty years ago with the establishment of a
Joint Development Authority to manage overlapping claims in the
Gulf of Thailand. The same Malaysian oil company involved in the
disputed Sulawesi Sea, Petronas Carigali, joined forces with
Thailand's state Petroleum Company PTT and agreed on a gas sales
and purchase agreement under which each party bought gas from the
JDA on a 50:50 basis and brought their respective share of gas
back to Malaysia and Thailand.

Jointly developing the area wasn't only a way to shelve the
territorial dispute, it also helped split the cost of a pipeline
that needed to be built in order to bring the gas onshore. Could
not the same deal be hammered out in the case of the disputed
waters off Borneo? It's a small price to pay, perhaps no price
at all given the joint investment possibilities, in exchange for
a closer bilateral relationship that everyone in the region
benefits from.

The writer is a former editor and chief correspondent of the
now defunct Far Eastern Economic Review. He can be reached at
michaelvatikiotis@yahoo.com.