RI has tough task in keep both China, Japan happy

RI has tough task in keep both China, Japan happy

Kornelius Purba, The Jakarta Post, Jakarta

In the early 1990s, president Soeharto's New Order regime
teamed up with the United States to stymie Malaysia's regional
ambitions. Flash forward to this week and Indonesia and the
rising rivalry between China and Japan will very likely be the
biggest stumbling blocks to Malaysia's ambition to play a larger
role in the ASEAN regional grouping.

Malaysian Minister of Trade and Industry Rafidah Aziz may very
well be disappointed again on Wednesday when her country has to
delay its 15-year ambition to play a leading role in the
establishment of the East Asian Community. In the same Cabinet
position in 1990, she was fully involved from the beginning when
then prime minister Mahathir Mohamad introduced his idea to form
the East Asian Economic Grouping (EAEG).

Then president Soeharto, in his typical Javanese way, vetoed
Mahathir's idea simply by saying during a meeting in Jakarta on
Feb. 5, 1991, that he "understands prime minister Mahathir's
idea".

The United States opposed the trading bloc because of
Mahathir's refusal to include the superpower in the regional
grouping, which was envisioned as a challenger to the U.S. and
Europe. Indonesia was concerned with the U.S. opposition, but
Soeharto also did not want to see ASEAN -- which Indonesia
dominated -- sidelined by the EAEG.

Although initially Soeharto also was reluctant to join
another regional grouping, this one initiated by Australia, the
Asia-Pacific Economic Cooperation (APEC) held its first summit in
Seattle, the U.S., in 1993. As a reward to Soeharto for getting
on board with the grouping, Indonesia hosted the second APEC
summit in Bogor, West Java, in November 1994.

When President Susilo Bambang Yudhoyono attends the annual
summit of the 10-country Association of Southeast Asian Nations
in Kuala Lumpur this week, which will also include the first East
Asian Community (EAC) summit on Wednesday, he is expected to take
a page out of Soeharto's playbook and let his host, Prime
Minister Abdullah Badawi, know he is opposed to the formal
establishment of the East Asian Community as it now stands.

The EAC summit will also be attended by China, Japan, South
Korea, India, Australia and New Zealand.

In his first appearance at an ASEAN summit as President last
year in Viantiane, Laos, Susilo reportedly committed a "slip of
the tongue" when he agreed to Malaysia's proposal to host the EAC
summit, although his chief diplomat, Hassan Wirajuda, had told
him Indonesia should reject the idea or at least delay the plan.
Indonesia worries the EAC could disrupt ASEAN's commitment to
create the ASEAN Community by 2020 and that ASEAN would not be in
the "driver's seat" in the EAC. As a newcomer, perhaps Susilo
felt uneasy saying "no" to other leaders.

Malaysia actually insisted that EAC membership be limited to
the 10 ASEAN states -- Indonesia, Thailand, the Philippines,
Malaysia, Singapore, Brunei, Vietnam, Laos, Cambodia and Myanmar
-- and its three dialog partners, China, Japan and South Korea.
China shared Malaysia's position.

Similar to its position in the early 1990s, Indonesia wanted
an EAC with a larger and more flexible membership -- like a
consultative group. Indonesia fears the rivalry between China and
Japan would affect ASEAN if the EAC membership was limited to 13
countries.

Jakarta wants other countries like India and Australia to be
invited to join the grouping, to counter China and Japan.
Realizing it would not be able to face off against China alone,
Japan supports Indonesia's position on the larger membership.
Singapore is also close to Indonesia's position for its own
strategic interests.

Indonesia realizes that China is the main destination for its
exports and also a giant source of investment, and that it is
only a matter of time before Japan is left behind by China in
terms of economic ties -- excluding the Official Development
Assistance, through which Japan is world's largest money lender
-- with Indonesia. Japan is today still the most important
trading partner for Indonesia, but this relationship is limited
mainly to manufacturing and raw materials, while the relationship
with China is much more varied.

What can Indonesia get as a "reward" from Japan for its
position on the EAC? Well, the Japanese government is stepping up
its campaign to persuade Japanese private firms to invest more in
Indonesia. Tokyo also plans more infrastructure loans for
Indonesia, though that also means more loans for the already
heavily indebted country. For the time being it is very difficult
to expect more investment from Japan, because Japanese investors
still see China as the most attractive investment destination in
the world.

"Japan is like an overjealous first wife, who will do anything
to make sure that she is more attractive then her husband's new
lover. But this can be dangerous if the husband fails to manage
the first wife," a diplomat joked in describing the situation
between Indonesia, Japan and China.

Indonesia also must be cautious not to upset China, which
could result in severe economic consequences.

If this "polygamous" relationship is not handled with great
care, both China and Japan could choose to "divorce" Indonesia.

The writer can be reached at purba@thejakartapost.com