This Week in Indonesian Politics (27-5 Mar 2026)

The week of 27 February to 5 March 2026 will be remembered in Indonesia less for what happened within its borders than for the extraordinary geopolitical storm raging beyond them. The United States and Israel launched coordinated strikes on Iran beginning on 28 February, killing Supreme Leader Ayatollah Ali Khamenei, triggering Iranian retaliation across the Gulf, and setting off a cascade of diplomatic, economic, and humanitarian consequences that reached deep into Indonesian domestic politics. Against this backdrop, the Prabowo administration found itself juggling a Middle East crisis, a clutch of significant corruption arrests, escalating legal battles, and the quiet but consequential work of economic and regulatory policy.

Indonesia and the Middle East Crisis

The death of Ayatollah Ali Khamenei dominated public discourse. President Prabowo Subianto moved swiftly to send a condolence letter to Iran’s leadership, conveyed to Ambassador Mohammad Boroujerdi in Jakarta, a gesture that drew praise from senior Islamic figures including PBNU chairman Yahya Cholil Staquf, known as Gus Yahya, and Jimly Asshiddiqie of ICMI. On the evening of 5 March, Prabowo hosted an iftar at Istana Merdeka attended by 170 ulama and habaib, including the heads of Muhammadiyah, PBNU, and MUI, where discussions reportedly covered both Lebaran preparations and Indonesia’s stance on the war. Former vice-president Jusuf Kalla, attending in his capacity as chairman of the Dewan Masjid Indonesia, urged the government to express sympathy for Iran and proposed sending a diplomatic mission directly to US President Donald Trump. Luhut Binsar Pandjaitan, chairman of the National Economic Council, warned that the conflict was unlikely to end within a month and cautioned Jakarta firmly against antagonising Tehran, citing Indonesia’s non-aligned tradition and China’s role as a major investor.

The war’s immediate practical consequences for Indonesia were significant. Roughly 54,000 Indonesian Umrah pilgrims were stranded as Gulf airspace closed, with transit routes via Qatar and Abu Dhabi suspended. The Indonesian Consulate General in Jeddah confirmed that 10,060 pilgrims had returned by 5 March, while around 300 remained delayed. The government opened a crisis centre and hotline, and 30 nationals stranded in Abu Dhabi were repatriated on a flight arranged by the Indonesian Embassy. The Indonesian Embassy in Amman clarified that 27 pilgrims had left Jordan via Cairo, though no formal evacuation plan had yet been announced. Cianjur’s regency government began coordinating repatriation of residents, including migrant workers, and urged travel agencies to suspend Umrah departures temporarily.

Domestically, the crisis ignited a fierce debate over Indonesia’s membership in the US-backed Board of Peace, which Prabowo had joined at the World Economic Forum in Davos on 22 January. MUI’s vice-chairman argued Indonesia should exit the BoP, saying it was proposed by leaders not fully committed to peace. ICMI’s Jimly Asshiddiqie proposed suspending, rather than withdrawing from, BoP obligations until the conflict subsided and Israel’s recognition of Palestinian independence was established. Anies Baswedan urged full withdrawal, framing it as a principled stand rooted in the Spirit of Bandung. By contrast, Gus Yahya urged Indonesia to use BoP as a lever for peace rather than abandoning it, likening the approach to digging a hole with a spoon when a shovel is unavailable. The UI Students Alliance announced a weekend of protests demanding withdrawal, while the foreign ministry confirmed that BoP talks had been placed on hold. Indonesia’s Foreign Minister Sugiono held phone calls with his Saudi and UAE counterparts urging de-escalation, and indicated that President Prabowo was willing to travel to Tehran to mediate if invited by conflicting parties.

Concerns about energy security accompanied the diplomatic turmoil. Deputy Speaker Sufmi Dasco Ahmad said the government had prepared fuel-stock mitigation measures, noting that domestic BBM stocks could cover around 20 days of demand. The news triggered panic buying in parts of Aceh. DPR Commission XII announced it would summon Energy Minister Bahlil Lahadalia to discuss resilience measures, including plans to expand storage capacity toward international benchmarks of 60 days. Coordinating Minister Airlangga Hartarto and Bahlil both confirmed that subsidised fuel prices – Pertalite and Biosolar – would not rise at least through Eid al-Fitr, even as global oil prices climbed. Fitch Ratings revised Indonesia’s sovereign outlook from stable to negative while maintaining the BBB rating, a move OJK attributed to external risk dynamics rather than any deterioration in Indonesia’s fundamentals, emphasising continued strong capital adequacy and prudent risk management.

Anti-Corruption and Judicial Developments

The week produced a notable harvest of KPK activity. Pekalongan Regent Fadia Arafiq was arrested in a sting operation on 3 March and named the sole suspect in a 2023-2026 outsourcing and procurement corruption case. The KPK alleged that PT Raja Nusantara Berjaya, established by her husband and son after she took office, dominated outsourcing contracts worth Rp46 billion across 17 regional units, three hospitals, and a district office, with approximately Rp19 billion allegedly diverted to the regent’s family. In a striking detail, the company’s listed director turned out to be the regent’s domestic worker. The KPK noted this was the first time it had invoked Article 12(i) of the Corruption Eradication Law – covering conflicts of interest – as the sole charge in a sting operation. Fadia’s admission that she did not understand governance because of her background as a dangdut singer drew sharp criticism from Deputy Home Affairs Minister Bima Arya Sugiarto, who said regional leaders must learn quickly rather than delegating everything. Her vice-regent, Sukirman, was designated acting regent pending the investigation.

The Chromebook procurement case against former Education Minister Nadiem Makarim continued to unfold at Jakarta’s Corruption Court. Prosecutors revealed evidence suggesting Nadiem’s wealth grew by around Rp6 trillion, pointing to share dealings linked to Google and its investment in PT AKAB via Gojek. State losses are alleged at Rp2.1 trillion, with Nadiem personally allegedly enriched by Rp809 billion. Former director Sri Wahyuningsih testified that she signed procurement documents on her superiors’ orders, while Acer Indonesia’s director denied a Rp425 billion enrichment figure cited by prosecutors, saying the company’s actual profit margin was approximately 4.7 per cent. Nadiem himself disclosed a possible deterioration in his health and the potential need for further surgery. Separately, the KPK demanded 5.5 years’ imprisonment for former North Sumatra PUPR head Topan Obaja Putra Ginting and four years for Rasuli Efendi Siregar in a road-project corruption case heard at the Medan District Court.

At the Batam District Court, ABK Fandi Ramadhan was sentenced to five years in prison for involvement in the smuggling of nearly two tonnes of methamphetamine aboard the Sea Dragon, sparing him from the death penalty prosecutors had sought. The court cited his polite conduct, youth, and lack of prior convictions as mitigating factors. Prosecutors said they were considering an appeal. Meanwhile, the Constitutional Court’s Honorary Council, MKMK, ruled it lacked jurisdiction to examine ethics complaints against newly appointed Constitutional Court judge Adies Kadir, as the matters concerned events predating his tenure. CALS announced it would pursue the matter at the Jakarta Administrative Court.

Policy, Regulation, and Economic Affairs

On the policy front, Coordinating Minister Airlangga unveiled tax deductions of up to 300 per cent for companies partnering with universities on semiconductor research and talent development, aiming to train approximately 15,000 engineers in the ARM ecosystem. The Ministry of Law called for intellectual property education to be incorporated from primary through secondary schooling and announced plans to integrate IP services into AI-based SuperApps. The Ministry of Communications and Digital confirmed that Government Regulation No. 17 of 2025, known as PP Tunas, would take effect on 28 March 2026, delaying children’s access to high-risk digital platforms until the age of 16 and lower-risk services until 13. Minister Meutya Hafid also conducted a surprise inspection of Meta Indonesia’s office, citing a compliance rate of below 30 per cent with national regulations on content moderation and algorithm transparency, and set a deadline for concrete commitments.

Danantara, the state-owned enterprise holding vehicle, began a comprehensive governance review of its portfolio through Danantara Asset Management, starting with the Karya group and extending to other sectors, targeting improvements in accounting policies, asset quality, and financial discipline. The Investree liquidation team verified 1,708 lender claims worth Rp151.78 billion, as one of Indonesia’s most prominent fintech scandals continued its slow resolution. OJK announced a target of 6-8 per cent growth in multifinance receivables for 2026, with January new financing reaching Rp78.16 trillion, and separately said it was drafting rules to regulate financial sector influencers, including those operating in cryptocurrency markets.

The anti-corruption commission also seized five vehicles from the Directorate General of Customs and Excise as part of a bribery investigation involving import manipulation, naming six suspects including former DJBC officials and a PT Blueray executive. OJK and Bareskrim raided Mirae Asset Sekuritas Indonesia over alleged IPO manipulation related to PT Berkah Beton Sadaya Tbk, with approximately Rp14.5 trillion in assets frozen.

Looking Ahead

The week closes with Indonesia at an unusually consequential crossroads. The Middle East crisis will continue to test Prabowo’s foreign policy instincts and his government’s capacity to protect citizens abroad, stabilise energy supplies, and maintain credibility with both its Islamic civil society and its international partners. The BoP debate is unlikely to dissipate, and the window before Eid al-Fitr – now expected around 20-21 March – leaves little time for the government to demonstrate both diplomatic coherence and domestic preparedness. With Fitch watching the sovereign outlook, fuel stocks under pressure, and 54,000 pilgrims yet to be fully repatriated, the Prabowo administration enters the homecoming season carrying an unusually heavy diplomatic and logistical load. How it manages that load – whether through the quiet pragmatism of Luhut, the active mediation ambitions of Prabowo himself, or the principled restraint urged by its religious interlocutors – will shape both its domestic standing and Indonesia’s reputation as a constructive middle power in a world that is becoming measurably more dangerous.