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Budget cuts undermine Indonesia’s geopolitical strategy, warns study

Centralized policymaking on foreign policy may weaken the country’s institutional capacity in responding to a potential conflict between bigger nations in the Indo-Pacific, as suggested by a recent report.

Yvette Tanamal (The Jakarta Post)
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Thu, July 2, 2026 Published on Jul. 1, 2026 Published on 2026-07-01T19:05:52+07:00

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President Prabowo Subianto (left) looks inside the cockpit of a Rafale jet fighter during a ceremony to hand over six new Rafale jet fighters, four Dassault Falcon 8X aircrafts and one Airbus A400M Atlas aircraft to the Air Force at Halim Perdanakusuma Air Force Base in Jakarta on May 18, 2026. President Prabowo Subianto (left) looks inside the cockpit of a Rafale jet fighter during a ceremony to hand over six new Rafale jet fighters, four Dassault Falcon 8X aircrafts and one Airbus A400M Atlas aircraft to the Air Force at Halim Perdanakusuma Air Force Base in Jakarta on May 18, 2026. (AFP/Bay Ismoyo)

I

ndonesia’s challenge in any conflict in the Indo-Pacific stems not from a direct military threat, but domestic governance and austerity measures that leave the country less resilient to economic shocks and geopolitical spillover, as suggested by a recent study.

The study, conducted by Asia Society Australia and supported by the Australian Department of Defense, examined how five maritime Southeast Asian nations, including Indonesia, would respond to an open conflict between major powers. They assessed each country’s foreign policy, economic and security alignments, as well as domestic factors shaping their international positioning.

Drawing on a two-year analysis based on interviews with experts and retired officials, the report found Indonesia to be likely to struggle to maintain its non-aligned stance in the event of an open conflict. 

“The President’s significant influence over foreign policy, combined with institutional limitations stemming from budget constraints, shapes a pragmatic approach that treats China as an indispensable economic partner and the [United States] as its most trusted security partner,” the authors wrote in the study issued in May.

“Under conflict conditions, however,” they continued,” this balance becomes more precarious.”

Under its long-standing “free and active” foreign policy, Indonesia has sought to maintain strategic neutrality in navigating power rivalries, with successive administrations varying in how they balanced relations with China and the US, depending on their policy priorities.

Former president Joko “Jokowi” Widodo, for example, was widely perceived as placing greater emphasis on ties with China, with his economic and infrastructure-driven agenda frequently aligning with Beijing’s initiatives.

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