Experts: Indonesia’s $10 billion deal with China could undermine sovereignty, increase political tensions

Maritime security and international law experts are concerned that a $10 billion deal concluded this week between China and Indonesia could not only undermine Indonesia’s sovereignty in the North Natuna Sea but also spur illegal fishing and increase political tensions among ASEAN nations.
“Indonesia could be subjugated economically by China, potentially leading to military power in the South China Sea region,” said Merisa Dwi Juanita, the founder of Bara Maritim, an independent institution for maritime security research.
Recently inaugurated Indonesian President Prabowo Subianto began his first foreign tour by visiting China on November 8. He held a series of high-level talks and met with President Xi Jinping in Beijing’s Great Hall of the People, where both expressed their commitment to long-standing bilateral relations.
“I would like to reiterate our commitment to enhance this relationship and to work together for the mutual benefit of our two peoples and for the prosperity, peace and stability of all of Asia,” Prabowo said during the meeting.
However, the joint statement that followed the visit alarmed analysts who view it as a departure from Indonesia’s long-standing South China Sea policy.
Maritime security and international law experts who talked to VOA say the statement implicitly recognizes Beijing’s “nine-dash line” designating its expansive territorial claims in the strategic waterway and could anger Indonesia’s neighbors within ASEAN. The Philippines, Malaysia, Brunei and Vietnam all are claimants in the dispute with China.
$10 billion deal
On his Beijing visit, Prabowo attended the Indonesia-China Business Forum, which saw the signing of business agreements between the Indonesian and Chinese private sectors said to be worth some $10 billion.
These provide for the joint development of fisheries, oil and gas exploration and maritime safety. They also call for cooperation in the management of ocean resources and sustainable mineral extraction practices.
By implicitly recognizing Beijing’s claim to territory that falls within Indonesia’s Exclusive Economic Zone, Indonesia “has assented to something that is illegal under international law,” wrote Aristyo Darmawan, an international law professor at Universitas Indonesia, in an op-ed in The Interpreter.
“Even worse, Indonesia is willing to share its sovereign rights to explore and exploit fisheries and oil with the country that is making this claim.”
He went on to say that since 2017, China has put forward several joint development proposals in the South China Sea, including the creation of a Spratly Resource Management Authority – with membership not just from parties to the territorial dispute, but also Indonesia.
Indonesia is not a formal claimant in the South China Sea territorial dispute. Nevertheless, it rejects China’s claim to the waters around Natuna Island, which lie inside China’s self-drawn nine-dash line but fall within Indonesia’s EEZ and continental shelf.
In order to create a joint development in a disputed area, Darmawan concluded, China would need to have a legitimate claim under the U.N. Convention on the law of the Sea (UNCLOS).
Merisa said the China-Indonesia maritime agreement could also spur illegal fishing.
“There are growing doubts about law enforcement on Illegal, Unreported, and Unregulated fishing by Chinese fishermen. The substantial losses caused by IUU fishing could increase if Indonesia maintains the overlapping claims narrative. This could undermine the efforts by local fishermen and the Maritime Security Agency (Bakamla) to protect Indonesia’s maritime resources. Consequently, Indonesia would face even greater losses if this policy continues,” Merisa added.
Merisa suggests Indonesia should strengthen its defenses by enforcing the law and better protecting local fishermen against aggressive Chinese coast guard actions.
Regional implications
An Indonesian Foreign Ministry statement following the agreement maintained that the deal is consistent with the 2002 Declaration on the Conduct of Parties in the South China Sea, signed by ASEAN and China. It said the parties will follow the maritime laws and regulations of each country, including maritime treaties, boundaries, marine spatial planning and fisheries management.
The Foreign Ministry said the two countries “agreed to form maritime cooperation. It is hoped that this collaboration can become a model for efforts to maintain peace and friendship in the region.”
However, the statement by the Indonesian Foreign Ministry stressed that the agreement does not acknowledge the Chinese claim represented by its nine-dash line, which has been rejected by an international tribunal and is not supported by UNCLOS. Thus, the ministry said, this cooperation has no impact on Indonesia’s sovereignty, sovereign rights or jurisdiction in the North Natuna Sea.
Indonesia believes the cooperation will encourage the completion of a long-sought code of conduct for the South China Sea, which could create stability in the region. However, Aristyo said that the agreement exposes the disunity among ASEAN countries in their negotiations with Beijing and could cause them to feel betrayed by Indonesia’s implied recognition of the nine-dash line claim, which the others have firmly and jointly rejected.
In addition, Indonesia’s seeming recognition of China’s overlapping claim contradicts a 2022 Indonesia-Vietnam EEZ agreement, which took 12 years to negotiate. Due to uncertainty caused by the joint statement with China, the ratification of the agreement with Vietnam could be set back.
According to Reuters on Monday, Beijing did not immediately respond to a request for comment on Indonesia’s statement.
Aristyo sees the joint statement as a huge win for Beijing. Indonesia had sovereign rights in its EEZ and continental shelf, but the joint development proposal would likely see Indonesia surrender those rights to a Joint Intergovernmental Steering Committee, he said.
He suggests that Jakarta would be better off to focus on developing the Natuna Islands on its own, rather than joining with China.