Articles

Introduction

The Iran war has run for nearly four months at the time of writing, and though the United States and Iran have reached an agreement to end it, the wider West Asia conflict is unlikely to be over soon owing to Israel’s vow to continue aggression in southern Lebanon.

This conflict, which has triggered a global energy and economic crisis, might seem unthinkable prior to its outbreak due to its potentially devastating consequences for the global economy and on the US economy.

The reopening of the Strait of Hormuz might alleviate the anxiety of trade-bound Southeast Asian countries like Indonesia, but the implications of the conflict extend far beyond energy supply alone.

The political implications of the Iran war on Indonesia are at least twofold: 1) increased scrutiny on the direction and trajectory of Indonesia’s foreign policy, and; 2) exposed vulnerabilities of Indonesia’s domestic capacity to cope with external shocks.

Foreign Policy Trajectory

For Indonesia, beyond rising commodity prices as well as concerns over the safety of Indonesian citizens residing in the broader West Asia, there is no direct political impact for the current administration stemming from the Iran crisis.

Nonetheless, as a country that champions multilateralism, anti-colonialism, and the role of multilateral institutions in maintaining international peace and security, the government’s muted response to the United States’ actions signals a departure from its traditionally principled position.

The crisis has also put a spotlight on the United Nations’ credibility in preventing unilateral attacks, thus complicating Indonesia’s ambition to become a top 10 contributor to the UN peacekeeping process. Apart from that, President Prabowo Subianto’s decision to bypass the United Nations by joining the Trump-led Board of Peace signals that Jakarta is ready to set aside its long-standing commitment to multilateralism.

Furthermore, Prabowo’s offer to mediate has gone largely unheeded. Indonesia simply lacks the diplomatic weight and proximity to influence West Asia. Unlike Qatar and Oman, which have spent decades cultivating deep regional networks as trusted interlocutors, Jakarta cannot build its credibility overnight through public declarations.

If Indonesia is serious about its profile as a peacemaker, it must first build diplomatic capital and prove its capacity in addressing conflicts closer to home, something that Jakarta has failed to demonstrate in such recent tensions as the Thai-Cambodian conflict.

Domestic Implications

Domestically, the government’s weak response in condemning the US-Israel attack on Iran has attracted considerable criticism from the public.

The reluctance to explicitly identify the United States as the principal sponsor of the attack, combined with the decision to join the Trump-led Board of Peace, has been perceived by many as a departure from Indonesia’s consistent opposition to Israel’s occupation of Palestine as well as Indonesia’s long-standing advocacy of Palestinian independence and a two-state solution.

Furthermore, perceptions that Jakarta is becoming increasingly more aligned with Washington are evident beyond its policy decisions in regard to West Asia.

The government’s recent decisions to grant blanket overflight access to US military aircraft and to provide Kertajati International Airport as a regional maintenance hub for C-130 aircraft have also been subject to criticism. Many view these decisions as inconsistent with Indonesia’s free and active foreign policy, its non-aligned status, and the government’s own rhetoric opposing neo-colonialism and foreign intervention.

Moreover, for many analysts, the administration’s significant concessions during negotiations over US reciprocal tariffs, which reduced the proposed tariff rate from 32% to 19%, further reinforce this perception.

These concessions reportedly included exemptions from local-content requirements and provisions requiring Indonesia to consult US authorities when negotiating trade agreements with other countries. Such measures have been interpreted by critics as evidence of submission to great-power pressure.

By making these concessions, Indonesia has drawn itself deeper into the vortex of geopolitical rivalry.

While such decisions may attract limited public criticism during peacetime, they carry much greater significance amid growing concerns over a potential Taiwan Strait crisis and rising tensions in the Malacca Strait following US naval operations targeting Iranian-flagged oil tankers in the region.

Vulnerabilities

Another, perhaps more important, domestic implication is that the crisis serves as an eye-opening moment for Indonesia in at least two respects. While the conflict itself is geographically distant and Indonesia is not a direct participant, its effects illustrate how developments far beyond Southeast Asia can expose vulnerabilities that already exist within the country.

Rather than creating entirely new challenges, the crisis risks exacerbating and making more visible long-standing weaknesses that have often been overlooked during periods of relative stability.

First, the crisis exposes Indonesia’s vulnerabilities in maritime domain awareness and maritime security.

Indonesia possesses three critical sea lanes of communication through which energy supplies and other commodities pass. Given their strategic importance, adversaries involved in a regional conflict in the Indo-Pacific may seek to exert influence over these routes, potentially dragging Indonesian waters into a conflict to which Indonesia is not a party.

The closure of the Strait of Hormuz and its impacts demonstrate the widespread consequences of a war when critical maritime chokepoints are affected. Although Indonesia is geographically distant from West Asia, disruptions in one strategic maritime corridor can produce ripple effects across global trade and energy networks.

This should serve as a reminder that Indonesia’s own maritime chokepoints are not immune from similar pressures.

In a future Indo-Pacific conflict, adversaries in a conflict may seek to utilise, monitor or contest access to sea lanes that pass through or near Indonesian waters.

One scenario that increasingly concerns Indonesian policymakers is the possibility of a Taiwan Strait crisis and the involvement of Indonesian territories in such a contingency.

But Indonesia’s maritime domain awareness remains limited, and its capabilities for surveillance, monitoring and deterrence in defence of its territorial waters remain insufficient.

Second, if the West Asia crisis took a turn for the worse and economic disruptions continued, Indonesia’s dependence on foreign energy supplies transported through increasingly vulnerable chokepoints could ultimately undermine the government’s legitimacy.

The current crisis demonstrates how geopolitical instability can rapidly translate into economic pressures through higher energy prices, supply disruptions, inflationary pressures and increased fiscal burdens on governments.

An energy crisis poses a direct threat to the development objectives of net importing countries.

Indonesia is among the countries most vulnerable to such disruptions. The country’s exposure is not merely a consequence of external dependency but also of domestic structural weaknesses that limit its ability to absorb external shocks.

Even before the current crisis, Indonesia faced significant governance challenges, including policy inconsistency, regulatory uncertainty, and entrenched corruption, all of which have weakened investor confidence and constrained long-term economic planning.

At the same time, the government is confronting growing fiscal pressures arising from a number of large-scale priority programmes that have attracted public criticism. These existing challenges reduce the state’s flexibility to respond to external disruptions at precisely the moment when greater resilience is required.

The Iran crisis therefore serves as a stress test for Indonesia’s broader economic and governance capacity. It reveals the extent to which the country remains vulnerable to developments beyond its control and highlights the costs of insufficient preparation for external shocks.

These structural weaknesses have reduced the government’s ability to develop the anticipatory measures necessary to build resilience during periods of uncertainty. Should the crisis persist, the consequences may extend beyond economic hardship and increasingly become a question of political legitimacy.

As citizens feel the effects of higher prices, slower growth and declining economic confidence, the government may find itself facing mounting pressure over its ability to protect national welfare in an increasingly volatile international environment.

Conclusion

Overall, the Iran war should not be viewed merely as a distant crisis unfolding in another region. For Indonesia, it is a warning about the increasingly interconnected nature of contemporary geopolitics. The conflict has exposed both the limitations of Indonesia’s current foreign policy posture and the vulnerabilities embedded within its domestic political, economic and security structures.

It has also demonstrated that developments occurring thousands of kilometres away can rapidly generate consequences for Indonesia’s energy security, economic stability, diplomatic credibility and national resilience.

As such, the challenge facing Indonesia is not simply how to respond to the current crisis but also how to prepare for the next one. This requires: 1) a foreign policy that is principled, consistent and credible; 2) stronger maritime and economic resilience, and; 3) investment in the institutions and capabilities necessary to anticipate and manage external shocks.

The views expressed are those of the authors and do not necessarily reflect those of STRAT.O.SPHERE CONSULTING PTE LTD.