Introduction
On 23-24 May 2023, President Seyyed Ebrahim Raisi of the Islamic Republic of Iran made his first visit to Indonesia since being elected into office in 2021. President Joko “Jokowi” Widodo welcomed this special guest at the Bogor Palace.
This meeting discussed the current world geopolitical conditions, especially regarding the crises in Palestine and Afghanistan. It gave birth to a memorandum of understanding (MoU) to strengthen bilateral cooperation in at least 10 areas. These are trade, science and technology, visa exemption, halal products, medicines, and cultural exchanges, among others
It seems that the two countries will take advantage of technological leaps to expand cooperation in the medical field, in which the two countries also signed a pilot project collaboration regarding telerobotic surgery or tech-enabled surgical processes. This collaboration synergizes with a pilot project on telemedicine devices in 11 community health centers in Indonesia, which has been running.
Both leaders also stated that they wanted to increase cooperation in technology transfer and joint production with Indonesia’s state-owned enterprises in the fields of biotechnology and nanotechnology, especially in the health, energy, agriculture and environmental sectors.
Furthermore, the signing of a Preferential Trade Agreement (PTA) was special. The PTA had been in discussion since 2021 in the virtual meeting between foreign ministries of both countries.
These steps forward in the bilateral relations have been in the pipeline for quite a while. In fact, more than half a decade ago, the two countries have fostered engagement and cooperation in two important dimensions, namely politics and the economy.
The rest of this piece will look into the intent of both countries to collaborate closely in these two sectors.
The Political Dimension
Tension due to Iran’s nuclear power development has stirred some dynamics in the relationship between Iran and Indonesia.
Major powers have put in place serious sanctions against Iran for its development of nuclear power. The consequences of these international sanctions have impeded Iran’s effort to expand its cooperation with the rest of the world.
However, a Joint Comprehensive Plan and Action (JCPOA) was signed in 2015 to limit Tehran’s nuclear program. JCPOA is an agreement for Iran to cancel its nuclear program in accordance with the limits set in the JCPOA, with the aim of fostering regional security. It was served to the table by the five members of the United Nations’ Security Council (UNSC) plus Germany. Iran has approved JCPOA as well.
This might appear as a curtailment of Iran’s national interest on the surface. For Indonesia, however, this initiative is a breath of fresh air to establish stability in the Middle East. For example, relations between Iran and Southeast Asian countries have continued to improve rapidly after the JCPOA was inked.
However, after a couple of years, President Trump unexpectedly withdrew the United States from the JCPOA in 2018. This is merely a manifestation of his many questionable policies towards the Middle East since his election into office.
The US’ withdrawal plunged Iran’s relations with other countries into uncharted territories. Old and new sanctions were imposed again not only against Iran, but also against any country that purchases oil from Iran and any financial institution that transacts with Iranian banks.
As a form of support for Iran, and also to display its policy of neutrality, Indonesia chose to abstain in the 2020 vote on UN resolution to extend the arms embargo on Iran proposed by the United States. Indonesia’s decision was also motivated by what it perceives as the inconsistency between the draft resolution and the JCPOA.
The Economic Dimension
The bilateral economic relations between Iran and Indonesia is also worth reviewing. The two countries certainly have a strong desire to strengthen trade relations, especially in the energy sector.
For example, President Susilo Bambang Yudhoyono (SBY) paid a visit to Iran in 2008 which resulted in the agreement to form a collaboration in industrial projects, one of which is building an oil refinery that can produce 300,000 barrel per day and in Indonesia. This collaboration is one of the joint ventures between Indonesia’s Pertamina and the National Iranian Oil Company. In addition, the two companies also agreed to build a plant that can purify as much liquid gas as many as 360,000 barrels per day and a urea factory that can produce 1 million tonnes per year in southern Iran.
Under Jokowi’s administration, energy cooperation continues to be expanded. In 2015, a trilateral cooperation between Indonesia, Iran and China was fostered for a project to build an oil refinery with a capacity of producing 500,000 barrels per day in East Java, Indonesia.
Apart from that, the increase in cooperation was even more obvious when Indonesia declared its support for the JCPOA in 2015. Not long after that, the two countries followed up their earlier agreement the development of an oil refinery that can produce 300,000 barrels per day in Indonesia, a project known to carry the price tag of US$ 8.4 billion.
Moreover, in December 2016, Jokowi brought his delegation of 60 Indonesian businessmen to visit Iran to encourage the expansion of trade and investment cooperation in Iran.
Despite these steps, both countries cannot avoid obstacles caused by prolonged sanctions by the United States and its allies in 2018. Nonetheless, in 2021 the total exports from Iran to Indonesia reached US$20.4 million. In contrast, in the same year, Indonesia’s exports to Iran reached US$187 million.
Iran, as an energy-rich country, certainly benefits from selling petroleum coke which is estimated at US$3.22 million, in addition to tropical fruits worth US$ 3.39 million and gas turbines (US$ 6.1 million).
Meanwhile, Indonesia, as an agricultural country, is known to export the most agricultural products, for example, nuts US$ 55.8 million and palm oil US$ 33.4 million.
The Factors
What causes Iran’s growing interest in Indonesia?
The most important factor is Indonesia’s strategic location. Located at the crossroads of the Pacific Ocean, the Strait of Malacca and the Indonesian Ocean, Indonesia could offer Iran strategic waterways for its shipping. It is important to note that Iran’s ties with other ASEAN countries, Australia and the Pacific have been increasing in recent years. Therefore, for Iran, securing Indonesia is a crucial step.
Nonetheless, in the past several years, there have been cases of Iran trying to exploit Indonesia’s strategic location for its transnational illicit activities. In 2021, for example, Indonesian authorities detained two oil tankers: the Panamanian flagged MT Freya and the Iranian-flagged MT Horse, which were transiting Indonesian waters on their way to China.
At the same time, Indonesia’s large population and the depleting natural resources is seen from Tehran as a market for Iranian exports.
This is also compounded by the fact that Iran, given its strained ties with the West and its neighbouring countries, has been trying to expand its international cooperation. Indonesia, as an increasingly promising global actor with its position as a leading member of G20 and now chairman of ASEAN, is a propitous target of friendship.
The second factor is Iran’s religious soft power. According to Rizwan Togoo’s study, following the 1979 revolution, Iran announced its intention to spread its ideology of revolution across the Muslim world, which is contained in its constitution. Given Indonesia’s status as a nation with the largest Muslim population, it is seen as an important avenue to spread its ideology.
AlthoughSunnis make up the bulk of Indonesian Muslims, at least 1 million Shiites live in Indonesia, especially in Jakarta, Makassar and Bandung. Over the years, Iran has been seeking to spread its influence through a number of platforms such as providing scholarships to Indonesian students, religious scholars, and academics to study in Iran. Some of them, especially those who had studied in Iran during the Iranian revolution, have now returned to Indonesia and are very active in the field of da’wah whereby many people are encouraged to join the sect.
This has been supported by the dissemination of Iranian literature in well-known Indonesian universities, as well as the establishment of “Iranian corners” in campuses and the Iranian Islamic Cultural Center (ICC) in Jakarta, which can be accessed easily by public and university libraries. Interestingly, this literature will be easily understood by local people because it has been translated into Indonesian.
Diplomatic exchanges have also contributed to this, where Iranian officials or diplomats giving lectures on domestic and international issues at several universities in Indonesia. One example is that during the visit, First Lady of Iran Dr. Jamileh Alamolhoda visited Paramadina University and gave a public lecture with the theme “Nurturing the Universe, Building Civilization”.
In addition, Iran has attempted to intensify its soft power by investing capital in the media sector. This is mainly done through journalist and media exchanges and the screening of Iranian films on several occasions, such as in the 15th Jogja-NETPAC Asian Film Festival, at the National Library and at the 14th Bali International Film Festival. As for cultural activities, the Iranian Embassy in Jakarta annually organizes Nowruz or the Persian New Year every year by the Iranian Embassy.
Overall, Iran’s growing ties with Indonesia are mainly factored by Tehran’s economic interests to strengthen its presence in the Indonesian market and in the wider Asia-Pacific, while simultaneously expanding its religious diplomacy.
A Note for Indonesia
For Indonesia, the Middle East is increasingly becoming a crucial partner, given that the region provides large markets for its exports and new investors to many of its development projects. At the same time, the region offers an opportunity for Jakarta to move beyond its traditional partners such as China and the United States. Strengthening ties with Tehran is part of this move.
Similarly, Indonesia needs to present itself as a balanced partner for the Middle Eastern countries. Amid conflicts and political rivalry in the Middle East, Indonesia aims to maintain a neutral position.
Right after Saudi Arabia’s King Salman visited Indonesia in 2017, Jokowi immediately visited Tehran in the same year in an attempt to stay neutral in the Iran-Saudi conflict. Recently, with the growing ties between Indonesia and Saudi Arabia, Indonesia sees the need to also bolster its ties with Iran to maintain its balanced position in the Middle East.
Additionally, Indonesia may face difficulties in maintaining relations with Iran due to the growing conservatism in the country. Therefore, while the government attempts to be seen as neutral externally, it is equally important to develop policies addressing raising conservatism domestically.
