The New York Times, Monday, July 21, 1997

Foreign Affairs

THOMAS L. FRIEDMAN

Indonesian Balancing Act

JAKARTA, Indonesia.

When all is said and done the Clinton foreign policy is going to be judged very heavily by how well it manages the two great historical transitions now under way: the decline of Russia and the rise of China. For now, Russia's decline is going relatively well (thanks to Boris), but the rise of China is another matter. It's critical that China's, rise at the close of this century be handled better than, Japan's rise at the start of this century, since Japan's emergence as a powerhouse led to three wars in Asia.

But there's no way the U.S. can manage the rise of China alone, or even with Japan. And that brings me to Indonesia. Indonesia has played one of the most important, but least understood, roles in managing China's rise. This is not only because with its 200 million people Indonesia is second only to China in weight in Southeast Asia, but also because Indonesia is the keystone of the Association of South East Asian Nations (Asean). Asean isn't NATO or the E.U., but it does a pretty fair imitation of both.

And Asean, which next week celebrates its 30th anniversary, would never have been created without Indonesia and without the policy President Suharto initiated when he took power from President Sukarno in 1965. Mr. Sukarno believed in an Indonesia that bullied its neighbors, sparking constant disputes. Mr. Suharto preferred to do business with them instead, while focusing on Indonesia's internal development. So he formed Asean, as an economic-trade association, comprising Indonesia, Malaysia, Singapore, the Philippines, Thailand and Brunei, and he transformed Indonesia's foreign policy from bully to gentle giant. Indonesia today has a defense, budget two-thirds that of tiny Singapore.

"Ever since Asean was formed this region has entered into an unprecedented period of stability and economic growth," Indonesia's Foreign Minister, Ali Alatas, said to me. "And I think it's not too much to say that Asean was formed because of Indonesia - because a new Government came in which renounced the earlier policy of throwing our weight around."

Asean was also a de facto security alliance, designed originally to block Communism from Hanoi. But in the last decade Asean quietly shifted from balancing North Vietnam to balancing China (and Japan). That transition was formalized last year when Vietnam - the most powerful and historically anti-Chinese force in Southeast Asia was added to Asean. This year Asean is adding the remaining loose pawns on the chess board before they fall too heavily under China's sway, namely Burma, Laos and Cambodia (if it gets its house in order).

China's Asia strategy is to deal with everyone bilaterally so that China's weight can be used to maximum advantage. This is particularly true, when pressing China's claims to oil fields in the South China Sea that are also claimed by Asean members. But Asean, by using solidarity as a substitute for military power, has forced China to deal with its members as a group. So when the Philippines found itself in a dispute with China over the oil-rich Mischief Reef, Asean stood behind the Philippines and swayed China into a dialogue on the issue. It helps too that Asean nations are among the biggest investors in China.

"Although strategically Asean is not a cohesive military entity, China cannot challenge any one of these states without having a problem with all of them," said Juwono Sudarsono, Indonesia's leading strategic analyst.

"And, as long as China's internal economic problem is so massive, it can't just assert its military might unilaterally. It needs the good will and investment of its neighbors" - particularly Indonesia, which controls the straits through which a growing China will soon have to import tons of oil from the Middle East.

With Asean, Japan and the U.S. Seventh Fleet each balancing China in its own way, the world stands a much better chance of seeing an emerging China that settles regional disputes through dialogue, not force.

But there's no Asean without Indonesia. The U.S. has some real problems with Indonesia today on labor and human rights. America cannot ignore Indonesia's abuses. But they also can't be the only lens through which Indonesia is judged. The best U.S. policy here would be one that carefully targets - and when necessary sanctions - specific Indonesian domestic abuses, while also supporting Indonesian foreign policies, that have contributed so heavily to stability in this region. Without an effective Indonesia policy, the U.S. will never have an effective China policy.