AUKUS’s Acceleration of Pillar II in Responding to Threats from China and Japan’s Dilemma

AUKUS’s Acceleration of Pillar II in Responding to Threats from China and Japan’s Dilemma

Okt 14, 2026 | Commentaries

Vol. VII / No. 15 | October 2026

Authors:

Lavanya Eliana Yudhistira – Undergraduate Student, Department of International Relations, Universitas Indonesia

 

Summary

AUKUS is a trilateral security partnership between Australia, the United Kingdom, and the United States, established to strengthen power in the Indo-Pacific region. During Pillar I, the ambition was to build nuclear-powered submarines for Australia. However, the long and complex process of developing these submarines created challenges for AUKUS in achieving its goals, especially in creating immediate deterrence to China. China’s growing technological capabilities leading to security threats have led AUKUS to prioritize and accelerate Pillar II. This prioritization aims to develop advanced capabilities faster and create immediate effect against China’s expanding power in the area. Pillar II opens room for external partners, including countries like Japan, whose advanced technological base and geographic position make it a valuable asset. This commentary uses Stephen M. Walt’s Balance of Threat theory to explain why the trilateral security partnership was created and why it prioritized Pillar II. It then examines why Japan, despite its strategic value, remains an external partner rather than a member, arguing that institutional and domestic constraints explain this.

Keywords: AUKUS, Balance of Threat, Pillar I, Pillar II, Japan.

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Introduction

As great power competition continues, the dynamics of state security evolve. The growing importance of advanced dual-use technologies has expanded how states assess military and strategic power beyond the quantity of conventional military assets. The growing technological dimension of security threats has transformed the way states approach alliance politics and has grown awareness of the digital sector in national defense. Traditional, rigid military alliances are now being complemented by functional minilateral cooperation focusing on technology development and cybersecurity.

China is seen as having a strong naval power in the Indo-Pacific area, granting them easier access to project power across the Indo-Pacific. The response to threats in the area is clearly illustrated by the formation of AUKUS in 2021, a trilateral security pact between Australia, the United Kingdom, and the United States. As seen on the Pillar I agreement, AUKUS focuses on building Australia’s capacity for nuclear-powered submarines to ensure deterrence against China. AUKUS takes advantage of Australia’s strategic location in the Indo-Pacific. However, the lengthy process of Pillar I has limited AUKUS’s ability to provide immediate deterrence against China.

This condition has led to the implementation of AUKUS Defense Ministerial Joint Statement on 30 May 2026. The ministers of defense from each AUKUS member met to accelerate the implementation of Pillar II (Advanced Capabilities). AUKUS’s acceleration of Pillar II is due to high tech being seen to advance faster and hold more tangible results than the submarine project in Pillar I. AUKUS’s Pillar II shows strategies such as the acceleration of AI technology, quantum technologies, undersea capabilities, and advanced cybersecurity. Pillar II’s focus on advancing technology needed for defense has opened opportunities for external actors, and reflects back AUKUS’ original intention in making Japan a member. Japan’s involvement in AUKUS’ development of military technology projects also raises questions as to why Japan, with great strategic value and who also faces threats from China, is not part of AUKUS by 2026. This commentary first uses the Balance of Threat Theory to explain the formation of AUKUS and its acceleration on the Pillar II. It then explains why Japan, despite its strategic value, has remained an external partner in selected AUKUS projects rather than becoming a member.

 

The Formation of AUKUS: A Balance of Threat Response to China

According to Stephen M. Walt’s Balance of Threat theory, an alliance is formed to respond to perceived threats and not only to power alone, with threats determined by aggregate power, geographic proximity, offensive capability, and aggressive intentions. The formation of AUKUS is the manifestation of that calculation. The aggregate power is seen through the spike of China’s defense budget as high as 7% and has reached 277 billion USD (Rp. 4,650 trillion). The US Department of War indicates that the number for China’s defense spending is greater, reaching 388-526 billion USD. This isn’t seen merely as statistics, but as a warning of how China’s maritime power is restructuring and becoming a threat to stability around the area.

China’s offensive capability poses a threat through its military advancement. Intercontinental Ballistic Missiles (ICBM) like the DF-61 and DF-31BJ contribute to the broader threat perception among AUKUS members. These capabilities, combined with China’s advancement in Unmanned Undersea Vehicles and Unmanned Aerial Vehicles (UAV), pushes AUKUS to accelerate its own technological development. Even though aggressive intentions are impossible to confirm, militarization in the South China Sea and the constant pressure on Taiwan contribute to the perception of a growing threat. Geographic proximity operates indirectly for AUKUS, since the US is far from China, Australia’s position on the southern edge of the Indo-Pacific gives the US access to sea lanes and straits in Southeast Asia that Chinese military activity could disrupt. Together, these factors lead AUKUS to focus more on deterrence against China.

 

The Acceleration of Pillar II: Prioritising Dual-use Technology

When it was first formed in September 2021, AUKUS focused primarily on Pillar I, aiming to provide Australia with nuclear-powered attack submarines (SSNs) to deter aggression and preserve stability in the Indo-Pacific. Australia’s commitment is seen through the massive investment of four billion Australian dollarA$ at the start, which can later reach up to thirty billion A$ for the submarine’s infrastructure. However, the implementation of Pillar I is generational and long-term, and it’s estimated to be completed by 2040. The long process limits AUKUS’s ability to respond to China’s rapidly evolving threats. Therefore, AUKUS has prioritized its focus through the acceleration of Pillar II (Advanced Capabilities) as a balancing strategy which offers a faster yet more effective response.

The acceleration of Pillar II reflects the adaptive nature of balancing. AUKUS countries through Pillar II give greater priority to dual-use technologies than to the quantity of military assets. Encompassing eight core areas, including artificial intelligence (AI), cyber capabilities, quantum technologies, undersea capabilities, hypersonics, and electronic warfare, Pillar II serves as a balancing strategy against China while Australia awaits its nuclear-powered submarines. By launching its first Signature Project in mid 2026, the development of AI-driven Unmanned Undersea Vehicles, AUKUS has simplified its technology transfer bureaucracies to generate immediate deterrence, allowing AUKUS to signal to China that its technological integration into military operations has advanced and grown to be an important part of AUKUS’s deterrence strategy.

 

Japan and AUKUS: Strategic Value versus Domestic and Institutional Constraints

Japan was once seen as one of the strongest candidates to be a part of AUKUS. While Balance of Threat explains AUKUS’s formation, Japan’s absence from membership could be explained by domestic and institutional factors. Since AUKUS’s formation, Washington has signaled interest in integrating Tokyo to strengthen deterrence in the Indo-Pacific. U.S. Ambassador to Japan, Rahm Emanuel (2022-2025), once noted that Japan was projected to become AUKUS’s first partner in Pillar II’s functional projects. Japan’s defense industry, critical geographical position, and advanced technological capabilities are what make Japan a strategic asset in balancing China’s military expansion. The reality says otherwise, the geopolitical urgency of the AUKUS alliance collides with fragile domestic and institutional constraints.

Japan is strategically strong but its institutional framework is not yet compatible with AUKUS. An analysis by Professor Michito Tsuruoka from Keio University in 2024 stated that Japan’s cyber defense architecture and information protection standards have not met the same standard as AUKUS’s members. Japan’s cyber regulations do notdon’t meet information security and anti-espionage standards, especially when Pillar II focuses on highly sensitive military technology sectors such as AI and quantum computing. Even though Japan established a new law back in May 2026 and has launched a new National Intelligence Bureau (NIB), these developments indicate that Japan still has a long way to go before it can be considered to be integrated into the alliance. Japan’s Atomic Energy Law also reflects Japan’s sensitivities around nuclear-related technology. The historical experience of Japan with nuclear weapons also suggests that resistance from the nation might emerge knowing that Pillar I is focused on nuclear-powered submarines. The combination of domestic and institutional limitations explains why Japan stays as an external partner for selected AUKUS rather than becoming a member of AUKUS.

 

Conclusion and Reflection

AUKUS can be understood as a balancing response to the threat China poses in the Indo-Pacific. Through the Balance of Threat theory, it is seen that the formation is made not only to strengthen power between the three countries, but as a response to China’s spike of rising defense spending, offensive capabilities, technology, and military advancement. AUKUS’s acceleration on Pillar II, focusing more on advanced technological capabilities, shows that balancing is adaptive. AUKUS prioritizes advancing their technology rather than the quantity of conventional military assets seeing the rise of China and how Pillar I will take a long period of time to deliver.

Japan, despite its strategic value, remains an external partner rather than a member of AUKUS. Institutional and domestic reasons such as low standards in regulation, security, and domestic constraints are seen as the reason. Japan’s cyber defense and information protection standards have not reached the same as AUKUS members, which is important since Pillar II involves many uses of sensitive technology. Japan’s law also reflects the possibility that there will be resistance from its people, knowing that AUKUS in Pillar I focuses on nuclear powered submarines. Through Japan, it is proven that a modern alliance doesn’t require a formal format, but can be done through involvement in selected projects, done individually or collectively. Based on the analysis, Japan needs to update their cyber and information security so that they will not lose chances of gaining access to protection and better military technology from other countries, especially AUKUS countries.

The Three Decades Deadlock: Does The ASEAN Nuclear-Weapon-Free Zone Protocol Still Matter?

The Three Decades Deadlock: Does The ASEAN Nuclear-Weapon-Free Zone Protocol Still Matter?

Sep 4, 2026 | Commentaries

Vol. VII / No. 14 | September 2026

Authors:

Rangga Aria Wijaya-Undergraduate Student, Department of International Relations, Universitas Indonesia

 

Summary

Since 1995, ASEAN has already had its own nuclear-weapon-free zone, named the SEANWFZ (Southeast Asia Nuclear Weapon Free Zone). Yet, the protocol that was supposed to bind the nuclear-weapon states was left in a deadlock. The concern surrounding the geographical coverage and the scope of the negative security assurance (NSA) has been the main reason for this prolonged delay. Three decades later, ASEAN remains committed in pursuing the protocol. This commentary then questions the relevance of the protocol for ASEAN. It finds that the protocol still matters for two reasons. First, the original mandate of SEANWFZ also includes managing external threats, and failure in one dimension will degrade the institution as a whole. Second, external threats are still looming and even growing, with the existence of AUKUS. But relevance is not the overall reason why ASEAN is still pursuing the protocol. The contemporary geopolitical situation, such as China’s nuclear policy and AUKUS, that provides the impetus for ASEAN to sustain the momentum toward it.

Keywords: ASEAN, AUKUS, China, nuclear weapon, SEANWFZ

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Introduction

The Southeast Asian Nuclear-Weapon-Free Zone (SEANWFZ) was established in 1995 to prevent any of the ASEAN member states from owning nuclear weapons that were proliferating post the Cold War. The more important issue at that time was also to legally bind the five nuclear weapon states (NWS), which are the United States, Russia, the United Kingdom, France, and China. Therefore, SEANWFZ was also accompanied by an additional protocol. The plan was for the five NWS to sign the protocol, which would prohibit them from using or threatening to use nuclear weapons within the zone, and also give ASEAN the NSA.

However, SEANWFZ remains the only nuclear-weapon-free zone (NWFZ) that does not have a single signature from the NWS. The two main concerns from NWS are (1) the expansive geographical coverage and (2) the extensive scope of the NSA. SEANWFZ has wider geographical coverage compared to the other NWFZs, which include the exclusive economic zones and continental shelves of its state parties. The NSA requested by SEANWFZ also uses the words “within the zone.” This means that not only can the NWS not use them against the zone’s states, but they also cannot use them against any states from inside the zone. A series of negotiations and consultations to solve these issues have been done for years with no significant outcome. This has resulted in a deadlock that’s been going on for three decades. Until recently, SEANWFZ showed signs of life, as in July 2025 ASEAN finally accommodated China by letting it be the first to sign the protocol. Not long after, in May 2026, the 48th ASEAN Summit also reaffirmed ASEAN’s commitment to keep pursuing the realisation of the protocol.

This decision has raised a question that will be the main discussion in this commentary: why is ASEAN still trying to pursue the SEANWFZ Protocol despite its three decades of deadlock? As for the ongoing delay, doubting its relevance is to be expected, especially since ASEAN is doing just fine without it—or at least that’s how it seems at first glance. For that purpose, this commentary will reassess the relevance of the SEANWFZ Protocol to understand why it still matters for ASEAN, particularly by considering recent developments in the region.

 

Institutional Balancing: The Fundamental Purpose of SEANWFZ

In reassessing its relevance, understanding the institution’s original purpose is a necessary step. There are, of course, many perspectives that could explain why. But this commentary borrows an argument from Kai He’s (2007) paper, which explains that states use institutions as a balance-of-power instrument, known as institutional balancing. He notes that states will use institutions to balance internal challenges as well as external threats. Therefore, based on this theory, the relevance of an institution will be seen in how it serves both of these for member states.

For Southeast Asia, the internal challenge back during the Cold War was the fear of nuclear proliferation that could spread inside the region, whether self-owned or deployed by the NWS. But only by the end of the Cold War did ASEAN manage to create an institution specific to tackle this concern. Thus, the SEANWFZ Treaty itself was the internal balancing instrument, as it contains the binding agreement that no ASEAN members could possess nuclear weapons. But an external balancing instrument was also needed, as an external threat has also existed since the Cold War, which is the NWS itself. Therefore, that’s what the additional protocol was for.

Kai He also emphasizes that both dimensions work mutually influencing, which means weakness in one dimension will affect the other. While SEANWFZ seems to be going well in managing internal challenges, the other was not so much. The dangerous thing is that the commitment of ASEAN countries not to acquire nuclear weapons was supposed to be complemented with guarantees from the NWS through the NSA. Failure to secure this will undermine ASEAN’s commitment to the treaty, which threatens the existence of SEANWFZ itself. Eventually, pursuing the protocol every year became a mandatory routine, as complete abandonment will invite nuclear proliferation among its members.

SEANWFZ in a New Era: The Problem with AUKUS

Almost three decades later, the external threat that the SEANWFZ Protocol meant to balance still exists, or in fact is growing, considering recent developments in the region. A particularly contentious moment came in 2021, when the United States (US), the United Kingdom (UK), and Australia announced their new regional alliance in the Indo-Pacific, called AUKUS. Its main programme, as well as ASEAN’s biggest concern, was the three-phase building of Australia’s nuclear-powered submarine capabilities. This means that the US and UK, which strain SEANWFZ by not signing its protocol, are now sharing their nuclear technology with a non-nuclear-weapon state that shares a border with Southeast Asia.

ASEAN members’ response towards this AUKUS plan remains “nuanced,” with Indonesia and Malaysia being the most vocal in expressing the region’s concern. Their concerns are mainly focused on the nuclear proliferation issue, which came from the fact that nuclear-powered submarine reactors have near—if not reaching—weapon-grade uranium enrichment levels. While it is true that Australia has shown its commitment to the non-proliferation regime, ASEAN is concerned that this programme model, if left unchecked, could be followed by other countries as a way to achieve a covert nuclear weapons programme.

However, there was a noticeable “change in tone” with Indonesia and Malaysia’s statements in 2023 that could be said to be more “accommodating.” Some suggest that ASEAN’s stance was tamped down thanks to AUKUS diplomacy, especially Australia’s. This commentary, however, begs to differ. ASEAN does not seem to back down from its original stance. AUKUS diplomacy just shows ASEAN that they are uncompromising about this, leading ASEAN to choose a different strategy rather than going head-to-head with one of the most powerful alliances. This strategic shift was seen in July 2025, with ASEAN—led by Malaysia—finally welcomed China to sign the SEANWFZ Protocol individually.

 

ASEAN Strategic Shift towards China

Prior to China’s meeting with Malaysia in January 2025, ASEAN decided to finally explore the possibility of allowing NWS to sign and ratify the protocol individually. Before this, ASEAN always had a “package deal” policy, where all NWS disputes were to be resolved collectively, and the accession was to be done simultaneously. This policy has always been the one issue that prevents SEANWFZ from achieving any single NWS signature. For example, SEANWFZ almost achieved China’s signature in 2012, had it not been for ASEAN’s decision to delay until the other NWS reached an agreement.

China’s support for SEANWFZ can already be traced back to 1999, with only one reservation, that single concern was the South China Sea, as China feared that the protocol would undermine its interests in the disputed territory. The deal in 2012 was supposed to resolve this, with ASEAN and China having agreed to sign a Memorandum of Understanding (MoU) prior to signing the protocol. This willingness to pursue SEANWFZ was part of China’s dual-track approach in nuclear policy. With this approach, China manages to project itself as a leader in supporting the non-proliferation regime, while still expanding its nuclear arsenal.

Meanwhile, for SEANWFZ, China’s approach is an opportunity. With AUKUS still lurking as a threat, inviting its main challenger inside is similar to calling in reinforcements. China’s participation could create a ripple effect that will confront AUKUS. First, it could accelerate Russia’s accession, which will pressure the remaining NWS, including the US and UK, to also sign. Second, China could amplify ASEAN’s voice in delegitimizing any nuclear presence, especially the nuclear-powered submarine, within the zone. In the end, China’s policy provided the political window to realise SEANWFZ’s protocol.

 

Does the SEANWFZ Protocol Still Matter?

Going back to the question, theoretically, yes, because the original mandate of SEANWFZ also includes managing external threats, as failure in one dimension will degrade the whole institution itself. Empirically, also yes, because the external threats are still looming, and even growing with the existence of AUKUS. But relevance is not the overall reason why ASEAN is still pursuing the protocol. With China’s consistency, ASEAN does it because it still sees a possibility of realising it one day. The urgency generated by AUKUS has recently compelled ASEAN to accelerate its engagement with the opportunities presented by China.

Indonesia on The Brink: Will Indonesia Face a Financial Crisis

Indonesia on The Brink: Will Indonesia Face a Financial Crisis

Sep 1, 2026 | Commentaries

Vol. VII / No. 13 | September 2026

Authors:
Keziah Friskila Roostee – An undergraduate student of international relations at Universitas Indonesia with an interest in IPE and business, and sustainable development.

 

Summary

Reflecting on the 1998 Asian financial crisis and the 2008 global financial crisis, large-scale financial disruptions are characterized by massive capital flight, which devalues currencies and equities, and precipitates recession. This commentary argues that crisis-like symptoms emerged in Indonesia during the first half of 2026, exacerbating existing vulnerabilities in the national economy. Despite several government efforts, vulnerabilities persist. To prevent future financial crises, the government must strategically manage the weakening economy and rebuild public trust.

Keywords: financial crisis, currency stability, capital flight

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External Shock and Internal Vulnerabilities Leading to Economic Downturn in the First Half of 2026

The escalation of Middle East conflicts has exposed Indonesia’s economic vulnerability to the global energy crisis. The Strait of Hormuz, a chokepoint carrying 20% of global oil consumption and 84% of Asia’s crude supply, saw disrupted trade that drove Brent crude prices up 13% by late February 2026. As a net oil importer, Indonesia felt this directly. In April 2026, two Pertamina tankers carrying two million barrels of crude oil were stranded in the strait. Despite the Foreign Minister’s claims of a secure national supply, anxiety manifested in restricted subsidized fuel purchases, energy conservation campaigns, and mandatory Work From Home for civil servants every Friday starting March 2026.

Beyond energy, supply chain disruptions in the Strait of Hormuz rippled through the domestic economy. Consumer goods and raw material price increases burdened households and industries. Essential material prices like plastic spiked 80%, squeezing businesses. This inflation worsened as the rupiah hit a historic low of surpassing its June 1998 crisis-era level of 16.650.

Movements in the Rupiah Exchange Rate, January–May 2026
Source: CNBC

Consequently, the real sector slowed, with declining Consumer Confidence Index and Manufacturing PMI from February to April 2026 signaling reduced household spending and contracted manufacturing activity.

However, this external shock is not a single provoking factor. It exposed two conditions of Indonesia’s existing systemic vulnerabilities. First, living costs are rising faster than incomes, echoing the 2008 crisis, where U.S. household debt outpaced income growth (Mian and Sufi, 2014: 76-9). The depreciating rupiah’s impact on living costs is expected to be felt more intensely in the second half of 2026. Although the government has yet to raise the price of subsidized fuel, non-subsidized fuel hikes have inflated logistics costs, while reliance on imported wheat, soybeans, and sugar is pushing up food prices, squeezing Indonesia’s already wage-stagnant middle class and making it harder for households to build lasting asset value.

Second, fiscal space is narrowing under heavy government spending. The Free Nutritious Meals (MBG) program alone is projected to cost Rp320 trillion this year, about 10% of the 2026 revenue budget, drawing skepticism from The Economist over its execution. Compounding this, even assuming global oil prices reach USD100 per barrel, the government has committed to maintain fuel subsidies while maintaining a 2.92% budget deficit. Besides the danger of reaching the legal 3% ceiling, economists have been warning that fiscal capacity can only bear this commitment in the short term.

By the end of March 2026, government spending surged 31.4% against 10.5% revenue growth. If global economic turmoil does not subside, the cost of maintaining fuel subsidies will become increasingly expensive, forcing the government to take on more debt within a limited fiscal space. Historically, unregulated debt surges preceded both the 1998 and 2008 crises (Oatley, 2012: 328-30), underscoring the need to preserve fiscal space as a safety net.

The Burning Wick: Eroding Institutional Trust Provoking Financial Crises

Beyond global shocks and domestic vulnerabilities, growing concern over the checks and balances among the executive, legislature, and central bank has further unsettled investors. The February 2026 appointment of Thomas Djiwandono—the President’s nephew—to Bank Indonesia’s Board of Governance was widely viewed as a threat to institutional independence. Following that appointment and the continuously weakening rupiah, the revised P2SK law expanded Bank Indonesia’s mandate to support economic growth. According to Mukhamad Misbakhun—Chair of the House of Representatives Commission XI—this is necessary to achieve President Prabowo’s 8% growth target. In July 2026, public concerns about the weakening institution were reinforced as the Bank Indonesia’s governor, Perry Warjiyo, resigned before his term ended, an announcement that alone knocked the Composite Stock Price Index (IHSG) down by 0.17% and weakened the Rupiah to Rp18,009/USD.

The fallout has been visible in markets. The IHSG has declined and 18 companies were dropped from the Morgan Stanley Capital International (MSCI) index, triggering capital flight from stocks and government bonds between April and May 2026, a contrast to rising equity indices in regional peers like Japan, China, and Singapore. International outlets including Bloomberg and the Strait Times have documented a “sell Indonesia” trend among global investors. Domestically, panic shows up in currency hoarding: in June 2026, Bank Indonesia reported that rupiah-denominated deposits grew 6.3 percent year-over-year, while foreign-currency deposits surged nearly three times faster, at 18.5 percent.

However, while capital flight has been happening, in fact, Indonesia’s current macroeconomic indicators are relatively stable compared to the 1998 financial crisis, except for a record low of the Rupiah.

Indicators19982026
Rupiah’s Exchange Rate Against the U.S. DollarRp 17.000~Rp 18.000~
Inflation (year-on-year)77,6%2,42% – 4,76%
GDP Growth (year-on-year)-13,7%+5,61%
Foreign Debt-to-GDP Ratio148%29,5%

Source: Central Statistics Agency (BPS) and Bank Indonesia

However, complacency would be a mistake. The rupiah ranks among the world’s ten weakest currencies, and continuous weakening would trigger a larger domino effect on the economy, such as declining purchasing power and costlier imports of essentials like fuel and fertilizer. The government has to be careful, especially as the US-Iran stalemate leaves the Hormuz Strait’s reopening uncertain. Should investor confidence erode further, the result could be speculative attacks, the same dynamic that catalyzed the 1998 crisis (Stiglitz, 2022:94).

Responding to Crisis Tendencies and Preventing a Worse Future Scenario

In response to the current turmoil, the government has not been passive. On the fiscal side, it has trimmed budgets, sustained subsidies for the real sector, and cut the free-meal program’s allocation. On the monetary side, Bank Indonesia raised its benchmark interest rate (BI Rate) to 5.25% and deployed over USD10 billion in foreign exchange reserves to defend the rupiah.

Officials have also tried to talk up confidence, such as the Finance Minister’s projection of a stronger Rupiah and the National Economic Council (DEN) chairman, Luhut Binsar Pandjaitan, assured global investors that Indonesia’s economy remains relatively strong, pointing to 5.61% first-quarter growth. Yet rhetoric alone has proven less persuasive to markets than concrete evidence of institutional credibility. What has moved markets is action: on August 10, 2026, President Prabowo nominated Destry Damayanti, BI’s acting governor and a career central banker, as the sole candidate for the permanent governorship, rather than a more politically-aligned figure. The rupiah strengthened roughly 0.75 percent on the news, reversing months of anxiety over the central bank’s independence.

To avert a future crisis, four priorities remain. First, stabilizing the rupiah is vital to protect domestic purchasing power and anchor global investor confidence. The President and DPR RI should carefully appoint credible people to fill the central bank’s governor role. Though the nomination of Destry still awaits parliamentary confirmation, the market reaction lends credence to a credible, independence-preserving leadership at Bank Indonesia for restoring investor trust.

Second, Indonesia should pursue energy independence. Despite ranking second in energy resilience from natural gas and coal by a JPMorgan report, Indonesia’s massive transport sector remains dangerously dependent on crude oil, and the rolling blackouts from PLN in Java underscore the need for more strategic governance beyond commodity optimization. As a net oil importer facing production decline and consumption rise, energy diversification is a long-term strategy for energy security. The current B50 initiative may be one of the building blocks, and it should be supported for quality and access improvement.

The last and most important point is trust. As markets’ positive reaction to Destry Damayanti’s nomination suggests, maintaining market confidence requires preservation of Bank Indonesia’s independence. Additionally, ensuring that numerical growth is translated into the market is also crucial so that it is felt by society. Therefore, trust could grow from where it naturally emerges.

 

Conclusion

Although Indonesia’s macroeconomic indicators remain relatively stable compared to 1998, a financial crisis remains possible if domestic vulnerabilities are left unaddressed. A weakening rupiah combined with an economic slowdown signals the kind of instability that erodes global investor confidence. To mitigate this risk, the government must prioritize rupiah stability to prevent capital flight, accelerate energy self-reliance as a long-term hedge against global uncertainty, and continue rebuilding the public and institutional trust that ultimately underpins financial stability.

Rethinking ASEAN’s Role in Protecting Migrant Workers under the Kafala System

Rethinking ASEAN’s Role in Protecting Migrant Workers under the Kafala System

Agu 10, 2026 | Commentaries

Vol. VII / No. 12 | August 2026

Authors:
Muhammad Atiqurrahman, Sania Idayu Virginia & Izzadin Rashaad Lubis – Undergraduate Program Department of International Relations, Faculty of Social and Political Sciences, Universitas Indonesia

Summary

Gulf countries have consistently remained as a major destination for migrant workers from Southeast Asia. Despite ASEAN’s longstanding commitments to migrant worker protection, exploitation and violation of migrant workers continue to happen under a sponsorship mechanism known as the Kafala System. This article showcases ASEAN’s institutional challenges in protecting its citizens abroad. Existing regional mechanisms rely heavily on non-binding norms and bilateral diplomacy, limiting ASEAN’s ability to collectively influence labour governance beyond Southeast Asia.

Keywords: Kafala system, Gulf country, Migrant Worker, Rights, Consensus

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Introducing The Kafala System

Over the past few decades, Gulf countries such as Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Bahrain, and Oman have become major destinations for migrant workers from Southeast Asia (Varia, 2008). In 2024, around 4.3 million ASEAN migrants were located in Western Asia, with the Gulf states serving as key destinations particularly for Filipino and Indonesian workers (International Labour Organization, 2025).

An important point to highlight is that many of these workers are employed under the Kafala system, a labor sponsorship system widely practiced across the Gulf countries. Under this system, migrant workers are only allowed to enter and work in a Gulf country if they have a sponsor who is responsible for their visa, residence permit, employment contract, and repatriation (Malaeb, 2015). As a result, migrant workers become highly dependent on their sponsors and are often unable to freely change jobs, leave the country, or maintain their legal status without employer approval.

Domestic workers often face greater exposure to exploitation and abuse under this system. As domestic work is often viewed as low-skilled labor, legal protections for domestic workers tend to be much weaker than those in formal sectors. Their vulnerability is further intensified by the fact that they work within private households, where state oversight is limited, access to legal assistance remains constrained, and cases of abuse are often difficult to detect (Malaeb, 2015). Many workers also remain trapped in exploitative working conditions due to migration-related debt, fear of losing income, or concerns about being sent home without financial gains (Longva, 1999).

The high number of human rights violations against migrant workers in Gulf countries, which include forced labor, unpaid wages, human trafficking, physical abuse, and sexual harassment, highlights a prevalent issue with said system (Malaeb, 2015). Data from the International Organization for Migration (IOM) shows that human trafficking has become a serious threat along migration routes to GCC countries. In the UAE, for example, the government identified 121 trafficking victims between 2024 and 2025, including victims from Indonesia, Myanmar, and the Philippines (U.S. Department of States, 2025). This situation is particularly ironic given that recent data shows Gulf countries remain highly dependent on migrant labor (International Organization for Migration, 2024). By exposing millions of ASEAN migrants to persistent exploitation and human rights violations, the Kafala system presents a challenge that extends beyond individual states and demands a more coordinated regional response.

 

ASEAN’s Framework for Migrant Protection

ASEAN’s institutional response to migrant worker protection rests on two principal instruments, the 2007 Cebu Declaration  (Association of Southeast Asian Nations, 2012) and the 2017 ASEAN Consensus (Association of Southeast Asian Nations, 2017), both of which set out shared principles for sending and receiving states within Southeast Asia. Neither instrument imposes binding legal obligations on member states, and both remain confined in practice to intra-regional labour flows rather than the far larger corridors connecting Southeast Asia to the Gulf.

Adopted at the 12th ASEAN Summit in January 2007, the Cebu Declaration asked receiving and sending states to uphold the dignity of migrant workers, cooperate on cases involving undocumented workers through no fault of their own, and facilitate consular access for workers in detention (Association of Southeast Asian Nations, 2007). As a declaration rather than a treaty, it carried no enforcement mechanism and explicitly avoided regularising the status of undocumented workers. By tasking ASEAN bodies with developing a follow-up instrument, a mandate that took a full decade to fulfil. That same follow-up process led to the establishment of the ASEAN Committee on the Implementation of the ASEAN Declaration on the Protection and Promotion of the Rights of Migrant Workers (ACMW), the sectoral body that has carried this agenda ever since (Association of Southeast Asian Nations, 2022).

The ASEAN Consensus on the Protection and Promotion of the Rights of Migrant Workers was eventually signed at the 31st ASEAN Summit in Manila on 14 November 2017, under the Philippines’ ASEAN chairmanship (International Labour Organization, 2017). The consensus affirms protection against passport confiscation and excessive recruitment fees, guarantees fair remuneration and safe working conditions, and recognises migrant workers’ right to join trade unions (Association of Southeast Asian Nations, 2017). Yet it remains, by ASEAN’s own description, a “living and evolving document” precisely because it is not legally binding (Association of Southeast Asian Nations, 2017). Implementation was left to a subsequent Action Plan (2018-2025) which the ACMW oversees and periodically reviews through member states’ self-assessments (International Labour Organization, 2020).

The ACMW convenes regularly as a subsidiary body under the ASEAN Labour Ministers Meeting, its sixteenth meeting in Jakarta in 2023 being one recent example, to track the Action Plan’s progress and coordinate new instruments (Association of Southeast Asian Nations, 2023). In recent years, ASEAN has adopted several supplementary declarations that broaden this framework’s scope, including instruments on the portability of social security benefits, the protection of migrant workers and their families during crises, and the placement of migrant fishers (Association of Southeast Asian Nations, 2023). ASEAN has also institutionalised the ASEAN Forum on Migrant Labour, an annual multi-stakeholder platform, first convened in 2008, that brings together governments, employers, workers’ organisations, and civil society to generate policy recommendations (Association of Southeast Asian Nations, 2022). These developments show a framework that keeps expanding in ambition. Yet, every instrument in it remains a declaration, a consensus, or a work plan rather than a binding legal commitment, and its design still centres on labour mobility within Southeast Asia.

In practice, however, the protection of ASEAN migrant workers in the Gulf has continued to depend primarily on bilateral diplomacy. Following the 2018 diplomatic dispute over the treatment of Filipino domestic workers, the Philippines negotiated a bilateral agreement with Kuwait that introduced stronger protections for domestic workers (Government of the Republic of the Philippines & Government of the State of Kuwait, 2018). Likewise, Indonesia resumed the deployment of domestic workers to Saudi Arabia only after securing additional labour protection measures through bilateral negotiations after the enforcement of its moratorium (Naila, 2026). These initiatives demonstrate that bilateral diplomacy can improve protections for migrant workers, but their benefits remain confined to the nationals of individual negotiating states rather than establishing common regional standards across ASEAN.

Only recently has ASEAN begun engaging the Gulf as a bloc. The inaugural ASEAN-GCC Summit, held in Riyadh in October 2023, produced a joint statement in which both sides agreed to encourage cooperation on orderly and safe labour mobility and to jointly counter trafficking linked to recruitment practices (Association of Southeast Asian Nations and Gulf Cooperation Council, 2023). This commitment sits within the broader GCC-ASEAN Framework of Cooperation (2024-2028), and the relationship was elevated again at the second ASEAN-GCC Summit in Kuala Lumpur in May 2025, though its accompanying declaration concentrated overwhelmingly on trade, investment, and energy cooperation rather than labour protection (Association of Southeast Asian Nations, 2025). Neither summit has yet produced a dedicated instrument on migrant worker protection comparable to the Cebu Declaration or the ASEAN Consensus.

 

ASEAN’s Future Role in Migrant Worker Protection

Given these institutional limitations, ASEAN’s most realistic contribution lies not in creating new legal obligations, but in strengthening regional coordination. Because labour-sending states continue to negotiate separately with Gulf countries, ASEAN member states have yet to leverage their collective position as one of the world’s largest sources of migrant labour (Association of Southeast Asian Nations, 2023). A more coordinated regional approach could help harmonize protection standards, facilitate information sharing among member states, and strengthen ASEAN’s collective voice in engagements with Gulf Countries. By coordinating common priorities before engaging external partners, ASEAN would also be better positioned to reduce disparities in protection among its member states and encourage more consistent labour governance across migration corridors to the Gulf.

Rather than establishing new institutions, ASEAN could make greater use of existing mechanisms such as the ACMW. Although the ACMW currently functions primarily as a consultative body, its existing mandate provides a foundation for deeper cooperation among member states. Beyond facilitating dialogue, it could serve as a platform for exchanging best practices, coordinating responses to emerging labour rights concerns, and promoting more consistent approaches to migrant worker protection in engagements with destination countries. Expanding the ACMW’s coordinating role would strengthen regional cooperation without departing from ASEAN’s principle of non-interference.

The 2026 Philippine Chairmanship presents a timely opportunity to advance this agenda. As one of ASEAN’s largest migrant-sending countries, with around 10% of its population working abroad, the Philippines has a robust repertoire of migrant protection mechanisms (Asis, 2017). Its leading role in regional cooperation, such as the Cebu Declaration, serves as a paramount proof of this nation’s commitment to protecting migrant workers (Presidential Communication Office, 2026). Although ASEAN cannot reform the Kafala system on its own, strengthening the role of the ACMW could enable it to serve as a pivotal mechanism for coordinating ASEAN member states’ diplomatic leverage and aligning their external engagement with the region’s longstanding commitment to protecting millions of Southeast Asian migrant workers.

Stabilization Without Transformation: Why UN Peacekeeping in Liberia Failed to Deliver Human Security?

Stabilization Without Transformation: Why UN Peacekeeping in Liberia Failed to Deliver Human Security?

Agu 4, 2026 | Commentaries

Vol. VII / No. 11 | August 2026

Authors:
Lanja Manohisoa Epifaniah – Master’s Programme in International Relations, Faculty of Social and Political Sciences, Universitas Indonesia

Summary

Between 2003 and 2020, The United Nations Mission in Liberia (UNMIL) was one of the largest and most expensive peacekeeping operations in UN history. It suppressed large-scale violence, organized credible elections and formally rebuilt state institutions. Yet by 2020, Liberia’s Human Development Index stood at 0.48, more than half the population lived in poverty, and the health system had collapsed under the stress of the 2014 Ebola crisis. This article argues that UNMIL’s limited human security outcomes are explained by a structural deficit of local ownership: the failure to transfer decision-making authority, ensure inclusive participation, build autonomous institutional capacity, and align reforms with Liberian social and political realities. Applying Donais’s (2012) Local Ownership Framework to 15 years of UNMIL documentation and post-conflict evidence, it appears that the mission achieved stabilisation without transformation: institutions were formally rebuilt, but lacked the legitimacy and autonomy to endure international withdrawal.

Keywords: UNMIL, Human Security, Local Ownership, Peacebuilding, United Nations Peacekeeping

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A Warning from Monrovia

In December 2025, Sweden announced it would close its embassy in Monrovia and wind down decades of development aid to Liberia, following earlier cuts by the United States and the European Union. For a country whose police, courts and clinics still lean heavily on money from the United States, mainly through USAID, and a small group of European partners such as Sweden and Ireland (AllAfrica, 2025).

The United Nations Mission in Liberia, known as UNMIL, was at its peak one of the largest and most expensive peacekeeping operations in UN history. It ended fourteen years of civil war, organised three peaceful elections, and helped rebuild a national army and police force from collapse. On paper, it worked. Yet by 2020, when UNMIL packed up and left, Liberia’s Human Development Index, the United Nations’ composite score for health, education and income, stood at just 0.48, placing the country among the ten least developed nations on Earth (UNDP, 2020). More than half the population lived in poverty (World Bank, 2024).

 

The Peacekeeping Paradox in Liberia

Liberia presents a puzzle standard peacekeeping metrics cannot resolve. UNMIL ended two decades of civil war, established a transitional government, ran three elections with minimal violence, and rebuilt the Armed Forces of Liberia (AFL) and Liberian National Police (LNP) from collapse. By the measures that peacekeeping evaluation typically privileges—violence suppression, institutional reconstruction, electoral facilitation—UNMIL performed well. Liberia’s Human Development Index score of 0.48 in 2020 ranked it among the 10 least developed nations globally, showing little change from the post-war benchmark despite international investment exceeding US$4 billion over 15 years by 2022 (UNDP, 2020; World Bank, 2024).

Liberia’s development indicators barely moved. This same gap, real success at stopping violence paired with institutions too fragile to stand alone, has shown up elsewhere: Congolese police posts fell into disrepair within weeks of each peacekeeper handover in the Democratic Republic of Congo (Africa Center for Strategic Studies, 2024), and security gains in South Sudan have unravelled wherever peacekeepers drew down without a transition plan (United Nations University, 2026). The question worth asking is not whether UNMIL succeeded, but why on-paper success failed to translate into a Liberia that could stand on its own two feet.

 

Why Rebuilding Institutions Wasn’t Enough

Political scientist Timothy Donais offers one answer through the idea of local ownership (Donais, 2012). His argument, in brief: post-conflict rebuilding only lasts if the people who will live inside the resulting institutions genuinely control them, not merely staff them. Donais breaks ownership into four ingredients: who actually holds decision-making power, whose voices shape reform, whether local institutions can function without permanent outside support, and whether reforms fit a country’s real social and political life rather than an imported template. Reform that ticks these boxes on paper while failing them in practice is what he calls nominal ownership, performed for outsiders rather than built for insiders. Applying this lens to fifteen years of UNMIL’s record shows the mission built exactly that.

 

Four Ways Local Ownership Was Weakened

Authority. UNMIL operated under a UN Security Council mandate that gave its head, the Special Representative of the Secretary-General, sweeping oversight of the mission, while donor funding rules kept reform priorities answerable to international budgets rather than Liberian needs. The police were rebuilt under a model designed largely by DynCorp International, a private US security contractor regularly hired by the American government to train foreign police and military forces (Devex, n.d.), with little input from Liberian security culture (Search for Common Ground & SIPRI, 2011). The LNP remained 60% donor-dependent in its operational budget by 2024, relying primarily on funding from the United States through USAID, along with support from European partners such as Sweden and Ireland (UNDP, 2018).

Inclusiveness. UNMIL’s outreach machinery was built for people already visible to international institutions: politicians in Monrovia, registered civil-society groups, English speakers. Rural communities, women’s and youth groups, and customary authorities like the Poro and Sande societies—which have long governed land and dispute resolution across rural Liberia (Immigration and Refugee Board of Canada, 2016)—were treated as recipients of reform, not sources of it. Fifteen years was enough time to build a genuinely participatory process; the evidence suggests that effort never happened.”.

Institutional capacity.  The police force was trained up to roughly 4,000 officers using a US-derived model, yet by 2024 only 30 per cent of officers had received adequate post-reform training. With only one officer for every 850 citizens across a predominantly rural country, police coverage remained thin and operational capacity limited. That thin, undertrained force is also part of why the 2014 Ebola outbreak hit so hard: the same reliance on external capacity that left policing hollow had also left the health system without enough trained staff and functioning local institutions to respond once a shock arrived. All ten primary healthcare indicators fell during the crisis, and more people ultimately died from the collapse of routine care than from Ebola itself (Wagenaar et al., 2018). The outbreak did not create this fragility; it revealed capacity that had never really been there.

Contextual alignment. Liberia’s post-war institutions were often built to look right rather than fit right. Land reform frameworks implemented throughout much of UNMIL’s mandate resulted in 40.9% of Liberia’s traditionally held land being formally unrecognised as of 2020. Anti-corruption bodies were established on paper, and Liberia’s score on the Corruption Perceptions Index rose to a peak of 41 out of 100 in 2012 before falling back into the mid-20s within a decade, as international oversight receded (Transparency International, 2024). Reintegration programmes for ex-combatants were designed around a formal job market that absorbed under 8.7 per cent of young workers (International Labour Organization, 2017). Also, Liberia held three credible elections without ever confronting the patronage politics, the exchange of political loyalty for jobs, favours and protection, that had helped fuel the war in the first place and continues to entrench corruption in Liberian politics today (ISS Africa, 2025).

 

Stabilization Without Transformation

The cumulative effect of these four ownership deficits was a peacebuilding architecture that functioned adequately while external support was present and fragmented progressively when it was reduced. A youth non-employment rate of 23 per cent, a Human Capital Index of 0.32, poverty exceeding 50 per cent — these are not post-withdrawal failures attributable to Liberian governance after UNMIL departed. They are the downstream effects of institutional designs that never built the social embeddedness, financial autonomy, organizational capacity, and contextual legitimacy that self-sustaining institutions require.

The argument I am making is ultimately not about UNMIL specifically. The structural logic of UN peace operations is based on how they are institutionally positioned: accountable to member states rather than the host population, evaluated on quantifiable outcomes rather than social integration, and organised around the assumption that international expertise is both superior to and replaceable by local knowledge. These assumptions did not originate with UNMIL. The liberal peacebuilding framework within which UNMIL operated includes these features.Evidence from Liberia, based on fifteen years of documentation across five institutional domains, illustrates their consequences with unusual empirical clarity. Changing these assumptions requires not better implementation of the existing model, but a fundamental rethinking of what ownership means in practice.

 

Lessons for Future UN Mission

Four changes could help. Mandates should set binding, time-bound targets for transferring real authority, over agendas, budgets and decisions, throughout a mission’s life, not only as an exit condition. Participation should be rebuilt around community and customary structures, not just urban, English-speaking counterparts. Security reform should start by mapping what security arrangements already exist and enjoy local legitimacy, rather than importing a foreign template. And financing strategies should build toward fiscal independence from day one, since donor dependence on Liberia’s scale never appears suddenly; it accumulates from choices made across a mission’s lifespan.

Negotiating Green: Why China’s Green BRI Looks Different in Indonesia and Vietnam

Negotiating Green: Why China’s Green BRI Looks Different in Indonesia and Vietnam

Jun 25, 2026 | Commentaries

Vol. VII / No. 10 | June 2026

Authors:
Rizka Bunga Shafira – Junior Fellow of Global South Solidarity, Development, and Transformation of Global Justice Research Cluster, Department of International Relations, Universitas Indonesia.

 

Summary

China’s Green Belt and Road Initiative (Green BRI) has been promoted as a commitment to sustainable overseas investment, yet its implementation varies considerably across partner countries. This article compares the Green BRI’s energy sector outcomes in Indonesia and Vietnam—two largest Southeast Asian economies that both drew major Chinese investment and pledged to decarbonise, yet diverged sharply, making them a natural test of what actually drives Green BRI outcomes. In Indonesia, Chinese capital remains locked into coal, sustained by a powerful coal oligarchy, fragmented regulation, and subsidies that disadvantages renewables. In Vietnam, a pivot toward renewable energy has taken hold, driven by centralised governance and proactive policy. The article argues that this divergence is shaped less by Beijing’s strategic intentions than by the domestic political economy and governance capacity of each recipient. The Green BRI works mainly as a legitimacy-building mechanism whose real-world impact is decided at home: Vietnam shows how deliberate policy can steer Chinese capital toward clean energy, while Indonesia shows that, without structural reform, it will remain green in name only.

Keywords: Energy Politics, China Overseas Investment, Domestic Context, Green Belt and Road

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The Green BRI as Soft Power, Not Hard Policy

The Green BRI emerged in response to mounting international criticism that Chinese-funded infrastructure projects were causing ecological damage across the Global South (Hughes, 2019) Policy documents such as the “Guidance on Promoting a Green Belt and Road” (2017) and the Green Investment Principles (GIP) signalled China’s commitment to low-carbon development overseas (MEE of PR China, 2017). The energy sector became the focal point, commanding nearly 40 per cent of total BRI investment, making it the obvious arena where green ambitions would be tested.

Yet the picture on the ground is far more complicated. China itself remain deeply reliant on coal domestically, and its energy governance is fragmented between central and local authorities. State-owned enterprises with entrenched interests in fossil fuels continue to seek profitable overseas markets, especially as China’s own carbon pricing regime raises the cost of doing business at home (Harlan, 2020). This domestic pressure incentivises Chinese energy companies to invest in countries with less stringent environmental governance, where compliance costs are lower and returns are more predictable (Nedopil, 2021). In this context, the Green BRI functions less as a coherent environmental strategy and more as a soft power instrument—a way for Beijing to project international legitimacy while its companies pursue commercial logic abroad.

 

Indonesia: Coal Lock-In and the Weight of Oligarchy

Indonesia illustrates how domestic structural conditions can neutralize the green aspirations of the BRI. Between 2006 and 2022, China invested roughly 35 billion USD in Indonesia, with a quarter flowing into the energy sector—overwhelmingly into coal ((Jiaying & Xinyue, 2025). Despite Xi Jinping’s 2021 pledge to stop financing overseas coal-fired power plants, Indonesia remains the world’s largest recipient of Chinese coal investment at 15.7 billion USD, with Chinese-backed coal plants exceeding 9 GW of installed capacity by 2024. Much of this infrastructure supports the metal processing industry, particularly nickel downstream for electric vehicle batteries (Gu, 2024)—creating a paradox where the clean energy supply chain depends on fossil fuel-powered production.

Indonesia’s coal lock-in is not an accident of the market, it is the product of domestic political capture, and tracing how that capture works explain why Chinese money keeps flowing to coal. Coal oligarchs—hold enormous sway over national energy policy, a grip underwritten by the sector’s sheer fiscal weight: coal delivered IDR 124.4 trillion in non-tax state revenue alone (Prihandono & Widiati, 2023). Government policy entrenches this dependence: the 2014 National Energy Policy (Kebijakan Energi Nasional or KEN), enacted through Government Regulation No. 79/2014, sets the country’s energy-mix targets through 2050 and locks coal in as a backbone of domestic electricity, while the Domestic Market Obligation (DMO) requires producers to reserve part of their output for the local market (Wijaya, 2021), together treating coal as both a strategic export commodity and a core energy source.

Structural barriers further hamper renewables: fossil fuel subsidies have historically outweighed clean-energy support by roughly 26 to 1, and PLN’s grid monopoly complicates tariff talks with independent producers. Even Indonesia’s flagship renewable rule Presidential Regulation No.112 of 2022, which bans most new coal plants and targets a coal phase-out by 2050, undercuts them by capping the tariffs producers can charge PLN, often below break-even, leaving little room for positive returns.

As commercial actors, Chinese firms follow the incentives the host-country sets, and in Indonesia those incentives point to coal. China Huadian, one of China’s largest state-owned power producershas engaged  in Indonesia mainly through hydropower—its engineering arm built the 180 MW Asahan-1 plant in North Sumatera. Even so, major Chinese generators like it remain reluctant to enter solar and wind, citing unfavorable tariffs and regulatory uncertainty  (Liu et.al, 2023). PowerChina’s withdrawal from the 9GW Kayan hydropower project in North Kalimantan—initially valued at 27 billion USD (Satriastanti, 2025)—further illustrates that even large-scale renewable projects face serious implementation challenges. Coal investment, by contrast faces none of these obstacles, it plugs into guaranteed demand under the DMO and PLN’s long-term contracts, and benefits from politically connected concession-holders who can smooth permitting and land acquisition (Ordonez et.al, 2021). Where renewables must negotiate capped tariffs with a reluctant monopsony, coal offers certainty—and capital, Chinese or otherwise, follows certainty.

Vietnam: Centralized Governance and a Renewable Pivot

Vietnam presents a strikingly different trajectory. While Chinese investment in Vietnam’s coal sector once reached 20 billion USD by 2022, the trend has reversed sharply. The last Chinese-funded coal plant was completed in 2021, and Vietnam now holds the highest cancellation rate of Chinese-backed coal projects, having scrapped sic project totaling 600 MtCO2 (Do & Burke, 2024). From 2018 onward, renewable energy’s share in Chinese investment flows rose dramatically, with firms like Trina Solar and Power China Harbor building solar panel and wind turbine manufacturing facilities in the country (Wengel et.al, 2023). These investment position Vietnam not only as a market but as a regional hub for China’s green technology exports.

The policy architecture underpinning this shift is robust. Vietnam’s Power Development Plan 8 (PDP8)—its binding national electricity roadmap to 2030, commits to raising the renewable energy share to 28.5 percents by 2030 and reducing coal from 51 to 28 percent, with a net-zero target by 2050 (Socialist Republic of Vietnam, 2025). The Renewable Energy and Climate Change Law provides a legal foundation, while the Feed-in Tariff (FiT) mechanism—a guaranteed price the state pays renewable producers, introduced in 2014 and expanded in 2020, offers price certainty and long-term contracts that substantially reduce investment risk. Vietnam added 4,500 MW of solar photovoltaic capacity in 2019 alone, making it one of the fastest growing solar markets in Southeast Asia (Eeg, 2023).

The key differences lies in governance. Vietnam’s single-party system under the Communist Party allows greater policy consistency and centralized energy planning. There is no coal oligarchy of the kind that dominates Indonesian politics. The government can screen and direct foreign energy investments—including Chinese ones—to align with long term strategic goal, even amid South China Sea tensions (Hai, 2021). The Communist Party of Vietnam (CPV) leverages foreign investment to bolster economic performance and domestic legitimacy, creating conditions where Chinese companies must operate within the state’s framework rather than negotiating around entrenched private interests.

What the Comparison Reveals

Three conclusions emerge from this comparison. First, the Green BRI is not a monolithic policy applied uniformly across partner countries; its outcomes are shaped by each recipient’s governance capacity, political structure, and economic interests. Indonesia’s fragmented, oligarch-influenced regulation pulls Chinese investment toward fossil fuels, while Vietnam’s centralised governance steers it toward clean energy. Second, Chinese energy companies behave as commercial actors, investing in renewables where the conditions reward them and following the path of least resistance where they do not. Third, the Green BRI works more as a legitimacy-building badge for China’s international standing than as a binding environmental commitment.

The divergence is itself the proof. If Beijing’s intentions set the outcome, two countries drawing on the same Chinese capital, the same state-owned firms, and the same Green BRI rhetoric would not end up in opposite places—one deepening its coal fleet, the other building a solar and wind supply chain. They diverge precisely because the decisive variable sits on the recipient side: the domestic rules that decide whether coal or clean energy is the safer bet. Where Vietnam’s centralised state could set a feed-in tariff and a binding power plan and make them stick, Indonesia’s rules bend toward the incumbents who benefit from them. That is what it means to read the Green BRI as a mechanism rather than a master plan—its colour is mixed at home, in Jakarta and Hanoi, far more than in Beijing.

Conclusion

If that is right, a greener Belt and Road cannot be negotiated with Beijing alone, it depends on whether recipient governments build the rules that make clean energy the rational choice. For Indonesia, that leaves a practical agenda, and the divergence with Vietnam is not destiny: it reflects choices about rules, and rules can change. Curbing coal incumbents’ political influence, rationalising the subsidies that tilt the field 26-to-1, and building a bankable tariffs for clean-energy investment would alter the very risk calculation that now sends Chinese capital to coal. Until that happens, the Green BRI in Indonesia will remain green in name only, not because Beijing wills it, but because Jakarta’s own rules make coal the rational bet.

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