U.S.-Indonesia Relations

U.S.-Indonesia Relations

U.S.-Indonesia Relations

Updated June 5, 2025 (IF10247)

Overview

With over 280 million citizens, Indonesia is the most populous country in Southeast Asia, the world's most populous Muslim-majority nation, and the world's third-largest democracy (after India and the United States). It has the world's 16th-largest economy—the 7th-largest when ranked by purchasing power parity. It straddles vital sea lanes and borders the Strait of Malacca, one of the world's busiest trade routes, as well as the Indian Ocean and the South China Sea. Over the past 25 years, Indonesia has become a robust democracy, holding five direct presidential elections, each considered by international observers to have been largely free and fair. In the most recent, held in February 2024, Prabowo Subianto, a former Defense Minister who served as commander of the Indonesian military's special forces in the 1990s, was elected to succeed President Joko Widodo. Prabowo took office in October 2024, and is to serve a five-year term.

The U.S.-Indonesia relationship has broadened over the past two decades, with closer military and counterterrorism cooperation and a range of new educational, environmental, and energy programs. Congress has played a key role in guiding the relationship, including by restricting interactions with security services accused of rights abuses, promoting cooperation on issues such as maritime security and counterterrorism, and conducting oversight of assistance programs and Indonesia's Millennium Challenge Compact, signed in 2023. (Much of the aid is in flux given President Trump's elimination of the Millennium Challenge Corporation (MCC) and the U.S. Agency for International Development (USAID)).

Indonesia's foreign policy is guided by its historical role as a leader of the Non-Aligned Movement, and successive Indonesian governments have resisted aligning too closely with the United States or others, including the People's Republic of China (PRC, or China). Indonesia is an active member in regional diplomatic institutions including the G-20 and Association of Southeast Asian Nations (ASEAN).

Some 87% of Indonesians are Muslim, with the vast majority subscribing to moderate, syncretic forms of Sunni Islam. Religious diversity is enshrined in the constitution. Some observers express concern about growing political influence of conservative religious groups. Non-Sunni Muslims and other religious minorities have been targets of violence, and some conservative groups have organized mass demonstrations against non-Muslim politicians. Indonesia also has a history of violent extremism: several bombings in Jakarta and Bali targeted Westerners in the 2000s, and smaller-scale attacks have occurred periodically.

Political Background

On February 14, 2024, over 200 million Indonesians voted in presidential, parliamentary, and local elections—the world's largest one-day democratic exercise—and selected Defense Minister Prabowo as president. Prabowo, the ex-son-in-law of the country's former authoritarian president Suharto, is a former general who was removed from the military in 1998 for allegedly torturing political activists, and who was implicated in 1999 violence in Timor-Leste (East Timor). A scion of a wealthy Indonesian family who spent much of his youth overseas, Prabowo campaigned on promises to continue the economic policies of President Widodo, including prioritizing growth in underdeveloped regions and promoting the mining and processing of critical minerals important to clean-energy supply chains. He chose Widodo's eldest son, Gibran Rakabuming Raka, as his Vice President, and announced a cabinet that included members of nearly every political party in Parliament.

As President, Prabowo has faced a range of challenges. His government's proposal to cut government subsidies for schools led to large street protests since February 2025. In a June 2025 speech, he warned that foreign-funded NGOs are "trying to divide" Indonesia. Some foreign policy observers criticized him for proposals that appeared to acknowledge Chinese claims in the South China Sea for the first time.

Figure 1. Indonesia

U.S. Engagement with Indonesia

The United States has traditionally engaged Indonesia across a wide range of issues, encouraging Indonesians to deepen their democratic institutions, promote religious tolerance and the rule of law, develop a more liberal trade and investment climate, combat terrorism, and engage on international issues such as maritime security and climate change. In 2023, the United States and Indonesia upgraded their bilateral "Strategic Partnership" to a "Comprehensive Strategic Partnership," continuing minister-level dialogues intended to address maritime cooperation, defense cooperation, economic growth and development, energy cooperation, cooperation on global and regional issues, and people-to-people ties. Most U.S. assistance has supported health, environmental, and educational initiatives, although the status of individual programs is uncertain given the Trump Administration's cuts to foreign assistance. Indonesia is part of the Indo-Pacific Maritime Security Initiative, which aims to strengthen Naval and Coast Guard capabilities in the region. In 2022, the two countries finalized several agreements, including a $698 million MCC Compact supporting climate-conscious infrastructure development.

Security Cooperation

U.S.-Indonesia security cooperation has deepened over the past decade, with the two militaries conducting around 170 annual engagements, including on maritime security cooperation and combatting terrorism. The largest U.S.-Indonesia military exercise is the annual Super Garuda Shield, hosted by Indonesia, which included over 4,000 troops from 11 nations in 2024.

This represents a sharp change from the early 2000s, when U.S. policies enacted in response to earlier human rights abuses by Indonesian forces severely limited bilateral engagements. In 1999, Congress suspended all International Military Education and Training (IMET) programs with Indonesia after its military, particularly the Kopassus special forces—headed at the time by Prabowo—and militia proxies killed over 1,000 in Timor-Leste following Timor's vote to pursue independence from Indonesia. Programs were restarted on a limited basis in 2002 and, from 2005 to 2010, the United States largely normalized military relations.

Indonesia is increasingly involved in rising South China Sea tensions. Indonesian authorities periodically confront or warn off PRC fishing and law-enforcement vessels seen as encroaching on Indonesian waters. PRC Coast Guard vessels reportedly have harassed Indonesian energy exploration vessels in the South China Sea more frequently, and have accompanied fleets of PRC fishing vessels into Indonesia's EEZ. In April 2025, Prabowo broke from longstanding Indonesian policy by proposing joint development projects with the PRC in disputed areas.

Militancy and Terrorism

Indonesia has had a long-running issue of domestic militancy, including religious and separatist movements, and the government has expressed concern that the Islamic State (IS) is conducting recruiting in Indonesia's national language (Bahasa Indonesia). In 2018, Indonesia amended its 2003 Anti-Terrorism Law, lengthening periods for which suspects can be detained without charge and broadening police rights to prosecute those who join or recruit for militant groups. U.S.-Indonesia counterterrorism cooperation is close; the United States and Australia helped to create Indonesia's elite counterterrorism unit, Densus-88, which has weakened militant groups such as Jemaah Islamiyah (JI), an Al Qaeda affiliate responsible for several bombings in the 2000s.

Economic Issues

Over the past two decades, Indonesia's economy has frequently posted growth of more than 5%-6% annually, buoyed in part by favorable demographics (66% of its population is of working age). The country is a large producer of natural gas and oil, as well as critical minerals including nickel. It is a major supplier of natural resources to Northeast Asia, including Japan, South Korea, and China, and is the world's leading exporter of palm oil.

Indonesia is the 24th-largest U.S. trading partner, ranking below neighbors such as Singapore, Vietnam, Malaysia, and Thailand. In 2024, bilateral goods trade totaled $38.3 billion and the bilateral goods trade deficit was $17.9 billion. Indonesia has imposed some policies criticized by foreign investors, including foreign ownership restrictions and local content requirements in some industries. In April 2025, the Trump Administration imposed a blanket 32% tariff on imports from Indonesia – then paused until July. Indonesian and U.S. officials are discussing possible Indonesian responses.

Human Rights Issues

Most observers say Indonesian human rights protections have improved over the past 20 years, as the country's democratic system has developed and a relatively robust civil society, including an active press, has flourished. Abuses still occur, including some by members of the military. Alleged abuses are particularly frequent in areas with simmering secessionist movements such as Papua. Islamist organizations have harassed and attacked minority religious groups, including Christians and other Islamic sects, such as the Shia and Ahmadiyya. In 2016, large demonstrations by Islamist groups opposed to Jakarta's Christian governor raised concerns for many about creeping intolerance. The State Department's 2024 Trafficking in Persons report listed Indonesia as a Tier 2 nation and reported it "does not fully meet the minimum standards for the elimination of trafficking but is making significant efforts to do so." Corruption is widespread: Transparency International ranked Indonesia 115th out of 180 nations in its 2023 Corruption Perceptions Index, below other Asian nations such as China, India, and Thailand.

Environmental Issues

The United States has conducted numerous environmental and clean-energy programs in Indonesia, which is among the world's most biodiverse countries. In 2022, the United States, Japan, and Indonesia announced a Just Energy Transition Partnership (JETP), aimed at accelerating private investment in sustainable energy. Indonesia has made some progress on issues such as deforestation, but its record of environmental protection is constrained by weak rule of law and poor land management. Because of deforestation, Indonesia is a major emitter of greenhouse gases—the world's third- or fourth-largest when emissions from deforestation are considered. Illegal logging remains rampant. In the 1960s, forests covered 82% of Indonesia; today, they cover 49%. Extensive wildfires cause severe air pollution each year, and climate change has led to recurrent poor harvests. Analysts also cite overfishing as a concern.