Interaction Between Actors in China's Energy Diplomacy in Indonesia

Interaction between Actors in China’s Energy Diplomacy in Indonesia Period 2002-2012 Dias Sukmarini Indonesia University, Depok Keywords: Interaction between China and Indonesia, Energy Diplomacy, Non-state Actor, State-Owned Enterprises Abstract: This study aims to analyze the interaction between actors in China’s energy diplomacy in Indonesia by using state actor and non-state actors based on their national energy policy. In this paper, the author analyzes the involvement of the state actors and non-state actors, their role, as well as the interactions that are formed in the diplomatic activities, especially Chinese energy diplomacy in Indonesia in an effort to obtain energy resources. State actors are represented by government officials, while non-state actors are represented by Chinese and Indonesian state-owned energy companies. The author describes and explains the interactions of actors based on three forms of interaction in economic diplomacy by Susan Strange’s theory of diplomacy. First is diplomacy between countries or state-state diplomacy, second is diplomacy between the firm and state or state-firm diplomacy, and third is diplomacy between companies or firm-firm diplomacy. Qualitative methods are applied in this research, by taking data through literature studies. The study found that the three forms of interaction in diplomacy between state actors and non-state actors are related to each other. The connection of interactions in each diplomacy shows the political and economic relations that affect the effectiveness of energy’s agreements between countries. 1 INTRODUCTION pointing out that state-owned enterprises can be described as non-state actor. Mostly, the debates In recent years, globalization has been showing many focused on China’s perspective because more than remarkable changes in the international relations. half of the firms in China are state-owned enterprises. This is indicated by the development of technology SOEs provide the largest revenue in China, especially such as the fast pace of production and in strategic sectors such as finance, infrastructure and communication, that pushing the changes of energy. According to Fortune Global 500, Sinopec international economic structure that raising the and China National Petrochemical Company (CNPC) awareness of the international market. Now, the state are the second and third SOEs' 'TOP earnings' in 2006 has to compete with another state through their in Asia. The classification of state-owned enterprises economic capabilities or wealth for showing their as non-state actors is based on the interests they have. states' power in international relations. In pursuit of Non-state actors have a role to support national that goal, many states have to cooperate not only with interests while the government has a big role in other states but also with non-state actors such as managing or managing the corporate structure. multinational firms. These dynamics shows the The strengthening of the active role of non-state increase in the role of non-state actors, one of which actors in state-level cooperative relations, rejects the is international firms or can be called a multinational general idea of diplomacy that state-level cooperation company in achieving home country’s interests. in bilateral diplomacy involves only state actors such Recognizing this, China has undergone a historic as ministries and government officials. Diplomacy economic transformation from totally centrally also involves non-state actors such as multinational planned economy and self-reliance to market- corporations. This shows that there has been a shift in oriented economy in 1978, In that policy, they competition for power. Today, competition for power utilized state-owned companies to achieve their has shifted from competition to wider territory to interest in economic development. In my opinion, competition for wealth. China’s state-owned enterprises are taking a role as a non-state actor. There are several debates which are 47 Sukmarini, D. Interaction between Actors in China’s Energy Diplomacy in Indonesia Period 2002-2012. DOI: 10.5220/0010272900470054 In Proceedings of Airlangga Conference on International Relations (ACIR 2018) - Politics, Economy, and Security in Changing Indo-Paciﬁc Region, pages 47-54 ISBN: 978-989-758-493-0 Copyright c 2021 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved ACIR 2018 - Airlangga Conference on International Relations interactions that it establishes. The method of explanative analysis is based on a descriptive analysis which then identifies the reason for something (p.40). State-State Firm-Firm Neuman adds that this method provides an explanation of social theory or previous research, then extends it to explain new problems or conditions. In conducting this research, researchers used the concept of diplomacy by John M. Stopford and Susan State-Firm Stopford dan Strange, 1991: 22 Strange (1991). They show that structural changes in Figure 1. the international political economy create a global competition that causes the state not only to interact Normatively, bilateral cooperation agreements are with other countries but also with multinational supported by the range of time the establishment of a corporations through the establishment of bilateral MoU or cooperation agreement between the two diplomatic relations. In addition, global competition countries. However, in Indonesia's energy also forces multinational companies to mutually cooperation relations, Indonesia's energy areas are diplomacy one another. almost dominated by the Chinese state than other This model of analysis shows that the actors Asian countries, especially Japan which has already involved in triangular diplomacy are state and established an energy forum with Indonesia. China multinational corporations as non-state actors. Three responds to the global situation by using state-owned sides of diplomacy are intertwined in negotiation and energy companies such as CNOOC, CNPC and others bargaining. the bargaining position of each party is in an effort to meet the national interests. On the other different. Bargaining activities on both sides of the hand, the importance of multinational corporations in new diplomacy (corporate-state diplomacy and global competition between countries has led to a corporate diplomacy) have interdependence decrease in state bargaining power (Stopford and relationships with the development of negotiations Strange, 1991: 215). The involvement of every between countries and countries (Strange, 1992: 14). diplomatic actor with his own interests in The interactions formed in diplomacy determine the international cooperation leads to complex degree of dependence of each actor and have an interactions. The interaction between actors in influence on the continuity of existing energy diplomacy also determines the effectiveness of the cooperation agreements. established cooperation agreement. The selected period is between 2002 and 2012 Based on the dynamics and success of the strategy because in 2002 it was the first time a memorandum undertaken by the Chinese state, this research aims to of understanding between China and Indonesia in the see the relation of the non-state actors' role energy sector through ICEF was signed. While the represented by Chinese multinationals toward their analysis ends in 2012 due to the form of 10 years of national interests through interactions in China's development of energy cooperation between energy diplomacy activities in Indonesia. Therefore, Indonesia and China. The selection of time also based the problem formulation used is "How is the on a change in energy policy in Indonesia that interaction between actors in Chinese energy resulted in a change in the authority of BP Migas that diplomacy in Indonesia period 2002-2012?" became one of the actors in energy cooperation in Indonesia, as well as the change of leadership in Indonesia during that period. In addition, 10 years time is also considered to show the form of interaction 2 METHOD that is formed between Chinese and Indonesian actors. The independent variables of this research are This research uses a qualitative approach in the actors in diplomacy, ie the countries and explaining the interaction formed between diplomacy multinational corporations as well as the fossil energy actors. The method used in this research is descriptive resources that are the focus of Chinese energy and explanative analysis. According to Neuman diplomacy. While the dependent variable is a form of (1997), descriptive analytical methods provide an interaction that is formed in China's energy overview of the situation, social circumstances, or diplomacy with Indonesia. relationships described in detail and specifically by focusing on the "how" and "who" questions (p.39). This analysis is used to illustrate the relationship between Chinese energy diplomacy and the 48 Interaction between Actors in China’s Energy Diplomacy in Indonesia Period 2002-2012 3 RESULTS CNPC is engaged in oil and gas exploration and production for upstream or midstream downstream 3.1 Actors in China’s Energy Policy sectors such as refining, oil and gas processing, distribution, and marketing. CNPC is a state-owned energy company with the largest income and The new SOE reforms during Jiang Zemin's reign were established with several major focuses, one of production in China. CNPC's former chairman, Jiang which was the amendment of the law on SOE Zemin, also served as director of SASAC and 5th

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