View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Calhoun, Institutional Archive of the Naval Postgraduate School Calhoun: The NPS Institutional Archive Theses and Dissertations Thesis Collection 2015-09 Shifting policy postures of Indonesia and Thailand: responding to the China challenge Wong, Anthony M. Monterey, California: Naval Postgraduate School http://hdl.handle.net/10945/47348 NAVAL POSTGRADUATE SCHOOL MONTEREY, CALIFORNIA THESIS SHIFTING POLICY POSTURES OF INDONESIA AND THAILAND: RESPONDING TO THE CHINA CHALLENGE by Anthony M. Wong September 2015 Thesis Advisor: Michael S. Malley Second Reader: Michael A. Glosny Approved for public release; distribution is unlimited THIS PAGE INTENTIONALLY LEFT BLANK REPORT DOCUMENTATION PAGE Form Approved OMB No. 0704–0188 Public reporting burden for this collection of information is estimated to average 1 hour per response, including the time for reviewing instruction, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to Washington headquarters Services, Directorate for Information Operations and Reports, 1215 Jefferson Davis Highway, Suite 1204, Arlington, VA 22202-4302, and to the Office of Management and Budget, Paperwork Reduction Project (0704-0188) Washington, DC 20503. 1. AGENCY USE ONLY 2. REPORT DATE 3. REPORT TYPE AND DATES COVERED (Leave blank) September 2015 Master’s thesis 4. TITLE AND SUBTITLE 5. FUNDING NUMBERS SHIFTING POLICY POSTURES OF INDONESIA AND THAILAND: RESPONDING TO THE CHINA CHALLENGE 6. AUTHOR(S) Wong, Anthony M. 7. PERFORMING ORGANIZATION NAME(S) AND ADDRESS(ES) 8. PERFORMING Naval Postgraduate School ORGANIZATION REPORT Monterey, CA 93943-5000 NUMBER 9. SPONSORING /MONITORING AGENCY NAME(S) AND 10. SPONSORING / ADDRESS(ES) MONITORING AGENCY N/A REPORT NUMBER 11. SUPPLEMENTARY NOTES The views expressed in this thesis are those of the author and do not reflect the official policy or position of the Department of Defense or the U.S. Government. IRB Protocol number ____N/A____. 12a. DISTRIBUTION / AVAILABILITY STATEMENT 12b. DISTRIBUTION CODE Approved for public release; distribution is unlimited 13. ABSTRACT (maximum 200 words) China’s rise and the strategic uncertainty about its future intentions have compelled countries in Southeast Asia, such as Indonesia and Thailand, to adopt hedging strategies to deal with China’s rise. Since 2012, with China’s foreign policy shifting toward a more proactive and assertive policy posture, Indonesia and Thailand have exhibited divergent hedging responses: Indonesia has shifted toward the balancing end of the hedging spectrum while Thailand has shifted toward the bandwagoning end. This thesis seeks to analyze Indonesia’s and Thailand’s hedging responses and the key factors that explain their different hedging preferences. This thesis contends that Indonesia’s and Thailand’s hedging strategies have shifted in response to a change in their ruling elites’ perception of benefits from an improved relationship with China, vis-à-vis their perception of China as a security threat. In both countries, domestic factors have also exerted an intervening effect on policy outcomes to different extents. Indonesia’s hedging strategy reflects the compromise between enhancing Indonesia’s future security, addressing nationalistic concerns of defending Indonesia’s sovereignty, and gaining economic benefits. On the other hand, Thailand’s ruling elites have sought to politically and economically benefit from China’s rise in order to bolster their political legitimacy at home. 14. SUBJECT TERMS 15. NUMBER OF China, Indonesia, Thailand, Southeast Asia, hedging, China foreign policy PAGES 137 16. PRICE CODE 17. SECURITY 18. SECURITY 19. SECURITY 20. LIMITATION CLASSIFICATION OF CLASSIFICATION OF THIS CLASSIFICATION OF ABSTRACT REPORT PAGE OF ABSTRACT Unclassified Unclassified Unclassified UU NSN 7540–01-280-5500 Standard Form 298 (Rev. 2–89) Prescribed by ANSI Std. 239–18 i THIS PAGE INTENTIONALLY LEFT BLANK ii Approved for public release; distribution is unlimited SHIFTING POLICY POSTURES OF INDONESIA AND THAILAND: RESPONDING TO THE CHINA CHALLENGE Anthony M. Wong Lieutenant Colonel, Republic of Singapore Air Force B.S., University of New South Wales, 1999 Submitted in partial fulfillment of the requirements for the degree of MASTER OF ARTS IN SECURITY STUDIES (FAR EAST, SOUTHEAST ASIA, AND THE PACIFIC) from the NAVAL POSTGRADUATE SCHOOL September 2015 Approved by: Michael S. Malley Thesis Advisor Michael A. Glosny Second Reader Mohammed Hafez Chair, Department of National Security Affairs iii THIS PAGE INTENTIONALLY LEFT BLANK iv ABSTRACT China’s rise and the strategic uncertainty about its future intentions have compelled countries in Southeast Asia, such as Indonesia and Thailand, to adopt hedging strategies to deal with China’s rise. Since 2012, with China’s foreign policy shifting toward a more proactive and assertive policy posture, Indonesia and Thailand have exhibited divergent hedging responses: Indonesia has shifted toward the balancing end of the hedging spectrum while Thailand has shifted toward the bandwagoning end. This thesis seeks to analyze Indonesia’s and Thailand’s hedging responses and the key factors that explain their different hedging preferences. This thesis contends that Indonesia’s and Thailand’s hedging strategies have shifted in response to a change in their ruling elites’ perception of benefits from an improved relationship with China, vis- à-vis their perception of China as a security threat. In both countries, domestic factors have also exerted an intervening effect on policy outcomes to different extents. Indonesia’s hedging strategy reflects the compromise between enhancing Indonesia’s future security, addressing nationalistic concerns of defending Indonesia’s sovereignty, and gaining economic benefits. On the other hand, Thailand’s ruling elites have sought to politically and economically benefit from China’s rise in order to bolster their political legitimacy at home. v THIS PAGE INTENTIONALLY LEFT BLANK vi TABLE OF CONTENTS I. INTRODUCTION..................................................................................................1 A. MAJOR RESEARCH QUESTION..........................................................2 B. IMPORTANCE ..........................................................................................2 C. LITERATURE REVIEW .........................................................................3 1. Strategies of States: Balancing, Bandwagoning, and Engagement ....................................................................................3 a. Balancing ............................................................................3 b. Bandwagoning ....................................................................5 c. Engagement .........................................................................6 2. Strategies of States: Hedging ........................................................7 a. Defining the Hedging Strategy: A Conceptual Framework ..........................................................................8 b. Conditions and Variables that Influence the Hedging Strategy ...............................................................11 D. HYPOTHESES ........................................................................................12 E. RESEARCH METHODS AND SOURCES ..........................................13 F. THESIS OVERVIEW .............................................................................14 II. CHINA’S FOREIGN POLICY SHIFTS ...........................................................17 A. HU’S FOREIGN POLICY: CONCEPT OF PEACEFUL DEVELOPMENT ....................................................................................18 B. XI’S FOREIGN POLICY APPROACH: CONTINUITY AND CHANGE ..................................................................................................27 1. Continuity: Adherence to the Path of Peaceful Development .................................................................................27 2. Change: A Proactive and Assertive Approach ..........................28 C. CHINA’S POLICY SHIFTS: IMPLICATIONS FOR SOUTHEAST ASIA’S POLICY RESPONSE ......................................35 D. CONCLUSION ........................................................................................37 III. INDONESIA’S CHINA POLICY ......................................................................39 A. 1965–2000: INDONESIA-CHINA HISTORICAL RELATIONS .......40 B. 2001–2011: INDONESIA’S POLICY AND RELATIONS WITH CHINA ......................................................................................................44 1. Evolving Strategic Considerations in Indonesia’s China Policy .............................................................................................44 2. Implementing the Hedging Strategy ..........................................46 vii a. Economic Pragmatism Policy: Economic Benefits and Competition ................................................................46 b. Strategic Engagement: Maximizing Benefits ..................49 c. Soft Balancing Policy: Mitigating the Potential Risks of a China Threat ....................................................52 C. 2012–2015: INDONESIA’S POLICY AND RELATIONS WITH CHINA ......................................................................................................55