National Interest

by John Sitilides and Adinda Khaerani

    A recent agreement with Indonesia expands the US military’s reach over China’s energy and trade lifeline.

    When US President Donald Trump met Chinese Communist Party General Secretary Xi Jinping in Beijing in May, he carried with him a strong measure of strategic leverage that most observers missed. The post-meeting analysis focused on China’s dominance of rare earth elements, which Xi skillfully deployed in October 2025 in response to Trump’s tariff escalation. Washington’s tightening controls matched those to keep advanced semiconductors and related AI-accelerated technologies out of the Chinese Communist Party’s hands.

    But several weeks before the Beijing meeting, Secretary of Defense Pete Hegseth signed a Major Defense Cooperation Partnership (MDCP) with his Indonesian counterpart, Defense Minister Sjafrie Sjamsoeddin, at the Pentagon. This follows on the heels of similar defense cooperation arrangements the United States enjoys with Indonesia’s neighbors to its north: Thailand in 1954 and 1962, Singapore in 2005 and Malaysia in October 2025. The four countries together control the northern and southern coastlines of theStrait of Malacca, the world’s most strategic chokepoint, more so than even the Strait of Hormuz.

    The Strait of Malacca is located at the western end of the vast Indonesian archipelago, which comprises more than 17,000 islands and islets, 6,000 of which are inhabited. At its narrowest point, the Malacca Strait is only 1.7 miles wide, while Hormuz is nine times wider at its narrowest, more than 20 miles between the southern coast of Iran and the northern tip of Oman. It is the most vulnerable component of the maritime superhighway that connects East Asian markets through the South China Sea and across the Indian Ocean to energy exporters in the Middle East, to natural-resource riches throughout the African continent and to affluent consumer markets across Europe via the Red Sea and the Mediterranean Sea.

    In the first half of 2025, more than 23 million barrels of oil on average traversed Malacca every day, exceeding Hormuz’s 21 million barrels and making Malacca the world’s largest maritime oil chokepoint. For China, the Strait of Malacca is structurally fundamental to its economic and national power. About 80 percent of its oil imports are shipped through the Strait of Malacca, which accounts for 60 percent of its total crude oil supply. About 60 percent of China’s liquefied natural gas imports pass through the Strait of Malacca, which also accounts for about two-thirds of China’s overall trade by value.

    The commodities trade index, excluding oil and LNG, through the strait is staggering. Iron ore, coal, copper, soybeans, palm oil, rice, as well as petrochemicals, fertilizers and other refined and processed industrial and consumer hydrocarbon byproducts, along with manufactured goods, electronics and advanced machinery, flow in all directions between East Asia, the Middle East, Africa and Europe. Over one-fourth of total global maritime trade, valued at $3.5 trillion, transits the Strait of Malacca, with 100,000 ships annually.

    Under the MDCP framework, the United States and Indonesia “will explore mutually agreed cutting-edge initiatives, including co-developing sophisticated asymmetric capabilities pioneering next-generation defense technologies in the maritime, subsurface and autonomous systems domains and cooperating on maintenance, repair and overhaul support to improve operational readiness.”

    The partnership’s most operationally significant element is the Letter of Intent signed by Hegseth and Sjamsoeddin, which opened the possibility of US military aircraft access to Indonesian airspace. Jakarta subsequently walked back the commitment publicly, insisting that Indonesia had made “not a single commitment with the US on airspace.” Beijing no doubt understands that public diplomacy does not reflect the private understanding that can be triggered in the event of a crisis.

    The US-Indonesia agreement is now being implemented, with a focus on strengthening military modernization, training, education, exercises and operational cooperation. But along the Strait of Malacca’s 550-mile southern coastline in Indonesia, a powerful diplomatic subtext emerges: the Trump administration is building the maritime dominance framework consisting of expanded airspace access, regional domain awareness and enhanced overhead intelligence, surveillance and reconnaissance operations for secured sea lane passage, force protection and persistent overwatch.

    Structured atop an Indonesia-anchored foundation, this widens similar arrangements Washington enjoys with its defense-cooperation allies and partners in Thailand, Singapore and Malaysia, delivering inordinate US influence over some of China’s most critical supply chains. The lack of viable alternatives to the shipping lane further exacerbates Beijing’s energy supply chain dilemma.

    Indonesia’s archipelagic geography includes the only other proximate viable chokepoints between the Indian and Pacific Oceans—the Sunda and Lombok Straits southeast of Malacca. Hence, the conceptual term Chinese strategists used two decades ago to confront and attempt to resolve the single greatest structural vulnerability in Chinese national security was the “Malacca Dilemma.”

    Indonesia has long maintained a balance-of-power policy towards the United States, Asia’s longtime security superpower and towards China, East Asia’s economic and trade powerhouse. Beijing’s more bellicose policies towards almost all its Asian neighbors since Xi’s rise to power in 2012 have warped relations between Beijing and Jakarta.

    Beijing’s massive territorial claims to national sovereignty over the South China Sea’s vast international waterways and airspace overlap with parts of Jakarta’s Exclusive Economic Zone (EEZ) in the rich natural gas reserves and marine fisheries of the North Natuna Sea. China acknowledges that the Natuna Islands belong to Indonesia, yet asserts that Chinese fishermen enjoy rights in traditional fishing grounds in waters overlapping Indonesia’s Exclusive Economic Zone (EEZ).

    Jakarta’s position is consistent with the UN Convention on the Law of the Sea (UNCLOS), as the waters fall within its 200-nautical-mile EEZ. Furthermore, Indonesia’s stance regarding the waters was reinforced by the July 2016 ruling of the Permanent Court of Arbitration under UNCLOS, which favored the Philippines against China’s “nine-dash-line” maritime claims throughout the South China Sea. Beijing’s Ministry of Foreign Affairs declared the court’s decision null and void, stating it had no binding force, a position that remains in force nine years later.

    But Jakarta will not become a US forward base, nor does it need to. Indonesia’s “free and active” foreign policy doctrine permits deepening defense cooperation with Washington while continuing to engage Beijing, without formal alignment with either. Its 287 million people make it the world’s most populous Muslim society. With a projected 2026 GDP of $1.54 trillion, accounting for 34 percent of ASEAN’s economic output, Jakarta is the bloc’s central political and intellectual pillar.

    Cooperation with the United States enables Indonesia to create the capacity required to protect these vital shipping lanes while maintaining its long-standing policy of non-alignment. Its diplomatic neutrality continues, with President Prabowo Subianto meeting Vladimir Putin in Moscow the day the US defense agreement was signed in Washington. Despite its territorial claims, China remains Indonesia’s largest trading partner and leading source of foreign direct investment. The non-aligned framework enables the government to deepen defense cooperation with the United States while continuing to engage China and other major powers without allying with either party.

    For Jakarta, the partnership with Washington offers strategic and regional advantages.

    With its armed forces undergoing modernization and the availability of US training, expertise and interoperability, the process will likely be expedited. The closer defense partnership may also provide Indonesia with greater influence in regional security discussions. Improved capabilities in maritime awareness and joint exercises put Jakarta in a stronger position to contribute to regional stability amid escalating tensions in the South China Sea and rivalry between Washington and Beijing.

    US strategic planners have long recognized that China’s Malacca dependency represents a powerful asymmetric lever, the ability to threaten Beijing’s supply lines without deploying forces to Chinese territory. The MDCP formalizes America’s proximity to that lever, granting Washington a formalized defense framework in which the sovereign nation controls access to Malacca, Sunda and Lombok, the three passages through which Chinese energy, food and commerce must flow.

    When Trump and Xi sat across from each other in Beijing last month, the question of who held the stronger hand was not settled by tariff schedules or the language on Taiwan alone. The Strait of Malacca and US security cooperation with Indonesia afford the Trump administration new leverage that should be changing Xi’s earlier calculus that 2027 would be the decision year to bring Taiwan under Chinese Communist control.