Et Tu, Indonesia!

As the squeeze continues on China’s energy supply (and Xi has started to lash out here and here), we suspect the next words out of the Chinese leader’s mouth (if he spoke Latin) will be “…et tu, Indonesia!”

As Stephen Green writes at PJMedia, it might have seemed like one of those dry, bureaucratic, almost meaningless announcements on Monday, when War Secretary Pete Hegseth posted on X that the U.S. and Indonesia “are elevating our relationship to a Major Defense Cooperation Partnership.” 

This arrangement “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.”

In parallel, it was reported that “US, Indonesia discuss allowing US military overflight in Indonesian airspace”, which refers to a “preliminary draft that is being discussed internally” right now, but the writing is on the wall that the US aims to leverage their MDCP to this end.

But a Major Defense Cooperation Partnership is kind of a big deal – and it’s aimed directly at China’s oil imports.

China’s difficulties begin in the Strait of Hormuz, but they peak at Malacca. 

Nearly two-thirds of China’s imports – largely the raw materials that keep its export machine humming – and a whopping 80% of its energy imports pass through Indonesia’s Strait of Malacca.

As Andrew Korybko notes, the grand strategic goal being pursued is Under Secretary of War Elbridge Colby’s “Strategy of Denial”.

The gist is that the US must do its utmost to prevent Chinese hegemony in Asia, in furtherance of which it’s indirectly controlling or cutting off Chinese resource imports (Venezuela and Iran) and seeking control over global chokepoints (Hormuz, Malacca, and the Panama Canal), with everything accelerating ahead of Trump’s trip to China from 14-15 May.

Trump hopes that this will coerce Xi into a lopsided trade deal.

“The game is not to control Venezuela and Iran to choke China…” Zoltan Pozsar of advisory firm Ex Uno Plures wrote in a March note.

And you might ask why Trump is squeezing China. Well, as Pozsar pointed out, “The aim is not to deny energy to China. The aim is to level the playing field between the two countries. To be blunt, in ways I couldn’t be at Credit Suisse: if you fuck me on rare earths, I fuck you on energy.”