In fresh pursuit of India's look-east policy, Indonesian President Susilo Bambang Yudhoyono will be the chief guest on the Republic Day on January 26, 2011.
Indonesia is the largest Muslim country in the world and the third biggest democracy after the United States and India. Last year it was the third fastest growing economy in Asia after China and India.
Both the United States and China are anxious to become its chosen allies, though both President Barack Obama and Premier Wen Jiabao have had to cancel previously scheduled trips to Indonesia earlier this year: Obama twice, once because he had to shepherd the health care bill at home and Wen because following earthquakes in China on the eve of his visit that claimed 600 lives.
When Obama cancelled his trip it was widely criticized in the US as a lost opportunity. To make up for Wen, President Hu Jintao met Yudhoyono at the G20 meeting in Toronto in June and promised to increase investment in Indonesia by supporting Chinese companies. China has recently committed investment amounting to $2 billion in building Indonesia's infrastructure.
Shyam Saran, the Prime Minister's former special envoy, said Indonesia has a unique strategic place in Asia. "Asia is home to several emerging and globalizing powers, including India, China and Indonesia. An important consequence of this is the increasing density of maritime communications from the Pacific to the Indian Oceans in which all major Asian powers have a growing stake."
"Given their location and capabilities, India and Indonesia have a critical role in guarding these vital lifelines. This is important for their own security. It will also enable them to play a key role together in shaping the emerging security architecture in the region. It is not in our interest that this architecture is shaped mainly by China or assumes a character detrimental to our interests," he said.
India and Indonesia signed a Bilateral Agreement on Cooperative Activities in the Field of Defence in 2001. In 2005, the two countries began joint maritime patrols as part of a strategic partnership. This is likely to go forward.
Indonesia broke off diplomatic ties with China in 1967 following suspicions that Beijing had been complicit with communist insurgents in Southeast Asia. Relations were restored in 1990 but unease about China's long-term goals in South East Asia has persisted in Jakarta. Its most recent manifestations were in Indonesia countering China's claim to sovereignty over the entire South China sea.
India, by contrast, has been engaged with Indonesia since the 1950s when Nehru and Sukarno stressed the importance of India and Indonesia working together to lead Asia's resurgence leading to the Bandung Conference of 1955, "which represented their first effort to create a new global order, anchored in an emergent Asia. Perhaps that effort was premature. But today India needs to make relations with Indonesia the centre piece of its Look East policy" Saran said.
He said although Chinese investment in Indonesia dwarfs Indian investments, the latter does not create the same kind of anxiety that Chinese investments do.
Indonesia has a serious problem of Islamic fundamentalism. In 2004 a Memorandum of Understanding on Combating International Terrorism was signed with India. This provided for the formation of a Joint Working Group (JWG) on Counter Terrorism.