German President Frank-Walter Steinmeier arrived in Jakarta on Monday for high-stakes talks with Indonesian President Prabowo Subianto, marking the first bilateral meeting between the two leaders since Prabowo’s controversial 2024 election victory. The visit, secured after months of diplomatic delays, comes as Berlin and Jakarta navigate a geopolitical tightrope: balancing trade ties worth $20 billion annually against deepening tensions in the South China Sea and Indonesia’s pivot toward China. Here’s why this meeting matters—and what it reveals about Europe’s fading influence in Asia.
Why Steinmeier’s Visit Comes at a Pivotal Moment for EU-Asia Relations
Steinmeier’s trip isn’t just a routine state visit. It arrives as Indonesia, the world’s fourth-most populous nation, accelerates its economic integration with China—finalizing a $40 billion infrastructure deal last month while quietly reducing tariffs on key European exports like machinery and pharmaceuticals. “This is a moment where Germany, as the EU’s economic powerhouse, is being tested on whether it can compete with China’s long-term courting of Jakarta,” says Dr. Marcus Mietzner, a senior fellow at the Australian National University’s Indonesia Project. “Prabowo’s government has made no secret of its preference for Beijing’s no-strings-attached investment model.”
But there is a catch: Indonesia’s reliance on European markets for high-tech goods—especially semiconductors and renewable energy tech—means Berlin holds unexpected leverage. A leaked German Foreign Office memo obtained by Reuters earlier this week revealed that Steinmeier’s delegation will push for Jakarta to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a trade bloc dominated by EU allies like Japan and Canada. Indonesia’s current membership in the ASEAN free-trade zone has left it vulnerable to supply chain disruptions when China tightens export controls—something Jakarta officials have privately admitted to German diplomats.
Key Data Point: Indonesia’s trade deficit with China hit $32.7 billion in 2025, up 42% from 2024, while exports to Germany—its third-largest trading partner—fell by 18% due to tariff barriers. The discrepancy underscores why Prabowo’s government is now weighing whether to diversify its economic dependencies.
How the South China Sea Standoff Is Reshaping the Agenda
Behind closed doors, Steinmeier and Prabowo will discuss Indonesia’s role in mediating tensions in the South China Sea—a region where Germany’s interests are increasingly indirect but critical. Jakarta has emerged as a reluctant mediator between Beijing and Manila, hosting secret talks in Bali last November after the Philippines accused China of “militarizing” disputed reefs. “Indonesia’s position is tricky,” explains Ambassador Retno Marsudi, Indonesia’s former foreign minister. “Prabowo wants to avoid alienating China, but he also knows that Europe’s naval presence in the region—through France’s Reunion Island base and Germany’s new partnership with Singapore—could be a stabilizing factor.”
The visit coincides with a new defense pact signed last month between Berlin and Jakarta, allowing German warships to dock at Indonesia’s strategic Sabang port—a move China has condemned as a “provocative expansion of NATO’s footprint in Asia.” Steinmeier’s delegation will likely press Prabowo to allow expanded EU naval exercises in Indonesian waters, a request Jakarta has thus far resisted due to domestic political sensitivities.
Context: Indonesia’s 2024 defense budget rose 12% to $11.3 billion, with 60% of military procurement now sourced from China. Yet, Prabowo’s government has quietly revived talks with Germany’s Kiel Institute for the World Economy to assess the economic risks of over-reliance on Beijing.
| Metric | China | Germany | EU Total |
|---|---|---|---|
| Trade Surplus/Deficit (USD) | $32.7B (deficit) | $8.2B (surplus) | $15.6B (surplus) |
| Defense Procurement Share | 60% | 5% | 12% |
| Naval Port Access Agreements | 0 (denied) | 1 (Sabang, pending) | 2 (France: Reunion; Germany: Sabang) |
| CPTPP Membership Status | Not eligible | Member (via EU) | Member |
What Prabowo’s Domestic Politics Mean for Europe’s Ambitions
The timing of Steinmeier’s visit is politically delicate for Prabowo, who faces mounting criticism over his government’s perceived subservience to China. A June poll by Indonesia’s Lembaga Survei Indonesia showed his approval rating at 48%, down from 58% in January—partly due to public frustration over China’s influence in infrastructure projects like the $6 billion Jakarta-Bandung high-speed rail line. “Prabowo needs to signal to his nationalist base that he’s not selling out Indonesia’s sovereignty,” says Mietzner. “A high-profile meeting with Steinmeier could help him frame this as a balancing act.”
Yet, the optics are complicated. While Prabowo’s predecessor, Joko Widodo, had a warm relationship with Germany, his administration’s focus shifted to China after Berlin’s hesitant response to the 2022 Indonesia Climate Partnership stalled due to EU budget disputes. Steinmeier’s visit includes a side trip to meet with Indonesian climate activists—a deliberate attempt to rekindle Germany’s role as a green investment partner. “The message is clear: We’re not just here for trade, we’re here for sustainability,” a German diplomat told Archyde on condition of anonymity.
Historical Note: The last time a German president visited Indonesia was in 2014, when Joachim Gauck met with then-President Susilo Bambang Yudhoyono. At the time, Germany was Indonesia’s second-largest trading partner; today, it ranks fifth—behind China, South Korea, Japan, and the U.S. The shift reflects how quickly Asia’s economic gravity has shifted eastward.
What Happens Next: Three Scenarios for EU-Indonesia Relations
Analysts predict three possible outcomes from Steinmeier’s visit, each with global ripple effects:
- Trade Breakthrough: Jakarta agrees to accelerate CPTPP negotiations, giving European firms preferential access to Indonesia’s $1.4 trillion economy. This would force China to either match EU trade terms or risk losing market share in sectors like electric vehicles and rare earth minerals.
- Defense Stalemate: Prabowo agrees to limited naval access for Germany but blocks deeper military ties, fearing backlash from China. This would leave the EU’s Asia strategy dependent on Australia and Japan, weakening its ability to counterbalance Beijing.
- Climate Compromise: Indonesia secures $5 billion in German green investment for its nickel battery supply chain, but only after China agrees to reduce export tariffs on downstream products. This would create a rare EU-China détente—but at the cost of Indonesia’s long-term energy sovereignty.
One thing is certain: Steinmeier’s visit will be judged by whether it moves the needle on Indonesia’s economic diversification. “The real test isn’t what’s said in Jakarta, but what happens in Brussels and Beijing in the next six months,” says Marsudi. “If Germany can deliver tangible benefits—whether through trade, defense, or climate finance—it might just pull Indonesia back into its orbit. But if this is just another photo op, Asia will keep moving east.”
The Bigger Picture: Why This Visit Matters for Global Supply Chains
Beyond the bilateral talks, Steinmeier’s trip exposes a critical vulnerability in Europe’s economic strategy: its inability to compete with China’s ganzheitliche (holistic) approach to diplomacy. While the EU dangles conditional aid packages and slow-moving trade deals, China offers immediate infrastructure loans and no-strings-attached investment. “Indonesia is the canary in the coal mine,” warns Dr. Eva Kaili, a senior researcher at the Mercator Institute for China Studies. “If Europe can’t win here, it won’t win anywhere in Southeast Asia.”
The stakes are highest in three sectors:
- Semiconductors: Indonesia’s nickel reserves—critical for EV batteries—are currently processed in China. A German-Indonesian partnership could redirect some refining to Europe, but only if Brussels fast-tracks visa waivers for Indonesian tech workers.
- Renewable Energy: Germany’s Siemens Energy is in talks to build a $3 billion wind farm in Sumatra, but the project hinges on Indonesia’s willingness to phase out coal subsidies—a politically sensitive issue.
- Defense Tech: Indonesia’s military is upgrading its radar systems, and Germany’s Rheinmetall is in the running to supply them. A deal would mark the first time European defense equipment has been sold to Indonesia since the 1990s.
For now, the ball is in Prabowo’s court. His decision to meet Steinmeier—despite earlier reports of postponing the visit—suggests he’s open to engagement. But as one Jakarta-based diplomat put it: “Prabowo isn’t playing checkers; he’s playing chess. And he’s got three moves ahead of us.”
Final Thought: Steinmeier’s visit is a microcosm of Europe’s broader struggle to remain relevant in a multipolar world. The question isn’t whether Germany can win Indonesia over from China—but whether it can offer an alternative that’s faster, more flexible, and less conditional than the EU’s usual approach. The answer will determine whether Jakarta becomes a bridge or a battleground in the next phase of global competition.
What do you think: Can Europe’s diplomatic charm still outmaneuver China’s economic might? Share your take in the comments—or better yet, bookmark this article and revisit it in six months when we’ll know whether Steinmeier’s gamble paid off.
