Monday Briefing: A Tough Opportunity in Indonesia

A tricky clean energy opportunity in Indonesia

Indonesia has long eluded larger geopolitical conflicts. But now, as it becomes a center for the production of electric vehicles, it is caught up in the rivalry between the United States and China.

At stake is control of nickel, a critical component of electric vehicle batteries. Indonesia, with the largest reserves on Earth, is something like the Saudi Arabia of nickel. It is carefully protecting that resource with an ore export ban: If foreign companies want Indonesian raw nickel, they must invest.

The country has attracted more than $14 billion in foreign investment, mainly from Chinese companies. Chinese investment has created much-needed jobs. But that upward mobility has a drawback: pollution and social conflicts on the island of Sulawesi.

And the US, concerned about China’s influence, refuses to offer Indonesia a trade deal that means even more investment and jobs.

I reached out to Peter Goodman, our global economics correspondent, to learn more about what’s at stake for Indonesia.

What stood out to you the most about the situation in Indonesia while reporting on this story?

I had not been to Jakarta for 30 years, since I lived there at the beginning of my journalistic career in the early 1990s. It was extraordinary to see how much the city had developed: the rise of luxurious shopping malls with high-end restaurants, new housing, a brilliant subway system, and the obvious presence of a prosperous middle class. But when I arrived on the island of Sulawesi, it was equally surprising to see how little had changed in communities far from the capital. Here was poverty, limited infrastructure, and a willingness to accept horrible pollution in exchange for jobs. Above all, I was struck by the sense of purpose, the designs to harness the country’s mineral wealth in an age of electric vehicles to advance development.

What is the biggest difference between the way China and the US treat Indonesia here?

Chinese officials and companies identified the strategic importance of nickel in the age of electric vehicles and the reality that Indonesia has critical stocks before anyone else. They invested quickly and aggressively, without concern for endemic corruption and lax environmental and labor safety regulations. The US, by contrast, was slow to appreciate Indonesia’s importance in the EV supply chain. And even as the Biden administration crafts a policy designed to secure American access to critical minerals, other considerations — discouraging Chinese investment, avoiding involvement in environmental destruction and labor disputes — are constraining action.

And in China: When Beijing tried to cool its housing market, it created a bigger problem, and the fallout from debt-ridden developers and falling sales spilled over into the broader economy.

Ukraine will get F-16

The Netherlands and Denmark said yesterday they would donate F-16 fighter jets to Ukraine, the first countries to do so, in what Ukraine’s President Volodymyr Zelensky said was a breakthrough in his nation’s quest to acquire the aircraft seen as imperative in the war against Russia.

The planes would enhance kyiv’s ground-launched air defenses and could deter Moscow by erasing its air superiority. Zelensky said the Netherlands would donate 42 planes once Ukrainian pilots and engineers have been trained.

Elsewhere in the war: Ukrainian commanders are more confident now that they are on the offensive. Despite heavy fighting and heavy casualties, they say their forces are in better shape now than they were a few months ago.

A Russian missile crashed into the main square in Chernihiv, Ukraine, on Saturday, killing at least seven people and injuring more than 100, including 12 children, authorities said.

Spain wins its first Women’s World Cup

Spain should not have been in dispute, writes my colleague Rory Smith. Their best players spent most of last year on strike, and as a consequence, a dozen of them were not invited to the tournament. The team that played was held together by an uneasy truce.

But Spain are world champions, beating favorites England to win by a single goal, 1-0. And that’s a testament to an enduring truth of football, of sports: talent can conquer absolutely anything.

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