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Indonesia’s trade deal with US risks straining its Middle East partnerships

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20.02.2026

This week, Indonesia and the United States signed the Agreement on Reciprocal Trade. Most of the negotiation debate focused on tariffs and market access. Far less attention went to Article 5.1 and its geopolitical impact.

That clause requires Indonesia to reflect US trade restrictions on third countries tied to American national security concerns. In practice, Jakarta could face sustained pressure to align with US sanctions. This creates friction with Indonesia’s long held free and active doctrine, which prioritises independence and active engagement across blocs.

Article 5.1 complicates that balance in concrete ways. It introduces the possibility that Indonesia’s trade posture toward the Middle East and North Africa could shift in response to decisions made in Washington rather than Jakarta.

Start with Iraq. Indonesia and Iraq have maintained diplomatic ties since 1950, when Jakarta opened its embassy in Baghdad. In recent years, officials from both sides have kept contacts active. They agreed on visa exemptions for diplomatic and service passport holders and discussed trade and investment channels, even if volumes remain limited. These steps preserve long term access and political goodwill. If Indonesia mirrors future US restrictions on Iraqi entities, even selectively, it risks narrowing that access and raising........

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