- Indonesia’s new deputy foreign minister has previously accused Brussels of ‘anti-palm ideology’ and ‘environmental espionage’;
- EU’s Foreign Policy Chief says the EUDR has ‘created significant difficulties’ and carries geopolitical risks
At the beginning of last week, Indonesia’s new President Prabowo appointed the country’s former ambassador to Germany, Arif Havas Oegroseno as Deputy Foreign Affairs Minister.
Anyone outside of the palm oil tent may not understand the significance of such a move. But for those who have followed the debate, this is a monumental development.
Havas was an outspoken critic of not just EU policies on palm oil, but the EU’s entire approach to Indonesia. In an interview with DW last year, he said:
“Your [EUDR] policy is not well thought out. You are actually killing the smallholders. If you really want to be serious in in this fight against deforestation which we are also very serious you can engage us much more robustly … Brussels should have helped us instead of attacking us.”
In the past, he’s referred to the EUDR as ‘environmental espionage‘, and called it “recolonising the Global South.”
This is not typical diplomatic language. But importantly, this approach — which is often outwardly hostile — has been rewarded.
More importantly, Havas is acutely aware of the EU’s future plans on nickel and battery production, and the role that Indonesia can play within that.
In other words, anyone that was expecting the delay to mean that Indonesia would simply capitulate to a set of rules that it perceives to be grossly unfair needs to recalibrate their expectations.
The alienation of Indonesia by the EU’s “anti-palm ideology” (Havas’ own description) has been quietly recognised by senior officials in Brussels. At the end of September, European Commission Vice-President and effectively the bloc’s foreign minister Josep Borrell made a speech on the EU’s geopolitical future. He stated:
“There is a risk … that we will alienate partners with whom, conversely, we urgently need to strengthen our ties. This applies in particular to the countries around the Mediterranean and in sub-Saharan Africa, as well as those in Latin America and South and South-East Asia.”
“In 2023, for example, we adopted a directive against imported deforestation. I naturally share the spirit and objectives of this law. But we have to admit that it has created significant difficulties in our relations with important partners such as Brazil, Indonesia and the countries of West Africa. It is important that all the measures we take in terms of economic diplomacy are precisely calibrated, discussed beforehand with our partners, and gradually implemented to enable them to adjust to these changes.
“It would be a major geopolitical risk for the Union if the majority of the countries of what is now called the Global South were to become hostile to us.”
This is not just a clear acknowledgment that the EUDR damaged trade ties with partners such as Indonesia, but that it also seriously risks the EU’s economic and geopolitical ambitions in the region.
The question for Brussels is now whether the recognition of the damage has come too late, particularly as trade relations between Brussels and Beijing continue to sour.
The other ‘own goal’ is less geopolitical and more specific to palm oil. President Prabowo is taking a number of measures related to both palm oil and smallholders. He’s announced a push to increase levels of food self-sufficiency, in which palm oil plays a major role. He’s made similar announcement on energy self-sufficiency, in which palm-based biodiesel will be critical. Underlying this is the significance of smallholders, and their inclusion in these domestic supply chains.
This — particularly a higher biofuel mandate — could result in reduced exports of palm oil to global markets and higher levels of domestic consumption.
It’s already the case that between 2018 and 2022, domestic use or processing of Indonesian palm increased from 32 per cent to 44 per cent. The EU’s share of Indonesian palm consumption declined to just 10 per cent in 2022 from a high of 17 per cent a decade earlier.
Is this a result of EU policy? Perhaps. Think of how the EU’s Renewable Energy Directive not only banned palm oil, but also featured an “inclusion” rule for smallholders that was basically unworkable. The EUDR appears to be making the same mistake. Is it any surprise that a new President might turn to domestic consumption as a means to support farmers?
More importantly, as less Indonesian palm oil goes to Europe, the less sway Brussels might have over Jakarta’s approach to the environment, rendering any such rules completely ineffective.
As Havas said: “You can engage us more robustly.” Will that engagement happen? The European Parliament vote on the EUDR is on November 12. That won’t be the end of the EUDR and palm oil debate from Indonesia’s perspective; it will be the end of the beginning