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Obama arrives in Indonesia to fanfare, but Mount Merapi ash will cut visit short

President Obama's visit to Indonesia, the world’s fourth-largest democracy and the country with more Muslims than any other, is expected to cover a broader range of issues than his trip to India.

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“It’s part of a bigger picture,” says James Castle, the vice president of the American Chamber of Commerce. “It provides the framework that will make it easier for both countries to understand each other and work together. So it’s much more than a drive-by. It puts the final stamp on the first step of a big process.”

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Indonesia's path

Indonesia has come a long way since 1998, when former strongman Suharto lost his grip on power. Indonesia’s large population, with 240 million people; its wealth of natural resources, including lucrative oil and gas concessions; and its growing leadership role in Southeast Asia now make it an attractive destination for investment, say economists.

But like many developing nations, it still faces problems with corruption and paltry infrastructure. Those concerns, combined with a lack of legal certainty, as well as the strong role the government plays in the private sector, give foreign investors some pause, says Castle.

China, however, has not moved so slowly to invest in Indonesia. Just one day before Obama’s arrival a trade delegation from Beijing pledged to invest $6.6 billion in various infrastructure and development projects.

“At the regional level, there is certainly a tug of war between China and the US over Indonesia,” says Evan Laksmana, an analyst at the Jakarta-based Center for Strategic and International Studies. “Indonesia would prefer to remain neutral,” he said. “But business people here are still wary of Chinese investors, and the military remains concerned with Chinese aggressiveness in the South China Sea. Most of us are more comfortable dealing with the US.”

Winning over Indonesia

Winning Indonesia, however, a country many analysts see as playing an increasingly important role in the G-20 and Association of Southeast Asian Nations regional grouping, will mean creating an equal partnership, rather than one where Indonesia feels dependent.

After a suicide bombing killed hundreds on the resort island of Bali in 2002, Indonesia became the second front in the former President George W. Bush administration’s war on terrorism. Since that time Indonesia has shown great progress in tackling terrorism, thanks in part to US backing of a state counterterrorism police unit known as Detachment 88. But those protesting Obama’s visit say they see little difference between his administration and that of his predecessor.

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