As President Obama’s trip last week to Indonesia and Australia demonstrated, it is vital for the United States to maintain a foreign policy strategy that ensures American leadership throughout the world, especially in the burgeoning Pacific region.

The signing of Indonesia’s new Millennium Challenge Corporation (MCC) Compact was among the most meaningful developments in trans-Pacific relations during the trip.  The second largest of its kind and the first MCC Compact for Indonesia, this Compact will help build the partnership between the United States and Indonesia as it reduces poverty and builds up economic infrastructure necessary to foster deeper American economic engagement.  Over the course of the next five years, $600 million will be disbursed in the form of three programs that focus on developing renewable energy and technology, maternal and child nutrition, and improved governance.  These projects will strengthen Indonesia, the world’s most populous Muslim country, as it continues to develop and becomes an increasingly important economic partner for the United States.  As the region of the world where the United States already does most of its trade, this Compact will be vital in expanding American economic opportunities.

At the same time, because the money flows through the compact, which is a bilateral agreement with a number of conditions that Indonesia must meet, this funding will also lead to dramatic policy reforms.  From procurement reform to greater anti-corruption efforts, these reforms will strengthen the Indonesian move toward more market-based policies and increase the opportunity for Indonesia and the U.S. to partner more closely in the future.

By strengthening the American-Indonesian economic relationship, the United States is safer and stronger.  As President Obama said, “Building an economy that lasts isn’t just about making things – it’s about opening new markets for people to buy them.  After all, 95% of the world’s consumers live outside our borders.  And as the fastest-growing region in the world, no market is more important to our economic future than the Asia Pacific – a region where our exports already support five million American jobs.”

With the increasing importance of trans-Pacific relations, Indonesia will continue to be a vital partner in American foreign policy. As a country that has been the victim of horrific terrorist attacks, this MCC Compact will help Indonesians fight the root causes of terrorism by drawing up an important region of the world out of poverty.  And a more stable Indonesia is good for both our security and economy.

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