Backlash in Indonesia as Danantara courts BlackRock amid Israel arms concerns
Critics say partnering with a firm that invests in arms suppliers to the Israeli military risks undermining Indonesia’s pro-Palestine stance
Danantara CEO Rosan Roeslani delivers his speech during a town hall meeting in Jakarta last month. Photo: EPA-EFE
Indonesia’s sovereign wealth fund has come under fire for its potential tie-up with BlackRock, as critics warn the US investment giant’s links to arms firms supplying Israel’s military risk compromising Jakarta’s pro-Palestinian foreign policy and undermining its constitutional stance against colonialism.
Daya Anagata Nusantara, or Danantara, was launched in February to manage nearly US$900 billion in state assets, increase dividend yields and attract foreign capital.
As part of that effort, Danantara chief executive Rosan Roeslani met senior BlackRock executives, including president and founding partner Raj Rao and senior managing directors Bayo Ogunlesi and Charles Hatami, in New York on May 13.
The potential tie-up “reflects the synergy between Indonesia’s development priorities and BlackRock’s global strengths in asset management, energy transition financing, and digital infrastructure”, Rosan, who is also Indonesia’s minister of investment and downstreaming, said in an Instagram post on May 14.
“As the world’s largest investment firm with total Assets Under Management of more than US$11 trillion, [the partnership with] BlackRock demonstrates global investors’ confidence in our strong economic prospects, while also opening up opportunities to attract more foreign investment to Indonesia.”
Aside from BlackRock, the Danantara team also met the International Development Finance Corporation, US Chamber of Commerce, Google, Avenue Capital, S&P Global, and shoemaker New Balance in the US.
However, the possible partnership with BlackRock sparked the most controversy, with critics highlighting that the asset manager invests in arms manufacturers that supply the Israeli military – an institution accused of perpetrating atrocities in Gaza.
Indonesia, the world’s most populous Muslim-majority nation, has been a vocal supporter of Palestinian independence and has repeatedly condemned Israeli military actions. President Prabowo Subianto has sharply criticised the West for failing to halt the war in Gaza, which as of Wednesday had killed at least 54,000 people, according to local health authorities.
This is not the first controversy sparked by BlackRock’s investment in Southeast Asia. In May last year, Malaysia was urged to drop BlackRock-owned Global Infrastructure Partners from a consortium that would take over its largest airport operator and manage 39 airports across the country.
US Army aircraft Lockheed Martin Super Hercules drops equipment during military exercises in Lithuania on May 16. BlackRock holds shares in the company, which supplies arms to Israel. Photo: AP
A month later, more than 30 UN human rights experts issued a joint statement warning that arms transfers to Israel “may constitute serious violations of international human rights and humanitarian laws, and risk State complicity in international crimes, including genocide”.
The experts named BlackRock among a list of financial institutions investing in weapons manufacturers supplying Israeli forces, and urged investors to take action. “Failure to prevent or mitigate their business relationships … could move from being directly linked to human rights abuses to contributing to them,” they said.
The US firm holds shares in arm companies such as Lockheed Martin, Northrop Grumman, and RTX, which have supplied fighter jets, missiles and the Iron Dome system used by Israel.
“BlackRock funds Israel, I am not happy that my money and the money of the Indonesian people who fought for Indonesian independence are used to support Zionism. It is not in line with the spirit of our 1945 Constitution … and with humanity and justice,” an Instagram user commented under Rosan’s post.
Indonesia’s constitution supports the abolition of colonialism and affirms that independence “is the inalienable right of all nations”.
BlackRock did not immediately respond to a request for comment from This Week in Asia.
‘Moral crossroad’
Condemnation also came from the House of Representatives. Muhammad Kholid, member of Islamic-leaning Prosperous Justice Party said that while he supported Danantara’s efforts, foreign partnerships should be in line with Indonesia’s beliefs.
“The involvement of global co-investors is indeed important to encourage competitiveness among national [investors],” Kholid said in a statement on May 21, as published by the party’s website.
However, Danantara’s potential partners must possess track records that were “in line with Indonesia’s humanitarian mission and foreign policy direction”, he added.
Indonesian Prosperous Justice Party supporters hold a huge Palestinian flag as they take part in a demonstration against Israel and its war on Gaza. Photo: dpa
Danantara should “investigate objectively whether BlackRock has any involvement in funding companies affiliated with the Israeli military industry involved in the military aggression in Gaza”, he said. “If there is evidence of a connection, then the cooperation plan must be cancelled.”
Muhammad Zulfikar Rahmat, director of the Indonesia-Middle East and North Africa division at Jakarta-based think tank Centre for Economic and Law Studies (Celios), said that Danantara’s engagement with BlackRock would harm Indonesia’s image as a staunch defender of Palestine’s independence.
“The question will arise: ‘How can we continue to voice the Palestinian issue both at the domestic and international levels when we become complicit and cooperate with BlackRock?’,” Muhammad Zulfikar said.
“It’s a mockery of our voices on the global stage.”
The partnership with the US investment firm would pose a “moral crossroad” as it went against Prabowo’s rhetoric about Israel on the international stage, he said.
It’s a mockery of our voices on the global stageMuhammad Zulfikar Rahmat, analyst at Celios
Prabowo has urged world leaders to press Israel to end the violence in Gaza, including during his talks with Chinese Premier Li Qiang and French President Emmanuel Macron in Jakarta in the past few days.
Instead of BlackRock, Muhammad said that Danantara should pursue partnerships with other foreign investors from countries such as Qatar or China.
Both countries have expressed interests in investing in the sovereign wealth fund. Last month, Rosan said that Qatar Investment Agency agreed to form a US$4 billion joint fund with Danantara to collaborate in sectors such as health, digital economy and renewable energy.
Danantara has also signed memorandums of understanding to work together with China Investment Corporation and French miner Eramet.
