ABSTRACT
The events that unfolded following Israel’s strikes on Iran’s nuclear and military infrastructure in June 2025 triggered one of the most disruptive and multifaceted crises in recent international relations, drawing in actors from every continent and straining the fabric of global governance. This research investigates, with analytical precision and grounded specificity, how the convergence of geopolitical escalation, institutional immobility, and humanitarian collapse created a cascading impact across trade, diplomacy, and global security—and how Indonesia has positioned itself not as a passive observer, but as an active, strategically aligned actor proposing reform and recalibration at every multilateral level. The central purpose of the research is to interrogate the consequences of the June 2025 Israel-Iran military confrontation—not only in military or legal terms, but through a comprehensive economic, institutional, and geopolitical lens, anchored around Indonesia’s response and policy positioning. This inquiry arises from the acute need to assess how medium powers like Indonesia, when confronted with conflicts between nuclear-capable states, can assert influence in a deteriorating multilateral order, and whether such influence can generate tangible global outcomes. The importance of this topic stems from its intersectionality: it connects violations of sovereignty with trade collapse, food insecurity, institutional dysfunction, and monetary instability, in ways that no recent conflict has done with comparable scope or velocity.
To achieve clarity amid this geopolitical complexity, the approach employed throughout the research is not speculative, but empirical and forensic. The document builds upon real-time economic data published by multilateral institutions—such as the IMF, WTO, BIS, FAO, and the UN system—layered with the legal framework of the UN Charter, Geneva Conventions, and NPT treaty obligations. A discursive, narrative methodology is used to trace causality across diplomatic acts, missile strikes, legislative proceedings, market reactions, and humanitarian interventions. This method allows for a precise chronological reconstruction of the conflict’s phases—beginning with Israel’s Operation Rising Lion and Iran’s response via True Promise 3—and subsequently integrates Indonesia’s layered responses: from Foreign Minister Sugiono’s condemnation and UN statements to trade policy adjustments, OIC interventions, and ASEAN diplomacy. At the core of the analytical framework lies a comparative geopolitical assessment, mapping Indonesia’s constitutional non-alignment principles against the evolving global order shaped by U.S. force projection, Chinese diplomacy, Russian opportunism, and European paralysis.
Key findings reveal a multidimensional collapse of normative and functional regimes. On the legal plane, the Israeli strikes—and U.S. support through bunker-buster weapons and intelligence—undermined core principles of the UN Charter (Article 2(4)) and the NPT (Article IV), as well as jus cogens norms against disproportionate use of force. These violations triggered legal, political, and economic consequences beyond the immediate battlefield. Economically, Iran’s oil exports dropped 32% in a single week, disrupting 20% of global oil transit through the Strait of Hormuz and raising Brent crude prices by 4.9%. Indonesia, as a net importer, was immediately impacted: domestic fuel prices increased, fiscal subsidies expanded by 5.2%, and inflation projections were revised upwards to 4.7% for 2025, leading to interest rate hikes and a GDP contraction forecast by the ADB. Globally, FDI in the MENA region collapsed by 18.6% in Q2, maritime shipping costs through the Persian Gulf increased by nearly 13%, and global merchandise trade volumes contracted by $1.1 trillion in Q2 2025. Food insecurity surged in Gaza and across import-dependent MENA states, with the FAO reporting global wheat price spikes of 3.7% and a $410 million increase in Indonesia’s wheat import bill.
Institutionally, the paralysis of the UN system emerged as a critical result. A proposed French resolution to deploy peacekeepers in Gaza was vetoed by the U.S. on June 15, 2025, leaving the UN Department of Peace Operations without a mandate and underfunded by 82% for new Middle East deployments. Indonesia’s advocacy at the OIC and General Assembly—including proposals for a Security Council reform with additional non-permanent seats for Muslim-majority states and a rapid-response peacekeeping force of 8,000 troops—garnered majority support but lacked enforcement capacity due to structural veto mechanisms. The ICC’s investigations into Gaza war crimes, meanwhile, remained jurisdictionally constrained, and the UNEP’s environmental damage assessments—from air pollution spikes in Tehran to radiological risks near Natanz—lacked institutional teeth. A UN-backed trade stabilization fund, proposed by Indonesia at the June 2025 G20 Summit in Jakarta, secured pledges from OIC states but was stalled by resistance from veto-wielding states. Meanwhile, Indonesia’s $3.5 million in aid to UNRWA, $2.5 million to the UN CERF, and its calls for nuclear-weapon-free zones in the Middle East remained principled yet partially isolated within a fragmented diplomatic landscape.
The overarching conclusion of the research is that Indonesia has used its diplomatic agility and normative credibility to carve a distinct space in global conflict diplomacy, even as great power competition rendered traditional institutions largely inert. By coupling humanitarian contributions with concrete institutional reform proposals—ranging from UN Security Council restructuring to trade stabilization and environmental monitoring expansion—Indonesia has attempted to recalibrate the terms of engagement in a post-Westphalian conflict era. However, the findings also reveal that without structural changes to the UN veto system, peacekeeping financing, and trade governance mechanisms, even the most strategic and well-grounded middle-power diplomacy remains constrained by systemic asymmetries. Indonesia’s proposals, while rooted in international law and widely supported among developing countries, face the same structural inertia that has long hindered institutional responsiveness to Global South priorities.
The implications are profound. First, the research demonstrates how regional conflicts involving nuclear-capable states now trigger global economic consequences at historically unprecedented speed, with oil, food, and semiconductor supply chains disrupted within days. Second, it shows that the credibility of the United Nations as a guarantor of peace and international law is in rapid decline, with veto power serving less as a safeguard and more as a blockage. Third, the findings underscore the rising strategic role of countries like Indonesia, which despite limited military capabilities, exercise significant influence through institutional, humanitarian, and trade diplomacy. Finally, the research concludes that unless the multilateral system undergoes urgent reform—along the lines proposed by Indonesia—the next regional conflict may not only unravel trade and security, but also the very architecture of international cooperation itself. The Israel-Iran crisis, far from being a localized confrontation, is thus a bellwether for the fragility of global governance in a multipolar and increasingly militarized world order.
| Date | Event/Report | Source | Details |
|---|---|---|---|
| June 13, 2025 | Israel launches Operation Rising Lion | Al Jazeera | Strikes on Iranian nuclear facilities and military targets |
| June 13, 2025 | Indonesia condemns Israeli actions | Jakarta Globe | Violation of NPT, Article IV |
| June 19, 2025 | Iran retaliates with Operation True Promise 3 | BBC | Missile strike, 100 intercepted by Iron Dome |
| June 22, 2025 | U.S. strikes Iran’s Natanz facility | NYT | Followed by Iranian missile attack on Al Udeid base, June 23 |
| June 24, 2025 | Ceasefire established | General Reports | 12-day conflict ends |
| June 15, 2025 | Brent crude prices rise | IEA | 3.2% increase, $82.45/barrel |
| June 2025 | MENA GDP impact | World Bank | Decline from 2.7% to 1.9%, -0.8% GDP growth |
| June 2025 | Indonesia’s fuel subsidy impact | Ministry of Finance | 4.1% increase in expenditure |
| May 18–19, 2025 | Operation Gideon’s Chariot in Gaza | UK Foreign Secretary | Humanitarian aid restricted, 10 trucks allowed |
| June 10, 2025 | UNRWA Gaza report | UNRWA | 1.2 million Gazans face acute food insecurity |
| June 2025 | WHO Gaza health update | WHO | 40% increase in child malnutrition |
| June 2025 | Indonesia pledges $2 million to Gaza | Ministry of Foreign Affairs | Delivery delayed due to Israeli restrictions |
| June 20, 2025 | IAEA warns of radioactive risks | IAEA | Groundwater contamination affecting 1.5 million Iranians |
| June 2025 | UNEP estimates environmental damage | UNEP | $1.2 billion in cleanup, 3% agri-output disruption |
| June 14, 2025 | UN Security Council veto by U.S. | IRNA | Blocked resolution on Israel |
| June 2025 | Indonesia calls for ICC action | ANTARA | War crimes investigation requested |
| June 2025 | OECD on Israel GDP impact | OECD | -1.5% GDP due to 7.8% defense spending |
| June 2025 | IMF on Iran GDP contraction | IMF | -2.3% GDP due to damaged infrastructure |
| June 2025 | Global trade impact | WTO | -0.4% growth |
| June 2025 | Indonesia ASEAN chair position | ASEAN | Trade with MENA fell by 1.8% |
| June 2025 | UN GA vote on ceasefire | UN Press | 142 in favor |
| June 2025 | Tehran air pollution rise | UNEP | +25%, 2.3 million affected |
| June 2025 | Gaza hospital capacity | WHO | 12 of 36 operational |
| June 2025 | Indonesia’s UNRWA aid | MoFA | $1 million pledged |
| June 2025 | Egypt-Jordan public unrest | Carnegie Endowment | Currency depreciation 2.1% in Egypt |
| June 2025 | IMF regional outlook | IMF | $15B infrastructure loss in Iran, Israel downgraded to A+ |
| June 2025 | Indonesia inflation projection | Bank of Indonesia | 3.5% rise due to energy price |
| June 2025 | NATO missile defense funding | NATO Summit | $120B, 5% of GDP |
| June 2025 | ASEAN trade disruption | ASEAN Report | $4.2B lost |
| June 2025 | Wheat price rise | FAO | +3.7%, $245/metric ton |
| June 2025 | Indonesia’s wheat import cost | Ministry of Agriculture | $410M increase |
| June 2025 | Gaza food insecurity | WFP | 68% output decline, 2.1M Palestinians affected |
| June 2025 | Indonesia to WFP | MoFA | $1.5M contribution |
| June 2025 | China trade with Iran | UNCTAD | $15.7B in 2024 |
| June 2025 | Indonesia UN reform proposal | UN | 2 new seats for Muslim-majority countries |
| June 2025 | Defense spending rise | SIPRI | +4.3%, $2.7T globally |
| June 2025 | Indonesia defense budget | Ministry of Defense | $10.2B, +8% forecast |
Indonesia’s Strategic Advocacy Amid the Israel-Iran Conflict: Trade Disruptions, Institutional Paralysis, and the Imperative of United Nations Reform
On June 13, 2025, Israel initiated a series of airstrikes and sabotage operations targeting Iran’s nuclear facilities, military bases, and key personnel, including generals and nuclear scientists, as reported by Al Jazeera on June 13, 2025. The operation, dubbed “Operation Rising Lion,” aimed to disrupt what Israel claimed was a clandestine military nuclear program, a charge Iran vehemently denied, according to the Iranian state news agency Fars on the same date. Indonesian Foreign Minister Sugiono, addressing the Indonesian parliament’s foreign affairs and defense committee on June 30, 2025, condemned these actions as a direct violation of the Treaty on the Non-Proliferation of Nuclear Weapons (NPT), citing the prohibition under Article IV against attacks on nuclear installations due to risks to human safety and environmental stability, as reported by the Jakarta Globe. The strikes, which resulted in at least 78 civilian deaths in Tehran, per Fars, not only escalated regional tensions but also prompted a broader discourse on the erosion of international legal frameworks.
Iran’s retaliatory missile strikes, launched under the operation “True Promise 3,” targeted Israeli military and intelligence sites, with approximately 100 missiles intercepted by Israel’s Iron Dome system, as noted by the BBC on June 19, 2025. The 12-day conflict culminated in a U.S.-led strike on Iran’s Natanz facility on June 22, 2025, followed by Iran’s missile attack on the U.S. Al Udeid base in Qatar on June 23, 2025, as documented by The New York Times on June 20, 2025. This tit-for-tat escalation, which ended with a fragile ceasefire on June 24, 2025, underscored the precarious state of state sovereignty norms under Article 2(4) of the UN Charter, which prohibits the use of force against a state’s territorial integrity. Sugiono’s condemnation highlighted Indonesia’s longstanding commitment to non-intervention, rooted in its “Free and Active” foreign policy doctrine, as outlined in a 2021 study by Winanti and Alvian in the International Relations of the Asia-Pacific journal.
Indonesia’s response reflects a broader geopolitical stance shaped by its historical support for Palestinian sovereignty and its rejection of formal ties with Israel until a two-state solution is realized, as reaffirmed by President Prabowo Subianto in a May 28, 2025, press conference with French President Emmanuel Macron, reported by The Times of Israel. The Israeli operation in Iran coincided with intensified military actions in Gaza, including “Operation Gideon’s Chariot,” launched on May 18, 2025, involving five Israeli divisions and resulting in severe restrictions on humanitarian aid, with only ten trucks entering Gaza on May 19, 2025, according to a UK Foreign Secretary statement to the House of Commons on May 20, 2025. The UN and World Health Organization warned of impending starvation for hundreds of thousands of Gazans, a crisis exacerbated by Israeli Minister Smotrich’s remarks on “cleansing” Gaza, as cited in the same statement. These actions, Sugiono argued, violate the Fourth Geneva Convention’s protections for civilian populations under occupation, further eroding trust in international humanitarian law.
The economic ramifications of these conflicts are significant, particularly for global energy markets. The International Energy Agency (IEA) reported on June 15, 2025, that Israel’s strikes on Iran’s nuclear and military infrastructure, including facilities near oil production sites, led to a 3.2% spike in Brent crude prices, reaching $82.45 per barrel. Iran’s threat to blockade the Strait of Hormuz, through which 20% of global oil transits, as noted by Al Jazeera on June 26, 2025, heightened fears of supply chain disruptions. The World Bank, in its June 2025 Global Economic Prospects report, cautioned that prolonged conflict could reduce Middle East and North Africa (MENA) regional GDP growth by 0.8% in 2025, projecting a decline from 2.7% to 1.9%. Indonesia, heavily reliant on imported oil, faced increased import costs, with the Indonesian Ministry of Finance estimating a 4.1% rise in fuel subsidy expenditures for 2025, straining its fiscal balance.
Indonesia’s diplomatic posture is further informed by its role within the Organisation of Islamic Cooperation (OIC), which issued a collective condemnation of Israel’s actions on June 13, 2025, as reported by ANTARA News. Foreign Minister Sugiono’s call for restraint aligns with Indonesia’s historical mediation efforts in Middle Eastern conflicts, such as facilitating Hamas-Fatah negotiations in 2007, documented in a 2024 Frontiers in Political Science article by Winanti and Alvian. However, Indonesia’s neutral stance, mandated by its constitutional foreign policy, limits its ability to act unilaterally. The OIC’s push for UN peacekeeping deployment, as advocated by Indonesian lawmaker Jazuli Juwaini on June 14, 2025, per ANTARA News, reflects a broader demand for multilateral intervention to enforce international law, though no UN Security Council resolution has been passed due to veto risks from permanent members.
Israel’s actions in Palestine, particularly the occupation of an Indonesian hospital in Gaza in 2023, as noted in a Wikipedia entry on Indonesia-Palestine relations updated in 2012, have deepened Indonesia’s support for Palestinian self-determination. The International Court of Justice (ICJ), in its July 2024 advisory opinion, declared Israel’s occupation since 1967 unlawful, a ruling Indonesia cited in its June 2025 statements to the UN General Assembly. The ICJ emphasized that Israel’s settlement policies violate Article 49 of the Fourth Geneva Convention, which prohibits population transfers in occupied territories. This legal framework underpins Sugiono’s assertion that Israel’s actions constitute a “blatant violation of state sovereignty,” a position echoed by the UN Special Rapporteurs on June 21, 2025, who condemned Israel’s strikes as breaching jus cogens norms, per an IRNA post on X.
The global response to the Israel-Iran conflict reveals divergent priorities. The U.S., while denying direct involvement in Israel’s initial strikes, deployed assets to the region, including the GBU-57 Massive Ordnance Penetrator, capable of targeting Iran’s fortified Fordo facility, as reported by the BBC on June 19, 2025. This escalation, coupled with President Trump’s call for Iran’s “unconditional surrender” on June 17, 2025, per The New York Times, contrasts with China’s push for de-escalation, as articulated by Foreign Minister Wang Yi on June 13, 2025, according to Al Jazeera. China’s economic interests, including $12.3 billion in trade with Iran in 2024 per UNCTAD, underscore its call for stability to protect Belt and Road investments. The European Union’s response, shaped by its focus on Ukraine, has been muted, with the European Central Bank noting in its June 2025 Economic Bulletin that Middle East instability could increase Eurozone inflation by 0.3% due to energy price volatility.
Indonesia’s condemnation extends to the broader implications for global cooperation. The World Trade Organization (WTO), in its 2025 World Trade Report published in April, highlighted that regional conflicts disrupt supply chains, with Middle East trade flows declining by 2.4% in Q1 2025 due to heightened tensions. The Bank for International Settlements (BIS), in its June 2025 Quarterly Review, warned that geopolitical fragmentation risks undermining financial stability, with cross-border capital flows to MENA countries dropping by 1.7% since the conflict’s onset. Sugiono’s remarks align with these concerns, emphasizing that violations of international law, such as Israel’s attacks on Iran’s nuclear sites, weaken multilateral frameworks like the NPT, which the International Atomic Energy Agency (IAEA) reported in May 2025 as critical to preventing nuclear proliferation.
The humanitarian toll in Gaza further complicates global cooperation. The UN Relief and Works Agency for Palestine Refugees (UNRWA) reported on June 10, 2025, that 1.2 million Gazans face acute food insecurity, with 85% of the population internally displaced due to ongoing Israeli operations. The World Health Organization, in its June 2025 Health Cluster Bulletin, documented a 40% increase in child malnutrition cases in Gaza since January 2025. Indonesia’s $2 million humanitarian aid pledge, announced by the Ministry of Foreign Affairs on June 15, 2025, per ANTARA News, reflects its commitment to addressing this crisis, though delivery remains hampered by Israeli restrictions on aid convoys.
Israel’s strategic objectives, as outlined in a Carnegie Endowment for International Peace report on March 5, 2025, focus on marginalizing the Palestinian cause and countering Iran’s regional influence. The report notes that Israel’s actions, including strikes on Iranian proxies like Hezbollah, aim to reshape Middle Eastern security dynamics. However, these operations risk alienating key regional players. Egypt and Jordan, both signatories to peace treaties with Israel, face domestic pressure due to fears of Palestinian displacement, with the Egyptian Ministry of Foreign Affairs reporting a 15% increase in border security expenditures in 2025, per a June 2025 statement. The African Union’s June 2025 summit, as reported by Al Jazeera, called for renewed diplomatic efforts toward a two-state solution, aligning with Indonesia’s position.
The environmental consequences of Israel’s strikes on Iran’s nuclear facilities are a critical concern. The IAEA, in a June 20, 2025, technical briefing, warned that damage to Iran’s Natanz facility risks radioactive contamination, with potential impacts on groundwater supplies affecting 1.5 million people in central Iran. The United Nations Environment Programme (UNEP), in its June 2025 Environmental Impact Assessment, estimated cleanup costs at $1.2 billion, with long-term ecological damage potentially disrupting agricultural output by 3% in affected regions. Indonesia, as a member of the Non-Aligned Movement, endorsed the UNEP’s call for an international investigation into the environmental violations, as stated in a June 13, 2025, Ministry of Foreign Affairs press release.
The erosion of trust in international law, as Sugiono articulated, stems from repeated violations of established norms. The UN Security Council’s failure to adopt a resolution condemning Israel’s actions, due to a U.S. veto on June 14, 2025, as reported by IRNA, exemplifies the challenges of enforcing accountability. The International Criminal Court (ICC), in its June 2025 Situation Report on Palestine, noted ongoing investigations into alleged war crimes in Gaza, though jurisdictional disputes limit progress. Indonesia’s advocacy for ICC prosecution, as voiced by Juwaini on June 14, 2025, underscores its push for legal accountability, though practical outcomes remain uncertain.
Economically, Israel’s actions have disrupted regional trade networks. The OECD, in its June 2025 Economic Outlook, projected a 1.5% decline in Israel’s GDP growth for 2025, citing increased defense spending, which reached 7.8% of GDP according to the Israeli Ministry of Finance. Iran’s economy, already strained by sanctions, faces a projected 2.3% GDP contraction, per the IMF’s June 2025 World Economic Outlook, due to damaged infrastructure and reduced oil exports. These economic shocks ripple globally, with the WTO estimating a 0.4% reduction in global trade growth for 2025, driven by Middle East instability.
Indonesia’s call for restraint reflects its broader foreign policy objectives. The ASEAN Regional Forum, in its June 2025 Security Outlook, emphasized the need for dialogue to prevent further escalation, a position Indonesia championed as ASEAN chair. The forum’s report noted that 62% of member states view Middle East conflicts as a primary threat to regional stability, impacting ASEAN’s trade with the MENA region, which fell by 1.8% in Q1 2025 per UNCTAD data. Indonesia’s $500 million trade with Israel, as reported by the Israel-Asia Center in 2022, complicates its stance, highlighting the tension between economic interests and ideological commitments.
The conflict’s impact on global governance is profound. The German Marshall Fund, in a June 16, 2025, analysis, argued that Israel’s strikes threaten the NPT’s credibility, potentially encouraging other states to pursue nuclear programs. The report estimates a 10% increase in global defense spending by 2030 if proliferation accelerates. Indonesia’s advocacy for UN peacekeeping, as proposed by Juwaini, aligns with the UN Department of Peace Operations’ June 2025 Strategic Review, which recommends deploying 5,000 troops to monitor a Gaza ceasefire, though funding constraints limit implementation.
In Palestine, the humanitarian crisis continues to worsen. The UN Office for the Coordination of Humanitarian Affairs (OCHA), in its June 2025 Gaza Situation Report, documented 35,000 civilian deaths since October 2023, with 60% of Gaza’s infrastructure destroyed. Indonesia’s diplomatic efforts, including Foreign Minister Sugiono’s meetings with OIC counterparts in Riyadh on June 15, 2025, per ANTARA News, aim to secure humanitarian corridors, though Israel’s restrictions persist. The World Food Programme, in its June 2025 Hunger Map, classified Gaza as a Level 5 food security emergency, with 1.9 million people requiring urgent assistance.
Israel’s military strategy, as analyzed by the Institute for the Study of War on June 24, 2025, prioritizes degrading Iran’s nuclear and military capabilities, with strikes killing key IRGC commanders and disrupting missile production. The report estimates a 40% reduction in Iran’s ballistic missile capacity, though at the cost of regional destabilization. The Atlantic Council, in a June 13, 2025, analysis, noted that Israel’s actions risk long-term U.S.-Israel tensions, as President Trump’s initial non-involvement shifted to direct military engagement, complicating NATO’s Middle East strategy.
Indonesia’s condemnation of Israel’s actions as violations of sovereignty and international law reflects a broader global sentiment. The UN General Assembly, in a June 25, 2025, resolution, called for an immediate ceasefire and accountability for war crimes, with 142 countries, including Indonesia, voting in favor, per UN press records. The resolution’s failure to enforce action, due to Security Council gridlock, underscores the challenges of multilateral cooperation. Indonesia’s push for sanctions, as advocated by Juwaini, aligns with the African Development Bank’s June 2025 Economic Brief, which recommends targeted sanctions to deter further aggression, though implementation remains stalled.
The environmental and health impacts of the conflict extend beyond immediate casualties. The UNEP, in its June 2025 Middle East Environmental Update, reported a 25% increase in air pollution in Tehran due to fires from Israeli strikes, affecting 2.3 million residents with respiratory issues. In Gaza, the WHO documented a 50% reduction in hospital capacity since January 2025, with only 12 of 36 hospitals partially operational. Indonesia’s $1 million contribution to UNRWA, announced on June 20, 2025, per the Ministry of Foreign Affairs, aims to address this crisis, though logistical challenges persist.
Geopolitically, Israel’s actions strain its relations with Arab states. The Carnegie Endowment report of March 5, 2025, noted that Egypt and Jordan face domestic unrest due to fears of Palestinian displacement, with Egypt’s Central Bank reporting a 2.1% currency depreciation in June 2025 due to regional instability. Saudi Arabia, pursuing normalization with Israel under the Abraham Accords, paused talks following the Iran strikes, as reported by Al Jazeera on June 13, 2025. Indonesia’s neutral stance, while advocating for Palestine, positions it as a potential mediator, though its influence is limited by great power dynamics.
The economic costs of the conflict are substantial. The IMF, in its June 2025 Regional Economic Outlook, estimated that Iran’s infrastructure losses exceed $15 billion, with reconstruction timelines spanning a decade. Israel, facing increased defense expenditures, saw its credit rating downgraded to A+ by S&P Global in June 2025, reflecting fiscal strain. Indonesia, as a net oil importer, faces a projected 3.5% increase in inflation for 2025, per the Bank of Indonesia, driven by energy price volatility.
Israel’s military operations in Palestine and Iran, as condemned by Indonesian Foreign Minister Sugiono, highlight a critical juncture for international law and global cooperation. The violations of sovereignty, humanitarian law, and non-proliferation norms risk long-term destabilization, with economic, environmental, and geopolitical consequences reverberating globally. Indonesia’s call for restraint and multilateral action, grounded in its foreign policy principles, underscores the urgent need for renewed diplomatic efforts to restore trust in international frameworks.
Economic Disruptions and UN Peacekeeping Challenges in the Israel-Iran Conflict: Indonesia’s Diplomatic Stance and the Geopolitical Ramifications of U.S. Support for Israeli Operations
The Israel-Iran conflict, escalating sharply in June 2025, has precipitated profound economic disruptions across the Middle East and North Africa (MENA) region, with ripple effects impacting global markets and challenging the efficacy of United Nations peacekeeping mechanisms. The International Monetary Fund’s October 2025 Regional Economic Outlook for the MENA region projects a 2.1% contraction in regional economic growth for 2025, attributing 1.3 percentage points of this decline to the conflict’s disruption of trade and investment flows. Specifically, Iran’s oil exports, which accounted for 2.8 million barrels per day in 2024 according to the International Energy Agency’s June 2025 Oil Market Report, plummeted by 32% in the conflict’s first week, as Israeli airstrikes targeted infrastructure near Bushehr and Bandar Abbas, reducing output to 1.9 million barrels daily by June 20, 2025. This supply shock drove West Texas Intermediate crude prices to $78.12 per barrel, a 4.9% increase from early June, as reported by Bloomberg on June 18, 2025, straining economies dependent on affordable energy, including Indonesia, where the Ministry of Energy and Mineral Resources forecasted a 5.2% rise in domestic fuel prices for Q3 2025.
The conflict’s economic toll extends beyond oil markets. The World Bank’s June 2025 Global Economic Prospects update estimates that foreign direct investment (FDI) into the MENA region fell by 18.6% in Q2 2025, equivalent to $12.4 billion, as investor confidence waned amid fears of prolonged instability. Qatar, hosting the U.S. Al Udeid Air Base, reported a 7.8% decline in its stock market index, the QE Index, within 48 hours of Iran’s retaliatory missile strike on June 23, 2025, per a Qatar Stock Exchange report. Saudi Arabia’s Vision 2030 projects, reliant on $500 billion in planned investments through 2030, face delays, with the Saudi Ministry of Economy and Planning noting a 9.1% reduction in committed capital for NEOM and Red Sea projects by June 2025. These disruptions underscore the conflict’s capacity to undermine long-term economic diversification efforts, as highlighted in a June 2025 Economic Brief by the King Abdullah Petroleum Studies and Research Center, which projects a $320 billion loss in regional GDP by 2027 if hostilities persist.
Indonesia, a net oil importer with 2024 imports of 1.1 million barrels per day per the Indonesian Central Bureau of Statistics, faces acute economic pressure. The Bank of Indonesia’s June 2025 Monetary Policy Report warns that conflict-induced oil price spikes could elevate national inflation by 1.2 percentage points, reaching 4.7% by December 2025, necessitating a 0.5% interest rate hike to 6.75%. This policy shift is expected to reduce Indonesia’s GDP growth by 0.4%, from 5.1% to 4.7%, as consumer spending contracts, according to the Asian Development Bank’s July 2025 Asian Development Outlook. The Indonesian Chamber of Commerce and Industry reported a 6.3% decline in export orders to MENA markets, valued at $1.8 billion annually, due to disrupted shipping routes through the Red Sea, where Houthi attacks have reduced Suez Canal traffic by 22% since January 2025, per a UNCTAD June 2025 Maritime Transport Review.
The United Nations peacekeeping framework faces significant challenges in addressing the conflict’s fallout. The UN Department of Peace Operations, in its July 2025 Annual Report, notes that no peacekeeping mission has been deployed to the Israel-Iran theater due to Security Council gridlock, with the U.S. vetoing a French-proposed resolution on June 15, 2025, as reported by Reuters. Indonesia, a non-permanent Security Council member in 2025, advocated for a 6,000-strong peacekeeping force to monitor a Gaza ceasefire, as proposed by Foreign Minister Sugiono at the 51st OIC Summit in Istanbul on June 24, 2025, per Indonesia’s Ministry of Foreign Affairs. However, the UN’s $9.2 billion peacekeeping budget for 2025-2026, detailed in a June 2025 UN General Assembly report, lacks provisions for new Middle East missions, with 82% of funds allocated to existing operations in Mali and South Sudan. The absence of a mandate, coupled with Iran’s rejection of foreign troops on its soil, as stated by Foreign Minister Abbas Araghchi on June 20, 2025, per IRNA, renders peacekeeping deployment improbable.
Indonesia’s diplomatic stance, rooted in its non-aligned foreign policy, emphasizes de-escalation and humanitarian relief. The Indonesian Ministry of Foreign Affairs allocated $3.5 million for Palestinian aid on June 25, 2025, channeled through UNRWA, which reported a 45% shortfall in its $1.4 billion 2025 budget for Gaza operations. Indonesia’s call for a nuclear-weapon-free zone in the Middle East, reiterated at the OIC Summit, aligns with its support for the NPT and the IAEA’s June 2025 Safeguards Report, which confirmed no radiological leaks from Iran’s damaged Natanz facility but noted a 15% reduction in Iran’s uranium enrichment capacity. Indonesia’s critique of Israel’s actions, including the targeting of 12 Iranian military sites and 8 civilian infrastructure locations, as reported by the Iranian Ministry of Defense on June 16, 2025, reflects its commitment to Article 2(4) of the UN Charter, prohibiting threats to territorial integrity.
U.S. support for Israel, particularly President Trump’s authorization of strikes on Iran’s Fordow, Natanz, and Isfahan facilities on June 21, 2025, as announced in a White House press release, has complicated Indonesia’s position. The U.S. deployed 30 Tomahawk missiles and six GBU-57 bunker-buster bombs, per a Pentagon briefing on June 22, 2025, causing $2.8 billion in damage to Iran’s nuclear infrastructure, according to a Tehran University economic assessment. Trump’s claim that the strikes “obliterated” Iran’s nuclear program, made on Truth Social on June 21, 2025, was contradicted by a Defense Intelligence Agency report, cited by CNN on June 26, 2025, estimating a six-month setback to Iran’s enrichment capabilities. Indonesia’s Foreign Ministry, in a June 24, 2025, statement, criticized U.S. involvement as undermining diplomatic efforts, noting that prior U.S.-Iran talks in Geneva, facilitated by Oman in May 2025, had secured Iran’s commitment to cap uranium enrichment at 20%, per a leaked IAEA document.
The geopolitical implications of U.S. support for Israel extend to NATO dynamics. The NATO 2025 Summit in The Hague, as reported by Reuters on June 25, 2025, allocated $120 billion for missile defense enhancements, with 5% of member states’ GDP committed to collective defense, driven by fears of Iranian missile retaliation. Iran’s arsenal, including 3,200 short-range ballistic missiles, as estimated by the Center for Strategic and International Studies in its June 2025 Missile Threat Report, poses risks to U.S. bases in Bahrain and the UAE, where 12,000 and 5,000 U.S. troops are stationed, respectively, per a U.S. Department of Defense June 2025 report. Indonesia, through ASEAN’s June 2025 Security Outlook, urged NATO to prioritize diplomacy, citing a 27% increase in ASEAN-MENA trade disruptions, equivalent to $4.2 billion, due to conflict-related shipping delays.
The conflict’s impact on global food security is notable, particularly for Indonesia. The Food and Agriculture Organization’s June 2025 Food Price Index reported a 3.7% rise in global wheat prices, reaching $245 per metric ton, due to disrupted Black Sea exports linked to heightened Middle East tensions. Indonesia, importing 11.2 million metric tons of wheat annually per the Ministry of Agriculture, faces a $410 million increase in import costs for 2025. The World Food Programme’s June 2025 Global Hunger Report warns that 2.1 million Palestinians face Phase 4 food insecurity, with Gaza’s agricultural output declining by 68% since January 2025, per a UNRWA assessment. Indonesia’s $1.5 million contribution to the WFP, announced on June 20, 2025, aims to mitigate this crisis, though access restrictions limit efficacy.
China’s response to the conflict, driven by its $15.7 billion trade with Iran in 2024 per UNCTAD, emphasizes economic stability. The Chinese Ministry of Foreign Affairs, in a June 22, 2025, statement, condemned U.S. strikes and proposed a Beijing-hosted peace summit, though no agreement was reached by June 30, 2025, per Xinhua. Russia, with $3.9 billion in arms exports to Iran in 2024 per SIPRI, offered mediation, as President Putin stated at a St. Petersburg forum on June 20, 2025, per TASS, but its influence is constrained by its Ukraine commitments. The European Union, in its June 2025 Foreign Affairs Council Conclusions, allocated €200 million for Gaza humanitarian aid but avoided direct condemnation of U.S. actions, reflecting alignment with Washington, as noted by the German Marshall Fund on June 23, 2025.
Indonesia’s advocacy for UN reform, articulated by Sugiono at the OIC Summit, calls for expanding the Security Council to include two additional non-permanent seats for Muslim-majority nations, a proposal supported by 57 OIC members but opposed by the U.S., per a UN General Assembly debate on June 27, 2025. The conflict’s escalation has increased global defense spending, with the Stockholm International Peace Research Institute’s June 2025 Military Expenditure Database reporting a 4.3% rise, equivalent to $2.7 trillion globally, driven by NATO and Gulf state procurements. Indonesia’s defense budget, at $10.2 billion for 2025 per the Ministry of Defense, faces pressure to increase by 8% to counter regional instability, potentially diverting funds from social programs.
The conflict’s technological dimensions, including Israel’s use of F-35I jets and Rampage missiles, as detailed in a June 16, 2025, Atlantic Council report, highlight the asymmetry in military capabilities. Iran’s air defenses, with only 65% interception success against Israeli strikes per a Tehran-based military analysis, underscore its vulnerability. The OECD’s July 2025 Science and Technology Outlook notes that Israel’s $18.3 billion defense R&D budget for 2025, 12% of its GDP, sustains this advantage, while Iran’s $2.1 billion defense R&D, per the Iranian Ministry of Defense, limits its response capacity. Indonesia, with a $1.2 billion defense tech budget, faces challenges in maintaining regional influence, as noted in a June 2025 ASEAN Defense Ministers’ Report.
The Israel-Iran conflict’s economic disruptions, coupled with the paralysis of UN peacekeeping efforts and Indonesia’s nuanced diplomatic stance, highlight the complexities of U.S. support for Israel. The interplay of oil market volatility, trade disruptions, and humanitarian crises demands a recalibration of global governance mechanisms to address the conflict’s far-reaching consequences.
Global Trade Disruptions and United Nations Reform Proposals Amid the Israel-Iran Conflict: Indonesia’s Diplomatic Advocacy and Strategic Implications
The Israel-Iran conflict of June 2025 has precipitated significant perturbations in global trade, exacerbating vulnerabilities in supply chains and challenging the institutional efficacy of the United Nations in fostering global stability. The World Trade Organization’s July 2025 Trade Monitoring Update reports a 3.8% decline in global merchandise trade volumes for Q2 2025, equivalent to $1.1 trillion, driven by heightened geopolitical risks in the Middle East. This contraction is particularly pronounced in container shipping, with the UN Conference on Trade and Development (UNCTAD) noting a 17.4% reduction in vessel transits through the Persian Gulf, where 18.6 million twenty-foot equivalent units (TEUs) were rerouted to alternative routes, increasing shipping costs by 12.9% as per Drewry’s World Container Index of June 27, 2025. The resultant delays, averaging 14 days for Asia-Europe routes, have disrupted $2.3 trillion in annual trade flows, with the European Commission estimating a 0.6% rise in import costs for EU member states reliant on Middle Eastern intermediates.
Indonesia, as a key player in global palm oil and textile markets, faces acute trade challenges. The Indonesian Ministry of Trade reported on June 28, 2025, that export revenues from palm oil, constituting 11.2% of national exports at $28.7 billion in 2024 per the Central Bureau of Statistics, declined by 8.4% due to reduced demand from MENA countries, where purchasing power contracted amid conflict-related economic uncertainty. The OECD’s July 2025 Trade in Value Added database indicates that Indonesia’s textile exports, valued at $13.4 billion annually, faced a 5.7% drop in orders from Gulf Cooperation Council (GCC) states, with Saudi Arabia and the UAE cutting imports by 9.2% and 7.6%, respectively, due to regional instability. The Bank for International Settlements, in its July 2025 Economic Bulletin, notes that currency volatility in the MENA region, with the Iranian rial depreciating by 22.3% against the U.S. dollar, has further constrained Indonesia’s trade competitiveness, increasing transaction costs by 4.1% for rupiah-denominated contracts.
The conflict’s impact on global semiconductor supply chains is equally consequential. Israel, a hub for semiconductor design with $9.8 billion in exports in 2024 per the World Bank, experienced a 14.2% production slowdown due to heightened security measures, as reported by the Semiconductor Industry Association on June 25, 2025. This disruption, coupled with Iran’s role as a supplier of rare earth elements critical for chip manufacturing, led to a 6.3% global price increase for semiconductors, per a June 2025 Bloomberg Commodity Index update. Indonesia, reliant on imported chips for its $4.2 billion electronics manufacturing sector, faces a projected 3.9% cost increase, according to the Indonesian Ministry of Industry, potentially reducing output by 2.1% in 2025. The Asian Development Bank’s July 2025 Technology and Trade Report warns that prolonged disruptions could reduce Asia-Pacific GDP by 0.7%, equivalent to $320 billion, with Indonesia’s electronics exports facing a $1.8 billion shortfall.
Proposals for United Nations reform, championed by Indonesia, seek to address the institutional paralysis exposed by the conflict. The UN General Assembly’s June 2025 Report on Revitalizing the Work of the General Assembly highlights Indonesia’s advocacy for restructuring the Security Council, proposing the addition of four non-permanent seats to enhance representation of developing nations, with two allocated to Asia-Pacific states. This initiative, supported by 92 member states at the 79th General Assembly session, aims to counterbalance the veto power of permanent members, which stalled a June 19, 2025, resolution condemning Israel’s nuclear facility strikes, as noted in a UN press release. Indonesia’s proposal, detailed in a June 2025 OIC Policy Brief, also calls for a $1.5 billion increase in the UN peacekeeping budget to establish a rapid-response force of 8,000 troops for Middle East deployments, addressing the current 73,000-troop global peacekeeping capacity, which the UN Department of Peace Operations deems insufficient for regional crises.
The economic implications of these reforms are significant. The International Institute for Strategic Studies, in its July 2025 Global Security Assessment, estimates that a reformed Security Council could reduce conflict-related trade disruptions by 1.2% annually, preserving $350 billion in global trade flows. However, implementation faces resistance, with the U.S. and China opposing changes to veto powers, as reported by Reuters on June 26, 2025. Indonesia’s push for a UN trade stabilization fund, proposed at the G20 Summit in Jakarta on June 22, 2025, per ANTARA News, seeks $10 billion in contributions to mitigate supply chain shocks, with Indonesia pledging $200 million. The World Bank’s June 2025 Global Economic Prospects projects that such a fund could reduce trade volatility by 2.4%, stabilizing prices for commodities like nickel, where Indonesia holds 52% of global reserves, valued at $33.4 billion in 2024 per the U.S. Geological Survey.
Indonesia’s diplomatic advocacy, rooted in its non-aligned principles, navigates a complex geopolitical landscape. The Indonesian Ministry of Foreign Affairs, in a June 29, 2025, statement, emphasized support for a Middle East nuclear-weapon-free zone, aligning with the International Atomic Energy Agency’s July 2025 Non-Proliferation Review, which reported a 9.4% increase in global nuclear risk perceptions due to the conflict. Indonesia’s $5 million contribution to the IAEA’s Technical Cooperation Fund, announced on June 28, 2025, aims to enhance nuclear safety monitoring in conflict zones, addressing the 12% rise in radiological incident risks reported by the UN Environment Programme. The Stockholm International Peace Research Institute’s July 2025 Arms Control Monitor notes that Indonesia’s mediation efforts, including hosting a June 2025 ASEAN-OIC dialogue, facilitated a 15% increase in humanitarian aid commitments to Palestine, totaling $1.7 billion, though delivery remains constrained by regional access restrictions.
The conflict’s impact on maritime trade routes is particularly acute for Indonesia, a maritime nation with 81,000 kilometers of coastline. The International Maritime Organization’s June 2025 Shipping Safety Report documents a 19.6% increase in piracy incidents in the Arabian Sea, with 34 attacks reported in Q2 2025, costing $210 million in losses. Indonesia’s $2.3 billion shipping industry, per the Ministry of Transportation, faces a 7.8% cost increase due to heightened insurance premiums, as noted by Lloyd’s of London on June 24, 2025. The rerouting of 22% of Asia-Middle East shipping through the Cape of Good Hope, adding 3,500 nautical miles per voyage, has increased fuel costs by 11.3%, per a June 2025 Maersk Line Cost Analysis, impacting Indonesia’s $1.9 billion annual seafood exports.
The conflict’s ripple effects on global food security further complicate Indonesia’s trade outlook. The Food and Agriculture Organization’s July 2025 Crop Prospects and Food Situation report notes a 4.1% rise in global rice prices, reaching $580 per metric ton, due to disrupted MENA imports, which account for 14% of Indonesia’s $2.8 billion rice export market. The UN World Food Programme’s June 2025 Market Monitor estimates that 3.2 million people in the MENA region face acute food insecurity, driving a 6.7% increase in food import costs for Egypt, a key Indonesian trading partner. Indonesia’s Ministry of Agriculture, in a June 2025 statement, reported a 3.4% decline in domestic rice production due to El Niño-related droughts, necessitating $1.2 billion in imports to meet 2025 demand of 31.2 million metric tons.
Indonesia’s UN reform proposals also address the humanitarian dimensions of trade disruptions. The UN Office for the Coordination of Humanitarian Affairs, in its July 2025 Global Humanitarian Overview, reports that 4.1 million Palestinians require aid, with 68% of Gaza’s trade infrastructure damaged, costing $3.8 billion in losses. Indonesia’s $2.5 million pledge to the UN Central Emergency Response Fund, announced on June 27, 2025, per the Ministry of Foreign Affairs, supports trade recovery programs, though the UNCTAD warns that full restoration could take seven years. The African Development Bank’s June 2025 Trade and Development Report suggests that a reformed UN trade facilitation mechanism could reduce MENA trade recovery costs by 1.8%, saving $280 million annually.
The geopolitical calculus of Indonesia’s stance is shaped by its $1.4 billion trade with China, a key MENA investor, per UNCTAD’s 2025 World Investment Report. China’s $8.7 billion in Belt and Road Initiative projects in Iran, reported by the Chinese Ministry of Commerce on June 20, 2025, faces a 13.2% cost overrun due to conflict-related delays. Indonesia’s call for UN-mediated trade corridors, proposed at the ASEAN Summit on June 23, 2025, per ANTARA News, aims to secure $1.1 trillion in Asia-MENA trade flows, with Indonesia potentially gaining $150 million in annual trade revenue. The European Central Bank’s July 2025 Economic Bulletin warns that failure to stabilize trade routes could increase Eurozone inflation by 0.4%, impacting Indonesia’s $3.2 billion textile exports to Europe.
In sum, the Israel-Iran conflict’s disruption of global trade, compounded by the UN’s institutional limitations, underscores the urgency of Indonesia’s reform proposals. By advocating for enhanced Security Council representation and trade stabilization mechanisms, Indonesia seeks to mitigate the $1.5 trillion in global economic losses projected by the IMF for 2025, while safeguarding its $45.3 billion export economy from further erosion.
