Regional Summary
The Alignment Premium Across the Indo-Pacific this week, governments that once sat between Washington and Beijing have learned that Donald Trump’s return demands a price—and most are paying it. Indonesia’s trade concessions, Taiwan’s chipmaking transplant, Japan’s scrapped arms-export limits all follow the same pattern: influence in the new Washington costs real strategic assets, and the buyers reckon that staying outside costs more. Indonesia’s case stands out. Prabowo Subianto, the president, flew to Washington and signed away tariffs on 99% of American products, lifted restrictions on critical minerals, and pledged 8,000 peacekeepers for Gaza—ten times larger than any previous Indonesian deployment and unmatched by any other Southeast Asian country. The deal was extravagant, yet rational. Mr Subianto keeps his BRICS membership and Chinese partnerships, but he has given Mr Trump something no other regional leader has: a visible win. Yet Washington’s favour comes cheaper than Jakarta’s domestic credibility. Credit agencies have downgraded Indonesia over central-bank independence, the rupiah is weakening, and Mr Subianto’s coalition has banned criticism of the president. A leader who gives everything abroad while tightening everything at home pleases neither audience. Taiwan and Japan show the same calculation. TSMC is considering $100 billion to build four more fabs in Arizona, shifting much of the world’s most advanced chipmaking to American soil and exempting those chips from tariffs. It is a massive concession of Taiwan’s greatest strategic asset—the silicon shield that makes the island indispensable—in exchange for deeper economic ties with its protector. Japan’s bet is military rather than industrial. Sanae Takaichi, re-elected as prime minister with 354 votes, has moved to scrap rules limiting lethal-arms exports and pledged to end fiscal austerity through “proactive public finances.” Mr Trump claims credit for her landslide and has invited her to the White House. Ms Takaichi, whom The Economist calls the world’s most powerful woman, appears content to let him. South Korea breaks the pattern. Lee Jae-myung, the president, riding a 56.5% approval rating after Yoon Suk-yeol’s life sentence for the martial-law debacle, has clashed with Washington over scaling back the annual Freedom Shield military exercise—the first known dispute over joint planning since he took office. Mr Lee is courting Lula and the developing world instead. Whether this is calculated diversification or stubbornness, it carries risk: the won is weak, the Bank of Korea is frozen at 2.5% for a sixth straight meeting, and Seoul can ill afford to be the one ally in the region that Mr Trump decides to punish. Australia is writing cheques its politics can barely cash. The $3.9 billion payment for the AUKUS submarine yard at Osborne—part of a $30 billion programme—locks the country into decades of military commitments even as the Liberal opposition polls at 18%, behind Pauline Hanson’s One Nation. The Reserve Bank has tightened rates to 3.85%, making Australia the first major economy to raise borrowing costs after the pandemic. Australia’s defence commitments span parties and generations, yet its domestic politics are so fractured that no party can claim a mandate for the grocery bill, let alone a nuclear submarine. The week reveals that the Indo-Pacific is not rallying to America out of conviction, but that alignment has become transactional in a way it was not before. Each government is offering something concrete—market access, troops, semiconductor fabs, arms-export liberalisation, shipyard billions—in exchange for tariff relief, diplomatic cover, or the absence of punishment. The price of entry is rising, and the leaders paying it bet that the returns will justify what they have given away. That bet may prove correct. But when alignment is purchased rather than earned, it lasts only as long as the buyer feels he is getting value. The moment the terms change, so will the loyalty.Country Summaries
Indonesia
Prabowo Subianto travelled to Washington this week for Indonesia’s biggest diplomatic effort since Trump returned to office, signing a trade deal and committing 8,000 peacekeepers to Gaza while other Southeast Asian leaders stayed away.
Mr Prabowo attended Trump’s inaugural Board of Peace summit and signed the Agreement on Reciprocal Trade, which cuts American tariffs on 1,819 Indonesian products and takes effect in 90 days. In return, Indonesia will remove tariffs on 99% of American products and lift restrictions on critical mineral exports. The deal shows Indonesia turning sharply toward Washington even as Jakarta keeps its membership of BRICS and its Chinese partnerships.
Indonesia pledged up to 8,000 troops for Gaza peacekeeping — the largest such commitment to any American-led initiative and ten times bigger than typical Indonesian deployments. Foreign Policy magazine notes that Indonesia is the only Southeast Asian country confirming participation while others steer clear of Trump’s peace plan. The first 1,000 troops will be ready to deploy by April.
But even as Mr Prabowo courts Washington, he is tightening control at home. Mr Prabowo fired financial regulators after January’s stock market plunge, because they ignored his warnings about MSCI’s concerns. Bank Indonesia held rates at 4.75% as the rupiah weakened after credit agencies downgraded Indonesia over worries about central bank independence. Danantara, the sovereign wealth fund, opened bidding for waste-to-energy projects that require technology transfer to local firms and announced plans to put 50% of its investments in public equity.
Mr Prabowo’s coalition continues to tighten its control. Golkar installed new leaders across East Java and imposed what Tirto, a news website, calls a “political fatwa” — a formal ban on criticising Mr Prabowo. The party is the most vocal about making the coalition permanent ahead of 2029 elections.
Joko Widodo’s residence in Solo went viral when it appeared on Google Maps as “Solo Wailing Wall,” drawing crowds of young people who performed prayers for the deceased. Videos spread across social media, with Mr Jokowi’s security team confirming they know about the visits but are not restricting them.
Other Stories
Other Stories
- Prabowo visits Washington for Board of Peace summit and bilateral meetings with Trump — Prabowo Subianto travelled to Washington DC for the inaugural Board of Peace meeting and bilateral discussions with Donald Trump. The visit included business forums, trade negotiations, and Indonesia’s commitment to provide peacekeeping troops for Gaza. (nytimes.com)
- Bank Indonesia launches Ramadan currency exchange programme through PINTAR platform — Bank Indonesia opened online registration for currency exchange services ahead of Ramadan and Eid through the PINTAR application. The programme allocates 185.6 trillion rupiah in clean currency across 2,883 service points nationwide. (kompas.com)
- Pertamina signs cooperation deals and faces corruption case developments — State energy company Pertamina signed an agreement with Halliburton for oilfield recovery services during Mr Prabowo’s American visit, while separately prosecutors demanded an 18-year sentence for oil tycoon Riza Chalid’s son in a corruption case involving company terminals. (ayokaltim.com)
- Prabowo pushes for clay roof tiles to replace zinc roofing — Mr Prabowo called for a nationwide drive to replace corrugated zinc roofs with clay tiles, saying he wants to shed Indonesia’s ‘rusty’ image while cooling homes and reviving the declining roof-tile industry. (scmp.com)
- Senator criticises Prabowo’s budget efficiency policy impact on Papua — Senator ARK said that Mr Prabowo’s budget efficiency policies are not aligned with central government commitments to expand new autonomous regions in Papua, suggesting a lack of support for regional development. (koreri.com)
Notes
Notes
Prabowo visits Washington for Board of Peace summit and bilateral meetings with Trump
February 16–21, 2026
Bank Indonesia launches Ramadan currency exchange program through PINTAR platform
February 17–22, 2026
Other
Taiwan
Taiwan Semiconductor Manufacturing Company (TSMC) is weighing a $100 billion expansion of its Arizona operations that could move much of the world’s most advanced semiconductor production to American soil. The investment would fund four more wafer fabs, potentially quadrupling the company’s US capacity and helping its chips avoid tariffs through local production.
The move deepens Taiwan’s economic integration with America even as Lai Ching-te, the president, hardens policy against China in other areas. His administration has tightened controls on Chinese capital flows and improved protections for Hong Kong political refugees, extending anti-Beijing measures beyond trade and defence.
Chinese forces sent five naval vessels and one balloon around Taiwan’s territory this week, matching previous reports. Mr Lai delivered his Lunar New Year message from a military radar station, promising continued defence efforts, and led traditional temple prayers across the island. The only unusual moment was when a temple chairman in Tainan became ill and vomited on the president during a ceremony — Mr Lai, who has medical training, helped the sick official before continuing with the event.
The ruling Democratic Progressive Party is preparing for 2026 local elections. The party views Cheng Li-chiun, the vice premier, as the strongest contender for Taipei mayor. The party has yet to nominate candidates for seven key municipalities.
Other Stories
Other Stories
- Temple chairman vomits on President Lai during Lunar New Year ceremony — During a Lunar New Year event at Sacrificial Rites Martial Temple in Tainan, Lin Pei-huo, the temple chairman, became ill and vomited on President Lai Ching-te during a public ceremony. Lai, who has medical training, assisted the stricken official before continuing with the event. (perthnow.com.au)
- Taiwan and US sign major trade agreement with tariff reductions — Taiwan and the United States signed the Agreement on Reciprocal Trade (ART) in Washington, reducing average tariffs on US exports from 35.7% to 12.33%. The deal includes exemptions for 2,072 Taiwanese export products and establishes a framework for expanded economic cooperation. (news.ltn.com.tw)
- TSMC considers additional $100 billion US investment amid trade developments — Taiwan Semiconductor Manufacturing Company is weighing an additional $100 billion investment in Arizona facilities to bolster American chipmaking efforts. The expansion would help TSMC chips avoid tariffs through local production and aligns with the new US-Taiwan trade framework. (taiwannews.com.tw)
Notes
Notes
Other
Japan
Japan
The lower house re-elected Sanae Takaichi as prime minister with 354 votes this week, converting her February election victory into a second term. Ms Takaichi kept all ministers from her previous cabinet. The Economist dubbed her “the world’s most powerful woman” after the landslide. The Liberal Democratic Party (LDP) is training a record 66 new lawmakers. The Aso faction has grown to 60 members, the only remaining faction after others disbanded. The new government is pursuing the agenda that won the election. In her first Diet speech, Ms Takaichi pledged to end fiscal austerity through “responsible and proactive public finances” to boost domestic investment. She outlined plans for targeted spending on economic security and repeated her promise to suspend consumption tax on food for two years. On constitutional revision, she said the LDP would “tenaciously work to create an environment in which an amendment proposal can be initiated as soon as possible,” noting that Diet discussions had “matured considerably.” Japan’s security buildup continues. The LDP’s security commission approved a draft proposal to scrap rules limiting defense equipment exports, allowing lethal arms shipments. The proposal would abolish existing restrictions and create a two-category system with National Security Council oversight, letting Japan export jointly developed equipment to third countries. Donald Trump claimed credit for Ms Takaichi’s victory, telling reporters she had attributed her party’s win to his endorsement. He confirmed plans to welcome her at the White House on March 19. Ms Takaichi responded with gratitude for his “warm words” and commitment to strengthening the Japan-US alliance.Other stories
Other stories
- The Economist names Takaichi ‘world’s most powerful woman’ — British magazine The Economist featured Prime Minister Takaichi as ‘the world’s most powerful woman’ following her election victory, stating she now ‘has a historic chance to transform her country.’ The article praised her defense industry measures and relationship-building with the US.
- Emperor Naruhito celebrates 66th birthday — Emperor Naruhito marked his 66th birthday on February 23 with public greetings at the Imperial Palace in Tokyo. The national holiday was observed ahead of significant disaster anniversaries, including the 15th anniversary of the Great East Japan Earthquake in March.
- LDP launches training program for record number of new lawmakers — The Liberal Democratic Party has begun training 66 newly elected Lower House lawmakers to avoid scandals and gaffes that could damage the Takaichi administration. The training comes as the party’s Aso faction has grown to a record 60 members, the only remaining faction after others disbanded.
- Osaka Governor Yoshimura remains Japan Innovation Party leader — Hirofumi Yoshimura will continue as leader of the Japan Innovation Party (Nippon Ishin no Kai) after party members voted against holding a leadership election. The JIP won 36 seats in the February election, up by only two despite being the LDP’s coalition partner.
- Maritime Self-Defense Force undergoes historic restructuring — The Japan Maritime Self-Defense Force is implementing a major organizational overhaul, reducing from four flotillas to three and establishing new commands including a Fleet Surface Force and Information Warfare Operations Command. The reform aims to strengthen command and control capabilities.
Other Stories
Other Stories
- The Economist names Takaichi ‘world’s most powerful woman’ — British magazine The Economist featured Prime Minister Takaichi as ‘the world’s most powerful woman’ following her election victory, stating she now ‘has a historic chance to transform her country.’ The article praised her defense industry measures and relationship-building with the US. (japantimes.co.jp)
- Emperor Naruhito celebrates 66th birthday — Emperor Naruhito marked his 66th birthday on February 23 with public greetings at the Imperial Palace in Tokyo. The national holiday was observed ahead of significant disaster anniversaries, including the 15th anniversary of the Great East Japan Earthquake in March. (www3.nhk.or.jp)
- LDP launches training program for record number of new lawmakers — The Liberal Democratic Party has begun training 66 newly elected Lower House lawmakers to avoid scandals and gaffes that could damage the Takaichi administration. The training comes as the party’s Aso faction has grown to a record 60 members, the only remaining faction after others disbanded. (japantimes.co.jp)
- Osaka Governor Yoshimura remains Japan Innovation Party leader — Hirofumi Yoshimura will continue as leader of the Japan Innovation Party (Nippon Ishin no Kai) after party members voted against holding a leadership election. The JIP won 36 seats in the February election, up by only two despite being the LDP’s coalition partner. (japantimes.co.jp)
- Maritime Self-Defense Force undergoes historic restructuring — The Japan Maritime Self-Defense Force is implementing a major organizational overhaul, reducing from four flotillas to three and establishing new commands including a Fleet Surface Force and Information Warfare Operations Command. The reform aims to strengthen command and control capabilities. (thediplomat.com)
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Notes
Other
South Korea
A Seoul court sentenced Yoon Suk-yeol to life in prison for leading last year’s failed martial law attempt, ending the crisis that has made Lee Jae-myung stronger.
The ruling ends the legal proceedings that began when Mr Yoon deployed troops to the National Assembly in December 2024. For Mr Lee, who returned to the Blue House after Mr Yoon’s downfall, the sentence ends the martial law crisis. His approval rating has risen for the third straight week to 56.5 per cent, boosted by his property policies and rising stock prices.
While consolidating power at home, Mr Lee is reaching out to new partners. Lula, Brazil’s president, became the first foreign leader to visit since Mr Lee’s return, arriving for a three-day state visit. The leaders will discuss trade, climate, energy, space and defence cooperation — Mr Lee’s latest effort to win over developing countries.
But Mr Lee clashed with Washington. South Korean and American military officials disagree over the annual Freedom Shield exercise, delaying their joint announcement. Mr Lee has told officials to look at scaling back the exercises after a recent North Korean drone incident. This is the first known dispute over military planning since Mr Lee took office.
The Bank of Korea is expected to hold its benchmark rate at 2.5 per cent for the sixth straight meeting, citing the won’s weakness against the dollar and uncertainty over American monetary policy. Housing prices in Seoul have risen for 53 straight weeks, but the central bank is more worried about the currency than the property market.
Other Stories
Other Stories
- Yoon Suk-yeol sentenced to life in prison for insurrection over martial law attempt — A Seoul court sentenced Yoon Suk-yeol, the former president, to life imprisonment after finding him guilty of leading an insurrection when he declared martial law in December 2024. The ruling followed his failed attempt to deploy troops to the National Assembly and suppress opposition forces. (ft.com)
- Lee Jae-myung’s approval ratings rise amid real estate policy disputes with opposition — Lee Jae-myung’s approval rating rose to 56.5 percent for the third consecutive week, driven by his stance on real estate policy. The president has been engaged in public disputes with Jang Dong-hyeok, leader of the People Power Party (PPP), over multi-homeowner regulations and housing market policies. (nytimes.com)
- PPP leader urges resumption of Lee’s criminal trials amid political tensions — Jang Dong-hyeok, leader of the People Power Party, called on the courts to resume criminal proceedings against Lee Jae-myung, arguing that five trials involving the president were halted before he took office. The PPP also criticised Lee’s response to North Korean drone incidents and other security matters. (upi.com)
- Foreign investment in Korean stocks nearly doubles amid Kospi rally breaking records — Foreign ownership of Korean equities nearly doubled in 2025 as the Kospi’s rally drove the market to record highs, with the index reaching above 5,500. The surge has been driven by AI-related optimism and strong corporate earnings. (cnbc.com)
- Mexican president confirms Lee Jae-myung responded to request for additional BTS concerts — Claudia Sheinbaum, Mexico’s president, announced she received a response from Lee Jae-myung regarding her request for additional BTS concerts in Mexico, highlighting cultural diplomacy between the two countries. Lee’s letter expressed appreciation for the growing Korea-Mexico relationship. (koreajoongangdaily.joins.com)
Notes
Notes
Former President Yoon Suk-yeol sentenced to life in prison for insurrection over martial law attempt
February 17–19, 2026
President Lee Jae-myung's approval ratings rise amid real estate policy disputes with opposition
February 16–20, 2026
PPP leader urges resumption of President Lee's criminal trials amid political tensions
February 16–21, 2026
Bank of Korea expected to maintain interest rates unchanged for sixth consecutive meeting
February 16–20, 2026
Brazilian President Lula begins state visit to South Korea for trade and defense summit
February 22, 2026
South Korea and US show differences over details of annual spring military exercises
February 22, 2026
Foreign investment in Korean stocks nearly doubles amid Kospi rally breaking records
February 18, 2026
Mexican President confirms Lee Jae-myung responded to request for additional BTS concerts
February 21–22, 2026
Other
Australia
Australia spent $3.9 billion this week on a nuclear submarine facility that will outlast any government now in power. The payment for the Osborne shipyard is the biggest chunk yet of the $30 billion Australia-UK-US (AUKUS) submarine project, which will employ 10,000 workers in a 420-metre fabrication hall using steel equivalent to 17 Eiffel towers.
The spending shows how Australia pushes ahead with long-term defence plans even as its politics remain chaotic. Angus Taylor, the new Liberal leader, tried to steady his crisis-hit party with shadow ministry appointments to balance factions. He promoted right-wingers Andrew Hastie and Jacinta Nampijinpa Price while making Tim Wilson, a moderate, shadow treasurer. But Coalition polling remains dire at 18%, well behind Pauline Hanson’s One Nation on 28%.
Even as politicians squabble, economic policy rolls on. The Reserve Bank said this week that it saw a “material shift” in the economy when it raised rates to 3.85% last month, making Australia the first major economy to tighten policy after the pandemic. With unemployment holding at 4.1%, economists expect more rises by May.
Anthony Albanese, the prime minister, also commented on Britain’s royal troubles, calling Prince Andrew’s arrest an “extraordinary fall from grace” but saying he would not use the scandal to push for a republic.
Other Stories
Other Stories
- Albanese government refuses to help ISIS families return to Australia from Syria — Prime Minister Anthony Albanese declared the government would not assist 34 women and children with ISIS links trying to return from Syrian camps, despite legal obligations to allow citizens back. The stance sparked political debate with the opposition calling for stronger passport restrictions and accusations of inconsistency from Liberal senators. (dailymail.co.uk)
Notes
Notes
Albanese government refuses to help ISIS families return to Australia from Syria
February 16–22, 2026
RBA under pressure as strong labour data fuels expectations of further rate hikes
February 15–22, 2026
Anthony Albanese comments on Prince Andrew arrest as 'extraordinary fall from grace'
February 20, 2026
Other