According to Foreign Affairs Minister Mohamad Hasan, the name “Sulawesi Sea” better reflects Malaysia’s legal position and sovereignty.

The issue first emerged when Malaysia unilaterally claimed the mineral-rich waters as part of its sovereign territory on a map issued in 1979. Indonesia, along with several other Southeast Asian countries, protested the new map.

Malaysia’s claim is based on an 1891 agreement demarcating the territorial boundaries between the British and Dutch colonial administrations in Malaysia and Indonesia, respectively. That agreement only addressed land boundaries, however, not maritime boundaries.

Furthermore, Indonesia and Malaysia had agreed in 1969 on the delimitation of their continental shelves. The Ambalat area was already recognized in that ratified agreement as belonging to Indonesia.

Yet a decade later, Malaysia reneged on the agreement by publishing a new map that included the Ambalat block within its territorial waters. Its claim intensified after the International Court of Justice (ICJ) in The Hague ruled in 2002 that the disputed islands of Sipadan and Ligitan belonged to Malaysia.

Emboldened by the ICJ ruling and its 1979 map, Malaysia used Sipadan and Ligitan as base points to claim the Ambalat block, which was inconsistent with the 1982 United Nations Convention on the Law of the Sea (UNCLOS), ratified by both Indonesia and Malaysia. Under UNCLOS, small islands cannot serve as base points for delimiting a continental shelf. Moreover, Malaysia is a coastal state, not an archipelagic state like Indonesia, and therefore cannot draw its continental shelf boundaries from its outermost islands.

Tensions escalated in Ambalat when Malaysia granted oil concessions to British and Dutch companies in 2005, even though Indonesia had signed contracts in 1999 with Italian and American firms. In fact, Indonesia had been conducting oil exploration in Ambalat since the 1960s without any protest from Malaysia.

But in 2005, when Indonesia began building a lighthouse on Karang Unarang Island in Ambalat waters, Malaysian warships repeatedly disrupted its construction. This prompted the Indonesian Navy to deploy warships to secure the lighthouse project and drive Malaysian vessels away from the area, resulting in mid-ocean encounters between the two countries’ ships.

Fortunately, naval personnel from both sides exercised restraint, avoiding the use of weapons and preventing the situation from spiraling into an armed conflict.

Ambalat’s vast mineral wealth appears to be a major driver of the dispute. The area is estimated to contain 764 million barrels of oil and 1.4 trillion cubic feet of natural gas, sufficient for more than 30 years of exploration. It also has significant fisheries potential, meaning Ambalat has both strategic economic and political value.

Efforts to resolve the Indonesia-Malaysia sovereignty dispute between over Ambalat have been ongoing for decades, but maritime diplomacy has yet to yield a final agreement.

Amid the stalemate, the two countries’ leaders agreed in July to jointly manage the area by establishing an economic cooperation arrangement or joint development agreement, as President Prabowo Subianto announced following a meeting with Malaysian Prime Minister Anwar Ibrahim in Jakarta.

The Ambalat issue will also be settled peacefully. Given that sovereignty negotiations over the maritime area are likely to take a considerable amount of time, the joint development initiative agreed by Prabowo and Anwar is a prudent, mutually beneficial step. This approach is also a manifestation of the so-called good neighbor policy grounded in cooperation and respect, as the President has emphasized on many occasions.

Economic cooperation in waters with overlapping territorial claims, or even in maritime areas with clear demarcation, can be an effective model for promoting regional economic growth. For example, the Baltic states established the Council of the Baltic Sea States (CBSS) in 1992 to foster regional economic cooperation, turning the Baltic Sea into a hub of economic growth for its members.

Through economic cooperation in Ambalat, Indonesia and Malaysia can jointly manage the area’s oil and gas resources while continuing peaceful negotiations over their maritime boundaries. Both countries already have the relevant experience: Indonesia once entered into a joint development agreement with Australia in the Timor Gap when East Timor was still an Indonesian province, while Malaysia has long partnered with Thailand to manage a joint development area in the Gulf of Thailand.

Nevertheless, economic cooperation must not replace the need for continued peaceful maritime diplomacy between the two countries to resolve their sovereignty dispute over Ambalat.

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The writer is a professor at the Indonesian Defense University and a former Navy chief of staff.