VZCZCXRO1923
OO RUEHDT RUEHPB
DE RUEHJA #0826/01 1320958
ZNY CCCCC ZZH
O 120958Z MAY 09
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2311
INFO RUCNARF/ASEAN REGIONAL FORUM COLLECTIVE PRIORITY
RHEFDIA/DIA WASHINGTON DC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 02 JAKARTA 000826 
 
SIPDIS 
 
DEPT FOR EAP, EAP/MTS, EAP/MLS, EAP/RSP; 
NSC FOR E. PHU 
 
E.O. 12958: DECL: 05/12/2019 
TAGS: PGOV PDEM ID
SUBJECT: "STRANGE BEDFELLOWS" -- PRESIDENT YUDHOYONO 
WORKING WITH FORMER PRESIDENT MEGAWATI ON ELECTION COALITION 
 
REF: A. JAKARTA 820 
     ¶B. JAKARTA 804 AND PREVIOUS 
 
Classified By: Pol/C Joseph L. Novak, reasons 1.4(b+d). 
 
¶1.  (C) SUMMARY:  President Yudhoyono and former president 
Megawati have seemingly declared a detente in their 
longstanding political cold war and begun serious coalition 
talks ahead of the July presidential election.  As a quid pro 
quo for Megawati abandoning her quest for the presidency to 
support Yudhoyono, the President would offer Megawati's party 
a number of seats in the new Cabinet.  This alliance seems to 
position Central Bank Governor Boediyono as the strongest VP 
running mate prospect for Yudhoyono.  All that said, the 
situation is fluid and things could realign again before 
Yudhoyono formally announces his ticket on May 15.  END 
SUMMARY. 
 
FIERCE OPPONENTS BURYING THE HATCHET? 
 
¶2.  (C) In an unexpected political move, President Susilo 
Bambang Yudhoyono has reached out to former President 
Megawati Sukarnoputri to explore forming a coalition ahead of 
the July presidential elections.  Following talks between 
Yudhoyono's Partai Demokrat (PD) and Megawati's Indonesian 
Party of Democratic Struggle (PDI-P) held over the weekend of 
May 8-10, Yudhoyono stated on May 10, "There appears to be 
goodwill between the two parties to communicate, so we're 
beginning substantial talks, and if possible, reconciliation." 
 
¶3.  (C) If Megawati joins with Yudhoyono, it would be a 
political shocker.  One contact told us that the two would be 
the ultimate in "strange political bedfellows."  Megawati has 
held a grudge against Yudhoyono since 2004 when he resigned 
as her security minister to make a successful run for 
president, defeating Megawati.  Yudhoyono made the first 
gesture to mend fences on May 6 when he sent his trusted 
State Minister Hatta Rajasa to Megawati's home.  This meeting 
also was attended by PDI-P Advisory Board Chair Taufik Kiemas 
(Megawati's husband) and PDI-P Secretary General Pramono 
Anung.  Talks on finding common ground and sharing of Cabinet 
positions have intensified through May 12. 
 
¶4.  (C) Up until May 6, Megawati had been expected to 
announce retired General Prabowo Subianto, head of the 
Gerindra Party, as her running mate.  However, the 
notoriously irascible Prabowo was vacillating and apparently 
leaning towards launching his own presidential bid, not 
liking the prospect of being number two on a ticket with 
Megawati.  PDI-P seems to have decided to drop Prabowo, his 
fickle behavior and poor human rights record not boding well 
for a lasting partnership.  If PDI-P does indeed abandon 
their possible partnership, Prabowo seems to have slim 
chances of forming a coalition to run for president.  (Note: 
Megawati was a strong opponent of the Suharto regime; Prabowo 
one of its strongest defenders, including via the employment 
of violent methods such as the kidnapping of opposition 
members.  Given this historical chasm, critics have said that 
the possible link up with Prabowo would have meant a big loss 
in crediblity for Megawati.) 
 
¶5.  (C) With Prabowo apparently out, Megawati was left with 
few alternatives to form a coalition large enough to meet 
Indonesia's complicated threshold requirements to run for 
president.  (Note:  PDI-P received only 14% of the vote in 
the April parliamentary elections and needs partners.) 
Golkar (another major party) had already announced that VP 
Jusuf Kalla would run with retired General Wiranto of the 
Hanura Party and PD had an apparent lock on a coalition with 
all the other major parties. 
 
¶6.  (C) Megawati has demanded a high price for her 
allegiance.  Yudhyoyono reportedly offered PDI-P a half dozen 
ministerial slots plus a position for Megawati as the Chair 
of the Presidential Advisory Council.  Speculation is that 
Cabinet seats would go to the capable PDI-P Chair Pramono 
Anung and Megawati's daughter, Puan Maharani, who came in 
first for PDI-P in Parliamentary elections for the electoral 
district of Solo, Central Java. 
 
¶7.  (C) Opinions are mixed as to how a PD/PDI-P coalition 
might affect Yudhoyono's government (if he is indeed 
re-elected later this year).  PDI-P is patronage-oriented, 
built around Megawati.  It has a strong grassroots network, 
however, and many dynamic younger leaders who could emerge in 
the next five years as Megawati's star fades.  PDI-P is 
 
JAKARTA 00000826  002 OF 002 
 
 
strong on religious pluralism but weak on market-oriented 
reforms, tending towards protectionism.  It tends to be 
hawkish on national unity issues such as Aceh and Papua.  A 
coalition with PDI-P might make it easier for Yudyhoyono to 
get legislation through Parliament since PDI-P has often been 
a major impediment to Yudhoyono's legislative initiatives. 
 
 
CENTRAL BANK GOVERNOR AS VP? 
 
¶8.  (C) In addition, a PD/PDI-P coalition would alter 
Yudhoyono's VP running mate scenario.  (Note:  Yudhoyono has 
made clear that he does not plan to choose current VP, Jusuf 
Kalla, as running mate again.)  The leading candidate had 
been Hatta Rajasa (ref B), but he would be less acceptable to 
PDI-P since he comes from the National Mandate Party (PAN). 
PAN is an Islamic-leaning party, which makes the 
secular-oriented PDI-P nervous.  In the meantime, Bank of 
Indonesia (Central Bank) Governor Boediyono's stock as a 
running mate possibility has again risen.  A talented 
economist, he served as Finance Minister under Megawati and 
is said to be liked by her.  While Boediyono is purely a 
technocrat with no political party base, PDI-P's support 
would more than make up for that. 
 
¶9.  (C) Boediyono (one name only) has a reputation for 
integrity.  He had a prestigious career as an economist, 
including with Bank of America in Jakarta, State Minister for 
National Planning and Development under President Habibie, 
Finance Minister 2001-2004 under Megawati, and as Central 
Bank Governor since 2008.  He has written several economics 
textbooks.  He has a degree in economics from the elite Gajah 
Mada University in Yogyakarta, a masters in economics from 
Monash University in Melbourne, and a PHd in business 
economics from Wharton School at the University of 
Pennsylvania.  He speaks fluent English. 
 
SITUATION FLUID 
 
¶10.  (C) The situation is fluid and things could yet realign 
before Yudhoyono formally announces his ticket on May 15. 
Already there is word that some Islamic-oriented parties are 
not happy with a PD-PDIP link-up and are threatening to bolt 
from Yudhoyono's coalition.  If President Yudhoyono can keep 
everyone on board--and add PDI-P to his coalition, he will be 
in a formidable position as he goes into the July 
election--and he already has a huge lead in the polls. 
HUME