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C O N F I D E N T I A L SECTION 01 OF 07 JAKARTA 002917 
 
SIPDIS 
 
SIPDIS 
 
C O R R E C T E D COPY - (PARA MARKING) 
 
E.O. 12958: DECL: 03/06/2015 
TAGS: PREL MASS MARR ID
SUBJECT: YOUR VISIT TO INDONESIA: MOVING OUR RENEWED 
BILATERAL RELATIONSHIP FORWARD 
 
JAKARTA 00002917  001.2 OF 007 
 
 
Classified By: Charge W. L. Amselem; Reasons 1.4 (b) and (d). 
 
¶1. (U) Madame Secretary:  Your team in Jakarta warmly 
welcomes your March 14-15 visit to Indonesia, the most senior 
USG visit since Secretary Powell's of January 4-6, 2005. We 
have underway preparations to ensure a visit high in 
substance and symbolism. 
 
Introduction 
------------ 
 
¶2.  (C) Summary:  Your decision to move quickly in November 
to normalize the military-to-military relationship with 
Indonesia has given a new, more cooperative quality to 
bilateral relations across a range of interests.  Although 
our bilateral cooperation improved following Indonesia's 
landmark 2004 national elections, SBY's inauguration in 
October 2004, and the splendid world-beating U.S. response to 
the December 2004 tsumani, our military aid "embargo" proved 
a major irritant to SBY and the Indonesian political class, 
and an impediment to working in key areas of mutual concern. 
Indonesians gave a collective sigh of relief when we ended 
the very public sanctions we had imposed for abuses that 
occurred under a different government in a very different 
era.  On learning of the Administration's waiver of 
conditions on military cooperation, an enthusiastic 
Indonesian President Susilo Bambang Yudhoyono (SBY) privately 
told his staff that "we can now have a new relationship with 
the United States."  The Indonesia Government has signaled in 
a variety of ways a willingness to begin in earnest a new, 
productive partnership with us. 
 
¶3. (C) SBY understands that your personal involvement and 
commitment made possible our policy shift.  He will want to 
work with you to craft the direction of our renewed 
relations.  We have heard from senior GOI officials that in 
addition to discussing military relations, the President and 
his ministers will raise their hopes for continuing the CT 
cooperation that has produced excellent results; exchange 
thoughts with you on the role of China in SE Asia; and 
discuss the threat posed by avian influenza.  We seek to 
assure SBY of our support for Indonesia's new democracy and 
commitment to reform, and that we look to Indonesia to adopt 
a greater role in handling regional and global issues in 
partnership with us.  Your visit provides an opportunity for 
you to brief the GOI on developments in Iraq, Middle East, 
Iran, the Korean peninsula, and China.  We need also remind 
SBY that failure to address key issues -- such as holding 
officials responsible for misdeeds including human rights 
violations -- could lead to a return of restrictions.  We 
want Indonesia to sign an Article 98 waiver and move its UN 
voting record closer to us on key issues and away from a 
fixation on "Non-aligned" positions. 
 
¶4.  (C) SBY seeks progress on many fronts: consolidating 
gains against terrorists; pushing economic reform and tsunami 
reconstruction under the leadership of a new economic team; 
and promoting military reform, in which we can now play a 
full partnership role.  Much work remains to solidify 
Indonesian democracy, inter alia, combating corruption, 
reforming the judiciary, improving government responsiveness, 
and addressing still lethal sectarian and ethnic divides. 
That said, however, Indonesia, the world's largest 
Muslim-majority nation, has put in place democratic 
structures over the last seven years, making it the world's 
third largest democracy, and emerged as an example for others 
of the transformational power of freedom. 
 
Objectives of Your Visit 
------------------------ 
 
¶5.  (C) We see your visit as a major opportunity to affirm 
the Indonesian model and pledge continued support.  Building 
on the very positive Indonesian reaction to changes in 
bilateral military relations, you could chip away at 
attitudes that remain from Indonesia's authoritarian and 
"non-aligned" days, bolster continued efforts for political 
and economic reform, and push democratic Indonesia to take 
greater responsibility to address regional and global issues 
in partnership with us.  You could also pursue the following 
objectives: 
 
a)  Urge Indonesia, the world's third-largest democracy, to 
help us push democratic progress and religious tolerance; 
 
b)  Move our counterterrorism agenda forward by urging 
 
JAKARTA 00002917  002 OF 007 
 
 
strengthened legal reforms and greater internal coordination; 
congratulate the government for recent successes ) including 
the neutralizing of terrorist mass murderer Azahari last 
November; 
 
c)  Propose further military cooperation and continued 
support for the modernization and professionalization of 
Indonesia's military and efforts to bring it fully under 
civilian control, paying continued attention to human rights 
and accountability; note Administration efforts to increase 
engagement and funding for assistance with maritime security 
issues and strengthening humanitarian response capabilities; 
 
d)  Encourage Indonesian economic reform and pledge U.S. 
support; 
 
e)  Underline your support for an Article 98 agreement, 
noting the personal commitment that POTUS made and you 
implemented to make normal military relations possible, and 
explain that such an agreement would benefit both parties and 
assist during discussions with and within Congress this year 
on military relations with Indonesia; 
 
f)  Affirm that Indonesia has "no better friend than the 
United States."  You can remind Indonesia of our huge aid 
program, including our response to the tsunami and to the AI 
threat.  We see Indonesia as a fellow democracy with shared 
values of tolerance and pluralism, as a nation of crucial 
importance to the region and the world, and one we want to 
succeed. 
 
Ensuring Democracy and Moderate Islam Prevail 
--------------------------------------------- 
 
¶6.  (C) We have a great stake in helping consolidate 
democracy in Indonesia, the world's fourth most populous 
nation and its largest Muslim-majority country.  Indonesia's 
emerging success as a democracy has profound implications for 
our bilateral objectives, for our broader goals in Asia and 
throughout the developing world, most notably among other 
Muslim-majority countries.  Within Indonesia, democracy has 
created opportunities for a U.S.-Indonesia partnership that 
supports mutual objectives in key areas such as combating 
extremism and terrorism, and promoting human rights, security 
cooperation, economic development and investment. Indonesia 
provides a strong democratic example for countries that lag 
in political freedom and stands out as a living example of 
Islam's compatibility with freedom and modernity. 
 
¶7.  (C) Indonesia has established new foundations for 
democracy over the past seven years.  The amended 
Constitution provides more effective checks and balances 
among the executive, legislative and judicial branches.  The 
country now has a freely-elected legislature with a chamber 
representing different regions, but security forces no longer 
have unelected seats in the House of Representatives (DPR). 
The People's Consultative Assembly (MPR) resoundingly 
defeated attempts by Islamist parties to inject Shari'a law 
into the Constitution.  The free and fair 2004 national 
elections put into practice a new electoral framework with a 
vibrant multi-party system.  The country's first direct 
presidential election defeated an incumbent President and 
brought reform-minded Yudhoyono into office.  Indonesia 
carried out a huge decentralization effort that has shifted 
much authority from central government to local officials.  A 
free, open, and frequently obstreperous press has replaced a 
tightly controlled and censored media.  Our assistance 
programs and diplomatic efforts have supported these 
developments. 
 
¶8.  (C) Democratic progress has made Indonesia a player in 
the ongoing struggle between democratic modernization and 
militant retrograde Islam.  As the world's largest 
Muslim-majority country, Indonesia suffers the same radical, 
hate-filled strains of thought that afflict the rest of the 
Islamic world.  At the same time, Islam in Indonesia -- 
especially its syncretic Javanese version -- has a long 
history of moderation, combining Islamic beliefs with 
modernization and outreach to the rest of the world.  We have 
worked with Indonesia's civic organizations -- dominated by 
Islamic groups -- to make the point that democracy, 
modernization, and Islam can work together; Indonesians have 
adopted this view and created one of the world's largest 
democracies.  We must show that we can forge close, long-term 
mutually beneficial ties with this fourteen percent of the 
Islamic world (more Muslims live here -- nearly 200 million 
 
JAKARTA 00002917  003 OF 007 
 
 
-- than in all the Middle East). 
 
Encouraging Engagement in Region and Globally 
--------------------------------------------- 
 
¶9.  (C) SBY's focus on repairing Indonesia's image, and on 
gradually building a leadership position on the world stage 
befitting Indonesia's size, gives the foreign policy 
apparatus an opportunity to change Indonesia's role in 
international fora. We need Indonesia to take the side of 
democracy in world debates and act as a moderating influence 
on more radical regimes in the Middle East.  Indonesia's 
historical non-aligned orientation and jealous safeguarding 
of national sovereignty have made it cautious in entering 
into bilateral agreements and reluctant to single out 
wrongdoers in multilateral fora.  Indonesia's decision to 
abstain in the IAEA vote February 2 to refer the Iran 
proliferation case to the UNSC demonstrated its continued 
difficulties when confronted by issues in which it needs to 
take a responsible public stand with other democracies of the 
world community.  Indonesia has begun to reassert its 
traditional leadership role in ASEAN and made tentative 
attempts to press for democratic norms within ASEAN's nascent 
political community.  ASEAN members made helpful statements 
in Kuala Lumpur about the lack of progress in Burma, and 
agreed to send Malaysian FM Hamid to Rangoon.  We have 
encouraged SBY to carry a strong message of reform to the 
Burmese junta during his visit there at the end of February. 
 
¶10.  (C) Indonesia should increase engagement in 
international security efforts, including maritime security 
and the Proliferation Security Initiative (PSI).  Indonesia 
has worked with Malaysia, Singapore, Thailand and the 
International Maritime Organization to improve maritime 
security in the strategic Strait of Malacca, but needs more 
effective measures in this and other areas.  Indonesia 
professes strong support for non-proliferation, but has not 
endorsed the PSI Statement of Principles.  It should see PSI 
as a means to enhance cooperation as part of our mil-mil 
relationship and as an area in which it should take greater 
responsibility. 
 
Significant Progress on Terrorism; Problems Remain 
--------------------------------------------- ----- 
 
¶11.  (C) The bombings in Bali October 1 left no doubt that 
terrorism remains a significant threat.  Jemaah Islamiyah 
(JI), the most active terror group in Indonesia and one of 
the world's deadliest, has conducted most of the dozens of 
bombings in Indonesia since 2000, killing hundreds of persons 
(mostly Indonesians).  Founded in 1992 as an offshoot of the 
Darul Islam network that for decades sought to turn Indonesia 
into an Islamic state, JI has as its ultimate goal the 
establishment of an Islamic caliphate that spans the southern 
Philippines, Malaysia, Singapore, Indonesia, and southern 
Thailand.  JI's leaders (including its now imprisoned 
"spiritual" leader Abu Bakar Ba'asyir or "ABB") returned to 
Indonesia from exile after Suharto's fall in 1998.  Thanks to 
the GOI's recent success in taking down bombing mastermind 
Azahari we see a much greater understanding within the GOI 
and the population of the dangers posed by these radicals. 
We see the greatest public commitment to act expressed by 
leaders since the first Bali bombings in 2002.  In your 
discussions with Yudhoyono and others you could stress the 
importance of government efforts to achieve clear public 
understanding that jihadist radicalism has no place in 
Indonesia. 
 
Reform of the Indonesian Military 
--------------------------------- 
 
¶12.  (C) SBY, a retired General, has continued the reform of 
the Indonesian Armed Forces (TNI) begun after the fall of 
Suharto.  As Defense Minister he has a strong-willed civilian 
military expert, Juwono Sudarsono, who also served as 
Minister of Defense in Gus Dur's cabinet.  Juwono's Ministry 
implemented the TNI law enacted in September 2004 and has in 
preparation legislation to bring TNI fully under control of 
the Ministry.  Under Juwono, TNI professionalism and respect 
for human rights continue to improve; TNI has stayed out of 
politics and submitted to increased civilian control; TNI has 
observed legal restrictions on its domestic CT involvement 
and allowed the Indonesian National Police to take the lead 
on the issue; and TNI has fulfilled its obligations under the 
GOI-GAM MOU ending three decades of conflict in Aceh. 
Although making progress, the GOI has not yet ended TNI's 
 
JAKARTA 00002917  004 OF 007 
 
 
business activities and provided it a realistic budget -- 
most of TNI's budget comes from "self-financing."  The 
appointment of Marshall Djoko Suyanto to lead the TNI should 
move reform even further given his reputation as the most 
open-minder senior general.  While TNI respect for human 
rights and punishment of individuals who abuse rights has 
increased, accountability has remained incomplete in the caseu/1K`:g}Wamang and other suspects remains a high priority for us. 
 
Indonesia,s Judicial Sector and Corruption 
------------------------------------------ 
 
¶15.  (C) Indonesia's judicial sector must overcome the 
corruption, ineffectiveness and pervasive impunity from which 
it suffered during the Suharto regime.  A broad range of U.S. 
programs assists Indonesia to do so.  We successfully 
encouraged the Attorney General to establish in September a 
counter terrorism and transnational crime task force and we 
will support it financially.  The AGO recently named someone 
to head the task force, but we still await significant steps 
by the AGO to create the body.  Our ICITAP and ATA training 
programs have helped develop the operational and 
organizational capacity of the Indonesian National Police 
(INP) as highlighted by the success of U.S.-trained "Task 
Force 88," which killed JI bomber and mass murderer Azahari 
last November in the course of a well-executed raid on a 
terrorist safehouse.  USAID has a multi-year rule of law 
initiative focusing on the courts, the AG's office and other 
judicial institutions, including the Corruption Eradication 
 
JAKARTA 00002917  005 OF 007 
 
 
Commission (KPK).  CT cooperation has led to arrests, 
prosecutions and convictions of large numbers of terrorists. 
Assistance to the judicial sector also helps SBY pursue his 
high priority anti-corruption agenda and create a better 
climate for foreign investment. 
 
Public Diplomacy Environment 
---------------------------- 
 
¶16.  (C) Indonesian institutions have proven remarkably open 
and receptive to U.S. public diplomacy efforts.  The point 
that Indonesia has "no better friend than the U.S." seems 
widely recognized among the elite who have benefited from 
U.S. education (a large number of the cabinet have studied in 
the U.S., often under USG sponsorship) as well as the man in 
the street.  While public opinion polls show disagreement 
with many U.S. policies, other polling results and our daily 
experience show a substantial positive feeling about the 
U.S., and our values and social institutions.  Our effective 
response and significant contributions to the tsunami relief 
had a tremendous impact, receiving wide publicity and praise 
in Indonesia, and helped turn around the decline in our 
approval ratings.  More important, our access to all levels 
of society provides opportunity for aggressive public affairs 
programming.  We have set up American Corners throughout 
Indonesia -- half in Islamic universities -- and carry out a 
large program of student exchanges with Islamic institutions. 
 Media remain receptive to training programs and 
participation in State Department reporting tours.  A large 
Fulbright program, an active International Visitor program, 
and an aggressive outreach to send younger people to the U.S. 
for a year in high-school all enhance mutual understanding by 
exposing the next generation of leaders to a deeper 
understanding of the U.S. 
 
Economic Reform 
--------------- 
 
¶17.  (SBU) Although Indonesia's record on counterterrorism 
and military reform receive the bulk of attention in the 
U.S., President Yudhoyono's domestic political future will 
rise or fall on the success of his economic reform program. 
Indonesia, one of the "Asian Tigers" before the 1997-98 
financial crisis, enjoyed annual GDP growth of over seven 
percent from 1990-96. The crisis triggered the collapse of 
Indonesia's state-centered, cronyist development model, and 
the country has since made halting progress toward a more 
open, private sector economic system.  Yudhoyono came into 
office with a ringing pledge to implement a "pro-growth, 
pro-poor, and pro-jobs" economic policy that, for the first 
time, explicitly recognized the private sector as a key 
partner in development.  He set the ambitious target of 
raising Indonesia's average GDP growth from 2006-09 to 6.6 
from its current 5.5 percent level, and halving the poverty 
and unemployment rates.  The Indonesian and foreign business 
communities responded warmly to Yudhoyono's agenda, and 
continue to support him strongly. 
 
¶18.  (SBU) Aside from the tsunami disaster, the defining 
moment of Yudhoyono's first year in office proved his bold 
decision to raise subsidized fuel prices by an average of 126 
percent on October 1, 2005.  The fuel subsidy cuts open the 
door to the most significant expansion of GOI social and 
development spending in a decade, and Indonesia's FY 2006 
budget shows a 28 percent increase in non-interest, 
non-subsidy spending.  But the subsidy cuts caused hardship 
to millions of low-income Indonesians accustomed to decades 
of cheap gasoline and kerosene, led to a surge in inflation 
and took some steam out of the economy.  In order to raise 
growth, SBY's highly regarded Coordinating Minister for 
Economics, Dr. Boediono, has said that the GOI will ramp up 
government development spending and issue a package of 
measures to improve the business climate.  As Indonesia's 
second largest non-oil and gas export market and the leading 
investor in the energy sector, we have an interest in 
Boediono's success.  Getting ExxonMobil's long-delayed USD 3 
billion Cepu oilfield project in East Java off the ground has 
shaped up as a test of Boediono,s ability to cut through 
bureaucratic red tape. 
 
U.S. Assistance Programs 
------------------------ 
 
¶19.  (SBU) For more than 40 years, the U.S. has had an active 
bilateral assistance program in education, public health, 
support for democracy, and economic growth including 
 
JAKARTA 00002917  006 OF 007 
 
 
infrastructure development.  In FY05 the bilateral USAID 
program came in at more than $135 million (appropriated 
dollars and food aid combined) and we actively work with 
Indonesian partners in areas Indonesia has identified as of 
highest priority.  The USAID program in Indonesia aims to 
"Help Indonesia Succeed."  The USAID country-wide assistance 
program works with the GOI, local governments and private 
partners, including civil society, to improve the quality of 
basic education; improve the delivery of essential public 
services at the community level, including health services 
and clean water; create a better business, trade and 
investment environment that will support economic growth that 
generates new and better jobs; promote more accountable and 
transparent governance at the national and local levels; and 
promote biodiversity and environmental protection.  Ensuring 
that Indonesians know of this contribution remains a key part 
of our public diplomacy and the mission, through PAS and 
USAID, conducts active campaigns to get this message out to 
the media. 
 
¶20.  (SBU) These programs allow the U.S. to lay the 
foundation for a better future for the people of Indonesia, 
while responding rapidly to more immediate requirements as 
varied as response to the Indian Ocean tsunami disaster; 
implementation of the Aceh peace accord; avian influenza and 
polio outbreaks; and an HIV/AIDS epidemic that risks breaking 
out.  Anti-corruption support, including a focus on 
"governance" issues in all sectors in which we work, as well 
as specific institutional support for justice sector reform, 
addresses one of the most difficult economic and democratic 
development issues faced by Indonesia today, and one of the 
highest priorities of SBY's government.  With USAID and other 
assistance, continued progress in the fight against 
corruption and better delivery of basic services will help 
Indonesia qualify for full support from the Millennium 
Challenge Corporation.  Indonesia just received MCC 
"threshold status." 
 
Assistance Programs for Aceh 
---------------------------- 
 
¶21.  (SBU) The U.S. has provided Indonesia tsunami recovery 
and reconstruction assistance totaling $400.1 million (and 
U.S. the private sector contributed more than $1.4 billion to 
the regions).  USAID implemented more than $43 million for 
relief and transition activities in the weeks following the 
tsunami and earthquake.  We have directed the remaining $357 
 
SIPDIS 
million to U.S.-managed reconstruction activities, debt 
relief ($20.1 million), a contribution to the jointly-managed 
Government of Indonesia-World Bank Multi-donor Trust Fund 
($10 million), and activities of the U.S. Trade and 
Development Agency ($2.5 million).  The U.S. will rebuild the 
road from Banda Aceh to Meulaboh and other vital 
infrastructure, restore livelihoods, and improve essential 
basic services (health, education, water, sanitation, and 
environment) while strengthening local governance capacity to 
manage these services.  We provide technical assistance to 
develop national and local disaster planning and 
preparedness, including early warning systems.  We have 
programmed more than $10 million to assist the implementation 
of the landmark peace agreement between the GOI and Free Aceh 
Movement (GAM) separatist movement.  Our programs promote 
public understanding and support of the agreement, help 
integrate former combatants into Acehenese society and 
sustain community-based development. 
 
Avian Influenza 
--------------- 
 
¶22.  (SBU) Indonesia's size and complexity complicated its 
response to H5N1 avian influenza (AI), and while we should 
praise Indonesia's efforts to prepare for a potential 
pandemic, much work remains.  Of a total 28 confirmed human 
cases since July 2005, 20 have proven fatal, a number second 
only to Vietnam.  Since SBY designated Coordinating Minister 
for People's Welfare Aburizal Bakrie to coordinate its AI 
activities, the GOI has developed an initial AI preparedness 
framework, but must improve coordination among health, 
agriculture and other sectors. Since the first confirmed AI 
patient in July 2005, Indonesia has responded with case 
investigations, has proven quick to report findings, and 
shared samples for confirmation with international 
laboratories.  The Ministry of Health (MOH) has established 
outbreak response teams to investigate reported human cases. 
The U.S. Navy Medical Research Unit (NAMRU-2) in Jakarta has 
supported the Health Ministry through its 24-hospital 
 
JAKARTA 00002917  007 OF 007 
 
 
influenza surveillance system, initial laboratory testing for 
the AI virus in hundreds of human samples, and outbreak 
investigations.  We have exchanged draft MOU's and expect to 
begin intensive negations soon to re-establish NAMRU-2's 
long-term legal status. 
AMSELEM