VZCZCXRO4430
OO RUEHCHI RUEHDT RUEHHM
DE RUEHJA #3170/01 3131035
ZNY CCCCC ZZH
O 091035Z NOV 06
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1974
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS PRIORITY
RUEHBY/AMEMBASSY CANBERRA PRIORITY 0076
RUEHWL/AMEMBASSY WELLINGTON PRIORITY 1121
RUEHKO/AMEMBASSY TOKYO PRIORITY 0093
RHHJJPI/USPACOM HONOLULU HI PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 04 JAKARTA 013170 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR PM/RSAT, EAP/MTS, EAP/RSP 
 
E.O. 12958: DECL: 11/09/2016 
TAGS: MARR PREL PGOV MNUC RI
SUBJECT: PM A/S HILLEN'S POLITICAL-MILITARY TALKS IN JAKARTA 
 
Classified By: Ambassador B. Lynn Pascoe, for reasons 1.4 (b, d). 
 
¶1. (C) Summary:  Assistant Secretary for Political-Military 
Affairs John Hillen discussed a range of political-military 
issues with Indonesian Minister of Defense Sudarsono, Foreign 
Affairs Director General Hariyadhi and other public leaders 
in Jakarta on November 7. The discussions built on similar 
talks in February, 2006 and emphasized the need to give 
concrete expression to the maturing bilateral relationship in 
the form of agreements and other mechanisms for cooperation. 
Key topics were defense reform, a Status of Forces Agreement 
(SOFA), the Proliferation Security Initiative (PSI), 
Indonesia's UNIFIL deployment, the Global Peace Operations 
Initiative (GPOI) and the Defense Reform Management Study 
(DRMS).  The Indonesians expressed support for increased 
bilateral political-military cooperation and welcomed further 
discussion on most of the agenda issues.  Sudarsono 
underscored Indonesia's limited economic means for military 
development and its priority on disaster relief.  A lengthy 
exchange on PSI with Foreign Affairs interlocutors elicited 
renewed statements of common interest but persisting 
reservations over its compatibility with the United Nations 
Law of the Sea (UNCLOS).  End summary. 
 
 
DEFENSE MINISTER SUDARSONO:   DISASTER RELIEF, SLOW GROWTH 
 
¶2. (C) In a meeting at the Department of Defense (DEPHAN), 
Defense Minister Juwono Sudarsono expressed appreciation for 
the lifting of the U.S. "embargo" on cooperation with the 
Indonesian military (TNI).  This was allowing the TNI to 
rebuild its capabilities.  For the immediate future, however, 
the emphasis would be on developing non-strike capabilities. 
Hillen said the embargo should be seen as an aberration, 
whereas now U.S.-Indonesian relations were becoming more 
normal.  It was important to demonstrate progress in order to 
maintain the support of respective publics.  The conclusion 
of a Status of Forces Agreement (SOFA) and an Article 98 
agreement as well as Indonesian accession to the 
Proliferation Security Initiative (PSI) would provide 
concrete evidence of trust, good faith and a mutual 
commitment between the two countries.  Hillen concurred that 
strike capabilities were less important for Indonesia at this 
time than counter-proliferation, counter-terrorism, maritime 
security, humanitarian assistance and disaster relief.  Many 
of these challenges were transnational or even regional in 
scope, and bilateral military cooperation would increase 
regional capabilities to address them. 
 
¶3. (C) On military reform, Sudarsono said a priority was to 
redesign the responsibilities of the TNI in Indonesia's 
provinces, i.e. modify the traditional "territorial system" 
inherited from the past, but this would require time.  Only a 
third of Indonesia's provinces had sufficient civilian cadres 
to meet local needs in public services such as disaster 
relief, schools and so forth.  Because civilian resources 
were still weak, there was still a real need for TNI 
involvement in local communities.  Sudarsono predicted the 
next 15 years would see considerable popular unrest if 
economic development did not keep pace with heightened 
expectations.  Half of the country's population remained 
below the poverty line, and this had to be factored into the 
equation military reform and expenditures.  Hillen pointed 
out that military cooperation offered a broad range of U.S. 
tools and resources which could help Indonesia to address 
these problems. 
 
...UNIFIL AND PEACEKEEPING TRAINING 
 
¶4. (C) Regarding Indonesia's participation in the United 
Nations Forces in Lebanon (UNIFIL) and Indonesia's plans to 
develop a regular cadre of peacekeeping forces, Sudarsono 
noted that Indonesia historically had contributed PKO troops. 
 UNIFIL would be Indonesia's first multilateral involvement 
in a hostile situation, however.  Hillen emphasized UNIFIL's 
objective was to secure southern Lebanon but also to 
facilitate the transition to Lebanese state control of its 
own territory.  Hizbollah was a significant force and had to 
be disarmed.  The disarmament and integration of Hizbollah 
was the job of the Lebanese forces, but this would take time 
and would not be easy.  Lebanon's military must be 
strengthened to restore security to the country.  The United 
States was committing substantial assistance to the reform of 
the Lebanese armed forces.  Sudarsono said the Indonesian 
contingent would be deployed in eastern Lebanon along the 
 
JAKARTA 00013170  002 OF 004 
 
 
blue line, in the Sheba Farms vicinity, but lacked a demining 
capability.  Noting that USG had worked to overcome Israeli 
resistance to Indonesian participation in UNIFIL and to find 
funding to transport Indonesian forces to Lebanon, Hillen 
said the United States could also help Indonesia on demining 
through the UN Mine Action Program.  Indonesia's presence in 
Lebanon marked a quick and significant return on the PKO 
training the U.S. military had given Indonesia earlier in the 
year. 
 
¶5. (C) Sudarsono said he hoped the UNIFIL experience and 
further PKO training would produce a standing reserve trained 
and equipped for PKO deployment.  These forces could also if 
necessary be deployed in Papua, central Sulawesi and other 
areas of ethnic conflict within Indonesia.  The Indonesian 
military was still needed domestically, and President 
Yudhoyono was committed to this strategy.  In so doing, the 
TNI would support the development of democracy.  Economic 
development would be essential, however, for this to succeed. 
 Over three quarters of Indonesia's poor were Muslims, and 
raising the welfare of the people would reduce Islamic 
radicalism. 
 
... MILITARY BUDGET 
 
¶6. (C) Responding to reports that the Indonesian state 
military budget was increasing 15-20 percent per year, 
Sudarsono said the TNI's divestiture of its business 
operations was supposed to be completed by 2009.  He 
stressed, however, that of the 1500 or so business operations 
owned or operated by the TNI, the vast majority involved 
local cooperatives and only six or seven had a value of over 
$50,000.  These few would be taken over by the Department for 
State Enterprises by 2008.  The rest would be required to 
comply with regulations for profit-making organizations.  For 
the next five years, the military expected to meet only half 
of its basic needs through central budgeting, while the rest 
would have to come from local support.  However, the "big 
octopus" of TNI business operations of the past was gone. 
 
¶7. (C) On next steps in bilateral military-to-military 
cooperation, Sudarsono noted that the $12 million in 
U.S.-donated medical equipment and supplies had been 
distributed to local hospitals in Indonesia, civilian as well 
as military.  He said any field-hospital and other basic 
equipment, including things as simple as mosquito netting, 
would be useful. 
 
¶8. (C) Hillen described the U.S. response to the coup in 
Thailand as restrained but making clear that the country 
needed to return to democracy before normal military 
cooperation could be resumed.  Sudarsono commented that Prime 
Minister Thaksin had tried to be more popular than the king 
and that this was a good lesson for the Indonesian military. 
The U.S. response had been the correct one and had sent the 
right message, but the United States should also welcome 
transitional steps on the road back to democracy.  The Thai 
public must respond to make this transition succeed.  Thai 
society was sufficiently wealthy and ethnically homogeneous 
to allow the country to recover quickly. 
 
 
LUNCHEON WITH PUBLIC LEADERS 
 
¶9. (C) In a luncheon discussion with experts, editors, 
legislative deputies and government officials, A/S Hillen 
stressed Washington's positive view of the developing 
military-to-military relationship and appealed for their 
active engagement to shape the bilateral relationship.  It 
was important to maintain public support for 
counter-terrorism, nonproliferation, maritime security and 
disaster relief.  Regional rivalries based on number and 
sophistication of military hardware were counterproductive 
and a legacy of the past and should give way to regional 
cooperation on common challenges.  It was important to show 
progress in order to maintain public support for cooperation. 
 
¶10. (C) Secretary General Imron Cotan from the Department of 
Foreign Affairs (DEPLU) said Indonesia had turned to Russia 
for military equipment because of the U.S. embargo and Russia 
continued to offer attractive terms.  However, most of 
Indonesia's existing equipment was still U.S. and so it was 
natural to look again to the United States for future 
equipment procurement.  Cotan and Commission I Chairman Theo 
Sambuaga of the National Legislature (DPR) highlighted the 
 
JAKARTA 00013170  003 OF 004 
 
 
current DPR debate over whether civilian law enforcement 
officials and civilian courts should have legal jurisdiction 
over military personnel.  Sambuaga also stressed the need to 
eliminate illegal business dealings within the military 
which, he asserted, mainly benefited senior officers, set a 
bad example for the rank and file and undermined morale. 
Although budgetary means were still limited, the DPR and 
DEPHAN were working to raise military salaries to reduce 
incentives for corruption.  National Employers Association 
Board Chairman Sofyan Wanandi said the number of viable TNI 
businesses was very small, while Tempo Magazine 
Editor-in-Chief Bambang Harymurti pointed out that TNI assets 
in some cases included schools, hospitals and other public 
facilities, some of which were very lucrative but represented 
a significant sum in terms of compensation if the TNI were to 
turn them over.  Cotan said Indonesia's UNIFIL deployment was 
for the duration of the mission.  Hillen stressed that the 
UNIFIL mandate was a chapter 7 mandate in everything but name 
and that UNIFIL troops would be expected to take action 
against violations. 
 
 
DEPARTMENT OF FOREIGN AFFAIRS ROUNDTABLE 
 
¶11. (C) In the main discussion with the Department of Foreign 
Affairs (DEPLU), A/S Hillen said the bilateral 
political-military relationship was doing well.  It should 
become strong enough that small incidents would not sidetrack 
it.  The new security environment of non-traditional, 
transnational threats provided a focus for common interests, 
including nonproliferation, counter-terrorism, maritime 
security and disaster relief. 
 
... STATUS OF FORCES AGREEMENT (SOFA) 
 
¶12. (C) DEPLU Director General for Europe and the Americas 
Eddy Hariyadhi cited recent talks on a Status of Forces 
Agreement (SOFA) as a sign of progress in the relationship. 
He had had a productive exchange with Ambassador Loftis in 
early October and had ended by leaving the door open to 
further talks.  Hillen said conclusion of a SOFA would send a 
strong signal of bilateral progress.  The United States had 
such arrangements with most of its friends and allies and it 
could be considered a pedigree for a serious relationship.  A 
SOFA would anchor the relationship, providing stability when 
incidents occurred, but also would facilitate quicker 
responses when prompt action was needed. 
 
¶13. (C) Hillen described continued Indonesian military reform 
as a pacing mechanism which provided the measure for 
political-military cooperation.  On strengthening civilian 
authority, Hariyadhi said Indonesia had adopted a one-door 
policy of military procurement in July, 2006 requiring DEPHAN 
approval of all military purchases.  Hillen stressed the 
importance of the Defense Resource Management Study (DRMS) 
and the need to move forward with it.  Ambassador Pascoe and 
Embassy Security Assistance Officer Col. Ken Comer explained 
the importance of U.S. licensing requirements and noted that 
in most cases problems arose from improperly completed 
applications and did not represent a denial.  USG had 
conducted training sessions for Indonesian defense officials 
in purchasing under the Foreign Military Sales (FMS) and 
other assistance programs, and would continue to offer these 
to ensure continuity of DEPHAN institutional knowledge of the 
process. 
 
... UNIFIL DEPLOYMENT 
 
¶14. (C) On Indonesia's deployment of a peacekeeping 
contingent for UNIFIL in Lebanon, Hillen underscored the 
mission's purpose was to support UN Security Council 
Resolutions 1559 and 1701, both of which had been passed 
unanimously, and UNSCR 1701 in particular was designed to end 
Hizbollah's status as a separate armed entity.  Some 
Hizbollah elements would resist this move, and UNIFIL troops 
should be prepared to enforce their mandate.  This was 
important for restoring Lebanese sovereignty and stability 
and dialogue in the Middle East but also for containing 
Iran's influence in Lebanon.  Muslims throughout the world 
wanted peace in the Middle East and the United States was 
working to restore dialogue between Israel and the 
Palestinians.  The United States welcomed the opportunity to 
assist Indonesia's deployment.  Indonesian Acting Deputy 
Director for International Security Yonatri Dilmania thanked 
USG for its assistance. 
 
JAKARTA 00013170  004 OF 004 
 
 
 
 
... PROLIFERATION SECURITY INITIATIVE (PSI) 
 
¶15. (C) Iran's nuclear program presented a second security 
threat, Hillen said, which was destabilizing for the Middle 
East and beyond.  Once Iran had nuclear weapons, Saudi Arabia 
and other Arab nations might seek them, too, and the world 
could expect to see new nuclear weapons states in the next 
decade.  This was not in the interest of either the United 
States or Indonesia.  The Proliferation Security Initiative 
(PSI) was an effective mechanism for containing Iran's 
ambitions as well as other types of proliferation.  The 
Iranian and North Korean nuclear programs would likely 
dominate the UN Security Council agenda during Indonesia's 
tenure on it.  Indonesia should consider this as it framed 
its UNSC strategy and consider what it could do to help stop 
proliferation now.  Joining PSI was one way to accomplish 
this.  Ambassador Pascoe added that the Indonesian proposal 
for a "bilateral PSI" was ill-defined and that the 
international community needed to be able to take concerted 
and quick action against defined proliferators.  Indonesia 
would soon have the radars necessary to assist in this effort 
in the Strait of Malacca.  U.S. objectives were to strengthen 
the control of Indonesia and its neighbors over the 
international waters in the region.  Deputy Director for 
Regional Security and Arms Transfers Henry Tucker suggested 
that if Indonesia could not sign on now to PSI, at least it 
could publicly endorse PSI principles and announce its 
intention to enforce its territorial sovereignty in respect 
to illicit transport.  Accession did not obligate Indonesia 
to act if it did not wish to. 
 
¶16. (C) Hariyadhi said Indonesia shared U.S. concerns on 
substance but had reservations about interdiction.  Hillen 
said the two sides should continue to explore options but 
keep a full PSI on the table as one of them.  The 
effectiveness of the initiative was growing exponentially 
with every new member, and Indonesia's accession as the 
world's fourth most populous country would have a substantial 
impact.  Some states were quiet members, which was also 
acceptable.  Cooperation involved sharing intelligence, 
training and interdiction.  Other maritime nations had joined 
PSI, and a way could be found to accommodate the Indonesia's 
legal requirements.  Eventually the initiative might reach 
the scope of a UN operation, but PSI would not be saddled 
with bureaucratic process and protracted discussion.  This 
was a serious consideration with Iran seeking a seat on the 
UN Disarmament Committee.  Hariyadhi thanked the U.S. 
delegation for the update but restated the Indonesian 
position that PSI exceeded the UN Law of the Sea. 
 
... GLOBAL PEACE OPERATIONS INITIATIVE (GPOI) 
 
¶17. (C) On the Global Peace Operations Initiative (GPOI), 
Hillen expressed satisfaction that the two sides had been 
able to move quickly earlier in the year to establish 
cooperation on peacekeeping training.  This had helped to 
facilitate U.S. support for Indonesia's UNIFIL deployment. 
GPOI was a G-8 initiative involving a U.S. contribution of 
$660 million over five years.  It was especially aimed at 
African and Asian partners.  The United States wanted to find 
ways to support the training center that Indonesia was 
establishing, though U.S. funding could be used only for 
military, but not for police, training. 
 
¶18. (U) This message was cleared by Assistant Secretary 
Hillen. 
PASCOE