VZCZCXRO0094
RR RUEHCHI RUEHDT RUEHHM
DE RUEHJA #2616/01 2610657
ZNR UUUUU ZZH
R 180657Z SEP 07
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 6313
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHKO/AMEMBASSY TOKYO 0813
RUEHBY/AMEMBASSY CANBERRA 1194
RUEHWL/AMEMBASSY WELLINGTON 1770
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUEHRC/USDA FAS WASHDC

UNCLAS SECTION 01 OF 02 JAKARTA 002616 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
DEPT FOR A/S HILL AND EAP/MTS 
TREASURY FOR IA-BAUKOL 
SINGAPORE FOR BAKER 
DEPT PASS USTR FOR DBHATIA AND DKATZ 
COMMERCE FOR 4430/GOLIKE 
ENERGY FOR A/S HARBERT, CUTLER AND GILLESPIE 
 
E.O. 12598: N/A 
TAGS: ECON PGOV EINV SENV ID
SUBJECT: U/S Jeffery Meeting with Vice President Kalla 
 
¶1. (SBU) Summary. Vice President Jusuf Kalla and Under Secretary 
Reuben Jeffery discussed U.S.-Indonesia cooperation in 
anti-corruption, energy security, and climate change during a 
forty-minute meeting on September 11.  Kalla returned to his 
customary theme of the importance of stability and economic security 
for the Indonesian people amidst the continuing social upheaval that 
accompanies democratization.  Kalla also expressed the hope that the 
U.S. and EU can achieve a breakthrough on agricultural subsidies to 
save the Doha Development Round. End Summary. 
 
¶2. (SBU) Kalla started the meeting by observing that Indonesia had 
learned a great deal from the Asian financial crisis ten years ago. 
He expressed confidence that the sub-prime mortgage meltdown in the 
U.S. would have little effect on Asia, in general, and Indonesia, in 
particular.  He said the Indonesian financial system was in a much 
stronger position than ten years ago. Soaring commodity prices have 
caused some pain domestically but have also been a boon to a host of 
primary products industries, which are Indonesia's strength. 
 
¶3. (SBU) Turning to the first theme of U/S Jeffery's visit - 
anti-corruption efforts - Kalla said no other country in the region 
has arrested as many public officials, whether at the national or 
local level, as Indonesia.  He said the GOI has served notice to all 
politicians and bureaucrats that corruption will not be tolerated. 
He repeated his complaint that the initial success of the GOI's 
anti-corruption efforts has caused increased cautiousness by public 
officials regarding contracts and procurement. 
 
¶4. (SBU) Kalla welcomed U/S Jeffery's offer of increased cooperation 
in energy security and noted that the GOI is looking for more 
foreign direct investment (FDI) across the board in energy.  He said 
the GOI's energy plan calls for the country to diversify its energy 
mix and seeks FDI in oil, natural gas, coal, as well as in 
non-traditional biofuels and coal-bed methane.  Kalla added that 
growing interest in biofuels has been a boon for crude palm oil 
(CPO) producers who grow the feedstock for biodiesel, but it has 
also had two less than salutary impacts.  Rising global corn prices 
as a result of the U.S. ethanol program have raised the price of 
chickens in Indonesia, which is both upsetting and perplexing to the 
average Indonesian.  He said the boom in CPO has also meant the 
doubling of cooking oil prices domestically.  The GOI has had to 
raise its outlays for subsidized cooking oil, but the budget cannot 
accommodate a full subsidy.  Kalla noted the second impact was in 
the form of increased pressure on Indonesian forests.  The GOI is 
under pressure to clear more land for palm oil plantations.  GOI 
policy is to create harmony between the need for a clean 
environment, plentiful food supplies, and energy security. 
 
¶5. (SBU) Warming to his subject, Kalla talked at length on the need 
to make best use of marginal land for biofuels feedstock.  He said 
already cleared land that was unused for food production was ideal 
for cultivating the jatropha plant, which can also be used for 
biofuels feedstock.  "We can use jatropha," he said, "to maximize 
biofuels without hurting food production or the forests."  Kalla 
also welcomed U/S Jeffery's offer to seek ways to share U.S. 
technology in biofuels since the U.S. faces the issue of food versus 
fuel in the biofuels arena. 
 
¶6. (SBU) Turning to climate change, Kalla mentioned that President 
Yudhoyono would be traveling soon to New York for a UN meeting on 
the subject and that Indonesia was proud to be hosting COP-13 in 
Bali in December.  Kalla noted that Indonesia has great 
environmental challenges but that it was not alone in that regard. 
He said the rest of Asia, Africa, and India all share the same 
concerns about sustainable development.  Kalla added that 
environmental problems - like haze from land-clearing fires - were a 
big concern to everyone in the region.  Kalla said the GOI is 
looking for international cooperation on the environment and would 
be glad to partner with the U.S. 
 
¶7. (SBU) Kalla then returned to one of his frequent themes with 
official USG visitors: the need for economic security for 
Indonesians as democratization continues apace.  He noted that 
Indonesia and the U.S. have partnered successfully in 
counter-terrorism efforts.  However, Indonesia will require 
sustained economic development to fight poverty and unemployment. 
The people of Indonesia need stability and economic development, not 
 
JAKARTA 00002616  002 OF 002 
 
 
just democracy.  "What good is democracy without growth and 
stability?" he asked.  Indonesia needs FDI for growth and noted that 
the Department of State travel warning is not helpful in getting 
potential investors to visit Indonesia. 
 
¶8. (SBU) In closing, Kalla expressed his hope that the U.S. and EU 
can bridge their differences on agricultural subsidies to save the 
Doha Development Round.  He added that Indonesia had a great 
interest in seeing agriculture subsidies eliminated as this would 
benefit Indonesian farmers.  Kalla mused that the proliferation of 
bilateral agreements around the region might complement the Doha 
talks and noted that Indonesia had recently signed bilateral deals 
with Japan and Korea. 
 
¶9. (U) U/S Jeffery cleared this cable. 
 
HUME