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Cablegate: Indonesia Withdraws From Opec

VZCZCXRO5778
RR RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHJA #1052 1500935
ZNR UUUUU ZZH
R 290935Z MAY 08
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 9135
RHMFIUU/DEPT OF ENERGY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHKO/AMEMBASSY TOKYO 2035
RUEHBY/AMEMBASSY CANBERRA 2572
RUEHBJ/AMEMBASSY BEIJING 5089
RUEHUL/AMEMBASSY SEOUL 4634

UNCLAS JAKARTA 001052

DEPT FOR EAP/MTS AND EB/ESC/IEC
DEPT PASS OPIC, EXIM, TDA
DOE FOR CUTLER/PI-32 AND NAKANO/PI-42
COMMERCE FOR USDOC 4430

SIPDIS
SENSITIVE

E.O. 12958: N/A
TAGS: EMIN ENRG EINV PREL ID
SUBJECT: Indonesia Withdraws From OPEC

1. (SBU) Summary: Government of Indonesia (GOI) Energy Minister
Purnomo Yusgiantoro signed a decree on May 29th to formalize
Indonesia's withdrawal from the Organization of Petroleum Exporting
Countries (OPEC). GOI officials cited high global oil prices and
Indonesia's status as a net importer of oil as the reasons for
withdrawing from the oil cartel. GOI officials tell us that
President SBY made the decision personally to withdrawal from OPEC.
Indonesia was OPEC's only Southeast Asian member. End Summary.

2. (SBU) The decision to withdraw was announced following a meeting
of President Yudhyono and his budget advisors on May 28th.
Indonesia is under increasing budgetary pressures resulting from
rising global commodity prices. President SBY recently made the
publicly unpopular decision to scale back Indonesia's fuel subsidy
program, raising fuel prices almost 30 percent. Withdrawing from
OPEC will save the GOI $3.1 million in annual dues; however
Indonesia is already paid up until the end of 2008.

3. (SBU) The announcement of the decision was not planned in
advance; it was revealed in response to a question from a
journalist. However the GOI's willingness to discuss the decision
six months in advance of Indonesia's expiration of dues underscores
the limited utility of OPEC membership to Indonesia. GOI officials
acknowledged Indonesia's limited influence within OPEC and do not
expect any adverse reaction from its withdrawal. At worst, the
decision may result in a short-term loss to Indonesia's
international standing and prestige. There is no immediate impact
from Indonesia's decision on U.S. policy or interests. Given that
Indonesia's output is less than one million barrels of oil per day
(out of OPEC's total of approximately 30 million), Indonesia has
little influence over OPEC's decisions to raise or lower output.

HEFFERN

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