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U.S.-Indonesia Relationship - B. Lynn Pascoe

U.S.-Indonesia Relationship

B. Lynn Pascoe, U.S. Ambassador to Indonesia
Remarks at U.S.-Indonesia Society Dinner
Jakarta, Indonesia
March 23, 2006

Minister Boediono, other distinguished Ministers, Ambassadors Arifin, Masters and LaPorta, Pak Emil, other distinguished guests, Ladies and Gentlemen:

Good evening. First, let me say what a pleasure it is to be here with you and to share the podium with such a distinguished group. Our deepest thanks go to the U.S.- Indonesia Society, and the American and Indonesian Chambers of Commerce for hosting this event tonight. These organizations are doing excellent work in promoting Indonesia and the U.S.- Indonesian relationship. We value our close working relationship with you. And Mr. Minister, as always, I was deeply impressed by your remarks and the excellent work that you and your team are doing for the people of Indonesia.

It has been ten months since USINDO hosted a dinner in Washington where we heard President Yudhoyono discuss his hopes and plans for Indonesia. I want to talk tonight about how well Indonesia has done and how the relations between our two countries have progressed since he made that historic trip to Washington. Ten months is a short period of time, but the developments have been dramatic and far-reaching.

Last May, Indonesia was moving from a period of emergency relief and planning for coping with the terrible destruction in Aceh to the establishment of a new office (the BRR) charged with carrying out the massive reconstruction work in the region.

No one could know at that point if the innovative BRR headed by Pak Kuntoro and his band of determined officials, could deliver on President Yudhoyono's promise of a clean and effective reconstruction program for Aceh; one that responded to the needs and desires of the people while at the same time ensuring that precious contributions from Indonesians and foreigners alike were not squandered or misused.

We have seen dramatic results. The fledgling agency established itself as the new standard for Indonesian governance: clean, pragmatic, efficient, and well-able to serve the people it seeks to help. Its bottom up strategy ensured that the people of Aceh took part in building their own future; its strict adherence to international standards of accountability honored the promise that assistance would not be misspent. In addition to the improvement in the lives of the people of Aceh, this remarkable performance by BRR has had a very positive effect on Indonesia's reputation worldwide.

Then, of course, we have the peace process in Aceh, brilliantly negotiated and skillfully implemented. All Indonesians hope that with the completion of the legislative process in the next few weeks, the peaceful reintegration of Achenese society can be achieved. Who among us here would have predicted peace in Aceh could come so quickly? It is a truly remarkable and commendable achievement. Indonesia's success in meeting the enormous challenges in Aceh demonstrates that this country is getting its priorities right and that the government is both determined and capable to lead Indonesia to a bright future.

I would also like to note the impressive successes Indonesia has had in the area of counter-terrorism over the past ten months. With Azahari deservedly dead and Noordin Top and other mass killers on the run, we note a clear sense in Indonesia that the tide is turning; that the level of terrorist violence is decreasing; and that Indonesia and its neighbors have the will and the stamina to fight this vicious struggle to the end and to win. Similarly, the government and many eminent figures understand the need to combat the twisted ideology that encourages young people to kill themselves as well as innocent bystanders. The war against terrorism is, of course, far from over -- we likely will see the terrorists lash out again -- but it is heartening to see that this government is so committed to eliminating this abomination against civilized society.

It's hardly necessary to mention to this audience the government's successful effort to get control of its budget by reducing the fuel subsidy last fall. This action was followed soon after by the return of Minister Boediono to the forefront of economic policy-making and the rotation of other key personnel. A renewed sense of urgency and purpose in resolving Indonesia's enormous economic problems is very much in the air in Jakarta. Complementing this effort to get the economics right, President Yudhoyono has made impressive progress in promoting good governance by pressing an anti-corruption program that is rapidly gaining traction. As these efforts to clean up the administrative atmosphere and strengthen the rule of law begin to show fruit, the efficiency and attractiveness of the economy for investment will greatly improve. Indeed, it's obvious to all of us that economic development and instituting good governance are keys to resolving Indonesia's other social ills.

These few months also have seen a major effort by the government to regain Indonesia's rightful stature in the region and the world. As the fourth largest country, Indonesia should play a role in world affairs that matches its size and potential. It has taken a more prominent role in ASEAN and is working to increase its influence in the Asian region and globally. On his trips abroad, President Yudhoyono has enhanced Indonesia's role and advanced its interests with a confident and activist foreign policy. He has effectively showcased Indonesia's moderate, democratic successes as a model for the world at large.

As I look back on the ten months since that Washington dinner, I am also struck by the dramatic changes in the U.S.- Indonesian relationship. Our Presidents have met three times during this short period for substantive discussions of bilateral and global issues. They share an optimistic vision of the future and a strong sense of how our two great nations can work together for the benefit of our peoples and the entire world.

This sense of shared purpose was particularly evident during Secretary Rice's extremely successful visit to Jakarta last week. During her meetings here, the two sides discussed global developments in depth, agreeing to coordinate policies in areas where our two democracies see eye-to-eye and to working together for a brighter future for our children. Secretary Rice was again impressed with President Yudhoyono's vision and commitment to reform and the economic team's ambitious plans to improve Indonesia's economic performance. She made it abundantly clear that the U.S. stands with Indonesia in its efforts to transform its economy and promote the well being of the Indonesian people.

The lifting of military-to-military restrictions last November was vital to the future of the developing strategic partnership between our two countries. It opened the way for us to develop full cooperation in a wide range of areas. For example, the change will allow the United States to support the policies of the Indonesian government to promote military reform and to assist it in developing a modern structure for the Armed Forces that fully reflects Indonesia's democratic transition to civilian control. Given the threats to our common security, a more effective and modern Indonesian military benefits both of us and indeed the entire region.

Last June, Congress appropriated a generous $400 million to support the relief and reconstruction of Aceh and Nias. This has allowed us to focus on improving access to healthcare in the region, providing long-term shelter, building capacity at the local government and village levels, and increasing access to education and infrastructure development. We carried out immediate roadwork to support reconstruction and are well into building the 240-kilometer Banda-Aceh to Meulaboh road that will serve as the transportation backbone of the tsunami-affected region.

Private donations from the United States played a major role in tsunami relief. We know, because we have worked closely with many of you in this room and the corporations you represent to carry out shared programs to help the people affected by this tragedy. The U.S. military, which provided crucial logistical support in the first weeks of the disaster, has continued its assistance through missions of the USNS Mercy hospital ship and cooperative efforts with the TNI in Nias to build schools and bridges.

Our nation-wide assistance programs have also moved forward in this period: In the health area, we have worked to improve management in decentralized health agencies and supported programs to eradicate disease and improve community health. We are contributing an additional $11.5 million this year to fight avian influenza in Indonesia and providing extensive technical assistance through NAMRU-II here in Jakarta and the CDC in Atlanta.

In education, we are well into implementation of a six-year, $157 million initiative announced by President Bush in Bali to improve the quality of education in Indonesia. That program is now at work in over 1,000 schools, both public and religious, located in nearly fifty districts throughout Indonesia. The number will expand to over 120 districts in the next few years. Secretary Rice saw first hand some of the innovative teacher training included in the program that is resulting in better student performance in critical subjects such as math and science. She also announced a program with the Children's Television Workshop to develop an Indonesian version of Sesame Street to help prepare millions of Indonesian children for school.

Let me commend the efforts of the U.S.- Indonesia Society and its generous donors for the Aceh School Project which directly contributes to Indonesia's educational goals and to the rebuilding of Aceh. Like you, I am also keen to improve our engagement with Indonesia on higher education. We are proud of the number of Indonesians who have studied in the United States and are eager to greatly increase those numbers.

The embassy has overhauled it visa procedures to ensure students receive priority treatment, and the United States Government is working with American colleges and universities to increase their recruitment and scholarships for Indonesians. We want Indonesian students to know that they are welcome in the United States, indeed they are eagerly sought.

In addition, of course, to those studying in the U.S. on their own resources, we have eighty-eight Indonesian students on Fulbright scholarships and expect to have over a hundred in the U.S. next year. In addition, we will add fifty new PhD scholarships in 2007, if Congress approves, as our contribution to the Presidential Scholars Initiative. Again, let me express our appreciation to USINDO for pushing this invaluable initiative.

Mr. Minister, we are strongly supportive of your government's efforts to promote economic development and good governance. President Yudhoyono's efforts to root out corruption are particularly welcome. In recognition of its intensive reform efforts, Indonesia was recently selected for threshold status by the board of the Millennium Challenge Corporation. We look forward to working closely with the Indonesian government to help it succeed in reaching full eligibility for this premier development program.

Let me add, however, as important as bilateral assistance is, it pales in importance when compared to the power of foreign direct investment to promote economic development and to transform people's lives.

I applaud the efforts of the Yudhoyono government and the steps outlined in recent days by Minister Boediono to improve Indonesia's investment climate. At the same time, I must say that I am appalled at much of the rhetoric and the demonstrations that we have seen over the past few days opposing foreign investment in Indonesia. Where do you suppose these people have been for the past 50 years? Or even the past 5? How can someone have missed the fact that foreign investment has been the critical element of economic growth for many countries in the region and has produced the economic miracles that have pulled hundreds of millions of people out of poverty? No economy that discourages investment can compete with open economies. A country with restrictive investment policies only hurts itself, its people, and its own future.

Foreign investment has worked for Asian countries just like it worked for Europe and for the United States. The United States has been, and continues to be, an enormous recipient of foreign investment, and multinational firms operate openly and freely throughout the United States. It's an obvious fact that foreign direct investment is behind the recent dramatic growth of China, India, and your ASEAN neighbors? Let me quote some figures: From 2000 through 2004, China received $274 billion in foreign direct investment, Singapore $58 billion, India $22 billion, and Malaysia $15 billion. People in this room know the equivalent figure for Indonesia, the world's fourth largest country net investment was well under $5 billion for the same period. The current campaign against foreign investors is particularly damaging because, for the first time since the crisis, Indonesia's FDI numbers picked up significantly over the past year and companies are thinking again about making major investments here.

People who are arguing against foreign investment in Indonesia or are trying to close down successful multinational companies operating here might have someone's interests at heart, but it's certainly not the interests of the people of Indonesia. Fortunately, the Government is not tempted by these ridiculous arguments and understands well that the future prosperity for the people of Indonesia demands much more, not less, direct foreign investment. Mr. Minister, I salute your efforts in this regard and want you to know you have our full support.

Ladies and Gentlemen, events of the past ten months since we dined in Washington with President Yudhoyono have shown the path for a very bright future for Indonesia and for our bilateral relations. In looking ahead, I would like to leave you with something Secretary Rice said in Jakarta last week: The United States and Indonesia "are building a true partnership - defined not just by the immediate threats we oppose, but by the enduring ideals we seek to promote: Peace and security; opportunity and prosperity; freedom and democracy; and justice and tolerance." I am confident that our partnership based on such a firm foundation will endure. Thank you very much.

Released on March 23, 2006


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