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Cablegate: Working with Indonesia in the G-20

VZCZCXYZ0001
RR RUEHWEB

DE RUEHJA #1641/01 2740857
ZNR UUUUU ZZH
R 010857Z OCT 09
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 3448
RUEATRS/DEPT OF TREASURY WASHDC
INFO RHEHNSC/NSC WASHDC

UNCLAS JAKARTA 001641

SIPDIS
SENSITIVE

DEPT FOR U/S HORMATS
TREASURY FOR U/S DESIGNATE BRAINARD
EAP A/S CAMPBELL, DAS MARCIEL
DEPT ALSO EAP/MTS, EEB/EPPD/PA, AND EEB/IFD/OMA

E.O. 12958: N/A
TAGS: PREL EFIN ECON ID
SUBJECT: WORKING WITH INDONESIA IN THE G-20

1. (SBU) Summary. The United States can partner with Indonesia in
the G-20 to advance our interests. Of the eleven countries in the
G-20 who are not in the G-8, Indonesia is arguably the one with whom
we have the least developed ties and the one least prepared
institutionally to actively participate. But many of the areas
discussed at the Pittsburgh G-20 Summit - elimination of fuel
subsidies, food security, and climate changes - are areas where we
can partner with Indonesia to advance our mutual interests. Embassy
Jakarta recommends that the U.S. delegation to the IMF/World Bank
meetings in Istanbul hold initial discussions with Indonesia on
possible areas of G-20 collaboration. Under Secretary Hormats could
continue these discussions in November if he were to visit Jakarta
in conjunction with his participation in the November APEC Summit in
Singapore. End Summary.

2. (SBU) Indonesia understands the historical significance of (and
the leadership role of the U.S. in supporting) the Pittsburgh
announcement that G-20 would be the premier global economic forum.
Indonesia's G-20 Sherpa told us that this decision rivaled the
development of the non-aligned movement and the founding of ASEAN in
importance for Indonesia. He also said that Indonesia sees its role
in the G-20 as the representative for ASEAN countries and the entire
developing world. (Note: Of the G-20 nations, Indonesia has the
second-lowest GDP per capita, ahead of only India).

3. (SBU) The eleven countries who are not G-8 members will all have
to figure out their role in this more important G-20. The United
States should help them integrate and encourage them to support U.S.
objectives. This process will be straightforward with most of these
eleven countries; we have strong, broad relations and frequent,
high-level interactions with India, China, Brazil, Turkey, South
Korea, Australia, and Mexico. Although we are building a
comprehensive partnership, our ties are less strong with Indonesia.
And Indonesia is less accustomed to playing a global leadership
role.

4. (SBU) There are, however, a number of areas announced at the
Pittsburgh Summit where our two countries can work to advance our
mutual objectives while building Indonesia's capacity within the
G-20. Interestingly, these areas of collaboration are key elements
of the rationale for transferring the G-8's role to the G-20. They
include: the elimination of fossil fuel subsidies, climate change
finance, and food security.

5. (SBU) We should find ways to help Indonesia meet the pledge to
eliminate market-distorting subsidies on energy. The World Bank
estimates that over the past eight years somewhere between nine and
twenty-five percent of the Indonesian budget went to fuel and
electricity subsidies. Despite these subsidies, 35 percent of
Indonesians have no access to electricity. Subsidies also make it
difficult for clean and renewable energy to compete with traditional
fossil fuels. Partnership with Indonesia in this area will enable
Indonesia to eventually commit to emission cuts; virtually all of
Indonesia's projected increase in greenhouse gas emissions will come
from the energy sector.

6. (SBU) Indonesia can also be a partner on climate change finance.
It is a member of the World Bank's Strategic Climate Fund Trust Fund
Committee and a likely recipient of funds from the World Bank's
Clean Technology Fund. Its G-20 Sherpa told us that Indonesia is
disappointed with the last-minute deletion of language regarding
financing of climate change in Pittsburgh. We should coordinate our
positions in advance of the planned heads-of-state teleconference on
this subject.

7. (SBU) Indonesia would also welcome collaboration on food
security. Given ongoing food shortage issues in eastern Indonesia,
President Yudhoyono has made food security a top priority and
specifically asked that food security be a part of the
U.S.-Indonesian comprehensive partnership. We have developed
proposals within that framework, including a center of excellence on
sustainable ocean fisheries. But Indonesia would be interested in
cooperating on this topic within the G-20 as well.

8. (SBU) By engaging with Indonesia within the G-20, the United
States can:

-- build Indonesia's capacity to assume its role in the 21st
century's premier global economic forum;

-- strengthen our bilateral ties to Indonesia; and

-- advance our own priorities within the G-20.

Embassy Jakarta recommends that the U.S. delegation to the IMF/World
Bank meetings in Istanbul hold initial discussions with Indonesia on
possible areas of G-20 collaboration. Under Secretary Hormats could
continue these discussions in November if he were to visit Jakarta
before or after his participation in the November APEC Summit in
Singapore.

OSIUS

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