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Cablegate: Scenesetter for the Visit of Under Secretary Burns

VZCZCXRO8130
OO RUEHDT RUEHPB
DE RUEHJA #1947/01 3290913
ZNR UUUUU ZZH
O 250913Z NOV 09
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3926
INFO RUCNARF/ASEAN REGIONAL FORUM COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RHEFDIA/DIA WASHINGTON DC PRIORITY
RHMFIUU/HQ USPACOM PRIORITY
RUEKJCS/JOINT STAFF WASHINGTON DC PRIORITY

UNCLAS SECTION 01 OF 04 JAKARTA 001947

SENSITIVE
SIPDIS

DEPT FOR U/S BURNS
DEPT FOR EAP, EAP/MTS, EAP/MLS
NSC FOR D WALTON

E.O. 12958: N/A
TAGS: PREL PGOV ECON MARR ID
SUBJECT: SCENESETTER FOR THE VISIT OF UNDER SECRETARY BURNS
TO INDONESIA

SENSITIVE BUT UNCLASSIFIED -- PLEASE HANDLE ACCORDINGLY

1. (SBU) SUMMARY: Under Secretary Burns, Embassy Jakarta
warmly welcomes your visit. Ten years of political and
economic reform have made Indonesia democratic, stable, and
increasingly confident about its leadership role in Southeast
Asia and the Muslim world. Indonesia has held successful,
free and fair elections; has weathered the global financial
crisis; and is tackling internal security threats. With this
as backdrop, the GOI views your visit as a chance to engage
the United States as a true partner in support of bilateral,
regional, and global objectives. Your participation in the
Bali Democracy Forum will support regional democratization
efforts, including those directed at Burma, while
demonstrating high-level American support for a pet project
of President Yudhoyono. Bilateral Strategic Consultations
should give you an opportunity to conclude a number of key
initiatives under the Comprehensive Partnership such as
return of the Peace Corps, push for progress in other
important areas such as health cooperation, and discuss
regional and strategic issues. President Yudhoyono is facing
domestic political issues that could derail his agenda if not
handled correctly. END SUMMARY.

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BILATERAL RELATIONS CONTINUE TO DEEPEN

2. (SBU) Your visit comes at a turning point in
U.S.-Indonesia relations. The GOI views the establishment of
the bilateral Comprehensive Partnership as a way to deepen
engagement with the United States across the board on the
basis of a relationship between true partners. The success
of Indonesia's democratization and reform process and its
inclusion in the G-20 have given the country new confidence.
This confidence can help the United States work better with
Indonesia to achieve our aims in Asia and elsewhere. Under
President Yudhoyono, the GOI has made significant efforts to
play a more prominent and constructive role in regional and
global affairs. The Indonesian military has taken on
peacekeeping duties in Lebanon, Sudan, and the Democratic
Republic of the Congo. Yudhoyono has staked out an ambitious
position putting Indonesia in the front ranks on climate
change. As home of the ASEAN Secretariat, Jakarta seeks a
greater leadership role in ASEAN, and it is succeeding. GOI
officials spearheaded efforts to enshrine democracy and human
rights in the ASEAN Charter. Indonesia has played an
important but largely behind-the-scenes role in encouraging
democracy and human rights in Burma.

BALI DEMOCRACY FORUM AND STRATEGIC CONSULTATIONS

3. (SBU) Your participation in the Bali Democracy Forum
(BDF) will support Indonesia's efforts to play a greater
regional role and will give a high-level American imprimatur
to a project of strong personal interest to President
Yudhoyono. The BDF aims to encourage democratization by
exposing participants, notably Burma, to democratic values
and practices. This year's Forum will be the second meeting
of the BDF and will be co-chaired by Japan. In the longer
term, the Institute for Peace and Democracy, established as
the programming arm of the BDF, plans to convene technical
workshops for regional government officials and experts to
strengthen democratic institutions.

4. (SBU) Your participation in the Strategic Consultations
will both give you an opportunity to discuss key regional and
bilateral issues with Indonesian counterparts and help
institutionalize an expansion of high-level consultations
under the Comprehensive Partnership. We anticipate that some
initiatives under the Partnership, such as the return of the
Peace Corps and a science and technology agreement may be
ready for closure, and that consultations at your level might
lead to progress in other areas, such as health, education,
military-to-military, and nonproliferation cooperation. A
session of the talks devoted to regional issues will focus on
key issues including Afghanistan, Iran, the Middle East, and
Burma.

THE BROADER PICTURE: THE COMPREHENSIVE PARTNERSHIP

5. (SBU) President Yudhoyono proposed that the U.S. and
Indonesia launch a Strategic Partnership (later upgraded to

JAKARTA 00001947 002 OF 004


the Comprehensive Partnership) in his November 2008 speech in
Washington. Secretary Clinton's visit in February 2009 began
a dialogue with Indonesians about the key elements of that
partnership. The absence of a November POTUS visit to
Jakarta, which Indonesians both inside and outside government
highly anticipated, has slowed the pace of progress on the
Partnership but not GOI enthusiasm.

6. (SBU) Even without a presidential visit this year, key
elements of the Comprehensive Partnership are moving forward.
Beyond the initiatives mentioned above, these include
cooperation on climate change, an Overseas Private Investment
Corporation (OPIC) investment incentive agreement, and,
possibly, Indonesian training of Afghan police. Under a
Comprehensive Partnership, we will strengthen Indonesia's
democratic institutions and capacity to promote democracy
beyond its borders.

7. (SBU) The partnership will also allow us to expand our
already robust regional security cooperation and deepen our
cooperation with the Indonesian military to enhance its
capability to provide disaster relief and participate in
international peacekeeping operations. We will promote the
people-to-people ties that are critical to the success of our
partnership, including expanding education cooperation. In
addition to our discussions with the Indonesians on their
commitments to reduce emissions from deforestation, our
cooperation is deepening on food security focusing on
fisheries and on combating emerging and tropical disease
whose spread will be exacerbated by climate change in this
region.

A POTENTIAL POLITICAL CRISIS FOR A VIBRANT DEMOCRACY

8. (SBU) The Yudhoyono administration faces a number of
volatile issues related to corruption cases and the rivalry
between the Indonesian National Police (INP) and the
Corruption Eradication Commission (KPK). The arrest of two
KPK officials, on what appear to have been trumped-up charges
of extortion and abuse of power led to widespread public and
parliamentary outcry. The fact-finding team that Yudhoyono
formed in response in turn demanded strong Presidential
action to resolve the case. At the same time, public outcry
over rumors of misallocation to the President's party or
family of bailout funds given to save a small Indonesian bank
rocked the administration. The bank issue has led to a
formal inquiry in Parliament, supported by both opposition
and coalition parties. This issue is further complicated by
the fact that Vice President Boediono was Governor of the
Bank of Indonesia at the time of the bailout.

9. (SBU) On November 23, President Yudhoyono delivered a
public message on both issues that was criticized from some
quarters as showing a lack of leadership. The twin problems
have taken public confidence in Yudhoyono to a low ebb. There
is no immediate danger to Yudhoyono,s presidency. But
should the investigation into the bank bailout reveal
corruption involving Yudhoyono or his family, (Note: there
has been no evidence of this to date) his presidency could be
imperiled. In the interim, the President's plans for an
aggressive 100-day plan to launch his second term have been
derailed.

10. (SBU) The foundation of Indonesian democracy remains
strong. The April 9 legislative and July 8 presidential
elections were fair, free, and peaceful. The results of the
legislative and presidential elections affirmed President
Yudhoyono's reformist policies. In April, President
Yudhoyono's Partai Demokrat (PD) won a plurality in
legislative elections, with 20.85 percent of the popular vote
(and over a quarter of the 560 parliamentary seats). This
was followed by Yudhoyono's reelection victory in July, in
which he captured 60.8 percent of the vote and 28 of the
nation's 33 provinces. The cabinet for the second Yudhoyono
administration, which came into office in late October,
contains a number of technocrats and a larger number of
political leaders.

A VIBRANT ECONOMY; PARTNERSHIP NEEDS WORK

11. (SBU) With estimated GDP growth of over four percent for

JAKARTA 00001947 003 OF 004


2009, Indonesia is the third-fastest growing economy in the
G-20. Indonesians are proud of their transition over little
more than a decade from an economic basket case during the
Asian financial crisis to the only Southeast Asian member of
the G-20, involved in coordinating global responses to the
current economic crisis. Although some of Indonesia's
responses to the economic crisis have been protectionist, new
opportunities for U.S. businesses are emerging. Boeing has a
huge order book with Indonesian airlines. General Electric
and Electro-Motive are competing for a several hundred
million dollar locomotive deal. The Export-Import Bank is
considering infrastructure and clean energy facilities to
finance U.S. business deals and looking for ways to decrease
the costs for lending in Indonesia.

12. (SBU) Despite these promising signs, trade and investment
is the weakest of the three pillars of the Comprehensive
Partnership. Indonesian officials say they want increased
U.S. commercial links. But the overall direction of recent
policymaking ) from nontariff barriers to investment
restrictions to bureaucratic interference ) signal a strong
bias towards domestic business interests. The conclusion of
a new OPIC investment incentive agreement would be a tangible
step towards attracting more U.S. investment to Indonesia.
An Indonesian decision to continue their partnership with
ExxonMobil on the $40 billion development of Natuna gas field
would show that Indonesia is serious about working with U.S.
companies.

MILITARY-TO-MILITARY COOPERATION GROWS

13. (SBU) Since the end of sanctions following establishment
of a democratic government in Indonesia, security cooperation
programs have expanded greatly. IMET is a key tool in
supporting defense reform by providing professional military
education opportunities. Indonesia's IMET allocation will
increase from $1.5 million in 2009 to $1.8 million in 2010.
The focus of foreign military sales to Indonesia is on
improving airlift capability and aviation safety. Indonesia
is expected to receive $20 million in foreign military grant
aid for 2010, up from $15.1 million for 2009. U.S. Pacific
Command is actively engaged in coordinating Indonesian
military participation in Global Peace Operations
Initiative-funded training programs and is coordinating $5.5
million in funding to support the GOI's desire to develop a
permanent peacekeeping training center facility. The
prohibition on U.S. training for the Army Special Forces
(KOPASSUS) continues to be viewed by Indonesia as a major
irritant to mil-to-mil relations.

OVERCOMING SECURITY THREATS

14. (SBU) The GOI's response to the July 17 terrorist
attacks was swift and effective. While the GOI is still
pursuing a few remaining associates of militant ringleader
Noordin Top, the killing of eight July 17 operatives,
including Top, and the arrest of 11 others appears to have
severely crippled Top's network. The GOI has heightened
security nationwide and the INP continues to combat
terrorism. Until the July 17 bombings, Indonesia experienced
three-and-a-half years without a major terrorist incident,
demonstrating how the GOI's counterterrorism efforts reduced
the ability of militant groups to carry out attacks.

15. (SBU) U.S. assistance has been an important component of
the GOI's success in locating and coordinating
counterterrorism strikes in the wake of the post-July 17
bombings. The Embassy has worked to build the investigative
support for and forensic capabilities of the National Police
through numerous developmental programs administered by
Department of Justice's International Criminal Investigative
Training and Assistance Program. The Indonesian National
Police, including elements of the Diplomatic Security,s
Anti-Terrorism Assistance (DS/ATA) trained Special Detachment
88, have effectively disrupted the Jemaah Islamiyah (JI)
terrorist network. The USG-funded Attorney General's Task
Force on Terrorism and Transnational Crime has successfully
prosecuted 64 terrorists, including 43 JI members since 2006,
and DOJ enhanced the prosecutorial capacity of the task force.

JAKARTA 00001947 004 OF 004


HUME

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