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Cablegate: Scensetter for Codel Bond's Visit to Jakarta

DE RUEHJA #0006/01 0050819
O 050819Z JAN 10




E.O. 12958: N/A

REF: STATE 129927

1. (U) This message is Sensitive but Unclassified. Please
handle accordingly.

2. (SBU) SUMMARY: Senator Bond, 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. These
developments have created an opportunity to deepen our
relationship through the United States-Indonesia
Comprehensive Partnership. This emerging effort deploys
"smart power" to build greater cooperation in defense,
counterterrorism, health, education, trade, science and
technology, and on key international issues such as
Afghanistan. In a recent demonstration of this approach, we
have signed agreements to bring the Peace Corps back to
Indonesia and to expand our Fulbright program. We are doing
more. With this as backdrop, Indonesian leaders will look to
your visit as a chance to engage the United States as a true
partner in support of shared bilateral, regional, and global
objectives. END SUMMARY.

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3. (SBU) Your visit comes at an important time in
U.S.-Indonesia relations. The GOI views the establishment of
our bilateral Comprehensive Partnership as a way to deepen
engagement with the United States across the board.
Indonesians want to move beyond the old donor-recipient model
to build a relationship between true partners. The success
of Indonesia's democratization and reform process, and the
country's inclusion in the G-20, have given Indonesians
heightened confidence. The United States and Indonesia are
deepening cooperation to achieve key aims in Asia and beyond.

4. (SBU) Under President Yudhoyono, Indonesia has begun to
play a more prominent and effective role in regional and
global affairs. The Indonesian military has taken on
peacekeeping duties in Lebanon, Sudan, and the Democratic
Republic of the Congo. Indonesia already provides capacity
building assistance to the Afghan government in agriculture,
education and health, and is considering doing more.
Yudhoyono has staked out an ambitious position putting
Indonesia in the front ranks on climate change. As the
largest member of ASEAN and home to the ASEAN Secretariat,
Jakarta seeks a greater leadership role in the regional
organization. For example, Indonesian 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.


5. (SBU) The emerging United States-Indonesia
Comprehensive Partnership will implement the "smart power"
strategy that you have long recommended for Southeast Asia,
including in your recent book. President Yudhoyono proposed
the Partnership during a November 2008 speech in Washington.
Secretary Clinton's visit in February 2009 began a dialogue
with Indonesian leaders about the key elements of that
Partnership, including cooperation in education, trade and
investment, development assistance, health, and science and
technology. The postponement of President Obama's November
visit, which Indonesians both inside and outside government
highly anticipated, has slowed the pace of progress on the
Partnership but has not curbed Indonesian enthusiasm.

6. (SBU) Important elements of the Comprehensive Partnership
have moved forward. We recently signed an agreement to bring
the Peace Corps back to Indonesia and we have signed several
memoranda of understanding to expand our Fulbright program,
which the Indonesian government has agreed to partly fund.
Additionally, we continue to explore deepened 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. In an example of the latter, Indonesia hosted the
second Bali Democracy Forum on December 10-11. Under
Secretary Burns led the U.S. observer delegation.

JAKARTA 00000006 002 OF 004

7. (SBU) Reaching the Indonesian people directly will be
critical to the Partnership's success. A key element of this
will be education--Mission Jakarta's top priority. We aim to
double the number of Indonesian students in the United States
and do the same for American students here. We have proposed
an innovative public diplomacy venue--The American Place--to
be located in a busy Jakarta shopping center. The American
Place will provide a space for educational outreach
activities, cultural programming, and other activities of
interest to Indonesians--especially young people. The
American Place will be open and welcoming, not hidden behind
high walls and razor wire.

8. (SBU) The Partnership will expand already robust regional
security cooperation and deepen cooperation with the
Indonesian military (TNI). We seek to enhance TNI's
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 diseases which regional
climate change could exacerbate.


9. (SBU) The Yudhoyono administration faces some domestic
political challenges. Chief among these is an ongoing
scandal 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 some say were 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. While authorities have freed the
two KPK officials, many Indonesians feel that Yudhoyono's
failure to take swift and decisive action in the matter
exacerbated the crisis.

10. (SBU) Public outcry over rumors of the possible receipt
by the President's party, campaign donors or family of funds
used to save a small Indonesian bank have also rocked the
administration. Both opposition and coalition parties
supported a formal Parliamentary inquiry into the bank
bailout. Administration critics have targeted Vice President
Boediono, who was Central Bank Governor at the time of the
bailout, and Finance Minister Sri Mulyani Indrawati, for
their roles in deciding to save the bank. Boediono and
Indrawati, both highly respected technocrats, enjoy strong
support from both investors and members of the business
community who favor continued economic and bureaucratic

11. (SBU) On November 23, President Yudhoyono delivered a
public message on both issues that some Indonesians
criticized 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, his presidency
could be imperiled. (Note: there has been no evidence to
date of Yudhoyono or his family's involvement in corruption
in this case.) In the interim, these controversies have
undermined the President's ambitious 100-day plan to launch
his second term.

12. (SBU) Despite these scandals, 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 impressive
reelection 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.


JAKARTA 00000006 003 OF 004

13. (SBU) With 2009 GDP growth estimated at 4.3-4.4 percent,
Indonesia was 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 orders booked with several Indonesian airlines. General
Electric and Electro-Motive are competing for a several
hundred million dollar locomotive deal. The Export-Import
Bank seeks to establish infrastructure and clean energy
facilities to finance U.S. business deals and looking for
ways to decrease the costs for lending in Indonesia.

14. (SBU) Despite these promising signs, trade and investment
is the weakest area 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. Many companies with investments in Indonesia
claim that recent policy shifts have already negatively
affected their business plans. The conclusion of a new OPIC
investment incentive agreement would attract more U.S.
investment to Indonesia.

15. (SBU) Like many countries, Indonesia has a significant
number of agricultural trade barriers. However, Indonesia
recognizes that increased food production and distribution is
a key part of its food security goals. Companies like
Monsanto seek to enter the market with biotech crops that
will improve Indonesia's agricultural output and help develop
the internal distribution networks. We are working with
Monsanto and other companies to spread the word about the
positive impact that U.S. technology can have on Indonesia's
food security goals.


16. (SBU) Security cooperation programs have expanded
greatly since the United States ended sanctions in response
to Indonesia's democratization. IMET remains 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.
With foreign military sales to Indonesia we aim to improve
airlift capability and aviation safety. Indonesia will
likely receive $20 million in foreign military grant aid for
2010, up from $15.1 million for 2009. U.S. Pacific Command
coordinates Indonesian military participation in Global Peace
Operations Initiative-funded training programs and plans to
contribute $5.5 million in funding to support the GOI's
desire to develop a permanent peacekeeping training center

17. (SBU) The last hurdle to fully normalized military
relations is resumption of cooperation with Army Special
Forces (KOPASSUS). KOPASSUS is Indonesia's most capable
fighting force and plays a key role in counteterrorism,
peacekeeping and other critical missions. However, working
with KOPASSUS remains controversial, including with some
Members of Congress, because of KOPASSUS' involvement in past
human rights violations, chiefly in Aceh and East Timor. We
are working to find a way forward that is consistent with the
requirements of the Leahy Amendment. Indonesian officials,
including President Yudhoyono, continue to regard the
prohibition on U.S. training for KOPASSUS as a major irritant
to mil-to-mil relations.


18. (SBU) While we work with Indonesia to address the
underlying causes of violent extremism, we also work together
to put terrorist groups out of operation. The GOI's response
to the July 17 terrorist attacks in Jakarta 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

JAKARTA 00000006 004 OF 004

19. (SBU) While the Indonesian effort has been impressive,
USG assistance has been a 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 INP through numerous developmental programs
administered by the Department of Justice's International
Criminal Investigative Training and Assistance Program. The
Indonesian National Police, including elements that receive
USG assistance, 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. The United States holds one
Indonesian national, Riduan bin Isomuddin (aka Hambali) at
the Guantanamo Bay detention facility. We expect that he
will be tried in U.S. District Court.


20. (SBU) USG efforts to engage Indonesia are paying off. A
December 2009 Department of State poll conducted in ten
cities showed that eight-in-ten Indonesians had a favorable
opinion of the United States--up from a bare majority in
April. Large majorities of the Indonesian public believe
that the United States is a positive force in the world
because of the USG's efforts in disaster relief, development,
democracy promotion, and protection of women's rights. Most
dramatically, those who participated in Mission activities,
including exchange programs and educational and cultural
outreach, were far more favorably disposed to the United
States than those who had not.


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