[Senate Hearing 106-76]
[From the U.S. Government Publishing Office]
S. Hrg. 106-76
INDONESIA: COUNTDOWN TO ELECTIONS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON EAST ASIAN
AND PACIFIC AFFAIRS
OF THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
__________
MARCH 18, 1999
__________
Printed for the use of the Committee on Foreign Relations
Available via the World Wide Web: http://www.access.gpo.gov/congress/senate
U.S. GOVERNMENT PRINTING OFFICE
56-856 CC WASHINGTON : 1999
COMMITTEE ON FOREIGN RELATIONS
JESSE HELMS, North Carolina, Chairman
RICHARD G. LUGAR, Indiana JOSEPH R. BIDEN, Jr., Delaware
PAUL COVERDELL, Georgia PAUL S. SARBANES, Maryland
CHUCK HAGEL, Nebraska CHRISTOPHER J. DODD, Connecticut
GORDON H. SMITH, Oregon JOHN F. KERRY, Massachusetts
ROD GRAMS, Minnesota RUSSELL D. FEINGOLD, Wisconsin
SAM BROWNBACK, Kansas PAUL D. WELLSTONE, Minnesota
CRAIG THOMAS, Wyoming BARBARA BOXER, California
JOHN ASHCROFT, Missouri ROBERT G. TORRICELLI, New Jersey
BILL FRIST, Tennessee
James W. Nance, Staff Director
Edwin K. Hall, Minority Staff Director
------
SUBCOMMITTEE ON EAST ASIAN AND PACIFIC AFFAIRS
CRAIG THOMAS, Wyoming, Chairman
JESSE HELMS, North Carolina JOHN F. KERRY, Massachusetts
PAUL COVERDELL, Georgia RUSSELL D. FEINGOLD, Wisconsin
CHUCK HAGEL, Nebraska PAUL D. WELLSTONE, Minnesota
GORDON H. SMITH, Oregon ROBERT G. TORRICELLI, New Jersey
(ii)
C O N T E N T S
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Page
Gadbaw, R. Michael, Chairman, U.S.-Indonesia Business Committee,
Washington, DC................................................. 22
Jones, Sidney, Executive Director, Human Rights Watch, Asia
Division, Washington, DC....................................... 19
Masters, Hon. Edward E., President, United States-Indonesia
Society, Washington, DC........................................ 17
Roth, Hon. Stanley O., Assistant Secretary of State for East
Asian and Pacific Affairs...................................... 2
Appendix
Responses of Assistant Secretary Roth to Questions Submitted by
Senator Feingold............................................... 29
Prepared statements of:
R. Michael Gadbaw............................................ 31
Sidney Jones................................................. 34
Hon. Edward E. Masters....................................... 37
Hon. Stanley O. Roth......................................... 41
(iii)
INDONESIA: COUNTDOWN TO ELECTIONS
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THURSDAY, MARCH 18, 1999
U.S. Senate,
Subcommittee on East Asian
and Pacific Affairs,
Committee on Foreign Relations,
Washington, DC.
The subcommittee met at 10 a.m., in room SD-419, Dirksen
Senate Office Building, Hon. Craig Thomas (chairman of the
subcommittee) presiding.
Present: Senators Thomas, Hagel, Kerry, and Torricelli.
Senator Thomas. I will call the subcommittee to order.
I am glad to have the opportunity today to have another
informational hearing on Indonesia. Our last hearing was in
1998. It will give us a chance to gauge the present political
and economic climate leading up to this June's elections.
I am going to keep my statement brief so we can get on with
the witnesses.
Despite growing economic problems and some regional
outbreaks of religious and ethnic violence, it is encouraging
that Indonesia's Government has stayed the course on its
promise of political reform and democratic elections, a
development for which I think we should commend the government
strongly.
I met last week with Amien Rais, one of a number of the
opposition party candidates in the upcoming election, and was
pleased that while he had some concerns, he was generally
optimistic about the direction things are going and hopes that
there will be an open, honest election and that that will set
the course in a different direction. I hope he had reason and
continues to, as June grows closer, to feel optimistic.
I also hope our Government will underscore to Jakarta the
importance of continuing down the path without interruption or
deviation and will lend assistance that we can toward that end.
That is not to say, of course, that everything is fine. I
continue to be concerned about the sectarian violence in the
east, continuing threats to the ethnic Chinese population, and
East Timor. While I support settlement of that situation which
would give East Timor at least autonomy, we probably need to
temper the proposed solution with reality. East Timor is not
presently capable of functioning as an independent entity, and
to urge its immediate independence from Indonesia, as some do,
probably ignores some of the reality. I hope we will continue
to urge a solution there.
Finally, the economy, while showing some signs of
stabilization, is still certainly in a shambles. I am
interested in hearing from the witnesses as to what their view
of the economy is at present and whether adequate measures are
being taken by the government to rectify things.
So, I think our purpose here is to try and get some updated
information so that we can have a notion of what is going on,
maybe more importantly what our role will be in terms of the
election and what it is currently in terms of the economy, how
Indonesia fits into the whole Asian question.
So, Secretary Roth, so nice to see you. I know you have
been on the road and we are glad to have you and appreciate
your taking time to come. So, if you will begin, sir.
STATEMENT OF HON. STANLEY O. ROTH, ASSISTANT SECRETARY OF STATE
FOR EAST ASIAN AND PACIFIC AFFAIRS
Mr. Roth. Thank you very much, Mr. Chairman, and let me
begin by commending you and the subcommittee. All too often
these days, Asian policy seems to be defined as China and Korea
and nothing else, and the fact that the subcommittee, under
your leadership, has regularly focused attention on Indonesia,
one of our most important countries I believe in Southeast
Asia, is important, and I think it demonstrates not just to the
American people, but to the Indonesian people where these
hearings get a lot of coverage, that Indonesia is indeed a high
foreign policy priority for the United States and that we do
care about what happens there.
Given your desire for information, I have prepared a rather
lengthy statement covering many of the topics that you
mentioned in your opening remarks, and I do not intend to read
it. I will submit it for the record and instead just try to
concentrate on a few key points so we can move on to the
questions.
Senator Thomas. We will include it in the record.
Mr. Roth. Thank you very much.
First, I would like to start with a theme that I have
discussed with your before both in hearings and privately which
is the complexity of the situation in Indonesia. It really
defies a simple up or down, good or bad characterization. I
think that what I have tried to emphasize is that there have
been a very large number of positive developments in the less
than 1 year since President Suharto left office last May, and
at the same time, there are a number of very serious, troubling
developments that we cannot ignore simply because there have
been so many good ones. In my testimony, I try to review them,
but you have highlighted a lot of it already in your opening
remarks.
I think probably the most positive development has been the
openness of the political process. If you go back a year ago
and read what was being said at the time of the transition in
May, there was enormous skepticism about whether the country
would wait for elections, whether the government could keep
charge, whether there would not be revolution in the streets,
whether there had to be a triumvirate or a snap election or
something dramatic like that.
One of the major successes of the Habibie government has
been to come up with a credible political process, one that has
been accepted by all the major opposition leaders. We have had
a proliferation of political parties including, as you
mentioned, some of the major figures. They are all running.
There is access to the media. And most importantly, this is
going to be the first election in Indonesia since 1955 where we
will not know the outcome the day before the election. That is
a major development.
So, I think that on the political side we have seen
dramatic progress. We have seen, you mentioned, dramatic change
with respect to East Timor. The government has come out with
two major proposals, one for autonomy, or second, if autonomy
is not accepted by the people of East Timor, independence.
While this is subject to negotiation, I feel that this is the
first time there has been a serious desire by an Indonesian
Government to resolve this issue politically, and that is a
major step forward.
There has been some progress--and I am being more cautious
here--on the military side. We have seen decisions by ABRI, for
example, to disassociate itself as a policy tool of the ruling
party, to stay neutral during the election. We have seen some
efforts--not enough and not fully successful--to account for
the past and some of the abuses that took place in Aceh or in
Timor or Irian Jaya. General Proboa is in self-imposed exile in
Jordan, not committing some of the abuses that his forces were
known for before. So, change, not necessarily enough, but
change is starting on the military side.
On the economic side, while it would be difficult to
express too much optimism, we have to look at where we were a
year ago again. Last year we were talking about the Indonesian
economy plunging downwards, possibly collapsing. We were
talking about estimates of negative 13 to 15 percent growth,
concern about the rupiah possibly deteriorating to 20,000. We
worried about the possibility of famine. In that sense--and I
am defining it in a limited sense--the Government in Indonesia
have done better than expected.
In fact, that they avoided a famine, there was some good
policy, as well as some food aid to make sure that rice was
distributed and subsidies used effectively. The rupiah has at
least temporarily stabilized in the 8,000 to 9,000 range, which
is not terrific, but better than many had expected. We have
found that some of the nightmare scenarios about the growth of
poverty and the extent of unemployment were exaggerated and
that some of the provinces in particular were doing far better
than we had imagined, and that the problems are mostly
concentrated on Java and urban areas and probably worse in
Jakarta, but not some of the nightmare scenarios we had
envisioned.
So, in all these areas, I think there is some good news.
At the same time, your statement again highlighted some of
the bad news, and I think I would have to put at the very top
of the list the question of the violence that has broken out in
so many places in Indonesia. What we are seeing now in Ambon,
what we saw earlier in East Java, some of the problems that
have happened all around the country are really horrifying
reminders that there is a large potential for violence and
possibility for escalation. So, I think that is one of the
crucial problems that the government still has to deal with
more effectively.
Even in some of the areas which I referred to positively,
there is a flip side to them. For example, East Timor. If the
situation is not handled carefully and if Indonesia simply
walks away from the island, if in fact autonomy is rejected in
the U.N. process, there is the prospect that what should be a
positive could become a negative and that East Timor could
descend into violence. So, we have to watch that situation
closely.
I think I have already pointed out the economic challenges.
There is a tremendous amount of work that remains to be done in
terms of corporate restructuring, debt restructuring, getting
the banks up and running again, which they are basically not,
and just scrambling back to positive growth. I would say that
here most of us have operated on the assumption that no
fundamental turnaround in the economy was really going to take
place until after they had elections, until after there was a
measure of political stability, until after there was a
perception of political legitimacy, and only then could the
private sector make a judgment about whether it should come
back into Indonesia. So, the elections have a crucial impact on
the economy as well.
Let me leave this general overview and instead just try to
highlight what are the priorities for the administration now on
Indonesian policy.
Let me be very clear. Right now my No. 1 priority, the
State Department's priority, is the elections. We see the June
7 elections and then the followup period between June and when
the constituent assembly meets possibly in November to select
the President as being crucial to the fate and future of
Indonesia. From our perspective, free and fair elections are a
necessary, if not sufficient condition for recovery. If they go
well, I think there is a greater chance that the government
will be able to deal with the enormous range of problems that
Indonesia still faces, ranging from controlling violence to
getting the economy started, to playing out the end game on
East Timor, and all the other challenges. But if the election
is not perceived as legitimate, if it is not perceived as free
and fair, then of course there is a possibility that the
situation will deteriorate rather than improve.
So, we are putting tremendous priority on the elections
themselves. We have highlighted to the Indonesian Government,
most recently during Secretary Albright's trip there, the
importance of carrying through on the elections, the importance
of making sure that there is not violence that would intimidate
candidates from running, that would intimidate the campaign,
limit access to the media. We highlighted the warning about
what is called money politics in Indonesian terms, meaning
whether funds would be spent to try to influence the outcome.
This is a particular concern in the period after the June 7
election up until when the constituent assembly, or MPR, meets
when you are really talking about 700 people selecting the next
President and Vice President. This is a period when money
politics, as they say, corruption as we would say, could be
crucial, and so we are focusing attention on the need for
transparency and not allowing money politics to dominate.
Finally, we are trying to help the Indonesians mount an
election. There is almost no one alive and in government in
Indonesia who participated in organizing a free and fair
election before, since the last one was really 1955. Sure, they
have had elections in terms of electoral lists and ballot
boxes, but they have not had competition. They have not had to
worry about problems of access to the media, good counts,
securing the ballots, because they always knew the results in
advance. Now they have to worry about these things.
The Indonesian Government, to its credit, has signed an
agreement with the UNDP, United Nations Development Program, to
oversee international assistance for the electoral program.
They have been very clear--and I think correct--that this is
not a situation of the international community coming in to run
the elections. These are international elections, but Indonesia
will allow international help, particularly in the technical
assistance side, and it will permit international observers,
which I think is a major step forward and very necessary. I
expect there will be quite a few observers at this election.
For our part, we are trying to put up what I would call
real money to assist on the technical side with the election
and we have so far put up approximately $30 million from the
Agency for International Development, and we have been going
around the world urging other countries to contribute
generously as well. I have been dealing with the Japanese, with
the Australians, with the EU, some of the individual European
countries to try to make sure that there is a generous
contribution because these elections are so important for the
future of Indonesia.
So, at this point I would say that we are working hard. We
are hopeful. The initial signs of good, as you said in your
meeting with Amien Rais, the opposition is giving high marks,
but we are not home free yet. We have to make sure that the
conduct of the election is good, the count is good, and then
what happens between the election and the selection of the
President and the Vice President later in the year.
Let me turn to the more difficult topic even of violence
and what can be done about that. I think it is important to
recognize that in one sense there is a profound change in the
human rights situation. When we dealt with this in past years,
we were generally talking about government-inspired abuses and
how do you stop the government from doing these things. Now we
are dealing with a more complex situation, but frequently you
are seeing trouble break out not inspired by the government or
not initiated by the government, but then the military or the
police are both called in to try to do something about it.
So, the military is walking a fine line between not wanting
to recommit the abuses of the past, which was brutal
suppression of dissent, but at the same time needing to
maintain law and order to prevent chaos, particularly in the
countryside. And they are having difficulty doing it as you
have seen now in Ambon where even the deployment of 3,000 or
4,000 troops has not yet been sufficient to end the violence.
But I think for us, one of the priorities that we have been
emphasizing is that the government has to make this the highest
priority because the violence has the potential to disrupt the
elections. It has the potential to disrupt the very social
fabric of the Nation after the elections. It has a terrible
impact on the economy and foreign investor willingness to come
back in. Of course, it is a huge humanitarian problem in its
own right and prevents Indonesia from changing its image as a
problem country on the human rights spectrum.
In particular, we have been focusing on the growing
perception in Indonesia that a lot the violence is provoked,
and that interestingly, now government officials, when you meet
with Wiranto, when you meet with Alatas, are telling you that
they believe that there is provoked violence and they have to
get at the provocations if they are going to get these problems
under control. The Secretary stressed to General Wiranto and to
Minister Alatas last week the need to go after whomever it is
necessary to go after, whomever they believe is provoking this
violence. And I should emphasize there is no hard evidence that
I can give to you naming individuals. It is in the realm of
suspicions, but the growing sense that there is provocation is
something that the Indonesian Government has to deal with.
On the economy, I think what we have to see first of all is
staying the course between now and the election. As you know,
adhering to IMF programs, meeting the conditionality from the
World Bank, the ADB, the IMF can sometimes be onerous, and
doing these things in the pressure of an election campaign is
hard. But, nevertheless, Indonesia cannot go backward in the
crucial period between now and the election.
We saw a semi-encouraging development last week with the
closing down of 38 banks which badly needed to be done and the
restructuring of some other ones, one step in dealing with the
banking problem. I say it is semi-encouraging because the
decision was delayed and implemented in a fashion which raised
some doubts about the government's commitment to it, and it
felt that foreign pressure was necessary to ensure that it
happened. But, nevertheless, a dramatic step was taken, and it
is an indication I think of the type of challenges that will
have to be met between now and the election.
Finally, let me just say something about East Timor. Our
basic policy position, Mr. Chairman, which I have expressed to
you before, is that the administration will accept any outcome
that is acceptable to the parties themselves. The reason I
emphasize that formula is it is not necessarily as stark a
picture as take the autonomy or take independence on January 1,
as President Habibie has said, that there is still a
negotiation.
There is a possibility that you might have an arrangement
either if autonomy is accepted, which most people do not think
will happen, but is still possible, or if it is independence,
what the Indonesian Government has been proposing is that the
East Timor would revert to the old situation that existed prior
to its incorporation into Indonesia as the 27th province. It
would mean it would revert to U.N. status. The U.N. would have
control. Portugal would be the administering country, and then
one could negotiate between the U.N. and the Timorese the
transition that you referred to, how do you get to independence
so that you do not get a desperately poor East Timor incapable
of economic self-sufficiency suddenly thrown to the wolves on
January 1.
So, we are still in a negotiating phase. It is supposed to
resume next month at New York. The Portuguese and Indonesian
foreign ministers are due back to meet with Ambassador Marker
in New York hopefully to finalize the text of an autonomy
agreement and to finalize the mechanism by which this agreement
will be put to the East Timorese people.
In the meantime--and let me stress this point--we have
given a tremendous amount of attention both publicly and
privately to breaking the cycle of violence on East Timor in
the short term. Secretary Albright, in her speech in Jakarta,
laid out four points that we think are crucial.
First, we think the need for a political mechanism. There
has been lots of talk about reconciliation councils or
commissions, proposals from different people, the Human Rights
Commission from Shanana Gusmau, from other Timorese leaders,
but the need to have a broad-based council or commission in
place in the island to bring all the parties together to try to
diffuse tensions is important.
Second, the disarming of militias. There has been too much
distribution of weapons on East Timor itself, and the fact is
that this threatens the ability to implement any agreement. If
the fighting gets out of control, it is unlikely that a
diplomatic settlement can be implemented. We have stressed to
ABRI the need to disarm the militias.
Third, we have called for implementation of a previous
Indonesian offer to draw down some of its forces as a
confidence-building measure. This is not a total withdrawal,
but rather to start withdrawing some of the ABRI units to give
confidence to the people on East Timor.
Finally, we have strongly supported an international
presence on East Timor as soon as possible as another
confidence-building measure to try to reduce the violence.
So, we have been very public in our short-term proposal,
even as we await the outcome of the negotiations.
Why do I not stop at that point, Mr. Chairman?
[The prepared statement of Mr. Roth is in the appendix on
page 41.]
Senator Thomas. Thank you, Mr. Secretary.
We have been joined by other members of the committee.
Senator Hagel, do you have any comments?
Senator Hagel. No; I am just here to ask some questions.
Senator Thomas. Senator Kerry. Thank you, sir.
Senator Kerry. Mr. Chairman, I do have a statement that I
would like to share and then turn to the questions. I welcome
Secretary Roth here.
This is a major turning point for Indonesia because for the
first time in 45 years, the Indonesian people are going to have
an opportunity to vote in a national election where the outcome
is not preordained, and it is really vital that they have the
ability to create credibility in the government. That will be
the only way they can achieve order in the economy and make the
reforms necessary that are essential to creating that order
ultimately and to providing the international community with
the confidence it wants and needs in order to proceed forward
in terms of the economic support.
I was there a few months ago and was struck by the
breakdown that has occurred and the civil disorder that was
occurring daily. But at the same time, notwithstanding the
skepticism of a lot of people in Indonesia and many in the
international community, it strikes me that President Habibie
has responded fundamentally to the call for political change
and has adopted a number of reforms that will help open the
political process and set the stage for democratic elections.
Anyone now can start a political party, as opposed to the
Suharto era when only three parties were allowed to function.
More than 100 political parties have registered to compete in
the June elections. Civil servants no longer have to vote for
the ruling Golkar party. The military's representation in the
House of Representatives has been reduced significantly
although, I might add, not reduced or eliminated entirely.
Seats in the House will be allocated according to the vote
percentage won by each party in each province, rather than a
winner take all strategy which favored the ruling Golkar party.
So, these are important reforms, but they do not in and of
themselves guarantee that the elections are going to produce a
legitimate government. That is really, I think, where our task,
the international community's task, lies in the next months.
The government, however, has two major responsibilities: to
ensure that the problem of violence is dealt with effectively
and sensitively, particularly in the light of the way that the
military handled protests in the past; and second, to establish
the modalities for a free, fair, and open electoral process on
the ground. We need to, obviously, respect that this is an
election by Indonesians for Indonesians. Neither we nor anyone
should assert ourselves in a way that interferes with that
concept, but nevertheless, we should also, in my judgment, play
an extraordinarily important, constructive role in providing
election assistance, expertise, and critical monitoring.
Mr. Chairman, in 1986 I had the privilege on this committee
of sharing responsibilities with Senator Lugar to help create
an observer mission for the election in the Philippines.
President Reagan appointed Senator Lugar and myself and others
to that official observer group. I might say that it was our
involvement with NAMFREL, the National Movement for Free
Elections in the Philippines, that helped create the capacity
to make judgments about that election which ultimately resulted
in the legitimacy of the transition, let alone the legitimacy
that flowed to the Aquino Government.
There was some violence. There was some vote buying, and
there was cheating in the election in the Philippines. These
could be factors in the Indonesian elections. And so, the
presence of domestic and international observers is critical to
the establishment of credibility, which we are all seeking, and
the outcome in the end.
When I was in Asia, I met with Jose Concepcion of NAMFREL
who is involved now, I am gratified to say, in the Indonesian
effort. But he warned me that because of the size of Indonesia,
the task ahead of them with respect to the monitoring is
obviously four or five times larger. So, it is critical for us
to guarantee the adequate training and adequate funding and
capacity of that monitoring process.
The stakes in Indonesia, I just want to emphasize, are not
only high for the Indonesian people, but also for the region.
In conversations with Lee Kuan Yew in Singapore and others in
the region, it was very clear that there is the potential for a
regional impact if this election is not successful, and that
regional impact has many different nuances and overtones,
including the capacity for extremism, a fundamentalism of a
religious kind, that could have a profound impact on the long-
term stability of the region.
So, I thank Secretary Roth for his involvement in this and
the administration's awareness of much of what I have just
said, which I really wanted to underscore because Indonesia is
not automatically on everybody's map except when the IMF and
Larry Summers and others are there visiting trying to institute
reforms. But what we are engaged in now, in these non-focused
days by the media, are just as important as all of those
efforts, and we need to understand that as we go forward.
So, I thank you, Mr. Chairman, and I look forward to
talking a bit about the election modalities and assistance with
the Secretary.
Senator Thomas. Thank you, Senator Kerry.
I certainly agree with what you have said about the
importance of Indonesia in the economic field particularly and
in the whole of Asia.
You mentioned one of the high priorities and difficulties
was violence. What is the solution? What is the remedy? How do
you limit violence?
Mr. Roth. Well, I think there are several keys. I think one
is that they have to find somebody responsible for some of the
incidents, whether it is on the government side, people who
have shot into crowds in the past, whether it is on the
provocation side, someone instigated violence, but people have
to be brought to justice. Until there are consequences for
engaging in violence in Indonesia, it is going to be very
difficult to have a disincentive for people to continue to
engage in violence.
Second, the Indonesians--the government in this case needs
I think to more aggressively embrace the responsibility for
intervening in situations like Ambon where there is violence
and trying to put it to a stop. They cannot just sit it out
which all too often has been the tendency until it gets out of
control. We did not see the government really go in in East
Java until almost 200 people had gotten killed. We did not seen
the government send in troops in Ambon until almost 200 or at
least 200 people had been killed, and I think the government
needs to deal with these situations better.
Part of the long-term answer--and I emphasize this is not a
short-term solution, but part of the long-term answer is the
Indonesian Government has to get much better at dealing with
violence and with crowd control. As you have probably heard,
the police has been a neglected institution in Indonesia. They
are part of the military until next year when they will be
separated. They have been underfunded, undersized, and
basically no training in crowd control. One of the results is
that when difficulties break out, you are frequently seeing
people shooting into crowds, whether it is at point blank even
with rubber bullets, like happened in Atmajaya last November or
whether it is with lethal force, as has happened elsewhere. So,
there is going to have to be a lot of work I would hope with
the support of the international community and the United
States to start training Indonesian police how to deal better--
--
Senator Thomas. That is sort of a shift away from the
military to a civil peacekeeping----
Mr. Roth. I emphasize in the short term it is simply not
going to happen. You cannot buildup and double the police force
between now and the election. So, both the military has to do
better with crowd control, and as a long-term objective, we
have to try to get the police force to be more effective.
Senator Thomas. What is your impression? Let us assume that
there is a relatively fair and transparent election. When I was
there, there were people who were very much interested in human
rights. They had a human rights commission. I suppose they
still do. But there was no rule of law. There was no apparatus.
There was no institutional apparatus to carry it out. What
makes us think there will be now, for instance, to avoid a
Cambodian kind of a thing after this election is over?
Mr. Roth. Well, I think you have raised a profound problem,
and remind me that I did not make a key point, which is that
even if we have a good election, which we are all going to work
hard for, for the reasons you and Senator Kerry have expressed,
this does not mean that on June 8, we check the box and say,
Indonesia is done. In fact, what we are doing is hopefully
setting the stage for improvement over time, but there still is
a staggering range of problems and the one you have flagged is
what I would call institution building.
Essentially Indonesia has been left from the Suharto period
with very few functional institutions. The national assembly
has not been a real parliament. The local parliaments have not
been real parliaments. The court system has been completely
politicized by Suharto appointments. The military has been
placed at over 100,000 people in local governments, retired,
and at an abnormal controlling say in the government of the
country as a whole. So, you are going to have to really start
working on all of these institutions to try to buildup a
foundation of what we call civil society----
Senator Thomas. Is that happening now, or is this all set
aside awaiting the election to happen?
Mr. Roth. I think it would be unfair to say that nothing is
happening, but I would not want to mislead you to tell you that
we are surging ahead with progress. So much of the attention
now is focused, first, on the elections and, second, on the
economy. In terms of dealing with some of the institutional
problems, it is slower.
But, for example, you now find the debates in the
parliament are real. The National Assembly is considering
legislation that will have a huge impact on the future of
Indonesia. For example, the balance of power between the
center, Jakarta, and the provinces, the flow of resources, Java
being resource poor, the outer islands being resource rich. In
the past the money flowed from the outer islands to Java. Now,
the question is, will there be a better distribution of
resources?
Will the local governments be given more autonomy?
Will there be mechanisms to correct abuses if the military
commits the kind of violations it committed in the past at Aceh
and Irian and East Timor?
So, some of this work is starting, but we are at the early
stages.
Senator Thomas. What about the economic hold of the Suharto
family? Has that begun to change?
Mr. Roth. I think that if you look at what happened with
the banks last week--your phrase is a good one, begin to
change. If you ask me has there been a wholesale dismantlement
in what in Indonesia is called KKN and we might call in
Philippine terms crony capitalism, the answer is no. At the
same time, several of the banks that were shut down were ones
that had major Suharto family interests. There has been a
statement by the justice minister that they have taken away the
passport of one of Suharto's sons and that he is under
investigation and they may go after him for corruption. So,
some steps have been taken but the issue is far from resolved.
Senator Thomas. My information is that there are roughly 8
million unemployed early last year and it rose to 20 million.
That is pretty marked. You said that is stabilized, would you
say, not reduced?
Mr. Roth. Let me say, first of all, that one should be very
careful in using statistics even from the World Bank and the
IMF because they have now acknowledged that some of the
statistics they were using were overstated. Now the estimate is
far lower than the 20 million unemployed.
But there is no doubt that there has been a major increase
in unemployment and under-employment, and that it has been
worse in the cities. When I travel to Jakarta now, which I do
regularly, you see street children out there begging and
hustling on the corners in ways that I have not seen since the
early 1980's. The impact has been very real.
I would like to tell you that it is stabilized, but with
the projection of continued negative growth of 3 percent, which
is the estimate of the World Bank or the ADB, I forget, this
year, that is not stabilization. That is still on the downward
path. I tried to distinguish it from the plunge last year, the
13 or 15 percent, but it is still not positive growth. So, we
cannot say it is stabilized yet.
Senator Thomas. Senator Kerry.
Senator Kerry. Thank you, Mr. Chairman.
Mr. Secretary, would it be your judgment, based on what you
have just been saying to the chairman, that you are comfortable
that we and the institutions which we support are doing enough?
Mr. Roth. I do not think there is cause for complacency. I
am not personally satisfied that we have checked the box yet in
terms of providing enough resources for the election. I would
actually hope that the two of you might help me in your
contacts with Europeans and the Japanese in particular. It is
absolutely baffling that the Europeans spent more on Cambodian
election assistance than they are willing to spend in Indonesia
when you consider not just the relative importance of the
countries, but the relative size of European investments,
particularly German and British, in Indonesia. Yet, their
contributions have been de minimis. So, we are working very
hard with UNDP, which is the coordinating role, to try to
regularly assess the election needs and see if we can raise
contributions. I am not saying we are there yet.
Senator Kerry. One of the things that I have been
questioning is whether we are raising the stakes high enough.
Are we pushing this at a level that sufficiently creates the
urgency and gets the decisions that you need?
Mr. Roth. I would say yes. I think that had it not been for
the United States' leadership, we would not have seen the major
Japanese contribution that was just announced. We have seen a
more than doubling of the Australian contribution. We have
seen, although it is inadequate, almost a tripling of the EU
contribution. More importantly, we have seen Indonesia accept
the concept of international assistance, accept election
observers, which is a crucial concept.
All I am trying to suggest is we are not done. This is
going to be down to the wire. Every step of the way we are
going to have to be on top of this situation. As I said in my
statement, this is our No. 1 priority in the administration
between now and the selection of the new President.
Senator Kerry. Well, we are a little less than 3 months
away from the election. How many polling places are going to be
set up?
Mr. Roth. Well, they will have over 125,000 polling places.
What this means, referring to some of the comments you made, is
obviously you are not going to have an international observer
at anything like the majority of the polling places. So, it is
absolutely crucial that two things happen.
First, that the Indonesians themselves train the poll
workers as opposed to monitors, the people who run the polling
places know what to do, get the counting procedures right. They
have just established an election commission last week. So, we
have to get those technical procedures down as well as make
sure they train these workers.
Then there is the question of observers. Once again, 1,000
observers might swamp Cambodia, but it gets lost in the
vastness of Indonesia. So, even if you add the media as de
facto observers, we are not going to have observers at most of
the polling places. This is why there is a lot of work being
done in Indonesia to get Indonesian observers at these polling
places, and there is a major effort to organize the students to
serve as election observers, and they are talking about
mobilizing hundreds of thousands of students. We are trying to
support this.
In addition, the parties will have their own observers, and
as you probably know from your Philippine experience, that can
be a crucial player when the parties report abuses. So, that is
another check on the process.
Senator Kerry. The problem is, as you can well understand,
that if the parties do not have greater capacity to have
observers from neutral and independent entities, you will be
flooded with claims that are absolutely unverifiable and you
will have an election that is prima facie lacking credibility.
This is why my concern--and I want to state it as clearly
as I can today--I do not believe the international community is
doing enough to make clear what has to be done in 2+ months to
even prepare, let alone monitor. You could have chaos on
election day if you have polling places that are only now being
established with no modalities for the election by the election
commission fundamentally in place.
Mr. Roth. Yes. I think you are perhaps underestimating the
degree of work that has been done in Jakarta by the UNDP
working with the Indonesians and with the foreign community. It
is not a zero base the way one might think. One can build on
the election lists from before, the polling places from before.
Even though the polls were bogus because candidates were not
allowed to run, the physical infrastructure for elections has
happened before, so there is something to build on within
Indonesia.
But we cannot be complacent. I could not agree with you
more on that.
Senator Kerry. But is the structure sufficient in your
judgment for us to be able--again being sensitive about not
interfering, but at the same time maximizing the capacity to
make the judgment that the staff will be there or to be able to
provide assistance and training, for instance?
Certainly the two institutes, the Center for Policy, et
cetera, could perhaps take greater roles and so forth.
Mr. Roth. I am not prepared to tell you that all our
concerns have been addressed and that everything is ready for
the elections. For example, they have not yet finalized what
the counting procedures are and how they secure the ballots,
how that proceeds up, which is a crucial step in every
electoral process and one where the observers can play a role.
All of the decisions are not done and we have a lot of work
left. I do not how to be more transparent than that.
Senator Kerry. Well, let us just look at the money for a
moment. The Indonesian Government, I understand, has allocated
about $180 million. Correct?
Mr. Roth. Right.
Senator Kerry. And we are going to provide about $30
million?
Mr. Roth. Yes.
Senator Kerry. And if you add the other countries, there
may be another $60 million coming from other places, somewhere
in the vicinity.
Now, will that funding in our judgment be sufficient to
cover the needs?
Mr. Roth. I think we would rather see more, based on
experience in other countries, I think I have testified before
that there has been an estimate in the Third World that
basically $3 to $4 per registered voter would be a better
outcome, and if you take over 125 million voters, it looks like
there are underfunded.
This is one of the reasons why we are still working on
trying to get more funding. I have been trying to organize an
international pledging conference because I think that could
increase the pressure for countries to contribute more
generously and focus the attention on the elections.
Senator Kerry. Well, I really want to just underscore--I
know the red light is on and I will not abuse it, but I just
want to underscore that there was a huge concern in this Nation
when the economic implosion took place. There are large
economic stakes in this. Japan has enormous investments there.
We have been raising a hue and cry about Japanese recovery
being essential to America's sustained economic growth. If
Indonesia implodes politically, then the values that Japan's
banks, many of which we know are fundamentally bankrupt, are
relying on to be sustained and to revalue, which is the way
they are trying to work out of this, is going to tumble. That
can have serious implications on larger world economic
interests.
The only way Indonesia will be able to make the economic
recovery sufficient to meet the standards of the IMF, World
Bank, and others is to have a credible government, and the only
way they will have a credible government is to have a credible
election. So, this is larger than just an election, and I think
it is critical for our allies and for us to really understand
that and push the envelope on this a little bit.
I must say, Mr. Chairman, I am glad you had the hearing
today. I raised this subject with staff several weeks ago and
began a process of trying to examine what we might be able to
do to leverage this. We will work with you, Mr. Secretary, as
much as we can, but I think it has got to be put on the front
burner more than it is now. I am not criticizing. I am just
saying I think that you need some help and lift from others in
the administration and that we need to be there too.
Mr. Roth. Well, I share your sentiments. We have
established an elections working group within the State
Department, pulling in some of the other agencies, precisely to
give it the kind of priority that you are talking about and to
look at these issues on a regular basis. You have virtually
used the talking points that I have used with the Japanese
about what the stakes are in this election. In fairness to
Japan, I should indicate that they have been extremely generous
on the economic side in terms of the assistance they are
providing under the Miazawa initiative.
They turn around and say, it is nice, United States, that
you are spending $30 million on elections, but we have put
forward billions of dollars on the economic side, to which I
say that is great, keep doing it. But the elections matter and
all this economic assistance will not be well utilized or have
the conditions to succeed if the elections do not turn out
right. So, do not be penny wise and pound foolish. But the more
you can reinforce that message in your own contacts with Japan
and other members of the international community, the better.
Senator Thomas. How about Australia? They are right handy
and very much involved. Do they participate?
Mr. Roth. They are extremely involved. They are also
extremely modest on the economic side. They have talked about
something roughly in the nature of $10 million U.S. They have a
little flexibility and that represents almost a doubling. I
have personally spoken to the Foreign Minister, Mr. Downer,
several times about their contribution.
Senator Thomas. Senator Hagel.
Senator Hagel. Mr. Chairman, thank you.
Mr. Secretary, welcome.
Mr. Roth. Thank you.
Senator Hagel. I wanted to ask first a question regarding
progress on negotiations between the Indonesian Government and
independent American power companies. You know. You have been
involved in this, and I appreciate very much the good work you
have done and your staff. What can you tell us about those
negotiations? Are we making progress?
As you know, many are perilously close to default, and I,
like all of us, am somewhat disappointed that we have not
gotten the Indonesian Government to respond more effectively
and positively on dealing with these issues.
Mr. Roth. I will provide you a more detailed answer for the
record so that you can fully get at the issues you are talking
about. But let me first set the framework.
Obviously, there is a massive problem based on the fact
that certain contracts were made, decisions were made based on
projections of a growing Indonesia with surging power demands.
With the onset of the financial crisis and the setbacks to the
Indonesian economy, obviously the power demands plummeted and
they were left with economic projects that had their
underpinnings pulled out from them so that it became necessary
to figure out how to deal with the problem that they did not
need this capacity that had been agreed upon.
Having said that, the Indonesian Government--my
impression--and the companies have not met the time tables for
negotiations to try to work out the agreements. The American
power companies have been--my impression--quite reasonable in
recognizing that there is a problem and that changes have to be
made, but they need to work out the debt and they need to work
out the contracts. And the deadlines have not been met.
So, we continue to press the Indonesian Government. I have.
I have been meeting with Mission Energy and other companies to
try to deal with some of the more critical contracts. But I do
not have an up-to-the-minute update for you, so let me get that
for the record on where we are this week.
Senator Hagel. Is this an issue that has been raised with
the various political candidates?
Mr. Roth. I do not know. I would have to inquire. I doubt
it. I think it is more likely to have been with the ongoing
government because there is some time urgency to it. We do not
want this to wait until the new President is selected in
November.
Senator Hagel. Well, that is right, but at the same time,
Senator Kerry's point is a good one. The fact is markets
respond to confidence, and what Senator Kerry and Senator
Thomas said is exactly right. Whoever inherits the mantle there
in Indonesia next to govern in the lead is still going to be
dealing with these problems, and I think it would be in the
best interest of all of us to, on a parallel track, bring these
issues up with the candidates, realizing that the current
government has to deal with them. But at the same time, I doubt
if there is going to be any scenario that we could envision now
that would have all these issues resolved before the elections.
I think it is smart for us to be dealing with all candidates
and all leaders on all tracks on this issue.
Mr. Roth. I will pass that suggestion on to Ambassador Roy.
Senator Hagel. Thank you.
You mentioned IMF in your statement. You mentioned that all
the political candidates, others, are helping develop some kind
of a structure dealing with the economic challenges. You talk
about the political figures have indicated their intention to
continue with the IMF program in a new government.
Give us a little more detail on where we are with IMF
programs in Indonesia.
Mr. Roth. Well, I think what one would have to say is it
has been an uneven course, rather than perfect trajectory.
There has been difficulty implementing various parts of the IMF
program.
For example, because of the economic retraction that took
place, the Indonesian Government was having difficulty spending
money, developing projects, and so there was some sense that
the IMF traunches were perhaps overly generous in light of the
actual budget needs of Indonesia. So, there had to be some
discussion of what Indonesia could realistically spend, its
absorptive capacity.
Second, there has been a huge issue of what is called
transparency, but obviously relates to the corruption of the
past regime. The international banks, for very obvious reasons,
given some of the mistakes made in the past, have been anxious
and they want to be sure that whatever assistance they give
does not end up in projects that do not meet common sense
standards on corruption. So, there have been problems not just
with the IMF but with the World Bank and with the ADB about how
do you ensure that these transparency standards are met.
Third, a lot of this has gotten caught up in election
politics. There is, unfortunately, from my perspective a raging
debate in Indonesia, particularly in the now-free press, as to
whether any assistance from the international community between
now and the elections is de facto tilting toward the
government. I personally view that as ridiculous. The notion
that we should not be helping the poor with social safety net
programs or the people who are unemployed as a result of the
crisis because someone might see this as a plug for the
government strikes me as almost immoral. But, nevertheless,
there is this political debate that we have to be sensitive
that the international community is not seen as intervening.
Then, finally, there has been uneven implementation of
policy. You could get more on this from Treasury, and I will
submit to you a more detailed answer for the record. But just
look at the way the recent bank issue was handled. They missed
the initial deadline, raised concerns that there was favoritism
toward the one bank, one crony in particular. Even though they
ultimately came up with a fairly ambitious program, the way it
was done was a mixed picture rather than an unclarified
success. So, this is going to still be a struggle to insist on
the implementation of the conditionality between now and the
election.
Senator Hagel. Is it your opinion that Indonesia is making
progress regarding such things as transparency, dealing with
crony capitalism? Are they not just moving in the right
direction, but in fact is there progress being made under the
Habibie Government?
Mr. Roth. I think one would have to say some but not
enough. We need more. But one cannot give them a perfect report
card at this point. I tried to indicate earlier, for example,
three of the banks that were closed had Suharto family ties and
children associated with them. That is a plus, but there has
not been a full accounting for all the corruption of the past
or prosecution of past cases. The IMF, the ADB, and the World
Bank still spend a lot of time negotiating transparency and
controls and conditionality in their agreements. We are not
over the hump on this yet.
Senator Hagel. Mr. Secretary, thank you.
Thank you, Mr. Chairman.
Senator Thomas. Thank you, sir.
We are getting a little jammed up on time. Let me ask you
one question which I suspect will have a simple answer.
You mentioned something about oversight in Timor. Are we
susceptible to sending troops into East Timor?
Mr. Roth. I think it is way premature to talk about troops
in East Timor. When the Secretary was in Indonesia, for
example, she met, amongst her many meetings, with Shanana
Gusmau, one of the leading Timorese leaders, and he said he saw
no need for PKO, or peacekeeping troops, that he thought an
unarmed Timorese police force with a little assistance from
international police forces could handle this. We are dealing
with a very small place with a population of under 800,000
people. We are not talking about a country with millions of
people spread out over vast distances.
But a lot of this is going to relate to what I mentioned to
you before. If ABRI, the Indonesian military, take steps to
disarm some of these militia, if you have a reconciliation
council on the ground, if you had a partial withdrawal of
troops to diffuse some of the current tension, if you have
international presence--and it can be things like the Red
Cross, the Human Rights Commission, as well as Ambassador
Marker who will have to have a presence there in terms of the
U.N. implementing the plan for autonomy or elections--all of
this could reduce the need for any type of international
presence. So, a lot is going to depend on what happens now, and
that is why we are pushing so aggressively to try to break this
cycle of violence so that we will not have to end up with the
hard choices about PKO.
Senator Thomas. I hope so. That is beginning to be sort of
a heavy burden to be having peacekeeping operations everywhere
in the world.
In any event, thank you, Mr. Secretary. We appreciate it
very much.
Mr. Roth. Thank you, Mr. Chairman.
Senator Thomas. So, gentlemen on panel two, if you will
come forward, we will try and move quickly here. Mr. Edward
Masters, President, United States-Indonesia Society; Ms. Sidney
Jones, Director, Human Rights Watch, Asia Division; and Mike
Gadbaw, Chairman, U.S.-Indonesia Business Committee.
Mr. Masters, if you would care to go ahead, sir, we will
put your full statement in the record, each of you. Whatever
you would like to say would be fine.
STATEMENT OF HON. EDWARD E. MASTERS, PRESIDENT, UNITED STATES-
INDONESIA SOCIETY, WASHINGTON, DC
Mr. Masters. Thank you very much, Mr. Chairman. I first
want to say I am delighted to be back again. It was just a year
ago this week that I had the opportunity to meet with this
committee previously.
At that time things were much worse in Indonesia than they
are now. It was an economic basket case. There were major
questions at that point about the survivability of the country
and certainly of the government. The Suharto Government since
did fall, and has been replaced, and we have seen significant
progress since then. I want to associate myself with Assistant
Secretary Stanley Roth's comments on that progress, but I will
not repeat much of what he said.
I particularly want to associate myself with his comments
on the economic progress. While there are still problems and
there have been missteps and while the bank restructuring and
the rescheduling of the private sector debt have been unduly
delayed, there has been progress on other aspects of the
economic sector.
What I want to focus on today, if I may, is the political
side, and particularly the way the government has set itself up
for these very important June elections.
As you know, Mr. Chairman, there were three critical laws
that were put before the parliament, first on the conduct of
elections, second on the formation of parties, and finally on
the composition of the parliament and the People's Consultative
Assembly, the latter being the body that elects the President
and the Vice President. There was concern that this was too
much to put on the plate at one time for a country that had no
recent experience with an open political system.
But to everyone's great surprise and delight, the
Indonesian parliament on January 28 did pass laws that were
very constructive in these three areas despite some lingering
problems, and I will talk about those problems.
Three critical issues threatened to derail these laws
governing the elections. One was the role of civil servants. In
the past civil servants joined a party, largely the government
party, Golkar. There are 4.1 million civil servants. They and
their friends and families were a significant element right
down to the grass roots level. The new legislation provides
that civil servants could not and would not be members of a
party or officials of a party, and if they did so, they would
be dismissed from the civil service. That is a major step
forward, and contrary to earlier expectations was not a
solution that Golkar wanted.
The second controversial issue was the number of seats for
the military. The pressures on that ranged from 0 to 50 or 60
reserved seats. The compromise solution was that the military
will have 38. The good news is this is less than the 75 they
used to have, but the bad news is that there are any at all. I
will come back to that in a minute.
The final issue was the size of the electoral districts, a
rather complicated, technical issue, but I think one that was
resolved quite satisfactorily.
The result has been a set of laws and principles which
serve as a viable basis for free elections, starting on 7 June.
These laws have been accepted by all of the major players and
all of the major political parties, and I think this is a very
constructive development.
A further sign of the moderation of the parties is the fact
that the major parties accept panchasila. Panchasila is
important because that is the buzzword to avoid mention of an
Islamic state. Adherence to panchasila means that, in effect,
you favor a non-Islamic, a non-religious based state, and all
of the major parties have accepted that.
There have been a number of other good developments so far.
Let me tick them off briefly.
First, universal suffrage. All Indonesians over 17 and
those who are married under 17 have the right to vote. No
discrimination.
Second, the composition of the electoral commission has
been a surprise and a joy to many observers. There was concern
that this group would be dominated by the government. That is
not the case. The government representatives who have been
appointed include a number of figures who have credibility,
including Buyung Nasution, a well-known human rights advocate.
Third, I think is the matter that I mentioned before, civil
servants are banned from participation.
Fourth, limits on financial contributions. Now, that may be
observed in the breech, but at least there is a regulation now
which restricts financial contributions. This will certainly be
helpful.
There are several continued problem areas. I mentioned one
earlier, the fact that the military still have seats. They have
38 seats. That is 7.5 percent of the total membership, and that
puts them in an important swing position.
There are other problems that I think have been identified
before, but basically the legislation is good. I think it
provides the basis, with adequate monitoring and with adequate
outside support--and I want to strongly endorse the previous
comments about the need for further U.S. support--for a
credible election, which will set the basis for further steps
in both the political and economic fields.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Masters is in the appendix
on page 37.]
Senator Thomas. Thank you very much.
Ms. Jones.
STATEMENT OF SIDNEY JONES, EXECUTIVE DIRECTOR, HUMAN RIGHTS
WATCH, ASIA DIVISION, WASHINGTON, DC
Ms. Jones. Thank you very much.
I guess I take a somewhat bleaker perspective because I
have just come back from Indonesia, and I spent most of my time
outside Jakarta. I was in Ambon in eastern Indonesia where the
communal violence is virtually a civil war. I was in Aceh in
the northern tip of Sumatra, which is also the target of major
military operations, and I was in south Sumatra briefly where
there are major problems between farmers and commercial
agriculture there.
My impression was that, yes, while the election is
important, it would be a real mistake to place so much emphasis
on the election that it somehow seems as though this is going
to be the key to solving all of Indonesia's problems because
when you get outside of Jakarta, the other kinds of problems
and the grievances are so deep and so pronounced that the
elections--they are not irrelevant, but they are clearly not
going to make a major difference in the outcome or the
resolution of those problems. I would like to list a couple of
the issues that are a major issue.
One of them is and continues to be the dominance of the
military. It is not so much a question of whether there are 38
seats left or how long it is going to take to remove the
military from power, but there are some very immediate issues
that in the short term are making things worse.
One is that the military has decided that, in an effort to
provide security for the elections, it has created this
civilian militia called wanra, which is being set up all over
the country. The United States, quite rightly, has opposed
these militias. But in a place where you have got communal
violence and sectarian violence breaking out all over the
country, what is happening is that the people who are
volunteering for this civilian militia are people who are
either ethnically distinct from the population more generally
so that in Aceh where you have these major operations taking
place, the people volunteering for the civilian militia are
transmigrants from outside from Aceh against whom there is
already resentment.
In East Timor, the people who were volunteering for the
civil militias are people who are pro-integration, therefore
building in immediate tension with the pro-independence people
in East Timor.
In Jakarta, last November when there was a civilian
militia, the people who joined the civilian militia were people
who were a priori opposed to the students so that you built in
a clash.
This notion that a civilian militia is going to provide
peace or security during the elections is not only wrong, it is
completely counterproductive, and what we may see is more
violence with these people on the streets who have been armed
with sticks and trained by the military.
Second, there are a couple of other problems that the
military continues to almost promote. One of them is it
continues to see all social unrest and civil unrest as being
almost tantamount to insurgency. This is not an army that has
been trained in any kind of ordinary law and order functions.
It has been trained in counter-insurgency, seeing the people as
the enemy. So, I wholeheartedly agree with the need to place
more emphasis on the police rather than the military, but that
is not going to happen for a while even though the army has
agreed that the police should be separated from the army in
terms of the overall armed forces.
At a time when Indonesia should be moving away from
reliance on the military, in fact what this civil unrest is
doing is creating pressure to create more regional military
commands. Right now there are 10 KODAM's, which are the largest
division of the army, each of which has about 700 personnel.
Now what we are seeing is that there has been a creation of a
new KODAM in Aceh where there has been this trouble since
December. You are seeing a demand for a new KODAM in Ambon as a
way of dealing with the unrest, and it is as though at a time
when more than ever Indonesia should be relying on civilian
institutions, the pressure is for expanding the role of the
armed forces.
Also, it is the case that you have got a real problem
within the military of all of these officers who have no place
to go. One of the rationales for creating more of these
divisional military commands is that you create slots for
officers to get promoted to, and there has got to be some way
of addressing this structural problem within the military.
A fourth issue is that the military itself and some senior
officers have very deep suspicions about political reform. So,
you get these comments by the military--and I put some in the
testimony--where they are asked why they did not take any
action when this communal violence broke out in Ambon, and
their response was, well, this is the reform era. We cannot
just arrest people the way we used to. So, it is almost a way
of using reform as the pretext for inaction or saying, see,
things were better and you were safer under the old system.
Let me just say very quickly on East Timor I would strongly
endorse much of what Assistant Secretary Roth said, but there
is going to be a ballot mechanism and there is going to be a
real problem with different factions in East Timor. You have
these militias that have been equipped and armed by the
Indonesian military, pro-integration militias, but you also
have violence that has come from the other side, from the pro-
independence side to the point where large numbers of refugees
are fleeing East Timor, people who are non-Timorese or people
who have somehow been collaborating with or working with the
Indonesian Government. So, in order to avoid a major outbreak
of civil unrest immediately, what you need to have is some kind
of international police presence there as soon as possible and
anything the United States can do to facilitate that would be
great.
I would like to just mention the fact that you do have
other centrifugal tendencies in Indonesia, and the fact that
East Timor is moving toward independence has given a new life
to independence movements in other parts of Indonesia, which is
not to say that there is not a dynamic of its own in places
like Aceh and Irian Jaya. But for the first time, their demands
for a referendum now in Aceh, which there never were before--
and that is not going to go away with a credible election and a
free and fair election and so on. That demand for some kind of
separate status I think is going to continue.
We are also seeing a hundred leaders from Irian Jaya go to
President Habibie and present local aspirations for
independence just last February 27. We are seeing perhaps
growing support in the South Maluccas in Ambon for a separate
state from the Christians who feel threatened now in Ambon. We
are even beginning to hear hints about a free Borneo republic
in Kalimantan. This is not to suggest that Indonesia is going
to disintegrate overnight, but unless those regional grievances
are addressed and addressed very soon, there is going to be a
major problem for any new government and it is going to last
well beyond the elections.
I would just like to say finally the ethnic Chinese
question has not been resolved at all. The government has made
no progress toward revoking or repealing legislation which
discriminates against the ethnic Chinese. It has not
implemented any of the recommendations of the joint fact
finding mission that was set up to investigate the riots in May
1998, and unless and until the ethnic Chinese feel as though
they can be secure and safe in Indonesia, not only are you
going to have real problems restoring the economy, but you are
also going to have many, many more political asylum
applications in the United States.
Thank you very much.
[The prepared statement of Ms. Jones is in the appendix on
page 34.]
Senator Hagel [presiding]. Ms. Jones, thank you.
Mr. Gadbaw.
STATEMENT OF R. MICHAEL GADBAW, CHAIRMAN, U.S.-INDONESIA
BUSINESS COMMITTEE, WASHINGTON, DC
Mr. Gadbaw. Thank you very much, Mr. Chairman and Senators.
I am pleased to be here on behalf of the U.S.-Indonesia
Business Committee of the U.S.-ASEAN Business Council. The
U.S.-ASEAN Business Council is a private, nonprofit
organization. It is made up of some 400 U.S. companies. We are
all dedicated to expanding trade and investment between the
United States and the member countries of the Association of
Southeast Asian Nations.
I was in Indonesia just 3 weeks ago leading a delegation of
U.S. business representatives committed to standing by
Indonesia during these difficult times. Ours was a confidence-
building and information-gathering mission. In the week we
spent there, our group met with a broad cross section of
government officials and private sector representatives. We met
with representatives of the political parties, members of the
Indonesian press, representatives of the Indonesian NGO
community, World Bank officials, and the Japanese business
community in Jakarta.
While I have been to Indonesia a number of times, I came
away from the visit with a strong sense that Indonesia is a
large, complicated country that is undergoing profound social,
political, and economic change. One cannot escape a sense of
historical moment in recognizing that the world's fourth most
populous country is undergoing a political transition to a more
open, democratic political system. At the same time, business
practices and instruments of governance that have been in place
for decades are now under persistent, largely constructive
assault.
On our visit to Indonesia, we encountered reform in every
discussion, from President Habibie and the Minister of Mines
and Energy to our meetings with those unconnected with the
current government.
The committee's message to our friends in Indonesia has
been consistent: A commitment to free, transparent, and
efficient markets must be a part of any viable reform agenda.
It is essential to draw the political leadership and other
influential sectors of the body politic out on these issues. If
left isolated, we are concerned that they will develop
positions that are not only less amenable to international
business, but untenable in the long run.
To this end, we have institutionalized a similar engagement
of the Indonesian private sector. Long before the onset of the
economic crisis, we worked with our Indonesian counterparts to
improve the business environment in areas as varied as tax
reform, customs reform, and distribution liberalization. The
crisis has encouraged us to redouble our efforts to engage them
even more broadly.
Indonesia has made an impressive number of commitments over
the past 2 years to reform its economy and has had most of its
promises, albeit in a somewhat halting and incomplete manner,
fulfilled. Its progress on economic reform has been
periodically approved by the IMF following extensive reviews.
In their totality, these reforms promise to transform the way
business is done in Indonesia. However, consistent engagement
is required of international financial institutions, foreign
donors, and the international business community to see that
they are implemented faithfully.
Beyond reinforcing my impressions about the overwhelming
needs of the reform process, our discussions in Indonesia gave
us a better perspective on the current economic climate. The
impression one has from the U.S. media coverage is that the
country is devastated, an economic basket case with as much as
100 million people descending into poverty. It is a very
difficult time there, no doubt. However, there is much more
resiliency in the Indonesian economy than has been generally
portrayed.
In a report prepared for the World Bank, surveys of
conditions in the country indicate that poverty is not as
severe as some have assumed. Before the crisis, the incidence
of poverty was approximately 11 percent, down, I should note,
from 70 percent 30 years ago. It is now at around 14 percent
according to this report. The crisis has hit hardest urban
areas, Java, and those whose income is in the upper half of the
nation's earners. The effects elsewhere have been less severe.
In fact, in some areas such as Sulawesi, the economy has
actually benefited from drops in the value of the rupiah.
Prior to the crisis, Indonesia's economy averaged 7 percent
growth for 25 years. It had created a middle class
conservatively estimated at 20 million, a larger population
than that of all Australia. To be certain, some of this
remarkable growth was unsound. But a great deal of it was
attributable and is attributable to Indonesia's integration
into the global economy, conscious diversification, the
strengths of the Indonesian people, and Indonesia's other
natural resources. Structural economic reform carried out to
its designated end and political stability will once again
permit Indonesia to make the most of its national assets.
Speaking on behalf of the U.S.-Indonesia Business Committee of
the ASEAN Business Council, I am confident of this.
Let me close by thanking you, Mr. Chairman, for the
timeliness of this hearing and for your own long-term
commitment to the region. This next several months are crucial
in Indonesia. They may very well determine its future for
decades to come. I am honored to be part of this subcommittee's
assessment. Thank you.
[The prepared statement of Mr. Gadbaw is in the appendix on
page 31.]
Senator Hagel. Mr. Gadbaw, thank you, and to all our
witnesses, thank you very much.
As you know, we have a rollcall vote on and the chairman
will be back momentarily. Let me ask my colleagues if they
would like to get a question in before they go vote. Senator
Kerry.
Senator Kerry. I would like to get a quick question in.
Ms. Jones, I appreciate the problems that you have laid
out, but I am a little perplexed to be honest with you. The
things you call for and the things you would like to achieve,
which we are well aware of, need a government to be able to
achieve them. I assume you do not believe that the Habibie
Government is in a position to do any of these things pre-
election.
Ms. Jones. No. As I say, I do think the election is
critical, but I think one of the things that is striking about
going outside Jakarta is how low the expectations are about
this election. They almost see it as a dry run for the year
2004. I think if you realize that there are now 48 approved
parties and that none of those parties have any skilled or
experienced personnel, you do realize that a lot is not going
to change after the votes are counted. I think that it is just
important to be realistic about what the elections are going to
achieve.
Senator Kerry. Well, a lot less is going to happen if they
do not have a good election.
Ms. Jones. Absolutely. I agree totally.
Senator Kerry. So, it is the precondition.
Ms. Jones. It is a precondition.
Senator Kerry. The precondition.
Ms. Jones. A precondition.
Senator Kerry. Well, when you say a precondition, tell me
what you think can happen if you have a failed election.
Ms. Jones. Well, I do not think anything can happen if you
have a failed election, but I think that it is not as simple--
--
Senator Kerry. If nothing can happen if you do not have a
good election, it is the precondition.
Ms. Jones. OK, sir.
Senator Kerry. Well, I am simply saying that because you
seem to want to try to minimize the impact of the election or
the importance of it.
Ms. Jones. It is not that I want to minimize, but what I
want to say is that it is not a guarantee of----
Senator Kerry. Well, I agree with that.
Ms. Jones. OK.
Senator Kerry. I could not agree with you more. Whoever
gets elected has an enormous set of challenges, as do we, to
try to pull things together beyond that, but there is no prayer
of doing any of that. All of the things you have cited, the
unrest in the countryside, the disintegration, the increased
movements for independence, et cetera, et cetera, will only be
exacerbated if you have a continued economic down slide and a
government without legitimacy.
Ms. Jones. That is true. I was trying to convey almost the
mood of places like Ambon now where it really is a situation
where they do not feel the elections matter. We do and I think
it is important, but it is important to realize that the buzz
about the elections in Jakarta does not filter down.
Senator Kerry. Fair enough. That is a very good point, and
I think it is a very important point for the committee because
in many ways you are underscoring the alarm bells that I am
trying to ring, that we need to make sure it does filter down
and to find ways to give some--what am I saying--the gravitas,
some tentacles to the election so that the results can be
stronger.
Ms. Jones. Can I just say there is one other issue, though,
which is that part of the dangers of this communal unrest is
that the election campaign itself is going to be marred I think
by communal issues. That is another thing just to keep in mind,
that the election campaign itself can be a divisive procedure
as much as a unifying one.
Senator Kerry. It can be. I do not disagree with that, and
that is the risk that the international community needs to
probably try to face up to now and squarely, but the
alternatives are even bleaker.
Ms. Jones. That is true.
Senator Kerry. So, I think we need to keep our eye focused
on what we can achieve, and it is a difficult road. These are
difficult roads in a lot of countries. Managing democracy and
beginning to move into changed governments is not without its
growing pains. But the key here is for us to maximize their
capacity to begin at a good beginning and to make it happen. I
think that is what is so key.
Mr. Chairman, thank you.
Senator Thomas [resumes Chair]. Thank you, sir.
Senator, welcome, nice to have you here.
Senator Torricelli. Thank you very much. I am very pleased
to be on the subcommittee, and look forward very much to
working with the members.
I regret, Mr. Masters and Ms. Jones, that I missed your
testimony, but I have or will read both.
I wanted to ask, given the enormous economic dislocations
and political pressures and now the precedent of East Timor,
are there any other fissures, multiple fissures, that threaten
national unity in Indonesia of which we should be aware, that
there are internal tensions arising that we should anticipate
future problems?
Ms. Jones. I mentioned in my testimony that there are very
strong independence movements both in Irian Jaya and in Aceh,
and while they each have their own dynamic, I think that the
progress toward East Timorese independence has affected both
places.
Senator Torricelli. How has it affected it?
Ms. Jones. For example, where there never used to be a call
for a referendum on the political status of Aceh, there is now
a very strong movement building, and it started with students
and it has now moved into the political parties in Aceh itself.
People told me that the one thing that could counteract
that move toward a referendum was the prosecution of even a
single officer for abuses that took place during the major
military operations there in the early 1990's. There is a
direct correlation between the frustrations over nothing
happening to address those abuses and the move toward political
independence. I think it is important to recognize that.
Mr. Masters. Could I make a comment, Senator?
Senator Torricelli. Yes.
Mr. Masters. Thank you very much.
These fissures have appeared very dramatically, and they
have surprised many of us who have followed Indonesia for a
number of years. We used to say that Indonesia had a remarkable
record of religious tolerance, of integrating several of the
world's major religions. That seems not to be the case. There
are now serious Christian/Muslim problems and also there are
problems on the ethnic side, not only the Chinese, which is a
longstanding problem, but also among other ethnic groups as
well.
I attribute this to the serious economic pressures on the
country. The breakdown of the economy, the rise in
unemployment, and more importantly probably underemployment,
have released built-up tensions within the society that were
dormant during the days of 7 or 8 percent annual economic
growth.
I would take as an example Ambon, a quiet, idyllic, area. I
was there 3 years ago, and a number of young men came up to us
in the bazaar and wanted to walk along with us talk. They were
nice young fellows. So, we asked them, what are you doing?
Well, they said, we are not doing anything. We found out they
graduated from high school 3 or 4 years before. They have never
had a job. That is what we might call a floating mass in Ambon,
further aggravated by economic stringency, that is contributing
to the violence and to the disruption in society.
I do not buy the idea that there is some third force or
hidden hand or Suharto family or whatever orchestrating this
violence. I think it comes much more from local circumstances.
Senator Torricelli. I only have 6 minutes left, so I am
going to have to run in a minute here on this vote.
But would you predict, without having to identify areas,
that if the economic and political strains continue, are we
likely to see other problems of national unity in the decade
ahead? Are there other natural fissures there?
Mr. Masters. I would certainly expect that, Senator, yes.
It is incumbent on the Indonesian Government to move much more
directly and more effectively in redressing the center-regional
relationship, both on the financial and the power-sharing
sides. They need to get on with that very quickly, or they are
going to have more difficulty.
I do not share the view expressed earlier that there is a
major problem in either Irian Jaya or Aceh, but there could be
if they do not move quickly to cope with it.
Senator Torricelli. Thank you very much.
Thank you, Mr. Chairman.
Senator Thomas. Thank you.
Just a couple more questions, if you do not mind.
What would you say, maybe each of you, what do you think
are the most serious threats to the credibility of the
election?
Mr. Masters. Well, I guess I have to kick off on that, Mr.
Chairman.
I would say maybe it is money politics. The mechanisms that
have been set up are reasonably good. There are still some of
the implementing regulations that have to be made, but the
system looks reasonable. As I say, it has been accepted by all
of the major players and all of the major parties.
But in carrying out the elections, although there are
restrictions--and that is one of the good things in the
election legislation--on individual and corporate campaign
contributions, there are probably also ways around those
limits. As we have said before, there are several hundred
thousand polling places. It is a huge number. They are not all
going to be monitored effectively. So, I think that there is
real danger that money will talk and that that will in some
areas perhaps discredit the outcome of the elections.
Senator Thomas. They have campaign finance, though.
Mr. Masters. They have campaign finance, yes, sir.
Senator Thomas. Ms. Jones?
Ms. Jones. I think there are two questions. One is that the
election law itself is so incredibly complex that it will be
difficult to explain even in the most sophisticated voter
education program what exactly the mechanism is for selecting
people. Right now the voter education tends to be you have a
right to vote, which is important.
But I commend to you this report by NDI on the new legal
framework for elections in Indonesia, and I could not
understand what the process was. All the more difficult is
going to be to explain this on a nationwide basis, and the
chances for people being elected with the majority of the votes
not getting a seat is quite high. So, that is one issue.
The second issue is what happens between the parliamentary
elections and the selection of the President afterwards because
you could get a vote which was legal and fair but not accepted
as credible by the Indonesian population.
Senator Thomas. Mr. Gadbaw.
Mr. Gadbaw. I think there are two things. There is the
process of the election and the result of the election.
I think on the process side, it is impressive to me that so
many of the key opposition figures agree that the process that
is being followed does provide the basis for a free and fair
election. The government appears to be committed to that, and
so I think on that score it is critical that that be followed
through on, but notwithstanding the obvious difficulties of an
election in a big, complicated country like this, anyone who
has watched the elections in other countries like India know
these are difficult, often very messy affairs.
Second, the results. I think in the end the credibility of
the process will, in fact, be judged by whether it produces a
government that can effectively govern this country in a very,
very difficult time, and it is clear that there will be some
kind of significant change that takes place. There may very
well be a new form of coalition politics. That would be a
profound change for Indonesia and how those forces will
converge, choose a single leader, and how that leader will be
able to pull together all of the competing interests in the end
I think will be the real key to people's perception of whether
this was a credible process.
Senator Thomas. What is the basic difference between the
system--how was Suharto selected? Is it the difference in the
composition on the House of Representatives?
Mr. Masters. Suharto was rubber-stamped, let us say, by the
People's Consultative Assembly which under the constitution has
the responsibility every 5 years to elect the President and the
Vice President.
Senator Thomas. What keeps that from happening this time?
Mr. Masters. Now there is a much more open political
system. One problem is that the MPR, the People's Consultative
Assembly, is not scheduled to meet until November. I hope the
timetable is moved up because there is too much of a time lag
there after the June 7 parliamentary elections before the MPR
will meet and elect the President and Vice President.
Ms. Jones. But the difference is that Suharto was sort of
reselected every time by the lackey parliament, the DPR, plus
500 other appointed people that he put in place. Now you will
have an elected parliament, plus these other appointed seats
have not only been reduced, but they are going to be drawn from
elected officials at the local level. So, it is a more
representative body.
Senator Thomas. What about U.S. investment, mining and oil
production and so on? Has it gone on pretty much unimpeded?
Mr. Gadbaw. I would not say it has gone on completely
unimpeded. I think much of the natural resource investments are
being maintained, and it is clear that that is critical to
sustaining the economy to the degree that it is being
sustained. But I think looked at more broadly, there are an
awful lot of companies that are in a wait-and-see mode that
view this as an important transition period and that are, in
fact, waiting to see the results of this----
Senator Thomas. The present one like Freeport and so on
have continued on?
Mr. Gadbaw. That is right. Yes, that is correct.
Senator Thomas. Ms. Jones, I have the impression--I should
not get impressions--that you sort of lean toward independence
of Timor. Did you say that?
Ms. Jones. I did not say I think it is going to happen.
Senator Thomas. Do you think that is a reasonable thing to
happen?
Ms. Jones. I think it is beyond the point of no return now.
Senator Thomas. Do you? You cannot help but be a little
worried about the fact that around the world there are lots of
countries wanting independence that perhaps do not have the
basis for remaining independent and sustaining themselves in an
economic world.
Ms. Jones. Yes. I think, though, if you look at the very
small states of the South Pacific and some of the states of the
Caribbean, there are certainly some states that started out
with the same disadvantages that East Timor will start out
with. But I do think there is going to be an enormous----
Senator Thomas. That is why we have a supplementary budget
going on.
Ms. Jones. May you add to it.
Senator Thomas. Well, I appreciate it very much. It is an
interesting thing certainly. As we have said earlier and all of
you have said, it is important to our overall future in Asia
besides trying to help stabilize democracies around the world.
So, we appreciate very much your being here and look forward to
continuing to talk with you.
Mr. Masters. Thank you, Mr. Chairman.
Senator Thomas. Thank you very much.
The committee is adjourned.
[Whereupon, at 11:38 a.m., the subcommittee was adjourned.]
A P P E N D I X
----------
Responses of Assistant Secretary Roth to Questions Submitted by Senator
Feingold
Question 1. The current situation is highly complex and the process
to determine East Timor's future status is fraught with potential
problems. What is your assessment of Jakarta's agreement to a direct
ballot? Do you believe that this will adequately represent the desires
of the East Timorese people?
Answer. We welcome Jakarta's agreement May 5 to allow a direct
ballot consultation of the East Timorese people on autonomy. The UN has
begun to establish a presence in East Timor to prepare for and conduct
the consultation vote on August 8. We remain deeply concerned about the
security situation and continuing unrestrained violent activities by
armed civilian militias. It will be critical for the Indonesian
Government to take adequate security measures to ensure that the UN,
backed by the international community, can assess the desires of the
people of East Timor on autonomy in a vote that will not be biased by
fear and intimidation.
Question 2. Even if the principle of a direct ballot is a laudable
one, there remain many questions about the mechanics of the process. Do
you believe that it is possible to carry out a vote that will be
internationally recognized as fair and broadly accepted by the people
of East Timor as credible? How would you address the difficult issue of
determining voter eligibility?
Answer. As noted, the UN has begun to move personnel to East Timor
to prepare for the consultation to determine the views of the people of
East Timor. The UN is considering the issue of voter eligibility,
including eligibility of East Timorese in exile. We have encouraged the
parties to the UN proposal to ensure that the process of resolving the
issue of voter eligibility is transparent so that we and other
interested observers can judge the fairness of the arrangements.
Question 3. The possibility of violence in conjunction with a
ballot is of considerable concern for both the wellbeing of the people
of East Timor and for the viability of the process. What information do
you have on the reports that the Indonesian Government may have armed
from 7,000 to 10,000 supporters of continued integration with
Indonesia? What can be done to limit the prospects for violence during,
and after, the balloting?
Answer. We are concerned about possible violence in connection with
the ballot and have called on all parties to adopt measures to reduce
tensions and promote a climate conducive to a peaceful vote. Indonesia
has overall responsibility for security for the UN mission and for
protection of all East Timorese and others in the territory. We are not
satisfied with steps taken to date and have strongly urged the
Indonesian Government and military to reverse its policy of providing
arms to civilian militias and to collect weapons already distributed.
We have supported initiatives for dialogue between East Timorese
factions, for cease-fire arrangements, and for Indonesian Government
confidence-building measures, including reduction of troop levels.
Question 4. One way to help ensure an environment conducive to a
fair balloting process would be for the Government of Indonesia to
release East Timorese who have been arrested for their political
beliefs. What can the United States, or the international community, do
to encourage Indonesia to continue on this path?
Answer. We have frequently raised the issue of releasing East
Timorese and other political prisoners with Indonesian Government
officials. Secretary Albright did so during her March 4-5 visit to
Indonesia; other U.S. officials and representatives of other concerned
nations have frequently reinforced the message. We welcomed as a
positive step the move by the Indonesian Government to arrange a
``house arrest'' status for Xanana Gusmao that enabled him to play a
more active role in East Timor's transition. We will continue to urge
the Indonesian Government to release him fully and allow his return to
East Timor before the August 8 consultation vote.
Question 5. In her testimony last month, Secretary Albright stated
that she was supportive of UN action on East Timor and that she would
be speaking with UN Secretary General Annan to determine what would be
the most helpful things the U.S. could do. She indicated at that time
that discussions on the nature of an international presence had not
``gelled'' yet. In that context, I would be interested in your views on
what the likely United Nations role might be, either during a ballot
process or in the follow-on transition period? Have plans started to
take form yet at the UN? Has the Secretary spoken to Secretary General
Annan about this issue?
Answer. The UN has begun to establish a presence in East Timor, a
goal we support. The UN will continue to play an important role at
every stage in East Timor's transition to autonomy or separation. These
include: conducting the ``direct ballot'' consultation with the East
Timorese on August 8, ensuring monitoring of measures to reduce the
potential for violence, and responding to humanitarian needs. If East
Timor transitions to separation from Indonesia, the UN role will be
especially important in focusing international support for the long-
term viability and stability of the territory.
Question 6. More specifically, can you assess the prospects for the
UN establishing a human rights monitoring presence in Dili? Was this
discussed during Secretary Albright's visit to Jakarta?
Answer. There is a growing international consensus for a UN
presence established in Dili to monitor the human rights situation,
among other tasks. Secretary Albright raised the issue with all her key
Indonesian Government and military interlocutors while in Jakarta in
early March, stressing that we support such a monitoring presence and
believe that it would strengthen the GOI's credibility as well.
Question 7. During her testimony in March, Secretary Albright
mentioned that the Administration would be focussing particular
attention on selected countries that were on the verge of crossing the
line to democracy and would be helping them get there. The Secretary
included Indonesia in that group, and I understand the Administration
is contributing $3O million to help conduct and monitor its elections.
Could you outline for me in more detail what the Administration
envisions for U.S. involvement in the election process?
Answer. The Administration strongly believes that free and fair
elections in June are essential if Indonesia is to emerge as quickly as
possible from its current political and economic crisis. The
international community is marshalling considerable technical
assistance under UNDP coordination to help Indonesia prepare for these
elections.
Bilaterally, the U.S. has been working since August 1998 to support
elections as part of a broader program to develop civic and community
institutions. The U.S. has committed $30 million in development
assistance to election support in the form of voter education,
technical assistance to the interim National Election Commission,
programs to train election monitors, and election administration. USAID
is implementing these programs through grants to U.S. and Indonesian
NGOs. The U.S. will also support a joint effort by NDI and the Carter
Center to field an 80-member team to observe the election.
Question 8. Do you know what specific arrangements are being
prepared either by domestic Indonesian groups or international
observers to monitor these elections?
Answer. The Indonesian General Election Commission (KPU) is in
charge of organizing Indonesia's preparations for all aspects of the
June 7 elections, including monitoring. Monitoring refers not only to
observing the polls on the day of the election but an evaluation of the
entire election process, from selection of political parties to voter
registration to evaluating the results of the election.
There are over 100 Indonesian organizations planning to monitor the
election. The three largest groups, UNFREL, the Rector's Forum, and
KIPP, are coordinating their efforts to avoid overlaps and to establish
common approaches. Between half and three-quarters of the monitors will
be students, with NGOs and trade unions also playing significant roles.
KIPP (The Independent Commission for Election Monitoring) has
branches in 23 of Indonesia's 27 provinces, and has recruited 40,000 of
the 60,000 volunteers it expects to serve as monitors. UNFREL (the
University Network for a Free and Fair Election) includes students and
faculty from more than 100 universities and claims to have more than
150,000 volunteers. The Rector's Forum is organized by senior lecturers
from 120 universities and expects to train 40,000 monitors by the
election. The three groups hope to monitor 60-70 percent of the
country's 200,000 polling stations. The international community is
helping to train monitors.
The Indonesian Government has welcomed the presence of
international observers for the elections. Australia, the EU, and Japan
have all signaled their intention to send official observer missions.
USAID is funding an 80-member observer team led jointly by the National
Democratic Institute (NDI) and the Carter Center. The team will include
both Republican and Democratic members.
Question 9. In addition to separatist violence in East Timor, Aceh,
and Irian Jaya, Indonesia has seen an increase in sectarian violence
between Christians and Muslims in Ambon. How can the Indonesian
Government stem the tide of violence and create an atmosphere conducive
to free, fair elections without resorting to the practices of its
authoritarian past?
Answer. This is one of the key questions facing the Indonesian
Government as the country prepares for the June elections. Security
forces must act to prevent violence before it occurs and to respond
quickly and decisively to stop violence from spreading once it has
begun. At the same time, security forces must carry out their duties
responsibly and with due respect for the human rights of the Indonesian
people. In addition, when human rights abuses are committed, the
perpetrators must be apprehended and brought to justice.
Question 10. Could you provide us with your assessment of the
electoral field? Do any of the opposition candidates appear to be
viable options?
Answer. The Indonesian parliament enacted a new election law at the
end of January that provides the basis for the June 7 parliamentary
elections. All major political parties seem prepared to participate in
the June elections under these rules.
This election will be significantly different than past elections.
This will be the first election in over 40 years for which the outcome
will not be known beforehand. In the past, only the government party
GOLKAR and two government-sanctioned opposition parties were allowed to
participate. In contrast, forty-eight parties have met the requirements
to participate in the June elections. All of these parties are free to
campaign, and will have access to the broadcast media. Five to seven of
these parties are expected to attract significant national support.
A credible parliamentary election will probably not result in any
one party having a majority. A coalition-building process will then
begin which will determine the relative strengths of various players in
the new legislature.
Question 11. The Indonesian armed forces have been cited for
numerous abuses of civil and political rights under the Suharto and
Habibie regimes. What is the Administration's position on proposals to
grant immunity to certain officers for abuses committed during either
the Habibie or Suharto eras? Do you see this as integral to restoring
the credibility of the armed forces prior to, and following, the
elections?
Answer. While we are unaware of any formal proposals to grant
immunity to certain officers for abuses, we are deeply concerned about
the continuing problem of impunity and lack of accountability of
Indonesian security forces responsible for abuses during both the
Soeharto and the Habibie eras. We have repeatedly urged the Government
of Indonesia to investigate past abuses, identify the perpetrators, and
move swiftly to bring them to justice. This would be the most effective
way to restore the credibility of the armed forces.
Question 12. What joint training of the army is the Pentagon
currently engaged in? Does it involve KOPASSUS units? What is the
process for considering the involvement of particular army units in
joint training, and how is the embassy assessing whether or not they
have engaged in serious human rights abuses?
Answer. U.S. military training with the Indonesian military in
Indonesia is currently restricted to humanitarian, engineering, and
medical activities. A mobile team also recently provided training in
human rights awareness and civil military relations. There currently is
no training in lethal military skills available to the Indonesian
military from U.S. sources. We have also had a small E-IMET program for
Indonesia in recent years. E-IMET training is restricted to human
rights awareness, civil-military relations, justice, and defense
resource management topics. This does not involve KOPASSUS units. We
carefully monitor all training pfograms to ensure that they comply with
all legislative restrictions on security assistance and training, and
that such programs are in full accord with our human rights objectives
in Indonesia.
______
Prepared Statement of R. Michael Gadbaw
I am pleased to be here on behalf of the US-Indonesia Business
Committee of the US-ASEAN Business Council. The US-ASEAN Business
Council is a private, non-profit organization which works to expand
trade and investment between the US and the member countries of the
Association of South East Asian Nations (ASEAN). It is made up of more
than 400 US companies. The US-Indonesia Committee, of which I am the
chairman, is comprised of Council member companies specifically
interested in Indonesia. The companies represent sectors as diverse as
oil, mining, energy, manufacturing, agriculture, apparel, high
technology and financial services.
I was in Indonesia just three weeks ago leading a delegation of US
business representatives committed to standing by Indonesia during
these difficult times. Our delegation was made up of 10 members of our
committee. Among the companies represented were General Electric
Company, Pennzoil-Quaker State, Enron International, New York Life
International, J. Ray McDermott, ARCO, Raytheon, Eli Lilly, Cigna
International, and Cargill.
Ours was a confidence-building and information gathering mission.
We wanted to demonstrate with our presence that American companies are
engaged and not running from the economic distress. Any of you who are
familiar with the charge that American companies lack long-term vision,
and the contrasting image of our competitors in Japan, know how
important this message is. We also wanted to get a firsthand feel for
some of the questions that have brought us here today. In the week we
spent there, our group met with a broad cross section of public
officials and private sector representatives.
We met President Habibie, the Minister of Mines and Energy, the
State Minister for the Empowerment of State-Owned Enterprises, the
Minister for Small Business and Cooperatives, and the Finance Minister.
We also met with many Indonesians from the private sector, including
individuals representing small and medium sized enterprises. We met
with representatives of the political parties, members of the
Indonesian press and representatives of the Indonesian NGO community.
We had an extensive discussion with World Bank officials and compared
notes with representatives of the Japanese business community in
Jakarta. The Committee has since supplemented this effort by meeting
with prominent opposition leader and Chairman of the National Mandate
Party (PAN) Amien Rais during his recent visit to Washington.
While I have been to Indonesia a number of times, I came away from
this visit with a strong sense that Indonesia is a large, complicated
country that is undergoing profound social, political and economic
change. One cannot escape a sense of historical moment in recognizing
that the world's most populous country is undergoing a political
transition to a more open, democratic political system. At the same
time, business practices and instruments of governance that have been
in place for decades are now under persistent, largely constructive
assault. Economic reforms are being implemented which challenge
fundamental social relationships in a country where national unity is
in constant tension with ethnic and linguistic pluralm.
On our visit to Indonesia, we encountered reform in every
discussion.
President Habibie, himself the target of quite a few reformers,
from students in the streets to his major political opponents, stressed
to us unsolicited the importance of reform. In a 90-minute meeting with
our group, he emphasized the importance of ``clean, fair, and open''
elections. Commenting indirectly on the cultural change in governance,
he drew fine distinctions between the conduct of government in the
Suharto-era and the operation of his own government during this new
democratic age. He expressed to us his belief that foreign companies
are ``national assets,'' and he underscored the government's commitment
to creating effective antitrust and bankruptcy regimes. He also
volunteered that Indonesian laws should be based on the UN Convention
on Human Rights.
In the course of a brief conversation, the President touched on the
sweep of massive reforms currently underway, and even then he could not
address them all.
Minister of State for the Empowerment of State Enterprises Tanri
Abeng discussed with us his efforts to carry out his assignment to
divest state-owned businesses. This has been considerably more
difficult than some anticipated when Tanri Abeng first assumed his
position last Summer. Ultimately, he is responsible for privatizing 159
state-owned companies. But despite setbacks, political resistance, and
interim measures, the Minister remains firmly committed to carrying out
his ultimate responsibility.
Minister of Mines and Energy Kuntoro discussed with us the several
reforms underway in his jurisdiction, including a reduction in the
government's share of oil & gas revenues, the ultimate removal of
subsidies, fair market pricing, and transparency.
The Finance Minister we met in the midst of final discussions with
the World Bank and IMF on Bank recapitalization and closures. He missed
his deadline, which expired two days after our meeting. But I am
pleased to note that this past weekend, the Indonesian government
followed through by closing 38 insolvent banks.
Even Minister Adi Sasono, an admittedly controversial and certainly
very complex figure, expressed to us the importance of the market
economy and the need to reduce the government's role in it. In this
vein, the Minister went so far as to quote Thomas Jefferson's
preference for the ``government that governs least.'' Minister Sasono
praised the U.S. for its commitment to good business ethics and
identified it as an example for Indonesia's reform movement.
There is no more clear sign of reform than in the Indonesian press.
Our business delegation met with representatives of the Indonesian
press in Jakarta for an off-the-record discussion of the current
economic/political atmosphere. Their critical views of the Habibie
government and frank assessments of the political process was in marked
contrast to the more circumspect attitude we faced in Indonesia on a
similar mission just ten months ago. The second day of our visit, in
fact, the Jakarta Post carried a front page editorial calling on
President Habibi's impeachment for his alleged obstruction of
investigations into President Suharto. The controversy over an
intercepted conversation between the President and his Attorney General
continued throughout our four-day visit. We are quickly becoming use to
the barbs of Indonesia's free press, but this sort of dissent was
unheard of only a year ago.
Meetings with political party representatives both in Jakarta--and
here in the U.S.--also underscore the centrality of the reform process.
Amien Rais, Chairman of the National Mandate Party was just in
Washington, DC, where, I, as I know several of those present today, had
the opportunity to talk with him at some length about the reform
process. During our meeting with him, Dr. Rais publicly voiced support
for the IMF's involvement in Indonesia's ratification of the OECD anti-
bribery convention. He was also supportive of foreign investment, the
sanctity of contracts and the importance of the international trading
system of rules.
The Committee's message to our friends in Indonesia has been
consistent: A commitment to free, transparent, and efficient markets
must be a part of any viable reform agenda. It is essential to draw the
political leadership and other influential sectors of the body politic
out on these issues. If left isolated, I am concerned that they will
develop positions that are not only less than amenable to international
business, but untenable in the long run. To this end, we have
institutionalized a similar engagement of the Indonesian private
sector. Long before the onset of the economic crisis, we worked with
our Indonesian counterparts to improve the business environment in
areas as varied as tax reform, customs reform and distribution
liberalization. The crisis has encouraged to redouble our efforts to
engage them even more broadly.
Indonesia has made an astounding number of commitments over the
past two years to reform its economy, and has held to most of its
promises, albeit in a sometimes halting and incomplete manner. It's
progress on economic reform has been periodically approved by the IMF,
following extensive reviews. Among the actions it has taken are the
following:
Announced closure of 38 insolvent banks.
Initiation of the restructuring of $80 billion in corporate
debt.
Initiation of the privatization of 12 state-owned
enterprises.
Establishment of a Bankruptcy Court.
Cancellation of 12 major infrastructure projects.
Cancellation of its government run airplane projects.
Cancellation of the National Car Policy.
Abolition of government agricultural monopolies.
Abolition of all restrictions on investment on wholesale and
retail trade.
Elimination of restrictions on foreign investment in listed
banks.
Reduction of export taxes on certain agricultural goods.
Tariff reductions on foodstuffs.
Dismantlement of marketing restrictions in the forestry
sector.
In their totality and with the critical proviso that they are
implemented faithfully, these reforms promise to transform the way
business is done in Indonesia.
While we must recognize the full extent of these efforts to
modernize the Indonesian economy, constant engagement is required of
international financial institutions, foreign donors, and the
international business community. In some cases, the necessary laws
have been passed and regulations rewritten, but changes in the field
have come slowly.
The most notable recent example in this regard is the establishment
of the Indonesian bankruptcy court. The Government appears to
understand how essential an efficient, effective bankruptcy regime is
to its recovery and future development. Simply put, creditors must have
a system whereby effectively insolvent companies can be made liable for
their debts. A new bankruptcy law went into effect in Indonesia in
September to do just this. Out of 38 cases filed since then, 12
bankruptcies have been declared. The problem is that in the most
prominent cases involving foreign creditors including the IFC
(International Finance Corporation), the commercial court has found in
favor of the debtors--despite what many think have been solid cases
against them.
Beyond reinforcing my impressions about the overwhelming needs of
the reform process, our discussions in Indonesia gave me a better
perspective on the current economic climate. The impression one has
from much of the US media coverage is that the country is devastated,
an economic basket-case with as much as 100 million people descending
into poverty. It is a very difficult time there. No doubt. However,
there is much more resiliency in the Indonesian economy than has been
generally portrayed.
In a report prepared for the World Bank, surveys of conditions in
the country indicate that poverty is not as severe as some have
assumed. Before the crisis, the incidence of poverty was approximately
11%--down I should note from 70% thirty years ago. It is now at 14%.
The crisis has hit hardest urban areas, Java, and those with incomes in
the upper half of the nation's earners. The effects elsewhere have been
less severe. In fact, in some areas such as Sulawesi, the economy has
actually benefited from drop in the value of the Rupiah.
The World Bank is now predicting that Indonesia's economy will grow
by 1 % during FY 1999/2000 and achieve 3% growth next year, if it
adheres to its reform program. This is an optimistic scenario, but most
forecasts, if they do not show as high a growth rate as 1% in the
current fiscal year, at the very least, foresee a positive growth
returning in 2000. Given Indonesia's potential as an engine for growth
in the region, I am inclined to be optimistic.
Prior to the crisis, Indonesia's economy averaged 7% growth per
year for 25 years. It had created a middle-class conservatively
estimated at 20 million--a larger population than all of Australia. To
be certain, some of this remarkable growth was unsound. But a great
deal of it is attributable to Indonesia's integration into the global
economy, conscious diversification, the strengths of the Indonesian
people and Indonesia's other natural resources. Structural economic
reform carried out to its designated end and political stability will
once again permit Indonesia to make the most of its national assets.
Speaking on behalf of the US-Indonesia Business Committee of the ASEAN
Business Council, I am confident of this.
Let me close by thanking you, Mr. Chairman, for the timeliness of
this hearing and for your own long-term commitment to the region. The
next several months are crucial in Indonesia. They very well may
determine its future for decades to come. I am honored to be a part of
the Subcommittee's assessment. Thank you.
______
Prepared Statement of Sidney Jones
Indonesia may be at a more dangerous crossroad now than at any time
in the last thirty years. When I was there last month, it was exploding
in violence from one end of the country to the other. A virtual civil
war was taking place in Ambon, in eastern Indonesia, with Christian and
Muslim neighbors hacking each other with machetes and burning down each
other's neighborhoods. In Aceh, on the northern tip of Sumatra, major
military operations were taking place to hunt down suspected
independence agitators, with villagers, as always, the major victims.
In West Kalimantan, communal violence between two ethnic groups, Malays
and Bugis, was set off when a passenger refused to pay his bus fare. In
East Timor, the unexpected moves towards independence have triggered an
upsurge of clashes between pro-independence forces and pro-Indonesia
civilian militias, armed and equipped by the Indonesian army.
Unrest is erupting as villagers confront corrupt officials, debtors
go after creditors, indigenous people clash with migrants, and farmers
confront commercial plantation personnel. Some of it reflects power
struggles at a local or national level. Some of it reflects nationalist
aspirations that the Soeharto government tried to smother. Some of it
is spontaneous, and some of it appears to be provoked, but provocation
only works where the basic kindling is there to begin with.
It is in this context that forty-eight parties, none with skilled
or experienced leadership, have been approved to contest parliamentary
elections in June. U.S. support for the electoral process is important,
and it is critical that the elections take place on schedule, but it
would be a huge mistake to see the elections as the key to solving
Indonesia's problems.
1. The army
The dominance of the army continues to be a major obstacle to a
democratic transition. Too often the army is portrayed as the only
force capable of holding Indonesia together. But from Aceh to Irian
Jaya, it is the army and its past and present abuses that are pulling
it apart. How many seats the military retains in the parliament or how
long it will take to gradually eliminate the army's role in social and
political affairs is not the key question. In the short run, the
question is how to prevent the army from making existing problems
worse.
I can give you four examples. The army quite rightly identified
widespread civil unrest as a serious security threat and one likely to
intensify during the election campaign. Its solution, however, was to
create a civilian militia, armed with the equivalent of nightsticks and
given rudimentary training. The dangers of such a force should have
been apparent last November when the army sought volunteers for a
militia to protect the special session of the country's highest
legislative body against threats from student protestors. Those who
volunteered were overwhelmingly from conservative Muslim youth groups
who saw any call for Habibie's ouster as tantamount to being anti-
Islam. Militia members were almost by definition hostile toward the
students, making a confrontation inevitable. For the elections, the
civilian militia is to be called wanra, an acronym for ``People's
Defense.'' In Aceh, an area that was the target of counterinsurgency
operations from 1990-98 and where the army is loathed for its abusive
practices, the wanra volunteers are reported to be largely composed of
transmigrants, or immigrants from outside Aceh, who are already
resented by the local populace. In East Timor, the wanra members are
very clearly pro-integration and anti-independence. Putting them on the
streets to safeguard the peace during elections is only inviting more
trouble.
A second problem is that the army tends to see all unrest through a
counterinsurgency lens. The Indonesian army has no capacity to take on
ordinary law and order functions. It was trained throughout the New
Order to respond to internal security threats: the people as the enemy.
In a situation of widespread civil unrest, this approach does not help.
Sending soldiers to confront students in the streets of Jakarta last
November proved to be a lethal error.
Even when insurgents are in fact involved, the army's response is
still disproportionate to the nature of the threat faced. In Aceh last
December, seven soldiers were dragged off a bus and brutally murdered
by people suspected of working with Aceh Merdeka or the Free Aceh
Movement, a political organization with a small armed wing. The
incident was not treated as a multiple murder and given to the police
to prosecute. It was treated as an act of war and triggered the sending
of thousands of fresh combat troops to the region, including from units
that already had a reputation for brutality in Aceh. The new military
operations in turn gave rise not only to new abuses, including the
murder of five detainees, but to a growing demand for a referendum on
Aceh's future political status.
A third problem is that just at a time when Indonesia should be
moving away from reliance on the military, some in the largely
unchanged bureaucracy are advocating the expansion of a military
presence. Officers are using mounting social unrest as a pretext for
recommending the creation of new military area commands (KODAMs) in
affected areas. Under the current military structure, there are ten
KODAMs, each with about 700 personnel headed by a major general. In
February, one new KODAM was approved for Aceh, and the violence in
Maluku province has led to a demand for a new KODAM there. Just this
week, officials in Nusa Tenggara Barat, the province that includes
Bali, decided to request a new KODAM ostensibly as a preventive
measure. The establishment of new KODAMs would not only mean a greater
troop presence on the ground, but it would open up slots for officers
seeking promotions at a time when available positions are shrinking,
and the economic crisis has dried up opportunities in the private
sector. A democratic Indonesia doesn't need more troops, it needs
fewer.
A fourth problem is the deep suspicion that some officers have of
political reform, however much they may see it as inevitable. When I
was in Ambon in February, the spokesman for the armed forces was asked
why local troops made no move to stop an outbreak of violence between
Christians and Muslims. He said that in the old days internal security
agents, (Bakorstanas) would just have arrested people, but now it was
the reform era, and they had to obey the rule of law. In this case, the
army was using reform to justify inaction. In Aceh, the regional
commander was questioned as to why his forces did not arrest an alleged
insurgent leader in January whom the army held responsible for a series
of violent raids. When troops surrounded his house, the man came out,
surrounded by his family, and calmly walked away, leading many Acehnese
to conclude that the army had no intention of arresting him in the
first place. The commander said that before, the army would have just
opened fire; now it had to be careful about shooting civilians. It's a
good thing if soldiers feel constrained by legal norms, but both
responses are disingenuous. They also imply that violence is a
necessary consequence of reform, and that people might be safer with
the old system back.
Many in Indonesia believe that the worst violence in Indonesia in
recent months, especially communal outbreaks involving Christians and
Muslims, has been provoked by elements close to the Soeharto family,
attempting to reassert their power. There is clear evidence of
provocation in some cases, although none I know of that conclusively
links it back to Soeharto. But when even General Wiranto is quoted
repeatedly as saying that provocateurs were responsible for the Ambon
violence and other incidents, one begins to wonder what evidence he
has, why that evidence has not been made public, and why no
provocateurs have been arrested.
There is no question that the image of the army has been badly
tarnished as more and more revelations emerge about its past and
present, but in terms of U.S. policy, it is an opportunity for the
administration to put all emphasis on strengthening civilian
institutions. There should be no joint training exercises with
Indonesian military units until the issue of provocation of major
outbreaks of violence, such as the Jakarta riots in May 1998 and the
civil war in Ambon, has been fully resolved, and any perpetrators
punished. The U.S. should oppose the creation of any new KODAMs. It
should support efforts, particularly in Aceh, to hold military officers
accountable for past abuses, even when those same officers are
currently holding senior positions in the government. It should
continue to use every opportunity to oppose the civilian militia. And
it should continue to support, as it has, the separation of the police
from the armed forces, a move that is likely to take place in April.
2. East Timor
I don't think any of us could have predicted at the last hearing on
Indonesia how far East Timor would have moved toward independence. On
the one hand, the progress is a tribute to the persistence of the East
Timorese, the quality of their leadership, and the work of the United
Nations. On the other, it indicates the depth of the pique Habibie and
other top Indonesian officials felt that their offer of ``wide-ranging
autonomy'' last August was met with ingratitude and cynicism. One gets
the impression now that they just want to get rid of the place as soon
as possible.
But Indonesia's policies over the last twenty-three years have
caused unimaginable damage, particularly in dividing the population to
the point that prolonged civil unrest, particularly in the western part
of East Timor, is not out of the question. There are some old political
wounds remaining from the civil war in East Timor in 1975, before the
Indonesian invasion. But most of the potential violence can be traced
to the Indonesian army's policy of creating paramilitary, pro-
integration groups to help the armed forces in counterinsurgency
operations. They were also used to terrorize pro-independence
supporters, mount counterdemonstrations to pro-independence rallies,
and engage in other political activities. Most were given arms and
military training. In January, shortly after Habibie suggested that
independence was a second option, many of these groups acquired new
weapons. In recent weeks, pro-Indonesia militias, working together with
local territorial troops, have attacked civilians suspected of
supporting independence in Liquica, Ainaro, and Dili.
Supporters of independence have also been responsible for violence.
Any future East Timorese leadership will have to be able to guarantee
the protection of the rights of all those who worked with the
Indonesian administration. It will have to guarantee the rights of non-
Timorese as well, many of whom came to East Timor as traders, teachers,
or transmigrant farmers. The signs there are not good. In the last few
weeks, almost 1,000 Indonesians have fled to West Timor, many of them
families headed by teachers and civil servants who have faced
harassment and intimidation since prospects for independence improved.
Ethnic Chinese and ethnic Bugis, who dominate retail trading networks,
have both been targets of attacks in the past and both need to be
reassured of their safety. Now the question is how to avert major
violence if, as is now planned, the U.N. conducts some kind of ballot
to determine the preference of the East Timorese: independence or
autonomy.
Before that ballot can be conducted, the militias have to be
disarmed, and some kind of security provided. The Indonesian army
cannot provide that security; it is hardly perceived as impartial. It
is therefore critical that the international community support, and
press Indonesia to accept, some kind of international police presence
that can also train East Timor's future police force. East Timor will
also need massive assistance, given its current dependence on Indonesia
for both budgetary support and for basic human resources.
3. Independence Elsewhere?
The moves toward independence for East Timor have not gone
unnoticed in other areas, although it would be a mistake to see East
Timor as the domino that will cause other regions to break away. There
are independence movements elsewhere, but they need to be understood as
having their own dynamic, rooted in grievances which need to be
addressed--and which will not necessarily be addressed by a free and
fair election. Aceh and Irian Jaya are two provinces with well-
developed pro-independence movements. On February 26, 100 political,
tribal, and community leaders from Irian Jaya presented a statement to
President Habibie expressing a desire for independence of the country
they call West Papua. In Aceh, as noted, demands for a referendum have
increased, first among student groups, now echoed by many political
leaders. Both places are rich in natural resources but have seen little
of that wealth reinvested at home. Both, because of the presence of
armed rebels, became the focus of military operations that resulted in
widespread human rights abuses and alienation of the local populace. In
both places, failure to address the abuses of the past has resulted in
greater support for independence from Indonesia. (When I was in Aceh in
February, the deputy head of the local parliament stressed to me that
the rising demands for a referendum and the ongoing violence both could
be halted by one act: the prosecution of a single officer responsible
for any of the killings and disappearances that took place in the early
1990s.)
The violence in Ambon may push more of Ambon's Christians toward a
separatist movement, even though support there for the largely
expatriate political movement of the Republic of the South Moluccas has
never been high. Muslims and Christians have been equally the
perpetrators and victims of the violence there, but it is an area where
the once-dominant Christians have become a slight minority through
demographic change, and they need to be made to feel as though there is
still a place for them in a Muslim majority country.
Indonesia is not going to disintegrate overnight, but neither
should the ferment in some of the outer islands be dismissed as
inimical to the well-being of the nation. That ferment could in the
long run produce a healthier political structure, perhaps based on a
federal system as Amien Rais and the PAN party have advocated. The U.S.
Embassy, which by and large has done a terrific job on human rights
issues throughout this crisis, should do more to get its embassy
personnel out of Jakarta and off of Java. Congress could assist this
process in allocating funds for the reopening of the U.S. Consulate in
Medan, North Sumatra. A Jakarta-centric myopia misses the point of much
of what is happening in Indonesia today, from the causes of violence to
the prospects for democracy.
4. The Ethnic Chinese
Indonesia's Chinese remain traumatized by what happened to them
then, when many were killed, some of their women were raped, and their
homes and shops destroyed. The Indonesian government is about to ratify
the Convention on Elimination of Racial Discrimination, but it has made
few other efforts to ensure the Chinese that they are valued members of
society. None of the discriminatory laws and regulations, such as those
banning distribution of Chinese publications or celebration of Chinese
New Year, have been repealed or revoked despite government promises to
review them. None of the recommendations of the government-appointed
joint fact-finding team that investigated the May violence has been
implemented. Attacks on Chinese shops continue to be a regular feature
of social unrest. The U.S. should continue to press the Indonesian
government, publicly and privately, to investigate the origins of the
May violence, if necessary offering FBI assistance the way it did
following a grenade explosion in Phnom Penh, Cambodia, in 1995.
In short, Indonesia has so many critical problems facing it at once
that it would be a mistake for the U.S. to place too much emphasis on
the elections as a way of getting the country back on track. Elections
will help move Indonesia toward a more legitimate government, although
many of the people I talked to regarded the June elections as a kind of
dry run just to see how the process worked, with the meaningful poll
taking place in 2004. The very low expectations about the upcoming
elections is probably advantageous, because there is a lower risk of
disillusionment. But regardless of the outcome, the role of the army,
the ongoing violence, the issue of East Timor, the threat of
disintegration, and the issue of the ethnic Chinese are all going to be
around long after the votes are counted.
______
Prepared Statement of Hon. Edward E. Masters
Thank you, Mr. Chairman. I am pleased to be here today to discuss
recent developments in the world's fourth largest country--Indonesia.
A year ago this week I testified before your committee describing a
country at a critical point in its relatively short history, faced with
an economy in paralysis undergoing massive IMF-prescribed austerity
measures and supported by emergency stand-by credits; a humanitarian
crisis due to the effects of El Nino; soaring prices for food;
shortages of food and medicine; and mounting unemployment. All of these
factors came to a head in May 1998 when massive demonstrations and
rioting led to the resignation of President Soeharto with his then vice
president B.J. Habibie assuming the presidency.
Today I will share my impression of the democratization process in
Indonesia.
I have been following events in Indonesia for nearly thirty-five
years. My first assignment, as political counselor in the American
Embassy in Jakarta, commenced on September 30, 1964, one year to the
day before the attempted communist coup that was launched on September
30, 1965. That traumatic event set in motion the eventual transfer of
power that took place officially on March 11, 1967. I witnessed the
first years of Suharto's New Order, when all efforts were mobilized to
stabilize the massive debt incurred by the Sukarno regime and to assure
a reliable food and fuel supply to the people.
I returned to Indonesia in 1977 as Ambassador, and served another
four years. By this time, the remarkable achievements of economic
development were well underway. Although corruption and cronyism have
been well known in Indonesia for a generation--as indeed in just about
all rapidly developing countries--the benefits of development were not
limited to the few at the top. The World Bank estimates that the
distribution of wealth, measured by the Gini coefficient, was slightly
more equitable in Indonesia in the early 1990s than in the United
States.
After four years as Ambassador I followed events in Indonesia off
and on until circumstances permitted a closer look five years ago. I
realized that this huge, rich, fascinating and important country--one
of the key nations in the world today is virtually unknown to the
American people. There are perhaps understandable historic reasons for
this, but nonetheless, this giant of Southeast Asia has been almost
totally ignored except for the occasions when it has been sharply
criticized for its shortcomings.
For this reason I, along with other Americans and Indonesians with
long experience in each other's countries, founded the United States-
Indonesia Society five years ago. Our purpose is to offer a variety of
programs in the United States to permit a more thorough understanding
than is commonly available. That understanding is essential today if we
wish to determine the best approach for the U.S. toward Indonesia's
problems.
From an historical perspective, the tremendous changes that took
place in 1998 will be viewed by most Indonesians as painful medicine
necessary for the nation to endure in order to achieve sweeping
reforms. It is ironic that demonstrating students last May welcomed
former President Soeharto's resignation with jubilation and euphoria at
first, but it was not long thereafter that the general mood turned to
one of fear and uncertainty about the future of the country.
A 15% contraction of the economy, high inflation, a much devalued
rupiah, domestic social unrest and a change of government all make it
difficult to chart a path toward economic recovery let alone the
restoration of political stability and social harmony. Most of us see
these processes as inseparable: Progress on both fronts must be made
simultaneously.
The nation passed the first litmus test of its ability to reach
political compromise when the Parliament adopted three laws to replace
the five political laws promulgated in 1985. The laws are about the
elections, political parties and the composition of the parliament, the
people's consultative assembly and the regional assemblies.
The date for elections to the national Parliament (DPR) as well as
to provincial and sub-provincial (district) legislatures has been set
for June 7, 1999, after a three week-campaign period from May 18-June
6. The district-level results will be announced first (over June 20-26)
with members installed on July 20; provincial results will be announced
between June 27 and July 2 with members installed on July 25. National
results will be announced over July 3-12 and members inaugurated on
August 29. A new 700-member Majelis Permusyawaratan Rakyat-MPR
(People's Consultative Assembly) is then scheduled to convene on
November 11 to elect a new president and vice president. For many of us
who have been monitoring developments in Indonesia, the period between
the parliamentary election scheduled for June 7 and the November
presidential election is critical and I will return to this point a bit
later.
Under Indonesia's political structure, eligible political parties
will contest for seats in the Dewan Perwakilan Rakyat--DPR (Parliament)
while members of the DPR will automatically become members of the MPR.
The DPR will consist of 462 elected members and 38 appointed armed
forces (ABRI) members. The size of the MPR was reduced from 1000 to 700
members. The MPR will consist of 500 DPR members plus 135
representatives appointed by provincial legislatures (5 from each
province) and 65 representatives of social organizations. The MPR will
elect the president and vice president and decide on the Broad
Guidelines of State Policy. There will also be elections for the
provincial and district assemblies.
The election will be based on a multiparty system. The election
will be held under a system of proportional representation at the
provincial level. According to the law on the election, to be eligible
to take part in the elections, a party must have branches in at least
nine provinces, and in half the districts in each of these nine
provinces. On March 4 a list of 48 parties that qualified was
announced.
Political parties will compete in the 27 provinces with their own
candidate lists for national seats (DPR), provincial seats (DPRD-I) and
district level seats (DPRD-II). Voters will elect by piercing the
symbol of their party.
An Election Committee or KPU, composed of government officials and
representatives of the parties which are eligible to take part, is
responsible for the conduct of the election. The KPU is in charge of
voter registration, the nomination of candidates, campaign
arrangements, polling and tabulation of votes at the polling stations.
The government will allow independent observers and monitors. The
KPU will coordinate election monitors which will play a crucial role to
ensure the elections are conducted in a free, fair and transparent
manner.
All Indonesian citizens above 17 will have the right to vote
(married people under 17 will also be allowed to vote). According to
the latest figures (based on the 1997 election) 124.7 million out of a
population of more than 210 million people will be entitled to vote.
In addition to conducting the June elections, the KPU will allocate
the number of parliamentary seats assigned to each province; tabulate
and announce results of the contest.
The Election Law stipulates that the government will provide five
representatives to the KPU, and that each political party taking part
in the elections will provide one representative. If and when the KPU
votes on decisions, the government and political party representatives
will each have a 50% weight in the voting rights. This makes the
government representatives particularly influential: together their
five votes carry the same weight as the 48 votes from the political
party representatives. If these five are credible figures with strong
integrity, it will boost the chances for fair elections. The five
individuals named to be government representatives to the KPU turned
out to be responsible private (non-government) figures who have been
critical of government in the past. The names of appointees were
greeted with relief and surprise by skeptical observers and opposition
parties.
The election schedule:
Feb. 1-March 1: Registration and selection of political
parties eligible to contest the elections.
March 16-April 20: Registration of voters.
March 15-April 15: Nomination of legislators for the House
of Representatives, and for provincial and regency
legislatures.
May 18-June 6: Election campaign season.
June 7: Balloting and vote counting.
July 3-12: Announcement of election results for House
legislators. Those winning seats in provincial legislatures
will be announced from June 27 until July 2 while election
results for regency legislative councils will be announced
between June 20 and June 26.
Aug. 29: Inauguration of new legislators in the lower House.
Legislators in regency and provincial legislatures will be
installed on July 20 and July 25 respectively.
Presidential Election tentatively set for late October
though there is some talk of advancing the date to as early as
August 29.
Under the new laws, civil servants are barred from joining
political parties. Civil servants who join a political party must take
leave of absence, while being entitled to draw his or her basic pay for
at least one year, and this can be extended to five years. Civil
servants who fail to report membership in a political party will be
fired. I view this as a very positive development and a clear break
from past practices--a leveling of the playing field whereby no single
political power can corner the civil servant constituency.
Progress is being made in Indonesia's electoral reform process in
other ways that are worth noting. New election laws stipulate monetary
limits on political donations (15 million rupiah for individuals, and
150 million rupiah for corporate contributions). This is a welcome
development and another example of a leveling of the playing field.
problem areas
There was great debate over whether the new election law would
designate seats in the DPR for ABRI, the armed forces. As it turns out,
the army retained seats and for the time being preserved the social and
political role it plays--the dwi-fungsi--in addition to providing for
the country's defense. The dual-function is one of the main obstacles
to democracy in Indonesia. Under the new laws, the armed forces, whose
members will not be entitled to vote in the elections, will occupy 38
DPR seats (down from 75) with full voting rights, leaving 462 seats for
the political parties which contest seats. The 38 ABRI seats in the
national parliament will represent the equivalent of 9 to 10 million
votes, a possible swing vote of 7.5%.
In the provincial and district-level parliaments, the armed forces
will occupy 10% of the seats without contesting in the elections. At
present, the armed forces occupy half of the nation's governor
positions, while 40% of district heads are from ABRI. By retaining
seats in the regional assemblies they will be able to influence
appointments of governors and district heads.
A component of the new law on the composition of parliament is the
appointment of two hundred members to the MPR by the provincial
legislatures and social groups. There will be 135 seats for regional
appointees (five representatives per province appointed by new
provincial legislatures) and 65 for community and social groups
nominated by the KPU. Thus the voting outcome for the provincial
elections will be critical for the selection of their representatives
to the MPR, which in turn selects the next president.
A problem area of the new political laws is the exclusion of local
parties from participating in the election of national and regional
parliaments. The stipulation that parties must have branches in at
least one third of all provinces means that local or ethnic groups will
not have their own representative parties in parliament. For instance,
Acehnese or Papuan political parties will not be able to participate in
the elections simply because they do not have branches in at least nine
of Indonesia's 27 provinces. Clearly, the new laws are skewed in favor
of Java-based, nationwide parties. In a country of such ethnic
diversity as Indonesia, this is a major drawback. The same rules will
also apply to the provincial and district assemblies that will be
rendered incapable of representing the local communities. On the other
hand it reduces the chances of separatist political parties.
It is too soon to draw assumptions or make predictions about the
upcoming parliamentary elections and whether the electoral process will
be free and fair for all political parties. The government will allow
independent observers to monitor the elections. As the world's largest
archipelago, it will be difficult for independent monitors to cover an
election estimated to cost $400 million and spread over 300,000 polling
stations, especially in the more remote parts of the country where
wholesale election malpractice typically occurs.
Disproportionate government control over the administration of the
election process such as voter registration, nomination of candidates,
voting and tabulation of votes in the polling stations from top to
bottom also raises the prospect of manipulation and fraud. Also, the
gap between the June elections and the November presidential election
offers a window in which violence might escalate. Flare-ups and
sustained inter-ethnic clashes as we have witnessed in Ambon in the
first few months of 1999 are testament to the susceptibility of
Indonesia's fragile social fabric. The eruption of violent incidents as
the elections draw near could derail Indonesia's first post-Suharto
general election.
Indonesia's Election Law may also be deficient in terms of how it
deals with the appeals process. Fair and transparent handling of
complaints will be crucial for this election, but the law fails to
grant the KPU control over processing appeals. Instead, the KPU must
``coordinate'' with the judicial system. The judicial committees with
which the KPU must coordinate will be made up of government appointees.
Indonesia's court system has been plagued by corruption. Even if the
KPU and the Ministry of Home Affairs manage to conduct the elections in
a fair and credible manner, one cannot rule out the possibility of a
mishandling of the appeals process by the judiciary.
The upcoming elections are one in a series of steps that our
friends in Indonesia must take on the long road to democracy. The
elections are not a panacea for all of the social conflicts and
economic problems the country is now dealing with. But if the June
election is conducted in a fair, transparent, and credible manner,
broader and more equitable representation of the people's political
aspirations will be achieved. We have an opportunity to help make this
the first truly democratic election in Indonesia since 1955, and I
strongly advocate continued engagement, consultation, financial and
humanitarian assistance to Indonesia at this critical time.
______
Prepared Statement of Hon. Stanley O. Roth
introduction
Mr. Chairman, thank you for the opportunity to address this
subcommittee. I am particularly pleased with your decision today to run
a little counter to current trends and give me the chance to focus not
on Korea or China, but on Indonesia.
Indonesia is one of Secretary Aibright's four ``priority''
developing democracies. Her criteria for selection included regional
impact, prospects for near-term democratic developments, and
resources--both natural and human--available for future development.
The Secretary's choice of Indonesia acknowledges what Indonesia
watchers have long held: what happens to Indonesia impacts all of
Southeast Asia.
I know that I need not belabor the importance of Indonesia with
this subcommittee: Indonesia sits astride strategic global shipping
lanes. It is the fourth most populous nation in the world and has the
largest Muslim population. It possesses a wealth of natural resources.
It plays a critical role in regional political issues. It encompasses a
wide array of cultures and religions. It is a co-founder of the non-
aligned movement, a member of OPEC, and a respected participant in the
Organization of Islamic Countries. It is a critical member of ASEAN.
What I do want to emphasize is that this is a pivotal moment in
Indonesia's history. Indonesia is about to hold the first election in
over forty years where the results are unknown. A successful electoral
process, culminating in the selection of a new President and Vice
President by the MPR in November, will go far in determining the
prospects for democracy, the pace of recovery, and the potential for
social stability in this key Southeast Asian nation. By extension, the
course that Indonesia follows will have ramifications well beyond its
borders.
present developments
The situation in Indonesia today is remarkably complex, reflecting
a number of positive developments as well as a number of troubling
ones.
On the positive side, President Soeharto's ouster in May, 1998
created genuine opportunities for reform in Indonesia's political
system. President Habibie has lifted controls on the press, political
parties, and labor unions. Civil society has blossomed. There is a
growing spectrum of diverse political parties. New rules for the
electoral system have been accepted by the major opposition leaders.
Parliamentary elections are set for June 7, 1999, and a new President
is to be selected several months later.
ABRI, Indonesia's military, one of the pillars of the Suharto
regime, is also changing. The Indonesian people have made it clear that
military dominance of the state is no longer acceptable. The number of
ABRI representatives in Parliament has been halved. Many opposition
parties have placed a diminution of the military's socio-political role
high on their agendas.
The armed forces leadership appears to be getting the message.
Under the leadership of General Wiranto, ABRI has committed to a number
of key structural reforms aimed at reducing the military's political
role in the state, including withdrawing support from the ruling party
and pledging neutrality in the upcoming elections; scheduling the
separation of the police from the military; requiring ABRI personnel
who accept jobs as civilian administrators to resign from active
service; and eliminating the position of Chief of Staff for Social and
Political Affairs--the very embodiment of the military's political
role.
Negotiations on East Timor's future have seen dramatic progress in
recent months since President Habibie's announcement that he will
recommend independence for the troubled territory if the East Timorese
reject Indonesia's offer of wide-ranging autonomy. Just last week,
Indonesia agreed to a direct ballot ``democratic consultation''
mechanism by which the East Timorese will be able to consider the
Indonesian autonomy offer. As things stand now, the UN, Portugal, and
Indonesia plan to finalize the autonomy proposal by late April and then
put the package to the East Timorese for a direct vote no later than
July.
On the economy, President Habibie's recent decision to shut down 38
insolvent banks is a vital step forward in the process of economic
recovery. Revitalized banks, ready and able to lend on commercial
bases, are necessary to get Indonesia back on the path to prosperity.
Consequently, with the rupiah strengthening from summer lows, inflation
down, and interest rates declining, the Indonesian economy is showing
some positive signs.
And so, Mr. Chairman, Indonesia has come a long way in the 10 short
months since Suharto resigned, but much continues to threaten that
which has been accomplished. First and foremost on the list of concerns
is the troubling persistence of violence. ABRI's inability to restore
order during outbreaks of violence has caused serious concerns both in
Indonesia and abroad. Ambon is one visible example, but many others
exist.
Unless this violence can be brought under control, Indonesia's
ability to carry out free and fair elections will be put at risk. More
fundamentally, the violence threatens the very fabric of Indonesia's
multi-ethnic society, jeopardizing the spirit of tolerance that has
distinguished Indonesia for so many years. ABRI's inability to quell
this violence, and the lack of accountability for past actions, have
all but destroyed the notion of ABRI as the protector of the people.
East Timor has not been spared this violence. In fact, a cycle of
violence may be intensifying in East Timor between pro-independence and
pro-integration factions. There are persistent, credible reports that
elements of the Indonesian military are arming pro-integration civilian
groups, and we have repeatedly made it clear to the Indonesians that
such actions must be stopped.
Another serious issue which will require a credible effort is the
lack of a credible effort to systematically address corruption. For
example, reports that ``money politics'' are creeping into the election
campaign are undermining the Indonesian people's confidence in the
credibility of the election process.
Finally, while the Indonesian government's recent bank
restructuring was a welcome and much needed step, the basic economic
picture remains grim. Indonesia's GDP dropped over 13 percent in 1998
and the IMF predicts it will drop another 3.4 percent in 1999. The
World Bank reports that 14 percent of Indonesians now live below the
poverty line, and the International Labor Organization estimates
unemployment between 8 and 11 percent. The return of investor
confidence, an important indication of, and contributor to, Indonesia's
economic recovery, will be dependent on sound economic policies as well
as credible elections.
policy priorities
The foregoing sketch gives an indication of the plethora of
important issues which Indonesia must address. For the immediate
future, this Administration will focus on the following: the importance
of credible June 7 elections, stemming the spreading violence,
continued progress towards economic recovery, and peaceful resolution
to the situation in East Timor.
June 7 Elections--
The success of Indonesia's June 7 parliamentary elections
constitutes our highest short-term priority because the elections are a
necessary, if not sufficient, condition for the restoration of
political stability and economic recovery. In order for these elections
to play that positive role, it is essential that Indonesians perceive
them as free, fair, and credible.
Preparations to achieve this standard of electoral legitimacy are
underway, but in an immense archipelagic country with as many as 125
million voters, much remains to be accomplished. The Indonesian
Government has recently indicated that it welcomes technical assistance
for the elections. The UNDP has stepped forward to coordinate the
international community's response. Financially, even our significant
$30 million in planned electoral assistance is far short of the total
amount Indonesia will need. Consequently, we are working closely with
other potential donors to ensure that additional monies are made
available to Indonesia on a timely basis.
Hopefully the June elections will be harbingers of fundamental
political change in Indonesia. Not surprisingly, however, there are
those who question the extent of the transformation underway. A legacy
of generally weak and frequently corrupt institutions has led many
potential political participants to remain deeply skeptical, both about
the elections and the reform process in general. These disaffected
actors do not trust the current Habibie government to carry out free
and fair elections. They believe the military should be completely
removed from politics. They want to see former President Soeharto, his
family, and cronies, prosecuted for corruption. They see President
Habibie's failure to follow through on some highly visible human rights
cases as evidence that his government does not have the political will
to break with past practice.
This skepticism is not without basis and those concerns should not
be dismissed. But, the vast majority of Indonesians see these elections
as the only way forward, even while recognizing that one election does
not a democracy make. Indonesians will have to work hard to internalize
democracy. Political parties which are unsuccessful will have to accept
the electoral results and take up the role of constructive opposition.
In subsequent elections, former victors will have to voluntarily
relinquish power. In short, successful June elections are only a first
step, and the U.S. must be prepared to remain engaged to support
democracy in Indonesia over the long term.
Violence--
Indonesia's present level of ambient violence threatens to negate
the country's hard-won progress. Ethnic conflict. Intra-religious
violence. Skirmishes between armed civilian factions. All have either
recently taken place, or are presently taking place.
Ambon is perhaps the most tragic example. Once known for its
tradition of peaceful co-existence between Muslims and Christians, now
Ambon is characterized by charred churches and mosques, fleeing
residents, armed civilians, and a collapsing economy. Up to 200
inhabitants have been killed in the violence that has erupted since
January. Thousands are homeless. The initial cause of the conflict is
not clear, but social restraints and security forces have thus far
proven unequal to the task of containing the spreading violence.
Throughout Indonesia, security forces have been faced with constant
street rallies and demonstrations. They have been forced to walk a
precarious line between violent suppression and unresponsive inaction,
and have erred in both directions. This in turn perpetuates the image
of Indonesia as a major human rights violator, overshadowing the very
significant progress that has otherwise been made on human rights
issues.
Given the inadequacy of police forces, ABRI will have to continue
to play a major internal security role for the foreseeable future. With
insufficient training in controlling massive and sustained civil
discord, cognizant of its past excesses and present failings, and
intent on keeping its pledge to remain out of politics, ABRI is
reticent to enter the new Indonesian era as the enforcer of domestic
peace. However, with the lack of any other viable alternative, ABRI
must shoulder its responsibilities honorably.
At a minimum, ABRI must assist in identifying and bringing into
civilian custody the provocateurs of violence and premeditated unrest,
and it must do more to end human rights abuses by its own members. The
course that ABRI takes on this critical issue will significantly
contribute to, or distract from, its domestic and international
reputation. By extension, the choice will dictate the strength of the
relations other nations, such as the U.S., will have with ABRI in the
future.
ABRI, however, cannot be expected to successfully combat the
violence alone. Civic and religious leaders, respected elders, leading
publications, all have an obligation to actively denounce the violence
and call for calm.
Economy--
In order to restore confidence and growth to its economy, Indonesia
will have to continue implementing its economic reform package. As both
Secretary Albright and Treasury Deputy Secretary Summers noted during
their most recent meetings in Indonesia, Indonesia must be particularly
vigilant from now through the November selection of a President. Most
major political figures have indicated their intention to continue with
the IMF program in a new government.
For its part, the international community will have to remain
committed to seeing the economic recovery process through and to
addressing social safety net programs to help Indonesia's poor. The
U.S. assistance program for Indonesia provides humanitarian assistance,
promotes democracy and fair election practices, accelerates economic
reform and recovery, and encourages better environmental management.
Under the rubric of humanitarian assistance, the U.S. government is
donating 600,000 tons of wheat as well as rice and other food
commodities. We are also engaged in activities to help strengthen
Indonesia's social safety network. Democratization activities center on
providing voter education, election administration, and training of
election monitors. We plan to provide more than $30 million for the
upcoming elections. We are also exploring ways to promote civil-
military dialogue and strengthen institutions of civil society.
Economic reform programs draw on the expertise of a myriad of U.S.
agencies. EXIM has offered a $l billion line ot short-term credit to
help ease trade financing constraints on Indonesian importers. Treasury
is providing technical expertise to assist Indonesian efforts in bank
and corporate restructuring. Other expert advisers, funded by USAID,
are helping design Indonesia's fiscal policy reforms outlined by the
IMF.
A list of U.S. economic efforts on Indonesia's behalf would not be
complete without mentioning the many American corporations who have
retained their presence and operations in Indonesia despite the
difficult economic conditions. The decisions of these companies to stay
the course in Indonesia not only support that economy directly, they
also support general investor confidence in Indonesia.
East Timor--
The situation in East Timor is unique in Indonesia. East Timor did
not share the experience of Dutch colonialism and was forcefully
incorporated into Indonesia just 23 years ago. Many in the erstwhile
Portuguese colony, primarily Christian and ethnically Melanesian, have
resisted Indonesia's incursion ever since. The associated, often-times
brutal, military repression has not engendered support or sympathy for
Jakarta in this province.
In an unprecedented and unexpected announcement on January 27, the
Indonesian government stated that, if the East Timorese rejected
Indonesia's autonomy offer, it would recommend to the incoming People's
Consultative Assembly--the MPR--to consider ``letting go of East
Timor'' on January 1, 2000. This announcement constituted a dramatic
reversal of long-standing policy, a reversal for which the Habibie
government deserves credit.
A window of opportunity exists in East Timor from now until the
July autonomy ``consultation'' to establish some of the fundamental
components of democracy. How to register voters, where and how to
establish polling stations, what kind of voter education to provide and
by what means, are only a sample of the many practical issues that will
have to be resolved in the near future. The U.S. intends to be actively
involved with this process. Furthermore, we believe that the systems
established will provide a foundation for East Timor's democracy no
matter what the outcome of this particular vote.
However, no electoral system will be successful in the atmosphere
of increasing tension in East Timor. The Indonesian government must,
therefore, put high priority on restoring a sense of calm and stability
on the island. Disarming civilian factions and embracing proposals such
as a broad-based council to promote peace and reconciliation are
necessary steps. Confidence building measures such as troop reductions
and an increased international presence in East Timor would also be
very useful.
No one can predict the outcome of the East Timorese vote on
autonomy. Clearly, however, the possibility exists that East Timor
could choose to turn down Indonesia's autonomy proposal thereby raising
the real possibility of independence. If this is the electoral outcome,
Indonesia must realize that an immediate withdrawal of Indonesian
support from East Timor will greatly increase the risk of civil war and
long-term inviability for East Timor. This would reflect badly on
Indonesia's international image and call into question its regional
leadership abilities. Consequently, should East Timor opt for
independence, Indonesia should commit to fair and supportive
transitional arrangements.
conclusion
The translation of Indonesia's national motto is ``unity in
diversity.'' Diversity--as exemplified by differing languages, multiple
religions, and distinct ethnic origins--is inherent to Indonesia.
Harmonious unity, on the other hand, will be a goal towards which
consecutive Indonesian governments will have to strive. Successful
market and financial reforms will help create the necessary economic
conditions for stability and, eventually, prosperity. Equity, justice,
and transparency, adopted as fundamental governance principles, will
help create an atmosphere of trust. Indonesia, just like any other
emerging democracy, will face many challenges in order to achieve
positive economic conditions and political trust, but both components
will contribute to the unity which characterizes successful nation-
states.