Indonesia in Transition: Implications for U.S.

Indonesia in Transition: Recent Developments and Implications for U.S.Policy

Ambassador Marie T. Huhtala, Deputy Assistant Secretary for East Asian and Pacific Affairs
Testimony before the House Committee on International Relations; Subcommittee on Asia and the Pacific
Washington, DC
March 10, 2005

I am happy to appear before you to address one of the most exciting and important developments taking place in Southeast Asia today, and indeed, in the world at large. The democratic transition under way in Indonesia, the largest majority Muslim country in the world and now the third largest democracy, represents an important opportunity for U.S. interests and for the people of Indonesia. How we approach our relations at this critical moment will have far-reaching effects on our long-term objectives, not only in Indonesia but also throughout the region.

The successful series of democratic elections in Indonesia last year produced a sea change in its domestic politics. The voters brought into office a new, directly elected President, Susilo Bambang Yudhoyono, who understands the United States and who ran on a reform agenda. As a U.S. university and military college graduate, he has first-hand knowledge of the U.S. and its people. The tragic earthquake and tsunami of December 26, 2004, and the joint Indonesian-American response have made a deep impression on the Indonesian government and people, as they have on Americans. In Indonesia, the television coverage of American military, diplomats and aid workers efficiently providing massive amounts of much-needed humanitarian assistance from the air, the sea and on the ground to devastated corners of Aceh made a powerful impression. Those images showed once again that Indonesia has no better friend than the United States. We are there when it counts.

Mr. Chairman, President Susilo Bambang Yudhoyono has a genuine mandate from the Indonesian people. He won 60 percent of the votes in the presidential run-off in September of last year, an amazing feat by a challenger with only a small political party behind him running against an incumbent with a large political machine. More than 75 percent of eligible voters cast their ballots. To put those numbers in context, just as many Indonesians voted in their presidential election as did Americans last fall--about 118 million in each case. That demonstrates the very strong commitment of Indonesians to democracy.

Our two countries have a great deal in common. The United States is the world's third largest country, and the second largest democracy after India. Indonesia is the world's fourth largest country, and its third largest democracy. The majority of the people of the United States call themselves Christians, but, of course, there are many other religions represented here and we have a history of tolerance of all faiths. The majority of the people in Indonesia call themselves Muslims, but there are many other religions represented there too, and Indonesians place a high value on the diversity of their country. Indonesia's national motto, "Bhineka Tunggal Eka," ("Unity in Diversity") is roughly equivalent to "E Pluribus Unum" ("Out of the Many, One"). There is another, grimmer parallel. The United States has suffered terrible terrorist attacks in recent years that killed Americans and foreigners alike, and Indonesia too has suffered terrorist attacks that killed Indonesians and foreigners. Our two countries thus share an interest in addressing the causes of terrorism and protecting our people from further terrorist violence.

Within a generation Indonesia will overtake the United States in population, making Indonesia the third most populous country in the world. The United States has an interest in ensuring that Indonesia succeeds as a democratic power, one that acts as a positive force on the global stage and ensures prosperity for its people at home.

The Indonesian presidential election late last year was only the latest in a number of important institutional changes since 1998, when President Suharto lost power. The direct presidential election itself was a product of sweeping constitutional reforms aimed at strengthening democratic institutions, accountability and transparency, and separation of powers. Other notable reforms have included the establishment of a police force separate from the military (TNI), the end of the military's appointed seats in parliament, and the passage of legislation in 2004 to ensure that the parliament begins to exert control over the military's budget process--currently a highly opaque one. A free press and an increasingly active civil society have become important agents of change. People are debating the abuses and excesses of the Suharto years and are demanding real accountability for what happened. Citizens are demanding justice from the judicial sector. Finally, the country is going through one of the most ambitious decentralizations efforts ever. That process is empowering Indonesia's far-flung 33 provinces and 421 districts, spread over 17,000 islands and introducing unprecedented levels of transparency and accountability into local governance.

All these changes represent rather substantial forward progress for a country that many in 1998 predicted would fall into chaos. How could such a vast, multi-ethnic nation with little history of popular rule transform itself? Most observers were betting against Indonesia in those days. But Indonesia not only has survived, it has thrived, conducting not just one but three peaceful presidential transitions in a row. By any measure, the people of Indonesia have shown that they are ready for democracy. Without any doubt, they deserve recognition and support from the world's second largest democracy, the United States, and the rest of the international community. Since the late 1990s, the U.S. has indeed been a strong supporter of Indonesia's democratic transition, and we will continue to support it.

It is perhaps ironic, and certainly a sad coincidence, that the tragic tsunami of December 26, 2004, occurred just as the new Yudhoyono Government was finding its feet, not even 100 days into the new administration. As the members of this Committee are well aware, the U.S. response to the disaster was immediate and substantial, thanks in large part to the support of the Congress for making sure that our diplomats, relief professionals, and the U.S. military are adequately funded.

Also significant is the high degree of close cooperation we experienced with President Yudhoyono's government. This dramatic example of bilateral cooperation was not lost on anyone in the world with access to television or a newspaper. Once Indonesian authorities recognized the extent of the death and destruction in Aceh, they immediately asked for international help. The Indonesian Government welcomed the assistance of the United States, the United Nations, and other countries, and opened the tsunami-affected parts of Aceh province to foreign militaries, aid workers and NGOs. Indonesians and Americans worked side-by-side to rescue victims and deliver food, water and medicine. The Indonesian military, contrary to the assumptions of many in the international media, did not attempt systematically to siphon off aid, prevent relief workers from reaching tsunami victims, or impose onerous restrictions on them. The situation on the ground was not perfect--it was confusing and difficult, to say the least--and there were isolated instances of problems between soldiers and assistance workers. The military did require visiting NGOs to register their presence, which was not unreasonable given the real security concerns in Aceh. On the whole, however, our Embassy in Indonesia, including the AID mission, and most NGOs who participated in the relief work have reported that the Indonesian military performed admirably given the extreme challenges presented by the emergency.

As President Bush has stated, the success of Indonesia as a pluralistic and democratic state is essential to the peace and prosperity of the Southeast Asian region. Indonesia is truly a front-line state in a trend we see all over the world: people want to rule themselves, and they want their governments to be accountable. We see Indonesia as advancing what President Bush has called the "agenda of freedom." In that context, we want to do everything we can to see Indonesia succeed and have our relationship develop to its full potential. Let me address the most important areas we will be emphasizing.

Our first priority is to encourage continued Indonesian progress on democracy, human rights, and justice. We envision an Indonesia that is democratic in the full sense of that term, a government that is transparent and accountable to its people, respects the rule of law, and protects the human rights of its citizens. As our 2004 Human Rights Report indicates, Indonesia's human rights record remains mixed, and there is much to be done, particularity in the area of accountability for abuses committed by members of the security services.

That said, there has been progress, including an increased willingness among the Indonesian army to hold their own service members accountable for human rights violations. We have been impressed by President Yudhoyono's frequent statements regarding the importance of democracy and accountability. Late last year, in an address by videoconference to the U.S. Chambers of Commerce, he said he is driven by "the hopes of the Indonesians who entrusted me to improve their lives." He spoke of the power of good governance and said he is establishing a team that would be judged by its performance. He said he wanted to establish a system that was accountable to the people and, looking ahead, he wanted to "ensure smooth elections in 2009."

In 2004 alone, the United States provided monetary and technical assistance totaling $25 million to Indonesia's electoral process. We also are also engaged in a range of programs to build capacity in the judicial sector, combat corruption, strengthen civil society, and help with effective decentralized governance. Our programs include training for police, local government and judicial officials, internships for journalists, and special visitor exchange programs focusing on conflict resolution, human rights, and rule of law.

One of the best ways to solidify democratic principles and practices, of course, is through educational opportunity. The U.S. is engaged in a 6-year, $157 million initiative to strengthen the education sector in Indonesia. By providing support to Indonesian teachers and students, we hope to promote tolerance, counter extremism, and help provide critical thinking skills so necessary in the modern world. These programs will strengthen the management of schools, improve the quality of teaching, and increase the relevance of education to work and life skills for Indonesia's youth, the next generation of leaders.

A second very important element of our policy is enhanced cooperation on security issues. Indonesians know better than most the devastating effects of terrorist attacks, such as those that have occurred in Bali and Jakarta over the last three years. We applaud the Indonesian Government's serious response to those attacks. Indonesia's police and prosecutors have arrested and convicted more than 130 terrorists since the Bali bombings. Indonesia has established an effective counterterrorism police force, which is working hard to bring terrorists to justice. Nevertheless, the threat of future attacks remains grave.

The short sentence (30 months) recently handed down against terrorist mastermind Abu Bakar Baasyir was disappointing and also shows that much work needs to be done in strengthening the judicial sector, including coordinating the efforts of police and prosecutors, and educating judges regarding the threat of terrorism. We welcome President Yudhoyono's announcements that arresting key terrorists is a priority and that he seeks to enhance international cooperation on terrorism.

We want to see an Indonesia that is open for investment and trade, and open to American investors playing a prominent role in the country's economic development. When President Yudhoyono spoke to the U.S. Chamber of Commerce, he spoke movingly of his determination to slash unemployment and poverty. These are worthy goals that deserve American support. In addition to providing aid aimed at strengthening democratic institutions, the U.S. is making a major effort to help Indonesia relieve poverty and embark on sound economic development. In August 2004, the U.S. Embassy signed an agreement with the government of Indonesia for a 5-year program that will provide a total of $468 million for basic education, water, nutrition, and the environment.

Although aid is an effective tool for economic development, there is always more money available from trade and investment than from aid. Moreover, trade and investment tend to be self-perpetuating.

At present, more than 300 U.S. companies have investments in Indonesia totaling more than $7.5 billion, and an estimated 3,500 U.S. business people work in Indonesia. Much of that investment is connected to Indonesia's rich natural resources, but there is some manufacturing as well. But while many companies have invested in Indonesia, many others are reluctant because of concerns over rule of law and corruption in the judiciary. They want respect for the sanctity of contracts, a transparent, non-discriminatory tax system, and most of all they want to do business in a climate free of corruption.

President Yudhoyono has said that attacking corruption and establishing legal certainty are key priorities for his government. We welcome those statements, and hope to assist in improving the investment climate and legal system. These issues have taken on even more urgency following the tsunami, because the international donor community expects that all funds given for the purpose of reconstruction must be closely monitored and carefully accounted for. To that end, the World Bank has created a trust fund that will include fiscal controls on the disbursal of donor funds.

On the trade side, bilateral cooperation picked up in 1996, when the U.S. and Indonesia signed a Trade and Investment Framework Agreement. That framework provides a formal basis for our discussions of detailed trade issues, and those discussions will continue this month in Jakarta. Indonesia has recently taken important steps to uphold intellectual property rights; the U.S. business community will be watching to see how those rules are enforced.

Finally, we are very interested in seeing Indonesia act as a stabilizing and responsible force in the region. Indeed, the United States has always viewed Indonesia as a pillar of regional security in Southeast Asia. In the past, Indonesia played a significant leadership role in regional institutions such as ASEAN and APEC. We look forward to seeing Jakarta reassert this prominent position in international fora and institutions. Our two countries share the important strategic objective of a stable Southeast Asian region that is free of transnational threats, including terrorism, weapons of mass destruction, smuggling, and trafficking in persons. American interests are best served by a democratic, prosperous Indonesia that respects and protects the rights of its citizens, is secure within its borders and is able to defend itself against transnational threats. For that reason, we firmly support the territorial integrity of Indonesia.

Indonesia needs to be strong in order to manage successfully the many challenges of this age. Maritime security is one of the more important challenges it faces. The strategic sea lanes that pass through and along Indonesian territory carry roughly 30% of the world's sea-borne trade and are key transit routes for the U.S. naval fleet. Half the world's oil passes through the Malacca Strait. Indonesia's vast archipelago is difficult to monitor. We stand ready to assist Indonesia to address this important challenge in ways that we will decide on jointly, and we already have begun the effort to encourage the growing cooperation between Indonesia and its neighbors in this important field.

As the world's largest Muslim-majority country, Indonesia has a key role to play in demonstrating the virtues of tolerance and mutual respect in a diverse, multi-ethnic polity. The ability of so many Muslims to thrive economically and pursue a democratic, just agenda respectful of other faiths serves as a powerful reminder of what a successful, tolerant society can look like. We will continue to provide exchange and training programs that promote interfaith dialogue. Our active and creative public diplomacy program for Indonesia is one of the most robust in the world today.

As elsewhere in the world, the United States must address the range of our interests with Indonesia in an integrated way. Even as we champion a strong and democratic Indonesia secure within its borders, we also support negotiated settlements to the conflicts in Aceh and Papua. With respect to Aceh, the terrible tsunami tragedy has left one consolation--the seeds of hope. Given the new developments in play, we see the possibility that this long-running conflict can be solved peacefully through negotiations that are now ongoing. We think President Yudhoyono, who has worked toward a peaceful resolution of the conflict for many years, seriously and sincerely wants to end the conflict so that the people of Aceh can recover and rebuild their communities in an environment free of violence. We hope that his administration will succeed in championing a real reconciliation in Aceh.

The tsunami disaster also demonstrated that the opening of Aceh to the international community could be a source of positive change. We will work with Jakarta to ensure continued free access by humanitarian groups, human rights workers, and the media. We also believe that to realize their democratic vision Indonesians will have to find the appropriate ways to further strengthen civilian control over the military and hold individuals accountable for human rights abuses. Again, improving the judicial process, eliminating corruption, and establishing solid professional standards will go a long way toward addressing these issues.

We continue to seek justice for the Americans murdered in Timika in August 2002, an issue we view with urgency. We appreciate the cooperation our FBI has received so far in its investigation, but there is much more to be done. Secretary Rice recognized this in her recent certification of Indonesian cooperation for the purpose of reinstating International Military Education and Training (IMET). We will work with the Indonesian authorities to move quickly to bring those responsible for this crime to justice.

These same principles hold true with regard to accountability for the crimes against humanity committed in East Timor in 1999. We encourage the Indonesian Government to cooperate with the UN Commission of Experts, which is in the process of reviewing the state of play on this issue in Dili and Jakarta. Meanwhile, the governments of Indonesia and East Timor have just announced details of a proposed bilateral truth and friendship commission. We urge Jakarta and Dili to respond positively to UN SYG Kofi Annan's initiative to have the Commission of Experts work with and advise the bilateral truth and friendship commission. With goodwill the parties will be able to achieve internationally credible accountability, put the terrible events of 1999 behind them, and proceed with their evolving good relationship.

We are hopeful that the day will come when the U.S. and Indonesia will be able to enjoy fully restored relations between our respective militaries. Secretary Rice's recent decision to certify International Military Education and Training will, we believe, result in increased professionalism of Indonesian military officers with respect to transparency, human rights, and public accountability. We also think that, under the proper conditions, U.S. assistance in the form of Foreign Military Financing (FMF) would be in the interests of both countries. However, FMF cannot be considered until and unless the concerns of Congress as laid out in Section 572 of the Appropriations Act of 2005 are addressed. That law requires accountability for the events of 1999 in East Timor as well as progress on military reform issues. We look forward to consulting with interested members of the Congress on how we might help Indonesia reach these goals.

Let me conclude by emphasizing how much we all look forward to working with Indonesia as it faces this exciting, challenging new chapter in its history. Although many issues and problems will have to be resolved, we have a better opportunity now than at any time in the recent past to help strengthen democracy and respect for human rights, and contribute to the stability and prosperity of an important strategic partner. The United States considers Indonesia a valued friend, and we hope to make that friendship with this, the largest democracy in East Asia, even stronger in the years ahead.

Released on March 11, 2005

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