LIPI urges RI to maintain ties with the U.S.

LIPI urges RI to maintain ties with the U.S.

Tertiani ZB Simanjuntak, The Jakarta Post, Jakarta

The National Institute of Sciences (LIPI) advised the
government on Tuesday to respond wisely to mounting demands by
radical groups to sever diplomatic ties with the United States
so as not to avoid great losses to the country.

"We will not gain any economic benefit from cutting relations
with the U.S. In return there would be great direct impacts on
Indonesia if ties are cut, not to mention indirect impacts," LIPI
economics researcher Wijaya Adi said.

Disclosing a scientific forecast on the losses and the
benefits of severing ties with the superpower, Wijaya revealed
that Indonesia's exports to the U.S. in 2000 were valued at
US$8.5 billion or 13.6 percent of total exports, which consisted
mainly of labor-intensive products.

By comparison, Indonesia's imports from the U.S. in the same
period were valued at $3.4 billion or 10.1 percent of its total
imports. Most of the imports were raw materials or machines.

LIPI also calculated that Indonesia might lose $3.77 billion
of total U.S. investment -- the sixth biggest in the country --
should diplomatic ties be severed, while other countries would
likely follow the U.S. and cancel their foreign investments.
Indonesia could also lose another $633.2 million in foreign
exchange from tourism and $184.5 million from bilateral aid,
Wijaya said.

Ties between the U.S. and Indonesia have generated job
opportunities for at least 420,000 workers. Should they lose
their jobs due to the cutting of bilateral ties, they would
further burden the country where over 31 million people are
already unemployed.

Even though LIPI suggested that the government not bow to
demands from radical groups, it said pressure should not be put
on the groups for fear that such actions could spark unrest among
the grass roots.

Wijaya reiterated that it would not be easy for Indonesia to
switch markets instantaneously as an alternative to other regions
-- such as the Middle East or Asia Pacific countries -- because
of the current unfavorable economic condition in the world
market.

Wijaya's colleague, Mahmud Toha, argued that since the early
1990s, there had been an oversupply in the world market, where
all countries strived to search for new markets for their
products in other countries.

"By cutting economic relations with one country, Indonesia
could not easily enter other markets which already have their own
suppliers," he added.