Part 1 of 2: U.S. and Indonesia must work to build ties

Part 1 of 2: U.S. and Indonesia must work to build ties

Ambassador Marie T. Huhtala, Washington DC

Indonesia has experienced a dizzying series of changes since
the fall of President Soeharto in 1998, representing rather
amazing progress in the country's democratization. With a vast,
multi-ethnic nation and little history of democracy, Indonesia
has faced a steep learning curve, but the results so far have
been impressive. The country has experienced not one but four
peaceful transitions, and this year it successfully conducted the
first-ever direct election of its President.

The U.S. has been a strong supporter of this democratic
transition. We view the stakes here as enormous, for 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 Asia region. For that reason, our President met several
times with former President Megawati, both in Washington and in
Indonesia. During their meeting in Bali in October 2003,
President Bush hailed Indonesia as a vital partner and a friend
to America.

So it's no exaggeration to say we are excited about the future
of U.S.-Indonesian relations, and we're determined to do
everything we can to see our relationship live up to its full
potential. We have a broad agenda, and lots of work ahead. Let me
address the most important areas we will be emphasizing.

Our first priority is to encourage continued Indonesian
progress on democracy and justice. Elections alone, however
successful, do not in themselves constitute democracy. 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.

This is not to denigrate this year's elections--far from it.
Indonesians went to the polls three times this year, voting for a
new parliament and voting in two rounds for President. And the
turnout in the Sept. 20 runoff vote was a whopping 75 percent,
exceeding anything the U.S. has experienced recently, even during
our extraordinarily well attended elections earlier this month.

These polls were Indonesia's second series, after the equally
successful elections of 1999. This is an impressive track record,
particularly the enthusiastic participation of the Indonesian
voters.

But there have been other important milestones in Indonesia's
democratization.

The military has lost its privileged position in the
legislature, and the new parliament that was seated last month is
the first in history to have no serving members of the military.

A new police force has been created, its members removed from
their previous position as part of the TNI, creating a separation
of powers that will encourage efficiency and accountability.

Civil society is growing rapidly, even though much remains to
be done. The emergence of a relatively free press is especially
important and needs to be encouraged.

Finally, the country is going through the most ambitious
decentralization effort in its history, a process that makes
tremendous sense given the far-flung nature of its 33 provinces,
421 districts, and over 17,000 islands.

We've been impressed by the early statements President
Yudhoyono has made regarding the importance of democracy and
accountability. Just recently, he spoke by video conference to
the U.S. Chambers of Commerce and told us 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 will be judged by its performance. He
said he wants to establish a system that is accountable to the
people and, looking ahead, he wants to "ensure smooth elections
in 2009."

These are all very welcome statements. The United States has
worked with the Indonesian Government in all these areas and we
intend to continue doing so.

Another very important element of our policy is seeking
enhanced cooperation on security issues. Indonesians know better
than most the devastating effects of terrorist attacks, and we
were horrified by the successive attacks in Bali and Jakarta over
the last three years.

We applaud the Indonesian Government's serious response to
those attacks, led at the time by then-Coordinating Minister for
Security Yudhoyono. Indonesia's police and prosecutors have
arrested and convicted over 80 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
serious. We salute President Yudhoyono's announcements that
arresting key terrorists is a priority for him, and that he would
like to enhance international cooperation on terrorism. I can
assure you we intend to explore such cooperation further.

We want to see an Indonesia that is open for investment and
trade, and we want to see our U.S. 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 address unemployment, which he
estimated at 10 percent of the population, and poverty, which he
said afflicts 10 million Indonesian citizens. He said his
government's goal is to reduce unemployment to 6 percent and to
reduce poverty by half. We support those goals.

In addition to our assistance 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 of this year, our Embassy signed an
agreement with the government of Indonesia for a five-year
program that will provide a total of $468 million for basic
education, water, nutrition, and the environment.

If aid is an effective tool for economic development,
investments are better because they tend to be self-perpetuating.
At present, about 300 U.S. companies have investments in
Indonesia totaling over $7.5 billion, and there are an estimated
3,500 U.S. business people there. Much of that investment is
connected to Indonesia's rich natural resources, though there is
some manufacturing as well.

But we have to be frank about the potential for more U.S.
investment. Many companies are reluctant to go to Indonesia
because of the extremely uncertain legal system. They want
respect for the sanctity of contracts, a clear and fair tax
system, and most of all they want to do business in an atmosphere
free of corruption.

President Yudhoyono has said that attacking corruption and
establishing legal certainty are key priorities. We welcome those
statements, and we hope to assist in improving the investment
climate and legal system. We believe that enacting a clear
investment law would be an excellent first step in that regard.

This article is an excerpt of Deputy Assistant Secretary of State
Marie T. Huhtala's remarks at a conference sponsored by the U.S.-
Indonesia Society (USINDO) and the Center for Strategic and
International Studies in Washington DC, on Nov. 17, 2004.