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.