Playing Taiwan's card in a bid to woo China

Kornelius Purba, Staff Writer, The Jakarta Post, Seminyak, Bali, korpur@yahoo.com

During her four-day visit to Bali and Jakarta last week, Taiwan Vice President Annette Lu showed her skill on how to entertain a broken hearted lady: Promise her the gift which the woman failed to receive from the person, while making the person jealous of Lu. She knows very well that President Megawati Soekarnoputri was disappointed with China, so she came with a lucrative pledge: "I can give you what China failed to give you."

Megawati's aides know that their boss is embarrassed with the failure, so they want to send a strong message to China not to disappoint her anymore. However they also want to make sure the action will not backfire on Megawati herself. The officials' problem is how to use the Taiwan card to appease their boss. They want to regain the promised present from China and, if possible, get Lu's promise also.

Precisely on the 12th commemoration of normalization of diplomatic relations between Indonesia on China on Aug. 8, China announced a decision awaited eagerly by President Megawati's government. The date was only a coincidence; however the announcement was like a slap on the face for the President: China chose Australia as the winner of a multi-billion 25-year contract to supply liquefied natural gas (LNG) to Guangdong province.

As a consolation prize, China awarded a much smaller US$10 billion contract to the Irian Jaya-based Tangguh Project to supply 2.5 million metric tons of LNG per year to Fujian province.

The President lobbied China hard to win the LNG contract, the first mega project in the first year of her term. She visited Beijing and even danced with Chinese President Jiang Zemin during a state dinner. She hosted another summit with visiting Chinese Prime Minister Zu Rongji in Jakarta. Maybe this was not enough so she sent her husband Taufik Kiemas to lead a government delegation, including some Cabinet members, to persuade Beijing to award Indonesia the Guangdong project.

Megawati's aides, at least in public, said they were proud with Taufik's great access to meet China's top policy makers. Denying rumors of possible business profits from the deal, Taufik boasted that he only wanted to serve his beloved president. The government was very confident that it would win the contract. According to reports from Taipei, during her meeting with two undisclosed Indonesian Cabinet members in Jakarta, Annette Lu had offered to purchase 3 million tons of LNG from Indonesia for $11.8 billion over 25 years, to supply the Tatan thermo-powered generation plant in Taoyuan province.

Minister of Foreign Affairs Hassan Wirajuda played down the significance of Lu's visit saying it was only a private visit. For the minister, this is a golden opportunity to use his diplomatic skills to persuade China to give more LNG concessions to Indonesia by making the LNG contract a political issue. This is a very complicated issue. China strongly responded to Lu's presence in Indonesia. Was China jealous? Maybe, but both China and Taiwan are good players in business and they will not take a hasty decision just because of jealousy.

"It is not easy to realize an LNG deal with Taiwan. Importing LNG is not like importing oil," said a Japanese participant of the third Indonesia-Japan energy round table here on Monday. Wednesday's meeting will also be dominated by the LNG issue. Most of Indonesia's LNG from Arun in Aceh and Bontang in East Kalimantan is exported to Japan. Indonesia wants to diversify its market due to Japan's weakening economy.

This was the second time that Indonesia attempted to play the Taiwan card against China. In February 1994, then president Soeharto received former Taiwan president Lee Teng-hui in Bali. Foreign minister Ali Alatas left Indonesia during Lee's visit, which was understood by many as Alatas' protest against the visit.

Alatas and Hassan faced two different problems. In 1994 Indonesia was at the peak of its economic growth and Soeharto was at the peak of his greediness. With a purse full of money, including a grant of US$50 million for Batam's development, Lee met with Soeharto. But it was actually hard to judge what Soeharto could gain for Indonesia, and not just for his family members or cronies, from his meeting with the Taiwanese president.

Megawati may hope too much from China and forget that in a business deal, friendship is often only an addition to business decision making. Minister Hassan played his part as Megawati's chief diplomat in attracting China's attention. Taiwan is the top investor in Indonesia, no doubt on it. But again this is business, and at the moment Indonesia's factor for China's global policy is not as significant as it was under Soeharto.

The President is of course dissatisfied with Fujian's contract because she wanted the Guangdong contract. The government likely wants to change the LNG issue from economic to political commodity. The problem is how strong and how prepared Indonesia is in facing China who knows that the LNG market is very limited, while Indonesia is desperate for foreign exchanges.

If not handled with care, it is possible that Indonesia will be trapped by diplomatic rivalry between China and Taiwan and become the loser, as it may fail to get anything from both China and Taiwan. Then who is to blame?