Playing Taiwan's card in a bid to woo China

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?