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American Indonesian

Chamber of Commerce

�for business and understanding�

 

To: All Members and Friends

From: Wayne Forrest, Executive Director

 

Notes on Ambassador Robert Gelbard's remarks� at AICC Meeting on April 16 (Not for Attribution)

 

Former US Ambassador to Indonesia (1999-2001), Robert Gelbard, opened his remarks to AICC (cohosted by Asia Society) luncheon by saying that one of his last activities before he left Indonesia in late 1999 was to become literally "part of the Indonesian family".�� What he meant was that he had been inducted into the Batak Panjaitan clan at a ceremony in North Sumatra arranged by his invitee, former Trade and Industry, Luhut Panjaitan.� Gelbard expects to honor the pledges he made at his induction.

 

He gave the audience of 55 a brief summary of his appointment by President Clinton, noting that his experience with regions in transition to democracy (Balkans, South America) were among the reasons for his selection.� His prior Indonesia experience: he honeymooned in the country.� His took up his post in Sept. 1999 while Habibie was still President, witnessed the violence surrounding East Timor's independence referendum, the election and impeachment/removal of Abdurrachman Wahid, and the first few months of President Megawati Sukarnoputri.��

 

Noting that democratic transitions are difficult and complicated, Gelbard said Indonesia's has been complicated by a "triple trauma": rupiah collapse, fall of the Suharto government (65% of Indonesia's population only new this government), and the 1999 secession of East Timor.

 

In his opinion Indonesia developed few national democratic institutions during the colonial period and the first 50 years of independence that could mitigate the above traumas. The authoritarianism of the latter years of� President Sukarno and all of President Suharto�s neutralized Indonesia's nascent political class, making solving current problems that much more difficult.�

 

Indonesia is not the first country to undergo a transition from authoritarian government and Ambassador Gelbard asked a rhetorical question: Why has there not been more progress ?� The answer, he said, is difficult but he offered a set of explanations:

 

1.      International institutions (IMF, World Bank) offered enormous assistance to Indonesia but with weakened conditionality.�� There should have been more.

2.      Newly elected democratic governments suffer from soaring, unrealistic expectations.� The challenge is to decrease expectations.�

3.      Lack of political will.��

 

Certainly going after easy marks ("low hanging fruit") is important to establish credibility.� But, said Gelbard, President Wahid, missed opportunities.� For example, Gelbard suggested to Wahid that although it would probably be difficult to prosecute former President Suharto, cases could be successfully mounted against several children who had become obvious objects of scorn.� Noting the bitterness surrounding the awarding of toll road contracts to Suharto's daughter, Tutut Rukmana, Gelbard suggested this as a relatively easy corruption case that could establish Gus Dur's credibility.� Wahid's response was that he couldn't go after Tutut because she had made significant donations to NU's Jakarta headquarters.� (NU is a large Moslem social organization headed by Wahid.)

 

Ambassador Gelbard used this example to raise his fear that the government's unwillingness to take decisive measures to establish credibility--even relatively small steps-- could spark a neo-Romantic view of Indonesia's authoritarian past.� The urge for order could overwhelm Indonesia's democratic gains.� He believes several retired senior military officials such as Gen. Wiranto may be positioning themselves to be presidential candidates in 2004.

 

Gelbard commented on several other challenges: regional autonomy and separatism, establishment of democratic institutions, economic restructuring, and Islamic extremism.

 

 

Regional autonomy:

 

The forces of decentralization are causing economic and security conflicts.�� Islamic extremists and security forces are keeping the "pot boiling" in the regions, blemishing reform efforts for political purposes. He recalled the many times he stepped in to assist a US company suffering from an illegal or unfair regional tax or policy.

 

The US should and is committed to Indonesia's territorial integrity.� A unified and prosperous Indonesia is vital to US interests and regional stability.�� Aceh requires enormous work on a comprehensive solution.� The US is willing to be more of a participant but Indonesia has not sought our active help.� Ambassador Gelbard does not have a positive view of GAM (armed Achenese guerillas seeking independence). Calling them "bloody-minded" insurgents, he thinks their leaders are particularly "irrational".�� He accuses GAM of fomenting assassinations to undercut moderates.�

 

In Papua, the problems ("of hearts and minds�) are similar but different.� Indonesia could be more serious in implementing a comprehensive autonomy strategy.� He believes, the independence movement in this province results from strong among Papuans that they are looked down upon by other Indonesians. It's more of a desire for respect and autonomy than true independence.� The central government needs to show Papuans that they care about them.� More non-military contacts must be established.�

 

Institutional Capacity

 

Creating viable democratic institutions is a medium to long-term process.� Priority needs to be placed on the justice sector: police training, judiciary, prosecutors, and laws.� Indonesian and foreign investors need a sense of recourse and legal certainty to attract new capital.

 

Indonesia's media, although it is making progress, is still subject to "envelope journalism". Stories can be planted for political purposes.� The level of ethics is generally low.

 

Indonesia's parliament, although criticized, has made some progress.� DPR must reach out to the district level to explain its decisions and help shape the capacity of district legislatures.

 

Economic Restructuring

 

Indonesia has done a credible job of macro stabilization.� Monetary policy has generally been well carried out compensating for inconsistent fiscal policies.� Competent Bank Indonesia personnel have stayed on even during the leadership crisis at BI (jailing of Governor Sabirin) under President Wahid.� Ambassador Gelbard urges more attention to tax collection.��

 

Indonesia needs to generate 6% annual growth to absorb new entrants to the job market and a change of the investment climate will be required.�� But with only a fraction (20%) of IBRA assets sold with 2 years to go, and 5 heads of IBRA in 4 years, he�s unsure this level of growth can be achieved.� He knows former Federal Reserve Chairman, Paul Volcker, Treasury and RTC officials have advised their Indonesian counterparts but he has yet to see the political will or leadership to create an atmosphere within IBRA where there are consequences of no results.���

 

Ambassador Gelbard also pointed to a chart showing a net outflow of investment and indicated that China was "sucking in" the majority of new investments in the region.� Vietnam and other ASEAN nations also stood to gain at Indonesia's expense.� He suggested that conflicting signals in the government need to be eliminated and that legal certainty for contracts had to be offered.

 

Islamic Extremism

 

Ambassador Gelbard closed his remarks with a discussion of Islamic extremism in Indonesia.� He said it was no surprise that after an authoritarian regime Islam would get a boost.� Having been consciously suppressed, a variety of approachs to Islam could now flower, including ones that were unhealthy.� Gelbard suggested that the rise of Islamic fundamentalism was not necessarily threatening and could have a positive influence on the conduct of civic life, pointing to a set of modern civic education textbooks being prepared by a group of young Muslim scholars.

 

During the period of 1998-1999 several fronts for Al Qaeda and other terrorist organizations developed in Indonesia.�� Coming to Indonesia with a strong counterterrorism background, Ambassador Gelbard said he tried to alert senior Indonesian officials in the defense ministry and intelligence but to his dismay they were uninterested.�

 

Laskar Jihad started while he was in Indonesia and he notes that the group (an armed militia acting outside the law) was allowed to publicly announce its training and organize violent demonstrations. He noted that a US journalist filmed members of the Indonesian Army handing out automatic weapons to Laskar Jihad recruits in return for their identity cards (presumably to be given back upon later surrender of the weapon).� Ambassador Gelbard believes that Laskar Jihad�s leader, Jaffar Thalib, has had more contacts with Osama bin Laden than he is willing to admit.� Violent conflicts in Ambon (Moluccas) and Poso (Sulawesi) occurred with the presence of Afghanis and others from outside Indonesia.� The group�s website has an identical design with those of several other Middle Eastern and Chechnyan Muslim organizations.�

 

In December a new extremist organization,� Jemaah Islamiyah, surfaced in Singapore with links to Indonesians.�� Ambassador Gelbard says he knew what the group looked like but not its name.� Its members are linked to the Moro Islamic Liberation Front (MILF) of the southern Philippines, a group financed by Al Qaeda.� The group is suspected of an attempted assassination of the Philippines� ambassador to Indonesia, the bombing of Indonesia�s stock exchange, Christmas bombings of churchs in 2000.� Detonators used in the bombings were identical to those used by the MILF.� Indonesia has questioned radical Indonesian cleric, Abu Bakar Bashir, suspected of being one of the group�s leaders, who had fled Indonesia in the 1980�s for Malaysia after being convicted for subversion under Suharto.� But Bashir has not been arrested and Gelbard is certain there is sufficient evidence and is unhappy with the explanations of government officials that the country�s new democracy prevents them from arresting him.�

 

Ambassador Gelbard believes that the challenge for Megawati�s government is to finding ways to deal with these extremist groups.� He respects Megawati and considers her a friend.� He is certain that she can martial the toughness and political will when she needs to display it and points to how she handled the attack on her party�s headquarters in 1996.� The international diplomatic community by and large believes that a culture of impunity has developed within Indonesia, a kind of unconditional entitlement that says, in effect,� �we are too important to live up to IMF and UN agreements�.� He also believes that it is �dangerous� for Indonesia not to arrest Bashir and Thalib and notes with dismay that Laskar Jihad is now setting up in Papua.

 

On a positive note he said that Indonesia did extradite a Pakistani national in connection with the Reid (shoe bomber) case.

 

He praised Foreign Minister Hassan Wirajuda as a �professional� who understands the importance of Indonesia leadership within ASEAN and indicated that a common regional approach (sharing intelligence)� to terrorism is being developed by the group.

 

On East Timor, the situation has improved between East and West Timor.� Although many have returned without incident there are still efforts to block East Timorese remaining in refugee camps.

 

Military-military relations

 

Ambassador Gelbard is opposed to training of Indonesian officers in the US.� He believes that the previous training did not produce satisfactory results.� Training could be restored with conditions similar to those in the Leahy amendment.� He believes the Indonesian military feels it is entitled to the training unconditionally.�� Efforts to improve police and prosecutorial methods can effectively deal with terrorism; they do not depend on the training the Indonesian military, in his opinion.

 

 

Ambassador Robert Gelbard at AICC luncheon meeting, April 16, 2002 at Yale Club of NY