THE TASKS AHEAD FOR YUDHOYONO

S E C R E T JAKARTA 008872 E.O. 12958: DECL: 09/21/2014 TAGS: PGOV PREL PHUM KDEM KISL ID SUBJECT: THE TASKS AHEAD FOR YUDHOYONO REF: A. JAKARTA 8399 (YUDHOYONO'S ASSOCIATES) ¶B. JAKARTA 7130 (YUDHOYONO AND THE USG) ¶C. JAKARTA 6801 (YUDHOYONO'S ABILITY TO GOVERN) ¶D. JAKARTA 5207 (YUDHOYONO ON ELECTION) ¶E. JAKARTA 5072 (INTRIGUE AT BAPETEN) Classified By: Political Officer David R. Greenberg, reason: 1.4 (b) and (d). ¶1. (C) Susilo Bambang Yudhoyono's projected win in the September 20 presidential runoff marks a resounding victory for Indonesian democracy. The challenger defeated a President who had forged an alliance with Indonesia's oldest and largest political parties, while credible reports indicated the government bureaucracy would pull out all the stops for the incumbent. We attribute Yudhoyono's victory to three main factors: Indonesian dissatisfaction with the status quo; Yudhoyono's personal popularity; and the free and fair nature of the electoral process -- something few here take for granted. ¶2. (S) Yudhoyono will have little time to revel in his victory, however. He has only a few weeks to form a cabinet. A near-term revamping of the leadership of Yudhoyono's Democratic Party (PD) appears likely. Yudhoyono also likely will devote some attention to upcoming congresses in other political parties, which could set the tone for his relations with the legislative branch for the next five years. The Ambassador had a productive discussion of governance issues with Yudhoyono in June, and we are confident he shares many of our priorities. End Summary. A TRIUMPH FOR DEMOCRACY -------------- ¶3. (U) In February and early March of this year, under 10 percent of the public identified Yudhoyono as the best candidate for President, according to credible International Foundation for Election Systems (IFES) polling. He placed slightly behind President Megawati and People's Consultative Assembly (MPR) Chairman Amien Rais. However, Yudhoyono quickly acquired momentum in the polls after he resigned his position as Coordinating Minister for Political and Security Affairs, following a public spat with First Gentleman Taufik Kiemas. IFES found Yudhoyono easily surpassing Megawati in late March, then breaking far from the pack of other candidates with over 30 percent support in mid-April. ¶4. (U) After the first-round presidential election, Megawati assembled a coalition that included Indonesia's oldest and largest parties, teaming her Indonesian Democratic Party - Struggle (PDI-P) with Golkar, the United Development Party (PPP) and other small parties, which together represented a majority of the popular vote in the April legislative election. Two large parties -- the National Awakening Party (PKB) and National Mandate Party (PAN) -- adopted formally neutral positions. Yudhoyono wound up formally supported by only four parties represented in the 2004-2009 parliament: his own Democratic Party, formed from scratch only two years ago; the Crescent Moon and Star Party (PBB); the Prosperous Justice Party (PKS); and the Indonesian Justice and Unity Party (PKPI). Together, these four parties -- none of which existed in any form before 1999 -- will hold just over 20 percent of the seats in parliament. Yudhoyono's coalition looked like an awkward alliance, given the diverse ideological positions of the parties and prior friction between the two staunchly Islamist members, PKS and PBB. ¶5. (C) With a hierarchical culture and a modern history of authoritarian rule, even many sophisticated Indonesians believed political party machinery would prove important, if not decisive, in the presidential runoff. While internal divisions surfaced in the parties backing Megawati, it appeared that the wealth and power of the First Family could compensate. Megawati's control over the government apparatus -- particularly the Ministry of Home Affairs, state-owned enterprises, the Police, and the State Intelligence Agency (BIN) -- worried Yudhoyono's camp, especially as National Police Chief Da'i Bachtiar and BIN Chief Hendropriyono appeared increasingly partisan. ¶6. (C) Yudhoyono's victory thus appears as a remarkable triumph of a popular, articulate figure against a rival with more power, money, and connections. His exposure as a member of Megawati's and Abdurrahman Wahid's cabinets provided a base for his popularity. And yet the ruckus surrounding his resignation, and his emphasis on appealing directly to the voters instead of simply courting politicians, gave him the aura of an outsider and underdog. With credible polling showing a clear majority of Indonesians felt dissatisfied with the status quo, Yudhoyono became the most viable alternative to Megawati. ¶7. (C) Yudhoyono could not have won, however, without the systemic reforms that took place from 1999 until 2003, as the MPR amended the Constitution to provide for the citizenry's direct election of the President (instead of election by the MPR),and the House of Representatives passed government-drafted election laws that strengthened the independence of the General Election Commission (KPU). Ironically, while our contacts told us Megawati's camp would stop at nothing to ensure the incumbent's reelection, the mechanisms that Megawati herself helped to establish may have deterred or frustrated the more ruthless efforts. (Note: Megawati, whose party won a plurality in 1999, had to settle for the Vice Presidency after her rivals outmaneuvered her in the MPR. When the MPR redesigned the election system, Megawati surely felt this would work to her advantage, although we do not begrudge her credit for reform-mindedness as well. End Note.) A CABINET MOSTLY COMPOSED OF PROFESSIONALS -------------- ¶8. (C) Yudhoyono faces immediate pressure to select a cabinet. He indicated publicly on September 20 that he would wait until after a formal KPU determination of his election victory before announcing a cabinet (the KPU should announce final results by October 5),but he would announce his line-up before his October 20 inauguration. Running mate Jusuf Kalla told reporters September 21 that Yudhoyono would announce his cabinet on inauguration day. We believe Yudhoyono already has a cabinet in mind, although he likely has guarded his plans closely so as not to alienate supporters hoping for cabinet positions. He has stated publicly that most cabinet members will be professionals. A credible source told us in early September that Yudhoyono particularly insists that non-partisan figures occupy the following key positions: Attorney General, National Police Chief, Chief of the State Intelligence Agency (BIN),Minister for State-Owned Enterprises, Minister for Energy and Mineral Resources, and Governor of Bank Indonesia (not a cabinet position). Besides selecting cabinet members, Yudhoyono and his team also will continue to plan a restructuring of the cabinet and the creation of an Office of the President based on the United States model. SOME LIKELY CABINET MEMBERS -------------- ¶9. (C) Prominent lawyer and human rights activist Todung Mulya Lubis likely appears on a short list of Yudhoyono's candidates for Attorney General. A top Yudhoyono advisor had mentioned to us over the summer that Police Major General Sutanto -- a former East Java Police Chief -- had come to the team's attention as a possible candidate for National Police Chief. Army Deputy Chief of Staff Djoko Santoso appears likely ultimately to become the next Armed Forces (TNI) Commander, but he would need to become the Army Chief first. Consequently, Yudhoyono could opt to extend the present TNI Commander, General Sutarto. Meanwhile, the prospects for the current Army Chief of Staff, Ryacudu Ryamizard, have diminished given his reputation for making irresponsible ultra-nationalist comments, and his well-known support for Megawati. ¶10. (C) We have heard Yudhoyono recognizes he should appoint few former Generals to his cabinet, despite the disproportionate number of retired military officers in his campaign team. Numerous contacts believe the two most likely retired Generals to hold cabinet positions in Yudhoyono's administration are Sudi Silalahi, as Coordinating Minister for Political and Security Affairs (having formerly worked as Yudhoyono's Secretary when Yudhoyono held that position),and national campaign team Chairman Mohamad Ma'ruf, as Minister of Home Affairs. A well-placed contact recently told us Yudhoyono will certainly appoint a civilian as Minister of Defense, and Yudhoyono had considered current Ambassador to the United Kingdom Juwono Sudarsono for that position, although Juwono's poor health (NFI) reduced the possibility of this appointment. ¶11. (C) Yudhoyono had mentioned to the Ambassador in June (ref D) that he considered both current Finance Minister Boediono and noted economist Sri Mulyani as contenders for his cabinet. We believe he had Boediono in mind when he told the press on September 20 that he might ask "two or three" members of the current cabinet to take positions in his administration. WHERE WILL THE ISLAMISTS GO? -------------- ¶12. (C) PBB Chairman Yusril Mahendra, the current Justice Minister, appears highly likely to receive a position in Yudhoyono's administration. Credible rumors indicate he may become State Secretary (SecNeg); Yudhoyono indicated to the Ambassador in June (ref D) that Yusril would not have influence over counter-terrorism matters, a prediction consistent with the SecNeg rumor. Meanwhile, Yudhoyono has promised four cabinet seats to PKS -- two for party officials, and two for professionals sympathetic to the party. A member of the PKS team that negotiated with Yudhoyono told us in early September that PKS had made four proposals. Our source said Yudhoyono took on board these names but made no commitments regarding particular individuals or positions. PKS had suggested: - PKS Chairman Hidayat Nur Wahid as Minister of Social Affairs; - PKS Board of Experts Chairman Suripto as Minister of Defense or Minister of Home Affairs; - University of Indonesia Professor Agus Nurhadi as Minister of Education; and - Lasman (phonetic) as Minister of Research and Technology. Our PKS source identified Lasman as a current official of that Ministry, but he may be Nuclear Energy Control Board (BAPETEN) official As Natio Lasman (ref E). KALLA'S ROLE? -------------- ¶13. (C) Credible reports indicate that Yudhoyono offered Jusuf Kalla various incentives in order to lure him onto Yudhoyono's ticket. Kalla provided significant financial resources for the campaign, as well as inroads into Golkar's network. It remains unclear how Yudhoyono will define Kalla's influence as Vice President, and whether Kalla will have the leeway to bring allies of his into the cabinet. We expect that, to whatever extent possible, Kalla and his loyalists aim to focus on economic and financial matters. WHAT ABOUT THE DEMOCRATIC PARTY? -------------- ¶14. (C) It remains unclear whether Yudhoyono will appoint PD Chairman Subur Budhisantoso to the cabinet. PD contacts have harshly criticized Budhisantoso, a University of Indonesia anthropology professor, as ineffective. His unremarkable performance during the election, which reportedly frustrated Yudhoyono at times, makes him an unlikely cabinet member. However, Yudhoyono may want to ensure Budhisantoso receives a respected position, in order to allow him a face-saving exit from PD's top position and enable a long-awaited restructuring of the party's leadership. In a recent sign of PD's lack of discipline, the Central Board recently suspended the entire PD membership of the Jakarta regional parliament. This move came after the PKS candidate for the parliament's speakership -- Achmad Heryawan, a member of the PKS Syuro Council (supreme body) -- failed to receive sufficient PD votes to win the top job, which instead went to a Golkar candidate. (Ref A provides more information on associates of Yudhoyono, in and outside of PD, who likely hope for offers of cabinet jobs.) OTHER POLITICAL PARTIES FACING SHAKE-UPS -------------- ¶15. (C) Both Golkar and PDI-P will hold party congresses in coming months. The outcome of leadership struggles in those two parties -- Indonesia's largest -- could determine the environment Yudhoyono faces in parliament for the rest of his term, as well as some of his likely rivals for the 2009 election. Golkar Chairman Akbar Tandjung has promised the National Coalition that backed Megawati's candidacy will remain united and form an opposition block, declining any cabinet positions that Yudhoyono might offer. However, few Indonesian politicians relish the prospect of an adversarial relationship with the presidency, and Akbar's survival as Golkar Chairman appears in doubt. (It appears that, in recent days, Akbar focused more on eliminating his enemies within the party than on rounding up voters for Megawati.) ¶16. (C) Either Jusuf Kalla -- who competed for Golkar's presidential nomination in the party's convention process -- or purged former cabinet members Marzuki Darusman and Fahmi Idris could play a role in overthrowing Akbar and aligning Golkar with Yudhoyono. Marzuki and Fahmi would benefit in that effort from the signal of support that Yudhoyono could send with a cabinet appointment. (Marzuki also told us he has communicated with Yudhoyono's team about possibly assuming a role in PD.) ¶17. (C) Similarly, PDI-P's future remains uncertain. Megawati's desire and ability to remain as Chairwoman are unclear. First Gentleman Taufik Kiemas has a clear incentive to retain control of the party -- the more power he retains, the better the chances that he will escape unpunished for his legendary corruption during his wife's tenure. However, many in PDI-P dislike Taufik and blame him for the party's poor performance in recent elections. Vice Chairmen Arifin Panigoro and Roy Janis have told us they have an interest in competing for the party's chairmanship, and both claim to have cultivated ties to Yudhoyono. Either a cabinet appointment or some other symbolic gesture from Yudhoyono could signal to PDI-P officials that those in the party who want to enjoy good relations with the President should back a particular alternative to the current First Family. COMMENT -------------- ¶18. (C) While the September 20 election marks an amazing triumph of Indonesian democracy, Yudhoyono will have little time to celebrate. His apparent victory has opened political floodgates, with under a month to go before inauguration. He will have to form a cabinet that taps a relatively small pool of people who appear competent, clean, and capable at least of objectivity, if not loyalty directly to him. He will need to balance representation of ethnic, religious, and professional affiliations, in a way that dispels fears of "militarism" and makes him appear neither overly secular nor ardently Islamist. He will need to settle some debts he has incurred and break bad news to many supporters who had hoped for significant rewards. And, even while he tries to strengthen his own Democratic Party, he would be wise to devote some attention to the turmoil afflicting Golkar and PDI-P, since developments over the next few months will determine whom he has to negotiate with for the duration of his five-year term. ¶19. (S) The Ambassador and Yudhoyono had a productive exchange on governance and cabinet formation, among other matters, on June 1 (ref D). While Yudhoyono understands the importance of a strong bilateral relationship, public accusations that he is too close to the USG have sensitized him to contact with us (ref B). We are confident, however, that he recognizes and, to a meaningful degree, shares our priorities and concerns. After his victory becomes official, we will seek out a meeting with Yudhoyono for a discussion of the challenges that lie ahead. BOYCE