THE DEPUTY SECRETARY'S DECEMBER 7, 2004 MEETING

C O N F I D E N T I A L STATE 265884


JAKATRA PASS DILI AS ACTION

E.O. 12958: DECL: 12/08/2014
TAGS: KAWC KJUST PHUM PREL USUN TT ID JA NZ PO
UK, S/WCI, EAP, IO, DRL, AS
SUBJECT: THE DEPUTY SECRETARY'S DECEMBER 7, 2004 MEETING
WITH EAST TIMOR PRESIDENT XANANA GUSMAO


1. (U) CLASSIFIED BY DEPUTY SECRETARY ARMITAGE FOR REASONS
1.4 (B) AND (D).


2. (U) DECEMBER 7, 2004, 4:40 P.M., IN THE DEPUTY
SECRETARY'S OUTER OFFICE.


3. (U) PARTICIPANTS:

U.S.
- THE DEPUTY SECRETARY
- EAP A/S JAMES A. KELLY
- EAP DAS MARIE T.HUHTALA
- AMBASSADOR GROVER JOSEPH REES
- D SPECIAL ASSISTANT CHRISTIAN CASTRO
- EAP/IET DESK OFFICER SAMEER SHETH (NOTETAKER)

EAST TIMOR
- PRESIDENT XANANA GUSMAO

- AMBASSADOR JOSE L. GUTERRES
- DCM CONSTANCIO PINTO
- INTERNATIONAL RELATIONS ADVISOR DOMINGOS ALVES


4. (C) SUMMARY: IN A FRIENDLY AND WARM ATMOSPHERE, DEPUTY
SECRETARY ARMITAGE DISCUSSED A WIDE RANGE OF ISSUES WITH
VISITING EAST TIMOR PRESIDENT GUSMAO. AFTER
CONGRATULATING PRESIDENT GUSMAO ON RECEIVING THE NATIONAL
DEMOCRATIC INSTITUTE'S HARRIMAN AWARD AND THE BIRTH OF HIS
THIRD CHILD, THE DEPUTY SECRETARY ASKED PRESIDENT GUSMAO
ABOUT HIS VIEWS ON THE CHALLENGES EAST TIMOR FACES, ITS
RELATIONS WITH INDONESIA, OIL REVENUES, REFUGEES, AND WHAT
ASSISTANCE THE U.S. COULD PROVIDE THE NEW NATION.
PRESIDENT GUSMAO SAID RELATIONS WITH INDONESIA WERE STILL
"FRAGILE." ON ACCOUNTABILITY FOR 1999 ATROCITIES, HE SAID
HE WOULD TRY TO CONVINCE INDONESIAN PRESIDENT YUDHOYONO AT
A DECEMBER 14 MEETING TO ACCEPT A UN COMMISSION OF
EXPERTS, BUT HE ALSO EXPRESSED SKEPTICISM ABOUT GOI
WILLINGNESS TO FACE THE ISSUE. PRESIDENT GUSMAO ALSO
CANDIDLY GAVE HIS VIEWS ON THE JUDICIAL SECTOR IN HIS
COUNTRY. END SUMMARY.

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EAST TIMOR - INDONESIA RELATIONS
--------------


5. (C) PRESIDENT GUSMAO SAID RELATIONS BETWEEN EAST TIMOR
AND INDONESIA WERE STILL "FRAGILE." HE AGREED WITH DEPUTY
SECRETARY ARMITAGE'S ASSESSMENT THAT SUSILO BAMBANG
YUDHOYONO (SBY) APPEARED TO BE MORE REASONABLE THAN FORMER
PRESIDENT MEGAWATI. HOWEVER, PRESIDENT GUSMAO CAUTIONED
THAT THE GOET DID NOT EXPECT ANY BIG CHANGES IN INDONESIAN
POLICY BECAUSE SBY, THOUGH A FORMER GENERAL, STILL NEEDS
THE SUPPORT OF THE INDONESIAN MILITARY. HE HOPES SBY WILL
BE ABLE TO FULFILL HIS PROMISES OF REFORM BUT EXPECTS THAT
HIS TASK WILL NOT BE EASY. WHEN ASKED ABOUT BITTERNESS
BETWEEN THE TWO NATIONS, PRESIDENT GUSMAO ANSWERED THAT
THE BITTERNESS REMAINS IN THE HEARTS OF THE INDONESIAN
GENERALS, SOME OF WHOM ADMIT WHAT THEY DID IN EAST TIMOR
IN 1999 WAS WRONG BUT AVOID DISCUSSING THE ISSUE. WHEN
ASKED ABOUT EAST TIMORESE REFUGEES, PRESIDENT GUSMAO
REPLIED THAT THERE WERE ABOUT 29,000 SCATTERED THROUGHOUT
INDONESIA AND THAT MOST HAD SETTLED THERE PERMANENTLY. HE
SPECULATED THAT ABOUT HALF MAY CHOOSE TO RETURN TO EAST
TIMOR SOME DAY.

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ACCOUNTABILITY
--------------


6. (C) PRESIDENT GUSMAO BELIEVED THAT SBY WOULD NOT BE ANY
MORE COOPERATIVE THAN MEGAWATI WAS WITH THE UN REGARDING
THE ISSUE OF ACCOUNTABILITY FOR THE CRIMES COMMITTED IN
EAST TIMOR IN 1999. PRESIDENT GUSMAO STATED THAT HE
PLANNED TO MEET SBY IN BALI ON DECEMBER 14 AND USE THAT
OCCASION TO TRY TO PERSUADE HIM TO ACCEPT THE UN'S
COMMISSION OF EXPERTS. DEPUTY SECRETARY ARMITAGE ASKED
PRESIDENT GUSMAO IF HE ENVISIONED A LIKELY SOUTH AFRICAN
TRUTH AND RECONCILIATION MODEL. WHEN PRESIDENT GUSMAO
INQUIRED WHETHER THE SOUTH AFRICA MODEL NAMED NAMES, THE
DEPUTY SECRETARY ANSWERED THAT NAMES WOULD HAVE TO BE
NAMED AND THAT THERE MUST BE TRUTH BEFORE RECONCILIATION
CAN OCCUR. PRESIDENT GUSMAO COMMENTED THAT FOR EAST TIMOR,
THE MINIMUM ACCEPTABLE SOLUTION WOULD BE AN ARRANGEMENT
THAT WOULD NAME NAMES.

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EAST TIMOR'S CHALLENGES
--------------


7. (C) EXPRESSING CONCERN ABOUT THE JUSTICE SECTOR IN EAST
TIMOR, PRESIDENT GUSMAO EMPHASIZED THE NEED TO BUILD
CAPACITY IN THE SECTOR BY TRAINING GOOD PROSECUTORS,
LAWYERS, AND JUDGES. HE STRESSED THE IMPORTANCE OF
CHANGING THEIR MENTALITY AND IMPROVING THEIR
PROFESSIONALISM. PRESIDENT GUSMAO ACKNOWLEDGED THAT THERE
WERE SOME DIFFERENCES WITHIN THE GOET REGARDING THE
APPROACH TO THIS TRAINING (NOTE: LIKELY REFERRING TO THE
MINISTRY OF JUSTICE'S PREFERENCE FOR TRAINING IN
PORTUGUESE AND BY CIVIL LAW NATIONS SUCH AS PORTUGAL).
ASSESSING TIMOR'S GENERAL CONDITION, PRESIDENT GUSMAO
INDICATED THE NEED FOR BETTER MANAGEMENT CAPACITY AND
ESPECIALLY FOR FIGHTING CORRUPTION. DEPUTY SECRETARY
ARMITAGE AGREED THAT THIS WOULD BE TOUGH BUT ESPECIALLY
IMPORTANT ONCE THE MONEY FROM THE OIL REVENUES BEGINS TO
COME IN. PRESIDENT GUSMAO REPLIED THAT AN OIL FUND WAS
BEING CREATED WITH THE HELP OF THE IMF AND WORLD BANK TO
ENSURE THAT ACCOUNTS ARE TRANSPARENT. THE DEPUTY
SECRETARY ASKED WHETHER THE PEOPLE OF EAST TIMOR WERE
PATIENT ENOUGH TO WAIT A YEAR FOR THE OIL INCOME.
PRESIDENT GUSMAO REPLIED THAT THE $100 MILLION LEVEL WOULD
NOT BE REACHED FOR ANOTHER THREE TO FOUR YEARS DUE TO
TECHNICAL DIFFICULTIES. HE ADDED THAT THE GOET'S ENTIRE
ANNUAL BUDGET IS ONLY $75 MILLION.


8. (C) PRESIDENT GUSMAO DESCRIBED THE HIGH EXPECTATIONS OF
HIS PEOPLE IN 2001, ESPECIALLY FOR JOBS. HE SAID THAT
ALTHOUGH EXPECTATIONS HAVE LOWERED, ONE CHALLENGE IS
CONVINCING THE UNEMPLOYED YOUTH WHO HAVE FLOODED DILI TO
RETURN TO THEIR COMMUNITIES AND CONTRIBUTE TO THE
AGRICULTURE SECTOR THERE. PRESIDENT GUSMAO IS TRYING TO
WORK WITH THE WORLD BANK AND IMF TO PURSUE THIS.


9. (C) REMARKING THAT THE USG WOULD "SAVE" ABOUT $20
MILLION DOLLARS WHEN THE UN MISSION IN EAST TIMOR ENDED IN
MAY, 2005, PRESIDENT GUSMAO SMILINGLY ASKED WHETHER THE
USG COULD USE SOME OF THAT AMOUNT TO PROVIDE TIMOR WITH
FURTHER ASSISTANCE. JOKINGLY COMMENDING GUSMAO FOR HIS
BUSINESS ACUMEN, DEPUTY SECRETARY ARMITAGE SAID THAT THE
USG WOULD CONTINUE ITS ASSISTANCE TO EAST TIMOR AND LOOK
INTO OTHER WAYS THAT IT COULD HELP IN THE FUTURE,
ESPECIALLY THROUGH MULTILATERAL ORGANIZATIONS LIKE THE
WORLD BANK.


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ARMY-POLICE TENSIONS
--------------


10. (C) WHEN ASKED ABOUT THE RELATIONSHIP BETWEEN THE
MILITARY (A GREAT NUMBER OF WHOM ARE VETERANS) AND THE
POLICE IN TIMOR, PRESIDENT GUSMAO AGREED THAT TENSIONS
EXISTED. HE SAID THERE WAS SOME FEELING OF FRUSTRATION
AND RESENTMENT AMONG THE MILITARY SINCE THE POLICE
OFFICERS, MANY OF WHOM ONCE SERVED UNDER THE INDONESIANS,
NOW APPEARED TO HAVE THE REAL POWER. HE SAID THERE IS A
NEED FOR THE ARMY TO FEEL USEFUL AND NOT PSYCHOLOGICALLY
INFERIOR TO THE POLICE. DEPUTY SECRETARY ARMITAGE SAID
THAT HE SENSED THIS TENSION AND RECOGNIZED THE NEED TO
IMPROVE THE ARMY'S SELF-ESTEEM. PRESIDENT GUSMAO
EMPHASIZED THE NEED FOR WORKSHOPS AND TRAINING PROGRAMS IN
HUMAN RIGHTS AND COUNTER-TERRORISM FOR TIMORESE POLICE
OFFICERS OUTSIDE OF TIMOR WHERE THEY WOULD BE ABLE TO
CHANGE THEIR MINDSETS. (COMMENT: PRESIDENT GUSMAO SAID HE
DID NOT FAVOR MALAYSIA AS AN APPROPRIATE OUTSIDE VENUE BUT
DID FAVOR THAILAND. END COMMENT.) WHEN THE DEPUTY
SECRETARY RAISED A QUESTION ABOUT CURRENT COUNTER-
TERRORISM TRAINING, AMBASSADOR REES REPLIED THAT THERE IS
NONE BECAUSE OF RESOURCE CONSTRAINTS. DECLARING THAT "WE
ARE ALL FRONTLINE STATES" AND TIMOR CANNOT ESCAPE ITS
GEOGRAPHY, THE DEPUTY SECRETARY STATED THAT A SMALL SUCH
PROGRAM COULD BE CONSIDERED.

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BILATERAL AND MULTILATERAL ASSISTANCE
--------------


11. (C) WHEN DEPUTY SECRETARY ARMITAGE ASKED ABOUT WORLD
BANK AND IMF ASSISTANCE, PRESIDENT GUSMAO REPLIED THAT
BOTH ORGANIZATIONS HAVE PROMISED TO SUPPORT TIMOR AND THAT
THE GOET WANTS TO BE CAUTIOUS ABOUT BORROWING BUT WILL
TAKE LOANS THAT SUPPORT GOOD PROJECTS, PROVIDING A
TRANSPARENT PROCESS IS IN PLACE.


POWELL