BALL IN SBY'S COURT ON REFORM UNIT

C O N F I D E N T I A L SECTION 01 OF 02 JAKARTA 013233

SIPDIS

SIPDIS

E.O. 12958: DECL: 11/16/2016
TAGS: PGOV KDEM KISL ECON EFIN KCOR PINR ID
SUBJECT: BALL IN SBY'S COURT ON REFORM UNIT

REF: JAKARTA 13173 (SHOWDOWN BETWEEN PRESIDENT AND VP)

JAKARTA 00013233 001.2 OF 002


Classified By: Ambassador B. Lynn Pascoe, reasons 1.4 (B) AND (D).

SUMMARY
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1. (C) With Golkar's November 13-16 annual national
leadership meeting as a backdrop, Vice President Jusuf Kalla
publicly called for Golkar's continued support for the
Yudhoyono administration and privately sought to mend fences
with the President following last week's public feud over
plans for a new government reform unit (REF A). Embassy
contacts tell us the Vice President and Golkar have dropped
their opposition to the "Presidential Unit for the Management
of Reform Programs (UKP3KR)," reportedly with the expectation
that Golkar would receive additional positions in an eventual
cabinet reshuffle, and that UKP3KR's chair, Marsilam
Simanjuntak, would be replaced. For his part, Marsilam
Simanjuntak told the Ambassador in a November 15 meeting he
found the UKP3KR's planned role to be "duplicative," noting
other entities already existed to perform its function and
said he would stand by for further instruction from the
President before embarking on his new job. One of UKP3KR's
two deputies, Edwin Gerungan, also told us he was waiting for
confirmation the unit would proceed as planned before taking
any action. Over three weeks have elapsed since the
President's office first announced the formation of the work
unit and the President has dedicated most of that time to
muting Golkar's public objections to the group. With his
largest political partner now apparently on board, if only
half-heartedly, all eyes are on the President to see if he
will use this group to push his reform agenda in earnest.
End Summary.

KALLA RALLIES GOLKAR BEHIND THE GOVERNMENT
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2. (U) In comments to the media prior to the start of the the
Golkar leadership meeting, Vice President Jusuf Kalla backed
away from his criticism of the President's reform unit and
indicated he would cooperate with the President on UKP3KR as
it was his "prerogative"(Note: Kalla is also Golkar party
Chairman. End Note). The comments set the tone for the
meeting and effectively pre-empted Golkar factions interested
in exploiting the issue to pull Golkar's support from the
government. In his address to the party leadership at the
beginning of the four day meeting, Kalla took it one step
further, pledging his party's continued support for SBY and
the government. According to press reports, the Vice
President characterized Golkar's relationship with the
government as a "critical, supportive and objective one" and
with a nod to his feud with the President, added "a small
problem should not be exaggerated when airing criticisms."


3. (C) The Vice President's pre-emptive expression of support
for the President seemed to muzzle most of the opposition
within Golkar to a continued alliance with the government; it
also ended discussion of the SBY-Kalla feud as a primary
topic of discussion at the meeting. Of the 36 provincial
delegations assembled for the meeting, ultimately only two
called for the party to withdraw its support from the
government. Despite this endorsement of his leadership, 12
of the regional delegations also signed a petition calling
for Kalla to run for president in 2009, a move that
highlighted the underlying tension between Kalla's
conflicting roles as supportive Vice President and Golkar
Chairman/party standard bearer.

GOLKAR SUPPORTS REFORM UNIT....FOR A PRICE
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4. (C) Dave Laksono, a Golkar Deputy Treasurer, told us the
Vice President and Golkar dropped their opposition to the
reform unit following a November 9 meeting between SBY and
Kalla. According to Laksono, the Vice President offered to
end Golkar's opposition to the unit in exchange for the
President's assurance Golkar would be considered for one or
two additional cabinet seats in an eventual reshuffle, as
well as his vow that Marsilam Simanjuntak would be removed as
chair of the unit. The President reportedly agreed. Dadan
Irawan, a member of the Golkar party's Central Board
corroborated this account, with one small variation. Dadan
told us the President would reward Golkar either with
additional cabinet seats, or other, as yet undefined

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positions of influence.

UKP3KR WAITING FOR MARCHING ORDERS
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5. (C) On November 15, the Ambassador called on Marsilam
Simanjuntak for his perspective on UKP3KR's prospects.
Marsilam briefly recounted the history of UKP3KR's evolution
before noting the three Coordinating Ministers and the
Secretary of the Cabinet already had the authority to carry

SIPDIS
out the unit's mandate. He said UKP3KR was duplicative and
admitted to strong reservations about taking the job. He
acknowledged the fact that SBY was hamstrung in his ability
to replace ineffective cabinet personnel, but nevertheless
shared his belief that the President should have replaced
obstacles to reform rather than creating another layer of
bureaucracy.


6. (C) Marsilam noted the controversy surrounding his
appointment as UKP3KR's chief and seemed somewhat stunned by
the ferocity of Golkar's opposition. He suggested the fact
that he was Christian, not a member of Golkar, and an
advocate for reform, accounted for most of the opposition.
He evinced surprise at the personal nature of many of the
attacks and said he was disappointed he was caught in the
crossfire of the SBY-Kalla feud.


7. (C) Marsilam went out of his way to explain he accepted
the job out of a desire to assist the presidency as an
institution and not necessarily the President himself. He
made frequent references to SBY's reputation for excessive
cautiousness and commented that SBY would ultimately be
responsible for whether or not UKP3KR could fulfill its
mandate. UKP3KR had encountered stiff political resistance
and Golkar was attempting to leverage the controversy for
more cabinet seats. As a result, UKP3KR was in a holding
pattern, and he had no real sense for whether or not SBY
would work to salvage the project.


8. (C) In a separate conversation with Edwin Gerungan, one of
UKP3KR's deputies and the Chairman of the Board of Bank
Mandiri, Gerungan also told us about the uncertainty
surrounding UKP3KR. Gerungan said he was waiting for some
indication the President would fight for UKP3KR and noted he
would keep his "day job" with Bank Mandiri, an indication
perhaps that even if the project does move forward, Gerungan
would have a rather limited ability to contribute.

COMMENT
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9. (C) Having secured Kalla and Golkar's support for UKP3KR
and defended the unit effectively and assertively, SBY would
appear to have political room to use UKP3KR to push his
reform plans; however, there is very little evidence that he
is doing so. We have talked with two of the three
individuals tapped to run UKP3KR and they are as uncertain
about its prospects as anyone else. We will be watching to
see if the President acts in the coming weeks to empower
UKP3KR and revitalize a project that has been sidelined by
political controversy. Simply inviting Marsillam to a
cabinet meeting, or appearing with the three UKP3KR members
in public would signal the project is back on track.
PASCOE