ADVISOR WORRIES ABOUT YUDHOYONO'S POLITICAL

S E C R E T SECTION 01 OF 04 JAKARTA 007941

SIPDIS

SIPDIS

E.O. 12958: DECL: 06/22/2016
TAGS: PGOV KDEM ID
SUBJECT: ADVISOR WORRIES ABOUT YUDHOYONO'S POLITICAL
POSITION

REF: A. 05 JAKARTA 15860 (CABINET RESHUFFLE)


B. 05 JAKARTA 8830 (CORRUPTION ARREST)

C. 04 JAKARTA 8376 (SBY PROFILE)

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Classified By: Political Officer David R. Greenberg for reason 1.4 (b)
and (d).

SUMMARY
--------------


1. (S/NF) President Yudhoyono has yet to consolidate
political power and could lose his 2009 reelection bid if he
cannot show significant achievements in the near future,
according to T.B. Silalahi, Special Advisor to the President.
In a June 13 meeting, T.B. told us that he had recently
sought to improve the relationship between Yudhoyono and Vice
President Kalla, although T.B. suspected Kalla had
presidential ambitions for 2009. Consistent with
conventional wisdom, T.B. derided Yudhoyono's Democratic
Party as ineffectual; he noted Yudhoyono's camp was
cultivating a splinter party that had broken from former
President Megawati's Indonesian Democratic Party - Struggle
(PDI-P). Although T.B. worried aloud that President
Yudhoyono lacks the financial resources to control
Indonesia's political elite, other contacts have told us
recently that the First Family -- particularly First Lady
Kristiani Herawati -- has intensified efforts to profit
financially from its political position. These efforts have
reportedly led to improved relations between Yudhoyono and
Coordinating Minister for People's Welfare Aburizal Bakrie.
A credible polling organization reported that popular
satisfaction with Yudhoyono's performance fell below 40
percent in late April. End Summary.

COMPLAINTS
--------------


2. (C) T.B. Silalahi, Special Advisor to the President, told
us on June 13 that he worried about Yudhoyono's chances for
reelection in 2009. It would be necessary, T.B. said, for
the President to show significant achievements in the next
two years. T.B. claimed to have met recently with
Singaporean elder statesman Lee Kwan Yew, who, according to
T.B., expressed the same concern, saying Yudhoyono needed to
produce results, or his reelection would be in jeopardy.
T.B. claimed the Singaporean elite had promised to assist the
GOI by promoting investment in Indonesia and creating
employment opportunities in targeted areas.


3. (C) T.B. told us he had a lengthy discussion with the
President in early 2006 in which he confronted Yudhoyono,
decrying his position as weak. Yudhoyono had not yet
demonstrated an ability to control the political elite or
dispense patronage. (T.B. did not share with us Yudhoyono's
reaction to this discussion.) T.B. told us Yudhoyono seemed
to expect political outcomes without providing the necessary
resources to achieve them. For example, T.B. recounted with
frustration that Yudhoyono had once asked him in general
terms to assuage former President Wahid. Normally, T.B.
said, one could easily satisfy Wahid by paying him off, but
Yudhoyono provided no funding for the effort. While
Yudhoyono has often appeared reluctant to play money politics
(ref C),T.B. appeared to feel Yudhoyono also lacked the
means to do so effectively, if he wanted to.

SLIPPING IN AN APRIL POLL
--------------


4. (C) In late April, Yudhoyono's popularity slipped
significantly, according to polling data released in mid-May
by the Indonesian Survey Circle (LSI),a credible
organization run by Denny J.A., a former Yudhoyono advisor.
(Denny was formerly Executive Director of the Indonesian
Survey Institute, which also uses the acronym "LSI.") LSI's
poll of 700 respondents found only 37.9 percent of
respondents satisfied with the Yudhoyono administration's
performance. LSI reported a margin of error of 3.8 percent
for its results. This is the first reputable poll of which
we are aware that places Yudhoyono's job approval rating
below 50 percent. One of our contacts told us that he had
discussed this poll in late May with First Lady Kristiani
Herawati, who attributed these results to the public
criticism leveled at Yudhoyono by members of the political
elite, such as Amien Rais and Abdurrahman Wahid.

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THE ALTERNATIVE?
--------------


5. (C) Even with Yudhoyono's recent slippage in LSI's poll,
our contacts find it difficult to identify a credible
alternative candidate who might defeat the incumbent in 2009.
There is widespread speculation within and outside of the
Golkar Party that Vice President Kalla -- who concurrently
chairs Golkar -- might run for the presidency, but most of
our contacts agree that typical Javanese (who comprise the
largest ethnic group in Indonesia) would not find Kalla's
persona appealing. Megawati Soekarnoputri, who remains
embittered toward Yudhoyono, seems likely to run again for
election. In our recent discussion, T.B. seemed to dismiss
Megawati's potential, suggesting that Yudhoyono represented
the last credible candidate with secular leanings. The
alternative to Yudhoyono, T.B. said, would likely come from
the Islamist side of Indonesia's political spectrum; he
seemed to feel Prosperous Justice Party (PKS) leading figure
Hidayat Nur Wahid -- now widely rumored as a leading
candidate for Governor of Jakarta in 2007 -- represented the
strongest possible Islamist presidential candidate.

THE POLITICAL MAP
--------------


6. (C) T.B. Silalahi disparaged the Democratic Party (PD) as
"losers," indicating that he held no hope that PD might
transform itself into an effective political instrument by
the time of the 2009 election. However, T.B. seemed to feel
that Yudhoyono could draw secular-minded voters from PDI-P's
base. He estimated that 70 percent of PDI-P loyalists did
not want Megawati to run for the presidency again. (Comment:
This estimate likely underestimates Megawati's support from
the PDI-P base. End Comment.) T.B. told us that he had
recently met with Roy Janis, a former PDI-P Vice Chairman who
now is one of the top figures of the Democracy Renewal Party
(PDP),which includes numerous high-profile figures formerly
associated with PDI-P. T.B. remarked that Roy "works for us"
-- although Roy separately portrayed the meeting with T.B. as
a discussion among equals, and he claimed to have laid out a
policy line independent of the Palace's.


7. (C) T.B. also told us he had recently met with Vice
President Jusuf Kalla. T.B. claimed that he had urged Kalla
to support fully Yudhoyono's administration until 2009; at
the time of the next election, T.B. said, Kalla could choose
to break away if he wanted to. T.B. told us he felt
skeptical when Kalla denied having presidential ambitions.


8. (C) While it would seem unnecessary and imprudent for
Kalla to split publicly with Yudhoyono in the near future,
many Golkar officials seem to believe the Vice President may
make a run for the presidency, and that Yudhoyono could
appeal to some secular, Golkar-affiliated voters by choosing
another running mate with ties to that party. Most of the
speculation along these lines focuses on the likelihood of
Yudhoyono teaming up with House of Representatives (DPR)
Chairman Agung Laksono, who also serves as Kalla's deputy in
Golkar's Central Board. Reliable contacts (including Agung's
son and right-hand political operator, Dave Laksono) claim
that the relationship with Agung and Kalla has become
increasingly uneasy, as the prospects of a split between the
two in 2009 become increasingly obvious. Even if Kalla does
not choose to run for the presidency, it is unclear that he
would necessarily retain his claim on Yudhoyono's ticket;
Yudhoyono is reportedly much closer to and more comfortable
with Agung.


9. (C) National Awakening Party (PKB) Deputy Secretary
General Yenny Wahid recently confirmed that PKB had made an
explicit deal with Yudhoyono, in which the party would
support Yudhoyono in the DPR. (According to the terms of
this deal, PKB overlord Abdurrahman Wahid -- aka Gus Dur --
remained free to adopt any public position he liked, Yenny
said, noting with exasperation that "even God" has given up
trying to control Gus Dur.) However, looking ahead to 2009,
Yenny, who became a member of the presidential staff a few
months ago, noted Yudhoyono would have to choose whether he
wanted the support of PKB, with its moderate Islamic
character, or of the more orthodox Islamist PKS. Yenny
predicted that Yudhoyono would not want to choose between the
secular and Islamist camps; he would hope for support from

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every party and, failing to move in either direction, might
find the more secular-minded parties deserting him.

FIRST FAMILY ATTENTION TURNS TO BUSINESS
--------------


10. (S/NF) Many Embassy contacts have told us that Yudhoyono
increasingly recognizes the need for financial resources,
particularly in order for him to win reelection in 2009.
Specifically:

- Some contacts tell us that First Lady Kristiani Herawati is
increasingly seeking to profit personally by acting as a
broker or facilitator for business ventures. A widely
circulating rumor believed by top politicians claims that
Cabinet Secretary Sudi Silalahi merely acted as a cut-out for
Kristiani when he received a commission for his endorsement
of a Korean firm's effort to receive a contract renovating
the Indonesian Embassy in Seoul (ref B -- this matter became
public in early 2006).

- Kristiani's family members reportedly have established
business connections to Coordinating Minister for People's
Welfare Aburizal Bakrie. Numerous contacts report that,
despite Bakrie's demotion in the December 2005 cabinet
reshuffle (ref A),Yudhoyono has become significantly closer
to Bakrie in recent months, drawn by his wealth and the
political benefits that it represents. Some well-placed
contacts assess that Bakrie has a good chance to become
Yudhoyono's running mate in 2009. (Comment: We saw no sign
of a closer Yudhoyono-Bakrie relationship in the GOI's
response to the May 27 earthquake near Yogyakarta, however.
Yudhoyono seemed to minimize Bakrie's role, even though
Bakrie's Coordinating Ministry would have been a logical lead
agency. End Comment.)

- Numerous contacts also tell us that Kristiani's family
members have begun establishing companies in order to
commercialize their family's influence. Some contacts claim
that the relationship between Yudhoyono and Vice President
Kalla continues to deteriorate at least in part because of a
perception that Kalla is a competitor for these business
efforts. (Comment: It is difficult to imagine that new
companies associated with Kristiani's family might compete
with Kalla's long-established firms. This competitive view
is more plausible, however, if Kristiani's family is fronting
for Bakrie's firms. End Comment.)

- Dave Laksono told us on June 5 that in a recent meeting
with DPR Chairman Agung Laksono, Yudhoyono bemoaned his own
failure to date to establish himself in business matters.
Dave -- who did not indicate whether he was present during
that discussion -- said Yudhoyono felt he needed to "catch
up," and speculated the President likely wanted to ensure he
left a sizeable legacy for his children.

- Presidential staff member Yenny Wahid claimed in mid-June
that some of Kristiani's family members were specifically
targeting financial opportunities related to State-Owned
Enterprises. She portrayed him as witting of these efforts,
which his closest operators (e.g., Sudi Silalahi) would
advance, while Yudhoyono himself maintained sufficient
distance that he could not be implicated.

COMMENT
--------------


11. (C) Although democracy is still relatively new in
Indonesia, Yudhoyono seems to recognize that popular support
matters more than back-room machinations. Yudhoyono's
personal popularity allowed him to defeat an incumbent with
more money and party machinery in 2004. Given the lack of
charismatic rivals who command public trust, Yudhoyono may
find that even only moderate achievements in the coming years
will allow him to retain a commanding lead entering into
2009's unofficial campaign season. In such a scenario, we
would expect many parties to seek a ride on Yudhoyono's
coattails. However, if Indonesian voters become increasingly
dissatisfied with the government's performance, and if the
President's popular appeal fades, he has little with which to
compensate. Yudhoyono currently has the committed support of
only a weak party that consists primarily of amateur
politicians. His inner circle is small, he has not
significantly expanded his network of loyalists since his

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election, and he has yet to build up a war chest to rival
that of his potential opponents.

AMSELEM