INDONESIA - MODEST TRADE OPENING WITH ISRAEL

C O N F I D E N T I A L SECTION 01 OF 02 JAKARTA 008622

SIPDIS

SIPDIS

E.O. 12958: DECL: 07/09/2016
TAGS: AADP ETRD ETTC PREL ID
SUBJECT: INDONESIA - MODEST TRADE OPENING WITH ISRAEL

Classified By: Economic Counselor William Heidt; Reasons 1.4 (b) and (d
)


1. (C) Summary. In the first initiative of its kind,
Chairman of the Indonesian Chamber of Commerce and Industry
(KADIN) Mohammed Hidayat led a 12-person delegation of
Indonesian Christian and Muslim business representatives to
Israel June 25-29. The group met several senior Israeli
Government officials, including Foreign Minister Livni and
Directors General at the Foreign and Trade Ministries.
Hidayat signed an agreement with the Israeli Manufacturer's
Association (IMA) on June 27 calling for facilitating
information sharing and joint business projects between the
two countries. A senior Kadin official told us on July 3
that several modest follow-up activities are in the works,
including possible Israeli participation in a November 2006
infrastructure forum in Jakarta, a possible agricultural
development project between the Indonesian Muslim mass
organization Nahdlatul Ulama (NU) and an Israeli firm, and a
possible invitation from NU to Israeli religious scholars for
discussions of interfaith issues. NU's willingness to
participate in the mission during a period of heightened
political tensions in Israel and the Palestinian territories
demonstrates again its moderate political stance. Domestic
Indonesian press reporting on the visit has been surprisingly
low-key. End Summary.

First Time Business Mission to Israel
--------------


2. (C) John Prasetio, Chairman of Kadin's International
Department, briefed us on July 3 about the June 25-29 Kadin
business mission to Israel. Prasetio, a Chinese-Indonesian
Christian, told us he arranged the visit with the assistance
of Israeli Ambassador to Singapore Ilan Ben-Dov, whom he met
on two occasions. Chairman of Kadin and Golkar Member of
Parliament Mohammed S. Hidayat led the mission. Other
prominent participants included former Minister of Trade and
Industry Luhut Pandjaitan; Kadin Vice President and wealthy
Indonesian businessman Chris Kanter; Tata Susila "Maxi"
Gunawan, the "financial backer" of current State Secretary
and former President of the Crescent Star Party (PBB) Yusril
Mahendra; Zuhairi Bin Misrawi, program officer at the
NU-linked "Indonesian Society for Pesantren and Community
Development (P3M),and Sandiaga Salahuddin Uno, President of
the Young Indonesian Entrepreneurs' Association (HIPMI). In
press remarks following the group's return to Indonesia,
Hidayat said the visit was for business purposes only and
that his delegation undertook the trip in response to an
invitation from the IMA.


3. (C) Neither Kadin nor the Government of Indonesia (GOI)
announced the trip in advance and no journalists traveled
with the group, facts that illustrate the continuing
political sensitivity in Indoensia of expanding relations
with Israel. Prasetio said he briefed Foreign Minister
Hassan Wirajuda prior to the trip, who responded that
although the Foreign Ministry had no objection, neither would
it endorse the trip. Presidential advisor Yenny Wahid had
been scheduled to participate in the mission, Prasetio said,
but had backed out when President Yudhoyono appeared
"reticent" when told of her plan to join the delegation.
Similarly, NU's rival Muslim mass organization Muhammadiyah
backed out of the mission at the last minute. According to
Prasetio, prominent Indonesian businessman James Riady
financed the travel of the NU participants as an inducement
for them to participate.


4. (C) Prasetio said the group was received warmly in Israel,
meeting briefly with Foreign Minister Livni on two occasions
and holding more substantive sessions with Directors General
at the Trade and Foreign Ministries. The group also received
a briefing by the Mossad, which not surprisingly, described
Iran and Iraq as Israel's top security concerns. Prasetio
noted that the mission had faced a few challenges--he said
delegation leader Hidayat was critical until the final day of
the visit, and refused to attend a meeting scheduled with a
Muslim member of the Knesset.

Modest Follow Up Activities Planned
--------------


5. (SBU) Prasetio described several modest follow up
activities that may flow out of the visit. He said Kadin
would likely invite Israeli companies to participate in the
planned November 2006 "Indonesia Infrastructure Conference"

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which Kadin will organize with the Coordinating Ministry for
Economic Affairs. In addition, Prasetio said the NU and an
Israeli agribusiness firm with experience in water-drip
technology may cooperate on an agricultural development
project in Eastern Indonesia, where rainfall is scarce.
Finally, the NU may invite Israeli religious scholars to
visit Indonesia for discussions of interfaith issues.
Delegation member Zuhairi Bin Misrawi of the NU has
participated in several international programs on religious
pluralism, including at least one sponsored by the Department
of State.


6. (SBU) Indonesians may travel to Israel with regular
passports but Indonesia does not have formal diplomatic
relations with Israel. Prasetio estimated that informal
trade with Israel amounted to about USD 150 million in 2005,
most of which was Indonesian exports to Israel of
agricultural products such as rubber. Israeli exports to
Indonesia, estimated about USD 14 million, consist mostly of
chemicals and electronics. The Jerusalem Post quoted the IMA
President as stating that the agreement could increase
two-way trade to USD 600 million by 2010.

Comment: Limited Press Blowback
--------------


7. (C) Despite the hush-hush preparations for the visit, we
have been struck by the very limited reaction in the
Indonesian press now that the Kadin mission has become
public. Although a handful of Indonesian dailies have
published articles that included some criticism of the
mission, press coverage has been reasonably balanced and the
story is fading fast. Another noteworthy facet of the trip
was NU's willingness to participate, a fact that underscores
to us the organization's continued, moderate approach to
political issues involving religion.
PASCOE