GUS DUR ON INDONESIA'S CHALLENGING ROAD AHEAD

C O N F I D E N T I A L JAKARTA 003046

SIPDIS

SIPDIS

DEPT FOR EAP, EAP/MTS, EAP/MLS, INR/EAP
NSC FOR EPHU

E.O. 12958: DECL: 11/01/2017
TAGS: PGOV PINR PREL KDEM KISL ID
SUBJECT: GUS DUR ON INDONESIA'S CHALLENGING ROAD AHEAD

REF: 06 JAKARTA 13379

Classified By: Ambassador Cameron R. Hume, reasons 1.4(b,d).


1. (C) SUMMARY: Former President Abdurrachman Wahid (aka Gus
Dur) underscored to Ambassador Hume that corruption was
Indonesia's single biggest impediment to development.
Looking and sounding more fragile than in recent memory, Gus
Dur welcomed the Ambassador to Indonesia during the
Ambassador's introductory courtesy call on October 31. Gus
Dur said the forces of globalization were advancing at an
unprecedented pace, and Indonesia's success or failure would
hinge largely on its ability to develop a special role on the
world stage and plot a strategic path forward. END SUMMARY.


FRAIL, BUT STILL GOING


2. (C) After commenting on the unrelenting pace of his recent
travel schedule, a visibly frail Gus Dur welcomed the
Ambassador to Indonesia and expressed delight that they were
able to meet. (Note: Gus Dur's speech was slightly slurred
and his energy level appeared to be lower than usual.) The
Ambassador said he was impressed with the overall spirit of
optimism in Indonesia as well as the palpable enthusiasm for
democracy.

INDONESIA'S CHALLENGES


3. (C) Turning to the challenges in store for Indonesia, Gus
Dur stressed that Indonesia's number one priority should be
to tackle corruption. The problem was enormous in scale and,
in Gus Dur's estimation, Indonesia still had not settled on a
coherent strategy to deal with it.


4. (C) According to Gus Dur, Indonesia would also need to
move quickly to carve out an appropriate role for itself in
an increasingly globalized world. While many of its
neighbors had been able to capitalize on the forces of
globalization by developing a strategic foothold in the new
world economy, Indonesia had by and large failed to find a
specialized role for itself. The Ambassador agreed with this
assessment, and noted that he had repeatedly asked Indonesian
interlocutors what role Indonesia envisioned playing in the
global economy.

GUS DUR'S WAY FORWARD


5. (C) In Gus Dur's view, one obvious way to increase
Indonesia's competitiveness would be to focus on developing
Small and Medium-sized Enterprises (SMEs). SMEs served as
the backbone of industrialized economies and generated jobs,
ideas, and tax revenue. The way to stimulate SME
development, according to the former president, would be to
seek a moratorium of four to five years on Indonesia's
obligations to the Paris Club. The resulting revenue could
be ploughed into a company that would specialize in
guaranteeing loans to SMEs. Though Gus Dur said this
"reform" plan would not serve as the basis of a presidential
platform, he believed it was an idea that President Yudhoyono
would be compelled to take under consideration.

THE FRAMERS HAD IT RIGHT


6. (C) Gus Dur told the Ambassador of his deep and abiding
respect for two of America's founding fathers: Thomas
Jefferson and Alexander Hamilton. Though the two obviously
had a difference of opinion on any number of subjects, they
both worked to ensure the Constitution put limits on power.
The principle of limits, as it was enshrined in the U.S.
Constitution, had paved the way for America's success.
Indonesia, Gus Dur added, would be wise to learn from that
lesson.

HUME