AMBASSADOR'S FAREWELL CALL ON VP KALLA

C O N F I D E N T I A L SECTION 01 OF 02 JAKARTA 000427

SIPDIS

SIPDIS

E.O. 12958: DECL: 02/16/2017
TAGS: PREL PGOV PHUM ECON EPET PINS ABLD ID
SUBJECT: AMBASSADOR'S FAREWELL CALL ON VP KALLA

Classified By: Ambassador B. Lynn Pascoe, Reasons 1.4 (b) and (d).

Summary
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1. (C) During a Feb. 15 farewell call, the Ambassador
congratulated Vice-President Kalla on the successful election
process in Aceh; expressed support for government efforts to
control violence in Sulawesi; urged the GOI to open Papua to
foreign visitors; raised plans to increase USG technical
assistance in Papua; supported ExxonMobil's request for a
standstill agreement on the Natuna gas project; raised
concerns about the Richard Ness/Newmont trial; lobbied for
quick passage of trafficking in persons legislation and
requested Kalla's assistance on an Embassy land issue. Kalla
described the issues in Aceh and Papua as primarily economic,
not ideological, and praised the new Aceh governor. The GOI
has decided to provide major transportation infrastructure
improvements in Papua. The VP welcomed a possible visit by
Congressman Faleomavaega (D-AS). Kalla said a tough approach
against the terrorists in Sulawesi was necessary. Kalla
stated firmly that ExxonMobil needed to provide an offer for
a new revenue split if they wished to keep the Natuna
concession, or else the bloc would be tendered. Kalla
expressed hope that Indonesian legislators would spend more
time on legislating and less on "supervising" the government.
He said he would obtain an update on the Ness trial and
tasked his staff to help resolve the Embassy land issue.


2. (C) The Ambassador made a farewell call on Vice-President
Jusuf Kalla February 15. The Ambassador praised Kalla's role
in creating the successful peace process in Aceh, and the
government's mature reaction to the election of a former GAM
member as governor as well as his speaking out in favor of
restoring order in Sulawesi. Kalla responded that while some
perceive violence in Sulawesi to be a big problem, he sees it
as a small one requiring a tougher approach. Kalla described
Governor Irwandi Yusuf in Aceh as well-educated and expressed
a certain amusement that the new governor would now have to
tackle the tough issues of governance. Kalla described the
issues in Aceh as not really having been ideological, but
centered on economics and equality.

Papua
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3. (C) The Ambassador cited the Papua region as an area
where economic issues were also significant, noting his
recent travel there. Kalla responded that the situation in
Aceh had been much harder than the current one in Papua. He
said that the people in Papua do not have a high level of
expectations; they need more aid and good living conditions.
The Ambassador replied that education and health were
important needs there and that Papua province Governor Suebu
had reached out to international donors to obtain expertise
to enhance government delivery of services. The Governor
says he has the funding but needs to develop implementation
mechanisms. USAID representatives will be traveling next
month to talk about what assistance might be provided.


4. (C) Kalla told the Ambassador that the government decided
the previous day that it should work to increase the welfare,
education and health of his people (note: a separate source
later confirmed that Papua had been a Cabinet meeting topic.)
The central government would need to focus on two major
areas: building two major roads in the region (one east/west
and the second north/south) and to provide better airports so
that transport in the region would be greatly improved.
Other services would be the focus of the provincial
governments.


5. (C) The Ambassador noted that there was increased
Congressional interest in events in Papua. He noted that the
chairman of House Foreign Affairs Asia Subcommittee,
Mr. Faleomavaega, was considering a visit. Kalla welcomed
the possibility, saying that it would provide a clearer
picture of the situation. Noting the strong reaction of
Indonesian parliamentarians to calls for Papuan independence,
Kalla added that he was less concerned about such statements.
He said that he tells Indonesian legislators that if one of
them called for the independence of Hawaii or Alaska from the
U.S., it would have no practical effect on the ground. The
U.S. would ignore it. Similarly, any such calls from an
American legislator should not worry them, Kalla stated.

Trafficking in Persons
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6. (C) Citing Kalla's role as head of Golkar, the Ambassador
noted the planned adoption of a new trafficking in persons
bill within the legislature. It has been under consideration
for several years and its passage would be helpful on an

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important issue. Kalla replied that Indonesian
parliamentarians spend too much time talking about activities
of the central government and need to focus more on other
things. There is talk that they would spend half their time
on legislation and half on the budget in the future. Kalla
said the problem is that it is easier for them to try to
supervise government activities than to act themselves.

Newmont Trial
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7. (C) The Ambassador reminded Kalla that the trial of
Newmont president Richard Ness remains a bellwether in the
business community about the investment climate within
Indonesia. We had attended every session of the trial, and
it was clear that the prosecution's case had no substance.
The outcome of this case has to be an acquittal. Kalla
replied that he would check on the situation with Minister of
Law Hamid Awaluddin.

ExxonMobil Natuna bloc
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8. (C) The Ambassador told Vice-President Kalla that
ExxonMobil is interested in a standstill agreement on work on
the bloc until new terms could be negotiated. Kalla replied
that the GOI had asked for new terms but ExxonMobil did not
give its position. New conditions would be required. The
previous deal that gave ExxonMobil a 100 percent to zero
percent split of the revenue (note: in the early years of
exploitation) was not acceptable when gas prices have risen
to the equivalent of 60 USD for oil. That split could not
stand.


9. (C) The Ambassador replied that the company was happy to
negotiate a deal but that for legal reasons a standstill
agreement was needed. They were frustrated by press reports
quoting government officials as asserting that there are
ongoing negotiations when they had not yet commenced. Kalla
replied that ExxonMobil had three months to come to
acceptable terms or else the bloc would be put out for a new
public tender. When the company offered new terms, the
negotiations could be finished within a month. They must
agree to forget the original terms of the concession.


10. (C) Kalla emphasized his point by citing a conversation
he had had with then Secretary Powell. Kalla recounted that
he said that in order for democracy to work in developing
countries, they had to have economic opportunities or else
they would go backwards. The Ambassador replied that
changing agreements signaled risks for outside investors.
Kalla rejoined that politically it was impossible to back the
original contract: opponents of the government would call to
support a future radical president, citing the success of
Presidents Chavez in Venezuela or Morales in Bolivia. If the
current agreement were implemented the GOI would be open to
charges that they allowed a "bad" U.S. company to cheat
Indonesia of its wealth. How could the government respond?
A response in favor of the U.S. firm could be much more
costly down the line. The Ambassador replied that foreign
businessmen looked to Kalla to understand the important role
that business plays in society. There had been previous
cases from a few years ago of businesses subject to arbitrary
actions and that Indonesia's reputation needs still to
recover from such events. Kalla expressed the belief that
Indonesia could match growth rates in India or China.

New Office Building for the Embassy
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11. (C) The Ambassador closed by seeking Kalla's support in
persuading the Ministry of Finance to provide a price for
land situated within the Chancery compound (which directly
adjoins the Vice-President's office) not owned by the USG.
Obtaining such a price was important for our budget process
and planned construction of a new embassy. Kalla instructed
his staff to follow-up on the issue.
PASCOE