INDONESIANS PROTEST PLANNED FUEL PRICE HIKES

C O N F I D E N T I A L JAKARTA 000943 SIPDIS DEPT FOR EAP, EAP/MTS, EAP/MLS, DS/IP NSC FOR E. PHU E.O. 12958: DECL: 05/13/2018 TAGS: PGOV PINS ASEC ID SUBJECT: INDONESIANS PROTEST PLANNED FUEL PRICE HIKES REF: JAKARTA 928 Classified By: Pol/C Joseph Legend Novak, reasons 1.4 (b+d). ¶1. (C) SUMMARY: Thousands of Indonesians demonstrated in Jakarta on May 12 protesting GOI plans to increase fuel prices. The largest rally took place in front of the Presidential Palace. The rallies were peaceful. The Indonesian legislature is also heatedly debating the matter, with the balance of opinion opposing the government. Under fire, the GOI is conducting a public relations campaign focused on ways to sell its plans. Given all of the opposition, it is not clear whether the government will move forward. END SUMMARY. ¶2. (U) TAKING IT TO THE STREETS: Thousands of Indonesians demonstrated in Jakarta on May 12 over GOI plans to increase fuel prices. The largest rally took place in front of the Presidential Palace. The march was peaceful but vocal, with rally goers energetically condemning the government. Marches also reportedly took place in Medan, Surabaya, Riau and East Kalimantan. (Note: Reftel reviews recent protests on the same issue in Makassar, South Sulawesi.) ¶3. (C) LEGISLATURE DEBATES MATTER: Back from recess, the Indonesian legislature (DPR) is debating the proposal. (Note: The legislature, technically, has no role in approving the proposals since the administration is free to take steps to lift the subsidies.) Based on what we understand, the balance of opinion in the DPR strongly opposes the government's plans. Golkar--which is the largest party and a member of the President's governing coalition--is split on the matter, for example. Meanwhile, the key party in the opposition, the Indonesian Party of Democratic Struggle (PDIP),is stridently attacking the government's plans. ¶4. (SBU) GOI EFFORTS: The GOI is attempting to counter the bad publicity with a public relations campaign that highlights a cash transfer program and other "pro-poor" policies that the GOI plans to unveil along with the fuel price hike. Economists and GOI officials have told us that the fuel subsidy program mostly benefits the rich. The World Bank estimates that the richest 10% of the population use 40% of the fuel subsidy. The GOI would use about half of the fuel subsidy savings for a cash transfer program that would give Rp 100,000 ($11) per month to 19.1 million poor families. In addition, the GOI would increase the subsidized rice program, which totals about $450 million. The Minister for Social Welfare, Aburizal Bakrie, went as far as to say that the poverty rate could be decreased from 16% to 14-15% with these "pro-poor" policies. ¶5. (C) WILL THEY GO THROUGH WITH IT?: GOI plans to hike the price of fuel make economic sense. That said, given all of the opposition, it is not clear whether the government will move forward with its plans. We have heard from some contacts that the GOI--which is notoriously risk averse--is very sensitive about the politics of the situation and may well back down. If it does move forward, the government will certainly face more political protests. HUME