MCC FY10 INDONESIA SCORECARD A "SHOCKER"

UNCLAS JAKARTA 001811 STATE FOR EAP/MTS, EAP/EP, EEB/IFD/ODF AIDAC FOR ANE, EGAT USTR FOR (EBRYAN) TREASURY FOR (BPELTON) SENSITIVE SIPDIS E.O. 12598: N/A TAGS: EAID PREL PGOV ETRD ECON KMCA MCC ID SUBJECT: MCC FY10 INDONESIA SCORECARD A "SHOCKER" REF: STATE 108510 ¶1. (SBU) SUMMARY. AN EMBASSY OFFICIAL DELIVERED THE MCC FY10 SCORECARD FOR INDONESIA TO THE GOVERNMENT OF INDONESIA (GOI) ON TUESDAY OCTOBER 27, 2009. A SENIOR INDONESIAN OFFICIAL EXPRESSED SHOCK AT THE RATINGS AND DEEP CONCERN OVER PUBLIC PERCEPTIONS IT MIGHT TRIGGER. THE OFFICIAL WORRIED THAT THE ANNOUNCEMENT OF THE RATINGS COULD DAMAGE THE U.S.-INDONESIAN RELATIONSHIP IF NOT HANDLED WELL. THE GOI IS FULLY SUPPORTIVE OF EFFORTS TO OBTAIN A GRACE PERIOD AND APPRECIATIVE OF THE UPCOMING MCC VISIT AS A SIGN OF SUPPORT. PLEASE SEE ACTION REQUEST IN PARA 6. END SUMMARY ¶2. (U) THE MCC INDONESIA SCORECARD WAS DELIVERED TO DR. IR. LUKITA DINARSYAH TUWO, DEPUTY MINISTER FOR DEVELOPMENT FUNDING AFFAIRS IN THE NATIONAL DEVELOPMENT PLANNING AGENCY (BAPPENAS) ON TUESDAY OCTOBER 27, 2009. REFTEL POINTS WERE COVERED. DR. LUKITA ACCEPTED RESPONSIBILITY FOR FURTHER DISSEMINATION OF THE SCORECARD WITHIN THE GOI. ¶3. (SBU) DR. LUKITA WAS CLEARLY SHOCKED BY THE RESULTS. WHILE HE KNEW INDONESIA NEEDED TO CONTINUE TO MEET MCC REQUIREMENTS, HE HAD NOT FOCUSED ON THE CONSEQUENCES OF GRADUATING TO A HIGHER INCOME GROUP ON THE STANDARDS TO BE MET. HE WAS ESPECIALLY DISTRESSED BECAUSE INDONESIA HAD CONTINUED TO IMPROVE ITS PERFORMANCE, HAD ESTABLISHED A SPECIAL UNIT TO WORK ON THE COMPACT, HAD FUNDS IN THE APPROVED BUDGET FOR NEXT YEAR FOR COMPACT DEVELOPMENT, WAS SET TO PRESENT THE RESULTS OF A CONSTRAINTS ANALYSIS, WAS PREPARING FOR THE MCC TEAM VISIT, AND WAS PLANNING A SERIES OF PUBLIC FORA TO DISCUSS THE CONTRAINTS ANALYSIS AND POSSIBLE PROJECTS. ¶4. (SBU) HE EXPRESSED DEEP CONCERN OVER POSSIBLE INTERNAL GOI REACTIONS AND THOSE OF THE PUBLIC. HE FORESAW POSSIBLE NEGATIVE IMPLICATIONS FOR THE BILATERAL RELATIONSHIP WHEN NEWS OF THE RATINGS BECOMES PUBLIC. INDONESIAN ELIGIBILITY FOR A MCC COMPACT HAD BEEN WIDELY DISSEMINATED AND CITED AS AN IMPORTANT STEP IN U.S. INDONESIA RELATIONS. UNLESS CAREFULLY HANDLED THE NEW SCORECARD COULD DO HARM TO THAT RELATIONSHIP. ¶5. (U) DR. LUKITA FULLY SUPPORTS MCC EFFORTS TO SEEK A LEGISLATIVE FIX WHICH WILL ALLOW A GRACE PERIOD FOR ADJUSTMENT. HE ALSO EXPRESSED APPRECIATION FOR THE PLANNED NOVEMBER VISIT OF THE MCC TEAM AS A SIGN OF CONTINUED MCC SUPPORT. ¶6. (U) ACTION REQUEST. VIA SEPTEL THE EMBASSY WILL PROVIDE DRAFT PRESS GUIDANCE FOR WASHINGTON CLEARANCE FOR USE WHEN THE RATINGS ARE RELEASED. HUME 1