U/S BURNS'S DECEMBER 11, 2009 MEETING WITH

UNCLAS SECTION 01 OF 02 JAKARTA 002069 SENSITIVE SIPDIS DEPT FOR EAP, EAP/MTS, EAP/MLS, EAP/RSP NSC FOR J.BADER E.O. 12958: N/A TAGS: PREL PGOV ECON EINV EAID OVIP BURNS WILLIAM ID SUBJECT: U/S BURNS'S DECEMBER 11, 2009 MEETING WITH INDONESIAN VICE PRESIDENT BOEDIONO ¶1. (SBU) December 11, 2009; 9:00 a.m.; Vice Presidential Palace; Jakarta, Indonesia ¶2. (SBU) Participants: U.S. -------------- Under Secretary William Burns Ambassador Cameron R. Hume, Embassy Jakarta Scot Marciel, EAP Deputy Assistant Secretary of State Ted Osius, Deputy Chief of Mission, Embassy Jakarta Laura Rosenberger, Special Assistant Peter Haas, Embassy Jakarta Economic Counselor (notetaker) INDONESIA -------------- Vice President Boediono Djohermansyah Djohan, Deputy for Political Affairs, Office of the Vice President Mohammed Ikshan, Deputy for Economic Affairs, Office of the Vice President Notetaker, Office of the Vice President ¶3. (SBU) Summary: Indonesian Vice President Boediono wants concrete progress under the Comprehensive Partnership before President Obama's planned 2010 visit. In a December 11 meeting with Under Secretary Bill Burns, VP Boediono discussed how to advance our partnership on trade and investment, a Millennium Challenge Account compact, climate change, science and technology, and education. On domestic matters, VP Boediono dismissed the Bank Century case as political sniping. End Summary. -------------- Concrete Actions Needed -------------- ¶4. (SBU) Vice President Boediono told Under Secretary Burns that Indonesia wanted concrete progress on specific projects under the Comprehensive Partnership in advance of President Obama's likely visit in 2010. He and U/S Burns agreed that we should seek to expand the range of our partnership in trade and investment, education, health, environment, and global issues. U/S Burns laid out several specific goals: the signing of a Science and Technology Agreement within the next two months; increasing the number of Indonesian students in the U.S.; and joint work on land-use management and peat to enable Indonesia to reduce its emissions. VP Boediono asked for a list of pending issues that would benefit from his involvement. -------------- Direct Investment Crucial to Growth -------------- ¶5. (SBU) VP Boediono assessed that the Indonesian economy is doing well but he wants to accelerate growth to seven percent per annum. He said that Indonesia needs to attract $200 billion of investment, much of it foreign, in order to reach its target growth rate. Indonesia's strengths are its democratic institutions, huge domestic economy, and strong economic leadership. VP Boediono acknowledged, however, that poor transport and power infrastructure prevents Indonesia from being considered on par with the BRICs. U/S Burns suggested that the U.S. could look into both military and civilian opportunities to cooperate to upgrade Indonesia's infrastructure. ¶6. (SBU) U/S Burns said many U.S. firms are interested in Indonesia, but the investment climate keeps them away. One modest step that would help improve confidence of U.S. companies would be an updated Overseas Private Investment Corporation investment incentive agreement. He urged conclusion of an updated OPIC agreement before President Obama's visit. This would be a symbol to U.S. companies that Indonesia wants their investment. Ambassador Hume explained that two issues remain: the inclusion of a foreign government approval clause and the definition of political risk. VP Boediono pledged to look into the matter. ¶7. (SBU) U/S Burns informed VP Boediono that the Millennium Challenge Corporation Board agreed the previous day to reselect Indonesia as compact-eligible. He added, however, that because Indonesia had graduated to lower middle income status, it is imperative to move quickly towards a compact or risk competing with other countries for fewer resources. U/S Burns said Indonesia should develop concept papers for JAKARTA 00002069 002 OF 002 possible projects over the next six months. ¶8. (SBU) VP Boediono underscored that Indonesia has the potential to play a more important role internationally as a member of the G-20. VP Boediono assessed, however, that Indonesia was diplomatically punching below its economic weight, and would need to do more in order to participate more fully in the G-20 and other forums. U/S Burns pointed out that the Comprehensive Partnership provided a mechanism for increased bilateral consultations, including on the G-20. Climate change is another global challenge where increased U.S.-Indonesia cooperation would be important, and U/S Burns praised Indonesia's very impressive targets, which send a positive signal to others. ¶9. (SBU) U/S Burns noted the importance of education to economic growth, and pointed to this as another area for increased U.S.-Indonesia cooperation. VP Boediono agreed, noting the important role that public libraries with books translated from English had played in his own education. U/S Burns noted that the digital age provided more opportunities for such cooperation, and also urged increasing the opportunities for Indonesians to study in the United States. U/S Burns also noted that the Science and Technology agreement under negotiation would serve both U.S. and Indonesian interests. The MOU was very close to agreement, and Burns urged finalizing it in the next two months. -------------- Political Sniping -------------- ¶10. (SBU) There is still demand for ending corruption, and VP Boediono noted that good governance was a key theme in President Yudhoyono's and his campaign. He said that legal reform will be central to the government's 100-day plan, especially the elimination of the "legal mafia" -- people who made money by fixing cases. Ambassador Hume said that the U.S. provides support to all of the players in Indonesia's anti-corruption efforts, including the Corruption Eradication Commission, the National Police, the Attorney General's office, the Supreme Court, and the financial intelligence unit. VP Boediono admitted that the political instability surrounding the Bank Century case could have a negative impact on the economy. He characterized the case as political sniping, concluding that he is ready to fight charges of wrongdoing. ¶11. (U) U/S Burns has cleared this message. HUME