SUGGESTED THEMES FOR GEITHNER-SRI MULYANI PULL ASIDE ON

UNCLAS JAKARTA 000427 SENSITIVE SIPDIS DEPARTMENT FOR EAP/MTS, EEB/IFD TREASURY FOR M.NUGENT, T.RAND SINGAPORE FOR S. BAKER E.O. 12958: N/A TAGS: EFIN ECON EAID ID SUBJECT: SUGGESTED THEMES FOR GEITHNER-SRI MULYANI PULL ASIDE ON MARGINS OF G-20 FINANCE MINISTERS MEETING REF: A) Jakarta 418 B) SECTO 9 C) SECTO 10 Sensitive But Unclassified. Not for Internet Distribution. ¶1. (SBU) Indonesian Finance Minister Sri Mulyani Indrawati will use her pull aside with Treasury Secretary Geithner to repeat Indonesia's requests made by Indonesian President Yudhoyono and Foreign Minister Wirajuda during Secretary Clinton's February 18-19 visit. Embassy recommends that Secretary Geithner congratulate Indonesia for its successful management of the financial crisis and look for ways to coordinate our positions on changes to the international regulatory framework. ¶2. (SBU) Numerous Indonesian officials have said that Sri Mulyani will likely ask Secretary Geithner about the status of Indonesian requests for economic assistance to the U.S. relayed to Secretary Clinton during her recent visit to Jakarta (reftel). Indonesia requested that the United States Federal Reserve provide a bilateral currency swap line. Sri Mulyani will also likely reiterate Indonesian officials' request for U.S. support for a capital increase for the Asian Development Bank and may ask whether the U.S. could agree to a bilateral add-on to the World Bank-led contingency financing package approved on March 3. ¶3. (SBU) We recommend that Secretary Geithner congratulate Sri Mulyani for Indonesia's successful management of the crisis to date. Sri Mulyani has led Indonesia to some sound policy decisions (quick action to increase liquidity, approval of a fiscal stimulus package equal to 1.4% of GDP, and successful domestic and global bond issuances) and also faced down some direct challenges to her authority (she reportedly threatened to resign over an attempt to overturn her decision to resume public trading of a company controlled by a fellow cabinet member). And she proactively sought contingent World Bank financing. She has not, however, been a public voice against increasing trade barriers in Indonesia. ¶4. (SBU) Sri Mulyani is also a potential ally against attempts to develop overly restrictive global financial regulations. She is concerned that developing countries will be unable to effectively implement some of the regulations currently being proposed. HEFFERN