YUDHOYONO WINS MANDATE TO PURSUE REFORM AGENDA

C O N F I D E N T I A L SECTION 01 OF 02 JAKARTA 000665 SIPDIS DEPT FOR EAP, EAP/MTS, EAP/MLS, EAP/RSP; NSC FOR E.PHU E.O. 12958: DECL: 04/13/2019 TAGS: PGOV KDEM ID SUBJECT: YUDHOYONO WINS MANDATE TO PURSUE REFORM AGENDA REF: A. JAKARTA 658 AND PREVIOUS ¶B. (08) JAKARTA 2157 Classified By: A/Pol/C Stanley J. Harsha, reasons 1.4(b+d). ¶1. (C) SUMMARY: With President Yudhoyono's Partai Demokrat (PD) apparent outright victory in the April 9 national legislative elections, Yudhoyono is positioned to push ahead on his reform agenda. He has the upper hand, stating that parties which want to join his next coalition will need to sign a "contract" agreeing to play by his rules. While PD is likely to gain enough seats in Parliament (DPR) for Yudhoyono to run on the PD ticket without a coalition, he needs a strong coalition both to stave off serious competition for President and to have the legislature's support for his agenda. Yudhoyono is most likely to choose a coalition similar to the current one but will have more power to call the shots, and, hopefully, enforce more discipline from his ministers. He knows that his legacy will depend on his reform agenda succeeding during his final term in office. END SUMMARY. THE NEED FOR CONSENSUS ¶2. (SBU) With reliable" quick count" surveys indicating that PD got over 20% of the vote for the DPR (ref A),Yudhoyono wasted no time in setting down markers for the next PD coalition. In an April 10 statement he said the first coalition lacked sufficient consensus, adding that the next coalition requires more order. He said "rules" are needed to avoid "clashes between the government and the coalition within the legislature, indeed within the cabinet itself." He called for a "clear political contract" which will lay out these rules, which he will offer "in good faith" to potential coalition partners. He added that if the ministers cannot support the Government they should be replaced, as in other countries. COALITION BUILDING ¶3. (C) Following this statement, the current coalition partners made positive overtures to Yudhoyono. The biggest coalition partner, secular Golkar Party, stated that a continued Yudhoyono-Vice President Jusuf Kalla team is a possibility. Center/right Islamic-oriented Prosperous Justice Party (PKS) said there is a strong possibility they will stay with Yudhoyono. The two moderate Islamic-oriented parties, National Awakening Party (PKB) and National Mandate Party (PAN),also are likely to want to stay with the coalition. The conservative United Development Party (PPP) is unlikely to stay in the coalition. ¶4. (C) PPP Chair Surya Darma Ali, appointed Minister of Cooperatives in return for PPP support, has been a thorn in Yudhoyono's side, opposing his policies, promoting radical Islam, and even endorsing former President Megawati. Presidential spokesman told DCM that Ali will lose his seat. Some others who reform-minded observers would like to see exit are Sports Minister Adyaska Dault (PKS),Minister of Forestry M.S. Kaban (PBB),Minister of Health Fadlilah Supari (unaffiliated),and Economics Coordinating Minister Aburizal Bakrie (Golkar). Much will depend on bargaining over the next few weeks and how willing each of these parties is to support Yudhoyono's agenda. Overall, Yudhoyono appointed a strong economic and security cabinet during his first term, with many of the others embarrassments appointed as political payback. ¶5. (C) While several constellations are possible, and it is too early to guess what Yudhoyono is thinking, most political observers believe he will keep the current coalition largely intact. Golkar's weight is needed to anchor PD's strength among secular supporters. PKB and PAN would burnish Yudhoyono's moderate Muslim credentials. PKS would appeal to a more conservative base while at the same time bolstering his reform agenda to fight corruption. Such a coalition would give Yudhoyono backing of parties which got about 55% of the April legislative vote, including PD (ref A). ¶6. (C) Yudhoyono must also factor competition for the July Presidential elections into his considerations of coalition-building. Megawati's Indonesian Democratic Party of Struggle (PDI-P) is already courting the two small populist/secular parties, Hanura and Gerindra, headed by former generals. This coalition would not pose a serious threat. However, a Golkar/PDI-P/Hanura/Gerindra coalition could pose a serious challenge to Yudhoyono, particularly in the first round (If no one gets more than 50% in the first JAKARTA 00000665 002 OF 002 round, a run-off is held among the two top vote-getters.) ¶7. (C) Several options are open to Yudhoyono for his choice of running mate, but Kalla remains the most viable. They are a proven team and poll well together, despite Kalla's links to Golkar's unsavory "old boys club." Kalla also knows how to handle radical Muslim groups and was influential in domestic peace accords. Alternatively, Yudhoyono could pick another Golkar powerbroker, such as the personable former chair Akbar Tanjung (possible) or House Speaker Agung Laksono (unlikely). ¶8. (C) Yudhoyono also could choose a competent technocrat such as Finance Minister Sri Mulyani Indrawati, a bold but unlikely move since she would bring no political party support and she does not poll well. There is some talk of Yudhoyono pairing with the popular PKS figure, Hidayat Nur Wahid, but observers agree this also is unlikely-PKS did not do well enough in the legislative elections to earn a VP spot and Wahid would alienate Yudhoyono's moderate, secular base. A senior Presidential advisor told DCM on April 13 that Yudhyono's camp is debating whether the VP candidate should be non-Javanese (like Kalla) or a woman (like Sri Mulyani). Yudhoyono's options are legion. ¶9. (C) Regardless of whom Yudhoyono selects, he wants to use his popularity to leave a reform legacy. Yudhoyono is now in a commanding position to form a new coalition on his terms. He can weed out some of the cabinet ministers who are impeding reform, those forced upon him by other political parties in return for their support. He will need to compromise but the reform agenda can be expected to accelerate in his second term. ¶10. (C) PD did well in the legislative elections in large part because of Yudhoyono's own popularity. He cannot run again in 2014, and PD, in the word of one leading political observer, is a "bubble party" which cannot survive without Yudhoyono. Yudhoyono has five years to build PD into a force that would outlast his administration. HUME