"STRANGE BEDFELLOWS" -- PRESIDENT YUDHOYONO

C O N F I D E N T I A L SECTION 01 OF 02 JAKARTA 000826

SIPDIS

DEPT FOR EAP, EAP/MTS, EAP/MLS, EAP/RSP;
NSC FOR E. PHU

E.O. 12958: DECL: 05/12/2019
TAGS: PGOV PDEM ID
SUBJECT: "STRANGE BEDFELLOWS" -- PRESIDENT YUDHOYONO
WORKING WITH FORMER PRESIDENT MEGAWATI ON ELECTION COALITION

REF: A. JAKARTA 820

B. JAKARTA 804 AND PREVIOUS

Classified By: Pol/C Joseph L. Novak, reasons 1.4(b+d).


1. (C) SUMMARY: President Yudhoyono and former president
Megawati have seemingly declared a detente in their
longstanding political cold war and begun serious coalition
talks ahead of the July presidential election. As a quid pro
quo for Megawati abandoning her quest for the presidency to
support Yudhoyono, the President would offer Megawati's party
a number of seats in the new Cabinet. This alliance seems to
position Central Bank Governor Boediyono as the strongest VP
running mate prospect for Yudhoyono. All that said, the
situation is fluid and things could realign again before
Yudhoyono formally announces his ticket on May 15. END
SUMMARY.

FIERCE OPPONENTS BURYING THE HATCHET?


2. (C) In an unexpected political move, President Susilo
Bambang Yudhoyono has reached out to former President
Megawati Sukarnoputri to explore forming a coalition ahead of
the July presidential elections. Following talks between
Yudhoyono's Partai Demokrat (PD) and Megawati's Indonesian
Party of Democratic Struggle (PDI-P) held over the weekend of
May 8-10, Yudhoyono stated on May 10, "There appears to be
goodwill between the two parties to communicate, so we're
beginning substantial talks, and if possible, reconciliation."


3. (C) If Megawati joins with Yudhoyono, it would be a
political shocker. One contact told us that the two would be
the ultimate in "strange political bedfellows." Megawati has
held a grudge against Yudhoyono since 2004 when he resigned
as her security minister to make a successful run for
president, defeating Megawati. Yudhoyono made the first
gesture to mend fences on May 6 when he sent his trusted
State Minister Hatta Rajasa to Megawati's home. This meeting
also was attended by PDI-P Advisory Board Chair Taufik Kiemas
(Megawati's husband) and PDI-P Secretary General Pramono
Anung. Talks on finding common ground and sharing of Cabinet
positions have intensified through May 12.


4. (C) Up until May 6, Megawati had been expected to
announce retired General Prabowo Subianto, head of the
Gerindra Party, as her running mate. However, the
notoriously irascible Prabowo was vacillating and apparently
leaning towards launching his own presidential bid, not
liking the prospect of being number two on a ticket with
Megawati. PDI-P seems to have decided to drop Prabowo, his
fickle behavior and poor human rights record not boding well
for a lasting partnership. If PDI-P does indeed abandon
their possible partnership, Prabowo seems to have slim
chances of forming a coalition to run for president. (Note:
Megawati was a strong opponent of the Suharto regime; Prabowo
one of its strongest defenders, including via the employment
of violent methods such as the kidnapping of opposition
members. Given this historical chasm, critics have said that
the possible link up with Prabowo would have meant a big loss
in crediblity for Megawati.)


5. (C) With Prabowo apparently out, Megawati was left with
few alternatives to form a coalition large enough to meet
Indonesia's complicated threshold requirements to run for
president. (Note: PDI-P received only 14% of the vote in
the April parliamentary elections and needs partners.)
Golkar (another major party) had already announced that VP
Jusuf Kalla would run with retired General Wiranto of the
Hanura Party and PD had an apparent lock on a coalition with
all the other major parties.


6. (C) Megawati has demanded a high price for her
allegiance. Yudhyoyono reportedly offered PDI-P a half dozen
ministerial slots plus a position for Megawati as the Chair
of the Presidential Advisory Council. Speculation is that
Cabinet seats would go to the capable PDI-P Chair Pramono
Anung and Megawati's daughter, Puan Maharani, who came in
first for PDI-P in Parliamentary elections for the electoral
district of Solo, Central Java.


7. (C) Opinions are mixed as to how a PD/PDI-P coalition
might affect Yudhoyono's government (if he is indeed
re-elected later this year). PDI-P is patronage-oriented,
built around Megawati. It has a strong grassroots network,
however, and many dynamic younger leaders who could emerge in
the next five years as Megawati's star fades. PDI-P is

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strong on religious pluralism but weak on market-oriented
reforms, tending towards protectionism. It tends to be
hawkish on national unity issues such as Aceh and Papua. A
coalition with PDI-P might make it easier for Yudyhoyono to
get legislation through Parliament since PDI-P has often been
a major impediment to Yudhoyono's legislative initiatives.


CENTRAL BANK GOVERNOR AS VP?


8. (C) In addition, a PD/PDI-P coalition would alter
Yudhoyono's VP running mate scenario. (Note: Yudhoyono has
made clear that he does not plan to choose current VP, Jusuf
Kalla, as running mate again.) The leading candidate had
been Hatta Rajasa (ref B),but he would be less acceptable to
PDI-P since he comes from the National Mandate Party (PAN).
PAN is an Islamic-leaning party, which makes the
secular-oriented PDI-P nervous. In the meantime, Bank of
Indonesia (Central Bank) Governor Boediyono's stock as a
running mate possibility has again risen. A talented
economist, he served as Finance Minister under Megawati and
is said to be liked by her. While Boediyono is purely a
technocrat with no political party base, PDI-P's support
would more than make up for that.


9. (C) Boediyono (one name only) has a reputation for
integrity. He had a prestigious career as an economist,
including with Bank of America in Jakarta, State Minister for
National Planning and Development under President Habibie,
Finance Minister 2001-2004 under Megawati, and as Central
Bank Governor since 2008. He has written several economics
textbooks. He has a degree in economics from the elite Gajah
Mada University in Yogyakarta, a masters in economics from
Monash University in Melbourne, and a PHd in business
economics from Wharton School at the University of
Pennsylvania. He speaks fluent English.

SITUATION FLUID


10. (C) The situation is fluid and things could yet realign
before Yudhoyono formally announces his ticket on May 15.
Already there is word that some Islamic-oriented parties are
not happy with a PD-PDIP link-up and are threatening to bolt
from Yudhoyono's coalition. If President Yudhoyono can keep
everyone on board--and add PDI-P to his coalition, he will be
in a formidable position as he goes into the July
election--and he already has a huge lead in the polls.
HUME