Indonesia: Domestic Politics, Strategic Dynamics, and American Interests

Indonesia: Domestic Politics,
Strategic Dynamics, and American Interests
Updated June 17, 2008
Bruce Vaughn
Analyst in Southeast and South Asian Affairs
Foreign Affairs, Defense, and Trade Division

Indonesia: Domestic Politics, Strategic Dynamics, and
American Interests
Summary
Indonesia is the world’s fourth most populous country and the most populous
Muslim nation. It is also a moderate Muslim state which is strategically positioned
astride key sea lanes which link East Asia with the energy resources of the Middle
East. Indonesia is also seen by many as a valuable partner in the struggle against
radical Islamist militants in Southeast Asia. Jakarta is continuing to democratize and
develop its civil society and rule of law under the leadership of President Susilo
Bambang Yudhoyono, who many view as reform-minded. However, a legacy of
abuse of human rights by the military which stems from the era of former President
Suharto remains unresolved.
United States foreign policy concerns have focused on building relations with
Indonesia to more effectively counter the rise of militant Islamist extremists, as well
as develop relations with a geopolitically important state. The United States has also
sought to promote democracy, the rule of law, and human rights in Indonesia in
addition to promoting American trade and investment interests there. There have
been several cases of avian flu in humans reported in Indonesia, and there have been
concerns that Indonesia does not have the resources sufficient to contain a large scale
outbreak should one occur.
This report surveys key aspects of Indonesia’s domestic politics and strategic
dynamics in addition to providing general background information on Indonesia. It
also provides an overview of the bilateral relationship between the United States and
Indonesia. The report examines issues of ongoing congressional interest, including
Indonesia’s role in the struggle against violent Islamist extremists, international
military education and training (IMET), human rights, religious freedom, promotion
of democracy and good governance, trade, foreign assistance, and regional
geopolitical and strategic interests. The report seeks to provide a broader context for
understanding the complex interrelated nature of many of these issues, several of
which are explored in greater detail in other CRS reports.

Contents
Recent Developments..............................................1
Lead up to Elections........................................1
Religious Freedom.........................................2
Bilateral Relations with the United States.......................3
Counterterrorism ..........................................3
Overview ........................................................3
Issues for Congress................................................4
Military-to-Military Ties and Human Rights.....................5
Avian Flu................................................6
Historical Background..............................................7
Political Transition.................................................8
Structure of Parliament.....................................9
The Role of the Military ............................................9
Autonomous and Secessionist Movements .............................10
East Timor..................................................11
Aceh .......................................................12
West Papua and Papua.........................................14
Inter-Communal Strife and Pan Islamic Movements......................16
The Economy....................................................18
The Environment.................................................20
Religious Freedom................................................21
Human Rights...................................................22
External Relations................................................23
The Struggle Against Terrorism.....................................24
United States-Indonesian Relations...................................26
Geopolitical and Strategic Interests...............................27
U.S. Security Assistance to Indonesia.............................27
The Tsunami............................................30
Options and Implications for the United States..........................30

Figure 1. Map of Indonesia.........................................34
List of Tables
Table 1. U.S. Foreign Assistance to Indonesia..........................29

Indonesia: Domestic Politics, Strategic
Dynamics, and American Interests
Recent Developments
Lead up to Elections. The political environment in Indonesia will
increasingly be shaped by the upcoming parliamentary and presidential elections
scheduled for 2009. It is thought that rising food and energy prices have to an extent
undermined popular electoral support for the president. There was reportedly
widespread discontent with his decision to increase the price of subsidized fuel by
28.7% in May 2008.¹ It is likely that President Susilo Bambang Yudhoyono’s
support from coalition partners beyond his own small Democrat Party will be
increasingly limited as elections near. Yudhoyono’s main rival is likely to be former
president Megawati Sukarnoputri. Yudhoyono’s popularity dropped in one poll held
10 days after the fuel price hike from 38.1% in December 2007 to 20.7% while
Megawati’s approval rate increased from 27.4% to 30.4% over the same period.²
Despite these factors, some observers believe that Yudhoyono may be reelected to
a second five-year term as president in 2009. Others are less sure. The election will
probably be a contest between well established political figures. Yudhoyono’s
political situation will also likely mean that he will be very cautious on Islamic issues
and economic policy in the run up to the polls.
The General Election Commission of Indonesia (KPU)³ has announced that it
is planning on shifting the general parliamentary election date to April 8 or 9, 2009.
The Indonesian House of Representatives (DPR) previously directed the KPU to set
the date. To be eligible to run in the parliamentary elections a party must have broad
representation in two-thirds of Indonesia’s 33 provinces. Much media attention has
been directed at the recent electoral performance of the Prosperous Justice Party
(PKS) that has a more Islamist agenda than the mainstream political parties in
Indonesia most of which are secular-nationalist based.⁴ Observers attribute their

¹ Yudhoyono’s Difficult Year Ahead,” Economist Intelligence Unit, May 30, 2008.
² “Indonesia President’s Popularity Drops on Fuel Price Hike,” Reuters, June 29, 2008.
³ Abbreviations for Indonesian entities are based on the Indonesian spelling.
⁴ This report uses the term Islamist, as opposed to Islamic, to connote a more radical
approach to Islamic affairs. The term Islamic is here used for that which pertains to Islam
and does not imply a radical agenda.

success in gubernatorial elections in West Java and North Sumatra to disillusionment
with the main established parties.⁵
The presidential election of 2009 will follow the parliamentary election three
months later and will likely be held in July 2009. The president is now directly
elected by popular vote. Under existing rules parties must have 3% of the seats of the
DPR to nominate a presidential candidate.⁶ In June 2008, the DPR was debating
proposed legislation that would change this requirement. The government’s proposal
to raise the threshold to 15% of House seats, or 20% of the popular vote for parties
or coalitions, was supported by Indonesian Democratic Party-Struggle (PDI-P) while
Golkar and the National Awakening parties favor an increase of the minimum
threshold for political parties or coalitions to 30% of House seats. Smaller parties,
such as the National Mandate Party prefer allowing all parties that qualify for
parliamentary election to be able to name presidential candidates.⁷
Religious Freedom. Indonesia’s reputation as a moderate Muslim nation has
come under scrutiny as the Ahmediya minority sect, as well as moderate groups that
support religious freedom, have come under attack by small religious extremist
groups in recent months.
The government’s response appears to seek to avoid alienating both religious
extremists and moderates. On the one hand, the government issued a decree banning
the sect from spreading its message. On the other hand, it pledged not to persecute
Ahmediya. Its move to arrest those extremists that used violence against moderates
demonstrating in support of religious tolerance also demonstrates the government’s
desire to place limits on how far the extremists can go.
Most Muslims do not believe Ahmadiyyah are true Muslims because they do not
believe that Mohammad was the last Prophet. Many see the issue as indicative of the
extent to which the government will bend to religious extremists at the cost of
minority groups’ rights to freedom of religion.
The extremist Komando Laskar Islam, thought to be affiliated with the Islamic
Defenders Front (FPI), attacked an alliance of moderate groups, known as the
National Alliance for Freedom of Religion and Faith, that was demonstrating
peacefully in support of religious freedom on June 1, 2008, at the Indonesian
National Monument Square (Monas) in Jakarta. The FPI has in the past been
involved with demonstration against the U.S. Embassy and the offices of Playboy
magazine. The FPI has also been responsible for past actions against Jakarta
nightclubs and pool halls.⁸ The moderates’ rally on June 1^st was seeking to “reclaim

⁵ “Indonesia: Country Report,” The Economist Intelligence Unit, May 2008.
⁶ “Indonesia’s General Election to be Held Either April 8 or 9: Commission,” Xinhua News
Agency, June 11, 2008.
⁷ “Parties Divided Over Presidential Election Threshold,” The Jakarta Post, June 2, 2008.
⁸ “Indonesia Detains 59 Muslim Radicals,” The Age, Melbourne, June 4, 2008.

political space for groups adhering to the secular state ideology Pancasila.” ⁹ The
Monas incident points to ongoing tension within the Indonesian polity between
pluralism and religious extremism. It is unclear just how widespread this is. Human
Rights Watch has called on President Yudhoyono to reverse the government decree
that allows persecution of Ahmadiyyah for “spreading interpretations and activities
which deviate from the principal teachings of Islam.”¹⁰
Bilateral Relations with the United States. Bilateral relations between
the United States and Indonesia at the state-to-state level have improved much in
recent years. This improvement in relations is seen to be the result of common¹¹
security concerns and the increasing democratization of Indonesia. While
diplomatic and security ties are closer, this sentiment is not necessarily mirrored by
public perceptions in Indonesia. According to one survey, 73% of Indonesians polled
believe it is the goal of the United States to “weaken and divide the Islamic world.”¹²
The U.S. Naval Medical Research Unit (NAMRU-2) provides a “forward
presence that combines virology, microbiology, epidemiology, immunology,
parasitology, and entomology into a comprehensive capability to study tropical¹³
diseases where they occur.” The Indonesian public, and a growing number of
politicians, government officials, and some experts, are coming to view the
NAMRU-2 lab as not in the interest of Indonesia. Some Indonesian experts have
deemed current cooperation on NAMRU-2 as not having clear goals for Indonesia¹⁴
and not concerned with the health priorities of Indonesia.
Counterterrorism. The operational capabilities of the terrorist group Jemaah
Islamiya (JI) are thought to be much reduced in Indonesia and the region largely due
to ongoing efforts by the Indonesian government in pursuing it.

⁹ Fatima Astuti, “Fallout From Jakarta’s Monas Incident: What is to Be Done with Fringe
Groups?” RSIS Commentaries, Singapore, June 11, 2008. Pancasila, or the five principles,
refers to the official political ideology of Indonesia. The five principles are: belief in one
God, humanitarianism, the unity of Indonesia, consultative and representative Democracy,
and social justice.
¹⁰ “Reverse Ban on Ahmadiyyah Sect,” Human Rights Watch, June 10, 2008.
¹¹ Joe Cochrane, “Visit to Mark Closer Ties with Jakarta; Military Cooperation Grows as
U.S. Concerns on Rights Issues Recede,” The Washington Post, November 19, 2006.
¹² World Public Opinion, “Muslims Believe US Seeks to Undermine Islam,” April 24, 2007.
¹³ Naval Medical Research Uit 2, Jakarta, Indonesia, [http://www.navy.mil/namru_2.htm]
¹⁴ “NAMRU-2 Disadvantageous Indonesia,” Septutar, June 3, 2008 as reprinted in U.S.
Embassy Indonesian News Roundup, June 3, 2008.

Overview
Indonesia is the world’s most
populous Muslim nation and is the
Indonesia at a Glanceworld’s fourth most populated
nation overall after China, India and
^P^o^pula^t^io^n:^{245 m}^illion^w^ith^{a g}^r^ow^th^{rate of}^1.3%the United States. Its population is
^Lⁱ^{fe ex}^pectancy:^70.46growing by approximately three
^Area:^{1,826,440 s}^q^{. k}^m^(abou^t^t^h^{ree t}ⁱ^m^es^t^h^e^sⁱ^zemillion people a year.¹⁵ It has
^of^T^e^x^a^s⁾
^G^e^ograp^h^y^:^Aⁿ^arch^ipelag^{ic s}^t^{ate of}^17,000extensive natural resources. A large
ⁱ^s^l^aⁿ^d^s^,ⁱⁿ^cl^u^dⁱⁿ^g^s^o^m^e^{6,000 occu}^pi^{ed i}^s^l^aⁿ^d^s^,percentage of world trade transits
^Ca^pita^l:^J^a^k^a^r^t^{a, 8}^.⁸^m^illioⁿthe strategically important straits of
^Et^{hnic G}^r^o^ups:^{490 et}^hⁿⁱ^{c g}^r^ou^ps^,^Jav^aⁿ^e^s^e^45%^,Malacca which link the Indian
^S^uⁿ^d^an^es^{e 14%}^{, Madu}^res^e^7.5%^{, c}^o^as^t^a^l^Mal^a^yOcean littoral to the South China
^7.5%^{, ot}^h^e^rs^26%^.
^La^ng^ua^g^e^s:^B^h^as^{a In}^don^es^{ia, offi}^{cial m}^odifⁱ^edSea and the larger Pacific Ocean
^f^o^rm^of^Malay^,^an^{d local dialects}^inc^l^udⁱⁿ^g^m^aⁿ^ybasin. Indonesia is also perceived
^A^u^st^r^o^ne^si^aⁿ^aⁿ^d^P^a^p^u^aⁿ^l^a^ngua^ge^s.¹³^l^a^ngua^ge^sby many as the geopolitical center
^h^a^v^e^o^v^er^oⁿ^{e m}^illioⁿ^sp^eak^er^s.of the Association of Southeast
^Lⁱ^{teracy Rate:}^90.4%
^Relig^io^n:^approxⁱ^m^at^el^y^86.1%^Mu^s^lⁱ^m^.Asian Nations (ASEAN), which is
^G^D^{P grow}^th^:^5.9%^{2008 es}^t^.a key actor in the geopolitical
^{Per capit}^a^G^D^{P purchas}^{ing pow}^{er parity:}^$3,834dynamics of the larger Asia-Pacific
^Unem^ploym^{ent rate:}^11.8%region. Indonesia is still emerging
^M^a^{in ex}^ports^:^{Oil, n}^a^tu^r^a^{l g}^a^{s, ap}^p^lian^{ces, tex}^tilesfrom a period of authoritarian rule
^{Natural res}^ources^:^p^e^tr^o^l^eu^m^,^tin^{, n}^a^tu^r^a^{l g}^a^s,and is struggling to consolidate its
ⁿⁱ^ck^el^{, t}ⁱ^m^{ber, copper, s}^oⁱ^l^s^{, coal}^{, g}^o^l^d^{, s}ⁱ^l^v^er
^Sources^:^U.S.^Departm^eⁿ^t^of^{State, C}^I^A^W^o^{rld Fact}status as one of the world’s largest
^B^o^o^k^{, Eco}ⁿ^o^m^{ist I}ⁿ^tellig^en^{ce Un}^{it, B}^B^C^New^s^.democracies. Indonesia also
represents a moderate form of Islam
that has the potential to act as a
counterbalance to more extreme expressions of Islam. Despite this, radical Islamists
and terrorist cells have operated amidst the country’s many social, economic, and
political uncertainties. Internal strife and social dislocation stemming from inter-
communal discord, autonomous and secessionist movements, political machinations
among elites, Islamic extremism, government corruption, and economic uncertainty
have all undermined stability in Indonesia in the past. More recently, Indonesia has
been consolidating democratic gains, building a more robust civil society, and
strengthening its economy which suffered major setbacks during the Asian financial
crisis of 1997/98.
Issues for Congress
A series of policy decisions taken in 2005 mark a fundamental shift in the U.S.
approach toward Indonesia. The Bush Administration’s lifting of restrictions on
International Military Education and Training (IMET), Foreign Military Financing
(FMF), and Foreign Military Sales (FMS) in 2005 helped deepen the bilateral

¹⁵ “Indonesia’s Population Increasing by 3 Million Yearly,” Xinhua News Agency, June 3,

2008.

relationship and laid the groundwork for further improved relations. Indonesia has
also moved forward on issues of concern to the United States. The relationship has
improved for a number of reasons as outlined below.¹⁶
^!The expansion and consolidation of Indonesia’s democracy through
the 2004 parliamentary and presidential elections.
^!The election of President S.B. Yudhoyono, who is generally seen as
reform-oriented.
^!The goodwill towards, and increased understanding of, Indonesia in
the United States in the wake of the December 26, 2004 tsunami.
^!The U.S. perception of Indonesia as an increasingly valuable partner
in the war against militant Islamist extremists, and valuable U.S.
assistance to Indonesian counterterrorism security organizations.
^!East Timor’s desire to develop positive relations with Indonesia.
^!The arrest of Anthonius Wamang, a suspect in the shooting of two
Americans near Timika.
^!Peace in Aceh.
^!Increasing appreciation in the U.S. of the strategic and geopolitical
importance of Indonesia.
^!The potential that Indonesian military reforms will proceed.
^!Indonesia’s position on the East Asian Summit.¹⁷
Unresolved human rights issues may yet limit the extent of the bilateral relationship
particularly in the area of military-to-military cooperation should new human rights
abuses occur. Others attitudes towards Indonesia may change should it develop closer
ties with China though for historical reasons there may be limits to how far such ties
can be taken.
Military-to-Military Ties and Human Rights. In 2005, the Administration
of President George Bush moved to open International Military and Education and
Training (IMET), Foreign Military Financing (FMF), and Foreign Military Sales
(FMS) programs for Indonesia. This was viewed by many as a first step toward
normalizing the military-to-military relationship. Indonesia has been a key player in
the war against terror in Southeast Asia and as an increasingly important geopolitical
actor in the Asia-Pacific region. Despite these developments, many continue to have
concern over human rights abuses in Indonesia. Senator Patrick Leahy has stated “a
key gap remains regarding justice for the victims of atrocities.” Other Members,
however, have emphasized the progress Indonesia has made in several areas. Senator
Christopher Bond, for instance, has stated that President Yudhoyono has made “a

¹⁶ This is an expanded version of a list developed by CRS Specialist Larry Niksch.
¹⁷ Indonesia reportedly worked to have a more expansive membership in the recently formed
East Asian Summit to include Australia, New Zealand and India in addition to the ASEAN
states, China, Japan, and Korea. Other countries, led by China, reportedly favored a more
exclusive grouping that left out India, Australia, and New Zealand. This move was viewed
by some observers as favorable to American interests. Sunny Tanuwidjaja, “The East Asian
Summit and Indonesia,” The Jakarta Post, February 1, 2006.

strong commitment to reform, to a recognition of human rights and to fighting
corruption.”¹⁸
During the Cold War, the United States was primarily concerned about
communist influence in Indonesia. After the Cold War, congressional views on
Indonesia were more influenced by ongoing concerns over human rights abuses by
the Indonesian National Defense Forces (TNI). The events of 9/11 added the concern
of how best to pursue the war against terror in Southeast Asia. Some Members of
Congress remain dissatisfied with progress on bringing to justice Indonesian military
personnel and police responsible for human rights abuses in East Timor. The January
2006 arrest of Anthonius Wamang, who is thought to have led an attack near the
town of Timika in Papua that killed two Americans, may resolve what has been an
irritant in the relationship. As the United States moved from the post-Cold War
world to fight the war against terror, human rights concerns have increasingly been
weighed against American security interests, and particularly the need to develop
effective counterterror cooperation with Indonesia to combat radical Islamic groups.
There is also increasing appreciation of Indonesia’s geopolitical position within
Southeast Asia among American decision-makers.
Some analysts have argued that the need to obtain effective counterterror
cooperation and to secure American strategic interests in the region necessitates a
working relationship with Indonesia and its key institutions, such as the military.
Other observers take the view that the promotion of American values, such as human
rights and religious freedom, should guide U.S. relations with Indonesia while others
would put trade and investment first. Some have viewed military cooperation
between the U.S. military and the Indonesian military during relief operations
following the December 2004 tsunami in Sumatra as having focused attention on the
issue of the need for military to military cooperation.
Avian Flu. Most cases of the H5N1 virus in Indonesia are thought to have
been transmitted through contact with birds. There is continuing concern however,
that the virus could mutate and become readily communicable between people. In
May 2008, a sudden die off of thousands of domestic birds in the area of Rimbo
Bujang District, Tebo regency, Jambi Province led officials to act to stem the¹⁹
transmission of the bird flu to humans. Indonesian inspectors have sought to
disinfect areas where birds are kept and promote improved hygiene but face a
daunting challenge as many people in Indonesia keep small numbers of birds. It is
estimated that some 500,000 birds are kept in Jakarta alone. Indonesia lacks²⁰
resources to implement adequate anti-Avian Flu measures.
U.S. efforts to work with Indonesia to address the problem have encountered
difficulty. NAMRU-2 is a biomedical research laboratory established in 1970 to
study diseases such as malaria, dengue fever, enteric infections, and other emerging

¹⁸ Ken Guggenheim, “Fight Looms in Congress Over Easing Indonesia Military
Restrictions,” Associated Press, February 2, 2005.
¹⁹ “Bird Flu Alert in Tebo,” The Jakarta Post, May 21, 2008.
²⁰ “Asia Remains Key in Battle Against Bird Flu,” US Fed News, January 3, 2007.

infectious diseases such as avian influenza.²¹ Indonesian critics of the facility have
called on the Indonesian government to reject the extension of cooperation with the
United States on NAMRU-2. DPR Commission IX Chairman Dr. Ribka Tjiptaning
stated that there is no reason to extend cooperation and breach national sovereignty.²²
Historical Background
Modern Indonesia has been shaped by the dynamic interaction of indigenous
cultures with external influences — especially the succession of influences of
Hinduism, Buddhism, Islam, Dutch colonial rule, and a powerful and nationalistic²³
independence movement. The geographic definition of modern Indonesia began to
take shape under Dutch direct colonial rule, which began in 1799.²⁴ The Dutch East
Indies were occupied by Japan during World War II. Following the Japanese
surrender in 1945, independence was declared by nationalist leader Sukarno. After
a four-year anti-colonial insurrection, the Republic of Indonesia gained its
independence from the Dutch in 1949. The Dutch retained control of the present day
territory of Papua and West Papua until the transition period 1963-1969.
Indonesian independence was followed by a period of parliamentary democracy,
which was replaced in 1959 by President Sukarno’s “Guided Democracy” that lasted²⁵
until 1965. In the late 1950s the United States provided clandestine assistance to
military rebellions in outlying provinces of Indonesia out of fear that the communist²⁶
PKI was gaining control of the country. On September 30, 1965, the military, under
General Suharto, neutralized Sukarno. One interpretation of events is that the military
stepped in to avert a communist coup. In the aftermath, an estimated 500,000
Indonesians lost their lives in riots and purges that were characterized as “anti-
communist.” President Suharto ruled Indonesia until 1998. During this 32-year
period, his authoritarian “New Order” provided the political stability thought
necessary by his supporters for fast paced economic growth. Indonesia’s economy
grew at an average annual rate of almost 7% from 1987 to 1997.²⁷ Suharto’s death

²¹ Public Affairs Section, “The Truth About NAMRU-2,” U.S. Embassy Fact Sheet, April

23, 2008.

²² “DPR Want Government to Reject NAMRU-2,” Sinar Harapan, as reprinted in U.S.
Embassy Jakarta Public Affairs Section, Indonesian News Roundup, June 5, 2008.
²³ Much of the background information is drawn from a comprehensive chapter by Harvey
Demaine, “Indonesia: Physical and Social Geography,” in The Far East and Australasia
(Surrey: Europa Publications, 2002).
²⁴ Harvey Demaine, “Indonesia: Physical and Social Geography,” The Far East and
Australasia (Surrey: Europa Publications, 2002). p. 493.
²⁵ Michael Vatikiotis, Indonesian Politics Under Suharto: The Rise and Fall of the New
Order (London: Routledge Publishers, 1998). p. 1.
²⁶ John Bresnan, ed. Indonesia: The Great Transition. (Lanham: Rowman and Littlefield,

2005) pp. 245-7.

²⁷ “Background Note: Indonesia,” Department of State, Bureau of East Asian and Pacific
(continued...)

in January 2008 served as a point of reflection on his rule during which economic
development and political stability came at the price of corruption and repression.²⁸
A period of reform, or “reformasi,” followed Suharto’s fall. Suharto was
succeeded by B.J. Habibie (1998-99), Abdurrahman Wahid (1999-2001), and the
daughter of former President Sukarno, Megawati Sukarnoputri (2001-2004). Despite
the political instability during this period, a number of key reforms designed to
enhance good governance and expand democracy were implemented. Particularly
important was a 1999 law that transferred enormous authority from the central
government to provincial and district-level government. However, by 2003, the
momentum for reform appeared to be faltering.²⁹ President Yudhoyono is thought to
have moved the reform agenda forward but has been hindered by his limited support
in Parliament.
The source of legitimacy, or lack thereof, for government has changed for the
Indonesian people over time. The Dutch colonial administration was viewed as
illegitimate. The Sukarno Presidency sought to base its rule on moral concepts but
it did not provide sufficient economic development. This was subsequently provided
by President Suharto until 1997, when the Asian financial crisis undermined his
ability to do so. At that point, with economic growth declining, Indonesians were no
longer prepared to accept what was increasingly viewed as a corrupt and authoritarian
regime. This brought on the era of democratic reform whose energy, prior to 2004,
had appeared to be dissipating before fully completing its goal of instituting
responsive and representative government.
Political Transition
Indonesia has done much to consolidate its democratic reform process following
the Suharto era. Since his departure, civil society has expanded, and a vigorous and
open media has emerged. In addition to the first direct election of the president, the
military no longer has seats in parliament and the police have separated from the
military. Indonesia has made significant progress toward institutionalizing its³⁰
democracy and more firmly establishing civil society. The General Elections
Commission functioned well during the 2004 elections.³¹ Indonesia’s parliamentary
elections in April 2004, and Presidential elections of July and September 2004, were
deemed by international observers to be free and fair, did much to instill confidence

²⁷ (...continued)
Affairs, October 2003. Michael Vatikiotis, Indonesian Politics Under Suharto: The Rise and
Fall of the New Order (London: Routledge Publishers, 1998). p. xviii.
²⁸ “The Death of Suharto: Epitaph of a Crook and a Tyrant,” The Economist, January 31,
2008
²⁹ “Survey of Indonesian Electorate,” Asia Foundation, December 9, 2003.
³⁰ John McBeth, “The Betrayal of Indonesia,” Far Eastern Economic Review, June 26, 2003.
³¹ Christine Tjhin, “Civil Society After Akbar’s Acquittal,” The Jakarta Post, February 17,

2004.

in Indonesia’s democratic process. These elections led to great expectations on the
part of Indonesians at a time when the state’s capacity to deliver was limited.³²
Structure of Parliament. Indonesia’s national legislative structure consists
of three separate bodies. First is a House of Representatives (DPR) of 550 members
elected from party lists in multi-seat districts. The DPR has the primary role in
passing laws. Second is a 128-seat Regional Representative Council (DPD) whose
members are elected directly. Third is the People’s Consultative Assembly (MPR),
which is composed of members of both the DPR and the DPD. It is responsible for
passing constitutional amendments and conducting presidential impeachments.
The Role of the Military
The Indonesian National Defense Force (TNI) is generally regarded as the
strongest institution in Indonesia. Its origins date to the struggle for independence.
The TNI traditionally has been internally focused, playing a key role in Indonesian
politics and preserving the territorial integrity of the nation — largely from internal
threats — rather than focusing on external security concerns. Its strong tradition of
secular nationalism has acted to help integrate the nation. The key elements of the
military in Indonesia are the Army Strategic Reserve Command, the Army Special
Forces Command, other special forces, and the Military Regional Commands. There
are also Air Force and Naval commands. While the military now has a less formal
role in the politics of the nation than it had in the Suharto era, it remains a key actor
behind the scenes.³³
Some observers are concerned about its indirect influence over politics. The
Indonesian military has attracted negative attention through its past involvement with
human rights abuses in East Timor, Aceh, Papua, and Maluku, although current
problems appear largely limited to Papua and West Papua.
During the initial period of reform, the TNI officially abandoned the doctrine
of dwifungsi, or dual function, which gave it an official role in the politics of the
nation.³⁴ Appointed members to the legislative bodies from the military were
removed, while the police were separated from the TNI. Efforts were also begun to
more firmly establish civilian control of the armed forces. Supporters of the reform
agenda in Indonesia would like to see additional measures taken, including reform
of the army’s territorial structure, a full withdrawal of the military from business
activities, and improving the military’s sensitivity to human rights.³⁵

³² Damien Kingsbury, “Indonesia: 2007,” Asian Survey, February 2008.
³³ Rizal Sukma, “The Military and Politics in Post-Suharto Indonesia,” in Thang Nguyen and
Frank Jurgen Richter, eds., Indonesia Matters: Diversity, Unity, and Stability in Fragile
Times (Singapore: Times Media Private Ltd. 2003).
³⁴ For a detailed analysis of earlier role of the military in politics, see Harold Crouch, The
Army and Politics in Indonesia (Ithaca: Cornell University Press, 1978).
³⁵ Angel Rabasa and John Haseman, The Military and Democracy in Indonesia: Challenges,
(continued...)

The TNI budget is thought to be to a large extent self-generated. This part of the
TNI budget is largely outside governmental control. The TNI has emerged from the
reformasi period with its territorial command structure intact, even as it lost its
military representatives in parliament.³⁶ The TNI will likely continue to play a key
role in the evolution of the Indonesian polity in the years ahead. It could continue to
play a largely constructive role supporting democratic change, or at least not
obstructing it, or it could act to slow change. It will also likely seek to preserve its
prominent place in Indonesian society.³⁷
While slowed, there are still signs that the reform process continues in
Indonesia. A policy document to guide the government in its efforts to take over TNI
controlled businesses was commissioned in 2008. As of June 2008, it was reported
that the TNI controlled some 1,520 business units, 1,071 cooperatives, and 25
foundations in Indonesia. A 2004 law requires the TNI to get out of business by
2009.³⁸ The DPR was also to consider legislation in 2008 to amend a law on military
tribunals to allow military personnel to be tried in civilian courts for civilian crimes.³⁹
It is thought that such moves would at least in part limit the TNI’s independence from
civilian authority.
Autonomous and Secessionist Movements
Center-periphery tensions between the dominant Javanese culture and minority
groups in outlying regions have been sources of political instability and strife for the
Indonesian state. There are signs that Indonesia is adapting its approach to such
tensions to alleviate autonomous or secessionist tension. This relatively more
moderate approach has reached accommodation where other efforts to quell
Indonesia’s fissiparous tendencies have failed.
The primary security threats to Indonesia are generally thought to come from
within. The political center of the Indonesian archipelago is located in Jakarta on
Java, the densely populated island where 60% of Indonesia’s population lives.
Traditionally, power has extended from Java out to the outlying areas of Indonesia.
This has been true both under Dutch rule, when Jakarta was known as Batavia, and
the modern Indonesian state. Throughout its history there has been resistance in
peripheral areas to this centralized control. This manifested itself in the
predominantly Catholic former Indonesian province of East Timor, which is now an

³⁵ (...continued)
Politics, and Power (Santa Monica: RAND Corp. 2002).
³⁶ Col. John Haseman, William Liddle and Salim Said, “The Evolving Role of the TNI,”
USINDO Security Workshop, October 16, 2003.
³⁷ Angel Rabasa and John Haseman, The Military and Democracy in Indonesia: Challenges,
Politics, and Power (Santa Monica: RAND Corp. 2002).
³⁸ Adianto Simamora, “Policy to Put TNI Out of Business On the Way,” The Jakarta Post,
May 29, 2008.
³⁹ Abdul Khalik, “House to Pass Military Tribunal Law,” The Jakarta Post, May 21, 2008.

independent state, as well as in the far west of Indonesia, in Aceh, and in the far
eastern part of the nation, in Papua and West Papua. Each of these regions has strong
ethnic, cultural, and/or religious identities very different from those of Java.
Such diversity has led to debate about whether Indonesia is an organic state or
an artificial creation of Dutch colonial rule. Analysis of early Indonesian history
reveals a level of integration in terms of economics and trade, if not extensive
political unity. While early indigenous empires were precursors of the Indonesian
state, political unity is generally considered to have been a product of Dutch colonial
rule, including a series of lengthy wars to subdue outlying islands and independent
political units. It has been suggested that a key lesson of Indonesian history is that
“unifying the archipelago administratively can only be done by the use of force.”⁴⁰
Forces of economic integration, or the creation of a national identity stemming from
the nationalist movement which started in Java in 1908,⁴¹ could be viewed as other
integrative forces.
East Timor
The Portuguese, whose influence in Timor dates to the 1600s, gave up control
of the island in 1975. With the Portuguese departure, three main parties emerged. Of
these, Frente Revolucionaria do Timor Leste Independente (Fretelin), a leftist leaning
group, soon emerged as the dominant party. On December 7, 1975, Indonesia
invaded East Timor with the then tacit compliance of the United States and
Australia.⁴² Indonesia, Australia, and the United States are thought to have been
concerned that East Timor would turn into another Soviet satellite state similar to
Cuba. A third of the population of East Timor is thought to have died as a result of
fighting or war-induced famine during the subsequent guerilla war fought by Fretelin
against Indonesia’s occupation.⁴³
On August 30, 1999, East Timorese voted overwhelmingly to become an
independent nation. 98.6% of those registered to vote in the referendum voted, with
78.5% rejecting integration with Indonesia. In the wake of the vote, pro-integrationist
militias attacked pro-independence East Timorese and destroyed much of East
Timor’s infrastructure. More than 7,000 East Timorese were killed and another

300,000, out of a total population of 850,000, were displaced, many to West Timor.

Hardline elements of TNI formed pro-integrationist militias in East Timor. These

⁴⁰ Merle Ricklefs, “The Future of Indonesia,” History Today, December 1, 2003.
⁴¹ Jusuf Wanandi, “Indonesia: A Failed State?” The Washington Quarterly, Summer, 2002,
p. 135.
⁴² “Ford and Kissinger Gave Green Light to Indonesia’s Invasion of East Timor, 1975,” The
National Security Archives, December 6, 2001.
⁴³ Michael Mally, “Regions: Centralization and Resistance,” in Donald Emmerson ed.
Indonesia Beyond Suharto: Polity, Economy, Society, Transition (Armonk: M.E. Sharp,

1999). p. 98.

groups sought to intimidate the East Timorese into voting to remain integrated with
Indonesia under an autonomy package being offered by then President Habbibie.⁴⁴
It is thought that the TNI had two key reasons for trying to forestall an
independent East Timor. First, there was an attachment to the territory after having
fought to keep it as a part of Indonesia. Second was the fear that East Timorese
independence would act as a catalyst for further secession in Aceh and Papua. The
subsequent devastation of East Timor may have been meant as a warning to others
who might seek to follow its secessionist example. Some believe that TNI
involvement in the violence stemmed largely from local “rogue” elements. Others
believe that it was orchestrated higher up in the military command structure. ⁴⁵
East Timor gained independence in 2002. Since that time, Indonesia and East
Timor have worked to develop good relations. The joint Commission of Truth and
Friendship was established to deal with past crimes.⁴⁶ A 2,500 page report issued in
early 2006 by the East Timorese Commission for Reception, Truth and
Reconciliation (CAVR), which was given to United Nations General Secretary Kofi
Annan, found Indonesia responsible for abuses of East Timorese during its period of
rule over East Timor. The report reportedly found that up to 180,000 East Timorese
died as a result of Indonesian rule.⁴⁷ This created tension in the bilateral relationship
between Indonesia and East Timor. Nevertheless, then East Timorese President
Xanana Gusmao and President Yudhoyono reaffirmed their commitment to continue
to work to resolve differences between the two countries.⁴⁸
The United Nations tribunal, which included the Serious Crimes Investigation
Unit, shut down in May 2005. During its six-year operation, the tribunal convicted
some East Timorese militia members for their role in the atrocities of 1999, but was
unable to extradite any indictees from Indonesia. A parallel Indonesian investigation
ended in acquittals for all Indonesians. A 2005 U.N. Commission of Experts found
the Jakarta trials for crimes committed in 1999 to be “manifestly inadequate.”⁴⁹ East
Timor has undergone a period of political instability in recent years.
Aceh
Aceh is located at the extreme northwestern tip of the Indonesian archipelago
on the island of Sumatra. The 4.4 million Acehenese have strong religious beliefs as
well as an independent ethnic identity. Many Acehenese have in the past viewed

⁴⁴ John Haseman, “Indonesia,” in David Wiencek, ed. Asian Security Handbook 2000
(Armonk: M.E. Sharpe Publishers, 2000).
⁴⁵ Emerson, p. 356.
⁴⁶ “Indonesia: International Relations,” The Economist Intelligence Unit, May 17, 2005.
⁴⁷ Sian Powell, “Xanana and SBY Let Shame File Slide,” The Australian, February 18,

2006.

⁴⁸ Rob Taylor and Olivia Rondonuwu, “”Gusmao, Yudhoyono Meet in Bali,” AAP Bulletins,
February 17, 2006.
⁴⁹ Human Rights Watch, “East Timor,” at [http://www.hrw.org].

Indonesia as an artificial construct that is no more than “a Javanese colonial empire
enslaving the different peoples of the archipelago whose only common denominator
was that they all had been colonized by the Dutch.”⁵⁰
The Acehenese fought the Portuguese in the 1520s as well as the Dutch in later
years.⁵¹ The Dutch Aceh War lasted from 1873 to 1913; making it possibly the
longest continuous colonial war in history. As a result of their resistance and
independence, Aceh was one of the last areas to come under Dutch control. Its
struggle for independence from Indonesia was once again taken up by the group
Gerakan Aceh Merdeka (GAM) until a peace agreement was reached in the wake of
the December 2004 tsunami which killed over 130,000 people and devastated much
of Aceh. The peace agreement signed by GAM and the government of Indonesia in
Helsinki in August of 2005 brought an end to a conflict that claimed an estimated
15,000 lives. Under the agreement, partial autonomy was granted to Aceh as was the
right to retain 70% of oil and gas revenue.
The recently resolved struggle dates to 1976. In the late 1980s, many of GAM’s
fighters received training in Libya. GAM then began to reemerge in Aceh. This
triggered suppression by the TNI from which GAM eventually rebounded. Former
President Megawati then called on the military to once again suppress the Free Aceh
Movement. This was the largest military operation for the TNI since East Timor.
The decision to take a hard-line, nationalist stance on Aceh was popular at the time
among Indonesian voters outside of Aceh.⁵²
Under the leadership of President Yudhoyono, Indonesia leveraged the
opportunity presented by the 2004 tsunami and achieved a peace settlement where
previous peace efforts have come unraveled. Under the agreement, the Free Aceh
Movement (GAM) disarmed in December 2005 as the Indonesian Military TNI
dramatically reduced its presence in Aceh.
The election of December 2006 selected a radical ex-rebel candidate to be
governor of Aceh over other candidates more closely aligned with Jakarta. Former
independence fighter Irwandi Yusuf received approximately 40% of the vote in a
field of eight candidates. The Islamic PKS party candidate received 10% of the
vote.⁵³ As governor, Irwandi has emphasized improving Aceh’s economy, including
efforts to attract foreign investment. An October 2007 International Crisis Group
report pointed to post conflict complications and stated “The behaviour of many
elected Free Aceh Movement (GAM) officials and ex-combatants is part of the

⁵⁰ Kirsten Schulze, The Free Aceh Movement (GAM): Anatomy of a Separatist Movement
(Washington: East West Center, 2004).
⁵¹ S. Wiuryono, “The Aceh Conflict: The Long Road to Peace,” Indonesian Quarterly, 3^rd
Quarter, 2003.
⁵² John Haseman, “Indonesia: A Difficult Transition to Democracy,” in David Wiencek and
Ted Carpenter eds. Asian Security Handbook, 3^rd ed. Terrorism and the New Security
Environment (Armonk: M.E. Sharpe, Inc., 2004).
⁵³ Mark Forbes, “Aceh Rebel’s Big Election Win a Snub to Jakarta,” The Sydney Morning
Herald, December 13, 2006.

reason for gloom: Acehenese voters seem to have substituted one venal elite for
another. Extortion, robbery and illegal logging involving ex-combatants ... are cause
for concern.”⁵⁴ It was reported in May 2008 that the central government would allow
local Aceh parties to contest elections in 2009 in accordance with the 2006 Aceh
Administration Law.⁵⁵ GAM renamed its local party Partai Aceh and indicated that
this marked the end of its armed struggle for independence.⁵⁶
West Papua and Papua
The region, formerly known as West Irian or Irian Jaya, refers to the western
half of the island of New Guinea and encompasses the two Indonesian provinces of
West Papua and Papua. West Papua and Papua have a population of approximately
two million and an area of approximately 422,000 square kilometers, which
represents about 21% of the land mass, and less than 1% of the population of
Indonesia. Papua has a long land border with Papua New Guinea to the east. About
1.2 million of the inhabitants of West Papua and Papua are indigenous peoples from
about 250 different tribes, the rest have transmigrated to the region from elsewhere
in Indonesia. There are about 250 language groups in the region. Papuans are mostly
Christians and animists. The province is rich in mineral resources and timber.⁵⁷
Papuans are a Melanesian people and are distinct from the Malay people of the
rest of the Indonesian archipelago. Like Indonesia, Papua and West Papua were part
of the Dutch East Indies. Many Papuans have a sense of identity that is different
from the main Malay, and predominately Muslim, identity of the rest of the
Indonesian archipelago, and many favor autonomy or independence from Indonesia.⁵⁸
Papua did not become a part of Indonesia at the time of Indonesia’s
independence in 1949. The Dutch argued that its ethnic and cultural difference
justified Dutch control until a later date. Under President Sukarno, Indonesia began
mounting military pressure on Dutch West Papua in 1961. The United States
sponsored talks between Indonesia and the Dutch and proposed a transfer of authority
over Papua to the United Nations. Under the agreement the United Nations was to
conduct an Act of Free Choice to determine the political status of Papua. The Act
of Free Choice was carried out in 1969, after Indonesia had assumed control over
Papua in 1963. The Act of Free Choice, which led Papua to become part of
Indonesia, is generally not considered to have been representative of the will of
Papuans. A referendum on Indonesian control over Papua was not held. Instead, a
group of 1,025 local officials voted in favor of merging with Indonesia.

⁵⁴ “Aceh: Post-Conflict Complications,” International Crisis Group, October 4, 2007.
⁵⁵ “Govt to Approve 12 Aceh Parties,” The Jakarta Post, May 26, 2008.
⁵⁶ Hoti Simanjuntak, “GAM Evolves Into New Political Party, The Jakarta Post, May 23,

2008.

⁵⁷ “A People Under the Jackboot,” The West Australian, September 18, 2004.
⁵⁸ “When Jacob Rumbiak was 11,” Port Philip Leader, April 4, 2005.

Papuan groups continue to oppose Indonesian control over Papua and West
Papua. The Free Papua Movement, or Organisasi Papua Merdeka (OPM), emerged
in opposition to Indonesian control. By some estimates, as many as 100,000 Papuans
are thought to have died as the result of military operations during the course of this
conflict.⁵⁹ Others assert that this figure is an overestimation. Coordinator of the
Institute for Human Rights and Advocacy John Rumbiak has reportedly stated that
“The Government in Jakarta has allowed the military to prevail in Papua, to take the
security approach which has denied ordinary people their rights and enriched military
officers who are making big money for themselves through dealings with mining,
logging and oil and gas interests.”⁶⁰ The United States has a large business presence
in the region.
The arrest and trial of Anthonius Wamang, who has been sentenced to life in
prison in November 2006 for carrying out an attack in 2002 that killed two
Americans working for the Freeport mine near Timika, Papua, has done much to
resolve an issue that had been an impediment to closer relations between the United
States and Indonesia. The mine is a subsidiary of Freeport McMoRan of New
Orleans. Some have wondered why Wamang and his co-defendants did not use the
trial to reassert earlier statements that the Indonesian military was involved.⁶¹
The Human Rights Watch report, Endemic Abuse and Impunity in Papua’s
Central Highlands,” of July 2007 made the following statement.
Among our key findings are that while civilian complaints of brutal treatment by
soldiers continue to emerge, police officers rather than soldiers are responsible
for most serious rights violations in the region today. We found that both army
troops and police units, particularly mobile paramilitary police units (Brigade
mobil or Brimob), continue to engage in largely indiscriminate village
“sweeping” operations in pursuit of suspected militants, using excessive, often⁶²
brutal, and at times lethal force against civilians.
A June 2008 report by the International Crisis Group warned of the potential for
inter-communal conflict in Papua. It pointed out that tensions were most acute along
the west coast of Papua and that “continuing Muslim migration from elsewhere in
Indonesia” was a key factor that is increasing strain between Christians and Muslims⁶³
in Papua.

⁵⁹ “Indonesian Police, Demonstrators Clash in Papua Province,” Oster Dow Jones, May 10,

2005.

⁶⁰ “A People Under the Jackboot,” The West Australian, September 18, 2004.
⁶¹ John McBeth, “The Murder Muddle,” The Straits Times, November 11, 2006.
⁶² “Out of Sight: Endemic Abuse and Impunity in Papua’s Central Highlands,” Human
Rights Watch, July, 2007.
⁶³ “Indonesia: Communal Tensions in Papua,” International Crisis Group Report, June 16,

2008.

Inter-Communal Strife and Pan Islamic Movements
While the vast majority of Indonesians practice a moderate form of Islam, a very
small radical minority have sought to establish an Islamic state. Some extremists are
hostile to the Christian minority and an even smaller group would use violence to
establish an Islamic Khalifate throughout the Muslim areas of Southeast Asia. While
they represent an extremely small percentage of the population, such groups have
created much internal turmoil in Indonesia. A distinction can be drawn between
groups such as the now disbanded Lashkar Jihad that focused on Indonesian inter-
communal conflict between Muslims and Christians in the Malukus, and factions of
Jemaah Islamiya (JI), which have used terrorist methods to promote an extreme
Islamist agenda with linkages to al Qaeda. There have also been allegations that
Lashkar Jihad was a tool of hardliners within the military that opposed the reform
movement and who allowed, or possibly even assisted, Lashkar Jihad activities that
destabilized the nation, thereby highlighting the need for a strong military that could⁶⁴
impose order. There has also been inter-group conflict elsewhere in Indonesia such
as between Muslims and Christians in Sulawesi and the Muluccas, and between local⁶⁵
Dayaks and internal Madurese migrants in Kalimantan.
There has been much attention focused on the potential rise of Islamic sentiment
in Indonesia in recent years. This is most notable in a political context with the rise
of the PKS Justice Party in the 2004 election. In that election, the PKS increased its
seats to 45 from 7 (out of 550) following the 1999 parliamentary election. Many have
attributed the success of the PKS in parliamentary elections in 2004, and in more
recent local elections, to its campaign platform of good governance and its party
organization rather than to its Islamist character. The PKS is not the largest Muslim
party and does not represent the large Muslim mainstream groups. It is of interest
because it has grown fast and proved effective, both among the poor and among
intellectuals. As such, it is a new phenomenon and its scale and importance are as yet
unclear. Some 90.4% of Indonesians believe religious affairs should be within the
framework of Pancasila and the constitution. Some 91.6% of Indonesians believe that⁶⁶
Indonesia’s state ideology is correctly based on Pancasila.
Another manifestation of the rise of political Islam in Indonesia is the March
2006 demonstrations outside the United States Embassy in Jakarta sponsored by
Hizbut Tharir which featured banners that read, “Now is the time for the Caliphate
to rule the world with Sharia” and “Crush the Zionist America and Israel.”⁶⁷
A challenge to the secular nature of the Indonesian state is over cultural and
moral issues. Not only the strictly fundamentalist Muslims but also more traditional

⁶⁴ See Sydney Jones’ work for the International Crisis Group, [http://www.crisisgroup.org].
⁶⁵ Amit Chanda, “Seven Killed in Indonesia, as Violence Flares up Again in Restive Maluku
Province,” Global Insight Daily, May 17, 2005.
⁶⁶ Robin Bush, “The Future of Islamic Parties and Islamic Politics in Indonesia,” The Asia
Foundation, 2008.
⁶⁷ Amy Chew, “5,000 Rally Outside US Embassy,” New Straits Times, March 6, 2006.

Muslims protest the influence of Western cultural and moral values in Indonesian
society. The challenge has four components.
One is the direct action by radical Muslim groups against businesses and
institutions which they accuse of representing Western cultural and moral values.
The most widely publicized group is the Islamic Defenders Front (FPI). The FPI
targets such businesses for direct, violent action. Squads of FPI cadre have forcibly
shut down gambling dens, discos, nightclubs and bars that serve alcoholic beverages,
and brothels. The FPI also has targeted Christian churches. Attacks by the FPI and
like-minded Muslim groups have forced the closure of upwards of 100 Christian
churches since September 2004, including more than 30 in West Java alone.⁶⁸ The
FPI is estimated to have supporters in the tens of thousands at most. It and similar
groups receive financial backing from Saudi Arabia. Its influence is felt widely
partly because police and law enforcement authorities have adopted a permissive
attitude toward its activities. Arrests of FPI members are few and infrequent despite
the government’s revisions of public assembly laws to make it easier to disband
violence-prone groups.⁶⁹
The second component is pressure by Muslim groups on authorities to establish
Islamic Sharia law. This is felt primarily on the provincial and local levels. The
State Department’s human rights report for 2006 cited an estimate that more than 56
Sharia-based local laws have been issued throughout Indonesia. These laws often
require that women wear head scarves, require that officials read the Koran in Arabic,
segregate men and women in public places, and prohibit alcohol and gambling. So
far, the central government have not challenged the constitutionality of such laws.⁷⁰
At the national level, the Indonesian parliament is considering an anti-pornography
law. Fundamentalist Muslim groups like the Islamic Defenders Front are lobbying
for a far-reaching law that would outlaw kissing in public and women exposing their
navels.⁷¹
The third is judicial action against non-Muslims or Indonesians who are accused
of insulting Muslim beliefs. The State Department’s 2006 human rights reports
described an increase in local court rulings in favor of fundamentalist Muslim groups
since 2004. Nationally, the most celebrated case involves the Indonesian
government’s prosecution of the editor of Playboy Indonesia for breaching the

⁶⁸ Yuli Tri Suwarni, “Another Christian Church Attacked in Bandung, Jakarta Post
(internet version), June 4, 2007.
⁶⁹ Tom McCawley, “Once Free, Indonesian Cleric Could ‘Revitalize’ Radicals,” Christian
Science Monitor, June 14, 2006. Bret Stephens, “The Arab Invasion,” The Wall Street
Journal Asia, April 18, 2007.
⁷⁰ Blake Respini, and Herdi Sahrasad, “The Rise of Sharia Seems not a Threat to Civil
Society,” Jakarta Post (internet version), May 19, 2007. Jane Perlez, “ Spread of Islamic
Law in Indonesia Takes Toll on Women,” New York Times, June 27, 2006.
⁷¹ Tom McCawley, “Once Free, Indonesian Cleric Could ‘Revitalize’ Radicals,” Christian
Science Monitor, June 14, 2006.

country’s indecency laws after mounting protest against the magazine by
fundamentalist Muslim groups.⁷²
The fourth component is in education, particularly in the thousands of
“pesantren” Islamic boarding schools in Indonesia. Observers warn that the
instruction in these schools increasingly is of a fundamentalist nature that emphasizes
intolerance of other religions and non-Muslim, secular practices. Former Indonesian
President Abdurrahman Wahid warned in April 2007 that the teaching of
fundamentalist Islam in the pesantren schools is an acute problem and that the
problem is spreading into Indonesian universities.⁷³
The Economy
The Indonesian economy was severely damaged by the Asian financial crisis of⁷⁴
1997-98. Per capita GDP fell from $1,088 in 1997 to $475 in 1998. Indonesia has
recovered since and is considered to have a well-balanced economy with all major
sectors contributing. Domestic consumption accounts for roughly a majority of
Indonesia’s GDP, but expanded foreign investment and exports are considered
crucial for GDP growth. Real investment grew by 9.2% in 2007 and foreign
investment grew by 13% over the same period.⁷⁵ Foreign businesses have in the past
been reluctant to invest in Indonesia in part because of concerns about the legal and
judicial framework. Corruption is a key concern and a deterrent to investment.
Indonesia ranked 143 out of 179 countries in the 2007 Corruption Perceptions Index
conducted by Transparency International.⁷⁶
Indonesian economic growth is expected to slow to 5.9% in 2008 from 6.3% in
2007. Declining exports to the U.S. and elsewhere, as well as rapidly rising fuel and
food prices, are thought responsible for the slowdown. There is concern that political
dynamics in the lead up to elections will lead to a reluctance to further reduce fuel
subsidies and that this may have a negative effect on public finances.⁷⁷ Food prices⁷⁸
increased 18.2% year-on-year in April 2008. At 9% year-on-year inflation reached

⁷² Sadanand Dhume, “ Playboy in Indonesia,” The Wall Street Journal Asia, March 30, 2007.
“Playboy Exposes Indonesian Tensions,” The Wall Street Journal Asia, April 11, 2007.
⁷³ Bret Stephens, “The Journal Interview with Abdurrahman Wahid: the Last King of Java,”
The Wall Street Journal Asia, April 10, 2007. Alpha Amirrachman, “Pesantren
Communities unable to Accept Pluralism, Tolerance,” Jakarta Post (internet version),
January 27, 2006.
⁷⁴ John McBeth, “The Betrayal of Indonesia,” Far Eastern Economic Review, June 26, 2003.
⁷⁵ Yudhoyono’s Difficult Year Ahead,” Economist Intelligence Unit, May 30, 2008.
⁷⁶ John McBeth, “Indonesia: Warning Signs,” Far Eastern Economic Review, December 4,

2003.

⁷⁷ “Indonesia Risk,” The Economist, June 11, 2008.
⁷⁸ “Inflation Hits 20 Month High,” The Economist, June 2, 2008.

a 19-month high in May 2008. Indonesia’s main export destinations are Japan (22%),
Singapore (13%), the United States (13%), South Korea (9%), and others (43%). ⁷⁹
Despite having been a key oil
Indonesian GDP,% Real changeexporter, Indonesia has in recent years
become a oil importer. Indonesia’s oil
¹⁹⁹⁶^7.8%production peaked at 1.6 million barrels
¹⁹⁹⁷^4.7%per day (bpd) in 1995. Currently,
Indonesia produces approximately 977,835
¹⁹⁹⁸^-13.1^%bpd while consuming 1.2 million bpd. The
¹⁹⁹⁹^0.8%government is reportedly seeking to raiseoutput by 200,000 bpd by 2010 to make up
²⁰⁰⁰^4.9%most of the shortfall. Observers note that
²⁰⁰¹^3.5%Indonesia will need foreign investment tohelp it boost production in its aging oil
²⁰⁰²^3.7%fields.⁸⁰ Indonesia is thought to have an
²⁰⁰³^4.1%estimated 8.6 billion barrels of oil and 182trillion cubic feet of natural gas in
²⁰⁰⁴^5.1%reserves.⁸¹ Given that it is no longer an oil
exporting country, Indonesia announced in
²⁰⁰⁵^5.3%May 2008 that it would pull out of the
²⁰⁰⁶^5.5%Organization of Petroleum Exporting
Countries when its membership expired
²⁰⁰⁷^6.3%later in 2008.⁸²
²⁰⁰⁸^5.7%^es^t^.
There are some positive economic
²⁰⁰⁹^5.9% ^es^t.developments in Indonesia as well.
^Ecoⁿ^o^m^{ist I}ⁿ^tellig^en^{ce Un}^{it Datab}^a^seIndonesia signed its first bilateral free
trade deal with Japan in July 2008. The
Economic Partnership Agreement with
Japan will exempt Indonesian goods from 90% of Japan’s import duties.⁸³ Tourism
in Indonesia was up 13% in 2007 from 2006 levels while Indonesian tax revenue
increased 47.6% over a five month period as compared to the same period a year
previously in May 2008.⁸⁴
Though Indonesia has one of the world’s worst poverty rates it has declined.
Indonesia’s poverty rate fell from 16.58% in March 2007 to 15.42% in March 2008.
The Indonesian poverty rate includes those living on less than $19.81 a month.

⁷⁹ “Indonesia: Country Report,” The Economist Intelligence Unit, May 2008.
⁸⁰ Andi Abdussalam, “Indonesian Oil Output Showing Upward Trend,” Antara News, May

14, 2008.

⁸¹ “Pertamina, Talisman to Cooperate on Indonesia Oil,” Reuters, June 23, 2008.
⁸² “Indonesia to Withdraw From Opec,” BBC News, May 28, 2008.
⁸³ “Indonesia, Japan Economic Partnership Agreement Takes Effect,” BBC News, July 1,

2008.

⁸⁴ Indonesia’s Tax Revenue Up 47 Percent,” Xinhua News, June 6, 2008.

Unemployment also fell from 9.1% in August 2007 to 8.5% in February 2008. There
is some concern that the May 2008 increase in fuel prices could undermine these
gains.⁸⁵ Indonesia is also set to become a rice exporter after only a few years ago
being one of the world’s largest rice importers. Indonesia plans to export an
estimated 6 million tons of rice in 2009. There are further plans to develop 1.6
million hectares of rice fields near Marauke, Papua, in the near future.⁸⁶
The Environment
The logging of Indonesia’s forests, both legal and illegal, is an issue of
increasing concern to many. Indonesia has the world’s third largest tropical forests
and the world’s largest timber trade. Rain forests are thought to be an important sink
for global atmospheric carbon and play a vital role in climate. Rain forests contain
an estimated two-thirds of the planet’s plant and animal species. It is estimated that
logging and other clearing of rain forests has reduced their extent from 14% of the
earth’s surface to 6%. A special report by The Economist estimated that about 2
million hectares of Indonesian forest, an area the size of Massachusetts, are logged
each year.
In the 15 years leading up to 2006, Indonesia lost one quarter of its forests. Such
a rate of logging is unsustainable. One 2006 estimate projected that at current rates
of logging Indonesia’s forests would be logged out in 10 years.⁸⁷ The destruction of
Indonesia’s forests would likely lead to widespread species extinction. It is estimated
that illegal logging deprives Indonesia of some $3 billion annually. Burning of logged
land to clear it for palm plantations and other uses in Southeast Asia led to
widespread haze over the region which accounted for an estimated 8% of greenhouse⁸⁸
gasses worldwide in 1997.
The United States and Indonesia moved to begin to address the problem of
illegal logging in April 2006. Bilateral talks were initiated to reach an agreement to
deal with the problem of illegal logging in Indonesia which is estimated to account
for 80% of all logging in Indonesia.⁸⁹ The United States and Indonesia signed a
bilateral agreement to combat illegal logging and associated trade in November 2006.
The United States initially committed one million dollars to fund remote sensing of
illegal logging and to develop partnerships with non-governmental organizations and

⁸⁵ “Indonesia’s Poverty Rate Falls,” Reuters, July 1, 2008.
⁸⁶ “Indonesia Set to Become Major Rice Exporter Next Year,” Dow Jones, July 1, 2008.
⁸⁷ Tanja Vestergaard, “Indonesia Launches Talks with U.S. on Fight Against Illegal
Logging,” Global Insight Daily Analysis, April 5, 2006.
⁸⁸ “Special Report: The Logging Trade,” The Economist, March 25, 2006.
⁸⁹ Tanja Vestergaard, “Indonesia Launches Talks with U.S. on Fight Against Illegal
Logging,” Global Insight Daily Analysis, April 5, 2006.

the private sector. The agreement established a working group under the U.S.-
Indonesia Trade and Investment Framework Agreement.⁹⁰
Indonesia has the most threatened species of mammals in the world. Poaching,
deforestation, and illegal logging continue to threaten the existence of orangutans,
the Sumatran Tiger, and the Javan Rhino. Ninety percent of the orangutan’s habitat
has been destroyed as land is cleared with fire by illegal logging, plantation
companies, and farmers. It is thought that orangutans will disappear if present
deforestation trends continue.⁹¹ The Javanese Tiger and the Balinese Tiger became
extinct in the 1970s. Only about 400 Sumatran Tigers are thought to remain alive.
This is a dramatic decrease from an estimated 1,000 Sumatran Tigers in the 1970s.
Their decrease is similarly attributed to a combination of deforestation, illegal
logging, and poaching. Effective control of the illegal trade in wild animal parts is
thought to be essential for the species survival.⁹² The Javanese Rhino is similarly
threatened with only 60 thought to remain in the wild.⁹³
Religious Freedom
The Ahmadiyyah of Indonesia, like other Ahmadiyya around the world, believe
that their founder Mirza Ghulam Ahmad, who founded the religion in 1889 in the
Punjab in British India, was a prophet. The Ahmadiyya belief was first brought to
Indonesia from India in 1925. Their views place them at odds with more mainstream
Muslims who believe that The Prophet Mohammad was the last prophet. Ahmadiyya
do accept Mohammad as a prophet and one of God’s messengers. As a result of their
differences, many in Muslim society, including in Indonesia, do not view Amadiyya
as true Muslims. Ahmadiyya also seek converts. It is reported that they have no open⁹⁴
supporters among Indonesia’s elite. Some Indonesians have been calling for the
Ahmadiyya to be banned and driven out of Indonesia. It is estimated that there are⁹⁵
some 200,000 to 500,000 Ahmadiyya in Indonesia. Attacks against Ahmadiyya and
their Mosques have grown in recent years.
Though Indonesia is overwhelmingly Muslim, its constitution protects religious
minority groups. Non-Muslims enjoy a general level of freedom in their beliefs
within Indonesian society which is largely tolerant. That said, inter-communal strife
can boil over into violence in places such as Poso and Ambon. A government panel

⁹⁰ Office of the U.S. Trade Representative, “Agreement on Illegal Logging as Part of Effort
to Deepen Trade and Investment Relations,” November 16, 2008.
⁹¹ Niniek Karmini, “Orangutans Flee Indonesian Forest Fires,” The Associated Press,
November 6, 2006.
⁹² Oyos Saroso, “Poachers Moving into Northern Sumatra, The Jakarta Post, May 31, 2008.
⁹³ “World’s Rarest Rhinos Captured on Video,” Reuters, May 29, 2008.
⁹⁴ Bramantyo Prijosusilo, “Comparing the Ahmadiyah and the Hizbut Tahrir,” The Jakarta
Post, April 16, 2008.
⁹⁵ Salim Osman, “Ban Minority Sect, Islamic Holy Body Urges Jakarta Govt,” The Straits
Times, January 2, 2008.

recommended in April 2008 that the Ahmadiyya group be banned. This decision
followed a January 2008 fatwa by Indonesia’s highest religious authority, the
Indonesian Ulama Council, to ban the sect for its deviance. The Ulama Council
shortly thereafter submitted its fatwa to the Indonesian Attorney General’s Office and
asked the government to ban the group.
According to one report, the government of Indonesia through the Attorney
General’s Office has banned the group from practicing in Indonesia due to its view
that the Ahmadiyya are a deviant sect and because they are causing restlessness in the
Muslim community in Indonesia.⁹⁶ On April 18, 2008, the day following reports that
the group had been banned, Indonesian Vice President Jusuf Kalla stated that there
would be no detention of Ahmadis.⁹⁷
The Ulama Council subsequently felt that the government did not go far enough
in its actions. On April 20^th thousands of Muslim hardliners protested to demand the
active disbanding of the Ahmadiyya. It is thought that Muslim extremists would go
beyond banning of the practicing of the Ahmadiyya belief and would favor adopting
further measures that would actively seek to disband and/or drive the group out of
Indonesia.⁹⁸ Some outside commentators view the decision to crackdown on the
Ahmadiyya as pandering to Islamic extremism. This placed the government of Susilo
Bambang Yudhoyono in a difficult position in the lead up to elections scheduled for
April 2009.⁹⁹
Human Rights
Much attention in the United States has been focused on human rights in
Indonesia. The State Department’s annual human rights report of 2007 stated that
the Indonesian government “generally respected the human rights of its citizens;
however, weak legal institutions, limited resources, and insufficient political will
prevented accountability for serious abuses that occurred in the past.” The report also
stated that problems remain including arbitrary detention, corruption in the judicial
system, killings by security forces, and intimidation of human rights groups by
security forces, among other concerns. The report did note that the “government’s
reformasi consolidated democratic gains with positive human rights developments”¹⁰⁰
in some areas. Human Rights Watch has observed that “Indonesia’s human rights
record has shown some progress in 2007.... However, the human rights situation in

⁹⁶ Salim Osman, “Jakarta Cracks Down on Deviant Islamic Sect,” The Straits Times, April

17, 2008.

⁹⁷ “Indonesian Vice President Says No Arrest on Followers of Banned-Sect,” Xinhua News
Agency, April 18, 2008.
⁹⁸ Salim Osman, “Ban Minority Sect, Islamic Holy Body Urges Jakarta Govt,” The Straits
Times, January 2, 2008.
⁹⁹ “Indonesians Demand Ban on Sect,” BBC News, April 20, 2008.
¹⁰⁰ Indonesia, Country Reports on Human Rights Practices, 2007, Released by the
Department of State Bureau of Democracy, Human Rights, and Labor, March 11, 2008.

Papua and West Papua has shown there a clear gap between Indonesia’s international
commitments and its rhetoric and the reality on the ground.”¹⁰¹
One investigation and trial that may be viewed as a test case is that against
Pollycarpus Budihardi Priyanto who was convicted of killing human rights activist
and critic of Indonesia’s military Munir Thalib with arsenic poisoning while on a
Garuda flight bound for Amsterdam on September 7, 2004. Pollycarpus’ sentence to
14 years in prison for the crime was overturned by the Supreme Court in October
2006 though he did receive two years in prison for falsifying documents. He was
released from prison on December 25, 2006.¹⁰² Priyanto was found guilty of the
crime a second time in 2008 and was sentenced to 20 years in prison. He has since
sought another judicial review to overturn his case.¹⁰³
During the investigation it became known that Pollycarpus had numerous
telephone conversations with State Intelligence Agency (BIN) official Major General
Muhdi Purwo Prandjono.¹⁰⁴ Indonesian police announced in April 2007 that its
investigation showed that Munir was poisoned during a stopover at Singapore’s
Changi airport.¹⁰⁵
Many have hoped a successful investigation and trial of those responsible for
Munir’s death would signal an end to a culture of impunity in Indonesia for such
crimes.¹⁰⁶ In June 2008 a new phase of the investigation was underway in which there
was speculation that a new suspect would be brought forward.¹⁰⁷
External Relations
Indonesian foreign policy has been shaped largely by two men, Presidents
Sukarno and Suharto. Once a leading force in the Non-Aligned Movement (NAM)
of the early Cold War era, Indonesia has traditionally sought to remain largely
independent from great power conflict and entangling alliances. Sukarno’s world
view divided the world into new emerging forces and old established forces. Sukarno
sought to fight the forces of neo-colonialism, colonialism, and imperialism, which
brought his government closer to China in 1964-65. Suharto’s New Order lessened

¹⁰¹ “Universal Periodic Review of Indonesia,” Human Rights Watch, April 7, 2008.
¹⁰² “President Summons Top Security Officials Over Munir Case,” LKBN Antara, December

26, 2006.

¹⁰³ “Killer of Indonesian Activist Files for Review,” Agence France Presse, June 4, 2008.
¹⁰⁴ “Indonesia Sentences Killer of Rights Activist to 14 years in Prison,” Thai News Service,
January 12, 2006.
¹⁰⁵ “Indonesian police interview fresh witnesses suspected on links to Munir murder,”
Agence France Presse, April 26, 2007.
¹⁰⁶ M. Taufiqurrahman, “Two Years on, Munir Murder Case is Cast in Shadows,” The
Jakarta Post, January 4, 2007.
¹⁰⁷ “New Phase in Disclosure of Munir Case,” Media Indonesia, June 5, 2008 as reprinted
in the U.S. Embassy Jakarta News Roundup, June 5, 2008.

Sukarno’s anti-western rhetoric and focused on better relations with other Southeast
Asian nations. Under Suharto, Indonesia was one of the founding members of the
Association of Southeast Asian States (ASEAN) in 1967 and played a key leadership
role in the organization. Indonesia’s internal problems since 1998 have kept it largely
internally focused. As a result, it has not played as active a role in the organization
as in past years. Indonesia exerts a moderate voice in the Organization of Islamic
Conference (OIC) and is a member of Asia-Pacific Economic Cooperation (APEC).
In recent years, Indonesia has done more to project itself as a moderating force in the
Muslim world, which positions Indonesia as a potential bridge between Islam and the
West.¹⁰⁸
Indonesia’s strategic interests are largely regional. Indonesia signed the Timor
Gap Treaty with Australia in 1991. The treaty provided for a mutual sharing of
resources located in the seabed between Australia and the then-Indonesian province
of East Timor. This lapsed with the independence of East Timor. Australia and
Indonesia also signed a security agreement in 1995 which fell short of an alliance but
called for mutual consultations on security matters. Indonesian displeasure with
Australia’s support of East Timor independence in 1999 led Indonesia to renounce
the agreement. Indonesian ties with the West have at times been strained over alleged
human rights abuses by the TNI.
In 1990 Indonesia and China normalized ties, which had been strained since the
alleged abortive coup by the Indonesian Communist Party (PKI) in1965. China and
Indonesia have an unresolved dispute related to the South China Sea, particularly
near the Natuna Islands at the southern end of the South China Sea. In recent years
ties have warmed between Indonesia and China. President Yudhoyono traveled to
Beijing in 2005 and signed a strategic agreement with Chinese President Hu Jintao.¹⁰⁹
In June 2008, Zhou Yongkang, a Member of the Standing Committee of the of the
Political Bureau of the Communist Party of China Central Committee stated that
China wanted to push forward the strategic partnership with Indonesia and further
promote the growth of bilateral relations between Indonesia and China while he was
visiting Jakarta.¹¹⁰
The Struggle Against Terrorism
In recent years, Indonesia has been successfully hunting down radical Islamist¹¹¹
extremists who have broken Indonesian law. The United States lifted its travel
warning on Indonesia in the Spring of 2008 as a result of the improved security

¹⁰⁸ Rizal Sukma, “Indonesia’s Foreign Policy Since Reformasi: Change and Continuity,”
CSIS Southeast Asia Bulletin, June 2008.
¹⁰⁹ “Indonesia: International Relations and Defense,” The Economist Intelligence Unit, May

27, 2008.

¹¹⁰ “Senior CPC Leader Vows to Enhance Cooperation with Indonesia,” Xinhua News
Agency, June 18, 2008.
¹¹¹ For further information, see CRS Report RL31672, Terrorism in Southeast Asia, by
Bruce Vaughn, Emma Chanlett-Avery, Thomas Lum, Mark Manyin, and Larry Niksch.

situation in Indonesia.¹¹² It appears that the terrorist organization Jemaah Islamiya (JI)
is dividing and changing. Many JI members reportedly were displeased with the 2002
Bali bombing which killed and injured more Indonesians than foreigners. President
Yudhoyono has made it a priority to capture or neutralize key JI members. Since the
2002 Bali bombing, Indonesian police and counterterrorism organizations have
arrested nearly 500 JI cadre.¹¹³ Key JI bombmaker Azahari bin Husin was killed in
a shootout in east Java in November 2005. Since that time, counterterrorism
authorities have focused on capturing his associate, Noordin Top, and have arrested
a number of militants linked to Top.¹¹⁴ In June 2007, authorities made a major
breakthrough, arresting the head of the overall JI organization, Zarkasih, and JI’s
military commander, Abu Dujana. It was reported in March 2006 that Al Qaeda
helped fund suicide attacks in Indonesia in the previous four years with money
brought to Indonesia through Thailand and Malaysia.¹¹⁵
Divisions within JI have apparently revolved around the extent to which JI
should focus on western targets as opposed to focusing on instituting Islamist rule in
Indonesia. Some are also focused on imposing an Islamic Chaliphate not only in
Indonesia but also in Malaysia and Brunei and Muslim areas of the Philippines and
Thailand and in northern Australia. A majority are thought to favor a focus on
Indonesia.¹¹⁶ The JI also is reportedly split over whether to continue major terrorist
attacks or shift tactics toward political action and attacks against smaller targets.
Violent efforts to rekindle inter-communal violence between Christians and Muslims
in Sulawesi and the Muluccas have largely been contained. JI has not conducted a
major terrorist attack since 2005, and experts believe that the arrests of Zarkasih and
Abu Dujana have weakened the organization substantially.¹¹⁷
Many Indonesians view the war against terror in a fundamentally different way
than the United States. This was particularly so prior to the Bali bombing of October
2002 in which approximately 200 people were killed, including many Western
tourists. The Bali bombing, and Marriott bombing of August 2003, changed the
government’s perception of the threat and evoked a rigorous response from the
police. Prior to these bombings, Indonesia viewed JI as foreign and focused on anti-
western activities. Since the Bali bombing, U.S. and Indonesian leaders have worked
together to address the threat. Although U.S.-Indonesian government-to-government
counterterror cooperation is improving, past polls indicate that the United States has

¹¹² Lilian Budianto, “Washington Lifts Travel Warning,” The Jakarta Post, May 26, 2008.
¹¹³ McCawley, Tom. “Indonesia’s terrorist hunt bears fruit.” Christian Science Monitor,
June 15, 2007. p. 6.
¹¹⁴ Tewily Nathalia, “Indonesia Looks for New Group’s Links to al Qaeda,” Reuters,
January 31, 2006.
¹¹⁵ Zakki Hakim, “Al Qaeda Aid in Indonesia Attacks Cited,” Philadelphia Inquirer, March

1, 2006.

¹¹⁶ See Sydney Jones’ definitive work for the International Crisis Group,
[ h t t p : / / www.cr i s i s gr oup.or g] .
¹¹⁷ Seth Mydans, “Indonesian terror group limits attacks,” New York Times, June 18, 2007.

become very unpopular in Indonesia. Only 15% of Indonesians had a favorable
opinion of the United States in 2003, as opposed to 75% three years earlier.¹¹⁸
United States-Indonesian Relations
Bilateral government to government relations between Indonesia and the United
States have improved significantly in recent years. Bilateral cooperation on
counterterrorism has increased at the same time that U.S. appreciation of Indonesia’s
strategic importance and increasingly democratic government has improved. Public
opinion polls demonstrate that the Indonesian public is less supportive of the United
States than the Indonesian government. According to one poll, 73% of Indonesians
believe it is the goal of the United States to “weaken and divide the Islamic world.”¹¹⁹
That said, there has been improvement in Indonesians’ perceptions of the United
States. In another poll, the percentage of Indonesians with favorable views of the¹²⁰
U.S. increased from 29% in 2007 to 37% in 2008.
While bilateral government-to-government relations have improved, there have
been a number of areas of friction, including with American companies operating in
Indonesia. Louisiana-based Freeport McMoRan’s subsidiary PT Freeport came under
scrutiny by environmental interests and was subject to demonstrations.¹²¹ The
blockade of the mine near Timika was carried out by disgruntled small scale local
miners who had been prevented from mining the waste from the mine.¹²² In April
2007, thousands of Freeport workers protested over wages and benefits and
demanded that Freeport hire more native Papuans.¹²³
In another case, Denver-based Newmont Mining Corporation paid a $30 million
out of court settlement in order for the Indonesian government to drop efforts to
pursue a civil lawsuit against the company for alleged dumping of mercury and¹²⁴
arsenic into a bay as part of its Buyat Bay gold mining operations. Newmont has

¹¹⁸ Ellen Nakashima, “U.S. Policy Censured in Indonesia,” The Washington Post, October

21, 2003.

¹¹⁹ World Public Opinion, “Muslims Believe US Seeks to Undermine Islam,” April 24, 2007.
¹²⁰ “Global Economic Gloom,” Pew Global Attitudes Project, June 12, 2008.
¹²¹ Mark Forbes, “Investment Fears Over Mine protest,” Sydney Morning Herald, March 4,

2006.

¹²² “Papuans Protesting Daily over Freeport Mine in Indonesia,” Agence France Presse,
March 7, 2006.
¹²³ “Protest, talks continue over pay with US gold, cooper firm in Indonesia.” Agence
France Presse, April 20, 2007.
¹²⁴ P. Kyne and I. Sentana, “”Newmont, Indonesia Settle Civil Suit,” The Wall Street
Journal, February 17, 2006.

denied it has dumped such toxic waste into the bay through its submarine tailing
disposal system. Environmentalists have been critical of the deal.¹²⁵
The 2006 arrest and trial of individuals involved with the 2002 murder of two
Americans near Timika in Papua did much to take a key area of friction between the
two nations off the table. In June 2008 it was reported that the United States had
offered assistance to Indonesia to establish a National Defense University.¹²⁶
Geopolitical and Strategic Interests
The Malacca, Sunda, and Lombok straits are some of the world’s most
important strategic sea lanes. Close to half of the total global merchant fleet capacity
transits the straits around Indonesia.¹²⁷ A significant proportion of Northeast Asia’s
energy resources transit these straits. The United States continues to have both
economic and military interest in keeping the sea lanes of communication open.¹²⁸
The waters around Indonesia have some of the highest incidents of piracy in the
world. Further energy deposits may also be found in the waters of Southeast Asia.
Some strategic analysts are concerned about growing Chinese influence in the
region. China was perceived as being more assertive in the 1990s, for example, by
fortifying a disputed shoal in the South China Sea known as Mischief Reef. China
is now seen as being more subtle. It agreed to a regional code of conduct in the South
China Sea in 2002. China signed a Joint Declaration on Strategic Partnership with
ASEAN in October 2003 and is developing a China-ASEAN Free Trade Agreement
to augment its existing bilateral trade agreements with many ASEAN members. This
has been viewed as a possible “foundation for a strategic partnership.”¹²⁹ China and
Indonesia also announced a series of agreements amounting to what some have
described as a “strategic partnership” in April 2005. At the same time, China is
expanding its naval capability.
U.S. Security Assistance to Indonesia
Indonesia has participated in the Regional Defense Counter Terrorism
Fellowship Program which includes intelligence cooperation, civil-military
cooperation in combating terrorism and maritime security. Indonesia has also
participated in the Theater Security Cooperation Program with the U.S. Pacific

¹²⁵ “Indonesia, USA’s Newmont Reach 30m-dollar Settlement,” BBC News, February 17,

2006.

¹²⁶ “US Offers to Assist Indonesia with Setting Up Defense University,” BBC News, June

3, 2008.

¹²⁷ Ed Masters, Report of the National Commission on U.S. Indonesian Relations (Seattle:
National Bureau of Asian Research, 2003).
¹²⁸ John Noer with David Gregory, Chokepoint: Maritime Economic Concerns in Southeast
Asia (Washington: National Defense University Press, 1996).
¹²⁹ Edward Masters, House Committee on International Relations, Subcommittee on Asia
and the Pacific, Testimony for a Hearing on, “The United States and Asia: Continuity,
Instability, and Transition,” March 17, 2004.

Command. This has involved Indonesia in counterterrorism seminars promoting
cooperation on security as well as subject matter expert exchanges.¹³⁰ Indonesian
Marines and U.S. Navy Seals have held joint counterterror exercises.¹³¹ In February
2006 Pacific Command Commander Admiral William Fallon announced that the
United States will help train Indonesian non-commissioned officers to help them
develop their technical skills.¹³²
Military to military ties between the United States and Indonesia have ebbed and
flowed since the 1950s. This has been conditioned by both the disposition of the
regime in Jakarta to the United States and by U.S. perceptions of the TNI’s record on
human rights. A significant relationship was established by the 1960s. This was
expanded in the wake of Sukarno’s demise.
The Administration’s policy on assistance to Indonesia is informed by the role
that Indonesia plays in the war against terror in Southeast Asia. The United States
and Indonesia cooperate on counterterrorism in a number of areas with assistance
going to the police and security officials, prosecutors, legislators, immigration
officials, banking regulators and others.
U.S.-Indonesian counterterror capacity building programs have included funds
for the establishment of a national police counterterrorism unit and for
counterterrorism training for police and security officials. Such assistance has also
included financial intelligence unit training to strengthen anti-money laundering,
counterterror intelligence analysts training, an analyst exchange program with the
Treasury Department, and training and assistance to establish a border security
system as part of the Terrorist Interdiction Program.¹³³ A major accomplishment of
these programs is the increasing capabilities of Detachment 88, an elite
counterterrorism unit that has received assistance from the United States and
Australia. Detachment 88 has been responsible for tracking down scores of JI cadre,
including Azahari bin Husin, Zarkasih, and Abu Dujana.¹³⁴

¹³⁰ “United States-Indonesia Military Relations,” Congressional Record, Senate, Page S734,
February 1, 2005.
¹³¹ “US, Indonesian Navies Hold Joint Anti-Terror Exercises,” Oster Dow Jones, May 10,

2005.

¹³² J. Gittler, “U.S. to Train Indonesian NCOs as Part of Renewal of Ties,” Pacific Stars and
Stripes, February 27, 2006.
¹³³ Information drawn from State Department Fact Sheet, “Summary of Counter Terrorism
Assistance for Indonesia,” October 2003 update.
¹³⁴ Tom McCawley, “Indonesia’s terrorist hunt bears fruit,” Christian Science Monitor, June

15, 2007.

Table 1. U.S. Foreign Assistance to Indonesia
Acct*FY2007Actual FY2008EstimateFY2009Request
CSH¹³⁵ $27,507 $25,737 $30,883
DA 29,524 70,953 122,021
ESF 69,300 64,474 -
FMF 6,175 15,572 15,700
HIV/AIDS250--
IM ET 1,398 927 1,500
INCLE 4,700 6,150 9,450
NADR 8,881 5,861 6,750
P.L. 48010,951--
Title II
T otal 158,686 189,674 186,304
^Source:^“^F^Y^{2009 C}^oⁿ^g^r^es^sⁱ^on^al^Bu^dg^et^J^u^s^tⁱ^fⁱ^catⁱ^oⁿ^f^o^r
^F^o^rei^gⁿ^O^p^eratⁱ^oⁿ^s^{,” U}^.^S^.^D^e^part^m^eⁿ^t^of^S^t^at^{e, 2008.}
The United States is promoting counterterrorism in Southeast Asia on a regional
and multilateral basis as well as on a bilateral basis with Indonesia. Such an
approach is viewed as complementing and promoting bilateral assistance and focuses
on diplomatic, financial, law enforcement, intelligence and military tools. Two key
objectives of the U.S. government are to build the capacity and will of regional states
to fight terror. These objectives are pursued through a number of programs. The
United States-ASEAN Work Plan for Counter-Terrorism has identified information
sharing, enhancing liaison relationships, capacity building through training and
education, transportation, maritime security, border and immigration controls, and
compliance with United Nations and international conventions, as goals for enhanced
regional anti-terrorism cooperation.
The Anti-Terrorism Assistance Program, directed at law enforcement training
and associated hardware, has aided Indonesia, among others. In addition, Financial
Systems Assessment Teams and the Terrorist Interdiction Program (which focuses
on border controls) have also assisted Indonesia. The United States has also

¹³⁵ Child Survival and Health (CSH), Development Assistance (DA), Economic Support
Funds (ESF), Foreign Military Financing (FMF), International Military Education and
Training (IMET), International Narcotics Control and Law Enforcement (INCLE), Non-
proliferation Anti-terrorism Demining and Related Programs Export Control and Border
Security Assistance NADR-EXBS, Non-proliferation Anti-terrorism Demining and Related
Programs Antiterrorism Assistance (NADR-ATA).

supported the Southeast Asian Regional Center for Counter-terrorism in Kuala
Lumpur. Foreign Emergency Support Teams are designed for rapid deployment in
response to a terrorist related event while Technical Support Working Groups work
with regional partners to find technical solutions to problems such as bio-terrorism
warning sensors.¹³⁶
The Tsunami. On December 26, 2004, an undersea earthquake off the coast
of Sumatra triggered a tsunami wave that killed an estimated 122,000 (with an
additional 114,000 missing) and left over 406,000 displaced persons in Indonesia.
Most of the devastation was in Aceh in northwest Sumatra, which was the closest
landfall to the epicenter of the Indian Ocean earthquake. This disaster led to a
massive international relief effort in which the United States played a leading role.
In Indonesia, this included helicopter-borne assistance from the aircraft carrier USS
Abraham Lincoln, which was accompanied by the USS Bonhomme Richard, and the
USS Fort McHenry. Before their departure from the area 2,800 relief missions were
flown, some 2,200 patients were treated, and 4,000 tons of relief supplies were¹³⁷
delivered. In the wake of the tsunami, the U.S. government pledged a total of
$397.3 million in humanitarian and recovery assistance for Indonesia.¹³⁸
Options and Implications for the United States
Debate concerning U.S. policy towards Indonesia has in recent years been
largely framed by human rights and security interests. Based on past debate in
Congress, individual decision-makers’ approaches to this question will likely involve
a consideration of a mix of U.S. foreign and strategic policy interests with Indonesia.
These will likely include a consideration of possible tradeoffs between a foreign
policy approach that stresses the promotion of human rights and one that seeks to
strengthen bilateral ties in order to assist in the struggle against violent Islamist
extremists and to promote United States geopolitical interests. Among possible
policy approaches, the U.S. might consider the following options.
^!Continue to focus on and give primary consideration to
Indonesia’s pivotal role in the war against radical violent
Islamists in Southeast Asia. Indonesia likely will remain an
indispensable partner in the struggle against violent Islamists in
Southeast Asia for years to come. As such, many view it as prudent
that the United States maintain a good working relationship with
Indonesia. Such an approach could build on momentum in
developing bilateral military-to-military ties built in 2005 and 2006
and develop enhanced exchanges, training, and military-to-military
relationships in order to bring the full capabilities of the TNI into the

¹³⁶ Drawn from State Department budget justification material.
¹³⁷ “Indonesia: Tsunami Reconstruction,” USAID, May 11, 2005, [http://www.usaid.gov]
¹³⁸ “USAID Rebuilds Lives After the Tsunami,” USAID Tsunami Reconstruction, March 24,

2006. [http://www.usaid.gov]

struggle against radical Islamists while continuing to work with the
Indonesian police.
^!Continue to focus on human rights concerns over past abuses by
the Indonesian military. Many feel that there remains a serious lack
of accountability for past human rights abuses by the Indonesian
military, particularly the human rights abuses perpetrated by pro-
integrationist militias in East Timor in 1999, and that more could be
done on either a bilateral or multilateral basis, or both, to increase
accountability for past abuses. Such an approach could involve a
closer working relationship with the United Nations and East Timor.
Past efforts by the United Nations — such as the U.N. Tribunal in
Dili including the Serious Crimes Investigation Unit and Special
Panels for Serious Crimes — have been shut down, while the
Indonesian trials ended in acquittals for all Indonesians. A
subsequent U.N.-sponsored Commission of Experts found the¹³⁹
Indonesian trials to be “manifestly inadequate.”
As part of its oversight role, Congress may opt to consider a range of policy
options for relations with Indonesia. In this context, the following options for the
bilateral relationship may be of interest. While such policy options are at times
mutually exclusive they often need not be. A non-zero sum approach might seek to
blend American foreign policy interests through a focus on an enhanced emphasis on
the promotion of democracy, good governance, civil society, and the rule of law as
well as human rights and security interests. Such an approach, by not taking a zero
sum view of tradeoffs between human rights and security interests, would be aimed
at achieving both enhanced partnership on security issues and enhanced promotion
of human rights and other interests in Indonesia by promoting and supporting
ongoing democratic and civil society developments in Indonesia. Supporters of this
approach believe that it could have an indirect positive impact on Indonesia’s human
rights record as well as reinforce ties between the two states.
^!Place enhanced emphasis on the promotion of democracy and
the rule of law in Indonesia. Such an approach is seen as consistent
with the president’s national security strategy which emphasizes
“building the infrastructure of democracy.”¹⁴⁰ Such an approach in
Indonesia could include additional funding and other support to
continue consolidating democratic reforms, the continued
establishment of an impartial electoral framework, political party
development, member-constituent relations, and strengthening of
national legislative bodies.¹⁴¹ The promotion of democratic values
could also have a positive impact on other issue areas such as the
promotion of human rights.

¹³⁹ Human Rights Watch, “East Timor,” [http://hrw.org].
¹⁴⁰ The National Security Strategy of the United States of America, March 2006.
¹⁴¹ For an example of some existing activities see National Democratic Institute, “Asia:
Indonesia,” [http://www.ndi.org]

^!Give the geopolitical importance of Indonesia more weight when
considering bilateral ties. Indonesia’s position on the Straits of
Malacca, as a moderate Muslim country, as the largest member of
ASEAN, and as a state that does not seek to exclude the U.S. from
regional multilateral fora or from the region gives it geopolitical
importance to the United States. As such, and in light of expanding
Chinese influence in the region, it is prudent in the view of many
that relations with Indonesia be developed so that Indonesia does not
seek to move away from the United States in international fora or by
developing alternative strategic relationships. Indonesia remains one
of the least well understood geopolitically important nations to
America. Expanding bilateral educational exchanges, research
grants, and language training could seek to educate Indonesia’s
present and future elites while giving them an enhanced
understanding of the United States and its values. Such educational
exchanges could also provide Americans the opportunity to better
understand Indonesia and the role that it plays in its region and in the
Islamic world.
^!Place enhanced emphasis on transnational issues, such as
environmental degradation, including rainforest destruction,
preservation of bio-diversity and global warming, and avian flu.
The United States and Indonesia initiated what would be a first-of-
its-kind agreement to combat illegal logging in April 2006.
Consolidating and extending such initiatives could help protect
Indonesia’s environment. Many feel that Indonesia’s bio-diversity
and diminishing environment would likely benefit from enhanced
protection. With only 1.3% of the earth’s surface Indonesia has an
estimated 10% of the world’s flowering plants, 12% of the world’s
mammals, 16% of the world’s reptiles and amphibians, 17% of the
world’s birds, and over 25% of the world’s fish.¹⁴² United States
assistance to Indonesia to help it protect its rainforests from illegal
logging would help protect the environment upon which Indonesia’s
bio-diversity is dependent. Avian flu has the potential to kill many
in the United States. Addressing the problem of potential human-to-
human transmission in Indonesia may be a highly effective way to
contain an outbreak but thus far Indonesia is generally considered to
be underresourced to handle the threat.
^!Do more to advance American trade and investment interests in
Indonesia. In April 2006, U.S. Trade Representative Rob Portman
pointed to developing “building blocks” that could serve as the basis
for negotiating a Free Trade Agreement (FTA) between Indonesia
and the United States.¹⁴³ Continued emphasis on further developing

¹⁴² “Indonesian Bio-diversity,” [http://www.geocities.com/rainforest/4466/biodiver.htm].
¹⁴³ “U.S. Indonesia Strengthen Economic Ties, Says U.S. Trade Representative,” U.S. Fed
(continued...)

these building blocks, which include such agreements as efforts to
curb illegal logging and the trade in endangered species, may help
move the two states towards an FTA. American companies have also
encountered difficulties in Indonesia in recent years and may benefit
from enhanced support or guidance from the U.S. government.
Elements of all of the options discussed here can be found in current American
foreign policy towards Indonesia, though the mix in emphasis has shifted over time.

¹⁴³ (...continued)
News, April 5, 2006.

CRS-34
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