Asia Times October 10, 2001

US business pushes for military ties with Indonesia

By Tim Shorrock

WASHINGTON - With political tension building in Indonesia over the United States military attacks on Afghanistan, US business groups are hoping to increase support for the government of Megawati Sukarnoputri by convincing Congress to lift the ban on military training for Jakarta.

The push to normalize military relations with Indonesia is coming from two influential business groups in Washington, the US-ASEAN Business Council, which represents over 400 US corporations doing business in Southeast Asia, and the US Indonesia Society, a private group whose membership includes top business and government officials from both countries.

It dovetails with a new Bush administration initiative to widen the coalition supporting US military action in the Middle East by waiving restrictions on military aid and weapons exports to any country deemed by President George W Bush to be aiding in the fight against terrorism.

But it could trigger a battle in Congress. US lawmakers have been remarkably united in their response to the September 11 attacks but are beginning to show signs of partisanship over how to respond economically and politically to the new war situation, specifically on a bailout for the airline industry and administration proposals on law enforcement.

Many Democrats are opposed to restoring International Military Education and Training (IMET) for Indonesia until some of Megawati's military backers are brought to justice for the 1999 violence in East Timor. They also want assurances that her government can control what many believe to be military overreactions in the rebellious provinces of Aceh and Irian Jaya.

With the Southeast Asian economy in a near recession and Indonesia's huge population of Muslims angry about the US war, however, the business groups believe that direct US engagement with the Indonesian military is critical.

"This council is in favor of lifting the ban on IMET," said Ernest Z Bower, president of the US-ASEAN Business Council, in an interview with representatives of the Asian press, including Asia Times Online. "You've got to work with people in Indonesia and engage them if you want progress. The way to go is engagement, rather than stand back and chastise."

Two days after Bower spoke, the US raids on Afghanistan began, sparking a strong backlash in Indonesia. On Tuesday, police fired warning shots and tear gas outside the US embassy in Jakarta during a clash with hundreds of stick-wielding Islamic activists protesting the attacks in Afghanistan and Muslim groups have threatened to retaliate against American interests and citizens. Meanwhile, the embassy issued a statement urging "in the strongest possible terms that all Americans resident in Indonesia remain at home and exercise maximum caution". Clothing and shoe giant Nike Inc is said to have evacuated much of its staff from Indonesia.

In his remarks, Bower argued that a lifting of the IMET restrictions and stronger military-to-military ties would reinforce US economic and trade measures taken towards Indonesia and US companies in that country during Megawati's September visit to Washington.

One of the most significant was the granting by US Trade Representative Robert Zoellick of duty-free import status to copper ores and concentrates, part of a broader plan to abolish duties of more than US$100 million worth of Indonesian imports. The elimination of the copper duties directly helps one of the largest US investors in Indonesia, Freeport-McMoRan Copper & Gold Inc, which operates a major copper mine and smelting operation in the country.

In addition, the Export-Import Bank, the Overseas Private Investment Corporation and the Trade and Development Agency agreed to provide $400 million in loans and guarantees to finance US exports to Indonesia.

During her visit, Megawati said that Indonesia was ready to cooperate with "other civilized nations" to fight terrorism and pledged to continue economic and financial reforms sought by US and other companies and the International Monetary Fund. She also used her time to press for a normalization of military ties and convince lawmakers that the Indonesian military was acting honorably in trying to end unrest in Aceh and elsewhere.

"As to the issue of Aceh, I am aware that it has attracted a lot of attention from some members of the US Congress, as well as human rights activists," Megawati said in a speech to the US-ASEAN Business Council and the US-Indonesia Society. "I am trying to handle it in a peaceful manner, through a responsible political process without sacrificing the national integrity of Indonesia."

On the issue of military relations, Megawati said that she had stressed in her talks with Bush that "the resumption of our military relations will strengthen democracy in Indonesia" and pointed out how earlier in the year the military had rejected a last-minute appeal from the impeached President Abdurrahman Wahid to dissolve parliament. "At that critical moment, they made a stand for democracy," she said.

Officials in Bush administration seem to agree and have used that incident to press Congress to lift the ban on IMET training. Defense Secretary Donald Rumsfeld and his deputy, Paul Wolfowitz, the former US ambassador to Indonesia, have been active in this front.

In late September, following reports that the Bush administration was seeking a blanket waiver on restrictions to countries that support the war on terrorism, two influential NGOs asked Congress not to lift the ban on IMET for Indonesia.

"Any move to lift congressional restrictions on US relations with the Indonesian military (TNI) would only empower a brutal military immune to accountability for human rights violations," the East Timor Action Network and the Indonesia Human Rights Network said in their joint statement. "A blanket waiver would undermine years of calculated congressional response to the TNI's own incriminating acts and seriously compromise congressional checks on executive action. It would also undeniably result in the use of US-supplied weapons, training, and other military assistance in the severe repression of Indonesian and possibly East Timorese civilians."

According to the US-ASEAN council, foreign direct investment in the ASEAN region last year dropped to half the level of 1997, from $32.5 billion to $13.8 billion. At the same time, the recession in the United States is reducing Southeast Asian exports. "The US won't be able to pull Southeast Asian exports like it did in 1998 and 1999," Bower said. The council will send a large business mission to Indonesia next January. This week, the council is sending 22 companies on a mission to Thailand.

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