The lure of Asia

INDONESIA is coming back and is set to resume its rightful leadership of Southeast Asia. This week its President, Susilo Bambang Yudhoyono, decisively reshuffled his cabinet, substantially strengthening the economics team. Two months ago SBY's Government took the crucial domestic economic reform step of cutting fuel subsidies after already enduring a huge increase in the external price of oil. Even Suharto had baulked at this reform.

Recently, Indonesian authorities eliminated one of the worst terrorists in the region, Azahari bin Husin.

Indonesia also recently surpassed, for the first time, its peak per capita income level from before the 1997 East Asian economic crisis. Economic growth this year will be 5.5 per cent and next year probably a bit better.

Washington has just lifted its limited arms embargo against Jakarta, having restored military training programs last year.

Meanwhile, relations between the Indonesian and Australian leaderships have reached an extraordinary level of intimacy, and this intimacy - and this is the most remarkable thing of all - is backed by large sections of the publics of the two nations as being in their respective national interests.

SBY, as he is universally known, is confident, engaged and upbeat when I meet him in his presidential office in Jakarta. The Indonesian presidential palace extends over a network of several large, low, white buildings, surrounding lush tropical gardens. But the President's office, as befits a military man, is crisp and efficient. There is a certain pomp, entirely right for the leader of the world's third largest democracy, but SBY is infinitely courteous and solicitous.

Our long discussion this week begins with the cabinet reshuffle. Yudhoyono has brought the respected former finance minister Boediono back as Co-ordinating Minister for Economics and made the well-regarded economist Sri Mulyani the Finance Minister, while keeping the Australian-educated Mari Pangestu as Trade Minister.

It is probably the best economics team Indonesia could have and Yudhoyono has been criticised for not appointing them all a year earlier.

In truth, like all good democratic leaders, he was balancing factions and interests and coalition parties, which is the very stuff of democracy.

Yudhoyono says Indonesia's economic growth is not bad, given the difficult external environment, especially the price of crude oil.

"I conducted a limited reshuffle and put Boediono in a strategic position and moved Sri Mulyani into finance," he tells Inquirer. "It's my belief these two people can manage the macro-economy best and improve our overall performance. I have worked with Boediono before and I know for sure he's capable."

John Howard and Alexander Downer have pressed their friends in the Bush administration in Washington very hard to take the historic opportunity that Yudhoyono offers. He is the best possible president they could hope for and he offers political stability, economic growth and continued improvement on human rights and democracy, and he is committed to fighting terrorists.

Whether Howard and Downer played any role or not, Washington recently decided to lift an embargo on selling and licensing military equipment to Indonesia which has crippled the capabilities of the country's armed forces. Yudhoyono is naturally pleased at this development.

"Firstly, I am delighted to note that the US has lifted the sanctions it imposed first since 1991 and the Dili incidents in the Santa Cruz [cemetery when East Timor was part of Indonesia] and again following the events in East Timor in 1999 [after which East Timor came under international control and Australian influence]," he says.

"Because of the embargo we have had a lot of difficulty in getting spare parts and maintaining operations and training for our forces.

"Since I became president I have had good talks with President Bush and Prime Minister Howard - I have not given them promises - but good talks on things we have to do to solve our security problems peacefully and democratically.

"We continue our reforms and we have solved Aceh peacefully and democratically." The same, he says, will happen in Papua.

"We are fighting hard against terrorism, not only as a global commitment but to make my nation safer. We are also trying to address the root causes of terrorism, to empower our moderate ulema [Islamic scholars] to save our brothers and sisters from being deceived. What I'm doing is seen positively in the US. I want to strengthen, normalise and widen relations [with the US]."

It is very easy to get Yudhoyono on to a pro-Australian riff, something you could not have said about any previous Indonesian president. His words, which carry immense moral and political authority, should give pause to those who claim either that the Howard Government is ineffective in Asia or that Canberra's closeness to Washington causes us serious damage in Southeast Asia. Here is Yudhoyono's considered view.

"I want to develop concepts to strengthen co-operation with the US and Australia and other friendly nations," he says. "I really enjoy the existing friendships and co-operations between the leaders. John Howard and I realise that even if we have some differences, we have to stay close, we have to co-operate. In fighting terrorism we were both shocked by the October attacks in Bali. It's a wake-up call to both Indonesia and Australia to stay close.

"I'm really grateful that when Indonesia was hit by the tsunami, Mr Howard and Australian soldiers helped us in a speedy manner. Australian soldiers arrived just in time. Australia has helped financially to rehabilitate Aceh and is part of the overall reconstruction of Aceh.

"Both leaderships, both John Howard and I, fully realise that in facing our regional challenges and global threats we have to co-operate. We have to maintain this closeness. Of course there are still several elements here in Indonesia that are probably unhappy with the US and with Australia, especially over actions in Iraq.

"We realise that we could disagree on certain issues but we are satisfied and happy with how we work together.

"I don't see growing anti-US or anti-Australian feeling in Indonesia. I believe in Australia there are also elements that are unhappy with Indonesia on certain matters, but this should not hamper our co-operation." Yudhoyono is presumably referring to the Australian public's emotional attachment to Schapelle Corby and the other Australians in prison on drugs charges in Indonesia. But he is right to say this has not had any fallout in government-to-government relations and having people in each others' courts is also a demonstration of how entwined the two societies have become.

On terrorism, Yudhoyono makes three key points: that terrorists have the capacity to regroup and reconsolidate even after suffering defeats; that much terrorism is driven by ideology; and that Indonesia is "working day and night, often with very little publicity, in very intensive intelligence and police actions" to thwart the terrorists.

Earlier in the week, Indonesia's Foreign Minister Hassan Wirajuda told me he believes Indonesia has the terrorists, especially their leadership "on the run" and under a great deal of pressure and thinks it likely that Noordin Top, the most senior and powerful Jemaah Islamiah leader remaining at large, will soon be captured or killed.

Across town, the urbane and deeply intellectual Juwono Sudarsono, Indonesia's Defence Minister, tells me he believes the biggest terrorist organisations have been broken up, but that the autonomous cell structures, spread almost randomly across Indonesia, are more difficult to track and in some ways more dangerous, though their attacks are likely to be smaller.

Juwono, an immensely thoughtful and erudite man, as with Yudhoyono, utterly rejects the proposition that Australia suffers from its association with Washington.

"The US has somewhat delegated to Australia some aspects of defence, political and cultural co-operation with Indonesia, to reduce the over-prominence of the US in seeming to assist Indonesia," Juwono says.

"It's important for the perception problems in Congress that Australia be seen to take the lead with co-operation from the US.

"I think the recent bilateral ministerial dialogue between Australian and the US mentioned that, not so much the deputy sheriff thing: much more discreet, much more measured and much more effective, low key so to speak."

Yudhoyono himself is often seen as a low-key leader, though, like most of his countrymen, he is inclined to warble a karaoke hit or three. But he has forged an effective government, which is bringing Indonesia back, keeping the show on the road and making improvements.

As I explained on another thread, Southeast Asia will be of a more serious concern to the United States in the medium to long term. They are populated by a group of Third World nationalist with classical "develop and we beat them [the West]" mentality. And they are certainly developing.

Far mroe dangerous than old Europe.

They are populated by a group of Third World nationalist with classical "develop and we beat them [the West]" mentality. And they are certainly developing.

Thailand has an incredible amount of western influence. The Thai Kings, at least for the past 400 years or so, have all had very close western advisors. FYI, the current Thai King was born in Boston.

It is what makes Thailand different than its neighbors. Instead of fighting against the west, they learn from it and absorb it. I have never heard Thais complain about the west. Far from it. The US, for one, is incredibly well respected in Thailand.

Oh I agree. I should have made it clear I believe the US is friends with Thailand and Singapore and possibly the Philippines in the region. I'm mainly worrying about Malaysia - which is extremely anti-American among all its major ethnic groups, is far more prosperous than Thailand and ecnomically powerful than anyone else locally except Singapore. Sometimes, if you read Singapore's Chinese press even they sound a lot like they are influenced by their counterparts in China or Malaysia. Indonesia...sometimes it runs on locksteps with Malaysia but less hostile towards the US than it sometimes historically did.

And given that Malaysia is one of a handful of Islamic countries that know how to build a real economy, it is not something to be taken lightly. Ths US will need to be careful in dealing with who's who in ASEAN - I think Malaysia is a danger nation, Cambodia is in anarchy, the Philippines is in a chaos and has lots of PRC influence over the past few years, Burma is a nasty hellhole.

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