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New US-Indonesia Relations:From Myth to Reality

Dana R. Dillon

Produced by
The Asian Studies Center

The Heritage Foundation
214 Massachusetts Ave., N.E.
Washington, D.C.
(202) 546-4400
No. 1439 May 11, 2001

Current U.S. policy toward Indonesia is designed to promote political, economic, and military reform in that troubled country, but finding sound policy prescriptions to accomplish these goals has been difficult. Indonesia is the largest and the most important country in the Association of Southeast Asian Nations (ASEAN) and a key to stability in the region. Despite U.S. aid and international assistance, however, it is still undergoing the most severe political, economic, and security crisis it has faced in the past 40 years. Moreover, despite international attention and alarm, the Indonesian military continues to abuse its power, undermining democratic progress, economic development, and the rule of law.

To recover its role as a leader in this important region, Indonesia will continue to need U.S. economic aid and some form of military assistance; but such aid must be based on facts and subject to strict limitations. American actions must not make a bad situation worse by subsidizing failed policies or by encouraging Jakarta to procrastinate in making the difficult but necessary reforms.

A new U.S. policy toward Indonesia must be based on a realistic assessment of Indonesia's strategic importance in the region. The challenge for the Bush Administration will be to develop a measured policy that ignores alarmist fears about the demise of Indonesia and assists its leaders in developing and implementing sound economic reforms, nurturing respect for the rule of law, reducing government corruption, and establishing accountability and oversight of the military.


In the past, finding policies that promote Indonesia's democratic and economic development has been difficult, but recent alarmist prognostications about Indonesia's future are compounding the difficulty. For example, Indonesian President Abdurrahman Wahid asserted in March that if he were to resign, several provinces would secede, implying the disintegration of Indonesia. 1 Some observers in Washington even have criticized the Clinton Administration's mishandling of U.S. policy toward Indonesia by comparing Indonesia's problems to the situation in Yugoslavia.

Such rhetoric is disingenuous: Indonesia is not about to disintegrate. At the same time, however, its continued economic and political turmoil prove that Jakarta's policies have failed. Washington should avoid listening to myths and alarmist rhetoric about Indonesia, and focus instead on the hard realities in order to create a new U.S. policy that assists this important nation in regaining stability and economic growth.

Myth #1: Indonesia is the world's third largest "democracy."

One election does not make a democracy. Since its first free and fair election in 1998, Indonesia has only begun its transition to democracy; the full transition may not be complete even by the end of this decade.

Examples of how far Indonesia must go are widespread. The press, though reasonably open, is still subject to violent intimidation from a variety of sources. The Alliance of Independent Journalists reported 106 attacks against Indonesian journalists last year alone. 2 In the current atmosphere of lawlessness and impunity, the frequently violent attacks have come from the public, government officials, and the police.

Moreover, government and military activities in Indonesia are not transparent. Military "charitable foundations," the principal source of income for the armed forces, have not been satisfactorily audited. Corruption in the government and the military is rampant. President Wahid has been censured twice by the parliament for corruption. The Indonesian police still jail people for the peaceful expression of political views that differ from Jakarta's. Theys Eluay, president of the Papuan Presidium, for example, was jailed simply for saying that West Papua (Irian Jaya) should secede.

A troubling development is that Vice President Megawati Sukarnoputri, who appears to be establishing herself to become the next president, is reportedly in close contact with the military generals, many of whom make no secret of their support. 3 Relying on the military to stabilize the presidential accession process would be a blow to the country's nascent democracy.

Myth #2: If the provinces of Aceh and West Papua (Irian Jaya) gain their independence, Indonesia will disintegrate.

The domino theory does not apply to Indonesia. After East Timor voted to secede from Indonesia in 1999, many political analysts posited that if the rebellious provinces of Irian Jaya and/or Aceh also were to break away, other provinces would follow, desert Indonesia, and usher in the disintegration of the unitary state.

That end state is not a foregone conclusion. Without doubt, there are very active independence movements in both Aceh and Irian Jaya; yet these two provinces account for less than 10 million of Indonesia's 217 million people, and the other 200 million are not looking for alternative homelands. Neither in Kalimantan nor in the Moluccas islands, where sizeable outbreaks of communal violence have occurred, are there important independence movements; almost all sides of these disputes assert Indonesian citizenship. Thus, even in the worst-case scenario in which Aceh and Irian Jaya seceded from Indonesia, there is still a core population of 200 million people who share a sense of national identity that would preserve the integrity of the Indonesian state.

In the words of Donald K. Emmerson, a Senior Fellow at Stanford University, "The geographical and cultural patchwork of Indonesia may shrink, but it is not about to unravel." 4 Indonesia would continue to exist even without Irian Jaya or Aceh, but the United States should not inadvertently take steps that would encourage their separation. U.S. policymakers should focus not on static defense of personalities and territories, but on how to help Indonesia though its economic and democratic transition.

Myth #3: Only the Indonesian military can hold the country together.

The Indonesian National Army (TNI) is probably the country's most hated institution. Although Indonesian army generals insist that the military is the only Indonesian institution capable of holding the country together, 5 this runs counter to the reality on the ground. The military wields power by virtue of its arms, but every one of Indonesia's current security crises is a manifestation of policies implemented by the government and the military during the previous administrations and continued, with little modification, by the present one.

For example, the government's transmigration program, which encouraged or forced migration from the island of Java to outer islands, created the conditions for inter-communal conflicts in the Moluccas islands and Borneo. 6 Javanese migrants were settled on land previously utilized by indigenous populations; they were given government jobs and priority access to licenses and permits that allowed their businesses to prosper. This marginalized the indigenous populations of the outer islands, both politically and economically. Decades of government neglect and military abuses exploded, and they continue to feed the violence today.

Insurrections in Aceh and Irian Jaya, which were present when Indonesia assumed control of those provinces in 1950 and 1963, respectively, were aggravated by the savage human rights abuses inflicted upon the people by the armed forces. 7 The movement of additional troops to these trouble spots did little to improve security.

In fact, because of a gross lack of discipline and the propensity of Indonesian soldiers and police to engage in illegal moneymaking activities, security arguably has worsened since the TNI arrived. Just this month, truck drivers in Aceh and North Sumatra went on strike to protest ruinous extortion conducted by army battalions deployed to their regions. New army units deployed to Aceh in April to bring stability, for example, instead set up roadblocks to extort bribes from the passing trucks. 8 The strike brought the Acehnese economy to a near standstill, with the prices of many food products more than doubling.

In short, far from being the institution best suited to bringing peace and stability to Indonesia, the military is the institution least likely to do so unless it undergoes serious reform and is made responsive to civilian leadership.

Myth #4: The Indonesian military is accountable to the civilian government.

Senior Indonesian army officers loudly declare their loyalty to the civilian government, but they have failed to make the institutional changes within the military and police forces to enshrine that loyalty in law. Since President Wahid came to power 18 months ago, there has been the appearance of reform in the security forces. The national police were transferred out of the ministry of defense; two civilians were appointed consecutively as defense ministers; and a navy officer was appointed as commander in chief of the armed forces--a position normally held by the powerful army.

In Indonesia, however, the more things change, the more they remain the same. Having taken these seemingly positive steps, Wahid then created the position of Coordinating Minister for Political and Security Affairs with responsibility over both the police and the military. He then appointed an army general, Susilo Bambang Yudhoyono, to fill this position, thereby effectively nullifying his so-called reforms.

Not a single member of Indonesia's military has been tried for crimes that occurred in East Timor following the independence referendum in August 1999. A still undetermined number of people--with estimates running from the hundreds to the thousands--were killed, and virtually the entire population was made homeless in September 1999 when the TNI burned down their houses.

Indonesia's generals are wrapped in a self-made cocoon of patriotic rhetoric and legalistic arguments that protect them from any accountability for their human rights abuses or other crimes, and this legal impunity extends down the entire chain of command, causing a gross disregard for discipline throughout the ranks. Members of the TNI and police regularly engage in competing criminal businesses, frequently resulting in firefights over territory. In the inter-communal conflicts, the soldiers and police often desert their units to fight on the other side or sell guns to anyone who pays in cash. The TNI is the force that is driving the country apart.

The United States will not be able to avoid contact with the Indonesian military, some of whom are bad actors. Many Indonesian generals
in positions of authority have been indicted for or are suspected of committing crimes against humanity. But while limited military engagement with the TNI is necessary for promoting U.S. security interests in the region, the program must be executed carefully with an eye toward avoiding contacts with, or reinforcing the importance of, officers indicted for or suspected of war crimes.


Even though Indonesia is not about to disintegrate, the manifest incompetence of the Indonesian government is such that, without reform, the repercussions caused by its economic and security policies could still be extremely serious.

  • Indonesia is the world's fourth most populous country.

  • Its archipelago stretches across strategic sea-lines of communication.

  • It is an important trading partner of the United States, as well as of Asia and Europe.

  • An interruption in the flow of its oil and gas exports could precipitate another round of regional economic crises. When Exxon/Mobil closed three liquid natural gas fields in Aceh this past March for security reasons, for example, customers in South Korea and Japan had to scramble to find other sources.

  • With millions of Indonesians already displaced internally, continued inaction by the central government could send millions of refugees spilling into neighboring countries, creating a humanitarian crisis.

  • Indonesia has the world's largest Islamic population. If that population turns to sectarian violence, it could spread instability to other parts of Southeast Asia.

Other security interests are also at stake. Incidents of maritime piracy have more than quadrupled over the past decade, and the bulk of the attacks against maritime commerce have occurred in an area adjacent to or within Indonesia's territorial waters. 9 A further decrease of Jakarta's ability to enforce law and order would result in a commensurate increase in piracy. The loss of central control also would make it more difficult for international institutions to assist Jakarta in its efforts to promote reform.

From the U.S. perspective, Indonesia is extremely important. From the perspective of Australia, America's closest ally in the region, it is indispensable. Of ASEAN's member countries, it is both the largest and the one with the largest economy. In the past, by virtue of its size, strategic attributes, and sense of destiny, Indonesia exercised a leadership role in ASEAN; after the fall of President Suharto, however, its capacity for such leadership deteriorated.

Reestablishing this leadership is even more important now that the United States and China are entering a period of competition and the South China Sea could become the cockpit for their tension. A strong, independent, and effective ASEAN community is vital to protecting the economies and democracies of countries in that region; but ASEAN cannot prosper without a stable Indonesia.


Indonesia, even in the midst of its most severe political, economic, and security crisis, remains an important regional leader for ensuring security and protecting U.S. interests. The Bush Administration must develop a new policy toward Indonesia that is based on this fact. Specifically, the Administration should:

  • View economic recovery in Indonesia as the key to regional stability. Indonesia has done less to recover from the 1997 Asian financial crisis than any other country in the region. Its economic growth last year was the result of a windfall from high prices for oil and other commodities. Its current political and economic crisis is due largely to the government's failure to implement even the most basic reforms.

The United States should help Jakarta design sound macroeconomic policies and should provide generous assistance--but only after the government implements the necessary but difficult reforms. Patience will be important; U.S. policymakers cannot make the Indonesian government move toward greater economic and political freedom any more rapidly than the political situation in Jakarta warrants. To assure that any change is long-lasting, it will be necessary for the Indonesian people to set the pace and scope of reform.

  • Demand accountability for the Indonesian military. President Wahid pleaded with the United Nations to prevent the establishment of an international war crimes tribunal to look into the Indonesian military's behavior in East Timor. He promised that Indonesia would hold trials. 10 However, not a single person--either military or paramilitary--has been tried or convicted for their actions in East Timor since President Wahid made that promise, and Jakarta continues to narrow the field for prosecution. Until the Indonesian military can be brought to justice for human rights abuses, Washington should continue to withhold State Department funds under its international military education and training (IMET) program, which would train uniformed military people, as well as sales of lethal military equipment.

  • Train Indonesia's political elite to strengthen the country's civilian institutions. Strengthening all the branches of the central government and helping loca lgovernments to become more autonomous should be among Washington's priorities. For example, Washington could help Jakarta create a civilian-led Ministry of Defense by providing a form of assistance known as expanded international military education and training (E-IMET) funds. E-IMET is a program, similar to IMET, to train senior military and civilians in human rights, legal, and other civil-society disciplines. A cadre of civilian experts, trained on defense management, budgeting, and acquisitions procedures, could staff the civilian-led Defense Ministry, which should maintain authority over the military.

Currently, funds for programs that train local governments and politicians are provided by the U.S. Agency for International Development and support the efforts of the International Republican Institute and the National Democratic Institute for International Affairs. In the future, funds should be dedicated to training provincial authorities and political parties to assist the Indonesians in making an orderly transition to democracy and establishing a more federalized system.

  • Show Indonesia how to institute legislative oversight of the military. After decades of rubber-stamp acquiescence to Indonesia's
    president, the new democratic parliament is not exercising effective oversight of the military. This is partly because it is unfamiliar with the appropriate means and methods involved in oversight of military activities. The United States could provide expertise in this area to members of the Indonesian parliament to enhance civilian control of the military, increase respect for the rule of law, and create transparency measures governing military activities. Experts from other Asian parliaments that have established committees for military oversight could be included in these training sessions.

  • Engage the Indonesian military where it serves U.S. interests. Current U.S. policy prohibits or limits American participation in any multilateral forum that includes Indonesian officers. The original intention of this policy was a response to TNI's brutal human rights record. Military engagement that addresses regional security issues and Indonesia's external defense requirements, however, would promote U.S. security goals in the region without condoning or encouraging improper behavior by the Indonesian military. U.S. attendance at multilateral security conferences, participating with Indonesia in military exercises that focus on external defense, training that enforces the rule of law, and Indonesian participation in peacekeeping operations can enhance regional security but should not be construed as condoning the behavior of the Indonesian military at home.

  • Support the development of the Indonesian police. The Indonesian government is taking steps to reform and civilianize the police, which often have been as corrupt as the military. President Wahid transferred them out of the armed forces, changed their rank structure from military to more common police ranks, and gave them sole responsibility for maintaining law and order internally. The United States, by providing training and equipment to the Indonesian police and the newly formed maritime police force, could assist Jakarta in this important effort. Although U.S. equipment and training are unlikely to result in direct or even perceptible reductions of crime in Indonesia in the short term, strengthening the police and maritime forces could indirectly shore up the civilian leadership vis-à-vis the military.


Until the Indonesian government reforms the economy and the military and strengthens its civilian institutions, the United States should withhold additional assistance and limit military engagement with this troubled country. Indonesia's stability is important to U.S. interests, but without reform, its economic and political crisis will continue. Washington therefore must find a means of engagement with Indonesia that will not subsidize its failed policies or lead its government to delay essential reform.

--Dana R. Dillon is a Policy Analyst on Southeast Asia in the Asian Studies Center at The Heritage Foundation.



1. "Students Storm State Radio Station in Ternate," Indonesian Observer, March 23, 2001.

2. "Journalists Face Violence and Intimidation," The Jakarta Post, May 3, 2001.

3. Michael Shari, "The Plot Thickens and the Economy Dangles," Business Week, May 14, 2001.

4. Donald K. Emmerson, "Will Indonesia Survive?" Foreign Affairs, May/June 2000, p. 95.

5. Sadanand Dhume, "Indonesia's Military Reasserts Its Authority," Far East Economic Review, December 28, 2000.

6. Sidhesh Kaul, "Ethnic Conflict or Policy Failure?" The Jakarta Post, March 9, 2001.

7. Jay Solomon, "Indonesia Clamps Down on Separatist Efforts," Asian Wall Street Journal, December 13, 2000.

8. "Aceh Truck Drivers Strike Over Extortion," The Jakarta Post, May 2, 2001.

9. International Chamber of Commerce, International Maritime Bureau, "Annual Piracy and Armed Robbery Against Ships Report for 2000," January 30, 2001.

10. Agence France-Presse, "Wahid Decree Rules Out Trial of Key Timor Suspects: Prosecutor," Jakarta, May 2, 2001.


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