Indonesia: domestic politics, strategic dynamics, and American interests.

Updated April 3, 2006

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 an increasingly valuable partner in the war 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 effective and 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 through which strategic sea lanes link the Middle East and Northeast Asia. 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.

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 war 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.

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. Thus far the government has been reluctant to pursue large scale culls of poultry to stem its spread.

For additional information on Indonesia see the following Congressional Research Service (CRS) reports: CRS Report RL33260, Papua, Indonesia: Issues for Congress, by Bruce Vaughn; CRS Report RS22136, East Timor Potential Issues for Congress, by Rhoda Margesson and Bruce Vaughn; CRS Report RS20572, Indonesian Separatist Movement in Aceh, by Larry Niksch; CRS Report RS21753, Indonesia-U.S. Economic Relations, by Wayne Morrison; and CRS Report RL31672, Terrorism in Southeast Asia, by Bruce Vaughn (coordinator), Emma Chanlett-Avery, Richard Cronin, Mark Manyin, and Larry Niksch. This report will be updated.

 
Contents 
 
Introduction 
 
Issues for Congress 
  Military-to-Military Ties and Human Rights 
  The Tsunami 
  Avian Flu 
 
Historical Background 
 
Political Transition 
  Structure of Parliament 
 
The Role of the Military 
 
Autonomous and Secessionist Movements and 
  Inter-Communal Strife 
  East Timor 
  Aceh 
  Papua 
  Inter-Communal Strife and Pan Islamic Movements 
 
Economy 
 
Foreign Policy 
 
Indonesia and the War Against Terrorism 
 
United States-Indonesian Relations 
  Human Rights 
  Geopolitical and Strategic Interests 
  U.S. Security Assistance to Indonesia 
 
Options and Implications for the United States 
 
List of Figures 
 
Figure 1. Map of Indonesia 
 
List of Tables 
 
Table 1. U.S. Foreign Assistance to Indonesia 

Introduction

Indonesia is the world's most populous Muslim nation and is the world's fourth most populated nation overall. It has extensive natural resources. A large percentage of world trade transits the strategically important straits of Malacca which link the Indian Ocean littoral to the South China Sea and the larger Pacific Ocean basin. Indonesia is also perceived by many as the geopolitical center of the Association of Southeast Asian Nations (ASEAN), which is a key actor in the geopolitical dynamics of the larger Asia-Pacific region. Indonesia is still emerging from a period of authoritarian rule and is struggling to consolidate its status as one of the world's largest democracies. For the most part, 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 operate amidst the country's many social, economic, and political uncertainties. Ongoing internal strife and social dislocation stemming from inter-communal discord, autonomous and secessionist movements, political machinations among elites, Islamic extremism, pervasive government corruption, and a faltering economy all undermine stability in Indonesia. Despite this, Indonesia has begun to consolidate democratic gains, build a more robust civil society and further strengthen its economy which suffered setbacks during the Asian financial crisis of 1997/98. The report will identify key issues for Congress before returning to the broader Indonesian context within which those issues are set.

Issues for Congress

A series of policy decisions taken in 2005 mark a fundamental shift in the U.S. approach toward Indonesia. Specific actions over the past year have helped deepen the bilateral relationship. 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 has laid the groundwork for improved relations. Indonesia has also moved on issues of concern to the United States. The relationship has improved for a number of reasons as outlined below. (1)

* The expansion and consolidation of Indonesia's democracy through the 2004 parliamentary and presidential elections.

* The election of President S.B. Yudhoyono, who is seen as effective and reform oriented.

* The goodwill towards, and increased understanding of, Indonesia in the wake of the December 26, 2004 tsunami.

* The perception of Indonesia as an increasingly valuable partner in the war against militant Islamist extremists.

* 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.

* Progress in peace talks between the government and rebels in Aceh.

* Increasing appreciation in the U.S. of the strategic and geopolitical importance of Indonesia.

* Prospects that Indonesian military reforms will proceed.

* Indonesia's position on the East Asian Summit. (2)

Though there was much positive momentum in the relationship created over the past year, unresolved human rights issues may yet limit the extent of the bilateral relationship particularly in the area of military-to-military cooperation. While President Yudhoyono is seeking to reform the military and prevent future abuses he may not wish to expend limited political power to prosecute past abuses by the military.

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 is perceived as 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. (3) 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 strong commitment to reform, to a recognition of human rights and to fighting corruption." (4)

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 Timika Papua that killed two Americans, may resolve what has been an irritant in the relationship. As the United States has 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. Many observers view such cooperation as critical to effectively fight terrorism in Southeast Asia.

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 Indonesian 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. (For further information see CRS Report RL33260, Papua, Indonesia: Issues for Congress, by Bruce Vaughn, and CRS Report RS22136, East Timor: Potential Issues for Congress, by Rhoda Margesson and Bruce Vaughn.)

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 were delivered. (5) In the wake of the tsunami, the U.S. government pledged a total of $397.3 million in humanitarian and recovery assistance for Indonesia. (6) (For further information see CRS Report RL32715, Indian Ocean Earthquake and Tsunami: Humanitarian Assistance and Relief Operations, Rhoda Margesson, Coordinator.)

Avian Flu. Since 2004, the United States Navy Medical Research Unit at the U.S. Embassy in Jakarta has provided assistance to Indonesia to help Indonesia fight the spread of avian flu. (7) Over 90 people worldwide have been killed by avian flu. Of that number 20 have been killed by the H5N1 virus in Indonesia. Nine of the 20 killed by the virus in Indonesia have been killed in 2006. This is a larger number of fatalities than in any other country in 2006. So far most cases are thought to have been transmitted through contact with birds and are not thought to have been transmitted between people. There is much concern however, that the virus could mutate and become communicable between people. One source has stated that the virus killing birds in Indonesia is different from the one killing humans. (8) Indonesian inspectors have sought to disinfect areas where birds are kept and promote improved hygiene but face a daunting challenge …