4.IN 8/16: IN 2/5 uiNiiLU aiAiw ruLICY TOWARD INDONESIA i'r,:,;: State Universil HEARING BEFORE THE SUBCOMMITTEE ON ASIA AND THE PACIFIC e£tion OF THE COMMITTEE ON INTERNATIONAL RELATIONS HOUSE OP REPRESENTATIVES ONE HUNDRED FIFTH CONGRESS FIRST SESSION MAY 7, 1997 Printed for the use of the Committee on International Relations U.S. GOVERNMENT PRINTING OFFICE 45-910 CC WASHINGTON : 1998 For sale by the U.S. Government Printing Office Superintendent of Documents, Congressional Sales Office, Washington, DC 20402 ISBN 0-16-056319-4 COMMITTEE ON INTERNATIONAL RELATIONS BENJAMIN A. GILMAN, New York, Chairman WILLIAM GOODLING, Pennsylvania JAMES A. LEACH, Iowa HENRY J. HYDE, Illinois DOUG BEREUTER, Nebraska CHRISTOPHER SMITH, New Jersey DAN BURTON, Indiana ELTON GALLEGLY, California ILEANA ROS-LEHTINEN, Florida CASS BALLENGER North Carolina DANA ROHRABACHER, California DONALD A. MANZULLO, Illinois EDWARD R. ROYCE, California PETER T. KING, New York JAY KIM, California STEVEN J. CHABOT, Ohio MARSHALL "MARK" SANFORD, South Carolina MATT SALMON, Arizona AMO HOUGHTON, New York TOM CAMPBELL, California JON FOX, Pennsylvania LINDSEY O. GRAHAM, South Carolina JOHN McHUGH, New York ROY BLUNT, Missouri JERRY MORAN, Kansas KEVIN BRADY, Texas Richard J. Garon, Chief of Staff Michael H. Van Dusen, Democratic Chief of Staff LEE HAMILTON, Indiana SAM GEJDENSON, Connecticut TOM LANTOS, California HOWARD BERMAN, California GARY ACKERMAN, New York ENI F.H. FALEOMAVAEGA, American Samoa MATTHEW G. MARTINEZ, California DONALD M. PAYNE, New Jersey ROBERT ANDREWS, New Jersey ROBERT MENENDEZ, New Jersey SHERROD BROWN, Ohio CYNTHIA A. McKINNEY, Georgia ALCEE L. HASTINGS, Florida PAT DANNER, Missouri EARL HILLIARD, Alabama WALTER CAPPS, California BRAD SHERMAN, California ROBERT WEXLER, Florida STEVE ROTHMAN, New Jersey BOB CLEMENT, Tennessee BILL LUTHER, Minnesota JIM DAVIS, Florida Subcommittee on Asia and the Pacific DOUG BEREUTER, JAMES A. LEACH, Iowa DANA ROHRABACHER, California PETER T. KING, New York JAY KIM, California MATT SALMON, Arizona JON FOX, Pennsylvania JOHN M. MCHUGH, New York DONALD A. MANZULLO, Illinois EDWARD R ROYCE, California Nebraska, Chairman HOWARD L. BERMAN, California ENI F.H. FALEOMAVAEGA, American Samoa ROBERT E. ANDREWS, New Jersey SHERROD BROWN, Ohio MATTHEW G. MARTINEZ, California ALCEE L. HASTINGS, Florida WALTER H. CAPPS, California ROBERT WEXLER, Florida MlKE Ennis, Subcommittee Staff Director RICHARD KESSL£R, Democratic Professional Staff Member DAN MARTZ, Counsel HEIDI L. HennIG, Staff Associate (II) CONTENTS WITNESSES Page The Honorable Aurelia Brazeal, Deputy Assistant Secretary, Bureau of East Asian and Pacific Affairs, U.S. Department of State 6 Dr. Paul Wolfowitz, Johns Hopkins University 16 Ms. Sidney Jones, Executive Director of Human Rights Watch/Asia 22 Mr. Michael Gadbaw, U.S. ASEAN Council 25 APPENDIX Prepared statements: Hon. Aurelia Brazeal 43 Mr. Paul Wolfowitz 56 Ms. Sidney Jones 63 Mr. Michael Gadbaw 74 Additional material submitted for the record: Amendment of Mr. Howard Berman, a Representative in Congress from California, "Indonesia Military Assistance Accountability Act 89 Questions submitted for the record to Hon. Brazeal 95 (IID UNITED STATES POLICY TOWARD INDONESIA WEDNESDAY, MAY 7, 1997 House of Representatives, Subcommittee on Asia and the Pacific, Committee on International Relations, Washington, DC. The Subcommittee met, pursuant to notice, at 1:35 p.m. in room 2172, Rayburn House Office Building, Hon. Doug Bereuter (chair- man of the Subcommittee) presiding. Mr. Bereuter. The Subcommittee will come to order. Today's hearing looks at U.S. policy toward Indonesia, a country few Americans have heard much about until the recent allegations regarding campaign financing. That is unfortunate because Indo- nesia, with a population of over 200 million people, almost cer- tainly will be, if it is not already, the dominant nation in Southeast Asia. Also, it is important to recognize that Indonesia increasingly has emerged as a major constructive player on the world stage, playing key roles in ASEAN, APEC, the NAM, the OAC and the United Nations. Indonesia has done much to preserve peace in Southeast Asia, something very much in the U.S. interest. Indonesia has forged, or helped to forge, the Cambodian settlement, relieved tensions with China over the Spratly Island dispute, and brokered a settlement between the Philippine Government and the Moral Liberation Front. Although not a formal military ally, Indonesia has cooper- ated with us in numerous ways. During the Persian Gulf War, In- donesia, an Islamic country, was a major supporter of the alliance against Saddam Hussein. Indonesia has welcomed the U.S. security presence in the region and has granted U.S. forces access to Indo- nesian facilities. I believe that continued military interaction through training under the expanded IMET or E-IMET program and the sale of ap- propriately limited military equipment will advance U.S. security interests as well as the cause of democracy and human rights, if we pay attention to this relationship and if we make wise policy choices. Indonesia's economic potential, of course, is enormous. U.S. ex- ports during the 1996 year totaled $4 billion, and U.S. investment, not counting investment of petroleum and gas, has reached about $7 billion. Still, it is my distinct and, I believe, informed impression that American business has yet to fully discover Indonesia. We will be interested to hear from our witnesses today about the opportuni- ties and the obstacles for U.S. business in Indonesia and what the (l) 2 U.S. Government can do to ensure that American business can more fully participate in the ongoing Indonesian economic miracle. While Indonesia and the United States cooperate in many areas, there are a number of troubling features in the Indonesian land- scape that have complicated our overall relationship. Perhaps the most prominent is the nature of Indonesian politics, especially the government's restriction on and practices related to human rights and the democratic processes. These circumstances have been especially evident during the cur- rent nationwide election campaign which some time next year al- most certainly will re-elect President Suharto for a seventh 5-year term. If he is alive and well and he runs, he will be re-elected. The government's heavy-handed election procedures, including deciding who can run and what they can say, quite evidently show a basic lack of trust in the Indonesian people. That will lead many to ques- tion the legitimacy of the election results. The Indonesian Government's security-oriented approach to the East Timor problem has failed to win the loyalty of the inhabitants. The recent awarding of the Nobel Peace Prize for Bishop Belo and Jose Ramos Horta has lifted the hopes of those people in East Timor or their supporters who call for full autonomy or independ- ence. But the prospects for a peaceful, satisfactory settlement of differences seem as far away as ever. Although serious human rights problems continue in Indonesia, including in East Timor—and, I might say, Irian Jaya, it should be recognized that Indonesia has institutions, some established by the government, that are establishing and advancing the cause of de- mocracy and human rights. Perhaps the most important of such new institutions is the National Commission on Human Rights. I was pleased to visit with them and learn some of the details of their activities in their headquarters last January. Established in 1992, the Commission has established itself as the leading force for the advancement of human rights in Indonesia. In addition, in- stitutions such as the Legal Aid Society and many other non-gov- ernmental organizations have promoted respect for human rights, awareness of the need to preserve the environment, and legal and electoral reform. Today, we will be interested to receive an update on develop- ments in Indonesia, to hear any recommendations our witnesses might have for U.S. policy. As we here in Congress consider and conduct oversight on U.S. policy toward Indonesia, I believe it is also important to realize that our influence on the Indonesian Gov- ernment is limited, especially when we act alone. Indonesia does not depend upon the United States for its security. Japan, not the United States, is the dominant external force in the Indonesian market. Our overall impact on their economy is not substantial. Therefore, although we can influence Indonesia's behavior, our im- pact is likely to be mostly on the margin I also believe it is essential that we not demonize Indonesia, al- though there may be a strong temptation to do so because of the highly questionable, perhaps unlawful, activities of Lippo Bank with regard to American election laws and perhaps our national se- curity. Also, I would emphasize that I have not seen evidence of a link between the Government of Indonesia and reported trans- 3 gression of Indonesian businessmen or Indonesian citizens during the 1996 election. I think we must be very careful not to attack the government because of alleged illegal acts that some of its citizens, corporations or Indonesian Americans may have committed. Finally, it seems to me that the debate in this country over U.S. policy toward Indonesia is not about goals. Most Americans would like to have excellent relations with Indonesia across the full range of U.S. interest—economic, human rights, political, security. In- stead, the debate is over means—how can the United States best accomplish our goals and support U.S. interest in Indonesia for the benefit of both of our countries and peoples. To discuss these issues and many others today, we have a very distinguished panel of witnesses. Representing the Administration will be the Honorable Aurelia Brazeal, Deputy Assistant Secretary of State for East Asian and Pacific Affairs. Welcome, Ambassador. Ms. Brazeal. Thank you. Mr. Bereuter. It is a pleasure to welcome you before the Sub- committee. Our second panel that I will name and introduce at this point in- cludes Dr. Paul Wolfowitz, currently the Dean of The Paul Nitze School of Advanced International Studies at Johns Hopkins Uni- versity. Dr. Wolfowitz has held many high-ranking positions in the government including Undersecretary of Defense for Policy from 1989 to 1993 and U.S. Ambassador to Indonesia. Second on the panel, we are pleased to have Mr. Sidney Jones, a noted authority on Indonesia. He is executive director of the Human Rights Watch/Asia. And, third, Mr. Michael Gadbaw, a vice-president and senior counsel for General Electric who is the chairman of the U.S.-Indo- nesia Business Committee at the U.S. ASEAN Council for Business and Technology. Thank you all for coming and participating. I know we will bene- fit greatly from your insights and advice. Your entire statements will be made a part of the record and I would ask you to summa- rize your comments in approximately 10 minutes so we have time for questions. Before I begin and recognize the Secretary, I would like to turn to the Ranking Member and distinguished gentleman from Califor- nia, Mr. Berman, for any comments he might like to make. Mr. Berman. Well, thank you very much, Mr. Chairman. With the parliamentary elections in Indonesia only a few weeks away, this is an opportune moment for the Subcommittee to take the pulse of our relationship and assess its direction and I congratulate you for calling this hearing. President Suharto's party has won every election since 1971. No one doubts that the ruling Golkar Party will once again win on May 29. Next March, I think it is everyone's expectation that Presi- dent Suharto will win a seventh 5-year term, although at 75 or 76—there seems to be a dispute about his age—it is unclear how much longer he will remain in charge. President Suharto has accomplished much for his country since coming to power in 1965. He has knitted together a geographically and ethnically diverse country, achieving high rates of economic growth. Development has come at a price, however: repressive poli- 4 cies against political opponents, trade unionists, environmentalists and other critics of government policies. There has been a great deal of attention focused on the situation in East Timor which the Indonesia military invaded in 1975. But there have been problems elsewhere, including Irian Jaya, and among union organizers in the new export-oriented industries and tribal groups protesting land confiscation by corporations, just to mention a few. The Congress has been vocal in expressing its concern, ending military training for the Indonesian military in 1992 because of concerns over human rights. Just last week, the International Rela- tions Committee adopted an amendment which I offered to H.R. 1486, the State Department authorization bill, entitled, "The Indo- nesia Military Assistance Accountability Act," (see appendix) and the effect of that amendment was to continue the prohibition on IMET and to suspend military assistance of items that can be used to violate human rights. Ironically, as our bilateral security relationship with Indonesia appears to be strengthening, the human rights situation appears to be worsening. Among investors, there is increasing concern over the corroding effects of corruption among the first family and its cronies. Ford Motor Company, for example, just announced it would not build cars in Indonesia until tax breaks to the presi- dent's automaker-son were ended. President Suharto's legacy of po- litical stability and economic growth may be endangered by crony- ism and political intolerance. This would be sad because Indonesia has gained so much and we have so much to gain from strengthen- ing our bilateral relationships. I look forward to the hearing and to the witnesses that you have scheduled, Mr. Chairman. Thank you. Mr. Bereuter. Thank you very much, Mr. Berman. I have not met Sidney Jones but I begin with an apology. It is Ms. Sidney Jones. I made the wrong guess. We look forward to her testimony. And I recognize either of our other two Members in attendance. Mr. Brown. Mr. Brown. Thank you, Mr. Chairman, for convening today's hearing to give Members of the Subcommittee an opportunity to learn more about U.S. policy toward Indonesia, particularly in the area of human rights, trade, and labor standards. The attention of the world in the past several months has been focused on the plight of workers in factories making Nike shoes. We have heard reports of the payment of wages below subsistence level, forced over time, managers treating their workers abusively, and the refusal to provide adequate safety equipment. My constitu- ents, like millions of other Americans, want to know that the sport- ing goods they purchase are not the fruit of child labor, sweatshop conditions, abusive labor practices, and less than subsistence wages. One of the primary methods the United States has for addressing these abhorrent practices is through awarding or denying GSP trading privileges. The premise of the Generalized System of Pref- erences is that the creation of trade opportunities for developing countries is an effective, cost-efficient way of encouraging economic 5 development, and a key means of sustaining the momentum behind economic reform and liberalization. The U.S. Trade Representative is required by Congress to certify progress on workers rights as a condition for a developing country's continued participation in the GSP program. According to the USTR's 1996 annual report, a central purpose of GSP is to "afford all workers internationally recognized worker rights." This require- ment is achieved by conducting periodic country practice reviews. Since 1994, however, the United States has suspended the prac- tice of conducting formal reviews of Indonesia's eligibility for GSP privileges. During that same year, the GSP program allowed Indo- nesian firms to ship $1.5 billion in goods to the United States duty- free, saving those firms an estimated $35 million in tariffs and making Indonesia the world's fourth-largest beneficiary of the pro- gram. And yet, what has the Indonesian Government done since 1994 to merit this waiver of the formal review process? The State Department's 1996 human rights report condemned the Indonesian Government for severe restrictions on the freedoms of press, speech, assembly and association and, equally impor- tantly, for suppressing the development of a "truly free trade union movement." Amnesty International has reported that the government held over 200 political prisoners in 1996, many of them prisoners of con- science, and that torture of detainees was common, in some cases resulting in death. Human Rights Watch/Asia reported in 1995 that no unions other than the government-controlled All-Indonesia Workers Union have been allowed to operate. Minimal progress has been reported over the last 2 years. The same group has stated that "intervention by the military in industrial disputes is routine". And Indonesia's leading independent union leader, Muchtar Pakpahan, is currently on trial for subversion for having spoken out against the govern- ment's denial of the right of Indonesian workers to form independ- ent labor unions. Moreover, Mr. Chairman, I am equally concerned with the re- sponsibility of corporate America in Indonesia, especially that of Nike. Although the company seems to have experienced a moral conversion of late, with its participation in the Administration's Fair Labor Standards Coalition and its employing of Andrew Young to investigate working conditions in its Asian factories, doubts about "the swoosh" remain. Will Nike redouble its vigilance to root out forced overtime with- in its Indonesian factories, as well as ensure that adequate protec- tive gear is available for worker use? Will the company actively im- plement its code of conduct, transforming it into a living, breathing document rather than a meaningless piece of paper which has ex- isted prior to this? These and other questions await an answer in the coming months, and the American people, as well as this Con- gress, will be watching. In the rapidly evolving global marketplace, American workers and businesses nave been forced to compete against countries that deny workers the right to form independent unions, allow their companies to pay wages below subsistence level, and refuse to take 6 action to eliminate child labor. Either the United States must in- sist on minimum standards for workers in countries like Indonesia, or we will find our own workers locked into an unwinnable race to the bottom in wages and working conditions. The GSP country re- view process provides the United States with a unique opportunity to assure that our trading partners respect basic human rights and internationally-recognized labor standards. We should use that GSP country review process. Thank you, Mr. Chairman. Mr. Bereuter. Thank you, Mr. Brown. Mr. Martinez, the gentleman from California. Mr. Martinez. Thank you, Mr. Chairman. I have no statement. I would like to hear the witnesses. Mr. Bereuter. Thank you very much. The gentleman from Florida, Mr. Hastings. Mr. Hastings. Mr. Chairman, in the interest of time, I will have no statement. Mr. Bereuter. I thank the gentleman. Ambassador, we are looking forward to your comments. You may proceed as you wish. STATEMENT OF THE HONORABLE AURELIA BRAZEAL, DEPUTY ASSISTANT SECRETARY, BUREAU OF EAST ASIAN AND PA- CIFIC AFFAIRS, U.S. DEPARTMENT OF STATE Ms. Brazeal. Thank you, Mr. Chairman. I have submitted a fair- ly lengthy statement for the record, but I would like to read a short statement as fast as possible so we can get to the questions of in- terest to the Members. Our exchanges this afternoon should help illuminate the major opportunities and challenges facing us in managing our ties with this vibrant nation of Indonesia whose population is the world's fourth largest and whose 17,000 islands span the strategic intersec- tion of the Indian and Pacific Oceans. In this regard, it might be useful to examine several central aspects of our trilateral ties, in- cluding human rights, our mutual economic interest and our secu- rity relationship, as well as Indonesia's growing role in Southeast Asia and internationally. Few countries are more difficult to characterize than Indonesia. Its cultural diversity, encompassing over 300 different ethnic groups, matches its geographic reach that equals the distance from Boston to San Francisco. Nearly 90 percent of its 200 million peo- ple are Muslim, which almost exceeds the combined population of the Middle East. Yet, Indonesia is not an Islamic State and affords generally effective constitutional protections for all the major reli- gions. The largest member of the Association of Southeast Asian Na- tions, ASEAN, Indonesia works with its neighbors through ASEAN to encourage consensual and constructive approaches to regional is- sues. Although a founder of the Non-Aligned Movement, Indonesia welcomes a strong, continuing U.S. security presence in the region. Boasting one of the most dynamic economies, Indonesia has a rapidly growing middle class that already nearly matches Aus- tralia's population, although many Indonesians still live at subsist- ence levels. 7 Popular attention in the United States, as the Members have pointed out, in recent months has focused on Indonesia's short- comings, especially in the area of human rights. These include seri- ous problems in East Timor; violations of worker rights and, in par- ticular, the ongoing trial of labor leader Much tar Pakpahan; re- strictions on press freedom; ongoing civil unrest; recent convictions of several political activists on subversion charges and claims of abuse against the military. Upcoming parliamentary elections will occur in the framework on an electoral system that severely limits political competition and denies Indonesians the ability to change their government demo- cratically. These developments are certainly cause for serious con- cern, as it was made clear in this year's State Department human rights report. However, and moreover, as President Clinton has said, our relationship with Indonesia, as important as it is, will not reach its full potential until there is improvement in that country's human rights performance. While Indonesia's human rights problems are serious, a closer examination of the workings of this diverse society provides a com- plex and nuanced picture. Unlike other countries whose govern- ments rely entirely on repression to control their populations, hun- dreds of independent non-governmental organizations function in Indonesia, despite recurring episodes of government pressure. These organizations promote democratic principles and better gov- ernance; defend individuals in legal proceedings; support environ- mental causes; advise ethnic groups on land rights; ease religious and communal tensions; and press for democratic reform. In other words, strong voices continue to urge reform. The Indonesian National Human Rights Commission has gained wide respect among human rights activists in Indonesia and out- side for its independent position on sensitive issues. The Commis- sion's report on the major riot of July 27 following the govern- ment's engineered takeover of an opposition party headquarters di- rectly blamed the government for interfering in the political proc- ess and for the ensuing unrest. The Commission has conducted other investigations on equally difficult issues that have led to ac- tions against officials or military personnel responsible for human rights abuses. The Indonesian press practices self-censorship. The government has banned publications, pressured the independent journalists' union and sentenced three individuals under laws prohibiting gov- ernment criticism. Yet the Indonesian press remains remarkably outspoken. Newspapers routinely feature articles on human rights issues. The press devoted extensive coverage to the Human Rights Commission's critical findings of the July 27 riot and to the State Department's pronouncements following the riot and subsequent arrests. Even our human rights report on Indonesia prompted an approving editorial in a leading English-language paper. The press has also covered lawsuits against the government and efforts by human rights groups to overturn the anti-subversion law. Indonesia does not prohibit private satellite dishes or restrict free access to the Internet. Growing numbers of Indonesians enjoy unfettered access to international news sources. 9 with their unique history and culture. In the meantime, we have urged the government to reduce troop levels, to allow increased ac- cess to the province and to release prisoners of conscience. We have also called on the East Timor resistance to foreswear violence and join efforts to achieve a peaceful resolution of the dispute. Over the years, we have been the largest international aid donor to East Timor with eight projects now currently underway with a total budget of $15.8 million. Our aid programs aim to improve the lives of average Timorese while helping them achieve more control over their economic future. In the area of workers' rights, we have urged Indonesian officials to implement internationally accepted labor standards and I have encouraged the Indonesian Ministry of Manpower to adopt a plan of action from the November, 1994 period that laid out a number of important benchmarks. Indonesia has made progress in imple- menting these commitments by increasing regional minimum wages and improving enforcement of the minimum wage law. The government has permitted formation of plant-level unions and al- lowed them to negotiate collective bargaining agreements. We are encouraging more progress in addressing remaining worker rights issues such as further relaxation of restrictions on freedom of asso- ciation, continuing the implementation of the 1994 action plan and reducing security forces' intervention and legitimate trade union activities. Of immediate concern is the trial of labor leader Muchtar Pakpahan on subversion charges and his resumed imprisonment on a 4-year sentence for inciting labor riots in Medan in 1994. Assist- ant Secretary Shattuck made a special point of visiting Mr. Pakpahan in March to stress our concern that his rights be re- spected and that he promptly receive all necessary professional medical treatment. We also remain deeply concerned at reports of continuing harassment of labor leaders and limitations on freedom of association. With the Indonesian military, we are working to encourage fur- ther improvement in its interaction with civilian populations while supporting the armed forces' own desire to improve its professional- ism in carrying out its responsibility. No better tool exists to achieve these results than IMET courses, as has been suggested. The evidence shows that Indonesian officials, officers trained in the United States, are strong advocates for human rights and ac- countability for the armed forces. We can think of no better means of encouraging better human rights performance by Indonesian military officers than by giving them extensive exposure to U.S. military forces with our doctrines of respect for civilian authority and the rights of civilian populations. As for the recent trials of political dissidents, we have publicly underscored our support for the rights of free association and free speech and we have urged respect for the defendant's rights to due process. Assistant Secretary Lord, as well as Assistant Secretary Shattuck, were permitted to meet with Budiman Sutjatmiko, an imprisoned political activist, last September. In addition, embassy officers attended these trials to demonstrate international concern for dissidents' rights. 10 The United States provided approximately $20 million out of an average of $50 million in total aid funding from Fiscal Year 1995 to 1997. Approximately $20 million of that is in financial support in the areas of human rights, democratization, good governance and the environment, much of which is spent through NGO's. In fact, we are the largest international donor to these organizations. Similarly, we have purposely sought ways to help highlight the im- portant work performed by the National Human Rights Commis- sion. Mr. Chairman, I have chosen to devote considerable attention in this statement to human rights, given that subject's prominence in recent months, and I could frame very briefly—and I do not want to repeat what you have already said about the importance of our economic ties and our security ties—but I will point out that we have tremendous interest in working with Indonesia in the area of economics and security. So, in concluding, let me commend you, Mr. Chairman, and your colleagues on the Subcommittee for holding these important hear- ings on Indonesia. As I have attempted to show in my statement, our relationship with Indonesia is a highly complex and unusually important one. It involves numerous key U.S. interests. I am cer- tain you agree that policies designed to advance those interests must be grounded in the full appreciation of the dynamic Indo- nesian domestic scene as well as a thorough understanding of that nation's large contribution to stability and prosperity in Southeast Asia and the wider region. In short, Mr. Chairman, our overall approach should encourage a continuation of Indonesian Government policies that reinforce our regional and global interests while supporting those Indonesians working for a more pluralistic and democratic Indonesian society and greater respect for human rights. I am confident that our dis- cussions today will sustain support in Congress for a sound rela- tionship with Indonesia and contribute greatly to ensuring our poli- cies advance important U.S. interests. Thank you. [The prepared statement of Ms. Brazeal appears in the appen- dix.! Mr. Bereuter. Thank you very much, Ambassador, for your ex- cellent statement and for your written testimony as well. I will begin the questioning. We will use the normal 5-minute rule. I want to focus on East Timor initially, at least, because it is one of the more notable problems that Members of Congress have with what is happening in Indonesia, and we have this debate related to E-IMET, for example. There is an element in the Catholic Church in this country, the more militant liberal end of the Catho- lic Church, whose organizations are very much focused on this issue. And members who come from Portuguese-American constitu- encies lead the effort against E-IMET or IMET or the greatest ex- pressions of concern about Indonesia. First, I need to know, as briefly as you can tell me, but carefully, what is U.S. policy regarding independence, autonomy, semi-auton- omy or referenda for East Timor? Ms. Brazeal. Thank you, Mr. Chairman. 11 We have recognized the incorporation of East Timor into Indo- nesia without any, I think, elaboration. Today, we are very sup- portive of the U.N. efforts. As I mentioned, I will be meeting later this afternoon with Ambassador Marker, who is a special rep- resentative, to discuss what his plans are. He has traveled to Indo- nesia, to Portugal, to other parts of the world to assess the situa- tion and he is now visiting the United States to get a fix in Wash- ington of our views of how we would like to proceed and how he would like to proceed. We want to hear him out. We have indicated we want to be very supportive of the U.N. efforts; that is, to bring both Indonesia and Portugal together and also to support the intra- Timorese dialog. It is a little difficult to be more precise until I have heard what Ambassador Marker has to suggest. Mr. Bereuter. But, Ambassador, is it true that the United States has not, as a policy, endorsed or recommended independence for East Timor? Ms. Brazeal. That is correct, Mr. Chairman, we have not. Mr. Bereuter. Is it also true that we have not taken a position, formally, at least, on the possibility of a referendum? Ms. Brazeal. We have not taken a position on that. Mr. Bereuter. Thank you. Now, one of my old friends and colleagues in the North Atlantic Assembly is now the Foreign Minister of Portugal, and he has been using his country's leverage in the European Union to force the issue on East Timor, to some extent. Portugal, of course, was a very neglectful colonial power when it came to its colonies, and the most neglected of all, of course, was East Timor. When they left, they left with no infrastructure, no training for the Timorese peo- ple. They left it in worse condition than any other colony through- out the world. And Indonesians say that, despite their efforts of late (the Portuguese, supposedly being willing to meet with Indo- nesia to discuss East Timor to understand wnat the objectives of Portugal are and what kind of accommodations, if any, and progress might be made), find reasons not to meet with Indo- nesians. Can you say whether or not there is validity or any potential va- lidity in what they are saying? And do you regard what the United Nations is doing as a way of possibly overcoming what seems to be a delay or impasse? Ms. Brazeal. We do know the meeting Mr. BEREUTER. And, in short, what are the Portuguese trying to do with respect to East Timor? Ms. Brazeal. We know the meetings from last December when Indonesia and Portugal were to meet were postponed and put off. I do not know a date that has been fixed for a renewed meeting schedule, but I think Ambassador Marker has some dates in mind for renewing that. It is difficult to characterize what the Por- tuguese have in mind for East Timor, except that we detect an in- terest in allowing the people to have more political freedoms. They have not really declared a position that I am aware of for independ- ence or not. They are still trying to work within the U.N. initiative. I am sorry. I saw the red light, so I thought I had better stop. Mr. BEREUTER. You can finish your sentence, though, if you have not. 12 Ms. Brazeal. That is fine. Mr. Bereuter. All right. Thank you. Thank you very much, Am- bassador. The gentleman from California is recognized, Mr. Berman. Mr. Berman. Thank you, Mr. Chairman. Two areas I would like to go into. One, the question of the role that IMET plays in influencing the Indonesian military. Could you tell the Subcommittee how many Indonesian military officers and enlisted men have benefited from expanded IMET which still re- mains in effect since the ban on regular IMET was implemented by the United States? Also, how many Indonesian military officers and enlisted men have participated in non-grant IMET programs, programs paid for by the Indonesian Government, since trie ban on grant to IMET was implemented and what was the value of those programs? Ms. Brazeal. I do not have with me the total numbers of Indo- nesians who have been trained, so I would like to take that ques- tion and we would have to get the data back to you. I do know that of those trained, several have gone back to Indonesia and have been instrumental in writing human rights-related terms of ref- erence and to the guidance for the troops under their control. The ones who have been trained have also been involved in hostage res- cue operations and also riot control operations. Those trained seem to have a different approach than those not trained through our IMET programs in better protecting the rights of the civilian popu- lations under each of those issues or situations. So, we believe that IMET and the way military people are trained to do whatever it is they are trained to do—if they are trained to take human rights into consideration, then they do that. If they are not trained, then they tend to do perhaps the wrong thing or what they have always done. Mr. Berman. First of all, I would like to get the numbers. If you could get them to my office, I would be very grateful. Ms. Brazeal. Sure. Mr. Berman. And, second, I guess from that you conclude that expanded IMET has a beneficial effect from a human rights point of view on the Indonesian military. Ms. Brazeal. Yes, we do believe that and almost any of the IMET training, regular IMET, if it were allowed, we see having a beneficial impact on the Indonesian military because they will be exposed to our military people for long periods of time. You cannot replace that kind of people-to-people training. Mr. Berman. One last question. Sidney Jones, in the next panel, her written testimony calls for U.S. Trade Representative to re- sume the review which was suspended in 1994 of Indonesia's ac- cess to GSP trade benefits on workers' rights grounds. You men- tioned our longstanding concern over workers' rights conditions in Indonesia, including the arrest of an independent union leader, limitations on freedom of association and that you are continuing to review whether or not to reopen the previous review of GSP privileges. When did your review of the review begin, and when do you expect your review of the review to end? Ms. Brazeal. Well, the review of the review has been ongoing at least as long as I have been in this position, which is about 8 14 economy if they raised the wages comparable to what they are in the United States. I do not expect that. But I do expect that they would take into consideration that these workers need to not make just the bare sustenance for life but to make something a little bit better and encourage the upgrading of the economy there. Ms. Brazeal. Well, your points are well taken. I have no evi- dence of Nike paying under the minimum wage. I think that people and different groups are trying to be vigilant to make sure that at least minimum wage conditions are met and perhaps salaries are higher. I think that you have made a good point on the complex- ities of Indonesia in terms of the people. There are over 300 ethnic groups there and, unlike the United States where we have sort of adopted a melting pot approach, here they have adopted more of an approach, I think they have as a motto, "Unity in diversity." So, they have kept the diversity. If Indonesia can work in a multi-eth- nic, multi-religious way keeping its diversity, I think that will be a very important country to look at for the rest of us. Mr. Martinez. I know there is a vote and we have limited time. Just let me ask one last question here. Did you mention that there were hundreds of groups, let's say tantamount to civil rights groups, that are fighting for the rights of the people there within that system? Ms. Brazeal. I did. I said there are many non-governmental or- ganizations that are partly supported by our aid funds and other sources that have as an objective broadly human rights develop- ment and civic society development. Mr. Martinez. Well, don't you think that this is a step in the right direction that, after all, that is the way it happened here? I go back to the sixties and the civil rights marches of Martin Luther King. Inherent in the Constitution was the right of all American citizens to vote, but they really did not get that right to vote. In fact, women's right to vote, women's suffrage, was a more modern history event back in the early twenties. So, we were not always in keeping in enforcing our laws in keeping what was in the Con- stitution. But groups fought for that. Martin Luther King fought for the right of the blacks to vote without poll taxes and literacy tests in the south and that is an evolvement. A more recent-day evolvement. The sixties is not that long ago and even yet today we find in a lot of instances where certain people, because they are Hispanic, they are challenged as to whether they are citizens and have the right to vote or not. So, these things are ongoing here and I would say that they have roots back there, fine that way. That is one of the positive things that we can say about Indonesia, wouldn't you say? Ms. Brazeal. Yes. I agree totally with you. It is a very positive development and we see it as one of the strengths of the system as change will occur and will occur in Indonesia. Mr. Martinez. Thank you, Madam Secretary. I would just simply close by saying that I wish we were more tol- erant of slower-developing democracies than our own and under- stood the problems that they have in those countries and then try to base our foreign policy on that. Thank you. Ms. Brazeal. Thank you. Mr. BEREUTER. Thank you, Mr. Martinez. 15 Mr. Brown, I think you have a question before we recess. Mr. BROWN. I will be very brief. Mr. Bereuter. Please proceed. Mr. Brown. Mr. Chairman, thank you. I think it is agreed that the GSP program provides the United States with an important means to encourage compliance with international labor standards. Lack of progress in worker rights by Pakistan led to the partial suspension of benefits last year. Sidney Jones, in her upcoming testimony, says that prior to 1994, it is im- portant to note that Indonesia s accceptance of both plant-level unions and a major increase in the minimum wage can be attrib- uted, in part, to pressure created by the USTR's review of Indo- nesian labor rights and practices under the generalized system of trade preferences. Yet, the Administration suspended the formal review process in 1994 and has resisted pleas from international labor organizations and human rights groups to reinstate it. Your 12-page testimony today, Ambassador, has but one sentence on GSP which says, literally, almost nothing. "We continue to examine the question of reinstating the formal review of Indonesia's eligi- bility for GSP privileges." Why the delay? Why have we suspended it and why are we not moving forward? We have this enforcing mechanism. Why are we not using it? Ms. Brazeal. We have had that benchmark action plan that was worked out in 1994. Perhaps I should say that although there is no label of a formal review, we have had a member of USTR travel out to Indonesia to take an assessment. We have our embassy also assessing these benchmarks. And, as I indicated, perhaps when you were absent briefly, what we intend to do is proceed with working out with Indonesia new benchmarks in this area with the recogni- tion that the GSP regime here expires May 31. With the stop-start sort of progress in GSP perhaps having some influence, we still intend to proceed directly with Indonesia on worker rights issues. Then, if GSP is reinstated as a U.S. Govern- ment program, we will review again to proceed to a review at that point. Meanwhile, we don't want to stay still. We don't want to not take action. So, we are going to proceed with working directly with the Indonesians' new benchmarks. Mr. Bereuter. Thank you. Ambassador, we need to go vote. I would like to leave a question for you to respond to in writing, if you would. The Indonesian army has been secular. On my trip to Jakarta in January, I heard allega- tions that there was pressure or quiet incentives being used to Islamicize the senior officers corp. So my questions are, do you have any additional information on the validity of those allega- tions; and, if so, if there was a move to move it away from a secular kind of orientation toward a more militant Islamic orientation, or at least an Islamic orientation, how would that affect U.S. interest? If you could get back to me and I will share it with the Committee. Ms. Brazeal. Thank you. We will give you an answer. Mr. Bereuter. I appreciate it. And, in light of our vote, I would like to release you and thank you for your testimony today. We will recess and reconvene in 15 minutes with the second panel. The Subcommittee is in recess. 17 important sea lanes in the world, those that connect Japan with the Persian Gulf, all pass through or near Indonesian waters. But I think Indonesia is even more important strategically because it is a major neighbor of China and, in fact, Southeast Asia is, in many ways, China's doorstep. I think we are rightly, these days, preoccupied with how to build a constructive relationship over trie next 15 or 20 years with the China that is emerging as one of the world's leading powers. I think our ability to do that is going to depend very strongly on whether Southeast Asia is a stable and progressing part of the world or whether Southeast Asia becomes, as it has been in the past and fortunately is not now, a source of instability. I think China will find it hard to stay out of Southeast Asia's problems if it has a lot of them. I think China is likely to stay out if Southeast Asia can maintain the course that it has been on. So, there is a lot at stake there. Second, I think it is important in talking about this country about which we do not know very much and which tends to pop on the screen when there are problems, to recognize that it has only been an independent country for a little more than 50 years and, in those 50 years, it solved some extraordinary problems. Just the creation of a single nation out of this multiplicity of ethnic groups is an incredible achievement and to have achieved the acceptance on a very wide scale of Indonesia as a national language is a major achievement. And I would note, it was an act of statesmanship on the part of Indonesia's early independence leaders to pick as the national language a variant of Malay, which was spoken in the na- tive language of only a few million people in this huge country in- stead of trying to impose the language of the largest ethnic group, Javanese. I think, in fact, among the achievements over the last 50 years that I have noted in my testimony, I think the achievement of eth- nic peace in this huge nation is an extraordinary achievement. We are talking about a country, if you put it on a map of Europe, that would stretch actually from London to Moscow. It is huge. It is on the equator so we sometimes do not notice it on our maps. But there are probably as many different ethnic and religious groups in Indonesia as in that whole expanse of Europe from London to Mos- cow. And to have as relatively peaceful relations among those groups as they have achieved, I think is a great accomplishment and I think it has to be counted as a victory for human rights. So, too, I believe the achievement of religious tolerance that I have referred to already is a real victory for human rights and I think if one construes human rights at least in a broad sense, it is an incredible achievement that this country where just over 30 years ago, tens of thousands of people starved to death on this par- adise of an island called Bali to have a country now where tens of millions of people have moved above the poverty line is a great achievement of which they are properly proud and which I think, again, counts on the list of successes for human rights in the broad terms. And, finally, in terms of Indonesia's achievements, I believe it would be a failure not to note that Indonesia has played a very, very constructive role diplomatically in the region. The creation of 19 In my testimony, I noted the case of Andi Syahputra, whom I misidentified as the editor of the unauthorized news magazine, Suara Independen. In fact, he was only the printer and I think it is viewed as particularly harsh to have descended on him in this way. He was convicted of subversion and there are two members of the Alliance of Independent Journalists who were convicted ear- lier who remain in jail. It has been evident in the recent subversion sentences of nine ac- tivists from the Democratic Peoples Party, as it styles itself. In fact, I think those sentences have actually been questioned by members of Indonesia's own human rights commission. And there is the prominent case of labor leader, Muchtar Pakpahan. As I note in my testimony, there has been some discussion recently of the possibility that the government might release Muchtar Pakpahan to go abroad for needed medical treatment and I personally believe that that would be a very welcome humanitarian gesture. One point I want to make is that as one approaches the question of human rights, or I think, in fact, when we used to think of it more broadly, the question of political change, is to realize that in Indonesia, there is a very powerfully felt need for stability as well. When I was ambassador in 1987 during the election campaign at that time, and I think you probably realize election campaigns in Indonesia are not the freewheeling events they are here, to put it mildly, but the democratic, the PDI, the Indonesian Democratic Party, one of the two opposition parties, held a rally in Jakarta which is really remarkable and it lasted 6 or 7 hours. It was not in one location. It roamed all over the city. And the estimates were roughly a million people demonstrating peacefully in the city of Ja- karta on behalf of an opposition party. And I thought this is a sign of extraordinary progress, not only that such a demonstration was permitted but that it was conducted entirely peacefully. And when I expressed my pleasure a few days later to an Indonesian friend, and this friend was someone who is very critical of many govern- ment actions, who is distinctly liberal in the broad sense of the term politically in Indonesia, who very much wants to see a more open society, I was astonished that he was not as enthusiastic about this mass demonstration as I was. And he said, "You have to realize, my wife came home shaking with fear having seen thou- sands of red-shirted youths shouting in the streets. It reminded her of the time in the 1960's when my friend was the target of mobs stirred up by the old Soekarno regime." Many people of his generation, which are now people in their for- ties and older, experienced incredible tragedy in earlier periods of instability in Indonesia and I think there is always a nervousness, particularly given the ethnic differences in that country and the re- ligious differences. There are many people who want to see change who are afraid of change taking place too fast. And I think as we, from the outside, advocate change, and I think it is appropriate to do so, I think we also need to keep in mind that, for them, the bal- ance between change and stability is very different than for us. That does not mean that every time some official drags out the danger of instability as an excuse for resisting change that they are right. I do not mean that at all. But it is a real problem and I think if we are not sensitive to it, we actually will diminish our influence. 20 And that brings me to my final point, which is what can we do to influence change in Indonesia. In order to approach this with some humility, I mean, right now we are going through our own problem about Indonesians—I would emphasize private Indo- nesians—getting involved in our political process and we do not like it. That does not mean that the situations are entirely equiva- lent. But we should recognize that we are foreigners, that we are talking about someone else's country. And, in the case of many Americans, we are talking about a country about which we knew nothing even a few weeks ago and still very little. And I think, if we are going to offer advice, we should offer it with some humility and some recognition that ultimately it is their country and they have to live in it. I do believe we should offer advice. I am not arguing for keeping silent about problems. I have noted some serious ones in my testi- mony just now. But I think I would offer a few pieces of advice to advisors. First, if advice is going to be offered, I think it should be done with some humility. We are not in a position to dictate. We should not sound as though we think we are. In an unrelated issue involving intellectual property rights, I had an assignment as Ambassador to try to get the Indonesians to change one of their laws and I began, mistakenly, by telling them publicly that if they did not do so, they faced 301 action. And one of the ministers who was working very hard to get the law changed told me, "Mr. Ambassador, it would help a lot if you would shut up because I'm trying to convince Indonesians that this is in our own interest and we're not doing it just because the Americans are telling us to do it. We're doing it because it's good for Indonesia. And every time you threaten to punish us if we don't, the people who are fighting me say, Tou see, he's just the running dog of the Americans.'" I said, "OK, Mr. Minister. I'll make a deal with you. I'll shut up, as long as you understand that it's a fact that if we don't make progress here, there is going to be 301 action." And the fact is, over the course of the next year and a half, we were able to work very effectively with them and the law was changed. That was not on an issue as sensitive as human rights issues can become and I think there you are talking about probably that caution has to be more in mind even more clearly, which brings me to my second point. There are ways to offer advice in public and ways to do it in pri- vate. There are some things that Sidney Jones can and will say that, coming from Sidney Jones, are, I think, very helpful. Coming from an American official like Deputy Assistant Secretary Brazeal would make it very hard for the U.S. Government to move things forward. So, I think that balance has to be kept in mind. I think whether the advice is public or private, it makes a big difference whether it is seen as coming from people who are basi- cally friends or whether it is seen as coming from people who would just as soon see Indonesia fall apart. In this connection, I would note that the recent Nobel Peace Prize winner, Ramos Horta, has gone around not only advocating independence for East Timor but suggesting this would be a great precedent for Aceh and West Irian and West Papua, as he calls it, as well. That is a good 21 way to put anyone in Indonesia who argues for change in East Timor in the position of siding with somebody who wants to break up their country. That is not a way to make progress. And, finally, I think if we want to encourage positive change, I think our role needs to be to persuade and not to coerce. I think most often sanctions do more to make us feel better than to actu- ally change things and, in some cases, I think sanctions have been—not might be—actually counterproductive. There are many Indonesians working inside the system to try to change people in the government, people in the news media, people in many NGO's, and I have been struck at how many of them have said to me, "Why on earth did the Congress cancel IMET?" The thing that most educates our military officers to what a democratic system can be like, that most accustoms them to understanding the kinds of democratic practices you have in the United States, has been the experience of going to the United States for IMET training. And now, the Congress, in the name of human rights, has made that nearly impossible. In fact, the military probably minds less than people who want to promote change in the country. Let me note, finally, and I will identify, if you will like, I am not an interested party. I am a volunteer trustee of both the Asia Foundation and the National Endowment for Democracy. I do be- lieve that these non-government organizations that are largely funded by the U.S. Congress—and I include with that the National Democratic Institute, the Free Trade Union Institute, the Inter- national Republican Institute and SITE—all of them that have pro- grams in Indonesia, I think, are doing a great thing to promote change in a positive way. There are many Indonesian groups that have benefited from that kind of assistance. I mentioned earlier the number of possibly 100 NGO's. I think a lot of those NGO's have gotten their start or gotten help through the Asia Foundation or through other similar foundations and I believe that Congress can do a great deal in a positive way by continuing to support those activities. Thank you, Mr. Chairman. [The prepared statement of Mr. Wolfowitz appears in the appen- dix.] Mr. Bereuter. Thank you, Ambassador Wolfowitz. You mentioned the lack of knowledge about Indonesia. I ref- erenced that, too, in my opening remarks, and it occurs to me that whatever we do and act on in this room has resonance around the United States because we have people from all over the world who live here or who are residents, who are citizens, who are expatri- ates. But, relatively speaking, there are not many Indonesians. Not nearly as many as Vietnamese-Americans or Portuguese-Americans or Filipino-Americans, for example. And I think that has some im- pact upon our deliberations here. And I noted with some interest that Indonesians do not go away from home as often as most people do. They stay there. And when students come to this country, I un- derstand they have the highest return rate—over 85 percent— going back home after their education in the United States. So, they are attracted back home and taking their education back home. That may be one of the reasons why we know less about a 22 country of 200 million than we ordinarily would expect to know about it. Mr. Wolfowitz. But it is a factor giving us huge influence there. All those Indonesians who have been here who go back home are almost uniformly friendly to the United States. Mr. Bereuter. Very positive impact for us around the world, I think. Ms. Sidney Jones, we look forward to your testimony. You may proceed as you wish. STATEMENT OF MS. SIDNEY R. JONES, EXECUTIVE DIRECTOR OF HUMAN RIGHTS WATCH/ASIA Ms. JONES. Thank you very much and thank you very much for inviting me to testify. I will summarize the main points in the longer testimony. But I would like to stress that, from our point of view, Indonesia has actually been sliding backwards on human rights over the last 3 years or so. I would not disagree with the statements that people nave made already about the importance of the NGO community, but it is important to note that controls and surveillance of those NGO's has tightened, not loosened, over the last 3 years. And, at the same time, we have seen a deterioration of human rights on virtually all fronts. We have also seen a growing resentment popu- larly in Indonesia against President Suharto and particularly his children. We have seen a perceived widening of the income gap. For a while there was no economic data supporting the fact that there was a rising gap between rich and poor. That data now ex- ists. And we are also seeing rising political tensions between Java and the outer islands and also within some of the outer islands themselves. These would be problems under any circumstances, but they are even more acute now because there are not political insti- tutions in place to deal with the succession and it has to be a long- term concern of the United States that these tensions are building in a way that may have implications for the long-term stability of Indonesia. I think, in the short term, they also have implications for the American business community in Indonesia. Let me just run through a few quick problems and possible ac- tions that the U.S. Congress could take. First of all, in terms of the political participation issue, we are probably seeing tighter controls during this election period than we have seen in the past. You have the most popular politician in Indonesia, Megawati Sukarnoputri, being banned from the ballot, together with all of her supporters, and one of her chief aides, a man named Abserson Sialoho, who is actually a serving member of the opposition PDI party, and is cur- rently on trial for insulting the President. Activists who have been campaigning for an election boycott have been arrested in the doz- ens and either charged with spreading hatred toward the govern- ment or, in one case, subversion. The first effort in an independent election monitoring organiza- tion, which in Indonesia is called KIPP, has been continually har- assed from the day it got started in 1996. And most recently, on April 7, there was a meeting in Ujung Pandang in Southern Sulawesi where, despite the fact that a workshop of KIPP had full 24 corporate community in Indonesia—that is, the American corporate community—could play in trying, for example, to help urge the Ministry of Manpower to make a public statement affirming Indo- nesia's respect for international labor standards; also, to help ob- tain a list of these 1400 plant-level agreements; and perhaps to convene seminars in Jakarta on industrial relations that would in- volve NGO's, academics, employers and members of the National Human Rights Commission. Many people have said thus far that Indonesia has been very tol- erant of other religions and respectful of other communities and I think this is beginning to change for the worse and it is something that needs to be monitored. Religious intolerance and communal vi- olence is increasing in Indonesia. The last 6 months have seen major outbreaks of communal violence, several of them on Java in- volving Muslim attacks on Christian churches, but the worst in West Kalimantan that has resulted in perhaps a death toll of as high as one thousand involving attacks by indigenous people, the Dayak, on immigrants to the area from the island of Madura who, I would note, are overwhelmingly very strongly Muslims. So, Mus- lims have been victims as well. In all of these conflicts, government policy has exacerbated com- munal tensions. While the immediate cause of the West Kalimantan violence, which lasted from December to March, was a fight over a woman at a dance, the underlying cause appears to be trie systematic alienation of Dayak ancestral land by the govern- ment for timber concessions, commercial plantations and mining operations, the major beneficiaries of which have been close associ- ates of President Suharto. Over the last two decades, Dayak land claims—and this is true of other indigenous groups—have been ig- nored in favor of Jakarta-based business interests and government development imperatives. The sources of subsistence and cash in- come for these indigenous groups have been systematically de- pleted. Their lifestyle and culture have been treated with disdain as primitive and destructive in comparison with that of coastal Ma- lays or other immigrants from Java and Medura. Unless this issue is addressed and addressed fairly soon, I think we are going to see more communal clashes and more violence which has, as I said be- fore, major implications for the business community. We believe the U.S. Embassy should devote as much of its re- sources to monitoring growing conflict in Kalimantan with regard to complications, obviously, because both areas are remote and in- volve difficult and expensive travel. But I think, just in terms of the credibility of the United States in monitoring human rights, it is critically important. Finally, East Timor. No major change has taken place in the last several years. The human rights problems persist. And I would urge everyone to read the recent resolution supported by the Unit- ed States that was passed by the Commission on Human Rights in Geneva just last month expressing concern about violations and the lack of progress made by Indonesian authorities. But it is particu- larly important to look at the recommendations. The resolution called on the Indonesian Government to, among other things, en- sure the early release of East Timorese detained for their political views, to invite the commission's special rapporteur on torture to 25 East Timor—and this is something that Members of this Commit- tee could strongly support—to facilitate the stationing of a program officer from the Office of the High Commissioner for Human Rights in Jakarta and allow him or her unhindered access to East Timor; to encourage the Secretary General of the United Nations to con- tinue to use his good offices to achieve a just and internationally acceptable solution in East Timor; and to provide access to East Timor for human rights organizations. Following through on those recommendations would be essential. Finally, I would like to say two words; one about Komnas, the human rights commission in Indonesia, and one about IMET. The human rights commission in Indonesia is, as everyone has said, an independent body which has done very good work. But it is impor- tant to note that its recommendations to the government have been often as ignored as they have been accepted. In terms of the rec- ommendations made after the July 27 riots in 1996 last year, out of, I think, six separate recommendations they made, not a single one has been adopted. Likewise, when the human rights commis- sion went to Irian Jaya to investigate abuses in August, 1995, the military prosecutions of four officers was the only recommendation that was actually followed through on. So Komnas is a very good organization, but it does not mean that its recommendations are adopted by the government on a uniform basis. And, finally, about IMET, it is simply not the case that we know whether IMET has any useful impact or not. I think it is very im- portant to try and put some kind of monitoring procedure together whereby the people who go through the IMET program can be sys- tematically tracked, looking at what their records nave been in the past and where they have been stationed, looking at whether those areas have been involved with major human rights abuses or not, and looking forward in the future to see whether the positions that they then take up are ones in which they actually do practically take any kind of different stance than they did before they went through the IMET program. That data does not exist now and I would strongly urge this Committee to see if it can be forthcoming. Thank you very much. Mr. Bereuter. Ms. Jones, thank you. I think we will need to make the distinction between E-IMET and IMET, if Ms. Jones. I think both should be monitored, however. [The prepared statement of Ms. Jones appears in the appendix.] Mr. Bereuter. Mr. Gadbaw, I apologize. I briefly have to go and help establish a quorum in a banking subcommittee markup, so I will turn the chair over to one of the Members here shortly, and I apologize. I will be back as quickly as possible. Please proceed. STATEMENT OF MR. MICHAEL GADBAW, CHAIRMAN OF U.S.- INDONESIA BUSINESS COMMITTEE, U.S. ASEAN COUNCIL Mr. Gadbaw. I appreciate that, Mr. Chairman, and I am pleased to be here on behalf of the U.S.-Indonesia Committee of the U.S. ASEAN Business Council. I would like to commend your leadership, Mr. Chairman, and the other Members of your Committee in scheduling this hearing be- cause I agree that the understanding of Indonesia in the United 26 States is not commensurate with our interests there. Together with over 100 of my business colleagues, I visited Indonesia in March to participate in the first ever ASEAN Business Summit. Last year, I had a chance to visit some of the cities beyond Jakarta, including the bustling center of Surabaya and Batam Island, a development center in the Indonesia-Singapore-Malaysia growth triangle. Your decision to approach the issue of U.S.-Indonesia relations in a de- liberate and thoughtful fashion is critical to building an under- standing of Indonesia and, on behalf of the 400 companies of the U.S. ASEAN Business Council, I want to thank you for treating this relationship with the care that it warrants. The Indonesian economy is one of the great success stories in Asia, having grown at an average annual rate of 7 percent for 25 years. In 1960, more than 60 percent of the population lived below the poverty line with per capita income at $70. Today, less than 15 percent live below the poverty line with per capita income of $1,000. Indonesia's middle class is at 20 million, larger than Aus- tralia's. The World Bank has estimated that by the year 2010, In- donesia could be the world's sixth-largest economy. But the most compelling statistic that underlies this economic growth imperative is that Indonesia must sustain a growth of over 6 percent to absorb the 2.3 million people that are annually enter- ing its workforce. Indonesia's transformation is the result of a steady stream of liberalization measures and sound free-market principles that have made Indonesia an international model of eco- nomic reform. Indonesia has succeeded not only in expanding the volume of its economy, but also in diversifying it. In 1984, oil and gas contributed 70 percent of export earnings and 65 percent of government revenues. Ten years later, these figures were 25 per- cent and 22 percent respectively. All this progress has happened while maintaining stability in a country of great ethnic and cultural diversity. When I explain to my children, I talk about Indonesia as if you take a cookie three times the size of Texas, crumble it into 17,000 pieces and spread it across an expanse of ocean equivalent to the distance from Bos- ton to San Francisco. You put over 200 million people on there speaking more than 500 languages and constituting over 300 eth- nic groups. The U.S. ASEAN Council started a program 2 years ago of en- gagement with the Indonesian Government and business to discuss changes that were needed in Indonesia to make the market more attractive to U.S. manufacturing companies seeking to trade and invest. We identified three priorities: amending the Indonesia-U.S. tax treaty, liberalizing the Indonesian distribution regulations, and customs reform. During the past 2 years, we have gotten remark- able cooperation from both the Indonesian Government and the pri- vate sector, with whom we have established a bilateral dialog in all three of these areas. In June 1996, the Government of Indonesia introduced a deregu- lation package, liberalizing their distribution regulations. In July, 1996, the United States and Indonesia signed a protocol to their tax treaty lowering the withholding taxes on U.S. companies. And, finally, we have developed an active program of technical assist- ance for Indonesian customs officials. 27 We are now working against a backdrop of increasing tensions in the bilateral relationship with the involvement of Indonesian pri- vate citizens in the financing of the U.S. Presidential election, the introduction of sanctions in the Massachusetts legislature, and just last week we marked the rise of Indonesia in the American political consciousness with an Indonesian sanctions debate in the Inter- national Relations Committee. These developments complicate the stiff competition in Indonesia. American businesses face competi- tion from Japanese, European, Singapore and other companies. Compromising U.S.-India relations will decrease U.S. competitive- ness and cede one of the world's fastest growing markets to our for- eign competitors. Although U.S. exports to Indonesia doubled this year, our market share is declining. We have gone from a 14 percent share of the Indonesian import market in 1992 to a nine and a half percent share in 1996. We are the third-largest exporter to Indonesia, the fifth-largest investor, and we rank sixth in terms of the amount of aid we grant to Indonesia. Indonesia has been a leader in establishing integration and liber- alization in the region, as shown in its role in developing ASEAN- AFTA and leading the way to free trade with APEC. Given Indo- nesia's strategic importance from an economic and security per- spective, it is in our collective interest to make sure that the U.S.- Indonesia bilateral relationship continues to grow and develop. In- donesia's growth shows no sign of abating. The extent to which U.S. and American companies participate in that growth will large- ly be determined by whether we choose to be engaged in that coun- try and the forces of change. Our commercial interest should be seen to be complimentary to— and not in conflict with—our overall interests. The more we can align our policy interests, our commercial interests and our trans- action interests, the more effective we will be in achieving our com- mon goals. Thank you. [The prepared statement of Mr. Gadbaw appears in the appen- dix.] Mr. MANZULLO. Thank you very much for the testimony. I have a couple of questions. On page two, Mr. Gadbaw, of your testimony, the last paragraph says, "I make this assertion not because I think our commercial in- terests displace our interests in economic and social development, or to minimize the importance of foreign aid, but because I believe there is a positive linkage between commercial engagement and our values and objectives in the social sphere." Do you believe that there is any connection between increased commercial engagement with a country and reports of human rights violations? And, Ms. Jones, that is obviously your field, so if you want to join in the answer. Do you believe there is a nexus? Mr. Gadbaw. Well, I believe there is a positive linkage between the engagement of American companies and the improvement of the social and economic conditions of the countries in which we participate. I think this is true of Indonesia and I think it is true 29 United States and, frankly, I do believe that, overall, that effect is quite significant in the general direction of change in Indonesia. Mr. Manzullo. Mr. Hastings. Mr. HASTINGS. Thank you, Mr. Acting Chair and thank you, Howard, for allowing me to go in advance of you. I appreciate the testimony of all of you and I appreciate very hearing together where we do have responsible individuals that have been studying this problem for quite some time. I would like to use a lot of time, and perhaps I will at some point, try to reach out to you to better understand. My interest is piqued, as one of the new kids on the block, by Ambassador Wolfowitz's comments about—and I think I quote you correctly— that sometimes our country's people are appallingly ignorant of not only Indonesia but foreign policy matters generally. I know you know this, Dean, that appallingly, people who are in Congress— and I may fall in that category in this particular arena—are equal- ly not as mindful of what is going on in countries that they half- heartedly approach policy matters about. Mine is less than a question at this point and, Dean, I know that you have immense responsibilities. But I urge upon you, based on your final comments that were sound advice and, in my view, real- ly textbook for operating as policymakers, diplomats, even businesspersons with your advice with reference to how we ap- proach countries. In this instance, you were referring specifically to Indonesia. But I think you would agree with me that the basic premise that you set forth would be equal anywhere in the world. As one who is beginning to get a grip on how we approach others from the diplomatic standpoint through the executive and through the legislative process, I am beginning to feel that we are making a hell of a lot of mistakes and we can correct some of that. And you and others might be instrumental in assisting in that correc- tion. Not any time soon, but if it is at all possible, to develop a week- end curriculum for Members of Congress who are interested and their staffs such that we would hear from you and others with some expertise regarding how we should conduct ourselves when we go to countries. I do not mean to cast a shadow on anybody. I am not a protocol expert. But, damn it, when I go to these places, I at least read about them and try to understand whether or not you ought to spit on the streets and whistle, you understand? And there are people who I have traveled with who simply did not take the time to do that and made serious mistakes or just little things. We need your help. And I will urge our Chairman Bereuter and chairman of this Committee that Members of this Committee, it ought to be a prerequisite that if they are going to serve in this arena, that they at least ought to have a better background than I see when we are abroad doing the business of this country. Sometimes, as you say, it is better to leave things unsaid and certainly sometimes it is better to say things privately in a more persuasive manner than to show our intellect and our ego and how powerful we are and how limited our knowledge is on a specific subject that we can expound on in front of a Premier or Prime Min- ister or a dictator at a given time. I just wanted to get that off my much Chairman putting this kind of 45-910 98 - 2 30 chest and ask you to please give consideration to that and then ask you and Mr. Gadbaw a question. Dean or Ambassador or Your Excellency, in your opinion, in light of the fact that you cite to the fact that we do not have very much leverage and that we should persuade rather than coerce or by using sanctions—and I might add, I agree in the long haul that that is the better approach—what is, in your opinion, our best le- verage in Indonesia to persuade them to become more transparent? And my question to you, Mr. Gadbaw, is, do we at any point in time have any contact with others of our allies—Japan, for exam- ple, that has a big economic presence in Indonesia; I do not know Australia's presence, but I, for one, think that we do not use Aus- tralia's influence sufficiently in our policymaking in that area of the world while they are there, that big rock sits there, and they deal with these people a little bit different than we do and that is all the way up to China—and I am curious as to whether or not there is any interface with American businesspersons and the Aus- tralians who might very well have reasons to have a need to par- ticipate with others. Sorry it took me so long. Ms. Jones, I do not want you, by any stretch of the imagination, to believe that I am ignoring the criti- cality of human rights concerns. I just did not put a question to you because I hear you loud and clear and we all know what those problems are. But I hope in there somewhere I have said some- thing as a new kid on the block. And, Dean, if we have any time, if you could address just any- thing that I threw out there, I would appreciate it. And thank you so much for giving me that amount of time, Mr. Chairman. Mr. Wolfowitz. Just very quickly, you said what I thought were some extremely important points at the beginning and I do not just say that as somebody who is the dean of a school of international affairs. I might be accused of having a professional interest. I am actually a dean because I believe it is very important for our coun- try to be even better educated about these matters and my faculty would always love more students and I would like to come and see you. If we could get some weekend students from this important body, it would be, I think, no trouble getting some people to spend time with them. I would also urge, and not just the Members of Congress but par- ticularly the press, to encourage foreign travel. I think no corpora- tion with interests in Indonesia as large as the United States had would keep its board of directors from ever visiting the country. But we have a situation where, when a Congressman travels abroad, they have to worry about people criticizing them. I never, during the time I was in Indonesia, had a single congressional visit that did not advance American interests in some way—sometimes small, sometimes large. One that just blew in for a half a day and I thought I was going to get nothing from them but a shopping trip, they ended up inviting the speaker of the Indonesian Parliament, who at that time was taking on the executive branch in some sig- nificant ways. It turned out it was the first time any congressional delegation ever called on the Indonesian Parliament. So, I really encourage those visits. They are very valuable. 31 On the general point of where do we have leverage, it is very complex. I do not want to be understood, either, as saying that we should not say things in public. I think some people need to be more public, some people need to be more private. Two things that I think are elementary: we have a lot more leverage when we have people in Indonesia on our side. It is very easy to push something off a table when it is already ready to tilt and it is very hard to push something if it is firmly on the table. I am referring, among other things, to this notion, if we start to become advocates for East Timor's independence or referendum, which is the code word for independence, we can argue till the moon turns blue about whether this is good or bad. But most Indonesians are against it and we are not going to get a whole lot of sympathy for our general point of view if that is where we try to push. But I think if we push on some of the things that I have mentioned and at some of the things that are in Sidney Jones' testimony where, in fact, members of the human rights commission are publicly criticizing some court verdicts, for example, I think we have a better chance. And, finally, I very much endorse your point about if we can get other countries to join us, and particularly the countries with big influence in Asia and Japan is No. 1 in that regard, it is very, very hard to do. I do not underestimate the difficulty. But, at times, we are so satisfied with the sound of our own voice that we do not think enough about how to get other people to join us. Mr. Gadbaw. Congressman, I would like to second the comments made by Ambassador Wolfowitz and certainly be willing to support any efforts of an educational nature regarding Members of Con- gress and to share what we know about Indonesia and other coun- tries. In response to your question about the extent to which we work with business from other countries, the answer is we definitely do that. At the ASEAN Business Summit, there were participants not just from the ASEAN region but from outside of the ASEAN region, including Australia. In the APEC context, this is the Asia Pacific Economic Cooperation process, there is an active business partici- pation. I do not think we do it as well as we should and I am in- volved in a number of groups to do it better because I firmly be- lieve that transactions drive policy and policy drives transactions and if we can get those aligned in a constructive, positive way, we have a tremendously effective force. I would say, in the Indonesia context, one thing you might study is the Paiton Power Project, which involved cofinancing from U.S. export credit agencies, Eximbank and OPIC, and Japanese financ- ing agencies which not only secured for Americans jobs and exports but also helped to create a way of doing business in Indonesia that I think influences both their infrastructure arena but also carries over into other areas of their economy, by setting a pattern which I think is an important pattern for how they ought to allow the pri- vate sector to operate, for the role of government in regulating and which, I think, has a very positive impact and is the kind of thing that we ought to be doing together with our counterparts in other countries. Mr. Bereuter. Thank you. 32 I understand the gentleman from California has commitments and I would be pleased to recognize him. Mr. Berman. Thank you very much, Mr. Chairman. Yes, I do have to go to a meeting. Dr. Wolfowitz's reputation for realism has been undermined by his notion of coming to Congress and suggesting that when we offer advice, we should do it with humility. Neither of the two of you on either end talked about the corrup- tion issue. We have heard Ms. Jones say, and to some extent I think Dr. Wolfowitz acknowledged, that there has been some re- gression in the area of human rights participation in the electoral process, communal tensions, greater evidence of communal ten- sions, some of them exacerbated by government policies. But, in ad- dition, I have just all kinds of clips of pretty rampant kinds of cor- ruption at the top, from the children of the ruling family and their whole role in this process. To what extent does that undermine the very focused efforts of the President to move Indonesia ahead on an economic sphere? And I would be curious about your reactions of how we would deal with that particular issue. And then, I guess I will ask my questions and be quiet and listen to the responses. I am curious about the issue of Indonesia's impor- tance as it relates to China. I can certainly understand the impor- tance of the country in terms of its size, its diversity, its position as the largest Muslim country, the sea lanes. But is this a notion of Indonesia as a counterforce to China in some fashion and, if it dissolves in civil war and the breaking up of the country, that there is some impact in terms of Chinese policies where they will thereby become more aggressive or seek to move in and fill vacuums? I am not sure what you meant by that. And my final point is, perhaps, mostly to Mr. Gadbaw. I am still trying to understand better what the evidence is that the role of American investment, in and of itself, produces benefits not simply for the workers in the communities where that investment is lo- cated in the economic, which is certainly important, but which should cause us, in the context of dealing with all these issues in many different countries, assume that our desires to promote plu- ralism, political transparency, respect for human rights, is inher- ently better off because American companies are actively investing in that country. I would like to know evidence for the side benefits of that because, if that is clear and established and true every- where in the world, it sort of makes a compelling case for ap- proaching issues in a certain fashion. But I am wondering if it is a self-serving conclusion by American business. Is it also supported by independent evidence? I mean, sometimes a self-serving conclusion can also be a correct one. I am just wondering if this may be a bigger issue than should be addressed at this hearing, but it is certainly an important ques- tion which you have addressed. Thank you. Corruption, China and the other. Mr. Wolfowitz. Yes. Let me take the hard one first. I mean, there is no question corruption is a problem. The Indonesians have a way of talking about it even at a fairly official level and they refer to it as the "high-cost economy." And it puts burdens on the 33 economy and I think it is a problem that is widely believed to have gotten worse in recent years, although not entirely. It is not uni- form. The main bright spot, I think, has been that starting 10 years ago, roughly, there was a major push to not privatize the Indo- nesian economy, because that was a bad word, but they used the word deregulate. And while there have been a significant number of things carved out for powerful individuals, which I think is a burden on the economy as well as unfair, there has been a lot that has been opened up. And the pressure to do that was, in fact, the pressure to compete internationally and the recognition that Indo- nesia could not continue to grow if it simply depended on oil re- sources. In fact, probably the single greatest leverage we have on this issue, in a larger sense, I think, is the desire, the competition among all these countries, for foreign investment. And when Indo- nesia does some of the things it has done, like the National Auto- mobile or the intrusions on the Busang Mine when it was still thought to be a mine, I think it has a dampening effect on foreign investment in general. At the moment, there is an awful lot of for- eign investment available everywhere, so the competition is a little less acute. But I think that is one thing that has some influence. I believe that the way we do our own business—and I think this is a reason why, given a choice among investors, I think there is an objective reason to prefer American investors because we are re- quired by our own law to behave in a way that other countries do not have to. I do not know if there would be a way to international- ize the Foreign Corrupt Practices Act, but it seems to me it would be not a bad thing to try to do. As I understand, in Germany, if you pay a bribe, you actually can take a tax deduction for it. It is not so far from being illegal. Maybe we cannot influence the Ger- man Government, but it would seem to me we might have a better chance working on them than working on the Indonesians. Mr. Berman. We cannot even agree on what technology to sell to Iran with the Germans, so I do not know. Mr. WOLFOWITZ. Well, there are limits to what we can do. But, I mean, we had a GAO inspection when I was in Jakarta of our PL-480 program and I was fairly new, so I did not figure it was something that I would have to apologize for. But I was really quite concerned. How do you run a program like that in a country with the business climate that was described and not have problems. And the GAO did its damnedest to find problems and we had to conclude that when the rules were clear enough and laid down by USAID, the Indonesians followed our rules because they wanted our program. And I think, similarly, they want the technology American oil companies have to offer and so they play by the rules that those companies have to live with. And I think we do have a significant influence within the sphere that we operate in in rais- ing people's standards. I am sorry, China. I in no way meant Indonesia as a military counterweight to China. In fact, one of the impressive things about this country is that even though it is dominated by the military, the military budget is relatively honest. And, as a military force, Indonesia is not the counterweight to anybody. What I meant is 34 that I do believe that if Southeast Asia were to go back to where it was 30 years ago with wars between Indonesia and Malaysia and disputes among the Spratlys, not just between China and the ASEAN countries but between Vietnam and Indonesia, it would be almost impossible for China to stay out, even if they wanted to. I think they would be drawn in to one side or another to protect their own interests. Conversely, if Southeast Asia remains stable as it is and, in fact, they have integrated Vietnam and they are about to bring Laos and Cambodia in, so the differences among them are kept to a min- imum, I think it will, even if the Chinese want to interfere, it is going to be much more difficult for them to do so because they will not be able to play Vietnam off against Indonesia or Indonesia against Vietnam. They will have to deal with the whole entity. That is what I meant. Mr. Berman. I am being called by my Committee to get over there. The question I gave to you is way beyond the scope of this hearing. I would be interested in hearing your thoughts about it at some point, but I am not going to be able to now and it seems un- fair to you to ask it to you and then leave while you are giving the answer, so let me apologize. Mr. Bereuter. Do you want him to answer it? We will have it for the record, if you do. Mr. Gadbaw. I would be happy to answer it and come back and talk to you directly, personally, if you would like. Mr. Bereuter. I liked his question, so if you would like to pro- ceed, we will have it on the record. Mr. Gadbaw. Thank you. I think the Congressman has asked two of the most important questions that we in the business community face and they are at the top of my agenda and the top of, I think, the U.S. Government's policy agencla. I think, on the issue of corruption, the most impor- tant thing to recognize is that the Indonesians themselves have ac- knowledged the problem of corruption and there is considerable discussion in the press on this subject. I think, despite the exist- ence of this problem, American companies are able to operate in In- donesia without giving bribes and with integrity. I believe that by our involvement and insistence on operating in an ethical manner, that we strengthen the forces in Indonesia that want a transparent and corruption-free society. I think that this is part of a much larg- er issue that has to be addressed in a comprehensive way. I think the efforts of the U.S. Government and the OECD to get agreement among the OECD countries that would level up the playing field and criminalize foreign bribery in all of the OECD countries and to enforce the recommendation that the OECD has already adopted to deny tax-deductibility for bribes are two very important initia- tives that deserve our support. I think there are other things that can be done, but we have to recognize that in the end we have to encourage action on the part of these countries to take this issue in hand and to deal with it effectively. I think, on the question of the linkage between our involvement and the social development and the development of human rights in these countries, I think that by our presence, we bring a set of values. That is, American companies and Americans that go over 35 to these countries to trade and invest bring with them the values that we have and the corporate cultures that embody these values. Ultimately, I think that economic development that is based on the kind of market principles and transparency and liberal reforms that the Indonesians have begun to pursue are the best reinforce- ment of the kinds of political and social changes that we are trying to advocate. We, in the U.S. ASEAN Council, have been working hard to un- derstand in more detail how the linkage works. We did a survey of our companies on their practices with respect to community in- volvement and attached to my testimony is a summary of that sur- vey. But I think we also need to be sensitive to the appropriate role of business. There are definitely limits to how far we can go and we can only support the kind of government-to-government initia- tives that are ongoing and the role of the non-government organiza- tions represented by others. Mr. Bereuter. Thank you very much. Did that clear up Mr. Berman s outstanding list of questions? All right. I have a couple, myself, to conclude with, and I guess the first would be addressed to Ms. Jones and Ambassador Wolfowitz, in particular. I asked Secretary Brazeal if she would respond in writ- ing to a question since we were about to recess to go vote, and so the question was basically related to allegations that I heard in Ja- karta when I was there. I do not know how much credibility to give to those allegations. But the allegations are that there is pressure, there are positive incentives is another way to put it, for the per- sons serving in the General Officers Corps, or hoping to serve there, to be Muslim and to move away from a secular kind of ori- entation in the military. I am wondering if you see any evidence of that, or have you seen any evidence in the past? And, if that were to be the case, whether or not the allegation has substance. What would be the effect on U.S. policy, on U.S.-Indonesian rela- tions? What would be your concerns? Ms. Jones. If I can start there, I think that there are two points that need to be addressed in that regard. One is that there is an increasing evidence of factions within the Indonesian military, one of which is called the Green Faction—that is, the group of officers that are more devoutly Muslim than others—but there are other factions as well and there is great resentment among part of the senior officer corps about the rapid rise of Suharto's son-in-law, Prabowo, and also of his agitans, Hortono. And so there are fac- tions in the military more generally of which there is one Muslim faction. I do not think it is cause for concern, especially if one re- members that a former commander-in-chief of the armed forces named Mohamad Jusuf was probably one of the most devout Mus- lims that the army has ever had as commander, is one of the most beloved and one of the cleanest and most respected at the officer corps. So I do not think that, per se, is a cause for concern. I do think that the Indonesian Government's policies over the last 7 or 8 years of encouraging a more strict adherence to Islam through organizations like ICMI, this organization of Muslim intel- lectuals, and so on has not been a direct consequence but it has been an indirect consequence of giving a cover to some of the more 36 militant Muslim groups that operate without direct government support in a variety of different settings that have led, for example, to an increase in the use of blasphemy, for example, as a charge against people who have been making puns about verses in the Koran and so on. We have seen a number of blasphemy cases used against people who criticize the government. So, I think there is a decidedly growing sense of religious intolerance that has come about as an indirect consequence of some government policies. But that is a broader question within the Indonesian Government and not specifically related to the officer corps. Mr. Wolfowitz. I think, with respect to the armed forces, there clearly is a certain degree of factionalism based on religious identi- fication, but I would emphasize two things. No. 1, I do not think any of the officers are Muslim fundamentalists in any western no- tion of the word. It is, rather, a matter of arguing whether Muslims should be promoted more rapidly, less rapidly. And I think, in fact, it is, in part, a legacy of the fact that earlier I do not think it was in any way unfair but there was actually a disproportion of Chris- tian officers and non-Muslim officers in the top ranks of the mili- tary for reasons that I think had nothing to do with an anti-Mus- lim bias. But there was that allegation made. I think it is internal army politics is basically what we are talking about and it is not something that is going to affect the larger climate in Indonesia. With respect to the larger climate, I think there is some truth in what Sidney Jones says about an injection of religion into poli- tics which, in part, the government bears some responsibility. On the other hand, it is also a reason why even a lot of people who want to see change in Indonesia are afraid of having it come too fast because if politics is wide open in Indonesia, there will be peo- ple who will demagogue the religious issue. There is no question about it. The government is guilty of doing that to some extent re- cently itself. Mr. Bereuter. It has been said that the Indonesian military is one of the forces, one of the few institutions—some people go so far as saying the only institution—that really seems to unite the coun- try. What would you say about its role and its importance to Indo- nesia? Mr. Wolfowitz. I think it is very important and it is very impor- tant for that reason and I believe that, on the whole, this should be added to what was said earlier. I think at least on the question of integrating across ethnic groups and across religions on the whole, the record of the military has been very good within its own institution. It is a weakness of the country that there are no other institutions and I think it is a fair criticism that when those insti- tutions have tried to develop, usually they have been cut down. And in spite of that, I believe because of the broad nature of politi- cal and social change in Indonesia, a lot of these things are hap- pening and that is what one means when one talks about the de- velopment of a middle class. I am not an economic determinist, but I do believe that more and more Indonesians, outside of the mili- tary Indonesians, are developing the confidence and ability to orga- nize on a national scale in a way that ultimately will be a great strength for that country. 38 violence that when it starts to erupt, people get very concerned and very nervous. And if the trend continues, it will be indeed disturb- ing. But I think some perspective should be kept on it. That is all I would say. Ms. Jones. Don't you think the trend is increasing? Mr. Wolfowitz. I do. Ms. Jones. Yes. Mr. Wolfowitz. No, it is increasing. But I am just saying that it started from a rather placid level a tew years ago and that is rea- son for concern. Mr. Bereuter. Thank you. Mr. Gadbaw, I think there is one element that has sort of been neglected by our questions and that is about the business climate and practices that the American businesses face there, except for the area of corruption which we have talked a little bit about and possibly the influence of the President's family on business and eco- nomic and trade relationships. But I wonder if you could more spe- cifically address—and, again, the Ambassador's comments are wel- come or any of the three of you—what categories, in brief, without necessarily much detail unless you want to provide it, what cat- egories of obstacles do we face—our own, or Indonesian, or some- thing else—which keep us from expanding our business involve- ment, participation and limits our ability to take advantage of op- portunities there? Mr. Gadbaw. Yes. I think it is a very important area and the area on which we spend a great deal of our time. I think in my longer testimony you will find a bit more detail on those subjects. I think the first point is that we have a very successful business- to-business and government-to-government dialog about the busi- ness conditions in Indonesia and specific ways to improve those conditions. I had mentioned the success we had in the distribution area, in the tax area, and in the customs area. I think in all of those areas we want to continue to press forward with further re- forms, particularly in the customs arena where the Indonesians have introduced some important changes, that we will want to make sure to move in a positive direction. In the area of deregulation, particularly in the energy sector and the downstream petroleum products sector, there are important ef- forts that need to be made to further deregulate and allow for pri- vate participation in those areas and I think that what is hearten- ing is that we have a very constructive effort on the part of both business and government to take on those issues provided that we can focus in on specific doable things that can then build support for the longer term reforms that we think are essential. Mr. Bereuter. Thank you. When I visited Jakarta, I visited with the American banking community there since I am a Member of the Banking Committee. And, not unlike most of Asia, we do not have national treatment. We have far from national treatment. In the area of retail banking, what is called retail banking, for example, we have almost no abil- ity for our institutions to function in that area. I would think that is a limitation on our and on other foreign countries' ability to work in the area and to assist American or foreign-based businesses op- erating in Indonesia. 39 This hearing has focused so much, it seems to me, on the prob- lems that we have in our relationship and the potential problems because, for one thing, we are trying to better understand some of the concerns that our colleagues had, not only in this Committee but throughout the Congress. And I do want to say that I think there are very many positive things about our relationship, and I tried in my opening statement to emphasize the increasingly con- structive role that Indonesia plays in the region. As I visited with Indonesians—and I would include specifically the military—there was a warmth that existed toward America. Many of them have had experiences here. We could talk about common experiences that they had during their military training or their education here, and so I think there is a lot to he said about the base for fur- ther improving Indonesian-American relations. This is, of course, our goal within our national interest and always only within our national interest. But I see little reason why improving Indonesian- American relations is not consistent with our principles and goals, always in our national interest. I would ask you, in conclusion, for any of you to make a contribu- tion here, two questions, converse sides. What is it that Congress should avoid doing to complicate or damage Indonesian-American relations in our national interest? And wnat, second, should we specifically do to maintain and enhance Indonesian-American rela- tions within our national interest? Mr. Wolfowitz. Do you want me to try to go first? Mr. Bereuter. The top of your list, both directions. Mr. Wolfowitz. Let me start with the positive side, and I appre- ciate what you said. I think we tend to look at the problems. But the opportunities here are enormous and not just in the trade and business area. I think we have the opportunity, if things go well— and I think they will go well over the next 15 or 20 years—to have a huge country in Asia, a huge country with a position in the Mos- lem world, that is progressing, that is progressive, and that is very warm and friendly to the United States. I think there is a lot at stake. I think one thing that Congress can do of a positive sort I said to Congressman Hastings. I think more Congressmen need to go there. It is a long way away. It is a difficult trip. But I do not know anyone, as I said before. I do not know any Congressman who has visited who did not advance American interests in some way and I do not know of any who did not come back considerably better understanding both the opportunities and the problems there and I really would en courage more congressional travel there. I believe that programs that bring Indonesians to the United States—and I include IMET in that regard—are very helpful. I do not have much doubt at all that, as a general proposition, Indo- nesians that have exposure to the United States are more likely to see things our way and more likely to share our values. And I spe- cifically believe tnat the efforts that we do to help non-govern- mental organizations, as I mentioned, through the Asia Founda- tion, through the National Endowment for Democracy, are very, very positive. I think what Congress should avoid doing is coming out with ac- tions that seem simply hostile or destructive, I think particularly 40 on the issue of East Timor. Even a lot of Indonesians who have concerns about human rights abuses in East Timor will complain that at times it seems as though the United States does not realize that there is the rest of Indonesia. That the only problems in Indo- nesia are in East Timor. And also, I think as I said very clearly, I think if you are going to make progress on East Timor, you have to recognize that inde- pendence is not the issue now. I believe, in fact, that if Portugal were willing to show some flexibility, I think there would be an op- portunity to get the Indonesian Government to move quite a long way. But if the issues seem to be independence, I think it becomes very destructive and I would urge the Congress to try to avoid that sort of destructive presentation of the issue. Mr. Bereuter. Thank you. Ms. Jones. Ms. Jones. I think I would urge Congress not to just look at In- donesia in terms of what happens in Jakarta primarily and that it is critically important not only for these congressional delegations but for other kinds of communication going back and forth to look at what is happening in Sumatra and Kalimantan and Irian Jaya and elsewhere because I think that is going to be increasingly im- portant in both a positive and negative way in the years to come. I also would endorse what Dr. Wolfowitz said, that style is very important. I think you can say a lot and you can put a lot of pres- sure on the Indonesian Government in terms of the substantive content of that pressure as long as it is done in a style that does not seem to be completely hectoring and from a completely Amer- ican point of view. And then, I guess, finally I would say, on East Timor, that it is critically important, I think, to find ways of supporting the U.N. initiatives and sometimes that even may mean offering financial support, which I know is difficult to come by these days, for specific initiatives like a visit of the special rapporteur on torture to East Timor because it does put it into an international context that makes it much more acceptable overall. Mr. Bereuter. Thank you. Mr. Gadbaw. Mr. Gadbaw. I think the United States needs to stay engaged. We need to understand the positive linkages between our commer- cial interests and our overall policy interests. And I think we have to strengthen the mutually reinforcing relationships between policy and transactions. I think what we should stop doing is stop looking purely at the negative measures to sanction behavior that we do not like without regard to whether it achieves the objectives that we intended to achieve and find ways to strengthen, positive means to reinforce and incentivize behavior and the achievement of objec- tives that we all share. Mr. Bereuter. Thank you very much. I found this hearing to be extraordinarily helpful. Your comments, your testimony, and re- sponses to our questions were to the point and very beneficial to us. I think, as a matter of fact, I will ask Mr. Berman to join me in having our staff prepare a summary of your remarks today, along with those of the Secretary, and provide a summary in the Congressional Record—which is rarely done here—as opposed to 41 just having it end up in our Committee files. That is how valuable I think your contribution has been here as members of the second panel. So, thank you very much for your time. We very much appreciate it. Hope to see you again. The Subcommittee is adjourned. [Whereupon, at 4:09 p.m., the Subcommittee was adjourned.] ft uotsasAqsu uo 'usqtd>(B«j 3ttqonw 'aapsal aoqei tuapuadapux buxpeal * 30 Ten; 6uxo6uo eqx eststs patTun aqt «T uaaouoo £>uxpuB}s6uoi p»3tJ©ua6 Stq teq} bsac as^oup SI stqfcxa ib^aom o *s^sxAXtoe stq6xa tZtmnq asaaomxx 3««2 °«3 03 papaens stM azxa«j laqoN 966T aqt aa^fe /ilexoades 'expaui 1 Euopsuaa^ux pup 'S'O UT a6«38AOO 5Soui ath ^dca3^b Xlqeqoad 'SZ.6I ux patatdap stsT-[sxaolo3 aesn6n3aod aouiao? aq^ a»t;t toa^uoo pazxas exsauopui aaaqM 'jouixx tsea ut sualqoad snoxaas o s:*q6xa uvmnq jo eaat eqt ux Xne'tsades' sduxuioot aoqs e.uox^tu aq* on pasnoo? saq tou ueqt ua;fo aaoui sqtuoui tuaoaa ut *s*n aq4 ut uox;u»;4s aelndod 'buxput3sthXrttou Atxzaldoioo s. exsauopui r^qBTH QTrgtTR oo wnsaj •sTSAai eouBtsxsqns ;e saxi Tins 'aaAdwoq 'suexesuopui 30 suoxllTW 'uoxtelndbd s'txi2tstiy saqotvu /-[itau JCpaaxl* sscto aippxai BuxmoaB X-[pxdt3 b bbm exesuopui 'uoxBaj butuiooq b ut esxmouooa oxjueuAp }sooi aq:» fo auo Bux^seog *uox6aa aq) ux eouaesad X^anoas S'n 6uxnuxtUoo '6U034S b esuiool*tt exsauopui 'tuauiaAOW pau6tiV-'JON aqt aapunof t qBnoqtlv *sasusx aluox6a2 03 esipecidde aAXtoru3suoo pus isnsuasonD afcpanooua 04 NY3SY q&noaqt saoqqbxau s^x qtx/t s^aom ssaelqtauou tx '(SY3SV) suottth uexsy ts«aqtnos ?o ontttxoossv aq3 30 abf Aq aaqxuaui ;esfeaBi aqx -suoxBxlaa JoCem TIP ioj suoxtoatoad i»uo:;n3T;suo3 aAX3oaffa All>Jaua6 spJOffB pus 'atsts oxuitlsi ut ;ou sx Bxesuopui ^aA *tcBa aiPPTw ath jo saxa^unoo oqt 50 uox3slndod pauxquion aqt spaaoxa 3bouilt qohim -uiTTsnw 8JB aldoad uoxuxm 00? S31 30 ^ueoaed 06 Ala«8H 'oosxous2a ues 03 uo^sog uioaf aauB^sxp aqt sl^nba tesM-ot-tsta thpsaaq s'exsauopui 'sszex 30 azxs eqt satin; aaaqt ts2t puel e thTM *qot8a Dhidsa6oa6 stx esqo3tui sdnojtb oxutha tuaaaffxp 00E J8AO 6insE»dujooue A^xsabaxp iBan^x"- 'ixesonpux usth azxaa^OBJtqo 03 ^lnoxffxp aaoui bab 9an;unoD msj upt^cm WTTOPg TbTPWII try *XlTeaoT3BUJ8^ux pus bxsv tssathnos ux alo2 6UTM026 s.txesuopui SB XX8M SB'dxqBUOX3tia2 A^x2noas no pus 'stesaatux oxmouooa len^nuj ano '8tq6t2 usumq ftuxpnloui 'sex3 l*2*:)*TTq ano j>° ctoadSt iiatubo \sj»a9s auxuiBzs o; lnfesn aq tqfixui tx 'pjcfcaa shit ui 'sueaoo oxfxoed put utipui ath 30 eantounC oxBb^ba^s ath Utdc npuBlax OOO'IT acoqw pas 4sa62tl-qt2T s.plaow aq^ sx uoitel^dod asoqn 'uoxttu tUtiqiA sxq^ q^T« s»X3 ano Buxfceueuj ux sn 6ux3t3 sabusllsqo put esxttunt2oddo 2oCim aqt a3BUxuinllx dlaq plnoqs uoouao^jb sxth esBuBqoza ano 'txesuopui thXM dhisuoxttela zalduioo '^uB^aodoix Jno isnosxp 04 X^^untaoddo ihit 303 'uBuuxsqo aw 'noX ifusqi 46 - 3 - Work in Program At the sim* time, it ia important not to labor under tha misconception that Indonesia is some sort of archipelagic Burma. While Indonesia's human rights problems are serious, a closer examination of the workings of this immensely diverse society provides a more complex and nuanced picture. Vigorous MgQ Community For one thing, unlike Burma or other countries whose governments rely entirely on repression to control their populations, literally hundreds of independent non-governmental organizations continue to function despite recurring episodes of government pressure. Many promote democratic principles and better governance, and take active public roles in defending the human rights of individuals accused of wrongdoing. Others support environmental causes, and advise ethnic groups on their rights to their lanps and traditional access to natural resources. Meanwile, various youth groups have begun to play a role in easing communal tensions, especially those arising from religious differences, and are pressing for democratic reform. There continue to be strong individual voices for reform and, while some have been muzzled, others have not. A number of outspoken personalities also continue to press a reform agenda. The Indonesia National Human Rights Commission, whose members were originally appointed by the President, has gained wide respect among Indonesian and U.S. human rights advocates alike for its willingness to take forceful, independent positions on sensitive issues. It was the Human Rights Commission, for example, that conducted a careful investigation of the July 27 riots and issued a public report that blamed the Government for interfering in the political process and thereby setting in train the events that led to the riots. Regrettably the government has yet to respond to that report. Although it cannot enforce its findings, the Commission has conducted other investigations and issued other reports on equally difficult issues. A number of these have led directly to government action against officials or military personnel responsible for human rights abuses. Active Preas The Indonesian press practices self-censorship. The Government has banned publications, pressured the independent journalists union, and sentenced 3 individuals under laws prohibiting government criticism. Yet, despite these problems, the Indonesian press can be remarkably outspoken. Newspapers daeqs at — eoueuuofaad s,A3e3Ii-ru) aq} BAOadmx 04 apew buxaq 929 s^aoffa 3tq3 t st 31 tnfl -asuaf30 aq3 30 A3XAB26 aq3 q33ttn satmlt 3011 op s283tloxa S3q6xa ututnq papaoooa saau»;ues 'oslv *suoi3bioxa 83q6X2 utumq pa6elXB J° sesao fiuxofeuo •Aloesa 03 put seoaoj pauue aqt fo aouaauofaed S3q6x2 atnnq aq3 aAOJdmi 03 auop aq astun aaoui a6pal«ou>pe saapeel AJB3-tlT«u lotuas * s boob 3 sumo a to 3Tn:»TJJTP Xm&TU. sauiTtauios aapun tuttatsba alqs2ap^BUOO patBlisuouiap esoaof pauue aq3 's3otl3uoo OTutha-aa^at pat s^o-pa ^uaoaj fiuxana -subtltaio 3uaoouux autq ioatuoo ixaqt aapan sdooat uaq* Xtxaoqtnt jo su0T.3T.s0d uioag paAoaaa siapusuniioo a2om pue $346x1 ueuinq 6ux3bl°Ta 203 pat3xAU03 pus petnoasoid uaaq aAtq saafpios aioui 'saaaX *»af 3«al aq3 ui -anooo XTT*S sasnqa q6noq3XB 'esi3TTTqt*uods82 Jxeqt 3no bwiAnvo 03 qoeo2dda axaq3 nx abunqo 8AX3XSOd 30 aouapiAa 6uxAoqs aje oslb seaaof pauue s.exsauopui zrrrrmi inrnnnQ atbutsbbjdbi *Aatunoo aq3 3noq6no2q3 Alaa23 sate2ado qoxqm '3au2e3ut aq3 q6no2q3 uot^bujjofut 03 ssaooe apxAOJd oslt s2atnduios ltonsaad 'W8q3 paofge ueo oq« suetesuopui 30 siaquinu 6utHO26 asoq3 aoj *et2«)(Br ut s^ota A c aq3 20; pemelq osoq3 st qons 'suopag 3uautujaAo6 30 staods: 6ux2833tT?un Aaela Xatj^ uaqw usa» 'essjnos swau ]Euopeu38;ux 03 ssaooe pasat^afun AoCaa suaxseuopui 30 saaqtomi 6uxmo2£> *3auja3ui aq3 04 ssaaoe aa2f ^3Ta-4esa 20 esqstp 3^n8^ss a^BAxad 3-cqhioad 30a S80p etsauopni 'S9u;unoD J8q)o 30 aaqumu Aue aXTTun 2tth llsm se 6in30u qaaoM sx 31 -paxJ3 6uxaq aap s2aq^o pu* ueqed)(id aapeal Joqei qoxqw aapun «al uoxsaeAqns-x3ue aq3 uai\;a3ao 03 sdnoa6 S3q&ij ueoinq Aq 533033a 03 a6tJ8AOO alduie 8ax6 os is siedtdsMau 3aq3 sppe piato' *W 'oxt'Joouea etsauopni 8th 30 ptaq se 2aq buxtsasun ux suox^ot stx 203 ^uauruaaAoo ath tsuttbs x24ndou28)fns x)ewe6aw Aq ygftnoaq saxsu «I 6nuaAoo 30 qoC poo6 « esop sesad aqt 'aoatd TBUJnoT 38»I5g TTBM 3tiaoa2 t ux 3no patuxod 'essusx S3q6x3 aaiiinq ltQOX3tU283ux UT 8AX33t 6aOX X8U2032t UEOfaauiy UB 'pTAtO ^OB£> SY «-pU8X2J B U102J WSXOTtT^O. pal3X3ua 28dsd a6tn6aBl-qsxlbua 6uTpeal t in ltT-'oaxpa AuxAOJdda aa patdoiosd axseuopui uo ;aodsa stqb^H UBmni) ano uaA3 -96BJSA03 a6ad-3U023 paAxaoa^ — stuapxssip leoT^ilod 203 sesooad anp pua 'aoi3ttoossB 30 uiopaa23 'uoxssa2dxa 30 uiopaa23 203 ^aoddsu ano 6inai2X33a — S3S822t tuanbasqsu pua S30X2 aq3 20 a^tM aqa in S3uaoiaounou02d 3U8U32tdaa 83t38 -S^oxj lz Xlnr aqt uo sfiinpin? l>OT3TJS *'uosisxuiuiod • 3q&iv uamiiH aq3 03 8&B28aoo 8AXCua3za pa30A8p A23unoo aq3 ux 82aqMasl8 pua t3JBi(er ux sesid aqx -esx23unoo waf a uaq3 aaoui ax pauuaq aq plhom 3Bq3 'uoi3dn2JOO axil 'soido^ 2aq3e ao esnssi *3q&Ta uanmq uo aaloi^J* 82n3B83 Xloin^noa - a - 48 - 5 - contrast to the behavior of the armed forces of some other nations where the/ are a law onto themselves. Just in tha last few weeks, for example, the International Committee of the Red Cross conducted a week-long seminar on international law and human rights for some SO Indonesian Special Forces officers. The head of the Special Forces, who requested the training, underscored his personal support for its objectives by attending its opening and.closing sessions. Also, defense spending in Indonesia is quite modest -- only 1.4 percent of GNP, which places it 119th in the world in terms of per capita military expenditures. The military's historic access to "off-budget" funds from state corporations has largely disappeared, although individual officers and units remain heavily involved in businesses. Growth with Eouitv Meanwhile, Indonesia's economy continues to grow. Over the last couple of decades, the country's Gross Domestic Product has expanded at an average rate of almost seven percent. Most experts see no reason it should not continue at about that pace for the foreseeable future, thanks to the government's sound economic policies. However, to assure such an outcome, the Government must continue along its chosen path of trade liberalization and must assure full access to capital and markets for all of its citizens who wish to participate in business. Strengthening the legal and regulatory framework for business operations will become increasingly important if economic growth is to qe sustained into the foreseeable future. Although some question the income level that should be defined as poor, everyone agrees that poverty has declined dramatically. Looked at another way, Indonesia has moved from an income base about half that of India's in the mid-1960s to a per capita income ($1,000) more than twice that of India today. It must continue its pattern of economic reform if it is to maintain its pace of economic expansion. While such impressive sustained growth has produced some enormously wealthy individuals, these same sound economic policies clearly have brought widespread benefits to average Indonesians. The numbers of those living below the absolute poverty line have declined from about 60 percent of the population to somewhere just above 10 percent over the last three decades. A World Bank report on poverty credited Indonesia with achieving the greatest reduction of any of the countries examined over the course of a 20-year study. Another World Bank study found that Indonesia has the smallest gap between its richest and poorest citizens of virtually any I 6^ qti« esn6eali03 /ssequia sjq pus Aon aopesssquiv aAsq se , setelv aatsxinM u6xejoj AlaAXSuetxe main passnosxp »Aeq sq6xaqlv pae aeqdotsi3qD ateas ?° sexaetaaoas ,otasqaos ^rap:s»asj qti* A-[^D97xp suaaotioD mo pesxsa seq 'elduiexe 20} * uo^utld tuapxesaj *«xesuopai 50 ^usutj.isaod &m R3T« anSoieip mo 30 iuetaodaix ub uaaq Buoi seq aouixx tsB3 at uoxtentxs aqj, JOinTX TVW2 'exesuopui qatM easqs aw s;seja;ux lentnai snoaaumu aqt 6uxaaqtari3 alxqw stqfixa usumq 203 aoadsaa j9-jraa£ sfitmooue dleq 0} suoxtos 30 aaqumu a uaxe; a*eq aw 'PT*b sxqj, -aantn? uwo nsu; adeqs nxw saepeal l'^T^TTod pus aidoad s.exesuopui pus 'ateuxuiopaad htm suox^eaapxsuoo Xeuaaiux 'uoittu afiael *ue ux sv *aueaaodexx ilias seslaqtauou q6noqtlp 'pa^xutxl Aiqeai^ux sx exsauopui ux sauaAo uo eouanlfux *sn acqt paefiea sxqi ui ezxuBooaa tsruu sm _ -aoue^aoduix pue apntxu6sui teqa 30 Xnunoo s ux tsxxa prnoqs aeqt msxleanld aqt azxu6ooaa XXTM a*Mt *'* uoxtxsusat Alaapao us. 'aaqdotsxaqo Aastaaoas aamaof 30 spaow aqa ux 'pue sxssonpui ux stqfixa usumq aof ^oadesa paAoaduix a^ouioad dTsq ot uexet seq sa-js^s patxun aqt suoxtos aqt fo auios 'ueuiaxeqD -aw 'naxAaa an aa»i ^usqioauii }nq pan™tT*:»Toil' 5'fl st?i *aananf tuetsiP 00t ;ou aqt ux uox;eu aqt ooej XXTM aossaoosu s 30 asusx aqt t«qa aaxleaa ot oiaas aaofeaaqt suexsauopui tsow -^uxod teu.t te PT° saeaA- LL Alasau aq IIX« »H *uxt6b una 03 espxoap aq fx 866T ux uiaaa aeeA-aATa qtuaAas e aof petoeels aq Xlin>taaD tsomle XXT« otaeqaos tuapxsaaa 'AanauaD axeu aqt otut puaaxa li»« ^bui t«ut assqd s 'dxqsaapeal Xsoxtxlod wau 03 uoitsiueat patoeatoad s aq 03 Xla^xl sx aeqn fiuxaeaue aq 03 saeadds wou eiesuopui t*M3 axxuoooaa ot tuetaodiiix osls si ti 'paaapsiuoo pue pasaq aq u» sasu 6inaa33XP ^sth aasuua 03 alqslxeAe aae smsiusqoaui amos ^seal as pue 'oni^oaaip l«3T3?X°a' aantnf s'Xatunoo aqt 6inpae6aa SBAlesmaqt suexesuopui 6uome Xew aepun si ateqaa *uisxuitado aof sonseaa osle jnq 'uaaoonD 30 seaae aae eaaqx *sesa6oad in yjon e 'xnlf in Aaexoos e sx exesonpui 'usmai«MD '^h 'aaoqs ui mu ui x^rrsog *peaqe ail 3«Ma s»6u©llsqD lex^uetsqsu XXT'S SM3 esoea ai se aouaxlxesa aaaeaaB siesonpui SSAX& pu« suialqoad ispos pue lsof^nod onxqsno sdlaq ti aeneoaq t^sduix alqeaapxsuoo seq qtwoa6 alqettnba Xl*Ait>Xa' 'PXd«a qons 'Its oa seslpaejj esiy ui Aaaunoo 6indol*Aap - 9 - 50 - 7 - their counterpart! in Jakarta. In Maw York and elsewhere, we have strongly supported UN-facilitated discussions between the foreign ministers of Indonesia and Portugal, aa well as the dialogue among the Timorese themselves. We are encouraged that Secretary General Kofi Annan's recent deciaion to appoint Ambassador Jamsheed Marker to be his Special Representative on East Timor matters will give a new impetus to these key discussions. I will be meeting with Ambassador Marker later today and will underscore with him the importance we give to the UN's role in finding a solution to the East Timor problem. While many of our efforts involve quiet diplomacy, we also have not been reluctant to support public expressions of concern where appropriate. For example, we have supported action on East Timor at the United Nations Human Rights Commission. Only last month, the Commission passed a resolution, with U.S. cosponsorship, that expressed deep concerns over Indonesian policies there. It will be important in our view that an overall solution in East Timor incorporate proposals that give East Timorese themselves greater control over their economic and political life, in keeping with the their unique history and culture. In the meantime, we have urged the government to reduce troop levels, to allow increased access the province, and to release prisoners of conscience. We have also called on the East Timor resistance to foreswear violence and join efforts to achieve a peaceful resolution of the dispute. Two U.S. Congressmen, Ambassador Roy, and Assistant Secretary of State for Democracy, Human Rights, and Labor, John Shattuck, recently visited the area, and other embassy officers have visited six times in the past ten months. Assistant Secretary Shattuck also visited the imprisoned East Timorese activist Fernando de Araujo last March. Over the years, we have been the largest international aid donor to East Timor, with eight projects now currently under way with a total budget of $15.8 million. Our aid programs are designed to improve the lives of average Timorese, while helping them achieve more control over their own economio future. Other Human Rights Concerns In the area of worker rights, we have maintained ongoing discussions with the Indonesian authorities to urge implementation of internationally accepted labor standards. In this regard, we encouraged the Indonesian Ministry of Manpower to adopt a Plan of Action in November 1994 that laid out a number of important benchmarks. Indonesia has made progress in 56 TESTIMONY OF PAUL WOLFOWTTZ DEAN THE PAUL H. NITZE SCHOOL OF ADVANCED INTERNATIONAL STUDIES OF THE JOHNS HOPKINS UNIVERSITY BEFORE THE U.S. HOUSE OF REPRESENTATIVES COMMITTEE ON INTERNATIONAL RELATIONS SUBCOMMITTEE ON EAST ASIAN AND PACIFIC AFFAIRS HEARINGS ON INDONESIA May 7, 1997 58 • Economic and Commercial Importance. With a population approaching two hundred million people, Indonesia is the fourth largest country in the world. Moreover, Indonesia'! economic growth has been impressive, averaging almost seven per p** Xflai over a period of more than two decades. As a result, even though it started from a relatively low base, Indonesia's is emerging as one of the world's larger economies. Tn fact, it is one the ten economies on (he Commerce Department's list of Dig Emerging Markets. While Indonesia is already an important trading partner for the United States, the prospect of continued rapid growth of this very large economy will make it even more important in the future. • Strategic Location. Indonesia's location makes it very important strategically. Most typically this kind of statement is accompanied by a reference to the fact that some of the most important sea lanes in the world, those which connect the Pacific Ocean to the Indian Ocean and the Persian Gulf, pass through or by Indonesian waters. But even more significant is Indonesia's crucial role as the largest country in Southeast Asia, a region of more than 400 million people mat is important not only in itself, but also as China's strategic neighbor. If Southeast Asia maintains its stability, as well as what the ASEAN countries call their "resilience " there is a much greater chance that China will remain at peace with its neighbors. Alternatively, if Southeast Asia becomes a region of instability or potential threats, China might be drawn into that instability, with consequences for the entire Pacific region, including the United States. Indonesia is crucial in determining that outcome. 2) IWnQMKglA'g Fm»nX4ir AVn PHI ITir Al PROOgR&S Considering thai Indonesia has been independent for only a relatively short SI years, it has made remarkable progress during that time. Although important problems and challenges remain, the record of major problems successfully solved makes me optimistic about Indonesia's ability to solve these problems in the future. It might provide a helpful perspective to think of where the United States was in 1127 and how many major problems - including human rights issues - remained to be solved. It is far too easy to sit here in judgment about the problems of another country twelve thousand miles away, forgetting that we have had more than two hundred years to develop our democratic institutions and that even so we still have many problems left to solve. Any balanced judgment of the situation m Indonesia today, including the very important and sensitive issue of human rights, needs to take account of the significant progress that Indonesia has already made and needs to acknowledge that much of this progress has to be credited to the strong and remarkable leadership of President Soeharto. The list of accomplishments is long, but let me mention four in particular: • Indonesia's economic development, which is entirely attributable to President Soeharto'a era and "New Order" government, has transformed Indonesia and is continuing to transform it. People who knew Indonesia at the end of the Soekamo era, in 1966, have difficulty recognizing it today. The economic growth that is so evident in the new skyscrapers of Jakarta is also evident in the prosperity of the countryside and in the 60 4 not feel that it wu shared by the great majority of Indonesians I knew. Obvious though it seems, we should remember that it is their country that we are talking about and Ihfiy should determine its future. In the seven years since that time, I have observed significantly greater openness in many respects. There is more questioning of public officials and government decisions; there have been important court decisions that have gone against the government, at least in their initial stages; military officers have been court-martialed for the massacre in East Timor in 1991; and the establishment of a government-appointed Human Rights Commission which has enough independence to issue reports that are critical of government actions is a remarkable milestone. However, there have also been some serious setbacks, most notably the closure of some news publications including the very distinguished and independent news weekly, TEMPO. In general, the area of political speech and expression baa been an area of both some significant progress and some significant setbacks. On the positive side, there seems to be greater tolerance of public criticism within legal channels of government actions. The Human Rights Commission, as already noted, has issued critical reports and senior members have even criticized decisions by the Indonesian courts. On the whole, the Indonesian press is allowed to discuss problems more openly than ten yean ago and even journalists from the banned weekly TEMPO have recently been allowed to take over the operation of some new weeklies that have consequently become quite outspoken. On the other hand, the government seems to be dealing more harshly with political speech and actions that is not legally authorized. In particular, there seems to be a disturbing tendency to use the very harsh subversion law against labor organizers, political activists and journalists who operate outside of the fairly narrowly constrained legal channels. This is true in the case Andi Syahputra, the editor of the unauthorized Suara Independen news magazine as well as the earlier case of two members of the Alliance of Independent Journalists who remain in jail; in the recent subversion sentences of nine activists from the Democratic People's Party; and in the prominent case of labor leader Muchtar Pakpahan. In the latter case there has been some discussion recently of the possibility that the government might release Muchtar Pakpahan to go abroad for needed medical treatment That would certainly be a welcome humanitarian gesture. 4) BAI.ArJr.TKn THR NRED FOR fTHAWCR AKT> THR WBRn FOB START!.IT-V There is a complex balance between the desire for change and the desire for stability in Indonesia that Americans, who are able to take stability for granted, have difficulty understanding. 1 had a personal experience of this in 1987 during the election campaign when the PDI staged a massive rally in Jakarta. It was remarkable for its size - with almost a million people in the streets, and for its duration — going on for several hours; but most remarkable was its extraordinary peacefulness. I was impressed, and very hopeful about the prospects for peaceful political expression in Indonesia. 1 expressed these sentiments a few days later to a very liberal Indonesian friend, who I expected would share them with me. I was surprised by his negative reaction. "My wife came home shaking with fear," he said, -lite large crowds wearing red shirts and displaying 61 5 pictures of the late President Soekamo reminded her of the terrible days of the Soekamo era when her husband and family were the targets oCred-shirted mobs. This experience brought home to me the importance attached to stability by those who experienced the instability and violence of Indonesia's first two decades. Perhaps they should have more confidence in the liability that their country has achieved since then; perhaps they are too inclined to err on the side of stability in making decisions about the right pace of change. But perhaps, also, those who have none of that experience are too ready to take stability for granted. This includes not only virtually all of us Americans but also a majority of Indonesia'e own population, since more than half of Indonesia's people were not even alive in 1967. It is difficult to say how the balance should be struck between change and stability, but it would be a mistake to pretend that it is not an issue. 5) TUP. ROTE OF OUTSIDERS IN INFLUENCING CHANOE This brings me to my last point, about how foreigners, including Americans, who wish to support progressive change in Indonesia should conduct themselves and how they should offer advice. To begin with, people should be careful about offering advice to countries they know very little about or which they had never even heard of a year ago. That is probably good general advice, but in certainly applies to a country as complex as Indonesia, a country where there arc dim cult balances to be struck concerning the pace and priorities of change, decisions that must be made by Indonesians for Indonesians. For those of us who foel in a position to offer advice, a few guidelines are in order mat 1 hope the Congress will keep in mind in any actions or resolutions it may consider concerning Indonesia: — If advice is offered as advice it should be done with some humility, We are not in a position to dictate, nor should we be. — Whether to offer advice in public or in private is a delicate question. I believe that U.S. government officials, and former officials like myself, will probably be most effective if they offer their advice in private. The object is persuasion and h is far more difficult to persuade people if they also have to suffer the appearance of being dictated to by a foreign government — Whether public or private, advice is not likely to be persuasive if it is perceived as hostile; if it appears to take no account of positive achievements along with problems; or if it appears to be based on inaccurate or tendentious information. — Finally, if we wish to encourage positive change, 1 think our role needs to be to persuade, not to coerce. The resort to sanctions may make some people feel better, but it ought to be judged by how it affects the situation. When our leverage is limited, the resort to sanctions is more likely to polarize the situation than to encourage positive change. 45-910 98-3 62 6 There are many people in Indonesia working to promote positive change, including many inside the government. But it is not only government officials who criticize some American actions In support of human rights as heavy-handed and counterproductive. For example, I have heard many Indonesians outside the government, who are working to promote change in their country, complain that the cancellation of IMET for Indonesia did nothing to improve the human rights situation in East Timor. But it did diminish U.S. influence with the Indonesian military and deprived us of the opportunity to bring Indonesian officers to the United States, which would have been an opportunity to teach them important things about how our democratic system works. HUMAN RIGHTS WATCH / ASIA Q*6SF,flt,A.«lu«. N~Y»A. NY 10017.6104 TEL (212) 972-8400 FAX (212) 972-0906 B-ia.il: lu-nyoGnr. o,, □ 1S22 K Sw. NW. #910. Vuklatv>n. DC 2000S12O2 TEL (202) 371-6592 FAX (202) 371-0124 H-™l kr-JrfWki%-.orj □ 109S1 V.l Ploo BouUuJ, #203, Lo«A»<.U, CA 90064-2126 TEL (310) 475-3070 FAX (310) 475-5613 H-m»d: !>r..uU.IJn»o.«r.m\ □ 33 l,l,n|l.n Hljl. Sw, N19LH, Lo»i~.. UK TBL (4471) 713-1995 FAX (4471) 713-1800 E-m*l: U~»s«>ik@|.>...o.o,j Q 15 Ru. V.„ C.mp.nW 1040. 9tmmm\ B.ljlum TEL (322) 732-2009 FAX (322) 732-0471 E-.~il kr.»teUu(}>|n..pc.o,| O FUl D. 16lk Floor, 57 Sp.ir,, C.nU Ua., vr.n CLi. Hou* Ko«<. TEL (8S2) 2574*275 FAX (852) 2572-8910 E-rnul, i ?;0NBT IONES Imihui. Biim., MIKEIENDKZB/CZYK T*ku^i™ Dhulin ROMN ML'NRO H.-aj RhM Dindol JEANNlNBaUTHRIS DINAH POKEMPNHR CVJJ. 3.UI. W|pi CU Pl,rd Allllll Mimui Amv-HvIk IU I u> Hurr llrl-II hkri L Iiimi I Mb Ml U«4ACX< Ajiu. V. D.VU Cliii.ii Dim D.U.. A. 0. .. Mv.L 0-IJ«„ Dukonk M. C.i^k^ DM. Hnl P,.J tUbwi Cm Ha Pvlrj b"W Bl K» P.ul M»n Il. HUMAN RIGHTS IN INDONESIA AND EAST TIMOR Statement by Sidney Jones, Executive Director of Human Rights Watch/Asia before the Asia and Pacific Subcommittee, Committee on International Relations U.S. House of Representatives May 7,1997 Thank you, Mr. Chairman, for inviting us to testify. My name is Sidney /ones, I am executive director of Human Rights Watch/Asia, and I have been following developments in Indonesia for the last twenty years. Indonesia has never been a paragon of human rights practices, but for a period in the early 1990s, it looked as though it was on a slow but steady path to greater openness. Since 1994, when President Soeharto suddenly shut down three news publications, the trend has been in the other direction. On virtually all fronts in the area of political and civil rights — freedom of expression, freedom of association, religious tolerance and communal harmony — there has been a perceptible decline, while on the economic and social side, unchecked corruption especially by what the Guardian newspaper has called Soeharto's "rapacious offspring"; a perceived widening of the gap between rich and poor; and inequities between Jakarta and the regions are producing major social and political tensions. Mill Stupta, Tightening political controls combined with widespread resentment of the government are a recipe for trouble under any circumstances in Southeast Asia's largest and most strategically important country. But they become even more serious given that President Soeharto, at age seventy-six and in power for over thirty years, has failed to put in place political institutions that can ensure an orderly succession when he departs. All of these problems have come into heightened focus as national elections approach on May 29. HUMAN KENNETH ROTH. Euc«tr~ Dir«rtor * CYNTHIA BROWN, Piojnrn Diwrtor * HOLLY J. BURKHALTER, AJvoo«cy Diweto RIGHTS GARA LAMARCHE. AjpoTPPB ua paui»aana aaq e3aodxa 30 uojsuadxa sxqs *«3X.xbuiv ui ajaq eqop 00S'9T staoddna a3jodxa s'n ut uoxlliq 1$ qsaa 3tsqs uoi3elnolvs asaauuuoo 30 3uaui3^«daa 'S-A 28 e *»6sm uinuiTutui aq? aaurc:) uat 03 sat 3 s* qonui am satsosj 'qof axaqta uo fiuxpuedap 'sexueduioo uvox-xauiv jo aaaAolduia uBisauopui sbouv3but suioe ui aSeM umuixuxui uaxaauopuj. aqa ueq3 aaoui saoxJom uaiaauopui pjed ^sbmol 2xeq:} u«ao aaffo uiaqq 30 Auew "aldutwca aAT^ieod umo a^oqt £ui:u»a Ax^axnb Aq pxvpua3e a£*M Buxaloab aqrj 03 But^nqyatuoo aav eaiuvdutoo uaoi-xauiY ae-ra s^t anupuoa AlaXTT TITM Pu* Aap Sfr-Z$ A-[e3eurpto.xddv spusqs mou 31 C66I aou-fs palqnop uvq? aaom esq -- la^aeui jsumouoD uvoxjcauiY aq3 jo spueuiap ath 3auxefiv pajneveui pue ea3sts P»3Tun aq3 ut eefivA 03 paaeduioa uaqm euusq T^UTUK3U UT M°I 3IT4M *- exeauopui xij a6«w uiruu-tuxui eqj, - bbBbm a-zesl8* aaAolduia jo esn a-[qxBu*3 qaoui aq3 ut apaw seq exeauopui 3«qt BaajcBoad aq^ azTuBosaj 03 -juBuoduiT bt 'aaaAoxduia Jf»q5 30 aisjT'« 3T9»q aq? Euxinsss ut aaTuvd«oo ueoi-xauiv 30 aoucuuofaad aqa 3* Bux^ool 3.10333 Mv-niM xaxoiata 'aaqt^nf u»as 3uauie6«uvui 32txwoot. 03 sucld 3A*q sexueduioa aq^ 30 -jsoui 'XXT3S' %0C - %S8 BB qoruu ec eeouvtauy 30 aaqanu e ut pue %0S ueqq a^oui Allvauafi ax uejeauopui ei 3eqa 3ueuie6eueui uaox-iauiv 70 aEv3uaoaad aqj, -Bututsi3 qoC-aqt-uo ptra adoqesfaoM .203 setters pa^xun aq? 03 3ubb s« uioqM 30 Auetu auoi3Tso<3 .xeBeueui X9AaI M6TM °3 PT111 UT eaeaj-xoM uexesuopui Aoxdma XT^unos aaainene NV3SY- "S-n »q^ Aq peAaAjtns ssxuaduioo aq^ 30 XT* '33*3 ui -eaefieueui pu* 'suBXOTuqoari 'uauiaalas s* pa£v£ua sjb Aeqj, - BapiAps* uoponpoad satbus^ut aoqal ut pafiefiua ais sexuaduioo UBaxaaiuv 30 eaaAolduia usTaauopui XXV 3ou 'a^va^enlXT BAoqe esajte Bututsji aqt 30 auioe ev '8X9A9X XI* 36 6UTUTEJ3 IBUOT^OUnf pU« '83X68 Xvojuqoa? pue aatneujj ut fiuiujsa3 '6uTUT*ja dfqsaapcal aoiuae esaAolduia uexeauopui OOS'Z e^T bxbjjo Xuxfaioj ar^poara r»-r»ff#© •qa 'eaiuedujon ueox^auiv Aq paaaffo Bututbj; aq? 30 lB3T except such term 3 shall not include Expanded IMET, pursuant to section S41 of such Act. 95 Question for the Record submitted to Deputy Assistant Secretary for East Asian and Pacific Affairs Aurelia E. Brazeal before The House International Relations Committee Subcommittee on Asia and the Pacific May 7, 1997 Q. The Indonesian army has long been a secular institution. I hear that quiet pressures are now being applied, however, to Islamicize the senior officer corps. I have two questions in this regard: can you identify any individuals so affected; and if this is occurring, what implications does it have for Indonesia's relations with the U.S.? A. Indonesia adheres to a secular state philosophy — Pancasila. One of the pillars of Pancasila, which the army has done much to promote, is the belief in one God and religious tolerance. Christians have had a long tradition of military service in the Indonesian military, beginning with the Dutch colonial army which recruited heavily among Christian minorities. Several recent studies have found that Christians have been and still are over-represented in almost every segment of the Indonesian- elite, when compared to their numbers in the population as a whole. This has been the case in the military as well. In recent years, though, there appears to have been an increase in the infuence of Islam within the Indonesian military, particularly the army. Some have maintained that Christian military personnel are now being discriminated against in terms of promotions and assignments. Muslim officers, on the other hand, seem to view the situation: differently, perceiving themselves as having:been disadvantaged historically and only now beginning to achieve equality. While the three most senior positions in the Indonesian armed forces are currently held by devout Muslims, many believe this to be a coincidence and not necessarily the result of any pressure. We see no particular reason a more Islamic Indonesian military would necessarily affect Indonesia's relations with the United States. We have good relations, of course, with numerous nations whose military establishments are almost entirely Muslim. Moreover, we share important interests with Indonesia, security and otherwise, which should help maintain good working relations with that country,5 military. At the same time, we continue to believe our IMET program represents the best possible means of ensuring that Indonesian military personnel understand U.S. policies and that they receive exposure to the professionalism and rule of law that characterize the conduct of the U.S. Armed Forces. 99 -3- regulations to (1) allow workers to form company unions independent of the government sanctioned national union; (2) permit these new unions to negotiate binding collective labor agreements; (3) restrict the role of security authorities in cases of industrial dispute; and (4) provide for a simplified mediation procedure to resolve complaints or disputes arising in the workplace. The document the Indonesians submitted in January 1994 also detailed work with an ILO team that visited Indonesia in November 1993 and described actions the government had taken pursuant to the ILO's recommendations. Finally, Indonesia described the measures it had taken to raise the minimum wage. At the time of the 1994 suspension of the GSP review, Indonesia also committed to "using the good offices of the ILO" to make further progress on worker rights and noted the Indonesian government's intent to work with the United States towards this goal. In late 1994, after a second USTR-led delegation to Indonesia to assess the worker rights situation, the Indonesian government announced a comprehensive plan for industrial relations reform. Specific reforms included: (1) restructuring the government recognized union (the SPSI); (2) a change in