International Herald Tribune Friday, October 6, 2000

U.S. Envoy to Jakarta Deplores Embargo 'Hysteria'

By Michael Richardson International Herald Tribune

Relations between Indonesia and the United States have frayed recently amid Indonesian allegations that the United States is considering imposing economic sanctions in retaliation for the killing last month of three United Nations refugee aid workers, one of them an American, by military-backed militias in Indonesian West Timor. Amien Rais, the head of Indonesia's highest lawmaking body, said that if sanctions were imposed, all American companies in Indonesia should be nationalized, while a Muslim-led group has threatened to kidnap senior executives of a large gold mine operated by Newmont Mining of the United States on the Indonesian island of Sumbawa. The U.S. ambassador to Indonesia, Robert Gelbard, discussed recent developments Thursday with Michael Richardson of the International Herald Tribune.

Q: Why did the embassy feel it needed to issue a statement Monday denying that the United States is considering any kind of embargo on Indonesia and expressing deep concern about the threats to expropriate U.S. companies in retaliation?

A: One of the most important requirements for Indonesia at this time is to build a strong, market-oriented economy. A key element of that is the need to get significantly greater investment, both foreign and domestic.

We have been dismayed by self-generated statements by some in Indonesia that attribute to the U.S. the threat of an economic embargo. No such threat was ever made. No such statement was made by any U.S. government official at any level that we have been able to determine. It is regrettable that some in Indonesia took it upon themselves, without doing any serious examination of the facts, to begin to create this kind of hysteria.

I don't like to see us in the business of disavowing statements or misleading exaggerations because there are, unfortunately, many allegations that are false that come out in Indonesia about U.S. policy and, worse, about our motives. Disavowing these would be almost a full-time job. But since these allegations of a supposed embargo threat were not going away, we finally felt compelled to issue a definitive statement saying that it was utterly false. What is worse, of course, is that some who picked this up and ran with it, then went an additional step to call for American companies to be nationalized or expropriated.

Q: Is this worrying U.S. investors?

A: It adds to an already pessimistic investment climate. Investors want legal certainty about their contracts and agreements with the government. And they want certainty about the climate. Threats to take over investments, and large investments in particular, really add to an increased unwillingness or uncertainty about possible new investors coming in or about existing investors making additional investments.

Some large American companies have told me that they have options to look elsewhere. I know of at least one major potential U.S. investment that has been canceled in the aftermath of this.

Q: Has it spilled over to alarm other non-American foreign investors?

A: I don't know. But we have already seen a degree of concern by American and other companies because of security threats. When we take the security environment, including the recent tragic and outrageous bombing of the Jakarta Stock Exchange building, plus the threat to bomb the American Embassy in Jakarta, plus the attack against the U.S. Consulate in Surabaya, Indonesia's second-largest city, and then add into the mix the threat to nationalize American companies, it is a most unfortunate development for a country that very much needs investment to absorb the significantly large number of new workers coming into the work force.

Q: Are you nonetheless optimistic about Indonesia's economic potential?

A: I still feel that the long-term outlook for Indonesia economically is bright. There are a number of excellent new ministers in the government on the economic side. But it's important to create an environment where investors will want to come. There are many countries round the world that are vying for investors right now; there are many in Southeast Asia competing for these investors.

Q: Some senior Indonesian officials have claimed that countries like the United States and Australia have an interest in seeing Indonesia break up and remaining in continuous crises because that way it would be easier to exercise influence and control over Indonesia. What do you say to such allegations?

A: They are ludicrous and offensive. We believe that a strong, democratic, prosperous Indonesia is in our national security interests. We don't want to see Indonesia break up. It's up to the Indonesian government to develop policies that will encourage and convince people in areas, ranging from Aceh in the west to Irian Jaya in the east, to want to stay in Indonesia.

We are always asked by the Indonesian government to make statements supporting their territorial integrity. That's easy, because we do.

We hope that they support our territorial integrity because we have been concerned by their occasional support for Cuban-generated movements to encourage independence for places like Puerto Rico.

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