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      CONGRESSIONAL RESEARCH SERVICE

      LIBRARY OF CONGRESS

      NUMBER: 94-233F
      DATE: June 13, 1996
      TITLE: U.S.-Indonesian Relations
      AUTHOR: Larry Niksch
      DIVISION: Foreign Affairs and National Defense Division

      SUMMARY

      U.S. relations with Indonesia went through a period of growth in the 1980s, as economic ties expanded and as diplomatic and security cooperation increased. U.S. exports more than tripled between 1985 and 1992, from $795 million to $2.8 billion. The United States and Indonesia cooperated diplomatically on the Cambodian peace settlement and other regional and international problems. Indonesia's importance to U.S. security interests mounted as the U.S. 7th Fleet deployed through Indonesian waters connecting the Pacific and Indian oceans during the 1988 and 1990-91 crises in the Persian Gulf and as the Defense Department sought access to military support facilities in Indonesia in response to the loss of U.S. bases in the Philippines.

      BACKGROUND

      Since 1990, two developments have brought contention and uncertainty into the relationship. One has been the re- emergence of the East Timor issue, since Indonesian troops killed a large number (50-200 estimated) of pro-independence demonstrators in Dili, East Timor's capital, on Nov. 11, 1991. The East Timor issue has been controversial in U.S. policy towards Indonesia since December 1975, after Portugal, the colonial ruler, withdrew from East Timor, withdrew and civil war broke out in the territory. Indonesia invaded in that month and formally annexed East Timor the following year. U.S. policy since 1976 has been to accept Indonesian sovereignty over East Timor but to acknowledge that the annexation was not a legitimate act of self-determination. American critics of this policy have called for U.S. pressure on Indonesia to allow self-determination. The Bush Administration reacted to the November 1991 killings by calling for the Indonesian government to punish military personnel responsible for the killings, and it reaffirmed the standing U.S. policy on Indonesian sovereignty.

      Congress, however, passed resolutions calling for self-determination. Congress also legislated a termination of the International Military Education Training Program (IMET) for Indonesia in the FY1993 Foreign Operations Appropriations Act. The second development was the advent of the Clinton Administration. As part of its stated goal of giving human rights a high priority in U.S. foreign policy, the Clinton Administration decided to pay special attention to Indonesia. Its policy has had two components: (1) to increase pressure on Indonesia about East Timor and focus international attention on the issue; and (2) demand that the Indonesian government act to expand "workers' rights" in order to continue to receive U.S. General System of Preferences (GSP) lower duties on U.S. imports of Indonesian products. (In 1993, the United States imported about $600 million from Indonesia under GSP, about 13% of total U.S. imports from Indonesia.)

      However, the Clinton Administration has faced constraints in both components of policy. On East Timor, the Clinton Administration used its influence to secure passage in the U.N. Human Rights Commission of a resolution critical of human rights violations in that territory. President Clinton raised the East Timor issue with President Suharto when the two leaders met in Tokyo in July 1993, in Seattle in November 1993, and in Jakarta in November 1994. The U.S. Embassy in Indonesia sent a number of Embassy officials to East Timor in 1993 and has pressed Indonesian authorities to allow more foreigners to visit the territory. The Clinton Administration has not adopted two measures suggested by American critics of Indonesia: (1) U.S. de- recognition of Indonesian sovereignty over East Timor and support for self-determination; and (2) the imposition of material sanctions on Indonesia. The Administration did veto the proposed sale of U.S.-built F-5 fighters from Jordan to Indonesia, but it opposed legislation proposed in the Senate which would have suspended U.S. commercial arms sales to Indonesia.

      By mid-1966, the Administration reportedly was close to finalizing a deal under which Indonesia would buy some of the 28 F-16 fighters that the United States originally sold to Pakistan in 1989 but never were delivered because of Pakistan's reported nuclear weapons program. However, the Administration accepted language in the FY1995 Foreign Operations Appropriations Act that prohibited the sale of "small or light arms and crowd control items" until the Secretary of State determines that "significant progress has been made on human rights in East Timor and elsewhere in Indonesia." In June 1993, the Clinton Administration responded affirmatively to petitions by the AFL-CIO and the International Labor Rights Education and Research Fund, asking the U.S. Trade Representative to investigate Indonesian government policies toward labor.

      The U.S. Trade Representative gave the Indonesian government until February 1994 to change its labor policies or face a cutoff of GSP. The Clinton Administration's demands included: (1) freedom for organizers of labor unions independent of the government- sponsored labor confederation (2) enforcement of Indonesian laws on minimum wage and child labor; and (3) removal of the politically powerful Indonesian military from labor disputes. The Clinton Administration decided in February 1994 to defer for six months action on the deadline. This apparently was the result of Indonesian government actions, including raising the minimum wage, the arrest of nine people for the murder of an independent union organizer in May 1993, and changes in regulations on military involvement in labor disputes and on collective bargaining rights. Moreover, U.S. pressure has sparked a public debate in Indonesia over labor policies, including proposals in newspapers and from prominent individuals for changes in policy. In August 1994, the Administration extended the deferral indefinitely, despite continued restrictions on independent labor unions.

      The Indonesian military has announced plans to reduce the size of military forces in East Timor. However, it has not changed its fundamental policies in East Timor. In March 1995, the government appointed Human Rights Commission issued a report criticizing the conduct of a military unit that killed several East Timorese in an incident in January 1995. The government has increased its diplomatic activities, including negotiations with Portugal at the United Nations and limited agenda talks with some overseas East Timorese groups. The limits on Clinton Administration policy reflect in part several constraining factors.

      The United States receives little support from other countries: no support from East Asian governments; advice from the Australian government to exercise restraint on human rights; and only selective support from Western Europe. Indonesia has threatened to purchase arms from other countries if the United States should restrict commercial arms sales. The Clinton Administration also faces pressure from American businessmen, who argue that the imposition of sanctions on Indonesia would result in the loss of business to U.S. firms, which would harm the Administration's goal of promoting U.S. exports that create American jobs.

      Finally, the Administration's decision to defer the February 1994 deadline on GSP reflected a perceived need for President Clinton to gain President Suharto's cooperation for U.S. proposals regarding APEC. Suharto hosted the APEC summit meeting in November 1994. In the Clinton-Suharto meetings during and after the APEC summit, President Clinton stressed the promotion of U.S. business opportunities in Indonesia. He stated U.S. concerns over human rights but did not link Indonesian practices to other aspects of U.S. policy. (See Endnote 1.)

      THE DEBATE OVER IMET

      For FY1995, Congress continued the ban on the use of U.S. funds for IMET in the FY1995 Foreign Operations Appropriations Act (P.L. 103-306, H.R. 4426). However, the legislation did not prohibit the Indonesian government from purchasing IMET training for its military officers. In 1995, the Clinton Administration's overtures to the Indonesian government resulted in pressure within the Congress to modify the ban on IMET for Indonesia. The Clinton Administration sought U.S. funding of $600,000 for IMET for FY1996. In the Foreign Operations Appropriations Act for FY1996 (P.L. 104-107, H.R. 1868), Congress basically met the Administration's request by allowing IMET funds for Indonesia to be used for "expanded military education and training." This so-called "expanded" IMET program for Indonesia (which has been an element of DOD's IMET worldwide program since 1991) would focus on human rights, military justice, and civilian control of military establishments.

      As part of the expanded IMET program, Indonesian participants would include members of the Indonesian parliament and representatives of non-government organizations. For FY1997, the Clinton Administration is seeking an $800,000 IMET program for Indonesia. On June 11, 1996, the House approved its version of the Foreign Operations Appropriations Act for FY1997, H.R. 3540, that would continue an "expanded" IMET program for Indonesia. During House floor debate on H.R. 3540, the House defeated a Frank amendment (by a vote of 149-272) that would have again prohibited all U.S. funds for IMET for Indonesia, including the "expanded" IMET program that was allowed in FY1996.

      ENDNOTES
      (1) For a further discussion of U.S. policy, see Indonesia: Recent Developments and U.S. Policy. Summary of a CRS seminar. CRS Report 94-390 F, May 5, 1994.

      CRS Report compiled by David Isenberg, Senior Research Analyst, CDI.
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