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52–039 CC








JUNE 4, 1998

Printed for the use of the Committee on International Relations

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BENJAMIN A. GILMAN, New York, Chairman
HENRY J. HYDE, Illinois
CASS BALLENGER, North Carolina
EDWARD R. ROYCE, California
JAY KIM, California
TOM CAMPBELL, California
JON FOX, Pennsylvania
LINDSEY O. GRAHAM, South Carolina
ROY BLUNT, Missouri
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RICHARD BURR, North Carolina
SAM GEJDENSON, Connecticut
TOM LANTOS, California
PAT DANNER, Missouri
BRAD SHERMAN, California
BOB CLEMENT, Tennessee
BILL LUTHER, Minnesota
JIM DAVIS, Florida
LOIS CAPPS, California
RICHARD J. GARON, Chief of Staff
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MICHAEL H. VAN DUSEN, Democratic Chief of Staff

Subcommittee on Asia and the Pacific
DOUG BEREUTER, Nebraska, Chairman
JAY KIM, California
JON FOX, Pennsylvania
JOHN M. McHUGH, New York
EDWARD R. ROYCE, California
HOWARD L. BERMAN, California
LOIS CAPPS, California
MIKE ENNIS, Subcommittee Staff Director
RICHARD KESSLER, Democratic Professional Staff Member
DAN MARTZ, Counsel
HEIDI L. HENNIG, Staff Associate
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    The Honorable Aurelia Brazeal, Deputy Assistant Secretary for East Asia and the Pacific, U.S. Department of State
    The Honorable Paul Wolfowitz, Dean, School of Advanced International Studies, Johns Hopkins University
    Ms. Sidney Jones, Executive Director, Human Rights Watch/Asia
    Mr. Adam Schwarz, Edward R. Murrow Fellow, Council on Foreign Relations
Prepared statements:
Hon. Aurelia Brazeal
Hon. Paul Wolfowitz
Ms. Sidney Jones
Mr. Adam Schwarz
Additional material submitted for the record:
Questions submitted for the record by Hon. Doug Bereuter, a Representative in Congress from Nebraska
Questions submitted for the record by Hon. Howard Berman, a Representative in Congress from California

Subcommittee on Asia and Pacific,
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Committee on International Relations,
Washington, DC.
    The Subcommittee met, pursuant to notice, at 1:58 p.m., in room 2172, Rayburn House Office Building, Hon. Doug Bereuter (chairman of the Subcommittee) presiding.
    Mr. BEREUTER. [presiding] The Subcommittee will come to order.
    I know that the staff will have to continue working here because we're starting later than I would have preferred because of a hearing that ran late.
    This is the Asia and Pacific Subcommittee. The topic of today's hearing: U.S. Policy Options Toward Indonesia: What Can We Expect; What We Can Do. We need today an open session to examine the situation in Indonesia and to explore what the United States and the international community can do to help stabilize that nation's economy and to help promote its nascent democratization.
    Virtually all of Asia seems to be in turmoil these days. It's not true, but it seems like that, I suppose. And Indonesia, of course, has had attention for quite some time. Following months of economic turmoil and decline, unsatisfactory elections where the old regime sought an artificial vote of confidence, and weeks of student protest, President Suharto resigned, as you all know, after 32 years of rule.
    He leaves behind a nation on the edge of chaos. Although we must give Suharto the credit for leading his country through several decades of strong economic growth and development, this narrow economic success took place in the absence of the development of sound social and political institutions. The media was stifled, as were other forms of political and social expression.
    The tragic neglect of these institutions and basic human rights by President Suharto may overshadow his economic achievements; only history will tell. Ironically, however, President Suharto's neglect of political reform while promoting economic reform has perhaps done something to debunk the myth of Asian values and expose the Asian miracle more than any other single action.
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    Most importantly, however, Suharto's neglect of political reform seems to me has caused much human suffering and tragedy. Indonesia's recent past has been marked with violence and bloodshed. Over 500 people died in the riots that left much of Jakarta's Chinatown in ruins. Some estimates have the death toll much higher. Many elites fled the country along with the large expatriate community, taking their capital with them.
    The current situation in Indonesia is at the same time both complex and fragile. The public euphoria that accompanied Suharto's resignation is already being replaced by the sobering reality that Indonesia is entering a dangerous period. Suharto, who lead his nation through a period of dynamic growth under an autocratic system, has left behind a political vacuum. The various social and political forces kept impotent under the Suharto regime must now forge a new identity and find a way to reassert themselves without causing a splintering of Indonesian society. Proliferation of ethic or religious-based parties that would pull the country apart at precisely the time when unity is most fragile is a risk that Indonesia cannot afford to ignore.
    The Indonesian military is widely recognized as one of the linchpins of that society. With some glaring and regrettable exceptions, it thus far has exercised restraint. The same cannot be said of the police, who were more brutal during the demonstrations. Commander-in-Chief and Minister of Defense Wiranto seems to have served as a force for change, refusing to take Suharto's side last week when the results could have been further bloodshed. I would like to believe that this restraint is at least, in part, attributable to the salutary effect of years of military-to-military contacts through the IMET, and E-IMET, and other U.S. programs that attempt to raise the level of professionalism of foreign military elites while simultaneously offering human rights training. Whatever the cause, the military will be under enormous pressure as a new government sorts itself out.
    Clearly, the economic situation in Indonesia is dire. And most unfortunately, indications are that the situation will get worse before it gets better. It is difficult for us to imagine how desperate conditions are. Credible economists estimate that Indonesia will suffer negative economic growth of between 20 and 25 percent in 1998. And it's hard to overemphasize the degree of hardship that Indonesia's people have faced in the past months, since the beginning of the Asian financial crisis last summer. Yet, despite the hopeful signs on the political front, Indonesia's economic crisis seems far from over. The economic challenges faced by Indonesia's new government would be daunting under the best circumstances, but these are enduring.
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    Today, we are eager to hear from our expert witnesses on what steps Indonesia must take to pull its economy out of its nose-dive and restore investor confidence. How do you view the prospects for Indonesia's future? What political reforms are necessary, and what are possible in the near-term and the long-term? What institutional factors must be addressed? And most importantly, what are the implications of Indonesia's current economic and political crisis on U.S. national interests?
    These questions about Indonesia's economic and political future raise serious questions for U.S. policy toward Indonesia. For example, as the largest shareholder in the IMF, World Bank, and one of the largest in the Asian Development Bank, we must decide when these institutions should resume their financial assistance to the country and under what conditions. In making these decisions, we will appropriately have to decide how long a Habibie caretaker government should last and when elections can reasonably be held.
    One final note: I hope that today's hearing will be able to focus also on the issue of East Timor. For over two decades, East Timor has been a stumbling block to Indonesia's relations with the United States and with the European Union. There is a long and complicated history of this troubled corner of Asia, but suffice it to say that the West has never recognized the legality of the Indonesian incorporation of East Timor. It would seem to me that there is an opportunity to put aside the old inflexible positions that the various sides have taken in the past, and to look for new ways to move toward a mutually acceptable solution.
    I will be very interested in hearing from our witnesses today as to whether they believe there is a role for the United States, a role for us to play in fostering such a renewed dialog.
    It is clear that Indonesia needs our help and that of the international community. Our actions must be bold, but not rash. We must be thoughtful, but not timid. Certainly, we must take care to preserve and strengthen the delicate unity which has managed to hold Indonesia together, but we must not allow a new government to fall back into the bad practices that doomed the Suharto regime.
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    We're happy to have with us today two panels of witnesses to help us better understand the situation in Indonesia and to assess how the United States should react to the crisis.
    On the first panel, the Subcommittee is pleased to welcome back the Deputy Assistant Secretary for East Asia and Pacific at the State Department, the Honorable Aurelia Brazeal. Ambassador Brazeal has testified before the Subcommittee on several occasions—most recently, at last year's hearings on the coup in Cambodia. That's my term.
    Testifying on the second panel, the Subcommittee will first hear from the Honorable Paul Wolfowitz, who well served this country in the late 1980's as our Ambassador to Indonesia in keeping with the U.S. tradition of appointing highly skilled, qualified diplomats to Indonesia. Ambassador Wolfowitz has also served as Assistant Secretary of State for East Asia and the Pacific and held senior positions at the Defense Department. Ambassador Wolfowitz currently serves as the dean of the School of Advanced International Studies at Johns Hopkins University here in Washington, DC.
    Next we welcome Ms. Sidney Jones, Executive Director of Human Rights Watch/Asia. Human Rights Watch has a long presence in Indonesia and has very close contacts with the NGO community. Ms. Jones most recently testified before the Subcommittee on the issue of U.S. rule-of-law initiatives in China.
    Last, the Subcommittee is pleased to welcome for the first time Mr. Adam Schwarz of the Council of Foreign Relations. Mr. Schwarz served as the Far Eastern economic reporter for Indonesia for a number of years and he is presently working on a number of publications regarding Indonesia.
    Ladies and gentlemen, thank you for taking time to be with us today. We certainly look forward to learning from your testimony. Consistent with the practice of the Subcommittee, I'd ask, if you can, to limit your oral remarks to about 10 minutes or so to allow maximum time for questions.
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    And I would like now to recognize the distinguished Ranking Member of the Subcommittee, the gentleman from California, Mr. Berman. And, welcome back after the elections in California. Mr. Berman.
    Mr. BERMAN. Well, thank you very much, Mr. Chairman, and it's good to be back.
    This is an opportune moment to bring a reassessment of our policy toward Indonesia. Any political transition presents opportunities to rectify the mistakes of the past, and to forge a more productive future. This is what I hope the Indonesian people do and our policy should be constructed to achieve them to the maximum extent possible. The economic reforms previously proposed by the IMF, I believe, were the correct ones and should be pursued. Eliminating price subsidies and abolishing inefficient monopolies are still worthy objectives. We must be careful that the assistance we provide to Indonesia ensures economic reform or Indonesia will revert shortly to the crony capitalism of the Suharto period.
    And I'm pleased that the Administration has begun looking into the matter of the Suharto family assets. There have been press reports that his family has assets as great as $43 billion. As Indonesians stated in testimony before another International Relations Subcommittee meeting recently: ''Our labor and resources are supposed to be devoted to paying off the debt for the next generation. Meanwhile, those 200 families who contracted the debt have enough money in their own personal accounts to pay it off many times over.''
    President Suharto can take enormous pleasure in the changes brought by his leadership in Indonesia's economic modernization. Unfortunately, at some point, he gave up on the policies advocated by his economic technocrats and began to take the path of enriching his family and friends. His departure presents a chance for those technocrats to retake the helm of economic policy from those who would use Indonesia's tremendous wealth for their own enrichment.
    I think we also need to be clear in our support for political reforms. In this regard, we must pay more than lip service to democratic progress. The demands for political openings are growing stronger in Indonesia. We cannot be deaf to the cause for a more open political system based on a new political calculus.
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    The Administration in its testimony today refers to the ''orderly transfer of power'' which took place to President Habibie.     Some in Indonesia have raised questions whether this was in fact a constitutional change in government, even it if was orderly. Habibie's plan to delay parliamentary elections until early 1999, with a choice of a new President only occurring after that, has a potential for preventing political and economic reforms from taking place. We should speak out forcefully and frequently about the importance of developing an open political system that gives a voice to all of Indonesia's many ethnic groups.
    We should not advocate a particular political system. The Indonesian people are the most capable architects of a new political system, but we must be clear that the old political system did not work and that the new government must take steps as quickly as possible to give voice to the demands of the Indonesian people. And once selections are called for, we must be prepared to assist in funding the electoral process.
    I remain concerned about this situation in the outlying regions of Indonesia, particularly in East Timor, where there are many discouraging reports about human rights abuses prior to Suharto's departure. A direct dialog should begin between East Timorese and the Indonesian Government over how to resolve their differences. The Indonesian Government could begin by releasing East Timorese leaders who remain in prison. There needs to be a change in Indonesia's policy toward East Timor and the debate over Indonesia's future political system is an opportunity to alter that policy, and I noted the Chairman's comments on this subject in his initial presentation and I would strongly support any action he would choose for the Committee and the House to take in this area.
    We still have an opportunity to forge a productive policy toward Indonesia to one that assists Indonesia in giving it an even more important role in regional and international politics. Indonesia has the potential to be a great democratic power in the world. We should be doing what we can to assist in its continued economic and political transformation as it labors to assume that role.
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    Thank you, Mr. Chairman.
    Mr. BEREUTER. Thank you, Mr. Berman, for your thoughtful remarks; I very much appreciate it.
    The gentleman from American Samoa, Mr. Faleomavaega, is recognized.
    Mr. FALEOMAVAEGA. Thank you, Mr. Chairman. I don't have an opening statement. I do want to commend you for calling this hearing this afternoon to a very important issue that I'm relating to the crisis that is now happening in Indonesia as the fourth most populous nation in the world—certainly, having a lot of economic implications to our economy and some of the things that are happening there, I am very happy that you have mentioned that in pursuing also the question of East Timor. But there is also another area, Mr. Chairman, for which many people in the world, especially in our own Nation, hardly anything has been spoken of, and that is West Papua, New Guinea or, as the Indonesians have called it, Irian Jaya.
    Mr. Chairman, I submit I can fully understand and appreciate the fact that East Timor was formerly a Portuguese colony, and that because of the active involvement of the Portuguese leaders, and the country of Portugal, and the United Nations, and all of this, that we have come to hear about the problems affecting these East Timorese and many of the Portuguese nationalists living in that area, which is now claimed by Indonesia. But, I do submit that there needs to be a lot of formulation and in-depth understanding and research by our own leaders about the problems of Irian Jaya.
    This is just a fancy label that the Indonesian Government has given to what was previously known as West Papua, New Guinea. This region was formally a Dutch colony and West Papua, New Guinea, the nationals, the indigenous people living in this area, have no relationship whatsoever culturally, historically, or are in no way or form tied to Indonesia. This format as far as a pure form of colonialism, West Papua, New Guinea has been a victim of the problems that have now transpired, and I hope that, with some of these reformations or changes that will come about in the political development of Indonesia, that West Papua, New Guinea will prominently be featured into the process.
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    The unfortunate thing is that now we've had thousands of Indonesians now forcing themselves into living in this area where there are tremendous resources of minerals, gold, oil potentials, in what is, as far I'm concerned, West Papua, New Guinea. And I sincerely hope that Mr. Chairman, my colleagues, the Congress, and the U.S. Government will take a better appreciation and understanding that the West Papua, New Guinea crisis is worse politically and economically than the East Timor crisis, as we've often been given in the press and in the media. And I sincerely hope that we will look into this with some depth.
    And I want to offer my personal welcome to our good friend, Deputy Assistant Secretary Brazeal, for coming here this afternoon to just testify at our Committee.
    Thank you, Mr. Chairman.
    Mr. BEREUTER. I thank you, Mr. Faleomavaega. You and I will have to talk about the colonial history of the Dutch East Indies.
    It's a pleasure now to recognize the gentlelady from California, Mrs. Capps, for any statement she might like to make, and welcome back from one more recent election for you, Mrs. Capps.
    Mrs. CAPPS. Thank you very much, Mr. Chairman. I don't have a prepared statement.
    I commend the leadership for the topic that's so timely for today's hearing. I look forward to the presentations.     Thank you very much.
    Mr. BEREUTER. Thank you.
    And now we are pleased to recognize Secretary Brazeal. Ambassador, your entire statement will be made a part of the record. You may proceed as you wish.
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    Ms. BRAZEAL. Thank you. I would submit the longer statement for the record but read a shorter statement, if I may. And thank you, Mr. Chairman, for allowing me to come back to testify before your Committee.
    This is a timely hearing and we welcome this opportunity to update the Subcommittee on recent developments. Assistant Secretary Roth is currently in the region and is completing a series of meetings with President Habibie and other political, economic, and social leaders in Indonesia. So, what I say this afternoon is a preliminary assessment. In the weeks to come, we will continue to engage the new Indonesian Government and monitor implementation of political and economic reforms.
    The past 2 weeks have seen a number of dramatic developments in Indonesia, a nation of key strategic importance to the United States. First, as the Chairman mentioned, after 32 years in control of the world's fourth most populous nation, President Suharto resigned from office in response to public pressure to step down.
    Second, an orderly transfer of power took place, and the new President, B.J. Habibie, quickly assembled a cabinet with a strong economic team; released a number of prominent political dissidents, and pledged new elections despite initial indications that he intended to serve out Suharto's 5-year term.
    Third, the military supported this peaceful transfer and moved to investigate those responsible for the deaths of students last month.
    In this rapidly changing environment, Indonesians have begun to explore a wide range of new freedoms. Political debate in the press, on TV, and on university campuses is more vibrant than at any time since the 1950's. Publications banned under the Suharto regime, including the popular weekly magazine Tempo, are considering reopening. And, political parties, long limited to three government-controlled groupings, are forming unhindered.
    Few observers in or outside of Indonesia anticipated the speed with which these changes took place. Moreover, after months of escalating protests, on the heels of devastating riots, and against a backdrop of accelerating economic collapse, perhaps even fewer observers foresaw a smooth transition to a new government.
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    With 40,000 troops massed in Jakarta to thwart an opposition rally at the high point of the crisis, and with upwards of 20,000 students occupying Parliament in open defiance of the regime, the potential for a crackdown was very real. To the relief of 200 million Indonesians, others in the region, and the world at large, Suharto's resignation defused this volatile standoff and opened the door to a peaceful process of transition.
    Throughout this critical period, U.S. policy was clear and consistent. In our public and private messages to the Suharto Government, we called for restraint in dealing with dissent; made clear our expectation that peaceful protests be allowed to continue, and urged a process of political reform through dialog. Since the onset of the crisis last fall, our communications have emphasized that the major economic problems of corruption, cronyism, and nepotism could only be addressed within the context of a more transparent and accountable political process.
    President Clinton's meeting with Suharto at APEC last fall, Special Presidential Envoy Mondale's session with Suharto in March, Secretary Albright's numerous discussions with Foreign Minister Alatas, and Assistant Secretary Roth's many trips to Jakarta were occasions for raising our concerns. The Administration also worked with other key partners to develop a coordinated approach, resulting in a strong, unified call for restraint, dialog, and political reform on behalf of the G–8 in Birmingham last month. Most recently, Secretary Albright used her remarks at the Coast Guard Academy commencement to underscore the U.S. commitment to supporting peaceful political change.
    Now that the first phase of a transition has taken place, Indonesians are trying to come to grips with the challenges and opportunities of a post-Suharto era. There is agreement across a broad spectrum of Indonesian society that the most pressing need is to restore public confidence in government, and a consensus has emerged that free, fair, and credible elections are the only way to achieve that goal.
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    President Habibie and Parliament leaders have responded to the groundswell of support for elections, pledging last week to convene a special session of the People's Consultative Assembly by January 1999 to choose a date for elections later in the year. The head of the Parliament further announced the establishment of a team of legislators tasked with the revision of laws which restricted political activities under the Suharto regime.
    The United States welcomes these moves and supports the process of establishing a clear timetable for elections and other reforms based on a broad, popular consensus. While cautiously optimistic about steps taken, we are acutely aware of the dangers ahead. In a country in which political forces have been emasculated and caged for three decades; in a system devoid of institutions capable of channeling popular aspirations, and with a long history of regional, religious and ethnic tensions, the road to a more open and democratic political system will be bumpy, at best. How Indonesia builds the kind of broadly representative system it needs will be determined, and must be determined, by its people. The key now is for the Indonesian Government to engage its citizens in a process of consultation and dialog as it moves forward with the implementation of political reforms.
    At the same time, it is imperative that the Habibie Government take action to address the economic crisis. For just as political unrest undermined the Suharto Government's attempts to stabilize the economy following the April agreement with the IMF, so too could unchecked economic deterioration undermine Indonesia's nascent political pluralism.
    While the Administration believes that Indonesia, rich in natural and human resources, has the long-term capacity to work its way back to prosperity, in the short term, priority must be given to dealing with humanitarian needs. Hard-won gains made over the past 30 years in nutrition, sanitation, and public health are all under threat, while crime, child labor, and poverty are on the rise.
    In short, Mr. Chairman, ordinary Indonesians are suffering as a result of this crisis and it's been the consistent policy of the Administration to work to meet humanitarian needs. In addition to ongoing assistance programs worth $550 million, the U.S. Government has pledged over $65 million in food and medical supplies for a humanitarian aid package and we're working with NGO groups to facilitate distribution of that assistance. We are also planning an additional contribution to the International Committee of the Red Cross for use in the region.
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    However, additional humanitarian aid will be critical, and while the Administration is currently reviewing what more the United States can do on humanitarian assistance, the magnitude of the problem will clearly require a concerted international effort. We are aware that other donors are also actively reviewing what more they can do.
    This bilateral assistance must be complemented by multilateral engagement. The World Bank voted June 2 to approve a $225 million project loan to support rural development and create jobs for the unemployed. Later this month, the Asia Development Bank and the World Bank will review the situation in Indonesia to determine whether an additional $2.5 billion in adjustment lending postponed last month can proceed in the near future.
    The IMF has decided to send a staff mission to Jakarta as early as next week to take a full review of the IMF program, and key to that review will be an assessment of the extent to which the program needs to be revised in light of changed economic circumstances on the ground. Following completion of that review—perhaps it might take several weeks—the IMF Board will decide on disbursement of the $1 billion tranche of funding previously scheduled for June 4.
    We think President Habibie has assembled a solid economic team and has stated his government's commitment to work with the IMF in moving forward on economic reforms. And while we are encouraged by these positive signals, the key question is whether the Habibie Government will be more successful than its predecessor in carrying through on its economic reform commitments. President Habibie has publicly affirmed the importance of moving on political reform and economic recovery in tandem. We will continue to closely monitor the government's progress in delivering on these pledges.
    Indonesia is undergoing a dramatic transformation. The changes thus far have been abrupt and difficult to predict, and the transition to a more pluralistic system will likely be lengthy and difficult. The United States has long sought to promote a more open and tolerant Indonesia, advocating greater freedom of speech and association by attending political trials; highlighting abuses in our annual Country Reports on Human Rights Practices report; urging Indonesian accession to international labor and human rights conventions; and supporting a wide range of non-governmental organizations that are laying the foundation for the emergence of a civil society. We will continue to work closely with Indonesia during this critical period.
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    And there is new hope that old problems can be resolved with fresh ideas and the prospect of making progress on issues long thought to be intractable. In this regard, we agree with the Chairman and the Ranking Member that we will be watching closely to see whether the change in leadership and emerging pluralism in Jakarta will provide the momentum necessary to make progress on the question of East Timor. Resolution of the East Timor issue is a priority for the Administration, and so we are urging all sides to seize this opportunity to dialog and initiate confidence building measures.
    In closing, a brief update on Americans, and during the May crisis, the safety and security of our citizens was our foremost concern and we took action to ensure that all Americans who wanted to leave Indonesia were able to do so. In addition to the many Americans who departed on commercial flights, 1,247 left on four U.S. Government and two Canadian charters. Our embassy in Jakarta remains on ordered departure status. That means all dependents and employees in non-emergency positions remain out of the country. We are prepared to return to full strength, as the situation warrants, and indeed additional elements of our assistance and economic staff have already begun to return.
    Thank you, Mr. Chairman.
    [The prepared statement of Ms. Brazeal appears in the appendix.]
    Mr. BEREUTER. Thank you very much, Ambassador, for your statement. Excellent; we appreciate it. I'd like to begin the question period myself.
    Concerning Mr. Rais, the leader of the Powerful Muslim League, and the leading voice of opposition against President Suharto, how much do we know about his objectives? Should the United States be concerned about an Islamic party in Indonesia?
    Ms. BRAZEAL. Well, if I could separate those two, I think Mr. Rais was recently in Washington and was meeting people at the State Department as well as in other parts of the city. He, I think, foresaw some of the difficulties that have subsequently developed in Indonesia in terms of President Suharto and his departure. We know him. We see him as an activist in Indonesia, but we have not tried to support one person or another. We're trying to support principles and a process. In that sense, that's what I'd like to say about Mr. Rais.
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    In terms of a party that's developed and on the line of religion, this could happen. There are multiple parties already creating themselves. There are parties that are beginning to merge with each other. There are groups that are considering joining and forming up in different ways. We would hope that the parties as they develop would be formed based on principles and values, and not necessarily based on religion or ethnic background, but that is something for the people of Indonesia to decide. There are large, organized groups already who are mostly Muslims, and those groups are engaged in trying to figure out how to participate in the opening up of the political process.
    Mr. BEREUTER. Ambassador, it seems clear when there is turmoil in Indonesia, the Chinese ethnic group often feels the abuse most directly. They seem to be a target for an expression of dissatisfaction. What has happened now to the Chinese ethnic citizens of Indonesia? How many of them, for example, have left the country all together?
    Ms. BRAZEAL. I don't have a firm figure for you, Mr. Chairman, on how many left and how many have come back. Many did leave. Some left to go to close-by places, Singapore and other places, temporarily, and then with the intention of coming back. Others have, perhaps, a little bit more of a permanent feel to their departure, but they were hit. If you look at the areas where the rioting took place, you will find that a lot of the destruction, and the burning, and the looting, took place in neighborhoods where Sino-Indonesians live, but there are Sino-Indonesians who have remained in Indonesia. There are others who have intentions of coming back.
    We see them as playing a very vital role and, in fact, it was mentioned I think, by one of the Members of the Committee, that the distribution systems have been already badly affected because some of the Sino-Indonesian shopkeepers have been either burned out or have left, and that's how the food gets out to the people which is why it's creating more of a concern about the food situation in Indonesia.
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    Mr. BEREUTER. The next questions I have might best be addressed to the Treasury. Perhaps you'll feel like you can respond because of the foreign policy implications. The World Bank recently approved a $225-million social safety net program for rural areas in Indonesia. I'm wondering, what conditions were attached to the disbursement? Did the Administration support the disbursement? And with respect to the IMF, the World Bank, and the Asia Development Bank, the latter two in particular, we will not have to decide as a government, through the Administration with the Treasury having the lead, I assume, but hopefully in consultation with the State Department, when those kinds of funds are turned loose from the ADB and the World Bank, and under what conditions, what limitations? What could you tell me about that situation? How will the Administration make a decision? What input are you likely to have as a State Department with Treasury having the lead through its executive directors on these two banks?
    Ms. BRAZEAL. Thank you. A team is already en route to Indonesia from the IMF. The World Bank has a resident representative there, so that we are aware that the banks are looking at most of their programs. The last IMF, the World Bank Program from April had well-specified milestones that were going to be looked at as the program proceeded. And I would anticipate that those milestones would be among the items that would be under review to take into account current circumstances, but I would not expect milestones to be eliminated. I think that they have to be there for all of us to regain a sense of confidence that changes are being made that would lead back to economic health.
    How we're going to decide that will be collective, the State Department, and Treasury, and other parts of the government will be brought into the process, but it's a little difficult, until we know how the review is going to be adjusted, to tell you how we're going to come out. I won't say we'll vote for it or we'll vote against it. We have to look at the details as they emerge, but I would expect milestones to still be incorporated.
    Mr. BEREUTER. Pulling you back to the $220 million World Bank Disbursement for Rural Area Assistance, the safety net, is this supported by the Administration? Do we have any concerns about it or the conditions that were attached?
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    Ms. BRAZEAL. The $225 million—I'm not aware of any conditions. That doesn't mean they weren't there. I can't speak for Treasury.
    Mr. BEREUTER. You would be aware, I suppose, Ambassador, if there had been a concern about the release of those funds?
    Ms. BRAZEAL. I would have been aware if there had been a concern. I think the recognition is that the United States intends to support the people of Indonesia, and those funds, specifically, were being used for the ordinary people of Indonesia for job creation.
    Mr. BEREUTER. I will have questions on East Timor if another Member does not cover those, but I turn now to the gentleman from California.
    Mr. BERMAN. Thank you, Mr. Chairman.
    A number of questions and some of them I'd like to submit for the record.
    Mr. BEREUTER. Without objection.
    [The questions appear in the appendix.]
    Mr. BERMAN. And, there are just a couple I'd like to ask about now.
    You mentioned in your statement U.S. support for Indonesian NGO's who were focused on human rights, and labor rights, and democracy building. What is the level of that support now?
    Ms. BRAZEAL. Well, right now since we have pulled many of our people out of Indonesia, many of our programs that flowed through our aid programs have had a slight suspension. But in general, we have—I don't know the precise amounts that we give for each NGO, but in general we have a program that's designed to support, not necessarily political NGO's, but NGO's in the environment area, NGO's in civil society. And those NGO's we have noticed have become quite active in the kind of dialog that is opening in Indonesia, both in the political and economic reform area. So, we think that the kind of support we provide to NGO's is helpful, including the support that would come through providing some funding for cars; some funding for holding conferences; some funding for those kinds of programs.
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    Mr. BERMAN. Well, is this the time to increase our level of support? To move quickly to try and make sure, in these very key formative periods, that these groups have the ability and the resources to push goals that we support?
    Ms. BRAZEAL. Yes, we agree with you, and for that reason, we're returning many of our aid employees, so they can re-engage and be there to continue these programs at the level they currently have or perhaps to look around to see how we can increase the level of support.
    Mr. BERMAN. The President apparently has made some releases of a few political prisoners, the new President. At the same time, he's announced that at some point in the future more will be released, but set forth certain criteria for the release of those people that are not opposed to the Constitution. They're not Marxist. They're not held on criminal charges, but in laying out those criteria one could sweep up a large number of the people who are under arrest for political reasons.
    Do you have any sense or any information about when additional releases might take place and the extent to which the criteria that he has set out will, in effect, keep many of these people in jail?
    Ms. BRAZEAL. Well, we understand the same criteria that you just outlined are being used to look at a review of these cases on a case-by-case basis, which is what has been announced. However, we do expect more releases and already, for example, some charges were dropped against eight East Timorese who are being accused of making bombs, and the case was dropped against them for lack of evidence. So that there are, almost every day, steps that are taken. There hasn't been another surge of releases in the category of political prisoners, but we have consistently called, and continue to call, for release of all political prisoners.
    Mr. BERMAN. The Indonesian National Commission on Human Rights said this week that the death toll for rioting last month was over 1,100, more than double the military's estimate. The Commission also said that there was no serious effort by security forces to prevent the spread of rioting and called for an investigation of reports that well-organized groups help spark the riots and target ethnic Chinese. Does the State Department agree with the Commission's estimate of death? What information does the Embassy have about the role of the security forces and these organized groups with regard to the riots?
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    Ms. BRAZEAL. Well, we have seen those figures and have no basis to disagree with them, the figures from the Human Rights Commission. Their statistics suggest that—I think they said about 40 shopping centers had been burned and over 2,000 shophouses, and even homes. So, they've put out some figures that we think should be looked at seriously.
    In terms of what the police were doing during the height of a lot of the rioting in Jakarta, we were receiving reports that police were outnumbered by crowds. Police were, some of them, on the point of exhaustion for having been out there for many hours. That's not to excuse them standing back and not doing anything.
    We think that those kinds of actions should be investigated and the Human Rights Commission is a good place to start that kind of dialog, discussion, and investigation of exactly what happened and who might have been around allowing it to happen. But we do know that at the height, things were changing so quickly and the numbers of people would come together rapidly—perhaps, outnumbering those security forces who were in the neighborhood—and it was a moveable kind of crowd that moved quickly from place to place. I am not an expert on security, but it may have been difficult at that time to get ahead of the curve. And many of the deaths were people who were burned inside shopping centers as the rioters set fire to these.
    Mr. BERMAN. Well, Mr. Chairman, because I'm interested in hearing the panel, I will give up what remaining time I don't have.
    Mr. BEREUTER. All right, the gentleman from American Samoa is recognized, 5 minutes.
    Mr. FALEOMAVAEGA. Thank you, Mr. Chairman. I think I'd better hit this question before I get into other subquestions, but primarily again, Madam Secretary, my concern about Irian Jaya.
    As I've stated earlier, the world is getting full attention, even by our own Nation, about East Timor, but hardly anything has ever been said about Irian Jaya. And let me share with you my understanding and history of not only the human rights violations, but the tremendous suffering that is occurring to the indigenous people living in this area formerly known as West Papua, New Guinea.
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    These people are basically Melanesians. They have no cultural heritage, ties socially or economically, in any way or form with the Indonesian Government. Now, I understand that this was a former Dutch colony and then when the Dutch left Indonesia, these people were not even given an opportunity to determine for themselves if they wanted to be independent or to be a part of Indonesia. I am very concerned because the media has hardly given any sense of understanding of what is happening there to some 3 million Melanesians that I understand are just being forced out of their lands. There's been massive settlement taken from people, other areas from Indonesia to these areas. And there's a tremendous amount of potential of mineral resources in this area. And yet, I want to know where the State Department stands on this, and I want to know, if there is so much talk about the human rights violations of the people in living in East Timor, I'd like to consider Irian Jaya just as important, if not more so in terms of the suffering that these people have had at the wake of the Indonesian Government and what they've had to put up with and I'd like to have a response from you concerning this.
    Ms. BRAZEAL. Well, I thank you.
    In addition to East Timor, we have been aware of Irian Jaya and other parts of Indonesia that have had groups formed and concerned about how they fit into the country.
    We are aware of the common colonial history with the Dutch, but I think we have expressed our concern to the government about the situation in Irian Jaya along with East Timor, but specifically on Irian Jaya. We have increased our aid program in Irian Jaya to try to account for some of the effects of the El Nino drought, because Indonesia has been severely affected. We have sent our Embassy officers there from time to time to visit and look at the situation, and talk to the people, and the authorities. So I think we also have supported the National Human Rights Commission in Indonesia to investigate many of the charges that have been brought forth from that part of the country. So we have been engaged on those issues.
    Mr. FALEOMAVAEGA. Well, would it ever be possible that someday that Irian Jaya would be placed under the U.N. category of the non-self-governing territory because people were never given the right to choose, juxtaposed to the problems that we have with East Timor?
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    So, I'd like to pass that on to you, Madam Secretary, to see what we can do later on, as I will be taking this issue up with the Administration.
    As you know the President has requested $18 billion in additional funding for Indonesia through the IMF. What would happen if we don't give them the $18 billion?
    Ms. BRAZEAL. Well, I think that we see severe problems if we're not able to work out a way to support the economic reforms in Indonesia. And I also would posit that we have a better chance at arguing our political ideals if we're really steadfast in our economic support for Indonesia, particularly, on the humanitarian side. So we would like to see Indonesia work out with the IMF and the World Bank programs that are sustainable for them, given their current circumstances. Well, you would hope to see——
    Mr. FALEOMAVAEGA. Well, what we want to know—that's OK. What is the bottom line if we don't get the $18 billion through the IMF? Can they still float for a while? Are they going to sink or are they going to—well, what would be the bottom line and the consequence if we don't get that $18 billion? Would it be devastating? Will it be lukewarm? Well, can you give and take a little or leave it or—what is your best judgment on this, if we don't get that $18 billion for Indonesia?
    Ms. BRAZEAL. It would be exceedingly serious.
    Mr. FALEOMAVAEGA. OK. There's been some concern by some of the Members, and I have a sentiment for that feeling, and the fact that the executive director of the IMF is paid over $220,000 a year. I mean, even our own President doesn't get that much pay. They're living high on the hog and they're getting all this ''funding'' and some of the Members are concerned. Is that a reasonable—what do you call—salaries and benefits that the IMF staffs are getting, and if we're getting all this funding that is supposed to go out to these respective countries, do you think they're worth that much?
    Ms. BRAZEAL. Well, wouldn't it be nice if we all got those kinds of salaries?
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    Mr. FALEOMAVAEGA. Even our President doesn't get paid that much.
    Ms. BRAZEAL. If I may separate the intent of your question about reforms in the IMF, I think there's recognition that the IMF is an institution and is going to look at itself again with the intent of making some reforms. That aside, I think the question of our providing the monies for the IMF is very important because it is a commitment by the United States to the institution that is currently in place in the world to deal with these emergency issues. If we didn't have that, we would have less of an opportunity to help overcome the kind of crisis that Indonesia is facing.
    Mr. FALEOMAVAEGA. Thank you, Mr. Chairman.
    Mr. BEREUTER. Thank you. Thank you Ambassador. I think you've passed another test of diplomacy.
    The gentleman from Pennsylvania, Mr. Fox, is recognized.
    Mr. FOX. Thank you, Mr. Chairman. Thank you, Madam Secretary, for joining us today here to support the hearing.
    What has the United States said to newly appointed President Habibie regarding elections? Is it our expectation that he will be a short-term, interim President?
    Ms. BRAZEAL. Well, what we've said is that we support his intention, and the government's intention, and the groups in Indonesia who are commenting on political reform, all the intention to have sort of a timetable laid out for elections.
    We have not tried to impose an American plan. We have not tried to impose any details on the kind of dialog that's going on among Indonesians, primarily, because we think, if we do, then we're going to polarize the situation and you have people who will either be for our suggestions or against our suggestions, and they would stop talking to each other, as we encourage them to do now, in a domestic dialog as to the direction they're taking. But we have, in my earlier statement, come out with appreciation that a timetable would be very helpful.
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    Mr. FOX. How troubled is the business community, both in Indonesia and international, regarding Mr. Habibie's somewhat unorthodox, economic prescriptions?
    Ms. BRAZEAL. Well, there is concern, but there's also some progress made in certain areas. For example, just today in Frankfurt, it's our understanding that an agreement has been worked out on private sector debt between banks and Indonesia. That's something we welcome. So, these actions to date seem to be in accord with what the IMF program and other reform measures have called for. We'll look at the actions and not on the past.
    Mr. FOX. And what about the military? They've had longstanding reservations regarding Mr. Habibie. Will the Indonesian military work with him or what will be the upshot there?
    Ms. BRAZEAL. The military seems to be working with the Habibie Government, and that is in accord with the kind of dialog we have noticed that has been coming in Indonesia. It hasn't been radicalized. It's been more a moderate kind of dialog, including military and retired military officials. All groups in society have jumped in and started talking to each other.
    Mr. FOX. Thank you, Madam Secretary.
    Mr. Chairman, I appreciate the opportunity to address some questions.
    Mr. BEREUTER. Thank you very much, Mr. Fox, for your questions on President Habibie, in particular.
    I think in order not to start another round and reserve more time for a panel, I would just say I will submit a couple of questions to you on terrorism and—let's see, what's the name of the organization? Fretilim?
    Ms. BRAZEAL. Fretilim.
    Mr. BEREUTER. Fretilim—their activities indicate it may be time for Portugal to begin to play a more constructive role, and maybe in an interest section. So we can pursue that independently here, and perhaps the Administration will, too.
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    Ambassador, thank you very much for your testimony. We very much appreciate it. We look forward to working with you and being kept informed about the activities and the Administration's progress in working with the new government of Indonesia.
    Ms. BRAZEAL. We will do that. Thank you very much.
    Mr. BEREUTER. I'd like now to call the second panel of distinguished witnesses to come forward to the witness table and the staff to help arrange them there.
    We look forward now to the testimony of our second distinguished panel. They've been previously introduced, but I will just give a shorthand version as well, call on them in order.
    Gentlemen and lady, as I mentioned, your entire statements will be made a part of the record. You may proceed as you wish.
    The first witness is Ambassador Paul Wolfowitz, Dean, School of Advanced International Studies or SAIS, Johns Hopkins University in the Nation's capital.
    Ambassador Wolfowitz, welcome back before the Subcommittee and we look forward to your testimony. You may proceed as you wish.
    Mr. WOLFOWITZ. Thank you very much, Mr. Chairman.     I think you have my statement. It's pretty short, but I will try to summarize it rather than read the whole thing.
    I very much welcome this hearing, and I think it comes at a truly historic time, and there are a lot of very important detailed issues to discuss and questions to be asked. I don't know of a country that's more complicated than Indonesia and it's particularly complicated now. I think if one steps back and looks at the big picture, I would make three points.
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    The first point is that there's now the possibility—I don't know whether it is a 20 percent possibility, a 15 percent, or an 80 percent, but a distinct possibility—that this country, which is the largest country in Southeast Asia, which is the largest country by a very wide margin in the Moslem world, has the potential to be the third largest democracy in the world sometime in the next 5 to 10 years. If that happens—and I have to underscore the ''if'' because it's only a possibility—if that happens, it's going to change, not only Indonesia and all the messy and nasty issues we've been talking about already this afternoon; it will change the whole region. It will make Southeast Asia a more stable place. It will make it easier, I believe, to bring China into a peaceful relationship with the rest of the world, and it will set a very important example for a billion Moslems. That's not a small gain, not only for the Indonesian people, but for the United States and the rest of the world. And I think we should keep our eye on that ball because, if there is a possibility of achieving it, we should do everything that can make it possible.
    Second, that moment of historic opportunity comes against a pretty grim background; that is to say, an economic disaster that in Indonesian terms is probably as bad as the Great Depression was in the United States, and it has many resemblances to the Great Depression, including a near total collapse of the banking system, something from which it will be very, very difficult to recover.
    It would be difficult even in the best of times to manage a successful transition to democracy. In part, Indonesians have President Suharto to blame for that. I have written recently, and I believe it's true, that if he had stepped down 10 years ago, he would still be widely admired in Indonesia; and believe even more that if he had somehow used the last 10 years not to allow his children to enrich themselves, but rather to lay the foundations for democracy, he would go down in Indonesian history as a hero.
    But it is very opposite of laying the foundations for democracy, so that today the political parties in Indonesia are a joke. The electoral process, although it follows, I think, certain mechanics of voting regularity, is a joke. The Parliament is a joke. The process for electing the President is a joke, and one could go on, unfortunately. Indonesians know that. They don't need Americans to tell them that. They don't need any lectures from us. It is astonishing, in fact, the political maturity that Indonesians have shown.
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    It is astonishing, and we should stop for a moment and give a lot of credit where it is due, that a leader of Suharto's former power could leave office after 32 years as quickly, and as relatively peacefully as he did. And while the riots were a pretty ugly matter, the riots were in some measure, as has already been noted, a product of restraint by the security forces, not brutality by the security forces. I will have to note, and I think Sidney Jones mentions it in her testimony, there is some suggestion at least that certain elements may have been encouraging and those elements, fortunately, have been pushed aside.
    I think you have to give Suharto some credit for that. You clearly have to give Arnie Rais a great deal of credit for that. You asked about him earlier. He's a complicated figure. He's changed a lot over the years. I would call it growth. I think as people get closer to leadership, not only in Indonesia, but in other countries, they change. And in any case, it's beyond question that when he was about to take a million students marching into the teeth of 40,000 heavily armed troops, he had the guts to call it off and to avoid violence, and the authority to get a million students to follow his lead.
    You have to give a lot of credit to the leadership of the Indonesian military, particularly, General Wiranto, but not only General Wiranto, for, among other things, getting their more violent people under control, in particular, the President's son-in-law, and for realizing that the students backing down was a temporary move and not something that should be taken advantage of, but rather something that provided an opportunity for the President gracefully to resign.
    And there are a great many other figures, including Megawuatie Sonkona Poochie, who I think is a leader of potentially great importance, who I think played a very important role, moderate role. Some very important Moslem Democrats, and I'm just going to mention two more names and I'll stop, but these are names that deserve mentioning. Your Holiest Muhammadiyah, who told the President to his face that he had to step down. And Omdurah Mobahi, who is the head of the largest Moslem organization in Indonesia and, therefore, in the world. That the 32-million member Nahdhatul Ulama—just to give—there are many ways to describe how remarkable this man is, but I think something that would be most understood in the U.S. Congress is that this is a man who went and visited Israel after the Oslo Agreement over the public objections of the Foreign Minister, publicly called for Indonesia to recognize Israel and is a trustee of Sheman Paris Peace Institute.
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    There's a lot of nonsense going on now that Islam, and Indonesia, and the emergence of religion and politics—emergence of religion and politics is always something to be a bit concerned about, but I think we shouldn't jump to conclusions any more than we would say that, because Helmut Kohl is the leader of the Christian Democratic Party, there's something wrong in Germany; that there's something wrong with a country with the largest Moslem population in the world having parties that have the Moslem character to them. As long as that character is tolerant and democratic, that is what is important and I think that's what we need to keep our eye on.
    But in this post-Suharto transition to construct new political parties, to agree on a legitimate political process, even just to agree on the timing of elections is an extraordinarily difficult thing. You all know from your own experience that every rule about campaign finance reform favors either the Democrats or the Republicans and it's very hard to come to an agreement on campaign finance reform because everyone knows that, apart from the abstract principles, there are practical consequences.
    Even the question of whether in Indonesia, whether President Habibie should step down and many should step down, about which I, myself, might have personal opinions, I've come to realize affects the Presidential prospects of every other candidate. Some want early elections. Some want late elections. I think most Indonesians understand that, if elections come too early, they'll be under the old system and they will be, once again, a joke.
    So there are some extraordinarily difficult issues to negotiate in this transition. It would be hard enough to do it in the best of times, but Indonesia is facing an economic disaster and I think we have underestimated the magnitude of that disaster. And sometimes I think we act as though it's already happened. Just because we repeated a crash a few months ago doesn't mean that the end of the consequences came with a crash. That was a beginning. That was when companies started to go bankrupt. That's when they started to lay off people, people who had been laid off now for several months and have exhausted whatever small savings they had.
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    On top of the financial disaster, Indonesia has been the victim of very bad weather twice now—once with the drought last year and more recently with floods caused by El Nino. So that a country that was once self-sufficient in rice is now seriously underproducing in rice. And I think very credible predictions say that by late summer or early fall there will be massive malnutrition in the country and possibly even starvation. And I think, if that happens, it's hard to conceive of a successful transition democracy.
    Which brings me to my third point. I think at this point the Indonesians don't need a lot of extra advice from us about how to negotiate these very difficult political questions. Maybe at some point they will. Maybe at some point they'll all want us to use the IMF to get President Habibie to recognize what they all know. But I think right now what we can do, unquestionably, is to prevent that kind of mass starvation, that kind of humanitarian disaster which will have not only humanitarian consequences, but disastrous social consequences.
    And I have to say, and this is my third point, I think the United States along with most other countries in the world, and along with the World Bank, and the IMF, is too little so far and too late. It doesn't mean that we can't catch up, but it seems to me that we are far too much in the mode of business-as-usual here.
    I think that there are reasons for it. It's difficult to measure the magnitude of the problem. Even before the rioting last month, it was hard to get good data on what the exact level of food supplies was in Indonesia. It's becoming even harder, because after the rioting a lot of key officials from both the World Bank and from foreign diplomatic missions were withdrawn. In fact, our Agricultural Attache is back here in Washington. I think he is returning to Indonesia shortly, but that makes it hard to get a good crop estimate.     And it's not only the estimate of the needs today. What we really need to figure out is what are needs going to be in August, or September, October, because, as a matter of fact if we started shipping things now, it would probably take about that long to get there. But I think the Administration, and if not the Administration then the Congress, ought to be taking a major lead here.
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    And there's a political point to it. It's not merely a matter of making sure that there's enough food available, although that is important. I think that it's also very important to me to make it clear that the United States stands ready to help; that we understand both the magnitude of the historic opportunity that Indonesia faces and that we understand the magnitude of the economic calamity that they face.
    Frankly, I think a lot of people in Indonesia right now are skeptical that we really care at all and some others are spreading the story that we deliberately destroyed the Indonesian economy in order to bring down Suharto, for whatever the various purposes we might have wanted to do that.
    I think it's going to be very hard to have the kind of political voice that we want to have and need to have over the coming months and years, if we don't demonstrate with our pocketbook that we are prepared also to help where there is a clear and unquestionable need, and I think it is there.     If I might just conclude here, I think, to only say, or some people may wonder with all of this negative news from Indonesia, how can you be talking about an historic opportunity? I think we have a tendency too much to look at the negative and there is a lot of ignorance. I've seen one blitz fax recently that labeled Obderock Muhammadiyah—it said we should very concerned about the enormous influence now wielded by—behind the scenes by Obderock Muhammadiyah of Nahdhatul Ulama. This is the man I mentioned who's on the Board of Trustees of the Sheman Paris Institute.
    Or we saw in The New York Times not so long ago that General Wiranto was strengthening his bid for power by sidelining General Prabowo. Never once did the article mention that General Prabowo was widely believed in Indonesia to be responsible for abductions of students, and murders of students, and maybe even the riots. And I'm sure it helped Wiranto's hold on power, but I think the basic motivation had much more to do with trying to prevent a collision.
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    So I think the glass is at least half full, and it can fill rapidly if conditions improve, although there are plenty of problems there and they need to be worked on. But there's a rule of danger, and I heard it in the preceding testimony and that's why I'm departing a bit from my prepared statement. I think there's a real tendency to say, well, now that the whole situation is changed, we have to clean up every problem that's out there. And I think that could be a colossal mistake—a really tragic mistake.
    We should not insist on everything, in particular not we, the United States. We should keep our guide, I think, on the main goal, which is achieving democracy in Indonesia. If basic political reform succeeds over the next few years, then most of the other problems that we've been discussing this afternoon will probably be solved also, including, I would suspect, East Timor. But if political reform fails, if we go back to an authoritarian, military regime, whatever limited progress we make in this period of time is very likely to be reversible.
    And I think you asked the question, very popular, about East Timor. East Timor is a tragedy, I think, for both sides. I don't have much doubt in my own mind that Indonesia would be much better off without East Timor. I'm not sure about the Timorese, but I think Indonesia would be. I don't have much doubt in my mind either that the solution that you've hinted at—I think you're hinting at it—that somehow Indonesia and Portugal should get together and compromise on some grant of very substantial autonomy to East Timor; I think that would probably be a very good outcome as at least a first step on the way.
    But I think it's a big mistake if we, out of our own concerns, make too much of the issue of East Timor right now or the issue of Irian Jaya. And those two, in particular, I would point out, raise the question of, where does it stop?
    In the interest of historical completeness, it should be mentioned that Irian Jaya was incorporated into Indonesia through the extraordinary diplomatic efforts of the late Robert Kennedy. And I'm not being sarcastic in saying that. It was a great achievement, actually, that the United States didn't virtually go to war with Indonesia over that issue.
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    But Indonesia is a country where almost everyone is afraid of the prospect of breaking up, the prospects of succession, the prospect of becoming a giant Bosnia. I don't think the danger is as great as most Indonesians feel it to be, but when you start having an agenda that seems right at the front to talk about taking different pieces out of the country, I think it's a great inhibition for the democratic forces in Indonesia. I'd say democracy first and let's resolve some of these problems later.
    And finally, moving on to the issue of Suharto's wealth, it is no question, particularly in the case of his children, that a great deal of it doesn't belong to them or shouldn't belong to them, if one wants to stand back and make a judgment. But I think those judgments should be made in the first instance by Indonesians and we should be prepared to support what is a consensus there. It was very striking to me a few days ago that Negarati Sukarno, who was, remember, thrown out of her leadership of her political party by Suharto, nevertheless, spoke up against people going too far and reviling the former President because she remembered what people had done to her father. And what she didn't say, but it must have been in her mind, she probably also remembers that Suharto was, all things considered, relatively civilized in the way he treated the first President of Indonesia.
    At this point in time, any country like Indonesia has a double challenge: the challenge of achieving justice and the challenge of achieving peace and reconciliation, and that requires some degree of compromising both goals. And I don't think those are compromises that we should dictate here from Washington. We should respond when they ask us, but I don't think we should insert ourselves in the middle of it.
    But let me just conclude, then, by saying that I think when it comes to what we can do at least in the immediate months ahead, I think what we can do is send a very, very loud, strong message that we believe that what the Indonesians seem to be trying to achieve is something that we very strongly support; that we will pay with our own money to help make it happen, and, in particular, we will go to very great lengths to diminish the human suffering that this economic calamity has caused and which threatens that achievement of democracy.
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    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Wolfowitz appears in the appendix.]
    Mr. BEREUTER. Thank you, Ambassador Wolfowitz for your very thoughtful and important statement. We appreciate that testimony.
    Next, we'll hear from Ms. Sidney Jones, Executive Director, Human Rights Watch/Asia.
    Welcome back. Thank you for coming to testify. You may proceed as you wish.
    Ms. JONES. Thank you very much.
    I'd just like to start by saying that I agree with much of what Ambassador Wolfowitz just laid out, although I would disagree in some respects with the emphasis at the end of his remarks.
    I also agree that this is a time of great optimism in Indonesia; that major changes can be achieved, and if you just go through the checklist of the things that have already happened from the fact that independent unions are now possible; that political parties are emerging; that the restrictions on campus life has been lifted; that there's a discussion about separating the police off from the army and civilian control—all of this is up for public debate now in a way that is exhilarating. And I would say that, particularly with the fact that political parties are emerging not only in Jakarta, but also in the region, that this may be a way to encourage new ideas coming about how to deal with places like East Timor and Irian Jaya, simply through the fact that local political parties are free to form and develop their own political platforms.
    But I would also not shy away from citing some of the things that have not yet been achieved or indeed some setbacks. And let me just mention these without in any way detracting from the positive steps that have been taken. President Habibie did announce the release of political prisoners, but thus far only four have been released. There are at least 47—that is our count—who have not been involved in violent activities, and it would be terribly important just in terms of underscoring the commitment to political reform and change of the political system, and, indeed, reconciliation with some disaffected parts of Indonesia, to have those people released. So anything that can be done to encourage that process would be very important.
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    The ethnic Chinese issue is critically important and it hasn't been effectively addressed. Although President Habibie did make an unprecedented visit to one of the burned-out areas of Jakarta's Chinatown and made a call for an end to racism, which was a very important thing to do, it needs to go much further because the anti-Chinese sentiment is still so high in Indonesia. And we're getting very dangerous solutions being proposed by people now that all limits are off in terms of political discussion, including almost a suggestion that there should be a new program of forced assimilation, for example. Or a suggestion that all the people who fled after the riots were somehow traitors to Indonesia, and that as they come back to Indonesia, their wealth should be assessed, and so on.
    This is real dangerous stuff, and I think one way to try and counteract that would be for President Habibie, with the encouragement of perhaps the U.S. Government, to announce the setting up of a commission to look into ways to end discrimination against the ethnic Chinese. I think it's a critically important issue to address.
    I think the fact that the army continues to play such a powerful role should be grounds for concern in the long term, although I fully agree with what Ambassador Wolfowitz said about the generally constructive role that General Wiranto has played and the fact that at least his faction has set forth a program for reform which includes, for example, a commitment to having a two-term Presidency or limits on the number of terms the President can serve.
    But I do think that we haven't seen yet what the limits to army tolerance will be and once the political debate gets to a discussion of the army's role in social and political affairs, once it gets to a discussion of East Timor or other areas where the army has a very important stake in terms of human lives lost as well as time and resources spent, I think that we may see limits.
    And I also fully agree that the economic situation is at a point where, if there were social unrest or further rioting in the streets, then the army might decide that all of this free-for-all political pandemonium which is so exhilarating now was in fact something dangerous, to be stopped. So, I do think that there is a connection between the economic crisis and the amount of political freedom that the army will tolerate. But I think that anything that can be done to encourage a discussion and debate about the role of the army in society should be encouraged.
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    I think that one of the things we're beginning to see which is worrisome is a backlash against the United States. It's very small at this stage still, and it's coming from very conservative groups in Indonesia. But despite the criticism that Stanley Roth received at the Senate Foreign Relations Committee hearing, about the lack of pressure from the United States to have Suharto step down, it's nevertheless the case that many activists in Indonesia today believe that the United States administered the final push to Suharto. And this is what we're beginning to see in terms of backlash and negative comments about U.S. support for NGO's, Human Rights NGO's, and various aspects of the pro-democracy movement. I don't think the United States should, necessarily—in fact, I'm certain that it shouldn't—change its support for these groups or for strengthening civil society, but it may have to think through about how to address that backlash.
    The government of President Habibie has also announced very clearly and very unequivocally that there will be no change in policy on East Timor, and this is one area where I disagree with Ambassador Wolfowitz because I do believe that now is an opportunity, although it's a very tricky time, to try and raise these issues. It's probably not a good idea to call for a complete reopening of the political status of East Timor, but there are steps that can be taken now that could not have been taken 3 months ago or even 3 weeks ago in terms of raising issues of reconciliation; raising questions of discussion of political reform and protection of human rights inside East Timor that could include discussion of reduction of the troop presence. It could include discussion of the release of Xanana Gusmao, the leader in Jakarta, and so on. But we shouldn't let East Timor fall off the reform agenda. That would be an enormous mistake.
    In terms of other things the United States can do, I would stress that it's terribly, terribly important for the United States to keep up the pressure on investigation into military abuses, and Congress perhaps could assist in this role by holding hearings on the linkage between the United States and Kopassus, the arm of the armed forces that used to be headed by Suharto's son-in-law, which has been accused in a number of these cases of human rights violations.
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    And it's not just the question of finding out the truth of what happened to the student activists who disappeared, at least four of whom are still missing. That's critically important, but the other thing that's very important is that this is a time where, if a precedent can be set into what a real investigation into military abuses should consist of, it might act as a deterrent now in a way that such an investigation wouldn't have, again, 3 months ago or 3 years ago. And I think to pursue this is very important for the future of political reform in Indonesia more generally.
    I think that just one other thing to stress is that there are a lot of calls in Indonesia for President Habibie to step down or to speed up the election process. And while I don't think it's the U.S. role to choose or to opt for one particular formula over another, I do think it's important to recognize that, no matter what positive step he takes, they're not buying him any legitimacy or credibility inside Indonesia as a result. And it's terribly important for him to realize that everyone understands that a timetable has to be set for elections in a much clearer way than he has set thus far, and that there's a demand for elections sooner rather than later. Anything the United States can do to encourage that, without seeming to interfere in the political process, would be highly desirable.
    And finally, there's so much pressure from inside Indonesia for reform that every step the United States takes toward encouraging further reform should be done with reference to the reform process already underway inside Indonesia. Anything that seems as though it's an agenda being set from inside and imposed on Indonesia is likely to be counterproductive.
    Thank you.
    [The prepared statement of Ms. Jones appears in the appendix.]
    Mr. BEREUTER. Thank you very much, Ms. Jones.
    And now we would like to call on Mr. Adam Schwarz from the Council on Foreign Relations.
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    Mr. Schwarz, welcome. Please proceed as you wish.
    Mr. SCHWARZ. Thank you, Mr. Chairman.
    I also am in substantial agreement with both of my colleagues who have already spoken. So I will jump pretty quickly to the end of my statement, but will submit a longer statement for the record, if I may.
    I'll begin with making the point that was raised earlier that Suharto has left his successor, B.J. Habibie, Indonesia's third President, up against a situation eerily similar, in fact, to the same situation Suharto arrived to 32 years ago, and that is facing simultaneously a profound economic and political crisis. I want to make just a few brief comments about both of these crises before turning toward U.S. policy.
    The dramatic political events of the last month have deflected our attention temporarily away from the economic situation, which is unfortunate. The situation was dire before the month of May and it is considerably more so today. There are a number of statistics one can try to use to capture just how bad the situation has become, but I'll limit myself to a couple.
    Analysts now believe that the GDP of Indonesia is likely to shrink by up to 20 percent this year and that the number of Indonesians living under the poverty line will double to 40 million in the space of 1 year. On the political side, again as Professor Wolfowitz mentioned, the task of rebuilding the political institutions in Indonesia and beginning this process of creating a more democratic environment would have been an extremely difficult task even against the backdrop of a growing economy. And in the current climate, the challenge is all the more greater.
    A number of deep social problems have burst through the surface of Indonesian politics, as was entirely predictable, whenever Suharto was going to go. The role of the ethnic Chinese in the economy, the role of the relationship between Islam and the State, and the distribution of political and economic power between Java and the outer islands are all questions that are going to take many years for Indonesians to resolve and the fact that they're going to begin this process in the current economic climate is a great misfortune.
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    President Habibie has begun the process of political reform, but it is unlikely he is going to be able to satisfy public demands for a clean sweep with the past. In the end, he is handicapped by the same problem that ultimately forced Suharto to step aside, and that is the lack of a legitimate mandate from the Indonesian people. Absent that, it is unlikely he will be able to deal effectively with the economic crisis. Bankers will not lend and investors will not invest until the political situation clarifies.
    The United States and other world powers can play an important role in helping Indonesia recover both economically and politically, but, again, to repeat points that were made earlier, I think it should be kept constantly in mind that Indonesian problems will require Indonesian solutions and on an Indonesian timetable. It would be unreasonable to expect that the frustrations pent up over 32 years under an authoritarian system could be dealt with overnight even by the most enlightened of governments.
    In my view, the United States could play a constructive role in the following areas: one, the Administration should urge the Habibie Government to move as quickly as possible to put in place a government with a fresh mandate from the Indonesian people. A full resumption of international economic assistance would not be effective until this occurs. The decision to begin with either the general elections or with a new meeting or a special meeting of the People's Consultative Assembly, again, is a decision that Indonesians would be in the best position to make. The focus for the United States should remain on the process, the process of seeing emerge as soon as possible a government with enough popular support to deal effectively with the economic crisis.
    Two, in light of the severity of the economic situation in Indonesia, the United States should support the immediate disbursement of the next $1 billion tranche of the IMF package. Many Indonesians have raised the concern that disbursing this aid would reduce the pressure on the Habibie Government to push ahead with political reform, and it is a valid concern. In my view, however, the greater risk comes from not disbursing, seeing the economy further deteriorating, leading to further unrest and economic hardship—trends that are going to pose a very real risk to the democratization process that is only just now beginning. I think a comparison to Weimar Germany would be one worth considering here.
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    In any event, future disbursements of IMFA aid will provide other alternatives or other opportunities for the United States to assess the progress the Habibie Government is making in generating popular support for itself. I guess my broad point I'd like to make here is that a U.S. policy of all sticks and no carrots is not going to be effective.
    The United States should move ahead immediately with humanitarian assistance, especially the direct provision of rice, soybeans, and medicine, and assistance for Indonesia's Family Planning Program would also be good policy. The United States should put into place quickly its promised export-financing facility, given that a quick resumption of Indonesian exports is one of the keys to Indonesia's economic recovery. This facility would be more effective if it were not tied to U.S. exports or to specific commodities.
    Three, the United States should recognize that in the absence of well-functioning political institutions in Indonesia, the military has a crucial role to play in the current transition. A debate in Indonesia about redefining the Indonesian dual-function role is already underway and the U.S. intervention in that debate is not likely to be effective or productive. On balance, the Indonesian military has acted responsibly over the past month and the Armed Forces Commander, General Wiranto, is seen to be pro-reform by much of the Indonesian opposition.
    Maintaining open links of communications with the Indonesian military will be essential if the United States is to stay usefully engaged with Indonesia over the near-term. And with that in mind as the political situation clarifies, we should consider reinitiating the IMET and J-CET Programs.
    Four, the United States should support U.S. and Indonesian NGO's working to promote ethnic and religious pluralism in Indonesia as well as those sponsoring civilian-military dialog. The United States should condemn any further violence targeted at Indonesia's ethnic Chinese minority or against any of Indonesia's religious communities. The United States should encourage the Habibie Government to investigate the widespread allegations that renegade units of the Indonesian military were responsible for instigating some of the violence we saw in the middle of May.
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    Five, the United States should encourage the release of political prisoners jailed for their non-violent opposition to the Suharto Government.
    Six, the United States should consider expanding funds available for scholarships for Indonesian students studying in the United States. Apart from the humanitarian benefit, this would be a very cost-effective approach to helping stem the productivity losses that Indonesia is almost certain to encounter in the medium-term.
    Seven, again to touch upon the issue discussed by both of my colleagues, the United States should recognize that dealing with the corruption issue in Indonesia will be a highly disruptive process, and how quickly, and how comprehensively, Indonesia wants to open that particular Pandora's box should be a decision left to Indonesia. The United States should stand ready to assist in an anti-corruption investigation initiated by Indonesia, but should be leery of acting in advance of such a request.
    Eight, and finally, the United States should recognize that the indebtedness of Indonesia's non-bank private sector is arguably the greatest obstacle to Indonesia's economic recovery. Attempts by foreign banks to hold out for full repayment of their loans to Indonesia firms will prolong Indonesia's economic crisis and, again, therefore, put at risk the political reform process. The U.S. Administration should urge the IMF to remain firm in insisting that neither the IMF or scarce Indonesian Government resources be used to bail out foreign banks.
    Thank you for inviting me to testify today.
    [The prepared statement of Mr. Schwarz appears in the appendix.]
    Mr. BEREUTER. Thank you very much, Mr. Schwarz.
    We'll proceed under the 5-minute rule, and since we have only a few Members here, we may be able to have two rounds, with the indulgence of our witnesses, if necessary.
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    Ambassador Wolfowitz, of course, I listened intensely to your testimony, but especially noted your concern about malnutrition and starvation, as we approach the fall. And I would like to ask you some more questions about that subject.     Typically, we respond to those kinds of problems with the Food for Peace Program or the PL–480 Program. Having just completed ten townhall meetings in my district, the premiere agriculture district in the country, I'm reminded of the fact that grain prices are very low. Reserves are no longer where they were in 1996, and we are facing a bumper crop across the country, according to projections. So it would seem to be a positive thing for us to use more of our expected resources for our own domestic purposes as well as to provide some assistance to the Indonesians.
    You didn't reference a specific program about providing assistance, but I'll focus on one, to give you an example. The Food for Peace Program has three titles, but give me an idea, if you have any, of the magnitude of what you would recommend to the President if you were asked, or to myself, since I am asking you.
    Mr. WOLFOWITZ. In preparation for this hearing, Mr. Chairman, I made some effort to try to find out what I could of what's being discussed within the U.S. Government. And the impression I had is that they're trying to figure out how to get more value out of what's there. That is to say, take slow-disbursing loans and turn them into fast-disbursing loans; take long-term assistance and turn it into food assistance, but that there is a distinct reluctance, in the words of one somewhat disappointed official, who said, no one seems to want to think outside the box, and apparently, thinking outside the box includes coming up and asking for more money. And I think that is very shortsighted and it fails to see the magnitude of what's at stake here.
    That's partly by way of saying I found it a little difficult to get the kinds of numbers that I'm sure you'd like to have, but I think it's roughly on this order: Eight weeks ago the World Bank had a meeting in which the statements were made that the projected shortfall in Indonesia this year—from February to February—would be something on the order of 5.5 million tons of rice, which I believe is roughly one-third of the international export market.
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    The list I got of what has been committed so far by countries includes for the United States, under title I of PL–480, 125,000 metric tons—I suppose that's of wheat, but I don't know; maybe it's rice—valued at $25 million and another 60,000 metric tons under PL–480, title II, valued at $35 million. Obviously, different commodities. The total, if you add together United States, Australia, Canada, Japan, Taiwan, and Malaysia comes to just slightly under 1 million tons versus projection requirements in the range of maybe 5 million tons. So it seems to me——
    Mr. BEREUTER. Those countries that you listed—excuse me, Ambassador—were potential sources of——
    Mr. WOLFOWITZ. These are countries that have commitments, of which the largest by far is Japan. Japan has a bilateral program of $100 million U.S. dollars, 500,000 metric tons, although it's listed as uncertain here, and another $10 million and 50,000 metric tons that they're donating through the World Food Program. I guess Taiwan is second, and we're third on that list with, as I said, a combined total of 185,000 metric tons.
    I think there's a real danger here of studying this problem until people starve to death. I mean, you're not going to get good, solid numbers and it seems to me that making it clear it will be a big push coming in anticipation of problems is one of the best things we could do. And as I said in my statement, I think it's very important from a political point of view also in two respects.
    First, I think there's an opportunity here to try to build some of the non-governmental organizations in Indonesia that are very important in this political transition. We have traditionally done quite a bit in Indonesia through the Catholic Relief Services. I don't think we've done very much with either of these giant Moslem organizations, and while their capacities may be limited, I think we should try them out, and I think building their capacity to provide this kind of assistance to the people also builds their capacity as organizations more generally.
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    And second, I think if the message came that the United States is determined to make sure that the price of rice in Indonesia is something that ordinary Indonesians can manage to afford, I think that would be a terrific message, and it would help to counter a lot of the garbage that was alluded to from various groups in Indonesia who are trying to say you shouldn't have anything to do with the United States now because we're hostile, or unfriendly, or whatever. I think it would be a very good message to the Indonesian people.
    Mr. BEREUTER. Thank you. I would just observe that very quietly North Korea has become the largest food recipient from the United States and Asia, some $85 million in the last year, I think—a country with which we do not have a peace treaty. And I am not objecting, and have not objected, and the Congress has not objected in any fashion to the Administration providing that, but it does raise some questions to me about why—maybe it's premature to make this judgment—why we might have timidity in advancing proposals from the Administration.
    Before my time—Ambassador, did you want to——
    Mr. WOLFOWITZ. I don't know why they're timid, but it is a real mistake and I guarantee you it will be monitored much better in Indonesia than it is in Korea.
    Mr. BEREUTER. Ambassador and Ms. Jones, you heard Mr. Schwarz say—I'll stop and come back to you at the completion of this—that, as I understand it, perhaps there ought to be an investigation of possible renegade units' involvement in appropriate activities during the last month or so. And your ideas about that and where that might take place?
    And he indicated that he had hoped that it might be appropriate now for us to reconsider continuation—restarting our IMET or our E-IMET Program, I would add—or our E-IMET Program. He didn't say that, as I recall.
    Do you have any reactions to——
    Ms. JONES. Yes, two things. On the investigation into the possible instigation of the riots on the 13th and 14th of May, I think it's critically important that that investigation take place. We were getting reports of a very circumstantial nature not only from Jakarta, but also from a number of cities in Sumatra, where the sudden appearance of large numbers of young men on trucks, for example, was regarded as something that at least raised concern or suspicions. And given the fact that we're also beginning to receive reports of almost 30 cases of rape of Chinese women that took place in Jakarta in the context of this, I think it adds to the need to look into this very clearly.
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    Mr. BEREUTER. Would the National Human Rights Commission be adequately staffed to prepare the proper location for such an investigation or do you recommend another location?
    Ms. JONES. I think that if the National Human Rights Commission were to work together with some of the NGO's who have better resources and have done more direct forensic investigations, I think that would be useful. They could also work with the Criminological Institute at the University of Indonesia, which has traditionally been quite good, but I think the National Human Rights Commission could certainly lead that effort.
    Mr. BEREUTER. And what about your recommendation, or one of the panelist's recommendation, that there be a more basic reexamination of discrimination and abuse of the Chinese ethnic Indonesians?
    Ms. JONES. I absolutely agree that——
    Mr. BEREUTER. What would be the location for that, would you anticipate?
    Ms. JONES. I think that perhaps the Habibie Government should appoint a separate independent commission of inquiry to make recommendations on ending discrimination and incorporating the ethnic Chinese more fully into Indonesian society, which would mean ending the kind of de facto quotas on universities. And one of the reasons that this kind of social frustration has come out is because all occupations other than business are basically closed off to many ethnic Chinese. So a reexamination of that through an independent commission I think would be useful and I would set it up independently, not have it, necessarily, under the National Commission. I would make sure that there were a number of leading people of ethnic Chinese descent who were on that commission.
    On the reference to Adam's recommendation about resumption of IMET and J-CET training, I don't have a position one way or the other on the IMET training, but I would say I think it's very important that the United States be very firm in ending its relationship in J-CET with the Kopassus unit, in particular, until a full investigation of these allegations of abuse has been undertaken.
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    Mr. BEREUTER. That specific unit——
    Ms. JONES. Yes. There's another unit which has cooperated with J-CET in the past, which is the Jakarta Regional Command, and because one of the J-CET Programs involved training in urban warfare, I think that that link also needs to be examined. I think a full exposure of what that training consisted of would be necessary before you should even be thinking of resuming it on any sustained basis.
    Mr. BEREUTER. Ambassador Wolfowitz or Mr. Schwarz, would you like to respond or make your own response to my question?
    Mr. WOLFOWITZ. I think on the issue of the Chinese, there's no question that the attacks on the Chinese community in the last 4 or 5 months, and particularly in May, are exacting a heavy price from Indonesia. I think that price alone is the incentive they need for fixing things up, and I'm not sure—I mean, if we were to see one, as we did earlier, senior officials or senior military people appearing to incite anti-Chinese sentiment, I think we should in one way or another make it clear how harmful that is, but it is a very, very complex issue and I'm not sure how much our advice is going to help them in sorting it out.
    If you just look a bit north in Malaysia, you can see how difficult it is. The Malaysians, I think on the whole, have managed it better but, of course, they have a much bigger Chinese minority, too.
    In the case of the military, I agree very strongly both with Adam Schwarz's comment that they played a constructive role and with Sidney Jones' comment that Kopassus, in particular, it seems the special forces seem to have belied a particularly unconstructive role. And I would generally follow those recommendations, but I'm not—maybe it's just because I got burned too many times trying to restore IMET—I'm not sure restoring IMET right now is going to make a very big difference one way or another. It's just going to inject our debate into the Indonesian debate, and I think since the issue of the military role in politics is going to be one of the most sensitive things the Indonesians have to figure in the next 6 to 12 months, I think the less we're involved in that debate, the better. That's my instinct right now.
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    Mr. BEREUTER. So as a matter of tactics, congressional tactics, you think it might be better to let the Australians carry the load for a while?
    Mr. WOLFOWITZ. At least—yes, for a while. I mean, sit back and watch. One might take a different view of it in 2 or 3 months, but I think right now I agree with that.
    Mr. BEREUTER. Mr. Schwarz, did you have any reaction to what's been said either way, since I reference several of your suggestions?
    Mr. SCHWARZ. A few comments, yes.
    Again, on the IMET Program, obviously, it's a contentious issue and, as I had mentioned, things should settle down now. It would be useless to raise IMET at this particular moment, but I do think over a long run—we'll put it this way: The civilian-military relationship remains a crucial one and one of the keys to the pace of democratization. And if we can help in educating up-and-coming military figures in Indonesia about how militaries operate in other countries, including our own, I think that is, in general, a helpful exercise.
    As for the Chinese, again, I would endorse very strongly what Sidney Jones had said about the economic clout of the ethnic Chinese community. It will be reduced. In fact, the status quo, which has a 4 percent minority, the ethnic Chinese controlling maybe up to two-thirds of the private sector wealth, is in an unsustainable situation in a democratic society. I think it would be beneficial for Indonesia to take an evolutionary approach to solve it and try to grow their way to a solution rather than an abrupt redistribution effort. And that would include some sort of restoration of political rights for the Chinese.
    More broadly, I would make the point that how the ethnic Chinese are treated right now is one of the most important things we should be keeping our eyes on. (a) it's crucial to recovery of the economy, but (b), it will have a very large demonstration effect elsewhere in society. Other minorities are watching what happens to the Chinese. Christians are watching what happens to the Chinese. So, again, I can't really overemphasize how important that issue is.
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    Just a very brief point on your questions about the economy and what we might do: Obviously, I think the direct provision of foodstuffs is a way to go rather than paying money for it. It would reduce the scope for corruption by providing the food stuffs directly, in particular, rice and soybeans.
    And again, on the educational front, already we are seeing lower enrollment rates. The figures that we've seen on nutrition intake are depressing. One of the things I think would be very useful would be to allocate a portion of our funding for scholarships in Indonesia at, particularly, the elementary, and junior secondary school level. This accomplishes two aims. It gets people off the unemployment roles and out of—many of them are choosing a life of crime as an alternative. And it gets them in school and it gets them to become better educated and in the future more skilled workers, and that will help productivity down the road.
    Mr. BEREUTER. Well, thank you, Mr. Schwarz.
    Mr. Rohrabacher, thanks for your interest and your patience. Welcome back after the California elections. The gentleman is recognized not for 5 minutes, but for 10 minutes.
    Mr. ROHRABACHER. Oh, thank you very much. I may need it.
    Just my respectful disagreement with the Chairman: I'm appalled that Korea and North Korea are recipients of so much food from the United States and there hasn't been one iota of reform in that government. And I think we should let them go hungry if they don't want reform, and that might create a situation where you'd have more reform, and in the end you'd have more peace or greater chance for peace in the long run.
    Which takes me back to Mr. Schwarz—let me take it that you don't want us to open the can of worms of corruption in Indonesia, but you just want us to send down another billion, right, into this incredible corrupt atmosphere? You don't want us to try to correct. You just want us to shovel another billion dollars into that furnace?
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    Mr. SCHWARZ. No, that's not correct. What I had said was that I think that it is an issue that is going to be divisive. I think it can be accurately described as a Pandora's box. I think we would agree that corruption is a serious issue in Indonesia. My point was that dealing with that issue is ultimately a political decision. How wide a scope do you make such an investigation? Is it Suharto? Is it Suharto's family? How broad should it be?
    Mr. ROHRABACHER. So, I am misinterpreting what you said? I thought it was very clear. You don't want us to open up that box, but you are strongly advocating that we put in a billion dollars.
    Mr. SCHWARZ. No, what I said was that I think the Indonesians should decide how quickly they want to open that box.
    Mr. ROHRABACHER. You know, I've heard this expression, let the Indonesians decide several times here. I don't know what that means. Do you mean Habibie, or do you mean the Suharto family, or do you mean some rich group that controls certain groups in Indonesia, or do you mean like let's have a plebescite tomorrow? I mean, this ''let's let the Indonesians decide'' doesn't tell me much, especially when I haven't heard anything about demanding free elections here. Shouldn't we be demanding Habibie set a time and say, we're going to have free elections on this date? I haven't heard anybody say that.
    Mr. SCHWARZ. I think we all said that actually. I think——
    Mr. ROHRABACHER. OK. What is the date that you think that they should have free elections?
    Mr. SCHWARZ. Well, I didn't set a specific date, again, because I think the Indonesians are faced with a dilemma. They had a meeting of the People's Consultative Assembly, this 1,000-member group that picks the President, in March. It picked Suharto as President, Habibie as Vice President. That is their constitutional process. It is, I think we'd agree, not democratic—but, it's constitutional. I didn't say it was democratic. I'm saying it's constitutional. Now they have a problem—with Suharto gone; Habibie's there.
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    Mr. ROHRABACHER. Well, if it's not democratic, who cares if it's constitutional?
    Mr. SCHWARZ. Well, many people——
    Mr. ROHRABACHER. You could have a Nazi constitution. So what?
    Mr. SCHWARZ. Well, to repeat myself, I think that's something the Indonesians need to decide.
    Mr. ROHRABACHER. Mr. Schwarz, the people of Indonesia, the young people, in a very courageous act, have put their country into a position, finally, with no thanks to the establishment of the United States, I might add, put their country in a position where they might have a chance for freedom in the future. And I, for one, am embarrassed that our country—the cold war has been over for a while—that our country has just sat by and let this corrupt regime go on without us siding with the people who are longing for freedom. And then all I hear about, you know—let me put it this way: Shouldn't we be now the leading advocates for a free election as soon as possible in Indonesia?
    Mr. WOLFOWITZ. Mr. Congressman, I think the Indonesian students and the people of Indonesia should be, and are, the leading advocates for elections in Indonesia. We should be making it absolutely clear that we support that demand; that we can't see the country succeeding without elections. However, when you say, what is the date, then the date gets wrapped up in the issue that they don't have rules for elections right now. If they ran them under the current rules, it would be a joke and Habibie might actually win.
    Mr. ROHRABACHER. Well, maybe that would be a good role for the United States to play, instead of saying, well, we really shouldn't get into the debate as to what role militaries are going to play in Indonesia. Are you kidding? The military role in Indonesia should be what the military role is in a democratic society. They shouldn't be making the decisions. They should go back to the barracks and make sure there are free elections.
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    Ms. JONES. Mr. Congressman——
    Mr. ROHRABACHER. I mean, of this idea that we shouldn't get involved in the debate in Indonesia as to what the role the military should play, I don't know where you folks are coming from.
    Ms. JONES. Mr. Congressman, if I could just say that I work very closely with the human rights organizations, with student groups, and with much of the activist community, and there's no agreement, even among those groups, about what the solution should be, because they all agree—and you're right—that there should be elections as soon as possible, and free elections as soon as possible, but there are actually different formulas that even those groups are proposing.
    So one of the things that I thought would be useful would be for the United States to provide a forum where you can get real public debate, hopefully, with members of the Habibie Government about what a desirable solution should be, but there's not agreement. There's not consensus even with the activists who were down there at the Parliament building.
    Mr. ROHRABACHER. Well, rather than pumping a billion dollars down into their corrupt financial system—it'll probably go right into the pockets of some Rhaidi, you know. What is it, the Rhaidi? How do you pronounce it? Rhaidis. I can't pronounce it right. The Lipo Bank, or something like that. Maybe we should spend the money on trying to help these people make a determination of how to structure their democracy. You know, the other way—going back to the basics.
    We have not been a force or a voice for democracy in Indonesia over these years. And no wonder why they look at the United States and they're a little skeptical of where we're coming from. Does anyone here think that the close financial relationship our President has had with the Rhaidis and other rich Indonesians, and the financial contributions that have been made to different political campaigns over the years have had something to do with this benign neglect that we've had from the United States for the past 6 years in trying to stand for democracy in Indonesia?
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    Mr. SCHWARZ. Well, speaking for myself, Mr. Congressman, no, I don't think so. I think, in fact, if we look at the record of the Clinton Administration compared to the preceding Administrations, the United States has in fact been more critical of a number of aspects of behavior of Suharto compared with our past practices.
    And if I could make another point, it would be that despite the criticisms that we're hearing from some fringe groups about U.S. interference, by and large, my very strong impression of Indonesian opinion is that they have looked upon the United States as being in favor of what they had tried to accomplish in the last couple of months, and if we put that into comparison, say, of Japan, or Australia, or Germany, that's the way they feel.
    Mr. ROHRABACHER. I sure hope so. I sure hope you're right because I try to put myself in their place, and it's very hard for me to come to that conclusion, when you have the United States entering into economic relationships with people who are ripping that country off right and left. I mean, here we have the talk about a famine in that country and the Suharto family, and the Rhaidis, and the rest of these people who have financial relationships with the campaigns of our President have ripped off billions of dollars. And now you're saying, oh, they're going to starve unless they get, what, $25 million here, or—well, why don't we find out, and why don't we help those people find out where the money is that their government has ripped off—or the people in charge of their government—have ripped off from that country. That's one way maybe we could pay to help alleviate the famine.
    Someone called me the other day, Mr. Chairman, from California and they said, well, you know, the Suharto family, they're a good family. In fact, just right down the block their son owns a big home in our neighborhood, San Marino. And, in fact, it's the richest home in San Marino. Well, guess what? That house probably costs—I don't know. I'm going to go out and take a look at it, but I bet you've got $10 million of Indonesian people's money right there. There's a little money that could feed some of these Indonesians during their hardship. Why don't we try to recover some of the loot that they've ripped off from their country, rather than trying to take money from the pockets of the people of the United States and tax it away from us?
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    Ms. JONES. Just one comment——
    Mr. ROHRABACHER. Yes, that will open the can of worms of corruption.
    Mr. BERMAN. Who is saying we shouldn't?
    Mr. ROHRABACHER. Well, earlier in the testimony—you missed it, Mr. Berman—there's this caution about opening this can of worms about corruption.
    Mr. SCHWARZ. Well, I think the caution, if I could clarify that, was on the United States initiating that action. There's a legal issue here, and as I said, the——
    Mr. ROHRABACHER. I think it would be great if they stood up for honesty for once. I think it would be great if the students and the young people of Indonesia know that we're not going to be the last stronghold or the place where all the bad guys in the world come and dump their money after they've ripped off their own people.
    Ms. JONES. I just should say that the only criticism that has come of the United States in the last couple of weeks has been from groups who are opposed to funding for democracy groups, and who think that the United States played too strong a role in getting rid of Suharto. So, that's something to add to the mix.
    Mr. ROHRABACHER. OK. You know, I'm always outspoken. It's all right.
    Thank you very much. I yield back the balance of my time.
    Mr. BEREUTER. The gentleman from California, the Ranking Member is recognized.
    Mr. BERMAN. Thirty years ago, no one from Indonesia could have owned a home in San Marino, so there's some progress.
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    Mr. ROHRABACHER. Well, now that they do, now the people in Indonesia can't own homes in Indonesia. All the money is in San Marino.
    Mr. BEREUTER. I thought San Marino was a country in Europe.
    Mr. BERMAN. It is a very, highly Republican area of Los Angeles.
    Just one thing: I do recall there was one person, one U.S. official, who called for democracy, more to push for democracy in the Middle East. I meant Indonesia, and it was the man at the table who I think during his ambassadorship and as he left made a major statement on the subject.
    Mr. WOLFOWITZ. Made a point of it. I mean, I think it's really unfair to say the United States has identified with propping up Suharto. By and large, I think it's been pretty clear over the last 10 years that we want to see change. I made it very clear in the speech that I made that Congressman Berman refers to just before I left talking about the need for greater political openness in Indonesia. I mean, you talk about letting the Indonesians decide and you talk skeptically about it, but I think, in fact, we're most effective when we express what they are thinking. And we're least effective when we get in the middle of a fight that they feel deeply about. And it isn't the can of worms about corruption that people are afraid of opening up, it's a can of worms of trying and convicting and putting in jail former leaders, and it is a very painful difficult issue. And one of the women—you may have been outside when I mentioned this—one of the people who spoke up against pursuing Suharto too vigorously was Negarati Sukarno, whom he removed from the head of her political party.
    I agree with Adam Schwarz. I don't think we should be leading them on this. I think we should be supporting them on that, if there were any kind of consensus that they want us to go after his assets in the United States. And I suspect those are pretty small because he would have been a fool to put them here after our pursuing Marco's assets, and we didn't find many of those, by the way. But if there were consensus on that, we obviously should respond to it, but in terms of where we stood—let me put it this way: I understand, as recently as last year, Suharto complained to some of his ministers that my speech was one of the reasons that his people were demanding political freedom now. That shows how out of touch he is, because they didn't need my speech to demand political freedom. But I don't think we've done a bad job and I think one of the important ingredients of it—and I would really urge it now, too—is who we meet with and who we see.
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    I remember when I first arrived in Jakarta, someone not in the Embassy suggested I should meet General Asutione, who was a grand old man in the Indonesian army who had played a crucial role in 1965, and then Suharto pushed him aside and put him under ritual house arrest after he started complaining about corruption, as a matter of fact. And some people in my Embassy said, no, no, you shouldn't do it because Suharto won't like it, and I came to the conclusion I didn't give a damn whether Suharto liked it or not. We had our friends and we would go and see him.
    Well, I paid a call on him. I'm not saying it was so courageous. It turned out right after I came, B.J. Habibie turned up. Sometimes we get more religious than the Pope in whom we avoid. I think it should be just the other way around, and I think, particularly right now when things are so fluid, one thing we can do is not to have endless meetings with Habibie, as though he is the only important person in Indonesia.
    One of the reasons why I would like to see us engage in large-scale relief efforts through the large Moslem organizations is that is a way to begin associating yourself—let me underscore the large democratic Moslem organization; it's that they're democratic that makes them so important—to associate yourselves with the forces of change. I think it can be done. I think it's important to do it. I agree with your sentiment, absolutely. We might argue about the tactics.
    Mr. BERMAN. I missed both of your testimonies. I heard Ambassador Wolfowitz's, and I apologize, but it sounds like you're trying to call for sort of a nuance kind of a policy, which is never a very good suggestion to Congress——
    But I'm trying to understand. Is it a consensus that the Indonesian people, and particularly the leaders in the push for democracy, consider the United States in the course of its position historically, or in the last few months, to have been on their side rather than a defender of the sort of corrupt regime? I mean, or is that too simple a conclusion?
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    Mr. WOLFOWITZ. I would say it this way, and I say from the perspective of somebody who, back in January, insisted on flying up here for the Banking Committee. I gave some pretty strong recommendations for political reform. I didn't quite say that Suharto should step down, but I said he should, in effect, create the conditions for his departure by creating a government-national unity.
    Mr. BERMAN. He did.
    Mr. WOLFOWITZ. Well, he did it by doing the opposite, as it turned out. And I was, frankly, a little frustrated that I couldn't get the U.S. Government to echo that because I thought it was not heavy stuff, but I thought that if the United States were to at least call for political reform, then a few more Indonesians might feel emboldened to actually call for Suharto to step down, which I don't think was our place to do.
    Having said that, I think we should have been a little more outspoken. I am impressed that we so far have gotten through without being blamed, and are being understood as, basically, being in favor of reform. In part, it's because everyone understood that the IMF Program in its focus on dismantling the monopolies of the President's children, was an effort at promoting reform.
    And I think, finally, we have the President's children to thank. I mean, everyone blames Suharto's children. Excuse me. Everyone in Indonesia blames them, and they blame them so strongly they don't have time to blame the rest of us.
    Ms. JONES. Can I just make a comment on that because I think——
    Mr. BERMAN. I'd like to hear what she——
    Ms. JONES. ——it's a very mixed impression. Overall, there hasn't been anti-U.S. sentiment until very recently, but there was very deep concern on the revelations of the J-CET training among the groups that I work with. There was also——
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    Mr. BERMAN. Which looked like an end-run around the restrictions on IMET?
    Ms. JONES. Yes, and there was great support, however, for the fact that the United States, through the Asia Foundation, was one of the first to come through with aid for the only indigenous legal aid organization in East Timor; and that when anything happened in East Timor, it was someone from the U.S. Embassy that was the first to call up groups in Jakarta who were working on East Timor and actually go out to the site. It's been a series of conflicting signals, but it hasn't resulted in anti-U.S. sentiment.
    Mr. BEREUTER. What's your reaction to Ambassador Wolfowitz's suggestions that the Administration or the Congress of the United States keep the central thrust on democracy, a new electoral and governmental process, taking care of this perhaps huge and enormous food crisis coming up, and downplay some of the very specific issues that have bothered some of us for a long time, like East Timor. And in the end, I assume he thinks we will serve those causes better as well by not focusing on them right now, and keeping our eye on just a couple of these things? What's your reaction?
    Ms. JONES. This is an area where I differ because I think that there is an opportunity, if it's handled properly, to actually have real substantive discussions on East Timor in a way that wasn't possible even half-a-year ago. And I think one of the ways to think through this is, first of all, to look at the fact that you have independent political parties now, and you should be able to establish free local political organizations now in East Timor.
    Will that be possible? Well, it's something that if there is an indication that such groups are forming in East Timor, that we should make sure that they have as much freedom as groups in Jakarta, regardless of what their political position is. And I think that's going to be something very interesting to monitor.
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    I also think that it's a time, when there is a discussion of release of political prisoners, to actually push for the release of Xanana Gusmao as the leader of East Timor. And I think if it's done in the context of (a) the fact that release of political prisoners more generally is an act that any new government coming in after a period of repression usually engages in, and (b), that it's a time for reconciliation with all the areas who have been so negatively affected by severe human rights violations that took place under the Suharto Government, it's a way of distancing the new government from the old government. If it's put in that context rather than, OK, independence for East Timor now, I think there's a real chance to move forward.
    Mr. BEREUTER. Mr. Schwarz, your reaction?
    Mr. SCHWARZ. Congressman, the short answer is, yes, I agree with Professor Wolfowitz's analysis there that the focus should stay on democracy and the democratization process.
    Transitions from authoritarian rule are always delicate and not necessarily irreversible. The history of the Latin Americans in the 1970's and 1980's makes a good example. The old bogeys for the Indonesian military have all come out of the closet at once. The specter of a radical, political Islam; of ethnic strife with the Chinese; of separatist movements around the country—they see all these threats to their traditional image of Indonesia, and what they want for Indonesia, and indeed what many Indonesians want for Indonesia.
    I think we will get over this. We're in the process of a great deal of rhetoric and talk right now, and not all of it sounds very pleasing. I think this will gradually die down and Indonesia will come to resolution on some of these issues, but right now is a very delicate time. My fear would be, although I certainly support the release of Xanana Gusmao and a more sincere dialog between Jakarta and the genuine leaders of the East Timorees' Independence Movement over a new political relationship for East Timor that may one day lead to a referendum, fair enough, but for the United States or other powers to weigh in at this particular moment heavily for East Timorees' independence, my fear is that the greater risk is that we set back this democratization process in this nation of 210 million people.
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    Ms. JONES. I don't think there's a mutually exclusive set of views here. I mean, I also think that it's possible to make progress on East Timor now without weighing in heavily on independence, but I think there are opportunities now that weren't there before, and they should be taken advantage of.
    Mr. WOLFOWITZ. I certainly am in favor of taking advantage of opportunities; I mean, where we can do something and simply play a positive role that would be generally greeted with approval in Indonesia, and there may be such things. There may very well be such things, and especially if we could get the Portuguese to be seriously interested in an autonomy arrangement, I think that would be very helpful.
    But where I would draw the line is where it begins to look as though we're using our economic leverage to coerce them to make concessions on East Timor that they consider jeopardize their security. Then, it seems to me, you start to build a constituency in the military, and the military is going to have a say in this whether we like it or not. Other groups want to attack the American view and say, look, where the Americans are trying to take us, which is toward democracy, is also toward the breakup of Indonesia—and, believe me, that is a very good way to lose democracy, whereas, I think if you get democracy, you'll have a lot of opportunity on East Timor. And I find it almost impossible to conceive of any position one could take on Irian Jaya along the lines of Congressman Faleomavaega's views that wouldn't excite that sense in Indonesia.
    So, where I would draw the line is where we appear to be using their need and our, therefore, coercive ability to force them in ways that threaten the survival of their country. Rather, we should make it clear we support democracy.
    And one other point, it's politically incorrect, but it's absolutely right what Adam Schwarz said about the importance of the military. Obviously, the ultimate role of the military should be out of politics. It's encouraging, actually, I think, the extent to which even the Indonesian military view the dual function thing as a transitional, temporary arrangement. Maybe it'll take 100 years to transition it—argue about the time—but the fact is that among the strongest advocates of an effective military in Indonesia are the Chinese minority. You can't sit here and talk about the importance of protecting minority rights and then say the military should be weak and ineffective. It is not a country that can be governed simply in the way that we're governed. It is going to go through transition. Hopefully, that transition will be faster——
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    Mr. BEREUTER. Except in Suharto the military becomes an instrument for repressing minorities.
    Mr. WOLFOWITZ. If the military were misbehaving badly, I wouldn't be sitting here saying what I'm saying. They've played a very constructive role. They ought to get a few pats on the back. In some sense, in a democratic Indonesia, their place will still be respected in a significant way. That's important.
    Mr. BEREUTER. Thank you, Mr. Berman.
    Some people who seem to know Indonesia well have told me that the military really is the only unifying force in a country that's split apart by geography, language, and culture. And I think they are a unifying force and they can be a force for good or evil. That's my own judgment.
    I think it's been a very helpful, very constructive hearing. I'm just appreciative of the fact that we had no bells ringing due to the length of the debate on the House floor. We had some discussion among my colleagues about other witnesses today, including congressional witnesses. I turned those down, and I think that the results of the hearing as we had originally planned it justify my decision. At least I'm sticking with that line.
    I want to thank our witnesses for their testimony. It's been very helpful and I appreciate your constructive suggestions to us.
    The Subcommittee is adjourned.
    [Whereupon, at 4:08 p.m., the Subcommittee adjourned subject to the call of the Chair.]


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