UNCLASSIFIED SECRET 1024 RELEASED IN FULL THE WHITE HOUSE WASH INGTON MEMORANDUM OF CONVERSATION SUBJECT Meeting with PARTICIPANTS United States The President Madeleine Albright Secretary of State Charlene B rshefsky U S Trade Representative Samuel R Berger Assistant to the Presid nt for National Security Affairs Sylvia Matthews Assistant to the Preside t and Deputy Chief of Staff Daniel Tarullo Assistpnt to the President for International Economic Affairs Gene Sperling Assistant to the President for Econ9mic Affairs James Steinberg Deputy Assistant to the President for National Security Affairs Larry Summers Deputy Secretary of Treasu ry Stanley Roth Assistant Secretary of Stat for East Asia and the Pacific Stapleton Roy U S Ambassador to Indonesia James Gagnon NSC Director for Asian Affairs AS AN Leaders U Notetak r Indonesia Soeharto President Hartarto Sastrosoenarto Coordinating Minister for Production and Distribution Ali Alatas Minister of Foreign Affairs Moerdiono Minister of State Secretary Nana suyresna Ambassador-at-Large Benjamin Parw to Indonesia Ambassador to Canada Bintoro Tjokroamidjojo Ambassador for APEC Affairs Widjojo Nitisastro Advisor to the President for Economic Affairs Dadang Sukandar Head of State Protocol Widod Sutyo Assistant Minister for Foreign Affairs - inister of State State Secretary Nazaruddin Nasution Director for Ameri an Affairs Department of Foreign Affairs UNITED STATES DEPARTMENT OF STATE SECRET REVIEW AUTHORITY CHARLES E LAHIGUERA Classified by Glyn T Davies DATE CASE ID 30 APR 2008 00502960 Reason 1 5 b d Declassify On 11 25 07 UNCLASSIFIED UNCLASSIFIED SECRET DATE TIME AND PLACE The President 2 November 24 1997 9 4Q - 10 40 a m PST Vancouver Canada When did you arrive in Vancouver U President Soeharto I arrived last night at 11 00 p m The flight from Sout Africa took almost twenty-two hours There is progress in South Afric but it still needs assistance from other countries C Let me thank you for the great oppcrtunity to meet with you here at APEC On behalf of the people of Indonesia I would like to thank you for the assistance wi h the fires We are suffering from the fires and the unusually long dry season One third of our forests are 'supposed to remain untouched one third are industrial forests with selective cutting to ens re continuin development and one third are being converted to palm oil rubber and being used OL slash and burn agriculture 5 Most of the converted land has deep peat soil So if we try to extinguish the fire it causes a great deal of smoke and smoldering The effects of the smoke have been felt in Malaysia Singapore and Brunei We are expecting rain but there has been a delay S want to thank the United States for the three Hercules aircraft They have been very helpful in extinguishing the fires on the island of J ava Rains came two days ago so I hope the fires will be extinguished S I I also want to thank you for helping Indonesia in the monetary crisis that has hit not only Southeast Asia but has spread to other parts of Asia such as Korea S If you look at the economic fundamentals the Indonesian economy is relatively strong But the effect of the spec'llators was too difficult to overcome You witl recall the financial crisis started in Thailand In Indonesia the situation worsened when loans came to maturity and had to be repaid Government loans were under control but the private sector had to buy dollars to repay loans While the private sector tried to buy dollars the people also rushed to purchase dollars weakening the rupiah The Indonesian public has lost confidence in the rupiah and it has been difficult to restore confidence In order to overco e this problem we have tightened the monetary supply rescheduled huge projects and taken ' other measures to strengthen the SECRET UNCLASSIFIED UNCLASSIFIED SECRET 3 rupiah Also included in our plan submitted to the IMF for evaluation was reforming the banking system Tbe IMF has approved a $10 billion loan the World BanK $4 5 billion and the Asian Development Bank ADB $3 5 billion for a total of $18 billion Other Asian countries also have demonstrated solidarity by providing contributions Singapore Malaysia Brunei and Japan S Of course I understand you yourself played a personal role in making possible a positive evaluation by the IMF The Indonesian economy will require consolidation economic rowth this year will decline to 6 percent with IMF lending and standby loans we will be able to import materials that will enable us to experience relatively high economic growth The question remains how to find ways to identify the causes of financial disruption to guarantee that it does not 'happen ago in 8 We need to think about an emergency fund that wouid overcome financial turmoil before IMF help comes forward f we rely on the IMF alone we prolong the suffering The fund would serve as a complement to the IMF I hope the fund will supply the capital needed to prevent layoffs or unemployment In export industries the fund would help maintain continued export earnings There will be a process of consolidation because the won crisis has caused the rupiah to weaken after it hadstrengthened S The government of Indonesia did intervene some to defend the rupiah but unlike Thailand we did not exhaust our reserves instead allowed the rupiah to float 5 We Coming back to natural disasters w'e can't totally prevent El Nino but we need to focus on how to overcome it and to better identify this phenomenon Indonesia is an ideal place to monitor climatic changes like El Nino hilt we don't have the resources or technology to do it If chosen as a site for this research Indonesia would cooperate in enhancing monitoring S I am reminded that you not only played a role with the IMF b t provided assistance that helped Indonesia face its financial crisis as well 8 The President I believe I have a strong bilateral and personal relationship with you We were pleased 0 help with the financial crisis and the fires We als0 have a deep strategic SECRET UNCLASSIFIED I - UNCLASSIFIED SECRET role and interest in Indonesia and the whole region I agree the underlying fundamentals of Indonesia are impressive We need to build on them through the trade opening PEC provides S Your leadership in Bogar led to the International Telecommunications Agreement ITA This year we will be opening nine different sectors which will give a lot of growth to the region S As to the financial crisis the Manila framework established a three step strategy -- each country is to implement responsible macroeconomic policies the IMF is to be supportive recognizing the nature of the economies may not require the same measures as twenty years agoi and back-up support by the United states and other countries I have a slightly different view on what we need to do next I think we should wait until Finance Ministers meet before deciding I understand meetings are planned in ' Kuala Lumpur and Japan However I think the solution agreed to in Manila will work S With regard to the fires I took great personal interest in the hurt and suffering experienced by the Indonesian people I am pleased that you are interested in joint planning for natural disasters If the scientists are right there will be' more natural disasters because there is more global warming occurring now than in the last '1 000 years In the United States severe weather events have increased significantly It seems a lot of this is due to climate change This makes the climate change conference in Kyoto important The United States i3 the largest cause of global warming because with Europe and Japan we produce the most greenhouse gases For this reason we have committed to accept specific targets for reducing emissicns to 1990 levels by 2010 S Big questions remain on whether there should be participation by developing economies Those agai t developing country participation claim implementation would hurt economic growth and opportunities Those in favor point out that if devel opir_g countries do not participate emission savings by developed countries will be offset by irtcreased emissions by developing countries in thirty years The increase in greenhouse gases has been dramatic Therefore we have sought to involve developing countries in a way that doesn't require them to sacrifice growth We know a lot more about energy than we did twenty years ago and can be more etficient now than the United States SECRET UNCLASSIFIED 1 1 1 UNCLASSIFIED ' 5 has been in the last fifty years It is far cheaper for a country to build energy efficient plants in the first place than to convert inefficient ones We llave develope a partial credit plan that gives developing countries access to technology and companies Many people in Latin America are working ith us on this but in Asia not many are interested because of concerns about the effect on growth We have sought to redesign the program so that it doesn't affect growth I would ask you to reconsider and support this program S We very much value the security arrangement with Indonesia and want to support you with military equi _3nt and training with the understanding that it will- not be used to put down unrest or destabilize the region I think we have had that understanding s We have some differences on human r ights East Timor and Mr Pakpahan I understand from a discussion between our respective foreign ministers that you are going to permit foreign doctors to visit the i prisoned labor leader Pakpahan S I would like to take a moment to discuss this cluster of issues For thirty years you have overseen development in Indonesia and have guided your country as it has made astonishing gains The size and diversity of Indonesia and its accomplishments will make it one of the world's most important countries in the next century 8 But I also believe that the nature of a modern society requires accommodations for order and stability versus individual liberty and national versus individual identity_ Failure to have the right balance can lead to tensions within a country's society and problems with its neighbors Most disruptions stemming from expressions of free speech are only miLor matters with which we have to deal I say not only as the Pre _dent of the United states but as a friend that I think you will have an incredible legacy when you complete your work But in this world of universal literacy provision for local concerns as opposed to national concerns is important and the political and economic costs significantly less than those incurred in maintaining rigid controls For example there has been an enormous posi tive response when you said you intended to investigate the shooting of the university students in East Timor S SECRET UNCLASSIFIED o o SECRET President Soeharto In 1945 a conference adopted the IIJdonesian constitution that stipulates how In onesia behaves with other countries in the world in order to have peace with social justi e Of course not all citizens in Indonesia favor the government Those who co it offenses or defy the people entrusted to uphold the constitution and those who violate the constitution will be brought to court to face the rule of law This is what Indonesia has been doing for years and outsiders do not understand Thank you S --End of Conver ation-- SECRET ----- This document is from the holdings of The National Security Archive Suite 701 Gelman Library The George Washington University 2130 H Street NW Washington D C 20037 Phone 202 994-7000 Fax 202 994-7005 nsarchiv@gwu edu