Excellencies, distinguished guests, ladies and gentlemen.  I am honored to have this opportunity to speak before the distinguished members of the World Affairs Council.  For this privilege I wish to thank all of you, particularly President J. Curtis Mack, who invited me to address this forum.

I am pleased to congratulate the Council on its 50^th anniversary.  In 50 years, it has seen much of history and has heard the voices of those who made history.  Hence, I join you today with some trepidation, knowing that leaders of much greater stature than mine have addressed this forum.  I draw courage, however, from my convictions that the message I bear, a message from and about Indonesia, is as relevant as any perspective that has been shared with you in recent times for the world economy today is vulnerable and the global political landscape is pervaded by uncertainty.

We in Indonesia believe that we can contribute to the constructive resolutions of that global crisis.  It is, in fact, our constitutional obligation to contribute to the shaping of a world of greater peace, social justice and equitable prosperity.  Moreover, we remain convinced that Indonesia can engage in a fruitful partnership with the most powerful nation on earth, the United States, in addressing that crisis.

We are indeed actively involved in various multilateral forums in which we work closely with the United States—such as APEC, the WTO, and the dialogue processes of Association of South East Asian Nations (ASEAN), especially the ASEAN Regional Forum (AFR).

We strongly support every effort of the United States and other concerned countries to resolve the nuclear issue on the Korean Peninsula.  In this regard, we have taken our own initiative to promote constructive dialogue on the issue.

We continue to sponsor an informal workshop on managing potential conflict in the South China Sea, an effort that has contributed to the development of several modalities of dialogue on conflicting and overlapping territorial and sovereignty claims in the area.

Last year, ASEAN in China computed the declarations on the conduct of parties on the Sultan Sea, which is an element for confidence building. We are keen participants in the economic integration of East Asia through the ASEAN+3 process -- +3 means China, Japan and South Korea—the proposed China-ASEAN free trade area, which we expect to be completed ten years from now, and the Japan-initiated Closer Economic Partnership.  We fully support the ASEAN Enterprise Initiative of the United States.  We are getting now to talk with India for the submissions of ASEAN-India free trade areas in the near future. 

Through the Asia-Europe Meetings (ASEM) and the ASEAN-EU Dialogue, we are sustaining our cooperation with our European partners.  This year alone Indonesia hosted two ASEAN meetings, meetings of Asia, Europe, with their financial ministers or economic ministers and foreign ministers.  Both were held in Bali in the recent months. 

Recently, Indonesia took the initiative of convening the Southwest Pacific Dialogue, incorporating Indonesia, Australia, New Zealand, Papua New Guinea and the Philippines, which actually form another strong link between Southeast Asia and the South Pacific.  The idea is to develop good habits of dialogue among neighboring countries in the Southwest Pacific.   

In cooperation with South Africa, Indonesia organized, last July, the first Asian-African Subregional Organization Conference (AASROC).  This has launched a process of building a bridge of cooperation across the Indian Ocean between the two continents.  The process will culminate in the holding of an Asian-African Summit in Bandung in April of 2005, in conjunction with the 50^th anniversary of the Asian-African Conference of 1955. 

That Summit will coincide with and celebrate the Golden Jubilee, as I just mentioned, and as you know, the Bandung Conference in 1955 was when the first generation of leaders of the two continents gave voice to their shared aspirations for political and economic independence. 

Early next month on the island of Bali, Indonesia will host an ASEAN Summit, during which we expect to launch a process toward the formation of an ASEAN Security Community.  This will enable us in ASEAN to enhance political and security cooperation and will also complement and bolster our efforts at forming an ASEAN Economic Community by 2020. 

I would like to mention that at the ASEAN summit, not only ten ASEAN leaders will meet but also our +3 partners, leaders of China, Japan and Korea, and our +1 partner, namely the Prime Minister of India, Atal Behai Vajpayee. 

By becoming a security community, ASEAN is not by any means forming a regional military alliance.  We are simply firming up our commitment to establish an ASEAN at peace with itself and at peace with its neighbors.  That entails greater cohesiveness among us, the earnest cultivation of a "we” feeling that will give us the confidence to address all security threats and concerns, including disputes among ourselves. 

That makes it necessary for us to activate the mechanisms for dispute settlements stipulated in the Treaty of Amity and Cooperation (TAC) in Southeast Asia, to which all ASEAN countries are signatories.  In fact, at the Bali meeting we expect China and India to accede to this treaty and we are now persuading Russia to accede by that summit.  The TAC, or the Treaty of Amity and Cooperation, is a rule of good conduct among countries in the region, but also a rule of good conduct between ASEAN countries and our partners.   

At the bilateral level, Indonesia is closely engaged with many other countries, both developing and developed.  The United States is among our most important trading and investment partners and in spite of the fact that military-to-military relations between our countries appear to be restored, we have begun to hold a regular security dialogue with the United States. 

We will continue to take such constructive foreign policy initiatives even while we grapple with a pack of formidable challenges on the home front.  Not the least of these challenges is the need to consolidate our economic recovery after the devastation wreaked upon our economy by the Asian crisis a few years ago.  Fortunately, we are making considerable progress in this regard. 

Our currency, the rupiah, is now so stable that it is regarded as one of the best-performing currencies in Asia today.  Our foreign exchange reserves stand at U.S. $34 billion— enough to meet payments of imports and maturing debts.  We managed to limit our budget deficit to only 1.6 percent of GDP in 2002, lower this year to 1.4 percent, and next year we expect the budget deficit lowered to 1.2 percent.  The inflation rate this year is expected to be a manageable eight percent and we expect this year to lower it to six percent.   

We have decided to close our current arrangements with the International Monetary Fund by the end of the year.  We are confident that we can summon the resilience and the fiscal discipline that this move will require. 

Our GDP growth rate has been hovering at about four percent for the past several years, and we can achieve that again this year.  But we aspire for growth rates that are more like six to seven percent in order to create more jobs for our people.  We must, therefore expand our foreign trade and attract greater flows of foreign direct investment. 

Another challenge confronting us is the threat to our national unity and territorial integrity by separatist groups in the provinces of Aceh and Papua.  We have responded to this threat by engaging the factions involved in sincere dialogue and taking measures to redress grievances and bring about reconciliation.  We have also accorded these provinces special autonomy so that they can set their houses in order, take control of their destiny and nurture their respective cultural heritages.  I would like to mention that this special autonomy regime is accompanied by a very generous revenue sharing.  More than 70 percent of revenues from oil and gas and other mining would go to local governments.   

We took political risks by engaging the separatists Free Aceh Movement in negotiation toward a political settlement with the full understanding that the starting point of negotiations was the law providing for special autonomy to Aceh within the fold of the Republic of Indonesia. 

After long and tedious negotiations of some three and one-half years, we managed to conclude a Cessation of Hostilities Agreement in December 2002.  It turned out that the separatists had negotiated in bad faith; soon enough, they reneged on their commitments and continue to insist on independence of Aceh.  Since last May, therefore, the government has been carrying out in Aceh an integrated cooperation; operations aimed at bringing in humanitarian aid to the province ensuring the normal functioning of our local governments, maintaining peace and order and defending the territorial integrity and sovereignty of the republic.  We hope that the situation in the province will be back to normal within a few months.   

The separatist movement in Papua is not as great as some problems, but we address it with the same diligence and patience that we are applying to Aceh: through dialogue, redress of legitimate grievances and implementation of special autonomy. 

Unfortunately, sporadic violence still takes place in the province.  In this regard, the killing of two American citizens and an Indonesian in the town of Timika in Papua in August of last year strikes me as a particularly senseless act of murder.  We know how important this issue is to the United States government.  Our police authorities are working closely with the FBI on this case and we will not rest until we bring the perpetrators to justice. 

Like the rest of Southeast Asia and the rest of the world, Indonesia faces the challenge of terrorism.  Much of the terrorism taking place in Indonesia today is the handiwork of separatist and extremist elements.  They have no popular support.  Thus, we have taken the brunt of a series of attacks that started with the bombing of two night clubs in Bali, killing 202 individuals, mostly tourists, and for several months laying low the tourist industry in Southeast Asia.  Recently, another bombing attack killed 12 persons, mostly Indonesians, and wounded scores of others at the J. W. Marriott Hotel in Jakarta. 

But we will not surrender an inch of ground to terrorists.  We will destroy their network and cells and bring them all to justice.  Already, two of the perpetrators of the Bali bombings have been sentenced to death.  With regard to the J. W. Marriott Hotel bombings, our police arrested 18 within a week after the bombing and when I left Jakarta the national police had also made public that they arrested some 15 others in connection with terrorist activities in Indonesia.  So this has been quite successful on the part of our police. 

On the other hand, we will not yield to the clamor for vengeance and abandon due process of law and the essential guarantees of democracy.  Accused persons will be meted the penalty of the law—but no more and no less than warranted by the evidence.  In the long run, however, the only way to defeat terrorism is to remove the social grievances on which it feeds.  The most pervasive occasion of social grievance, of course, is poverty.  Our answer to that problem is social and economic development.  The more we are able to overcome the problem of poverty and its attendant maladies, like hunger, ignorance, superstition and despair, the less likely that terrorism can find hospitable ground in our country. 

But there are other occasions of grievance: the people's perception of social inequities, a common sense of injustice, and a sense of being excluded from the decision-making process of the nation  These breed grievances that militate against social order and provide fertile ground for terrorism. 

Our answer to such grievances is reform.  Hence, we are consolidating and carrying forward the reforms that were launched at the height of the Asian crisis.  That was when the Indonesian people chose to repudiate authoritarian rule and take the path of democracy.  

Our efforts to reform the economy have resulted in a gradual recovery from the effects of the Asian crisis. 

The reform of the bureaucracy and the judicial system is being sustained with the active involvement of civil society.  Laws that are no longer relevant, that carry vestiges of the past repressions, are being repealed or amended. 

The reform of the military, which began with the affirmation of civilian supremacy over the military, continues at a steady pace.  The 38 appointive seats reserved for the military and the police in Parliament have been abolished by law, effective after the elections next year.  The exit of the military from politics will allow it to develop fully as a professional organization with the sole mission of defending the country. 

The people's desire to participate more directly in national decision-making will find fulfillment in the completion of our transition to a more fully democratic system.  Next year, and it should be a big feat for Indonesia, we will hold two important elections.  In April, the election of members of Parliament at the national level, and the provincial at district levels, and by July we will have direct popular elections of Indonesia's president and vice president.  This will be our first such experience in the 58 years of the existence of Indonesia. 

Whoever will be elected President of Indonesia will then be directly accountable to the people and not to Parliament or any political party.  The president will thus have a stronger mandate to carry forward the reform process.  By direct popular elections we hope this will also improve the check and balance between the executive and legislative branches, because as of now, despite the fact that constitutionally the nation of Indonesia adopts the presidential system, in practice, because of the powerful parliament; our parliament is behaving and acting like any parliament in the parliamentary system.  So there is somewhat of a constitutional confusion and we hope that through these elections next year we will be able to correct it. 

The general elections and presidential elections of 2004 will test the political maturity of the Indonesian electorate.  I have no doubt that we will pass the test, whatever may be the obstacles and difficulties that will arise.   

We thus seek to welcome the support and cooperation of friends all over the world, including the United States.  We are grateful for the consistent support of the United States for the territorial integrity and sovereignty of the Republic of Indonesia in the face of separatist movements. 

The United States, as represented by American businessmen and entrepreneurs, has an important role in the restoration of Indonesia's economic dynamism. 

In the fight against terrorism our most natural ally in the world is the United States.  We have an ongoing cooperation on terror that should be intensified and expanded.  Our police operatives have the sleuthing skills, but need more technology and equipment to bring into this fight. 

We believe that official advisories discouraging travel to Indonesia are counterproductive.  They deal a severe blow to tourism, not only in Indonesia, but also in the rest of Southeast Asia, which is precisely what the terrorists want to happen. 

A full restoration of military-to-military relations between our two countries would also greatly help us in our efforts to reform our military establishment.  The Indonesian military is in the midst of a process of reform and is a key protagonist in our fight against terrorism.  For the United States to ignore the Indonesian military today is to be oblivious of a committed ally and a friend who is sincerely mending his ways. 

Two years ago, President Megawati Soekarnoputri became the first world leader to visit the White House in the wake of the terrorist attack of September 11.  While smoke was still rising amid the rubble of the World Trade Center, she encouraged President Bush in his intention to build a broad coalition across religious lines, civilizations and cultures to deal with new and deadly threats.  She also emphasized the importance of taking into account the view of the Muslim world. 

Let me reiterate that encouragement.  The United States can show its true greatness by embracing multilateralism as embodied in the United Nations. 

As two of the world's largest democracies, the United States and Indonesia can do much together. 

A United States that is sensitive and responsive to the views of others, including those of the world's largest Muslim population, should find it easier to earn the trust of the Islamic world and, for that matter, the rest of the world. 

An Indonesia that has reformed and conquered the basic problems of poverty through democratic means will send a strong message to the rest of the world.  And the message is that Islam and democracy are compatible and their splendid combination can redeem many nations from the morass of poverty and social injustice. 

If we play our respective roles correctly, we can together make a world of difference. 

Thank you.