Foreign Policy for Sale?

It may be difficult to avoid the appearance of influence peddling. But have large contributions from wealthy Asians to the Democratic Party altered U.S. foreign policy to their country’s benefit, as the GOP is charging? Not really. Instead, it’s influence peddling on the margins of the U.S.-Indonesia relationship.

You don’t have to accept Republicans’ feigned shock! shock!, or Democrats’ protestations that more than $475,000 in campaign contributions from officials and relatives of an Indonesian banking conglomerate are legal, innocent political philanthropy, to sense that something is awry. Legal or not, few would argue with campaign-finance reformers, Democrat and Republican alike, that loopholes in campaign-funding laws have allowed immigrants holding green cards but who cannot vote, and U.S. subsidiaries of foreign companies, to funnel millions of dollars into both parties’ war chests--and that they need to be closed.

That said, what does the flap over Bill Clinton’s Indonesian connection amount to, and exactly which policies did it possibly influence? The Nobel Peace Prize recently awarded to activists from East Timor, which is claimed and occupied by Indonesia, has put Jakarta’s human-rights practices--and the U.S. response to them--in the spotlight. And what about trade privileges?

The Indonesia connection evolved from an odd chain of events that began in 1977, when James Riady, son of the head of the Lippo Group, a $6-billion Indonesian conglomerate with ties to the Suharto government, worked for a Little Rock investment bank and later ran the Arkansas-based Worthen bank, which was partly owned by his family.

What developed was a complex, logrolling, old-boy network reaching to then-Gov. Clinton’s circle. At the center of the network was John Huang, a Democratic Party fund-raiser who was a top executive of the Lippo Group in the United States before serving in the Department of Commerce. One concrete result of all this networking was a $1-billion joint venture between a Lippo Hong Kong affiliate and Entergy, a New Orleans company, to build a power plant in China, a deal signed during a trade mission led by former Commerce Secretary Ronald H. Brown. And was it mere coincidence that former Clinton aide Webster Hubbell was offered a job by Lippo after resigning from the Justice Department?

In terms of how the connection influenced U.S foreign policy, however, the evidence is, at best, mixed. U.S. policy toward Indonesia, the world’s fourth-largest nation and largest Islamic state, has long been a difficult balancing act. Jakarta is a friendly, though authoritarian regime, and an important U.S. economic partner. Competing pressures generated by economic and defense interests, on the one hand, and human-rights concerns, on the other, have dogged many an administration.

Clinton has been no less sensitive to human rights in Indonesia than his predecessors and, in some respects, more so. In March 1993, for example, the United States, for the first time, backed a U.N. resolution critical of Indonesia for human-rights abuses in East Timor. To this day, White House officials say, the president has not shied away from raising human-rights concerns in the presence of Suharto. In July, the administration put off the planned sale of F-16 fighters to the Indonesian military after rioting and repression broke out.

Nonetheless, it is difficult to believe that the Lippo connection did not succeed in putting Indonesian concerns on Clinton’s political radar screen. One episode in question concerns a request by Suharto, in spring 1993, to participate in a Group of Seven summit. At the time, Jakarta was the head of the nonaligned nations’ group, and Suharto saw his participation as a way to symbolize a North-South dialogue. James Riady came to Washington with a senior Suharto advisor to persuade Clinton to agree to the proposal. Clinton only acceded to a one-on-one meeting with Suharto, not the larger stage that the Indonesian president sought. Then last year, when Suharto was in Washington on a private visit, he was treated to a meeting in the Cabinet Room with the vice president and several Cabinet officials.

Perhaps the most controversial policy-related issue was a trade decision to allow Indonesia to retain special low tariffs, under the Generalized System of Preferences, granted to many developing countries. In 1992, a policy review of the program began. The law requires that countries receiving preferences adhere to minimal labor standards. Although Mickey Kantor, then U.S. trade representative, ended the review in June 1993, he kept the Indonesia case open because of that country’s animosity toward unions and its use of the military to resolve labor disputes.

Subsequently, Kantor decided not to take away Indonesia’s duty-free benefits on $640 million of exports. He did so, according to White House documents released last week, after Suharto pledged to allow independent unions and not use his military as a labor basher.

Did the Indonesian political donations make a policy difference? It is hard to argue that the decision to continue trade preferences for Indonesia, which was backed by major U.S. corporations fearful that contracts might otherwise go to European or Japanese competitors, as well as by some government agencies, would have been any different if no Indonesian contributions had been made. Nor is there persuasive evidence that administration policy on East Timor, or on any other major outstanding dispute involving Washington and Jakarta, would have been otherwise without the Indonesian connection. Easier access and a leg up on a power-plant deal are, so far, the only demonstrable results of the connection. As for James Riady, even such limited success is probably enough to have boosted his stature in Indonesia as a “friend of Bill” who can open doors in the United States.