April 13, 2009 / 6:37 AM / 10 years ago

Indonesia president's party eyes Golkar, Islamist pact

JAKARTA (Reuters) - The Indonesian president’s party is in talks with its existing partner, Golkar, and with Islamist parties to form a coalition controlling more than half the seats in parliament ahead of a presidential election.

Such a coalition could make it harder for President Susilo Bambang Yudhoyono’s main rival, former President Megawati Sukarnoputri of the opposition party PDI-P, to muster enough support to mount a serious challenge in the presidential election on July 8.

President Yudhoyono’s Democrat Party won a fifth of the votes in last week’s parliamentary elections, ahead of Golkar and PDI-P which both performed poorly, with their support falling to just 14-15 percent of the votes each.

Yudhoyono is widely tipped to win re-election given his personal approval ratings of 45-50 percent, putting him well ahead of potential rivals including Megawati and Jusuf Kalla, the chair of Golkar who is currently Yudhoyono’s vice president.

Kalla and Megawati had discussed forming an alliance to challenge Yudhoyono amid talk that the president and vice president had fallen out, but since the initial results emerged last Thursday Kalla has indicated he wants the alliance between the Democrat Party and Golkar to continue.

“What is clear is that until now we have and are in a coalition with Golkar,” Andi Mallarangeng, who is one of the heads of the Democrat Party, told Reuters on Monday. “Therefore of course it is natural if we continue the co-operation again.”

Indonesian stocks and the rupiah jumped on Monday, as analysts saw the election result as setting the stage for continued stability in Southeast Asia’s biggest economy.

Mallarangeng said that Yudhoyono and Kalla had already held discussions.

“There will be meetings, which are more intensive, between the two parties to discuss details,” added Mallarangeng, who is also a presidential spokesman.

Yudhoyono, a reform-minded former general, has said he would welcome all parties but stressed the need for a formal coalition where members were committed to the same platform.

The president’s reform efforts were partly thwarted by his less reform-minded ministers from other political parties during his first term in office.

Under former President Suharto, Indonesia’s late autocratic ruler, the Golkar Party dominated politics for decades as opposition parties faced tight restrictions.

With Suharto’s resignation in 1998, Indonesia embraced democratic reforms and allowed more political parties to participate in free elections. Golkar’s popularity plummeted and while it is currently the biggest party in parliament, it support has now dropped from more than 20 percent to around 14 percent.

The Democrats almost tripled their vote from 7.5 percent in 2004, as Yudhoyono has delivered strong economic growth and brought relative peace and stability to the world’s most populous Muslim nation, which also has sizeable religious minorities.

If Yudhoyono sticks with his current alliance with Golkar and Islamist parties, analysts said this would likely mean a relatively slow pace of reform.

But they still expect market-friendly policies, particularly if Yudhoyono keeps his respected finance minister, Sri Mulyani Indrawati, and other technocrats in the cabinet.

Additional reporting by Olivia Rondonuwu; Writing by Ed Davies; Editing by Alex Richardson

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