The Long Run of Living Dangerously

Suharto–and the West–have left Indonesia’s politics as impoverished as its economy.

The last two weeks in Indonesia, culminating in the resignation of its longtime autocrat, President Suharto, have been exhilarating, especially for the thousands of activists who succeeded in pushing him out. Unfortunately, it is not yet time to celebrate a triumph for democracy. The “smart money” in the international community is betting on another round of military-dominated rule, even though the popular opposition wants a much more representative government, partly to protect itself against the international community’s neoliberal economic agenda. The resulting conflict between economic liberalization and political liberalization is likely to be a prolonged one.

To understand this next phase of the struggle, start with the positions taken by Indonesia’s most influential trading partners during the crisis. From August 1997, when that crisis first broke, until this May, when Suharto finally implemented the sharp price increases and subsidy cuts demanded by the International Monetary Fund, these partners were primarily concerned with economic reform–budget cuts, currency boards, bank regulation, and other technical policy questions. Only at the last minute, as Suharto’s base eroded and the mass movement threatened to seize power, did they rediscover the need for political reform. It was not until the day before Suharto resigned that President Clinton advised him to “enter a dialogue with the rest of society.”

This focus on economic performance has been consistent. One recalls Clinton, dressed in his bright new batik shirt, greeting Suharto warmly at the 1994 Asia-Pacific Economic Cooperation summit in Bogor, Indonesia, and praising him for economic leadership. The United States also helped Suharto to seize power back in 1965-66, sanctioned his occupation of East Timor in 1975, and basically looked the other way at three decades of one-man rule and serious human rights violations. After 1995, the United States tried to hedge its bets, providing $26 million of United States Agency for International Development money to Indonesian nongovernmental organizations involved in grass-roots organizing. But until this March, the United States spent more than that each year on training for Suharto’s army.

All Suharto’s other key First World trading powers–Japan, Australia, Great Britain–did much the same. They had few complaints about his anti-democratic methods as long as Indonesia’s growth rates remained high; investors got access to its ample minerals, oil, cheap labor, and market for foreign capital; and foreign debts were serviced. No one in official circles questioned the way the fruits of growth were distributed or the extreme corruption and environmental devastation that it generated. No one criticized the fact that Suharto had somehow made the Forbes list of billionaires, with a personal net worth of $14 billion, or that his friends and family always seemed to be selected as local partners by such leading investors as GE, AT&T, Merrill Lynch, Freeport McMoRan, Hyatt, and Marubeni. Everyone ignored the deep-seated ethnic resentments sowed by this system–ultimately grounded in the fact that Indonesia’s top 50 families, a majority of whom happen to be ethnic Chinese–control more than 60 percent of the wealth. (The other 99.99 percent of the population includes millions of working-class Chinese.)

I n short, for three decades the international community never bothered to question whether Suharto’s system was capable of sustaining social and political development in the long run. His global supporters turned against him only when his unpopular administration had become a threat to the region’s stability and just plain bad for business.

So now comes the long run. With Suharto off the stage, Indonesia’s foreign partners and creditors are eager to turn Indonesia’s focus back to economic policy, especially the matter of rescheduling its $137 billion foreign debt and restarting its stalled IMF program. This agenda’s main political imperative is a strong government that can implement the program quickly. A genuine national election that gave the opposition time to organize and prepare an alternative agenda might mean yet another change of government and costly delays, especially if an IMF program actually had to be debated by a popular assembly. Far better to have it implemented unilaterally. The basic creditor country preference is for a kind of Turkish solution, a secular state with a civilian face, support for free-market policies, and a pro-Western, if unaccountable, military.

One basic requirement of this agenda is an alliance with Indonesia’s military. This will be essential to implement the tough medicine likely to be included in a new IMF program–higher interest rates, more spending cuts, increased prices, more unemployment, and renewed debt service, all at once. In recent years the United States and Australia took great pains to cultivate closer relationships with Indonesia’s military elite, notably Lt. Gen. Prabowo, Suharto’s son-in-law and the head of the feared Kopassus special forces; and Gen. Wiranto, the commander in chief; as well as many younger officers. On his visit to Indonesia last January, U.S. Defense Secretary William Cohen spent half a day with Prabowo at Kopassus’ headquarters in Jakarta. The unit has been a leading beneficiary of U.S. training, when it is not busy repressing peasants in East Timor.

Indonesia watchers at the IMF believe that this “civilian face/military fist” strategy can succeed in Indonesia so long as the military remains united. Similar efforts have worked before in Brazil (1964-69), Chile (1973-1985), and Peru (1991-now). Of course, there have also been some remarkable failures–the Shah’s Iran, for example. But Indonesia’s situation is rather different from Iran in the late 1970s:

Indonesia’s entire economy is now on life support, and the West controls the breathing apparatus. Last month’s riots destroyed the country’s food distribution system–there are acute shortages of food and raw materials. Ninety percent of Indonesia’s own corporations are technically bankrupt, and most of the money they owe is to foreign banks. The country has been very dependent for management skills on foreigners and the Chinese minority, most of whom have now fled. Trade and investment have shrunk to zero, capital flight reached more than $20 billion in the last three months, and the country’s foreign reserves could be completely exhausted by the end of June.

Indonesia’s military appears to be united, in charge, and armed for bear. Just this week it succeeded in intimidating the opposition with a massive show of force in Jakarta. No “left-wing colonels” have yet appeared to help the opposition, at least not in public.

Most important, Indonesia’s popular movement is not nearly as well-organized and united as the opposition movements of Iran or even the Philippines. In general, Suharto did a supremely effective job of dividing, co-opting, and simply eliminating his opponents. The Indonesian movement was a rather spontaneous resistance led by ordinary students, workers, the unemployed, and the lower-middle classes. Its only weapon was its now demonstrated capacity to mobilize mass protests and shock the world with violence. Many had hoped that the daughter of former President Sukarno, Megawati Sukarnoputri, would play the central role that Corazón Aquino did, but that has not happened. Fortunately, perhaps, for those who favor tolerance and democracy, there is also no Khomeini–the leading Muslim organizations are deeply divided.

To the extent that the popular movement has an agenda, it is precisely the inverse of the international community’s. It seeks genuine direct elections after a period that is sufficient to organize alternative parties and prepare a campaign based on freedom of speech and other civil rights, the right to have free trade unions, the release of more than 200 political prisoners, debt relief, stronger penalties for corruption and pollution, no amnesty for Suharto and his fellow thieves, and a respite for the poor from the hardest edges of “economic reform.” But aside from primitive prescriptions such as “cut prices” and “nationalize the banks,” the opposition has no coherent economic program.

This is not to minimize last week’s extraordinary accomplishment. But even though Suharto has been defeated, the real battle lines between economic and political liberalization are just now being drawn. As one commentator observed in Manila right after Marcos fell, “Ali Baba is gone, but the 40 thieves still remain.” At the very least it is by no means clear that Indonesia will soon be able to rid itself of its unaccountable generals, rapacious investors, massive foreign debts, or the political impoverishment that could well be Suharto’s most lasting legacy.