The Long Run of Living Dangerously
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.)
In 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.
