APSN Banner

Balancing act

Asiaweek - August 10, 2001

Warren Caragata, Jakarta – On a day when most business executives in Jakarta were chasing rumors about the possible shape of President Megawati Sukarnoputri's cabinet, investment banker Tim Gray was past caring. Let others worry whether her government will prove any more stable than that of her impeached predecessor, Abdurrahman Wahid. Gray is leaving town. "The type of deals I do, the movement of capital into this market, those sources of capital have dried up," he says. After more than 10 years in Jakarta, he left his job as president of Development Capital, a privately held investment bank, and headed to Dubai. It's a departure with regrets, says the American-born banker. But even with Megawati as president, there's no sense staying.

"They've dug themselves a deep hole. To dig themselves out is going to take years." Megawati, eldest daughter of Indonesia's founding president Sukarno, will soon return to the palace where she grew up a lively little girl. It's been more than 35 years since a Sukarno has lived in the stately mansion, but Megawati will not be reliving any memories of cosseted palace life. Instead of play, there will only be duty, and the burden of implacable problems ranging from separatism to economic malaise. Many are left over from the fall of the Suharto dictatorship three years ago, many are new ones created or worsened by the erratic 21-month rule of her predecessor.

Wahid's sacking by restive legislators and the blatant military support for his ouster have added new challenges. No wonder Amien Rais, chairman of the People's Consultative Assembly that impeached Wahid two weeks ago, says a meeting this week with the country's third president in as many years found Megawati in a serious mood. "She understands that her work is almost beyond anyone's capacities," Rais told Asiaweek.

Rais himself may be one of Megawati's main challenges. He, as chairman of the assembly, and Akbar Tanjung, as speaker of parliament, took what used to be rubber stamps under Suharto and turned them into power centers that first stymied and then brought down a president. (Parliament is the day-to-day legislature. The assembly, which includes all members of parliament plus other society and military representatives, elects the president.) One reason Megawati refrained for so long from publicly supporting Wahid's ouster was the fear that Rais and Tanjung could take her down in her turn. "They won't stop," a senior member of her Democratic Party of Struggle (PDI-P by its Indonesian initials) said a few weeks ago.

No one is talking that way now amid talks to set up the new government, but Indonesia could face renewed instability once Megawati's honeymoon ends.

The omens so far are mixed, threatening not so much opposition to Megawati but more squabbling. While the assembly voted unanimously to oust Wahid and elect Megawati, it quarreled for two days over who should be the new vice president. It finally chose Hamzah Haz, who represents a coalition of Islamic parties. Ironically, he was one of the leaders of the successful effort in 1999 to deny Megawati the presidency and hand it to Wahid – an effort masterminded by Rais. Running against Haz was Tanjung as leader of the Golkar party. Megawati instructed her caucus to support Haz because she feared the optics of an alliance with Golkar, which used to be Suharto's main political support group and is still distrusted by many Indonesians.

Tanjung took his defeat gracefully. The next step is to choose the cabinet. The outcome of that could turn squabbling into serious opposition.

But Megawati may enjoy a longer than expected honeymoon. That's because after six months of political infighting over Wahid's fate, the country simply will not accept any more shenanigans. "Everyone is fed up," says Jusuf Wanandi, senior fellow at Jakarta's Center for Strategic and International Studies. "Even Rais and Tanjung have to recognize this is the last chance." Wanandi says it's the last gasp because, without stability, the economy will simply collapse on itself.

Analyst Umar Juoro says the real danger is that the army might lose patience if there's more political bloodletting. "If she doesn't survive, it will encourage the military to move in," he warns. Lt.-Gen. Agus Widjoyo, the head of the military's territorial bureau – in effect its political department – says simply: "There should be a national commitment to realize that the remaining three years until the next election should be used to help bring the country out of its crisis."

Ultimately, Megawati's biggest advantage may be that she is more careful in her handling of potential allies than Wahid, who came to power as head of a minority partner in a coalition and started governing as if he had a majority. Coalition partners were tossed from cabinet: Haz within a few months, Laksamana Sukardi, one of Megawati's top advisers, soon after that.

Of course no one is going to give Megawati a free ride. But in addition to cabinet seats, what the parties want from her is what everyone else does: a government that works. Success, and the support that goes with it, is in her hands, says Fuad Bawazier, financial Eminence grise of Rais' Central Axis coalition of Islamic parties. "Megawati is driving the bus and I am only a passenger. Why ask me for a guarantee?"

That's a view shared by Sukardi, Megawati's economics guru. "There won't be any support that is perpetual," he said. "It depends on our performance." So far, Megawati has had some beginner's luck. The transition from Wahid was peaceful. The rupiah has bounced. Bond rating agency Standard & Poor's raised its outlook for Indonesia to stable from negative. And, for the time being, everybody is saying, at least in public, that they want Megawati to succeed. Rais, famously ambitious for the presidency, says he wouldn't mind if Megawati did so well that she became a sure thing in the next election in 2004. "I am a realistic politician. I would voluntarily go back to Yogyakarta [where he was a university professor]."

To send Rais back to Yogya, Megawati will first have to come to terms with the economic mess that prompted Tim Gray to pack his bags. The last few months were a disaster. "There was just uncertainty – who was at the helm?" says industrialist Aburizal Bakrie, head of the Indonesian chamber of commerce. "How can we live with that situation?" The first priority, Bakrie says, is to bring investors back, and that means rebuilding confidence. An early bellwether will be whether there's a quick agreement with the International Monetary Fund, which has delayed a $400-million aid payment due last year because of Wahid's failure to move ahead with promised economic reforms.

How reformist is Megawati?

Critics say she is too close to the military, that Wahid was the best hope of fighting corruption and keeping the generals at bay. As one Wahid minister puts it: "It's the return of the tanks." The night before the impeachment vote, the army sent tanks to the presidential precinct – with guns pointed at the palace. Officers then refused to implement Wahid's decree to dissolve parliament.

Standing with parliament may have won the soldiers some friends, but Megawati's enemies will remember the tanks. The military may also try to exact a price for its support, which could include demands for fewer restraints in the fight against separatism and protection from prosecution for human rights abuses. But, says former defense minister Juwono Sudarsono: "She will have to be careful about reinforcing this image of being over-reliant on the military." If Megawati gives the soldiers a free hand in Aceh, says Wanandi, "her credibility is finished." Megawati got a taste for what lies ahead in her first few days on the job.

The judge who convicted Suharto's son Tommy of graft and was preparing to try generals accused of human rights abuses in East Timor was assassinated on a Jakarta street. A bomb blasted a police headquarters in Sulawesi, where communal violence simmers. Seven alleged guerrillas were killed by security forces in Aceh. As she moves into the palace where she once played childhood games, Megawati may be wondering what she's got herself into.

[With additional reporting by Amy Chew and Simon Montlake/Jakarta.]