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Why Indonesia sees double on the IMF

DIGEST No. 47 - December 9, 1997

'I think the speculators and the money mafia are a plot by American spies', says psychic Ki Gendeng Pamungkas. 'They want to undermine the government. I don't think the IMF can do much good – they will be met with lots of demonstrations'.

Gendeng Pamungkas represents a strong tradition in Indonesian political thought. Sukarno was a great exponent of it, in rhetoric at least - and there has certainly been more rhetoric than action along these lines. Megawati appears to think like her father in this regard. Protectionist, nationalist, anti-capitalist, anti-American, often anti-Chinese - in a word, populist - these are the adjectives that come to mind.

The nationalist tradition has many more credible adherents than Gendeng Pamungkas. Professor Mubyarto from Yogyakarta has persuaded the government to adopt socially responsible 'Pancasila economics', including the IDT welfare scheme for poor villagers. He deplores 'amoral' Western economics. Noer Fauzi heads the Consortium for Agrarian Renewal (KPA), which tracks land conflicts around the country. He says globalisation, of which the IMF package is today the most visible symbol, is just another word for unrestrained capitalism. The 'structural adjustment' the IMF always demands will, he says, impact badly on the poor. The environmental consortium Walhi has also warned that IMF austerity measures will hit the poor hardest and produce unrest. The banned leftist party PRD speaks of IMF 'imperialism' in its Internet dispatches.

Other economists and even businessmen have also warned against the socially destructive effects of an IMF austerity program. Rizal Ramli of the economic think tank Econit says 'the IMF is not a saving God but an amputating God... It will perform an amputation in the emergency room and then force the patient to go on a strict diet even if he did not need an amputation'.

Sofyan Wanandi, spokesperson for the Jimbaran group of businessmen that have responded to a call by Suharto to help the poor, has expressed similar misgivings, as has Sri-Edi Swasono of the cooperative movement. Islamic think tank Cides intellectual Umar Juoro argues that the IMF is acting out of interests of its own, and its help is there mainly for the well-connected.

Most outspoken among the nationalists is Islamic leader Amien Rais, popularly but unrealistically regarded as a presidential candidate by students and young people. The IMF, he says, continues an old imperialist tradition, and Indonesia should do as the Philippines has done and withdraw its head from the noose. The trouble with this school of socially responsible thought is that it also includes the crony capitalists who have given it a bad name in many other quarters. Suharto's half-brother Probosutedjo speaks the language well. He said the closure of his bank under IMF instructions was 'a violation of human rights'. Tommy Suharto, whose 'national car' is a symbol of what's wrong with Indonesia's pre-IMF economy, reportedly called the top official Suharto appointed to negotiate with the IMF 'a collaborator with the West'.

Suharto's cousin Sudwikatmono, another Jimbaran member, who controls Indocement, said not all monopolies were bad. Bulog, under attack by the IMF for its monopoly on food grains, helped protect the common people from the vagaries of the market, he said. Suharto himself has hardly entered the IMF embrace with enthusiasm. He has kept his Coordinating Finance and Economics Minister Saleh Afiff out of the negotiations, some say because Afiff was too keen on the IMF proposals.

Opposed to the nationalists is a newer pole of opinion. It is rapidly eclipsing the worthy if tainted and now increasingly unfashionable nationalist school. The main themes of many respected economists are opposition to bureaucratic corruption and to ideological control. Kwik Kian Gie, Christianto Wibisono, Didiek Rachbini, Fortuna Anwar, Laksamana Sukardi, Sjahrir, Faisal Basri and Anwar Nasution are globalists. They most often appear in print praising IMF practice and urging deregulation, debureaucratisation and privatisation. They realise IMF austerity measures might cause social unrest, but believe the absence of IMF action will ultimately cause even greater disquiet.

The globalist agenda is rational and middle class. It certainly parallels the nationalist agenda at some points. Both tend to be opposed to the Suharto family, the one because he is capitalist and the other because he is corrupt. But the two clash in other, more fundamental ways. The nationalists exalt solidarity; the globalists think it smacks of authoritarianism. The first favour re-regulation, the second deregulation because it will give others the chance to become tycoons too.

Nationalists reject globalisation for fear it will disempower the national state that can protect the poor against predatory foreign capital; globalists embrace globalisation precisely because it weakens a state that is too corrupt and invasive to deserve much autonomy. Nationalists consider capital as the enemy and the state as an (imperfect) ally; globalists on the contrary consider capital to be essentially benign, with the state in need of down-sizing. These generalisations are crude, but they perhaps have heuristic value.

As public discourse in Indonesia becomes more middle class, the nationalist agenda slips further behind. Anyone reading the Indonesian newspaper today would think the IMF really was a 'saving God'. This is a contrast with the press in Thailand and the Philippines for example.

Nationalist ideas are not easy to defend in today's post-socialist climate. But the consequence of abandoning them - or at least of abandoning the element of social solidarity that lies behind them - could be that, deprived of middle class support, the poor will resort to violent direct action along ethnic or religious lines. These will be Ki Gendeng's demonstrations.

[Gerry van Klinken, editor, Inside Indonesia magazine]