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An aging Suharto is both Indonesia's lock and key

Source
Wall Street Journal - February 3, 1998

Raphael Pura, Jakarta – Asia's crumbling financial markets have plunged Indonesia into deep trouble. But domestic politics could keep it there.

Southeast Asian nations are suffering from many of the same economic ills, but Indonesia stands alone in one critical way: More than any other major Asian nation, it is effectively run by one man.

That man is 76-year-old President Suharto, assisted by a beholden cadre of bureaucrats and military officers. And despite a mounting clamor for change, he appears determined to stay in power – and has groomed no heir-apparent. As a result, the world's fourth-largest country must cope with its nastiest economic crisis in 32 years, and growing popular discontent, led by an aging, autocratic leader at the controls of an unresponsive political system.

"There's no obvious successor, and if Suharto were to go, what makes you think any successor would be any better?" sighs historian Harold Crouch, an Indonesia specialist at Australian National University, noting the shallow talent pool left by Mr. Suharto's long monopoly on power. "The more I look at it, it's almost insoluble."

To gauge the extent of the political obstacles to Indonesia's rebound, consider: In both South Korea and Thailand, the International Monetary Fund's bailout plans coincided with clean-cut changes in political leadership. In both cases, elections opened the door to broad acceptance of radical economic overhauls.

In Indonesia, however, Mr. Suharto decided last month to seek a seventh five-year term, to begin in March. This means Indonesia must pursue IMF-imposed reforms while being led by the man who for years has resisted the very measures the IMF is mandating – the elimination of monopolies, projects and other privileges that have benefited the president's family and business cronies. Yet the fear that there won't be an orderly succession – and the lack even of strong potential successors – leaves observers equally nervous about a post-Suharto era.

Mr. Suharto, who fashioned himself as the country's "Father of Development," has watched millions of Indonesians slip rapidly back toward poverty. The economy has stalled: credit-starved factories and businesses are idling or closing, mistrust of the currency and banking system is widespread, and hopes that a $33 billion International Monetary Fund rescue program will save the day are fragile.

That fragility is partly due to the murky political outlook. Many Indonesians – as well as some foreign investors and creditors – fear that Mr. Suharto, insulated in the paternalistic political structure that he created, and irritated by foreign pressure on his government, may not act forcefully and urgently enough in carrying out the plan.

Indonesia's political stalemate stems from the concentration of authority in Mr. Suharto's hands over three decades. Since his accession to power in 1966, all other national institutions – from parliament and political parties to the bureaucracy and the armed forces – have been subordinated to his desires and decisions. That, say critics, has stunted the modernization of state institutions, which have struggled to cope with pressures produced by rapid social and economic change.

That didn't used to matter as much, at least to foreign companies eager to do business in Indonesia. Mr. Suharto's tolerance of costly state monopolies, endemic corruption, cronyism and nepotism in government and business didn't seem to impede expansion or deter international investors and bankers from flinging money into the country; the economy averaged 7% annual growth over the last decade.

But these days some foreign investors – and many Indonesians – increasingly see Mr. Suharto, and the system of government he has fostered, as the problem. "It's hard to see any major systemic change taking place," says Bruce Gale, Singapore-based general manager of Political and Economic Risk Consultancy Ltd. "What's happened, especially in the last five years or so, has been the ossification of the public process. And you don't have a national opposition waiting to take over."

Indeed, some believe the president's biggest miscue has been his failure to recognize his own mortality. "The old man is convinced he's the only one who can save the nation," says economist and former cabinet minister Mohammad Sadli. "The only alternative is to try to get rid of him and face a period of instability. ... That's our dilemma."

That has kept confidence in the IMF bailout plan and other home-grown reform proposals low. "The market is worried that with the same president in charge, there will be no follow-through on reforms," says Dewi Fortuna Anwar, a political scientist at the Indonesian Institute of Sciences. "But the market would also be worried if some unknown came in, who may not have the power or experience to make reforms stick. Even when the coffers are full, it's still a major challenge to try to balance all the groups in Indonesian society."

That view leads some analysts to contend that Mr. Suharto, thanks to his dominance of the armed forces and bureaucracy, may be the only figure able to enforce the tough measures needed to right the economy and maintain order. It is "important to have a very strong center as part of the overall reform policy," maintains Juwono Sudarsono, vice-governor of National Defense Institute, who sees Mr. Suharto staying on for at least two years. "He won't step down in times of adversity, he'll only step down when a recovery is on. The critical part is persuading him without seeming to push him."

The succession issue has taken on urgency because Mr. Suharto must choose his next vice president by early March, when the People's Consultative Assembly sits to re-elect him. Mr. Suharto's advanced age and his bouts of ill health in recent years have made the vice presidency – long a figurehead post – far more important. If the president dies or steps down during his term, the vice president automatically succeeds him.

More than a half-dozen Indonesians – including military officers, cabinet ministers and Mr. Suharto's eldest daughter – are considered potential candidates. Mr. Suharto has customarily refrained from indicating his choice until the last moment. Last month, however, he created a stir by hinting that he might select Research and Technology Minister B.J. Habibie as his deputy.

Mr. Habibie, a close confidant of Mr. Suharto for more than 20 years, has support among some Muslim army officers and Islamic intellectuals, who advocate a brand of economic nationalism that worries Indonesia's ethnic-Chinese business community. Mr. Habibie's love of state-backed high-technology projects, and his lack of political experience, dismay financial markets and some Indonesians, who question his credentials to take command of the country.

Whoever he selects, however, Mr. Suharto himself will have to bear the burden of facing the immediate economic onslaught. And he will do so with diminished popular support from an abruptly impoverished and resentful population, which is largely powerless to influence government policy.

Mr. Suharto's mandate to rule – like that of other authoritarian Asian leaders – was based largely on a tacit pact with his people: He would deliver steady improvements in living standards, while the people accepted a late 20th century version of monarchical rule.

That mandate is evaporating. Indonesians have seen buying power accumulated over three decades wiped out within weeks by an 80% depreciation of the rupiah against the U.S. dollar since July. Two to three million workers have lost jobs or are expected to lose them by the end of this year.

Ordinary Indonesians' woes stand in stark contrast with the wealth amassed by Mr. Suharto's family and business cronies. Long tolerated by Indonesians, their excesses increasingly elicit anger at the perceived greed and hypocrisy of the privileged class. Goenawan Mohamad, an influential intellectual and former editor of now-banned Tempo magazine, talks of a economic gap between what he calls "two Indonesias, one belonging to 200 people and the other to 200 million, [which] are like distant neighbors who hardly care for each other." The convergence of rapid economic deterioration and a loss of confidence in the political system has a sobering precedent in Indonesia. In the turbulent final years of President Sukarno's regime, economic chaos helped reveal the social, ethnic, regional and religious divisions in a country, which sprawls for 3,000 miles across more than 13,000 islands.

Influences embedded in the political culture after 350 years of Dutch colonial rule and a protracted independence struggle bubbled to the surface. Among them: an aggressive strain of nationalism, and an enduring mistrust of business and capitalism – embodied by the foreign and ethnic-Chinese domination of Indonesian commerce and industry. Chinese, who make up about 4% of the population, have historically borne the brunt of social unrest in hard times.

Amid hyperinflation and social unrest, the pot boiled over in September 1965. Then-General Suharto and Indonesia's army intervened, effectively deposing Mr. Sukarno. Hundreds of thousands of Indonesians died in the aftermath, and tens of thousands were imprisoned, before the country found its new course.

Mr. Suharto saw political order as a prerequisite for restarting Indonesia's economic engine then, a principle that has guided his strategic thinking ever since. In 1971, Mr. Suharto and the armed forces introduced a revamped political structure – dubbed the New Order – predicated on eliminating the competitive and ideology-based party politics that made the Sukarno era so chaotic. The changes effectively ensured that the president and the military, combined, would always be able to nominate a majority of members in the People's Consultative Assembly, the body which elects Indonesia's president.

To replace traditional political parties, Mr. Suharto used a state-backed agglomeration of so-called functional groups – the civil service, army and labor unions – under the name Golangan Karya, or Golkar, to act as the government's de facto political arm. Muslim and secular-nationalist elements in Indonesia's political spectrum were compacted into two other officially recognized parties: the United Development Party and the Indonesian Democratic Party, respectively. Any "political" activity outside the controlled arena of official politics was deemed destabilizing.

The problem is, say some analysts, that politics have been so thoroughly constrained that the system has petrified and become fundamentally a decorative prop to governance that's concentrated in the presidency. Thus, the ability to influence decision-making is confined to Mr. Suharto's bureaucratic chieftains, military commanders and a narrowly based business elite, many of them ethnic-Chinese Indonesians who have forged commercial relationships with Suharto's family members or other government insiders.

The result: There is little room for expression of public opposition, except through ostensibly "nonpolitical" groups or through sporadic outbreaks of street protest.

Among the former are social or religious organizations with large followings, and two Muslim groups are particularly important wild cards. One is the 30-million-member Nahdlatul Ulama, a socially conservative group led by widely respected but ailing cleric Abdurrahman Wahid. A second is the Muhammadiyah group, which has a tradition of social activism. It is led by Amien Rais, a charismatic advocate of egalitarian economic policies and greater public participation in the political arena.

Other foes of Mr. Suharto have coalesced around former President Sukarno's eldest daughter, Megawati Sukarnoputri, who once headed the Indonesian Democratic Party. Ms. Megawati – who espouses no clear-cut ideology beyond the goal of opening Indonesia's political arena – is backed by a mix of middle-class liberals, urban blue-collar workers, student activists and others drawn to the aura of the Sukarno name.

Individually, however, none of these elements has the organizational structure, mass following or national stature to do more than voice protests.

The ad hoc nature of the opposition makes the prospect of a Philippine-like "People's Power" uprising in Jakarta an unlikely scenario, according to most analysts. The middle class represents less than 10% of the population, and many are civil servants, soldiers or others with ties to government payrolls or privileges. They have much to lose from protests that could spin off into violent antigovernment demonstrations.

The opposition groups are "united only in opposing Suharto," says Mr. Crouch, the Australian Indonesia specialist. He fears that any "people-power movement would quickly become an anti-Chinese movement and a rioting movement." Already, he and other analysts note, violent incidents with anti-Chinese and anti-Christian overtones have become more frequent in the past two years.

The real prospect that Indonesia's economic and political problems will provoke violent social unrest has focused fresh attention on the armed forces, the one institution perceived as essential to Mr. Suharto's survival. The military's current leadership is generally considered loyal to Mr. Suharto, who carries the rank of a five-star general. But the armed forces have a long tradition of playing a political as well as a security role.

That mandate – known as dwifungsi, or dual functions – justifies military intervention in social and economic affairs in the national interest.

The military abhors disorder and is unenthusiastic about allowing broader political rights. "The last thing armed forces wants is the South Korean model, where you have a democracy catharsis leading to chaos," says the Defense Institute's Mr. Juwono. But neither do many officers want the armed forces to be seen as the brutal suppresser of an already impoverished population. That puts the military in a tight corner. Some analysts believe that the armed forces – with or without Mr. Suharto's concurrence – would feel compelled to act if incidents of popular unrest threatened to mutate into widespread chaos. But there's no consensus on who would make that assessment or whether military intervention would necessarily lead to an abrupt change of leadership.

Another fundamental security concern worries some analysts. Indonesia has just one policeman for every 10,000 citizens. And while Indonesia's armed forces are 500,000 strong, fewer than 10,000 troops are trained and available to put down trouble, several military analysts say. Should riots break out in multiple locations across the archipelago, the armed forces would be hard pressed to bring the situation under control.

Against this backdrop, the final chapter of Indonesian 20th Century history will be played out. The drama could last weeks, months or even years. But the chances of a smooth and benign transition to a new economic and political era are likely to diminish the longer the question of future leadership remains unsettled.

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