Michael Vatikiotis, Jakarta – Is Indonesia's new-found stability coming apart? Events this past week certainly make it seem so. A resurgence of popular protest and social tension has caused nervousness in financial markets and sent the rupiah tumbling. Meanwhile, opposition to the six-month-old administration of President Abdurrahman Wahid is starting to flex its muscles. Left unchecked, these developments could undermine Wahid's ability to push through vitally needed reforms and even lead to his removal.
Wahid's response has been poor. In public he grumbles about a host of enemies, and displays flashes of anger at criticism from the country's freewheeling press. A senior palace official identifies a motley crew of former ministers from the previous regime, disgruntled businessmen and military officers as the core interests behind this groundswell of opposition and the source of a swirl of rumours about alleged corruption in Wahid's administration. Yet even friends and allies of the near-blind president are unhappy. They complain about his overconfidence, unwillingness to listen and apparent failure to dispel the whiff of scandal from the palace.
Compared with the optimism that marked the first months of Wahid's administration, something of a siege mentality has set in. Meanwhile, concern is mounting over the value of the rupiah, now at its lowest levels against the US dollar since Wahid came to power.
This toxic blend of political pressure and flagging international confidence has many administration officials worried. Based on the growing litany of complaints, a senior palace official concedes that the threat to Wahid's legitimacy is real. Matters are expected to come to a head in August at an annual session of the People's Consultative Assembly, known as the MPR. Some critics say that a two-thirds-majority vote could result in Wahid's impeachment from the floor. "The MPR has no limit to its power," says Heri Achmadi, a member of parliament from the Indonesian Democratic Party of Struggle, which sits in Wahid's coalition government.
Most people hope things won't get this far. A move to impeach would set a precedent for the removal of the president on an annual basis. The constitution stipulates that if the president is removed, the vice-president serves the rest of the term. But Vice-President Megawati Sukarnoputri is seen as too close to military elements and lacks support from the Muslim political majority.
August is some way off, and Wahid's mercurial politicking makes a day, much less a week, seem like a long time in politics. But the sense of official insecurity and public uncertainty building up over recent weeks is critical because of the impact it is having on economic confidence.
The rupiah was already plunging when Coordinating Economic Minister Kwik Kian Gie told the foreign media on May 10 that he didn't see much reason for foreign investors to come to Indonesia. Market uncertainty was further fuelled by a violent demonstration by students demanding that members of the old regime be brought to trial, and then, more disturbingly, by unrest in Jakarta's Chinatown on May 13. On May 16, the rupiah was trading at around 8,500 to the dollar, up from a seven-month low of 8,760 days earlier. Faced with these difficulties, the Wahid government could veer in one of two directions, neither of which promise to do much to shore up the country's flagging image. The president could build bridges to disaffected coalition members. But that would mean making concessions on stalling reforms. The other option is to sweep his cabinet of dissent or disgruntled factions, replacing them with loyalists – but that would invite more accusations of corruption and cronyism. The signs are that Wahid may be leaning toward the clean-sweep approach.
A recent cabinet reshuffle that ousted two ministers from coalition parties resulted in their replacement by close Wahid allies. A younger brother was appointed to the Indonesian Bank Restructuring Agency and a close confidant, Johan Effendi, will likely take over the state secretariat. Meanwhile, from the armed forces comes grumbling about Wahid's meddling. "We've given him an amber warning light," says one senior general, referring to rumours that Wahid is about to replace the army chief and his deputy with officers close to him.
News of these moves has reinforced perceptions that Wahid is faltering as a reformer. Local commentators clamour about the return of Suharto-era corruption and collusion. Specific allegations have been aired about a missing 35 billion rupiah ($4.1 million) from Bulog, the rice-distribution agency. Press reports have also hinted at corruption within Wahid's family. Wahid firmly denies these allegations. One of his daughters, Alisa, wrote a letter to the media insisting that "in terms of business, my father's stance is that it must be a matter of fair play and healthy competition."
Economic uncertainty
The broader concern, however, is that Wahid's government isn't performing on economic reforms, such as helping to sell off debt-burdened companies and repairing the country's moribund banking system. On Wahid's recent visits to Singapore and Thailand, the leaders of both countries urged him to speed up the process. True, exports are up – albeit on the back of a weaker rupiah. But the primary concern businessmen have is that policymaking is haphazard at best.
Reflecting the growing uncertainty, Indonesia's State Statistics Bureau warned on May 15 that economic growth this year could be less than half as strong as previously expected, and could fall to 1.54%. Political uncertainty and the rupiah's weakness were blamed.
Inside the palace, exasperated aides complain that Wahid doesn't have a grasp of complicated economic issues (he often nods off in cabinet meetings), while his ministers tend to leave decisions up to him instead of offering concrete initiatives. "They give him room to make mistakes," says Sri Mulyani Indrawati, a member of the National Economic Council.
Wahid wasn't elected for his grasp of economics but for his commitment to tolerance and democratic principles. Yet there are concerns that his leadership is not healing the deep wounds inflicted on Indonesian society by more than three decades of authoritarian rule. The government has been slow to bring corruption charges against former President Suharto. As well as students and workers protesting on an almost daily basis, the military shows concern about the recruitment of paramilitary forces by political parties. Helping to polarize these forces, Wahid insists on lifting a ban on communism in the face of opposition from conservative quarters. Slow progress on the Suharto trial promises to invite further popular protest; pursuing a lifting of the ban on communism will help solidify a conservative alliance against the president.
Then, there's the army, still not totally disengaged from politics and watching from the wings. In an oblique warning to the government, Lt.-Gen. Agus Widjojo, a reformist officer, has hinted at a Pakistan-like scenario in which the military may be forced to act in the face of civilian disarray. "The ball is now on the civilian side to prove they are efficient and law- abiding," he told a public forum on May 14. "We're not waiting for them to fail, but if there is a threat to democratization, it is from civilians, not the military."
The way out for Wahid will get increasingly harder if the economic situation deteriorates. Many are mindful that the trigger for Suharto's downfall was a weak rupiah.
Sympathetic commentators believe Wahid has a reserve of popular support – although opinion polls show his popularity waning – and even his toughest opponents admit that the best solution for all would be for him to be persuaded to improve his performance.
That's where the MPR session in August could turn into a constructive warning instead of a mob scene, some analysts say. The assembly could send a strong message to Wahid on his performance, but hold off impeachment and instead allow him to form a functioning cabinet of experts, at the same time stressing that continuing failure could lead to censure or impeachment in the future. Even so, Wahid faces an uphill battle.
Wahid's support
President Wahid can count on considerable grassroots support, given his former leadership of the Nahdlatul Ulama, a Muslim organization with more than 30 million members. They include a paramilitary force, which recently mobbed the offices of a newspaper after it alleged graft in the Wahid administration. Speaking privately to a prominent politician, Wahid has threatened to bring two million supporters onto Jakarta's streets if the criticism continues.