FFWD Weekly
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| VIEWPOINT After 30 years, dictator Suharto left office quickly and easily when he announced his resignation last week. Will the change help Indonesia? It looked like a strong, stable and friendly dictatorship, the kind business and the G-7 like, but it fell apart in an instant. A palace intrigue worthy of King Lear forced President Suharto out. Indonesia's economic and social realities and the International Monetary Fund's (IMF) desire for control over the Indonesian economy set the stage for his retirement and a long and difficult time of change for the world's fourth most populous country. B.J. Habibie, Suharto's vice president, became Indonesia's third president since independence in 1945. General Wiranto, the military's commander-in-chief and Suharto's minister of defence, was the king-maker. Working with academic experts, Wiranto decided that the smoothest transition for Indonesia would be for Habibie to replace Suharto. Wiranto apparently considered a number of options, but decided that direct military action was not the way to go for now. Habibie was the big winner in Wiranto's apparent respect for the rule of law, but most experts agree that Habibie will not be around for long. His grip on power is weak at best. The military and the IMF are not big fans of the nation's new leader. What is certain is that Habibie's presidency will not help the economic crisis that pushed Suharto's supporters to turn against him. The riots started on May 12 when the price of gas increased over 100 per cent and the military lost its uncharacteristic discipline of the last 12 months and killed six students at a demonstration in Jakarta. Those events were the trigger, but the potential for the violence came from the collapse of the rupiah (Indonesia's currency), a rice crop ruined by El Niño, and the price increases caused by the IMF's demand that subsidies on such basic goods as gasoline be removed. Indonesians tolerated Suharto's dictatorship and personal profiteering because the country's economic success put food in the mouths of the poor and money in the pockets of the rich. The financial crisis that swept through Asia last October took Suharto's economic crutch away. The value of the rupiah went into free-fall. Indonesia turned to the IMF for help, and found it willing. After all, the crisis was hurting North American and European financial institutions. As always, Indonesia had to pay a price for the IMF's help. The economy would have to be reformed to meet the IMF's concept of a free market, and Indonesia would have to open up its borders to goods from the rest of the world. Suharto agreed to the reforms when he signed a $43-billion (US) IMF bailout, but his efforts were half-hearted. The livelihood of his children depends on the nationalized industries he gave them to run. The price increases caused by the removal of subsidies would create social unrest as the price for food and other essentials soared out of reach for most Indonesians. While few in the military or Indonesia's elite were all that concerned with the fate of Suharto's children, violence and unrest in the ethnically diverse population of 200 million was a real threat. The riots were all the evidence the military and the elite needed to know that something had to be done. Change could not be controlled as long as Suharto was president, and his removal was a symbolic gesture that could give the rest of the government enough time to figure out what to do next. How Indonesia's new rulers go about creating change may prevent further violence, but the cards are stacked against them. Next week: Indonesia's future and the circumstances that will shape it. Side bar Estimated worth of the Suharto family $20 billion Financial bailout for Indonesia from the IMF $43 billion Percent of Indonesians that are Muslim 87% Amount of the economy controlled by the Chinese community 70% Indonesian Chinese killed by Suhartos Communist pogrom in 1965 200,000 Sources: Forbes, World Press Review |
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