Against the Current, No. 73, March/April 1998
The IMF's Imperial "Reform"
— The Editors
Random Shots: The NASA Seniors Tour
— R.F. Kampfer
"I Don't Want To Wait Twenty-six Years for Justice" Roisin McAliskey in Limbo
— Stuart Ross
Political Prisoner Dita Sari
— Emily Citkowski
The Jericho `98 March: Amnesty and Freedom for All Political Prisoners
— Steve Bloom
- For International Women's Day
The Struggles of Women in Brazil
— Dianne Feeley interviews Tatau Gadinho
Poverty & Oregon's Welfare Reform
— Johanna Brenner
Activists Speak Out: The Poverty of Welfare Reform
— Interview with Theresa el-Amin
Activists Speak Out: The Poverty of Welfare Reform
— Interview with Amy Hanauer
LA Sweatshops: Common Threads In Struggle
— Edna Bonacich
Activists Speak Out: The Poverty of Welfare Reform
— interview with Heidi Dorow
The Family As It Really Is
— Stephanie Coontz
The Rebel Girl: We Shoot, We Score — At Last!
— Catherine Sameh
- Asia's Capitalist Boom and Bust
Causes and Consequences: Inside The Asian Crisis
— Martin Hart-Landsberg
Suharto's Days Are Numbered: Protests, Riots Rise as Clinton and IMF Back Dictator's Regime
— Malik Miah
The World Bank's The State In A Changing World: The Global Politics of TQM
— Gerard Greenfield
Transnational Capital and the State in China: Partners in Exploitation
— Gerard Greenfield
The Destiny of A Revolution
— Donald Filtzer
INDONESIA’S LONG-STANDING MILITARY ruler Suharto (age 76) faces the broadest opposition ever to his thirty-two-year rule. Markets swamped with people hoard basic foodstuffs as prices climb by the day. Inflation is in the double digits; unemployment is rising as factories close.
The urban poor, and village families dependent on income from now-fired workers living abroad and in the cities, are going hungry. The 13,000-island archipelago is simmering with fear and rage. Talk of impending insurrection is no longer considered a wild rumor. The army definitely takes it seriously.
Calls for Suharto to step down as president come not only from liberal and left-wing critics, but many conservative businessmen and religious figures who have benefitted from his rule. Both the government-regulated media and international press report signs of anger against the ruling family and corrupt businessmen.
The West applauded Suharto when he finally agreed to accept the IMF’s austerity—only after a call from President Clinton (thirty minutes from Air Force One) and other Western government in early January.
But his announcement that he would accept nomination for a seventh term as president, and that his good friend and longtime protege minister of science and technology, Yusuf Habibie, would become vice-president, sent the rupiah down to 16,5000 before rebounding back to 12,500 to the dollar.
“’It’s the beginning of the end,’ says a well-known Indonesian political scientist, who did not wish to be named. `The president doesn’t know what to do, and his ministers don’t know what to do either.’” (Far Eastern Economic Review, January 22, 1998)
The Currency Meltdown
In May 1997, Suharto and his family and business friends were on top of the world. The May parliamentary elections resulted in the ruling Golkar party soundly defeating the two official opposition parties. While protests did take place, including violence in Jakarta, the army was able to keep things under control.
The only questions facing Suharto, he thought, were: Would he accept the nomination for his seventh five-year term as president on March 11, 1998; and whom would he pick as his new vice-president?
Since the 1,000-member People’s Consultative Assembly (MPR) is mostly hand-picked by Suharto (only 425 are elected directly and these candidates are vetted by the regime), the outcome was a foregone conclusion.
Moreover, Suharto knew his powerful friends in Washington, especially in the Pentagon and State Department, would never allow critics in Congress to harm him. Suharto was backed by Washington when Indonesia invaded East Timor in 1975. Even though the Clinton administration has mildly criticized recent human rights violations, Secretary of Defense Cohen’s January trip to Jakarta made clear human rights were secondary to strengthening military ties.
Yet something unexpected happened that even the dictator could not stop: a currency meltdown. The once stable rupiah, trading at 2,400 to one dollar in June, in less than six months dropped by more than eighty percent to some 12,500 rupiah in January.
According to the government only twenty-two of the 282 companies listed on the Jakarta Stock Exchange remain viable. Most owe debts more than their dollar value. Total private debt is estimated by the government at $65 billion (others say $100 billion).
The government announced in late January a temporary moratorium of debt repayments (interest and principal). Government foreign reserves are estimated at $20 billion. Official unemployment went from 4.4 million to 6 million, with the government-sanctioned union (All Indonesian Workers Union) saying the number will increase to more than 9 million by year’s end.
Since working one or two hours a week is considered being “employed,” the real plight of workers is much worse. The situation is so bad that the military has issued a warning that unrest will be met ruthlessly. Reports from Jakarta indicate that an additional 14,000 troops have been deployed there.
Because a majority of Indonesians still live or have families in the rural areas, the government issued highly subsidized train passes to the unemployed in Jakarta to return home to their villages for the month of Ramadan observance—with no return passes. The fear of rebellion is widespread. (See January 29 New York Times, January 26 U.S. News & World Report.)
The International Monetary Fund
The currency crisis in Southeast Asia sent shock waves around the world. The sudden decline of the once-powerful Asian Tigers led the major imperialist centers in the United States, Japan and Europe to pull out their capital and raise the specter of a world recession. The International Monetary Fund (IMF) and World Bank—controlled by Washington—are demanding that the governments in these countries pay back Western bankers and investors. How? Take IMF funds and accept austerity plans that will send millions of working people to the unemployment line, or starvation.
The IMF has pledged $43 billion to Suharto’s regime if it agrees to carry out drastic austerity plans that include opening up the country to more direct foreign ownership especially of banks and ending subsidies on food and fuel.
The fig leaf—in order to prove the IMF is out to hurt all Indonesians equally—is that Suharto must end many of the special projects of his six children, other family members and close friends.
Yet it is unlikely that the “crony capitalism” of Suharto’s rule will be rolled back. (For example, when Suharto’s son, “Tommy,” had his bank shut down, he simply took control of another bank!) According to Forbes magazine, the family worth (in 1996) is between $20 billion to $40 billion.
Suharto sold off valuable resources to foreign partners on the cheap. Dummy corporations were established by family members and friends so these foreign corporations could funnel money to the family associates.
Suharto’s wealth alone is $16 billion. Before the latest currency crisis, the per capita income of the 210 million Indonesians was around $1,200. Now it is $300.
While agreeing to the strict IMF terms, the problem for Suharto’s regime is that those who must pay the bill may not give the Western bankers and governments what they want: a peaceful slide to economic ruin.
Protests, riots and strikes are on the rise, though underreported. Most working people, including sections of the middle classes, are protesting the IMF and Western-imposed austerity. At the same time some are joining reactionary protests, fueled by communalists, against non-Moslems and ethnic Chinese. Ethnic Chinese Indonesians have historically been blamed for economic crises because of their large control of the private sector.
Suharto has been able to hold onto power for so long for two reasons: repression and economic improvements. His control of the military that wiped out up to two million Indonesians in the bloody military coup of 1965-66 has been decisive. Protests are firmly crushed and opposition leaders arrested.
But he has also used the vast natural wealth of the country to get rich and trickle down some improvements to the poor. The food and fuel subsidies to the poor and lower middle classes were essential to keep working people passive and out of politics.
Along with the selective repression, stability was assured. Suharto also never allowed a potential rival to emerge—changing vice presidents and shuffling the military high command regularly. Thus there is no leadership transition plan, a problem that so worries Western capitalists.
Clinton to Suharto’s Rescue
The rapid decline in foreign and domestic confidence, and the growing ferment among the working poor and lower middle class for radical change, occurs today because the carrots are gone. Repression alone can’t bring economic stability. The markets don’t believe economic stability is possible with Suharto still in power.
Suharto like all dictators cannot see a future for “his” country without his rule and that of his friends. The military high command so far agrees. Clinton and the Western powers still see Suharto as their best bet for political and economic stability. It is why they are willing to back him against the Indonesian people. Contact with the opposition is being made, but this is really for show and—and for a last minute maneuver, should Suharto fall soon.
Clinton sent top government officials to Jakarta and the region to make clear to Suharto and others that Washington remains on their side as long as they carry out the austerity plans. Many in Congress don’t agree, and oppose the increase of $18 billion from the United States to the IMF.
Last year Congress voted to end future military arms sales to Indonesia until positive changes are made, including taking steps to end Indonesia’s illegal occupation of East Timor by accepting a referendum on its status.
The Growing Opposition
Who’s the opposition? The most important force are the unorganized newly unemployed and devastated working poor who are being forced back to their villages. The peasants are also suffering because of the worst drought in fifty years. These working people have lost everything and openly talk about taking action.
The organized opposition cuts across the political spectrum—retired generals, recognized youth groups, NGOs, independent unions and the major Islamic organizations that represent a majority of the country’s ninety percent Moslem population.
The conservative leader, Amien Rais, of the 28-million urban-based group, Muhammadiyah, has called for Suharto to step down and accepted nomination to be president by a faction of the Assembly. Abdurrahman Wahid (better known as “Gus Dur”) and leader of the 34-million member village-based Nahdlatul Ulama, has urged Suharto to decline renomination.
Megawati Stands Up
Both religious leaders have expressed sympathy for the most popular liberal leader, Megawati Sukarnoputri, the daughter of the country’s founding father, Sukarno. She has declared herself ready to be president to lead the nation out of the current crisis.
Megawati, in a brilliant speech given at home on January 10, called on the people to tell Suharto to resign and support establishment of a democratic government.
She explained that the crisis is a product of three factors: “the continued promotion of unbridled greed by those with political and economic power in our country;” “a total lack of transparency and the attempted extinction of democracy, which threatens to destroy the sovereignty of our people; “ and “the spread of multiple violations of the principles and ideals of freedom and independence, blatantly forgetting that we are a civilized, cultured religious nation.”
Her solution? “I urge the people of Indonesia, as citizens of a nation of laws and religious beliefs, to abstain from participating in an idol-worshipping personality cult by placing any individual before God, regardless of who it is or their authority.” She called for the formation of a broad based democratic government.
While Megawati’s chances of getting elected president are nil in the current Assembly, the sympathetic response of the middle class and working people shows the depth of the crisis for the regime. A member of the U.S. embassy, in fact, sat at the front of the platform when Megawati gave her speech.
The other important force is represented by the resistance movement in East Timor. The nationalist forces continue to press their case for self-determination and see the current economic crisis as a way to push for a referendum. Other islands (Irian Jaya, for example) are also pressing their claims for autonomy.
The banned left-wing group, the People’s Democratic Party (PRD), charged by high military figures as “communists,” continue to function in the underground.
PRD leaders serving time in prison have issued statements against the regime and in support of the broad democratic movement. Supporters of the PRD have helped to establish a new broad coalition, the National Committee for Democratic Struggle (KNPD).
The KNPD’s manifesto calls for the formation of a “Council of Political Leaders to safeguard the sovereignty of the people.”
Suharto and his allies believe they can survive the crisis. His support in the military high command is key as well as that of the large business community. He has few problems within the ethnic Chinese community, which controls seventy percent of private business.
The foreign capitalists don’t really care if it is a family member or not who makes a deal with them. They simply want a high return on their investment. It worked for the past thirty years.
In the end, the issue isn’t nepotism or cronyism, but the stability of profits. While Suharto may make it through the Assembly vote on March 11, the writing is on the wall. As one Australian Indonesian watcher put it: “It would appear he [Suharto] no longer has Heaven’s blessing.” (Business Week, January 26)
ATC 73, March-April 1998