COLUMN

Challenges in Indonesia

The new government in Indonesia will need to bring about major changes in the economic policies that have in the past brought immense hardship to the country.

JAYATI GHOSH

FOR a while it seemed as if violence would dominate one of the most exciting democratic developments in any country in the recent past. But the first "free and fair" elections in Indonesia for more than three decades turned out to be relatively peaceful, and remarkably participatory given the odds. And so the immediate sensation seemed to be one of sheer relief and even joy generated by the fact that after more than a generation people could actually express themselves through the ballot box. But this h as also given rise to very high popular expectations, which the new government is likely to find it difficult to match.

For 32 years, the authoritarian and repressive regime led by President Suharto and enforced by his Golkar Party not only dominated Indonesian politics but instilled so much fear into potential voices of dissent that many citizens took refuge in apolitica l apathy. And even when he was forced to step down last summer and his chosen successor, B.J. Habibie, announced that genuine elections would be held by the middle of 1999, the sceptics who doubted that this would actually happen were in the majority.

FIRIDIA LINSWATI/AP
Voters at a polling station in central Jakarta on June 7.

In fact, the elections themselves do appear to have been conducted in a fair manner, although the subsequent counting of votes has been so delayed, and the nature of the counting process has been so tortuous that allegations of fraud have already been ex pressed. At the time of writing, the party of Megawati Sukarnoputri, the PDI-P, appears to be ahead with more than one-third of the vote, which should normally be a winning margin in an election involving 48 parties and in which the PDI-P has been offere d the support of two of the three other largest parties. But Golkar - which was earlier thought to be a poor third, may emerge as the second largest party. Golkar has been associated with major corruption, authoritarianism and misrule in Indonesia, but it also has advantages because of its sheer spread, vast organisation and money power, and because control over the state machinery gave it great powers of patronage which it has used extensively.

Megawati's own political strength derives from the dynastic factor which plays such a strong role in Asian politics. Her father, Sukarno, is still revered among the Indonesian people as one of the main fighters for independence from the Dutch, the creato r of a secular state bringing together more than 13,000 islands, the President of the fledgling country who dared to stand up to the Americans and a prominent founder of the Non-Aligned Movement in the 1960s. Sukarno was overthrown in 1965 in a military coup whose aftermath saw one of the bloodiest episodes in living memory as the Army under Suharto cleansed Indonesia of all actual and suspected communists. It is interesting that despite all of Suharto's efforts (or perhaps because of them?) to dislodge Sukarno from public memory, he continues to occupy such a large role in the popular imagination.

Megawati herself displayed little interest in politics until a few years ago, when she became the focus of attention as the regime tried to manipulate the internal election in her own party to oust her from its leadership. Her current popularity has as m uch to do with the general public dissatisfaction with the Golkar Party as it does with the fact of her being seen as the inheritor of her father's mantle.

THE apparent docility of the population during the years when a dictatorial and harsh government determined their lives and destroyed all opposition has been a source of surprise to outside observers. It has even been attributed to the patriarchal cultur e of the Javanese, which emphasises obedience to the father-figure. But this clearly was a mask put on by most people in order to avoid the unpleasantness that would otherwise ensue. From the outbreak of the financial crisis in July 1997, this mask began to disintegrate, and the students' protests became hugely popular movements that eventually dislodged Suharto.

When the local counting of votes occurred, this became very evident. Golkar candidates across Java and Sumatra were shocked to realise that the very voters who had stood outside the polling station and listened meekly to their perorations, went off to vo te against their party within a few hours. And still, most voters are jealously guarding their precious secret of the vote, which for the first time in more than three decades offers a genuine choice.

However, the nature of the Constitution is such that the party that wins the majority may still not be in a position to lead the government and choose the President. Habibie - who is himself a Suharto protege - made the free elections possible, but he di d not change the Constitution of the Suharto regime, which effectively loads the dice against complete electoral democracy.

Under Suharto elections were held periodically, but each election was little more than a farce, since the Golkar Party candidate always won. In addition, the military and government appointees made up one-third of the seats in the electoral college which voted for the President. Under this Constitution, once voted in the President has overarching powers. Clearly, therefore, a new government that genuinely desires more democracy would first seek to amend or change the Constitution. Already, because of pu blic pressure and the need for legitimacy, the military has agreed to reduce the number of seats it has to half of its previous level.

THE vote that has just been concluded will elect 482 people to Parliament. But another 238 (38 representatives from the still powerful military and 200 government appointees) will also form part of Parliament that elects the President. This means that u nless one party can get an overwhelming majority in the freely elected seats, it is unlikely to be able to choose its preferred candidate as President. And it also gives the military and the nominated government members the power to block candidates they do not wish to see as President. This is why many Indonesians are saying that General Wiranto, the chief of the armed forces, may be the one who ultimately decides who will be the next President of the country.

Furthermore, even the popular vote may not be very clear-cut. Megawati's party is clearly dominant in Java and Sumatra, two major islands that make up more than half the population, as well as in Bali. But in the outer islands, including Sulawesi and oth ers, Golkar is thought to be in the lead.

The Indonesian regime had the same attitude to the outer islands as that of the Dutch colonialists before them, viewing them as the sources of rich natural resources to be exploited. The little development that did occur was generally directed towards re source extraction, and did little to improve the living standards of the people. But just as they were left out of the economic growth process, so they also avoided the subsequent crisis: nothing much has changed in the material lives of most people livi ng in the outer islands. Here Golkar has the advantage simply because of its wider organisation and experience of rule.

So, even after the votes are counted the political outlook is likely to remain foggy for some time. The new President will certainly have the sweeping powers that the current Constitution provides, but she or he will still have to negotiate a thin tightr ope to ensure legitimacy from the people and keep the military and the existing political elite satisfied at the same time.

This task is especially difficult because one of the crucial issues relates to the way in which Suharto is to be treated. The popular desire is that he and his family be brought to book for the blatant manner in which they have reportedly siphoned off pu blic resources into their private purses. But both the military and the bureaucracy fear this, since any proper investigation would definitely unearth information that would indict many others besides the Suharto family.

Megawati herself has been relatively uncommunicative on this matter, giving rise to rumours that she may turn out to be "soft" on Suharto. Indeed, she has been remarkably non-committal on most important policy issues, in a manner eerily reminiscent of he r counterpart, that is, our own current contribution to dynastic politics in India. Megawati's chief appeal has been emotional and general rather than focussed and detailed. And with respect to the area that is really likely to matter, that is, economic strategy, she has so far shown little imagination or expertise; she has blindly agreed to toe the International Monetary Fund (IMF) line as far as possible.

SEVERAL outside observers have noted with some surprise how little the economic issues have become a focus of electoral politics. It is surprising because economic failure was the clear proximate catalyst for the downfall of Suharto, and the country is c urrently in the midst of an unprecedented economic crisis. The IMF strategy that has been in operation in the region since late 1997 is now widely discredited, so much so that the IMF itself has changed some of its parameters, allowing larger government deficits and slightly looser monetary targets.

Nevertheless, the impact on the Indonesian economy of the crisis and the subsequent harsh stabilisation measures has been nothing short of disastrous. Gross Domestic Product fell by an estimated 19 per cent in 1998, and continues to fall even into 1999. Industrial production in the first quarter of 1999 was down by 14 per cent over the same period in 1998, which was already lower than the previous year. Meanwhile, the currency depreciation and cutting of government subsidies on food and fertilizer have led to high inflation, with consumer prices up by more than 30 per cent over the year.

It is true that since January the Indonesian currency, the rupiah, has stabilised and even recovered slightly from its lowest level, and is currently at around Rp. 8,000 a dollar. Also, the stock market index has risen by 44 per cent since January 1, 199 9. These indicators, which are usually all that international fund managers are interested in, have led to the belief in some circles that the Indonesian economy is on a recovery path.

In reality, recovery is still a distant dream. The real economy is still in deep depression, made worse as the negative linkage effects of large-scale job losses make themselves felt throughout the economy. The World Bank's estimates for Indonesian pover ty, which have traditionally been lower than other estimates, suggest that the number of people living below the poverty line doubled to 20 per cent of the population, amounting to 20 million people, in just one year between 1997 and 1998. Other estimate s suggest that the incidence of poverty has increased to as much as 40 per cent. The World Bank also found that the average standard of living of the people (that is, per capita consumption) fell by as much as 25 per cent in 1998 alone.

In this vast country, with a multiplicity of linguistic and ethnic groups, geographical diversity, highly unequal incomes and regional inequalities, social tensions are always just below the surface. The economic crisis has blown the lid off these tensio ns in the past year, with growing incidents of violence between ethnic and religious groups and greater frequency of crime. And now, people's expectations of a democratic government are much more than before, as they look eagerly towards a state that wil l guide them out of their current mess.

All this means that the tasks confronting the new President will be far from easy. And if the new government continues to carry on the economic strategy which has already brought the country so much hardship, it could lose its popular legitimacy quite ra pidly. A new economic vision may well turn out to be the necessary condition to avoid a descent into political and social chaos in Indonesia.