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ASIET NetNews Number 5 - February 9-15, 1998
Political/economic crisisStrangers attack bus and kill three people Costa tore apart district attorney's paper Horta does not represent Xanana
Environment/land disputesThree killed, many detained 2,000 Indonesian students riot Riots over rising prices Suharto warns of plot IMF heads for showdown Indonesia plans to pull plug Indonesia crisis brings crimes Edginess becomes a way of life Currency fix could cause huge damage Warning against protests defied Food crisis US commander sounds alert Riots hit another eastern Indonesia town Indonesian foreign debt spirals Price rises exact a high cost in Indonesia Troops show muscle amid food riot fears
Human rights/lawRenewed Indonesia fires
PoliticsEighteen ALDERA members arrested
Muslims say time to seize economic Business thumbs down for Suharto
| East Timor |
Dili -- Eight unidentified men attacked a bus and killed three passengers near Los Palos, the Indonesian police said on Tuesday. The spokesman for the police in Dili, Colonel Muarfi, said that the attack took place last Sunday and that the three passengers were beaten to death.
Sources of the Timorese resistance have denounced the existence of groups named "ninjas" formed by locals under the service of Indonesia and who are used to terrify the population and commit crimes that are later imputed to the resistance by the occupying forces in an attempt to discredit it.
Indonesia invaded East Timor in 1975 and annexed it one year later but the United Nations still regards Portugal as the territory's administering power.
Dili -- The accused Falintil bomb-maker, Constancio da Costa dos Santos alias Aquita, tore apart the District Attorney's official response paper on Wednesday 21 January, 1998. The incidence that took place in the courtroom of Dili State Court surprised Judge I Made Nandu and District Attorney Eko Purwanto and the audience packed in the courtroom.
He then, unfurled a banner with writings on it and yelled pro independence slogans. "We will not stop fighting," he yelled loudly. "We are not terrorists who attempt to kill people arbitrarily. We only fight for the independence of East Timor!"
Security officers grabbed the banner and forced Constancio to leave the Courtroom. Outside the room, accompanied by his lawyer, Constancio still yelled pro-independence slogans. On his hearing before, Constancio was firm holding his statement that the bomb was made under the instruction of the Falintil Commander in Chief, Kay Kala Xanana Gusmao, now imprisoned in Cipinang Correctional Institution, Jakarta
Military intelligence arrested Constancio and his comrade in arms, Paulo George Rodrigues Pareira, on 15 September 1997 aboard a ship anchored in Dili harbor. They confiscated 20 homemade bombs and 76 M-16 assault rifles and .45 caliber FN pistol bullets. They also confiscated books on Xanana Gusmao, Nelson Mandela, and a Political Manifesto of the Socialist Party Timor.
Among other things, they also found a T-shirt with Conis Santana picture on it, videocassettes, a handycam, wristwatches, a cellular handphone, a sunglass, and photographs of Constancio interviewing Ramos Horta.
Joaquim T. de Negreiros, Lisbon -- Joao Carrascalao, Chairman of the Timorese Democratic Union (UDT), is unbending: UDT will not take part in the first resistance overseas congress. There are various reasons, but one determining factor is his rejection of Ramos Horta's status as Xanana Gusmao's overseas representative.
The UDT Chairman is convinced that there is now "antagonism" between the resistance's historic leader, imprisoned in Java, and the Nobel Peace Prize laureate who has taken on the role of Xanana's spokesperson outside East Timor.
Carrascalao says that he detected "antagonism" recently and alluded to Ramos Horta's "moderation" in various statements about Indonesia, and to references by Horta to "immaturity" on the part of the Timorese having been one of the causes of the Indonesian invasion. The UDT Chairman said he did not believe that Xanana Gusmao would agree with that such positions.
Carrascalao does not question Ramos Horta's role in the Timorese resistance - on the contrary, he argues that Horta "has won his own place" and "ought to speak for himself" -, but does say that his concerns about the status of Xanana Gusmao's representative contributed to his decision not to attend the congress of overseas Timorese resistance activists, to be held early this year in Lisbon.
The symbol and the Leader
The other reasons why the UDT Chairman wants to keep his organisation away from the congress are, he says, connected with the representation of the various political groups taking part, and with the way in which the meeting was being organised.
According to Joao Carrascalao, the congress organising committee started the congress preparations without first hearing the views of the UDT, and even went as far as issuing statements assuming positions which conflicted with UDT's line. The problem again turns on Xanana. Carrascalao mentions a communiqui which stated that one of the aims of the congress would be the consolidation of Xanana Gusmao's leadership, when UDT does not recognise that leadership. "Xanana is a symbol of Timorese resistance", says Joao Carrascalao, "but while he is a prisoner, he cannot be a leader because he is subject to restrictions imposed on him by the Indonesians".
On the question of representation at the congress, the UDT Chairman disagrees that his party should be allotted the same number of delegates to which "the various Timorese mini- organisations..." are entitled. Neither will he agree to a tripartite distribution among the main political forces - UDT, Fretilin and the CNRM, because he claims that, unlike UDT, Fretilin is integrated in the CNRM and this fact would, therefore, unbalance the relative participation of each one of the three organisations from the outset.
Over the next few days there will be no shortage of appeals to UDT's Chairman to reconsider his position and to agree to participate in the congress. Today and tomorrow, Carrascalao may be found in Lisbon attending the seminar "Rethinking Timor", organised by Professor Barbedo de Magalhaes. Later, he will be having a private meeting with Ramos Horta and Jose Luis Guterres (Fretilin) after they have all been received by the President of Portugal.
| Political/economic crisis |
Jim Della-Giacoma, Jakarta -- At least three people have been killed and 154 detained in riots over rising prices directed mostly against shops run by Indonesia's minority Chinese, police and witnesses said on Saturday.
The worst damage was in the coastal town of Pamanukan on the heavily-populated island of Java, where dozens of buildings including shops, places of worship and doctors' surgeries were set on fire or damaged, the Suara Pembaruan newspaper.
Police said 154 people were being held for questioning on suspicion of looting and rioting in Pamanukan.
The newspaper quoted police as saying riots erupted on Friday in towns around Cirebon port on the north Java coast, after a man was shot in the head.
The 28-year-old victim of the shooting was identified only as Ata from the village of Cipeyuh, apparently the first confirmed death in the wave of unrest.
"We are examining who was the wrongdoer from the Lemahabang police station who fired the shot," Cirebon port police chief Colonel Sukandri was quoted as saying. He gave no details.
Suara Pembaruan named the two other victims as Tarmin, 22, from near Cirebon, and Amron from Brebes in neighbouring Central Java, but gave no further details.
Prices have soared in Indonesia because of the slump in the value of the rupiah currency and drought. Most of the shops attacked in recent weeks were owned by ethnic Chinese, who control much of the commerce across the sprawling archipelago of 200 million people and who are a traditional scapegoat during times of hardship. Chinese businesses have been accused of hoarding, which the government has declared a subversive act.
The official Antara news agency also reported a riot in North Sumatra, and a peaceful demonstration against rising prices in the southwest of Sulawesi island in eastern Indonesia.
Residents reached by phone in the West Java town of Jatiwangi said the streets were quiet as police and troops stood guard there after disturbances on Thursday and Friday. "There are a few small fires still burning, but people are now cleaning up. The town is secure, with police and soldiers guarding the streets. To my knowledge there were no victims, only property was damaged," a local businessman said.
In Losari, on the border of West and Central Java provinces, and in nearby Brebes, more than 60 shops were damaged by mobs, Suara Pembaruan newspaper said.
Antara news agency reported police were escorting public buses through the Tegal area in Central Java on Saturday after a bus was burnt and two cars damaged just after midnight. Police blamed the attack on "children" and said the problem was quickly controlled. Antara reported however that many shops on main roads were shut on Saturday.
Antara said security forces were also in control after rioters angered by rises in the price of vehicle spare parts stoned shops in Padang Sidempuan in North Sumatra on Friday. But a protest by about 1,000 people against price rises in the town of Bau-Bau in Southeast Sulawesi passed off without violence, it said.
Many Indonesians earn around only 4,500 rupiah (50 cents) a day if they can find work, and have keenly felt the impact of the worst economic crisis in decades.
In Jakarta, the national police have clamped an effective ban on mass rallies for the week before and week after the March 1-11 meeting of the People's Consultative Assembly (MPR), which is expected to reelect President Suharto for a seventh, five-year term.
Suharto, who has faced unprecedented calls to step down at the end of his current term over his handling of the economic crisis, has told the military and police to take a firm hand in dealing with unrest.
Jakarta -- Some 2,000 students threw stones at several stores Saturday morning on Indonesia's Sulawesi Island after their rally to protest higher basic commodity prices turned into a riot, the state-run news agency Antara said.
According to Antara, the protest rally and rioting by senior high school and university students occurred in the Southeast Sulawesi provincial capital of Kendari.
The agency quoted local police as saying the students, who marched from a local university to the city council building, demanded that basic commodity prices be lowered and that strong actions be taken against distributors who stockpile goods. Lt. Col. Sudarmanto, head of the Kendari police, said three people were detained following the rioting.
Major cities and towns throughout Indonesia have been hit recently by rioting related to higher prices of basic essentials caused by the economic and monetary crisis that has plagued the country since last year. On Friday, there were at least eight riots in eight cities.
Irwan Firdaus, Sukamandi -- In the most violent day of protests yet in Indonesia's economic crisis, thousands went on the rampage in at least eight towns today, venting their anger against Chinese traders they blame for soaring prices and mass unemployment.
One death was reported -- a man killed in the biggest riot, in Losari, where more than 3,000 people ran wild, the official Anatra news agency reported. No details of the death were immediately available. Mobs burned or damaged hundreds of shops, houses and cars. Three Chinese churches in two towns were raided and furniture was burned outside. Looting was widespread. Police detained hundreds of people, while scores of terrified Chinese families took shelter in police stations or fled to other towns.
Fearful residents painted the word "Muslim" on their doors to keep rioters from attacking their homes. "The crowd became angry in the morning because of rising food prices in the market. They rioted until sunset," said witness Neng Kursiasih in Sukamandi, about 45 miles east of Jakarta. Rioters hurled stones at buildings and vehicles. Others grabbed goods from shop shelves, piled them in the streets, and set them on fire.
Streets were littered with rocks, shattered glass and burned debris as troops patrolled late into the night to stop sporadic outbreaks of new rioting. Violent protests flared on the eastern side of Java about a month ago and have progressively moved west toward the capital, Jakarta, as the pain from the worst economic crisis in three decades hits the poor.
Today's strife broke out a day after President Suharto ordered the military to crack down on activists he accused of exploiting widespread economic discontent to destabilize the state ahead of a presidential election in March.
Suharto, who has governed for 32 years, is expected to win a seventh five-year term when a 1,000-member electoral college-like assembly votes.
Ethnic Chinese, who are mainly Christian or Buddhist, make up about 4 percent of Indonesia's population of 202 million, which is about 90 percent Muslim. Chinese dominate commerce and storekeepers are often targeted as scapegoats when prices increase and civil unrest breaks out. Hundreds of police and troops armed with shields and sticks were trucked in from other towns to restore calm in Losari, about 125 miles east of Jakarta.
Violence was also reported in the towns of Ciasem, Gebang, Pamanukan and Jatiwangi as well as Sukamandi. All six towns are on the western side of the main island of Java. Roads leading to the towns were closed when rioters threw rocks at passing automobiles. Some were reopened later but only after police warned drivers that their safety could not be guaranteed.
"I'm worried about what will happen next," said Arifin, a resident of riot-torn Pamanukan, about 55 east of Jakarta. "I saw angry mobs set fire to shops. Many Chinese families left town."
About 160 people were arrested in Pamanukan where 23 shops were burned, police said. Security personnel in other towns reported dozens of arrests, but gave no exact figures.
Many shops in Bandung, the provincial capital of West Java, were closed amid fears that the trouble would spread, police said. However, the city was quiet tonight.
Raju Gopalakrishnan, Jakarta -- President Suharto accused unnamed groups on Thursday of using Indonesia's economic crisis to undermine his government as the country announced the appointment of a new armed forces chief.
"We are currently facing economic and monetary turmoil...There is even a hope that this economic and monetary turmoil will lead to a crisis against the government," Suharto, a former army general, told the country's military elite.
Meanwhile, signals that Suharto's close confidant Research and Technology Minister Jusuf Habibie could be the country's new vice-president in indirect presidential elections in March unsettled financial markets.
Habibie is considered by economic analysts as an financial maverick and the rupiah currency plunged to a historic low of 17,000 to the dollar when hints first surfaced last month that he may become vice-president and the potential successor to the 76- year-old Suharto.
Currency market dealers said the rupiah dropped to a low of 7,800 to the dollar from a 7,700/800 open on news that the ruling Golkar party had nominated Habibie and party chairman Harmoko as its choices for the vice-presidency.
However, the currency regained ground on hopes Indonesia would soon announce a fixed peg for the rupiah under a currency board system, the dealers said.
Jakarta's plummeting stock index was down over nine percent in early afternoon trade with most shares under strong selling pressure, on turnover estimated at 367 billion rupiah ($50.27 million), brokers said.
The embattled composite index stood at 443.705 at 0715 GMT, down 44 points, on continued fears about the country's political and economic direction. "The market was really, really bad today," a head dealer said. "Foreigners looked so concerned over the currency board system.
Brokers said foreign investors led selling on various concerns -- possible unrest over price hikes, the currency board proposal and the choice of Habibie as potential successor to 76- year-old President Suharto.
An announcement that another strong candidate for vice- president, chief of army staff General Wiranto, was being promoted to armed forces chief was also a sign that Habibie had become the front- runner, political analysts said. Other analysts suggested that the move in fact strengthened Wiranto's chances of being Suharto's running mate, although the former presidential adjutant was possibly of more value as armed forces commander.
The military, which is guaranteed a political role under the constitution, is one of the most powerful organisations in Indonesia and its commander is one of the country's most high- profile leaders. In announcing his replacement next week by Wiranto, a Javanese Moslem, outgoing armed forces commander General Feisal Tanjung avoided naming the military's preferred candidate for vice-president.
Analysts also said Golkar's naming of Harmoko as one of the potential candidates was in case opposition to Habibie mounted from within the ruling elite. Current Vice-President Try Sutrisno is also in the running for re-nomination and analysts said intense jockeying continued behind the scenes for the post.
Suharto, who is basically assured of a seventh five-year term in indirect elections next month, told the military that unnamed groups were trying to take advantage of the country's economic crisis to destabilise the government.
He said Indonesia would experience zero economic growth in the 1998/99 fiscal year, which would be a great barrier to social and economic development. "In this kind of situation, there are signs that certain groups are using the chance to achieve their political goals, which they have failed to reach through democratic and constitutional means," he said.
He told the officers that the armed forces needed to be on the alert because the nation was entering a tense period ahead of the March elections. "Take stern action against those who violate (the law) and carry out unconstitutional actions, especially those which lead to national disintegration," he said. "We need national stability, especially when our nation is preparing itself to carry out the tasks which will determine our future," said Suharto without elaborating.
Meanwhile, the United States called for caution on Indonesia's plans to race ahead with a fixed-peg currency regime. Treasury Secretary Robert Rubin said Indonesia needed to strengthen its banks and reaffirm its commitment to reforms before introducing a currency board, an inflexible system which glues the domestic currency to a convertible one and ties cash in circulation to central bank reserves. "There are a lot of issues that need to be worked through before you get to the question of whether or not you have a currency board," Rubin told reporters.
Washington -- The IMF is headed for a showdown with its third largest borrower on Thursday, insisting Indonesia was not ready for a rigid currency regime and highlighting political uncertainties there.
IMF First Deputy Managing director Stanley Fischer, using uncharacteristically blunt language about political issues, noted that Indonesia's rupiah currency had been hit by suggestions that Indonesia could select a vice president whose "devotion to new ways of doing things was limited". He gave no names but was apparently referring to Research and Technology Minister Jusuf Habibie, who is a candidate and a close confidant of President Suharto.
Fischer also said it was too soon for Indonesia to consider a currency board, an inflexible regime with a fixed rate of exchange where a country only issues money when it has sufficient reserves to back it up. A central bank becomes irrelevant. "We have concluded that a lot of options need to be in place before a currency board would make sense," Fischer told a luncheon seminar in Washington. "I do not believe that Indonesia is there at the moment."
The IMF package, coupled with doubts about the government's commitment to the program of economic and financial reforms which is underpinning the rescue deal, have done little to stabilise domestic financial markters. The govt (sic. Suharto) is therefore considering the drastic alternative of a currency board which government sources say could be ready within weeks.
Fischer said prerequiisites for a currency board included the need for adequate central bank reserves and a stronger financial system, while Indonesia would also need to settle problems surrounding a mountain of corporate debt.
US Treasury Secretary Robert Rubin, in his second comment on Indonesia's currency plans in two days, told a Senate Foreign Relations panel that several issues had to be sorted out before Indonesia could think about a currency board. "For this even to be worth considering you have to have underlying conditions that will enable it to work and I think there are enormous issues to be worked out in the Indonesian case before you can even consider doing it," he said.
Indonesia's security forces plan to tap phones to monitor dissidents calls and pull the plug on conversations that are deemed political, a newspaper said on Friday.
The armed forces, worried about the spread of unrest amid soaring food prices, had backed a police plan to access cellular networks and "silence calls which were political in nature", the Jakarta Post said. "Investigations and efforts to preserve security are two reasons why police investigators have the authority to tap telephone calls," the newspaper quoted the armed forces spokesman as saying.
Indonesia, facing its worst economic crisis in decades, is cracking down on unrest which has seen scattered riots and demonstrations across the country. The newspaper said 152 demonstrators faced a mass trial on Thursday after a recent protest against price hikes in Jakarta. President Suharto Thursday renewed his charge that certain groups were trying to use the economic crisis to undermine the government.
Christopher Torchia, Jakarta -- It wasn't a bomb, but the box found next to a bank machine in an airport was meant to send a warning. Marked "explosive with remote," the package of plastic pipes and electric wires carried this warning: "Bring down prices or it will happen in other places."
No one claimed responsibility for leaving the mock bomb in the airport in Medan, on the island of Sumatra. But bomb threats have been on the rise in Indonesia since the value of the country's currency began plummeting seven months ago, causing a sharp rise in the price of food and other basic goods.
In the past week, there were bomb threats in a Jakarta bank building and a shopping mall. On Feb. 1, a Japan-bound Garuda Indonesia jetliner with 237 people aboard turned around after takeoff following a telephoned threat. Nothing was found on board.
Many people, already worried by riots over price increases, also fear common crime will soar as people lose jobs. One Jakarta security company that rents guards and sells alarm systems says business is up. Many clients are banks and multinational firms. "They're just trying to protect their properties," said Yohan Sethiadhi, manager of Securicor Indonesia.
Other Asian countries with economic woes are worried, too. Since November, South Korea has more than doubled its police force in Seoul to 22,000. In Bangkok, shoppers walking through mall parking lots have been mugged recently in a series of highly publicized incidents. Store owners say there are fewer people in the lots because business is down, making them more vulnerable to criminals.
One frustrated husband beat his wife after he lost his factory job in south Jakarta. A laborer in central Java killed his spouse in a dispute over money. As times get tougher, domestic violence is on the rise, a women's group in the capital says. The group, Kalyanamitra, is receiving half a dozen calls from battered women each day to its hot line. Before the crisis, the rate was one call a week. A newspaper reported on a worker who killed his wife because of money troubles. "I was angry because my wife didn't want to understand about my low wages," the Pos Kota newspaper quoted the worker as saying.
As unemployment spirals upward, Indonesia's finance minister is urging the rich to help slow the trend. "If you have one housemaid, hire another one," Mar'ie Muhammad said at a plenary session of Parliament this week. "If you don't have a gardener, hire one. If you need a driver, do it." Labor is cheap in Indonesia: Hiring a live-in maid costs as little as $27 a month at the current exchange rate.
Some goods, mostly imported, are becoming scarce. Sanitary napkins are reportedly hard to find in Yogyakarta, prompting one store to impose a quota of two boxes per customer.
And the riots that have erupted in more than a dozen towns aren't just over food prices. Fishermen in one village lobbed stones after a store jacked up the price of fishing nets by 10 percent.
Seth Mydans, Surabaya -- The military officer seemed puzzled when asked about the giant Tactica armored water cannon that was parked beside him, in front of the glass-and-chrome Delta Plaza Shopping Center. "Vehicle?" he asked. "You mean those taxis over there?"
Shoppers bustled in and out of the shopping center, where a young woman in the foyer sang love songs accompanied by a grand piano -- apparently as oblivious as the military officer to the riot-control vehicle with "Polisi" painted in large white letters on its side.
Another water cannon was parked not far away outside the Tunjungan Plaza shopping center. Another was at the Galaxi Mall. Two military transports were parked near the central railroad station. Soldiers in camouflage uniforms lounged at traffic- control booths.
Indonesia's second-largest city is on full alert, and despite their outward nonchalance, the people here share nervous reports about the latest food riots in smaller towns to the south and east and west of them. "Everything is normal," insisted a young saleswoman at Delta Plaza, before asking for the latest news about the riots.
In one of the taxis that were indeed parked outside near the water cannon, a driver described himself as "a little bit jittery". "Security is really tight because people around here are hot-headed," said the driver, tapping his forehead in a local gesture that indicates that patience is running out.
Indonesia has become the focus of concern in Asia's economic crisis, with its economy showing less hope of an early recovery and its political stability more uncertain than in Thailand, South Korea and Malaysia.
But despite the riots that have spread in recent weeks through this huge archipelago of 200 million people, and despite the worries in cities like this one, only a major eruption in Jakarta, the capital, seems likely to have a significant impact on the nation's stability.
President Suharto is due to be acclaimed in Parliament next month for a seventh five-year term despite the growing restiveness. This event, together with the pain of rising prices and unemployment, has raised the political temperature in Jakarta. And outside the capital, small demonstrations against rising prices have become more frequent and opponents of the president have become bolder in their criticisms.
Surabaya is a city with a reputation for tight security rather than for riots, but it is also known as the City of Heroes because of an uprising in 1945 that helped bring down the Dutch colonial administration. "Surabaya is one of the barometers of Indonesia," said the taxi driver proudly, though he refused to give his name. "Everyone knows: if Surabaya explodes, it all goes up."
In the city's northwestern industrial section, where giant warehouses and factory buildings testify to the country's rapid growth over the past decade, security forces were also preparing for unrest as thousands of workers lose their jobs. "It's unpredictable," said a long-time foreign resident, describing the latest rumors of impending riots. "It's always a combination of circumstances: wrong shop, wrong time, a group protesting at a factory." He said the security at the shopping centers reflected a concern that as symbols of affluence, they could be targets of angry crowds. Shopping centers were also heavily guarded in Jakarta when a huge riot erupted there in July 1996.
Troops in Jakarta have staged a show of force with a demonstration of anti- riot tactics. And police are questioning men who arrive at Jakarta's train and bus stations and have sent home several hundred who cannot prove their residency or prospects for a job in the capital.
In another effort to defuse tensions, the government has begun job-creation programs to absorb some of the growing millions of unemployed. "The main worry now is the capital, not these riots and demonstrations we are seeing around the country," said a political analyst in Jakarta. "We are still seeing a net inflow of 400,000 people into the capital, despite the economic crisis and the loss of job opportunities here."
In the Glotok market in Jakarta, a vendor, Sarki, was selling sweet pyramid- shaped pastries. He said that the costs of all his ingredients -- flour, sugar, rice and coconut milk -- had gone up, but that he dared not raise his own prices for fear of losing customers. Like most Indonesians, he was suffering in fatalistic silence, reluctant to place the blame for his hardships. "It's the monetary crisis," he said, though he was not certain exactly what that meant. Asked if times are hard, he answered simply, "Yesterday was better."
Indonesia's plan for a currency board may look attractive. But it is a high-risk gamble that could cause huge damage. The superficial appeal of fixing the rupiah is clear, given that the currency's plummet to only a third of its pre-crisis valueh as wreaked havoc, especially to corporate balance sheets. Hong Kong's currency board, meanwhile, has helped cushion it from the regional crisis.
Alas, the search for a "magic bullet" is an illusion. When Hong Kong pegged its currency in 1983, it had a strong banking system and no debt problem. Indonesia -- with its near-bankrupt banks and private-sector debt crisis - could hardly be more different. Moreover, financial markets are deeply sceptical about President Suharto's motives and willingness to reform the economy.
Optimists blithely assume a currency board would be protected from speculative attack because the central bank's $19bn hard currency reserves are triple the value of rupiah notes and coins at current exchange rates. This is nonsense. Notes and coins are only a tiny fraction of the total money supply. Moreover, the reserves are swamped by the country's $137bn foreign debt -- much of it short term and owed by private companies.
The risk is that people would treat a currency board as the last opportunity to swap rupiah for dollars at a favourable rate. The supply of rupiah notes and coins would shrink, while interest rates would soar. Those who did not head for the exits rapidly could find their money trapped in banks that had literally run out of hard cash. The government would be powerless because the currency board would stop it supplying liquidity to the financial system.
Such a scenario might be avoided if confidence in Indonesia were high. But it is not. The downside risk of implementing a currency board and failing would not only be high for Indonesia but would focus attention on currency boards in even robust economies like Hong Kong and Argentina -- with potentially worrying consequences. Mr Suharto should think again.
Louise Williams, Jakarta -- Hundreds of people marched through Jakarta's main business district yesterday protesting against rising prices and unemployment, just a day after the armed forces paraded 25,000 troops in a massive show of force and warned against demonstrations.
About three hundred people picketed the heavily guarded offices of the Central Bank about lunchtime and turned to march to Bulog, the state agency charged with stabilising the prices of basic food items, gathering more supporters as they went. Police lined the streets but took no action. The protesters said they had lost their jobs and were calling on the Government to stabilise prices.
In drought-stricken eastern Indonesia riots raged for a second day and a Jakarta newspaper said one man had been killed and scores of shops, cars and motorcycles destroyed by mobs angered over rising prices and food shortages in the town of Ende, on the island of Flores. Police said rioters attacked more than 21 shops owned by ethnic Chinese, who have become the scapegoats in a string of riots in rural towns because of their dominant position in trading. Twenty ethnic Chinese were reported to have taken shelter in the police station after at least 1,000 people came out onto the streets again yesterday morning hurling rock and sticks at Chinese shops.
The Muslim leader Mr Amien Rais led a debate yesterday at a central Jakarta mosque as scores of troops and police looked on. Mr Rais, who heads the 28-million strong Muhammadiah organisation, has openly challenged President Soeharto for the national leadership but yesterday said he would rethink his strategy of planned mass demonstrations following the show of force in Jakarta.
"I am afraid there will be bloodshed," he said. "For me there are certain political constraints. Since yesterday I have been followed everywhere by police."
Mr Rais conceded that his challenge for the presidencyand a similar bid by the pro-democracy leader Ms Megawati Sukarnoputri would be unlikely to succeed, but said the democracy struggle must continue beyond next month's elections. Mr Rais's apparent backdown leaves the pro-democracy movement with little room to manoeuvre and increases the likelihood of uncoordinated protests and riots in response to the deepening economic crisis. Supporters of Ms Megawati, who has formed a loose alliance with Mr Rais, were due to meet last night to decide whetherto go ahead with plannedstreet rallies despite the military warning.
The rupiah fell for a third day yesterday, breaking back through the 10,000 level against the US dollar as jitters continued over the deep social problems the economic crisis will bring. Wholesalers and traders said prices were due to rise again this week and millions are returning to Jakarta after the annual Muslim holidays to find factory gates locked. In the outer islands, the drought is continuing and eastern Indonesian is facing food shortages as crops and distribution networks fail.
Raphael Pura, Jakarta -- A food crisis is closing in on Indonesia. The coming crunch could compel the beleaguered country to seek at least $1 billion in emergency funds for short-term food subsidies to supplement an International Monetary Fund- backed financial rescue package announced last month. But even with such help, Jakarta faces a triple-digit-percentage price explosion for imported food staples within weeks -- a development likely to provoke an angry backlash from Indonesians already struggling to cope with a 73% decline in the value of their currency, the rupiah, against the U.S. dollar since July.
The dimensions of the food crisis are stark, according to Indonesian officials and foreign agricultural experts who are watching the situation with growing alarm. The impact of a lingering drought is expected to shrink domestic food output -- including crucial rice production -- for the second consecutive year. That will force Jakarta to import a record amount of rice -- more than five million metric tons -- in 1998 at an estimated cost of $1 billion to $1.5 billion.
At the same time, an IMF-mandated elimination of state-held monopolies that have partially subsidized other key imported commodities will prompt rupiah price jumps of 250% to 500% for items such as sugar, soybeans and wheat flour, unless the Indonesian government steps in to buffer the blow with huge new outlays that it can't afford. The country currently imports 100% of its wheat, one-third of its sugar and soybeans and as much as 10% of its rice.
"We agree fully with the IMF [agreement to end the monopolies], but how to implement it in the conditions we have now is the question," says Beddu Amang, a U.S.-trained economist who is chairman of Indonesia's National Logistics Board, which has long run the monopolies. "Because of the [rupiah] depreciation, the slowdown in the economy and because of drought, peoples' purchasing power has declined," he adds.
'Scary situation'
Bulog, as the board is known, was to relinquish its monopolies for all commodities except rice on Feb. 1. But the agency -- with the tacit blessing of Indonesian economic officials -- has continued to shield consumers from the full brunt of import-price increases by releasing existing stocks at subsidized prices and by absorbing the cost of new imports. Bulog officials say the agency has stocks of rice, sugar, wheat and soybeans to last at least until Indonesia's next fiscal year begins on April 1. "Until the end of March, we are still there with subsidized prices," says a Bulog executive, who adds, "But after that, what? What's the policy?" The prospect of enormous food-price increases comes at a time when domestic food supplies and prices are already under mounting pressure. Last week, for example, cooking-oil prices jumped when merchants were released from a commitment to hold down prices during just-ended Muslim holidays; by the weekend, stocks had disappeared from some Jakarta shops. Reports of other shortages pop up daily as the impact of higher import bills reverberates through the food-supply chain. One fresh victim: the poultry industry, where meat and egg production has collapsed because companies can't afford to buy imported feed. "In 60 days' time, we'll have a scary situation," says an Indonesia food-industry chief executive, who adds, "Things may be available, but they won't be affordable."
Rising food prices -- already up 24% over the past 10 months, according to Indonesian government statistics -- and fears of supply shortages are the main causes of the sporadic rioting that has shaken parts of Indonesia over the last few weeks. Angry Indonesians have attacked shops in regional towns and cities, in particular targeting enterprises run by the country's small, but commercially dominant ethnic-Chinese minority.
Such social unrest -- with its racial overtones -- is seen as a growing security and political flashpoint for Indonesia and its 76-year-old President Suharto, who is expected to begin his seventh five-year term in office next month. The food problem is an acute embarrassment for Mr. Suharto, a native of rural Java who has prided himself on increasing the country's food production during his 32 years in power.
The recent rioting stems "mostly from the incapacity of people to buy foodstuffs" and isn't yet overtly political, says Lukman Soetrisno, an economist at Gadjah Mada University. But he warns that a "food crisis can bring a government down" if it isn't addressed. A foreign agricultural specialist concurs: "There's no social safety net in Indonesia -- the only safety net was growing by 7% [per] year," as the country did for the past decade. This year, the government and IMF officially forecast zero economic growth. But some independent economists are predicting the economy may contract by as much as 5% and labor officials concede that unemployment is rising sharply.
Urgent dilemma
The food crisis poses an urgent and painful policy dilemma for Indonesia's government and for IMF and World Bank advisers involved in Indonesia's $33 billion financial-bailout plan. Foreign agriculture experts say Indonesia's key international allies recognize the country's need for immediate financial assistance for food beyond what will be available in the IMF package. But they say donors are reluctant to provide funds if Jakarta appears intent on continuing to subsidize commodities other than rice and on permitting Bulog to effectively maintain its nonrice trade monopolies indefinitely.
"We need to link the whole IMF set of conditions to short-term steps to make sure we don't have a famine," says a foreign adviser working on Indonesian food policy. He argues that the IMF, the World Bank and international capital markets can accept a staged transition of the Indonesian rice price to full free- market levels over a couple of years. But, he says, "capital markets will balk if you're going to hold all four of the other commodities in Bulog's hands and [subsidize them] for another 18 months or more."
During the last three weeks, the World Bank has assembled a group of international donors to raise $1 billion for an "emergency food package" for Indonesia, according to people familiar with the plan. The Asian Development Bank, the Food and Agriculture Organization and the governments of the U.S., Canada, Australia and Japan have joined the effort. Japan is prepared to ship Indonesia one million metric tons of rice under the plan, while other countries and organizations would chip in with cash or technical help.
The World Bank will formally propose its plan to Indonesian officials this week and hopes to move at least some of the aid to Indonesia by next month. One economist contends that the $1 billion package -- including the Japanese shipment of rice -- would be enough to help subsidize the rice price to consumers at a level 25% to 50% above its current trading price through Indonesia's coming fiscal year. But it wouldn't be sufficient to subsidize prices of other commodities at current levels for long. "You can't subsidize anything but rice for more than a few more months," he says, adding, "My concern is [the government] may try to use a lot of resources trying to keep everything stable." "This Is a Bad Policy'
In particular, some foreign and Indonesian economists call for an end to subsidies on wheat, which have underwritten rapidly expanding baked-goods and noodle markets in Indonesia. Until November, Bulog held a monopoly on wheat imports; the agency also held a monopoly on domestic wheat-flour distribution, which supposedly ended on Feb. 1.
Bulog's wheat monopolies have long been a target of government critics because of the central role played in them by Indonesia's biggest private conglomerate, the Salim Group. Founded by Indonesia's wealthiest entrepreneur and long-time Suharto friend, Liem Sioe Liong, the Salim Group among other things imports wheat on Bulog's behalf and holds quasiexclusive rights to mill it for a fee. The resulting wheat flour returns to Bulog, which sells it at a subsidized price in the domestic market. The Salim Group's food arm, PT Indofood Sukses Makmur, which has a lock on Indonesia's instant-noodle market, was a major customer.
People familiar with the situation say Bulog continues to maintain de facto control over wheat-flour distribution and prices despite the passing of the Feb. 1 deadline to end the monopoly.
"This is a bad policy," says an Indonesian agricultural economist, adding, "The wheat subsidy was huge before and it will be even bigger" if it continues. But breaking Indonesia's wheat- dependency won't be easy or popular, since inexpensive- pricing policies have converted millions of urban-dwelling Indonesians to wheat products. "It's the urban poor's staple food," says a foreign economist.
The $1 billion World Bank plan may not be enough to suit the Indonesian government, however. Some economic and political analysts believe, for example, that Mr. Suharto would like to maintain food subsidies for a longer period to contain social unrest. Sticking to current prices of all the commodities Bulog controlled, according to one Indonesian government estimate, would cost about 18 trillion rupiah ($1.94 billion) in the financial year beginning April 1, up from 12 trillion rupiah in the current year. Doing so would be a clear breach of Jakarta's commitment to end the commodities monopolies and would also bust the IMF's limit on the Indonesian government's budget deficit, set at 1% of gross domestic product.
Distant goal
The scale of the problem wasn't evident on Jan. 15, when Indonesia agreed to a 50-point economic-reform package hammered out with the IMF to salvage the country's rapidly failing economy. Under the IMF plan, Bulog was to open all its monopolies, save rice imports, to free competition on Feb. 1. At the time, the IMF's managing director, Michel Camdessus, said he hoped the reforms would reverse a sharp slide in the rupiah, strengthening the Indonesian currency to a level that would mitigate rupiah price increases for the commodity imports scheduled to be freed. So far, that hasn't happened: Although the rupiah has recovered from a low of 17,000 rupiah to the U.S. dollar, at its current rate of about 9,500 rupiah, imports cost Indonesia about four times what they did last August.
Mr. Suharto formally accepted the IMF measures at the time. But in a speech the same day, the president indicated he had reservations about some of them, in particular, the elimination of Bulog's monopolies. In his speech, Mr. Suharto alluded to an apparent difference of view with the IMF and World Bank regarding Bulog's role and said that "we'll wait and see how that develops" when the monopolies end.
"The question is can we apply this IMF commitment directly, or are we going to apply this in stages over one or two years," says Bulog's Mr. Beddu, who suggests that economic analysts sometimes don't fully weigh the social and political implications of food- related problems. "We all agree that at the end, we have to reach what IMF wanted -- a totally free market, both domestically and in foreign imports. That's our goal, [but] I don't know when we can reach it."
Freeing market prices could provide an incentive for more local production of sugar and soybeans, which would benefit Indonesian farmers in the long run. But Indonesia is unlikely to become self-sufficient in either commodity and expensive imports would have to plug any supply gap.
Some Indonesian economists also worry that the end of Bulog's monopolies might mean the beginning of private-sector monopolies for the same products because -- in the current financial crunch -- only Indonesia's strongest companies would have the resources to import and distribute key commodities. Until Indonesia's current financial crisis stalled the economy, the country imported four million tons of wheat, 1.1 million tons of sugar and 700,000 tons of soybeans per year.
"The poor will go from tiger's mouth into the crocodile's mouth," suggests Mr. Lukman of Gadjah Mada University. H.S. Dillon, executive director of the Center for Agriculture Policy Studies, concurs, calling the sudden dismantling of Bulog's monopolies "very rash." He adds: "No private companies are prepared to step into the breach and import commodities, except those controlled by powerful business tycoons."
Michael Richardson, Singapore -- A senior U.S. commander has expressed concern that Indonesia could be on the verge of social and political instability. The question of domestic turbulence is critical to the U.S. military because of fears that instability in Indonesia could jeopardize secure the passage of American warships through the Strait of Malacca, the quickest route between American bases in the Pacific and such flash points as the Gulf.
In unusually candid comments, the commander of U.S. forces in the Pacific, Admiral Joseph Prueher, said that the Indonesian authorities had many problems to grapple with and that the nation's institutions were weaker than they should be to cope with those problems. "And so I worry about the stresses and strains on the government," he said in a speech Monday to the Royal United Services Institute for Defense Studies in London. "It's a really tough situation," Admiral Prueher said, Reuters reported. "Even if all the good decisions are made, there is trouble ahead. There is no economic and political stability. We're trying to work in an economic, political and military way to be as supportive as we can to try to bring this back in line."
Referring to recent riots by majority Muslims in some parts of Indonesia, which were triggered by reports of food hoarding and price increases by ethnic Chinese shopkeepers, Admiral Prueher reportedly said: "The word `amok' is a Malay word. Indonesians will riot at the drop of a hat, so it is a very tough issue."
This view of turbulence ahead in Indonesia, the world's fourth most populous nation, arises because of a looming recession triggered by financial turmoil; increasing unemployment, social unrest, and ethnic and religious tension; and the unsettled question of who will succeed President Suharto, who has held power for 32 years but is now 76 and in suspect health. Such instability could unleash nationalist or Islamic forces hostile to the United States and opposed to the presence of U.S. military forces in the region and in the Malacca strait, which separates Malaysia and Singapore from the Indonesian island of Sumatra and links the South China Sea and the Indian Ocean. Mr. Suharto's generally pro-Western regime has so far contained these forces.
Colonel Thomas Boyd, chief of public affairs at the headquarters of the U.S. Pacific Command in Honolulu, questioned Friday about news agency reports of Admiral Prueher's remarks, said they were fairly accurate. "Any time a country looks as though it could be less than cooperative with the rights of transit passage through international straits would be of concern to us," Colonel Boyd said. "We do not think we are looking at that in Indonesia but we are worried about how things are going there."
Two of the three U.S. aircraft carriers now in the Gulf off Iraq, accompanied by escorting ships and submarines reached there from the Paicific through the Malacca strait. "The United States," said Charles Morrison, a regional security specialist at the East-West Center in Honolulu, "has a mayor interest in doing everything it can to ensure a peaceful political transition in Indonesia. "There's deep concern in the U.S. militaty about the potential for instability in Indonesia because of its size and strategic location. There is no way for American naval forces to move easily between the Indian and Pacific oceans without going through, or very close, to Indonesia."
The U.S. Navy has calculated that if an aircraft carrier and its escorts based in Japan were unable to use the Malacca strait or two other international straits that pass through Indonesia, they would need an additional 15 days to reach the Gulf by a more circuitous route.
Indonesia has a population of 200 million, and the government has estimated that about 10 percent of its work force of 90 million will be unemployed by the end of 1998, the Jakarta Post reported Friday. But the newspaper said that the official estimate could be understated and quoted the All Indonesia Workers' Union as saying unemployment could reach 13 million by the end of the year.
Jakarta -- About 200 people attacked and set on fire shops and vehicles in an eastern Indonesian town in protest against price hikes, the Jakarta Post reported on Monday. It said at least 16 shops, two cars and two motorcycles were damaged or set on fire during the disturbances on Sunday in Ende town on Flores island.
The violence followed similar riots in Bima town on nearby Sumbawa island on Saturday. At least two shops were burned and seven others damaged during a protest against rising prices of foodstuffs sparked by the country's currency crisis. The newspaper said some 200 people went on a rampage in Ende in protest against rising prices. It did not say who owned the shops that were targeted by the mob.
Indonesia's ethnic Chinese minority, who control much of the country's retail trade, have been the main targets of mob violence in riots against rising prices since the rupiah crashed last month. They also are mostly Buddhist or Christian in a mainly Moslem nation. Meanwhile, the Neraca newspaper said residents of Jakarta rushed to buy milk and cooking oil on Sunday because of rumours that prices would double. But the markets were mostly calm on Monday and there was no immediate word of any price hikes.
Jenny Grant, Jakarta -- Indonesia yesterday estimated the country's foreign debt at US$137.4 billion -- higher than previous official figures -- and announced it was drafting a new bankruptcy law to deal with the nation's private debt. "Companies not able to solve their debt problems... must have a legal solution. The government will produce as soon as possible a bankruptcy law," said the Council for Economic and Financial Resilience, set up to deal with the debt crisis.
The head of the seven-member council, Radius Prawiro, said that of the total foreign debt estimate, the private sector owed $73.9 billion and the government $63.5 billion. The council said the International Finance Corp and a number of other banks had provided 42 Indonesian companies with $1 billion in credit to help them pay off their loans. Publicly listed telecommunications company Telkom is the only state-owned company to receive finances from the corporation's package. The council said there would be no guarantee, bailout or government subsidy of any kind in assisting with privately held debt. "If the companies can do this themselves [pay off their debts], please do so," said Mr Prawiro earlier yesterday.
Developing a new bankruptcy law is part of the $43 billion rescue package agreed between Indonesia and the International Monetary Fund in October. Existing bankruptcy processes in Indonesia are time consuming and complex, leaving creditors empty handed after years of chasing bad debts. The lack of a clear bankruptcy law has further eroded investor confidence in recent months after the spiralling rupiah made many Indonesian companies technically bankrupt. A high level of hidden corporate loans and uncertainty over the national leadership succession have caused a total loss of confidence in the economy. Anthony Salim, whose family owns the giant Salim Group, said the solution to the debt problem would have to be positive for both sides to encourage foreign investors to return.
Seth Mydans, Semari -- When hundreds of rough-looking men burst through the alleyways of the nearby town of Kraton two days ago, throwing stones and waving sharpened sickles, most of them came from here in Semari, a placid village of farmers and fishermen.
"Rising prices! Rising prices!" they shouted as they smashed a couple of windows and tried unsuccessfully to set a barrel of kerosene on fire, angered by reports that a Kraton merchant had raised prices.
The police quickly choked off the riot, though shopkeepers had pulled down their metal shutters and retreated into back rooms. The green and blue shutters of most shops remained closed, and the town was still tense.
Half a mile away, Semari seemed as calm as ever. White cows grazed in its bright green pasture and sunshine sparkled from its flooded rice fields. Men smoked quietly on cool porches. Small children, seeing a foreign visitor, called out the only words of English they knew: "One, two, three, four!"
Here on the far eastern tip of Indonesia's main island of Java, the political debate of the capital city of Jakarta seemed worlds away. Currency devaluations, collapsing banks and frightened stock markets are unknown concepts in Semari. No one here has heard of the International Monetary Fund, which has imposed an economic austerity program as part of a $40 billion rescue package.
But Semari and villages like it around this vast nation of 200 million are at the heart of the crisis that threatens Indonesia's stability. And the people here know exactly why that is. "Let me tell you something: the problem is the price hikes," said Muhammad Jamil, a 37-year-old farmer. "Our income stays the same, but prices keep going up. If the prices come down, the problems will be solved. That's the solution. Just bring down the prices." On the other hand, he said, "If the prices keep going up, we'll protest in the streets."
It is already happening up and down the coast of eastern Java, as well as in several other places. In a dozen towns over the last two weeks, small riots have broken out as the prices of rice, cooking oil, kerosene an other staples have begun to rise.
Most analysts say this is just the beginning. Government price supports are only now starting to be removed from staple items as part of the IMF plan. Gasoline prices are scheduled to rise in two months. Bigger, broader and more damaging riots are feared as inflation intensifies and prices rise further.
Indonesia is already a restive nation, held together by force for the last 32 years under President Suharto. A pervasive government apparatus offers little outlet for grievances over corruption, abusive officials, unresponsive courts, disparities in wealth and wrenching cultural changes as cities grow and new factory towns devour fertile farmland.
"There is no rule of law," said Saukat Mifta, a 48-year-old businessman who lives in Kraton. "There is no way for people to channel their frustrations. The common people feel they are ignored by the law. The government does not respond to their complaints. So if there's a problem, they quickly become angry and they turn to violence. They don't try to understand. They just react."
And so, as life becomes harsher for the farmers and fishermen here, even unfounded rumors of price rises have been enough to spark riots. As they gathered around a visitor to shout their complaints, the villagers of Semari were a fount of exaggerated reports of rising rices. "Kerosene is 1,000 rupiah a liter, can you believe it?" they said. "Rice is up to 2,000. Cooking oil is 6,000. Everything is up! Some say sugar is 6,000 a kilo." A woman whispered, "Coconuts cost 200 each." These are impossible prices, said a farmer named Abdul Mukti. "Can you imagine, just 2,000 rupiah for working all day in the fields, and then prices like that? What if you have three kids to feed?" Before the Indonesian currency, the rupiah, began its steep fall last summer, 2,000 rupiah was worth about 80 cents. Today its value is closer to 20 cents.
So on Monday morning, when word spread that a prominent Kraton trader named Nuning had raised the price of a liter of kerosene to 1,000 rupiah from 350, the people of Semari were already seething. Kerosene is a key commodity, used by many Indonesians to fuel kitchen stoves. "We headed into town," said Jamil, the farmer. "Raising our knives!" shouted a young man. "No, no, no," the older men hushed him, glancing at their visitor. "No knives. No knives."
Men from another village brought two small potash bombs that are used illegally by fishermen to stun fish. One was a dud, the villagers said, but one exploded in front of the iron shutters of Mrs. Nuning's shop. (Like many Indonesians, she uses only one name.)
"The interesting thing is that Nuning hadn't raised her prices," said Saukat, whose mother-in-law owns a restaurant across the street from Mrs. Nuning's shop. "She wasn't even open that day. She hadn't been open for five days." Many Indonesian shops had not yet reopened following the Muslim holiday that ended the holy month of Ramadan.
But like so many of the conflicts that have produced Indonesia's crisis -- from small-town riots to questions of governmental mismanagement -- events here were driven as much by personal frictions and rivalries as by deep-rooted issues. "She's known as a rude person," Saukat said, voicing what seemed a common opinion in the nearby marketplace, where people described Mrs. Nuning as "hardheaded" and "troublesome." Mrs. Nuning was not available to defend her reputation; she was under military guard in a local hotel.
One local version of the Kraton riot is that a rival kerosene merchant had spread the rumor that Mrs. Nuning had raised her prices. On a broader stage, a prominent official in eastern Java has suggested that a rival politician is fomenting riots to discredit him.
Along with deepening poverty and spreading unemployment, the economic crisis has heightened frictions between political and economic rivals, between employers and their workers, between shopkeepers and their customers and between ethnic and religious groups. However the crisis plays out, everyone here seems to agree, Indonesia has become a more dangerous place.
As in many a town in many a country, the day's last word came in the Kraton market's barbershop, a tiny whitewashed room decorated with demure pinups of women wearing Muslim head scarves. "These price increases are incredible, incredible," said Dahlan, 65, a retired furniture finisher who spends his days relaxing on a small bench here. "It's not a game anymore." His friend Suwandi, a retired military officer, agreed. "The common people are shaken," he said. "They're confused. It's going to be noisy here. People will shout. You know how young men love to shout."
Louise Williams, Jakarta -- Riots over rising food prices hit drought-stricken eastern Indonesia over the weekend as the chief of the armed forces led thousands of troops bristling with firepower in a daunting public display in central Jakarta.
Amid the crippling economic crisis, Opposition groups are believed to be planning demonstrations in front of Parliament this week in the lead-up to presidential elections on March 11.
In his speech to an estimated 25,000 military and police personnel charged with securing the elections, General Faisal Tanjung said there were "negative signs" which may lead to "disturbances to national stability". "These disturbances can take the form of demonstrations, mass unrest and radicalism," he told the forces.
They displayed rapid response tactics, including helicopter drops in the city centre, the use of armed personnel carriers and deploying squads of black-clad motorcycle riot troops.
In the eastern Indonesian town of Bima, on the island of Sumbawa, to the east of Bali, at least nine shops were burnt or damaged when local residents rioted over sharply increasing food prices, after marching to the local Parliament.
Witnesses said people attacked shops owned by ethnic Chinese, who have become the scapegoats in unrest which has hit 11 rural towns and cities over the past few weeks as the crisis forces millions out of work and pushes up prices for basic commodities. General Tanjung told his men that "repressive actions" against the people should be the "last resort" but gave no indication of what other methods the armed forces may use to calm an increasingly frustrated public.
The Jakarta military commander, Major-General Syarie Syamsudin, pledged there would be no demonstrations or riots in the capital in the lead-up to the polls, in which President Soeharto is expected to be re-elected unopposed for a seventh five-year term by the rubber-stamp Parliament. Opposition groups are rumoured to be planning to step up demonstrations this week, with the opposition Muslim leader, Mr Amien Rais, due in Jakarta today.
Seven people were arrested in Bogor over the weekend for distributing a speech by the pro-democracy figurehead, Ms Megawati Soekarnoputri, who has forged an alliance with Mr Rais to challenge Mr Soeharto's re-election.
The Legal Aid Foundation head, Mr Hendardi, warned that three days of military exercises were intended to cow an angry public - "to scare the public and stop them demonstrating. But, already, both the lower and the middle classes are suffering due to the economic crisis".
Earlier last week the major wholesaler, Goro, said prices of basic foods would rise by 10 to 15 per cent by mid-week, prices of soap and detergent would rise by 75 per cent, and imported goods by perhaps 300 per cent.
| Environment/land disputes |
Michael Richardson, Singapore -- With the Indonesian government short of money and preoccupied with an economic crisis that threatens to lead to serious social unrest, concern is growing in Singapore and Malaysia that the region will again be smothered in smoke pollution from uncontrolled forest fires in Indonesia. Last year, such fires caused widespread health problems, disrupted air and sea traffic, and hit Southeast Asia's multibillion-dollar tourist industry.
Scientists and weather experts warned on Thursday that if the fires continued to gain a strong foothold in Indonesian Kalimantan and Sumatra, then Brunei, Malaysia, Singapore, southern Thailand and the Philippines could see a repeat of the pollution that blotted out the sun for days at a time in the worst-affected areas between August and November and prompted many tourists to cancel their vacation plans.
This would be a major blow for a region already battered by a currency and banking crisis, and now facing the specter of rising unemployment and inflation as economic growth slows sharply, economists said. Indonesian officials said in Jakarta on Thursday that satellite photographs showed more than 90 "hot spot" areas, up from 23 last week, that were affected by new or resurgent fires in parts of Kalimantan and Borneo, gripped by one of the worst droughts in living memory.
"We could certainly be in for a repeat of last year if the fires keep burning," said Steve Tamplin, regional adviser on environmental health in the World Health Organization office in Manila. "Firefighters couldn't do very much to contain the fires once they got started." This is because in East Kalimantan Province on the island of Borneo, where most of the fires are blazing, there are vast dried-out peat and coal seams close to the surface. Once they catch fire, they are very difficult to put out. They also release poisonous sulfur and nitrogen pollutants into the atmosphere along with heavy smoke.
Soetarso, a senior official at the Coordinating Board for National Disaster Management in Jakarta, said recently that the Indonesian government hoped the fires would not spread smoke to other countries. "We might not have the money to fight the fire because of our economic problems," he added.
Such comments and the apparent inability of Indonesian authorities to control the fires, despite an official ban on burning and evidence that most are deliberately set by plantation companies or farmers to clear land for development, are causing increasing concern in neighboring countries that have to bear the consequences. Malaysia is especially worried because it will be host to the Commonwealth Games in September, the month in which the air pollution was at its unhealthiest in 1997.
Malaysian leaders fear that a recurrence this year of the pall of smoke from Indonesian fires, which traps transport and industrial fumes to create noxious smog, will deter athletes from competing. Singapore also has health and economic concerns.
Environment and Health Minister Yeo Cheow Tong said recently that the government was keeping a close watch on the situation and helping to alert the Indonesian authorities to new fires using satellite pictures. "What we would like to do is to understand from them their capabilities at the present moment for fighting those fires," he said.
Malaysia, Singapore and Indonesia agreed on a joint action plan in December to prevent a recurrence of the smoke pollution, under which Jakarta agreed to improve its fire-fighting capabilities.
The International Monetary Fund's managing director, Michel Camdessus, said recently that Indonesia was unable to use its special reforestation fund to help cope with the fires last year because the money had been earmarked for a "national" car project. When the IMF started looking at Indonesia's finances to draw up a loans-for-reforms package, he said, it found a "well- endowed" reforestation fund that was intended to help replant and protect the country's tropical forests, the second largest in the world after Brazil.
But no money had been taken from it to fight the forest fires or set up better anti-fire defenses, Mr. Camdessus told an anti- corruption business forum in Paris. "When asked why the money had not been spent, we were told it was because it had been set aside for the project to create a national car," he said. "Little is known about this extra-budgetary Reforestation Fund, but it contains billions of dollars drawn from timber taxes," said Gerry van Klinken, editor of Inside Indonesia, a magazine published from Melbourne. "Administered via presidential decree, it has long been a convenient-fund for many other purposes beyond restoring forest cover." He said that its major use was to provide cheap loans to commercial timber plantation companies, which replanted cut forests with quick-growing pine or acacia trees for pulp factories.
Indonesian environmentalists and some officials blame plantation companies, many with close connections to the government, for starting most of the fires because it the cheapest and quickest way of clearing forest and scrub land for commercial development.
| Human rights/law |
Eighteen members of the People's Democratic Alliance, ALDERA, were arrested at crack of dawn Thursday by a force of 15 policemen, several of whom were in civvies. The police forced their way into the organisation's Bogor, West Java office and rounded up everyone there, without saying a word. The were taken away on three police vans to police headquarters in the city. This comes in the wake of the arrest last Saturday of four ALDERA activists who were taken into custody for distributing copies of the latest speech by PDI chairperson, Megawati Sukarnoputri. The four were beaten as they were being arrested. They have since been released but required to report regularly to the police.
One of the four, Robert, told the National Human Rights Commission on Tuesday this week that they were brutally beaten on the way to the police station and handcuffed. Robert was among the eighteen activists arrested this morning.
Meanwhile a young man was arrested in Sukabumi, West Java for having in his possession three hundred copies of a book containing speeches by Megawati.
The whereabouts of ALDERA secretary-General [Pius - JB] is still not known. He disappeared last Thursday and has not been seen since. The director of the Nusantara Legal Aid Institute in Jakarta, Desmond J Mahesa, has also been missing since last Friday.
SIAGA, Solidarity for Amien Rais and Megawati, has reported the disappearance of these two men to the police and to the National HR Commission. SIAGA coooordinator Ratna Sarumpaet, the playwright and actress, said they feared these missing men might be suffering the same fate as the young student Hendrick who disappeared two years ago and was held incommunicado for fifteeen days by the military, during which time he was physically maltreated.
The 146 people who were rounded up in Jakarta yesterday while taking part in a protest demonstration are still being held. According to their team of lawyers they should have been charged or released within 24 hours.
It is understood that the police plan to have them charged for taking part in a demonstration without police permission. The intention was to hold a summary trial on minor offences but the court was not available to conduct the trial. When the police said the trial would take place at the police station, lawyers protested because trials must be held in court.
The 146 people arrested were taking part in a demonstration calling for Suharto's wealth to be investigated. After going to the Attorney-General's office, they made their way to the Department of Manpower to call for measures to be taken to stop massive layoffs that are taking place across the country. It was while they were on their way to the department that police forced them to disperse, hit a number of participants, put them onto police vehicles and took them to police headquarters.
| Politics |
Margot Cohen, Jakarta -- Fadli Zon has a vision. The former student activist imagines his countrymen cycling slowly down Jakarta's Jalan Thamrin, a central boulevard normally choked with cars. Instead of Western clothes, everyone will be wearing sarongs made of rough cloth. "If necessary, we'll go backwards 10 or 15 years," he says fervently. "The Muslim majority is ready to face any challenge, as long as there is economic justice. We can start to develop our country without them."
To Fadli, a rising young thinker and editor, "them" refers to Indonesia's tiny ethnic-Chinese minority, which he holds responsible for the country's deepening economic crisis. If "they" don't return their wealth parked overseas, he warns, it's payback time. Time for the 87%.
Muslim majority to seize the reins of an economy from a community that accounts for a mere 3% of the country's 200 million people. Time to construct a New Economic Policy that could go further than the Malaysian model in promoting the indigenous race. Time, too, for the military to help assert the rights of the nation's Muslims.
Fadli is not alone in his thinking. In fact, such ideas are gaining wider currency in Indonesia, and might worry foreign investors. A backlash against the nation's largely Catholic-and Buddhist-Chinese entrepreneurs would delay economic recovery and dent the already battered rupiah further. In addition, religion- based policies appear to clash with the deregulated, free-trade environment sought by the International Monetary Fund.
Will Muslim economic nationalism triumph? Will long-simmering anti-Chinese sentiment explode beyond the current level of scattered riots? There are no simple answers. For the moment, the Muslims have no coherent political strategy -- not surprising, given President Suharto's systematic attempts to depoliticize Islam since launching his New Order in the 1960s. In fact, the grassroots distress triggered by the current economic crunch has deepened the rifts within the Muslim community, spawning new groups with shifting memberships and nebulous loyalties. Despite Muslim activism's many colours, a pattern is beginning to emerge, although still blurred. Some groups, for example, believe the economic turmoil can be used to harness Muslim discontent to bring about democratic change. That would include a reduction in the military's influence on political life and a new president -- Suharto's insistence on standing for a seventh term notwithstanding.
Some Muslim activists subscribing to these views are willing to work across religious and ethnic lines to achieve this goal. Take Amien Rais, chairman of Muhammadiyah, a Muslim group that boasts 25 million largely urban members from the middle and lower-middle classes. Rais has agreed to work with Megawati Sukarnoputri, ousted chairman of the opposition Indonesian Democratic Party. Megawati may be short on answers for the nation's future, but she brings a religious rainbow of supporters to the table.
Other Muslim groups, however, prefer to side with the status quo. The gentler, wealthier 1990s have been benign for Indonesia's Muslims. They have gained greater freedom to preach and practise, as well as a new Islamic bank and the Indonesian Association of Muslim Intellectuals, whose aim is to foster Muslim social and economic interests. Known by its acronym ICMI, the organization draws its members from Indonesia's social elite, and is chaired by Research and Technology Minister B.J. Habibie, viewed as Suharto's choice for vice-president.
To be sure, ICMI has disappointed Muslims by its failure to empower Muslim entrepreneurs. But now that they have come in from the cold, certain Muslim leaders don't want to rush back outside. "There's no guarantee that under new leadership we can enjoy all of these benefits," says H. Ahmad Sumargono, vice-chairman of the Indonesia Committee for World Muslim Solidarity, known by its acronym KISDI. Fear of reprisal is also a factor. It was probably behind the decision of the Muslim-oriented United Development Party, better-known as the PPP, to support another presidential term for Suharto. A. Hafidz Ma'soem, chief of the PPP's chapter in Jombang, east Java, believes backing another candidate could have led to ostracization of party members. A Muslim youth leader in Jakarta echoes those qualms. "How can we summon the courage to struggle? If there's a discussion at noon, the authorities find out by evening. The security forces are very repressive," says Syaiful Bahri Anshori, who chairs a youth group under Nahdlatul Ulama, Indonesia's largest Muslim organization.
While the men in olive-green remain repressive, as the youth leaders testify, over the past six months their image has been re-worked as a bulwark of Islam. The spin doctor is none other than Maj.-Gen. Prabowo Subianto, commander of the elite Kopassus force, son-in-law of President Suharto, and among the seven men who matter most in the Indonesian military.
Prabowo has sought to consolidate support from KISDI and other Muslim groups, especially those who felt marginalized in the early days of the New Order. In a high-profile ceremony that was splashed across the pages of local newspapers, he broke the Muslim Ramadan fast along with about 5,000 of the faithful, including some well-known clerics and activists, at a January 23 ceremony held at the special forces headquarters. "It has never happened before," beams Hussein Umar, secretary-general of Dewan Dakwah Islamiyah Indonesia, a group that the military once suspected of extremist tendencies. At the ceremony, Prabowo urged his fellow officers and Muslim leaders to "close ranks" in facing the challenges ahead. What the challenges were remains unclear.
But copies of Lords of the Rim, a glossary of Chinese-owned Asian groups, were distributed to Muslim clerics at the event. And rumours circulate in Jakarta that prominent military officials are trying to fan anti-Chinese sentiment in an attempt to divert popular criticism from Suharto's seventh bid for power. A retired general told the REVIEW that this development had alarmed some of their elder colleagues. "We don't want this problem to escalate into racial sentiments," he said. "That would only push this country into deeper difficulties."
The general's concern stems from recent attacks on Sofjan Wanandi, a leading light of Indonesia's ethnic-Chinese business community. After the fast-breaking ceremony, Maj.-Gen. Sjafrie Syamsuddin, Jakarta's regional military commander, announced that Wanandi, chairman of the Gemala Group, was being questioned in connection with a bomb blast in a Jakarta apartment. The military claims that Wanandi gave funds to the outlawed People's Democratic Party, a tiny youth group branded as communist, to which the bomb's three makers belonged. Wanandi, among the few ethnic-Chinese businessmen openly critical of Suharto in recent weeks, has denied any involvement.
The military's willingness to target Wanandi seemingly has disrupted the cosy relationship between the armed forces and ethnic-Chinese business. Beneficial to both sides, the business ties have nonetheless been largely supported by corruption, and potentially expose Abri to criticism from Indonesian Muslims resentful of the ethnic-Chinese community's economic power. Analysts say Prabowo has been proactive in showing support for the Muslims, and thus deflecting criticism away from the military. His superior, Gen. Wiranto, army chief of staff, has been comparatively more discreet and not shown any partisan preference for Muslims.
The Wanandi affair has presented Muslim activists a chance to demonstrate their opposition to the ethnic Chinese, safe in the knowledge that a military reprisal is unlikely to follow. In late January, about 50 Muslim youths repeatedly gathered outside the Centre for Strategic and International Studies, demanding that the Jakarta think-tank, where Wanandi sits as a director, be shut down. Some protesters belonged to the Muslim Students Association, operating under a different name in order to avoid any risks for this mainstream organization. Rumours that the youngsters were on Prabowo's payroll at 50,000 rupiah a head were denied by Hasan Azhari, a protester, who told the REVIEW that no money had changed hands.
In a sense, the allegation of compensation is almost besides the point. What matters is that the activists sensed that the time was ripe to right historic wrongs. In some Muslim circles, the CSIS is responsible for fomenting the bad blood between the military and Islam in the 1970s and 1980s, through its association with Benny Murdani, a former intelligence chief who was forced into retirement in 1993. Wanandi makes a particularly vulnerable target right now, just like the ethnic-Chinese shopkeepers in Banyuwangi, Jember, Pasuruan and other Javanese towns who have been accused in recent weeks of hoarding essential goods and artificially hiking prices. The rioting and pillage spread in early February to Donggala in central Sulawesi province. Again, the victims were mainly Indonesian Chinese.
For Fadli, and many other young Muslims, there is no real difference between ethnic-Chinese conglomerates and small shopkeepers. "They will follow what the conglomerates say, both in their political and economic stance," he asserts. For their part, leaders of KISDI and Dewan Dakwah Islamiyah Indonesia insist darkly that the ethnic-Chinese conglomerates are part of an international conspiracy to drag down the rupiah -- never mind that the currency's decline has badly hurt those very conglomerates. They openly question the nationalism of all Indonesian Chinese, although they concede that a few, such as economist Kwik Kian Gie, have proved their loyalty to the nation. However, the Muslim leaders fight shy of taking responsibility for anti-Chinese rioting. In an eerie echo of the military line, they blame that on the "leftist" opposition, which in the words of KISDI's Ahmad Sumargono, "has a manipulative agenda that will bring suffering to the people." He says, though, that he would mobilize a rally to support Habibie if the minister were attacked by a group with a "different ideology," for example, Catholics.
Such talk makes many Indonesians nervous, especially since the felling of Abdurrahman Wahid, the influential Nahdlatul Ulama chairman and a leading voice of tolerant Islam, by a stroke in January. Although his condition has improved steadily, Abdurrahman's re-entry into politics remains uncertain. Some fear his absence will leave the NU exposed to outside forces. Others worry that even the calming presence of people like him cannot stem the racial tension that will escalate along with economic pressures.
Yet many other Indonesians believe Islam can play a positive role at this critical moment in their history. Their feelings were articulated by scholar Moeslim Abdurrahman at a recent seminar. Islam, he said, must act "as a symbol of solidarity for those who suffer, those who feel excluded, and those who feel defeated."
The Asian Executives Poll recorded in the Far Eastern Economic Review (5 February 1998) shows that most businesses in the region will have no confidence in an Indonesia under Suharto's continuing leadership.
37.5 per cent answered "very bad" to the question, "Would a seventh term of office for President Suharto be good or bad for Indonesia's economy?" Another 37.5 per cent answered "bad". The goods were down to 18.7 per cent and just 6.3 per cent answered "very good". Polling among Indonesian businessmen was even more negative for Suharto: 83.4 per cent felt that Suharto's re- election would be "bad" or "very bad".
Answers to the question, "Would a change in leadership in Indonesia make you more confidence or less confident of the country's investment climate?" were even more unequivocal. 61.7 per cent over all said they would be "somewhat more confident" and 17.9 per cent answered "a lot more confident". Among South Korean and Australian businessmen, all respondents answered either "more confident" or "a lot more confident".
Another question related to confidence in Megawati, were she to take over in Indonesia. The majority view, 62.2 per cent was that she would not be more adept at dealing with the country's crisis. Confidence in her was the highest in South Korea and the lowest in Indonesia.