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ASIET NetNews Number 41 - October 26-November 1, 1998
East TimorWomen campaign against state violence Moslem students protest political rules Workers demand release of Dita Sari Protest seeks resignation of Habibie
Political/economic crisisMilitary exposed on Timor Timor refugees win their day in court Former diplomat says Balibo 5 murdered Leak shows no East Timor troop cuts Community groups back referendum
Human rights/lawLynch mobs rampage in East Java Habibie's challenge
News & issuesOfficials 'scared of report on May riots'
Arms/armed forcesThe business of hatred Soeharto's legacy Moslems demonstrate over Bali furore Protests against Pancasila ideology Backlash fear over poll delay Thousands of troops secure parliament
Economy and investment`Regret' as joint military exercises axed` Snuggling up clouds our vision
Assets sale raises concern with IMF
| Democratic struggle |
Jakarta -- A group of Indonesian women Thursday campaigned against state-condoned violence by distributing flowers, pamphlets and black ribbons in a Jakarta main street.
Some 20 activists from the "Voice of Concerned Mothers" (SIP) rights group knocked on car windows, jumped onto buses and stopped passers-by amid busy lunchtime traffic, calling on people to say "no to violence."
"We are campaigning against all forms of violence, especially violence against women and especially acts that were supported, defended and allowed to happen by the state," said SIP's Karlina Leksono.
Leksono said the public had learned about a long list of human rights abuses in their country only after the end of the 32-year-long New Order era of ousted president Suharto. "It is time for us to join our hands and say no more to violence," Leksono said, adding that the black ribbons were a sign of mourning. Leksono was arrested earlier this year when campaigning against the soaring price of milk.
The SIP is most active in subsidizing sales of milk for low- income mothers of children under the age of five. The group along with several human rights groups had been subjected to various forms of terror and harassment, ranging from phone calls and kidnap threats to receiving a grenade in the mail.
Jakarta -- Some 300 Moslem students protested in front of parliament Thursday demanding the military ends its political role and calling for an investigation into the wealth of former president Suharto.
The students, including veiled Moslem women students, staged a peaceful rally outside the closed gate of the national parliament and held joint prayers before disbanding peacefully. The students, from the United Action of Indonesian Moslem Students, made four demands in a statement. They demanded an end to the armed forces' role in politics, accorded to them by law, saying the law "gave legitimacy for ABRI (the Indonesian armed forces) to play a larger role in the political landscape of Indonesia... which therefore greately reduced the role of Moslems."
They also demanded the scrapping of a law under which all political and mass organisations must adhere to the state ideology. The law prohibits the development of religious parties, the students said, adding it also "hindered democracy in Indonesia."
A third demand was "an investigation into the wealth of Suharto as a reflection of the upholding of legal certainty in Indonesia."
Jakarta -- About 100 workers demonstrated Thursday for the release of a jailed labor activist convicted of organizing a strike while former President Suharto was in power.
The rally came one day after 8,000 students demonstrated outside Indonesia's parliament in the biggest protest to hit the capital since violent unrest forced Suharto's resignation in May.
Like the students, the workers demanded an end to the Indonesian military's big role in politics and said the armed forces always favored employers in labor disputes. They staged their protest outside the attorney-general's office.
Their main demand was the release of Dita Indah Sari, who was convicted last year of organizing a strike by 20,000 workers in Surabaya, Indonesia's second- largest city in 1996. He was arrested in a nationwide crackdown on opposition activists and sentenced to six years in jail.
The workers, who came from diamond, electronics and shoe factories, also demanded the government lower the prices of basic commodities. Inflation has soared and millions of people have lost their jobs as Indonesia endures its worst economic crisis in decades.
Jakarta -- More than 3,000 students rallied near parliament Wednesday to demand Indonesian President B.J. Habibie resign and hand over power to a transitional government free from Suharto- era officials.
The students, who were stopped from approaching the parliament's gate by a cordon of 200 armed soldiers and riot police, also called on the people to reject the plan to hold a special session of the country's highest legislative body. Under the plan, the People's Consultative Assembly (MPR) is due to meet on November 11-20 to prepare for fresh parliamentary elections in May.
Hundreds of soldiers and policemen formed a cordon inside the grounds of parliament. Lieutenant Colonel S. Widodo of the Central Jakarta district police said that about 800 soldiers were deployed to back up police forces there.
"Form a democratic transitional government," read one poster. Others read "Reject, Reject, Reject the special session," "Bring Suharto to trial, eradicate the (Suharto's) New Order."
Many of the protestors, who were from the United People's Action which groups 10 student organisations, also wore T-shirts reading "Total Reforms, No Suharto, No Habibie and No Corruption- Collusion-Nepotism." The road in front of parliament was closed to traffic and at least two armoured vehicles carrying water cannons were on standby.
The demonstrators pushed down a high wire fence which separated a tollroad from the road passing in front of the parliament. The security forces later allowed the students to gather in front of the parliament for about 20 minutes before they were asked to disperse. No other incidents were reported.
Another rally, involving hundreds of students and several reform leaders and held to reject the special session, was also staged at the two campuses of the state Universitas Indonesia -- in Central and South Jakarta. Some 400 pro-reform activists gathered at the Central Jakarta city campus where they called for a more sensitive government.
Sri Bintang Pamungkas, chairman of the newly formed Indonesian Uni-Democracy Party, said Habibie's presidency was illegitimate since power was handed over to him by Suharto. "Habibie who is part of the Suharto regime, should not be in the current government and he should definitely not be allowed to claim (to be carrying out) reforms," Pamungkas said. "It is impossible for someone who is corrupt to eradicate corruption," he added.
In Bandung, a university town some 200 kilometres (124 miles) southeast of here, some 800 students staged a similar rally in front of the provincial parliament there, an AFP photographer there said.
Chanting "Habibie resign," and "Hang Suharto", the demonstrators also brought down two huge pro-Habibie banners adorning the building, tore them and set them on fire. "We, the United People's Action, deem it important, even a pressing need, to return the people's sovereignty by a more democratic transition, that is, through a collective government free of the New Order regime," a statement issued by the protestors in Jakarta said.
It said the government was allowing issues to develop and split the nation while it neglected its main task -- resolving the economic crisis, upholding the law, and demanding the accountability of the Suharto regime for its past rule and violations. "Both the Suharto and Habibie regimes have failed to resolve the problems of the people but on the contrary have only prompted disunity," the statement said.
It cited the mysterious murders in East Java, comments by a minister deemed discriminatory against a certain religion, the prevailing controversy about whether mass rape had taken place duing a string of riots in May, as among the issues splitting the nation. It also cited the government's tendency of slapping communist, leftwing and anarchist labels on pro-democracy movements and the suspected tendency by authorities to organise pro-government rallies to offset anti-government ones.
[On October 28 the Wall Street Journal reported that the demonstrations had lead to lower share prices with the Jakarta Stock Exchange composite index loosing 5.811 to 312.290. Traders said the situation also forced the Rupiah to trade lower against the US dollar which dropped to 7,675 - James Balowski.]
| East Timor |
Don Greenlees and Robert Garran, Jakarta/Canberra -- The leak of confidential Indonesian army documents on troop numbers in East Timor yesterday appeared to throw the armed forces headquarters in Dili into confusion.
Deputy military commander Colonel Mudjiono initially denied the contents of personnel documents showing 17,914 troops were stationed in East Timor at the end of August, despite promises by Jakarta to start withdrawals. "I swear that there are now only five battalions of territorial troops. This means about 5000 men," Colonel Mudjiono told The Weekend Australian.
However, a less senior officer in the Dili command, Lieutenant- Colonel Supadi, told AAP the estimate of almost 18,000 combat and territorial troops "may be true". "There are still many civilians who have been trained in military exercises and they also carry guns," said Lieutenant-Colonel Supadi, chief of staff in the Dili headquarters.
When these comments were put to Colonel Mudjiono and a commander at Udayana Command in Bali, Lieutenant Colonel I Made Runa, they admitted the number of troops could be up to 18,000 if various categories of police units, navy, air force and civilians trained as military were included. Both continued to insist those troops still in East Timor were engaged in "farming and building houses" for local people, and not combat duty.
The confused response to troop numbers follows the extensive leak this week of armed forces personnel information to foreign media and governments. More than 100 pages of highly detailed documents show unit compositions, names of personnel, details of the extensive paramilitary network and the extent of the military role in civil administration.
Despite Indonesian claims to have withdrawn all combat troops, 7938 were still in place in August, up 1766 from November last year. The leak is an embarrassment to Jakarta and threatens to undermine confidence in negotiations on a solution to the East Timor problem. Foreign Minister Alexander Downer yesterday cautiously criticised the Indonesian Government's failure to withdraw troops from East Timor, saying he would be "disappointed", and the reconciliation process "weakened", if this were the case.
He said his Indonesian counterpart, Ali Alatas, had officially informed him on July 27 that troop numbers would be reduced by about 1000, with further possible reductions after that. "They (the reported troop figures) are completely new to me but I have seen figures that have varied enormously, by almost tens of thousands, and clearly a lot of the figures you hear are wildly inaccurate," he said.
"If the documents were to be accurate, it would be a matter of real concern to us. If troop numbers aren't being reduced in East Timor, then that is going to weaken the spirit of reconciliation, which is necessary for there to be a settlement to the East Timor problem."
Opposition foreign affairs spokesman Laurie Brereton said yesterday the documents dealt a blow to efforts in East Timor at building confidence and trust. "An independent monitoring presence is essential to establish an atmosphere conducive to effective dialogue and negotiation," he said. But Mr Downer rejected the call, saying: "Indonesia is a sovereign country and they'll make their own judgments about whether they would allow international observers in."
The armed forces have consistently understated troop strength in East Timor, putting numbers at 11,700 after a heavily publicised "pull-out" from Dili on July 28.
David Brearley -- Australia's Timorese community was celebrating a victory last night it hopes will open the nation's doors to 1500 asylum seekers and free them from legal limbo.
Lay Kon Tji, who came to Australia from East Timor in 1992, succeeded in his Federal Court bid to overturn a finding by the Refugee Review Tribunal that he was a Portuguese national and therefore ineligible for refugee status. Justice Ray Finkelstein dismissed Mr Lay's first two grounds for appeal, but found the tribunal was wrong in concluding his Portuguese nationality was "effective".
"It is clear enough, indeed it is an inevitable finding, that the decision of the tribunal was based upon erroneous findings of fact," Justice Finkelstein said.
Mr Lay arrived in Australia on an Indonesian passport. In 1994, a delegate of the immigration minister rejected his claim that he had a well-founded fear of persecution if he was sent home. The tribunal found otherwise, ruling that Mr Lay would face detention and torture if he were returned because of his race and political activism, but said the problem was effectively Portugal's.
In setting aside this finding yesterday, Judge Finkelstein called for the parties to inform him by Friday of appropriate orders, or to make individual submissions.
Mr Lay's wife, Kathy Lay, said she was encouraged by the judgment and confident her family would eventually win the right to stay in Australia. "I do think that, yes," she said. "I'm hoping that."
Refugee lobby groups hailed Judge Finkelstein's decision as an important precedent, but expressed fears it would be overturned on appeal. "My reaction is very mixed," said Etervina Groenen, Mr Lay's caseworker.
"I'm quite thrilled, because I know these people are quite traumatised. Every time I see them they ask if there's any news -- their lives have been in the balance for so long -- and finally I have some news for them, some very good news. "I guess I just hope the Government won't appeal."
A spokesman for Immigration Minister Philip Ruddock said yesterday the Government would not decide its response until legal experts had studied the judgment.
Tribunal chief Peter Nygh doubted the finding would set a precedent for all Timorese asylum seekers because each application had to be decided on its merits. "The East Timor situation is probably one of the most litigated parts of the tribunal's work. Whatever the tribunal decides, the party aggrieved is likely to appeal," Dr Nygh said.
At Collingwood College in Melbourne, which has more than 40 Timorese among its students, news of Mr Lay's victory caused spontaneous outbursts of tears and song. "The kids are unbelievably thrilled," said principal Frances Laurino. "They were all singing the Fretilin anthem. Teachers were crying."
A former Australian diplomat says Australia's Foreign Affairs Department has maintained sensitive files on East Timor. The diplomat says the files showed Australia had prior knowledge of -- and agreed with -- Indonesia's invasion of East Timor, and, that Foreign Affairs knew years ago that Indonesian soldiers had killed 5 Australian-based journalists.
Bruce Haigh was a diplomat for more than two decades, until 1994, and was in charge of the Indonesia desk in the mid-1980s. Mr Haigh says he was asked to maintain sensitive files about East Timor in his office rather than placing them, as is customary, in the Department's central registry. The former diplomat is talking to Graeme Dobell.
Dobell: Bruce Haigh , what was in these so-called sensitive files?
Haigh: Well there were two files, They existed, They're real enough, one of them related to investigations and other information relating to the deaths of the five journalists, and there were photographs included in that file, and reports as I say and other information which had been pulled together from various sources relating specifically to the deaths of the journalists at Balibo.
Dobell: What did it say about the deaths of the journalists?
Haigh: Well... there was a lot, but from my reading of the file, and I think from any other person's reading of the file, the reasonable conclusion would be drawn that they were murdered. So the reading of the collective papers on those files would lead to the conclusion that they had been murdered. I don't recall there being one single line saying the journalists were murdered, but when you put the information which was on those files together... when you read the file as a whole... that's what emerged.
Dobell: Why were you told that these files were sensitive, to be maintained in your own office and not sent to central registry?
Haigh: Well I inherited them. When I went into the section, the files were there, and they'd been there for some time... well they must have been because I went into the section in late '84, I think there must have been a concern that they needed to be held where they could be watched because they didn't want bits and pieces to be leaked off them. I mean Foreign Affairs was notorious for leaks in those years, and I guess people were concerned that that would happen with the information on these files.
Dobell: What would have been the problem do you think for the Department if they had been leaked or became public?
Haigh: It would have embarrased our relationship with Indonesia with the sort of relationship that they had built up and were seeking to maintain with Indonesia, but now this far down the track it would have been a good thing
Dobell: How do you think these two sensitive files would change the public understanding of what took place in East Timor in 1975?
Haigh: Well the other file that we didn't discuss had information relating to the Department... exchanges of cables and other information relating to the Department. Prior knowledge of the Indonesian intention to consider the invasion of East Timor as an option... there were other options of course. I think that if this information was publicly released, people would see that the Australian Government had been very closely involved... or had been involved with the Indonesian Government at the time that the Indonesian Government was trying to work out what it was going to do with East Timor. I would say that we had received and had been consulted and had discussed with the Indonesian Government on the options that they felt they were faced with including the military invasion of East Timor, and incorporation of East Timor into Indonesia.
Dobell: Now these discussions with Indonesia, these took place weeks before invasion... months, how far back?
Haigh: From my recollection it covered at least a period of nine-months if not 12-months before the invasion, but to be on the safe side, nine-to-ten-months before the invasion.
Dobell: So how does this information differ from the public explanations that have been given by Australian Governments of both political persuasions about what Australia knew, and what Australia did over East Timor?
Haigh: I'd say Australia knew, and I would also say that Australia agreed with the military-incorporation, or the incorporation by the military of East Timor into Indonesia.
Dobell: Why did you not give evidence to the inquiry set up by lawyer Tony Sherman two-years ago... why did you not speak to Mr Sherman?
Haigh: Because I didn't think that they were serious about getting to the bottom of the whole question, because the terms of reference were very narrow... because of the way in which Garreth Evans adressed himself on the question of the inquiry, and because after having been at Foreign Affairs for 23-years I was unsure about the processes of government relating to East Timor and indeed to the conduct of foreign policy and diplomacy in the region. And I just didn't believe that they would make rigorous efforts to uncover what happened there, and in fact that's exactly what happened.
Dobell: Will you speak to the second Sherman inquiry?
Haigh: No no no.
Dobell: What sort of inquiry would be necessary do you think?
Haigh: Judicial. You have to give protection to witnesses and it has to be conducted at a level above that of a sort of a "Kangaroo Court". I mean Sherman can't be asked or nor should he volunteer his services, to go back and try and make good his tarnished reputaion with respect to this inquiry. It's done, he had a go, he was given the opportunity, he failed. Now it's no good getting him to try and make good that failure.
Don Greenlees -- Confidential Indonesian army documents show the number of combat troops in East Timor has remained steady in recent months, in an embarrassing rebuttal of Jakarta's claims to have started troop withdrawals.
Personnel data on the armed forces operations in East Timor reveal 7938 combat troops were still stationed in the contested territory in August -- unchanged from a month earlier when troop cuts were supposed to have occurred.
In an extremely damaging leak, more than 100 pages of highly detailed data on unit compositions and the territory's elaborate network of paramilitary groups have been circulated to foreign journalists and governments. Western diplomats, who have reviewed the documents, say they have no doubt the information is accurate.
It shows total armed forces strength in East Timor, including combat and territorial battalions, stood at 17,834 by late August. The documents also confirm the continued presence of units from the army's elite special forces, Kopassus.
Indonesia has made strenuous efforts to convince the East Timorese and the international community that troop numbers were being reduced. After a much-publicised withdrawal of about 1000 troops from Dili in late July, Indonesia claimed no combat forces were left in the territory.
In an interview with The Australian last week, Foreign Minister Ali Alatas said the only forces remaining in East Timor were several territorial battalions, comprising 750 to 1000 troops each. Asked if combat troops remained, he said: "As far as I know, not any more."
The comprehensive leak of personnel data is a damaging blow to Indonesia's credibility as it attempts to negotiate a final settlement to the status of East Timor, 23 years after Indonesia invaded and annexed the former Portuguese colony.
President B.J. Habibie has offered to give wide-ranging autonomy to East Timor in the hope of winning international recognition of Indonesian sovereignty. The promise of troop reductions was seen as a gesture of goodwill aimed at improving the mood of negotiations with East Timorese groups and at the UN.
But based on the armed forces' own estimates, overall troop strength actually increased between November 1997, when combat and territorial personnel numbered 15,912, and August. Combat forces increased by 1766 over the same period. If irregular and militia groups are included, the overall number of personnel under armed forces control is as high 21,000.
The documents confirm five combat battalions, each with a strength of 985 men, are stationed in the two operational zones that divide East Timor. A further 10 companies, including Kopassus units, are also attached to the Dili command.
Sources said at least one Kopassus company of some 140 troops had been withdrawn. But this leaves one Kopassus company and a Kopassus intelligence and headquarters unit still in the territory. At the time of the staged-managed withdrawal in July, the armed forces claimed all special forces were departing.
The documents also show the extent of the armed forces control over civil administration, with 140 officers in senior bureaucratic jobs.
Louise Williams, Jakarta -- Indonesian community groups have for the first time formally joined East Timorese activists in calling for a referendum on independence for the troubled province, saying the East Timorese conflict remains a "major problem" for Jakarta.
Over the weekend a group of Indonesian and international non- government organisations called on the Habibie Government to withdraw Indonesian troops, release jailed East Timorese leader Xanana Gusmao and allow the people of East Timor to vote on their status in a fair referendum.
"The so-called integration of East Timor into Indonesia has turned out to have been a result of a large-scale military invasion which was preceded by various military operations which were concealed from the Indonesian people," their statement said. "Gross human rights violations on a daily basis ever since have increasingly stained Indonesia's name."
The statement, signed by 40 organisations, is the first formal support for East Timorese activists from national Indonesian community organisations, and represents a stepping up of domestic pressure on the Habibie Government.
Under President Soeharto restrictions on freedom of speech meant pressure on East Timor was limited to international diplomacy, and few Indonesians were willing to challenge Indonesian rule. East Timor's largely Catholic population of about 800,000 is a tiny ethnic and religious minority within predominantly Muslim Indonesia.
"In the past Indonesian individuals have supported our position, but this is the first time Indonesian national organisations have supported our demands for a referendum. It is very positive for us," said one East Timorese activist.
The statement, which was also signed by the Australian Council for Overseas Aid, pointed out that East Timor was in the process of decolonisation from Portugal when Indonesia invaded in 1975. Indonesia, formerly a Dutch colony, was formed on the principle of decolonisation and self-determination, processes which were then denied the East Timorese people, the statement said.
"The claim by the Soeharto Government that East Timor is an internal Indonesian problem did not solve the issue, but the current Habibie Government is continuing with this claim. In the international community, East Timor has become a major and very serious obstacle for Indonesia. "Additionally, the East Timor problem has clearly become a heavy economic burden. State expenditures for the military presence and operations have become an increasingly expensive burden."
| Political/economic crisis |
Surabaya -- Hundreds of people, angered when police refused to hand over to them a suspected killer, went on the rampage in the East Java town of Pasuruan, reports reaching here said Monday.
The violence broke out after a man, suspected of being involved in the killings and terror against local Moslem leaders, was caught Saturday on the highway in Ketapaan, near Pasuruan on the northern coast, sources there said.
The man, an ethnic Chinese was arrested and brought to the local headman, who refused to hand him over to a lynch mob outside his house, sources said. The angry crowd then went on the rampage, attacking shops, banks and vehicles, they added.
"The man is still being held here and we have also arrested four of the rioters for questioning," an officer on duty at the Pasuruan police headquarters who identified himself as Hari told AFP. First Sergeant Rachmat of the Pasuruan military said one unit of soldiers had arrived on Saturday from Beji while another unit had arrived from nearby Malang earlier Monday to assist the local security. One unit includes about 100 men.
"There has been no more unrest since Saturday," Rachmat said. Residents said shops had begun to reopen for business on Monday. The banks, attacked on Saturday were also open again, they added. Both Rachmat and Hari declined to confirm sources' allegations that shots, believed to be warning shots, had been fired on Saturday.
Between 10-15 shops were damaged as well as the three banks. The crowd also overturned a passing sedan and damaged a police pickup which had come to take the man to the police station, they added.
Violence has risen against suspected "ninjas" -- marauding men clad in black with their faces covered in the fashion of the Japanese Ninja assassins -- who have been blamed for a series of killings in East Java in the past few months.
The backlash came after scores of Moslem scholars and teachers became the victims of the mysterious killings which initially targetted warlocks. At least 178 people have been killed in East Java so far, according to an independent fact finding team set up by student activists here, the Surabaya-based Jawa Pos daily said.
The Nahdlatul Ulama (NU) Islamic movement said that 96 of its members were among the victims. Scores of local NU leaders have also spoken of being terrorised, including receiving anonymous telephone calls. The Suara Karya daily said threatening telephone calls have also targetted Moslem leaders in Sukabumi, Bogor and Cianjur in West Java.
Religious and military leaders have said conflicts within the country's political elite may be behind the violence in East Java as they seek to spread unrest in the run-up to next year's elections.
Action by neighbourhood watches, set up by the local population in several areas in East Java to protect their villages against ninjas, has led to the deaths of scores of people suspected of being involved in the killings.
They have been arresting and attacking people found without identity documents or roaming the countryside after dark. In Central Java, crowds beat to death three people suspected of belonging to the Ninja groups, the Media Indonesia daily said.
Two men killed by mobs on Saturday after they were caught in ricefields in Wedung in the district of Demak late on Saturday, turned out to be snake hunters, the daily said.
The third victim, a woman, was killed when mobs dragged her from a motorcycle carrying her to a police post after she was arrested by a neighbourhood watch in the same district on Saturday without clear indentity papers and declining to answer questions, the daily added.
In Malang, mobs last week killed eight people, beheading at least two of them and burning another. In the East Java district of Mojokerto, where 87 leaders of Moslem boarding schools have reported threatening telephone calls, the local NU youth arm has set up a special security team of some 2,500 members to assure the security of the threatened Moslem teachers, the Jawa Pos said.
To the outside world, Indonesia looks like a disaster waiting to happen. Even inside the country, there are fears that the upheavals of May which led to the overthrow of President Soeharto will be nothing compared with what lies ahead if the new government of President B.J. Habibie fails to rebuild a shattered economy, distribute affordable rice to millions of people and give them their first free election in 43 years. In the first article of a five-part series on the state of Indonesia, Asia Editor David Jenkins asks if Habibie has what it takes to pull his nation back from the precipice.
The play, which was called Thuk, was performed to packed houses in Jakarta by a group from Solo, the old royal city in Central Java. It was in Javanese, not Bahasa Indonesia, and it dealt with the lives of Indonesia's long-suffering underclass, the people who often seemed to lag behind as the nation raced headlong towards "development".
The language was gutsy, earthy, angry and abusive. Audiences loved it. They loved hearing Javanese being spoken on stage. They loved the fact that the wong cilik, or "little people", had been given a voice.
They delighted in the sexual and political allusions. There were cheers when a struggling bicycle repairman said that his dream was that all the cars on the toll road would get a puncture. Members of the audience, which was drawn largely from the ranks of the middle class, were aware that most of Indonesia's toll roads were owned by President Soeharto's eldest daughter, Tutut.
They knew that no-one with a Mercedes-Benz stopped anymore to have a puncture repaired at a modest tambal ban, or roadside tyre-repair stall. That was four years ago. Today, the members of the Indonesian elite appear to be a good deal more ambivalent about the nation's large and increasingly restive underclass.
They are concerned, up to a point, about the welfare of those at the bottom of the social pyramid. But they live in growing fear of the Jacobin masses. They worry that members of the underclass may wreak a terrible vengeance should the existing social order collapse, as it already has in some places. "I foresee a great chaos," says Rosihan Anwar, a retired editor and columnist as he receives a visitor at his Dutch villa in Menteng, an elite Jakarta suburb.
"The people will no longer go against the Chinese. That is the past. They will go against their own people, the middle class, whom they regard as the haves... Here, in the Menteng area, they will burn down [the houses of the wealthy]. That is really a revolutionary situation. It could come to that."
Similar concerns are expressed by Abdurrahman Wahid, the respected moderate who heads Nahdlatul Ulama, Indonesia's largest Islamic group, with 34 million members, many of them in the densely populated villages of East and Central Java, where tensions are already spilling over into violence.
The grass, he says, is tinder dry. A single miscalculation, such as postponement of the May 1999 general elections, may trigger social revolution. "People will take things into their own hands," says Wahid, as the call to midday prayer reverberates around his compound at Ciganjur, on the southern outskirts of the capital, "and there will cease to be viable government in Jakarta.
"All institutions will lose their meaning, including the army, including the bureaucracy, including Nahdlatul Ulama. "The religious organisations are basically strong but now they lose all meaning. And the initiative will be in the hands of local people, like what happened in Bondowoso, like what happened in Lhokseumawe, like what happened in Kebumen. People now have hooliganism everywhere."
According to one of the nation's most prominent economists, Dr Sjahrir, "class conflict" may be only a matter of time. "We are," he says, "running against the clock."
Others, it must be said, are more sanguine. There is some semblance of social breakdown, they concede. But it does not follow that the lid is about to blow off. "At times it looks like the place is really going to spiral out of control," notes one source. "Then it calms down."
Five months after the fall of Soeharto, whose 32-year-old authoritarian government collapsed amid a wave of rioting, looting and arson that claimed 1,200 lives, there is mounting hardship -- and tension -- across Indonesia.
The situation is especially bleak in Java, the heartland of the Indonesian state and the island hardest hit by the nation's economic crisis.
Java, barely half the size of Victoria, has a population of 110 million. People are packed solid into the shanty towns of the great cities and into the thatched villages of a beautiful but desperately overpopulated island, which is studded from one end to the other with major volcanoes, many of them still active, their great cones looming over the landscape, restless and smoking. Even in the best of times, many Javanese find it difficult to make ends meet. These are anything but the best of times.
The bottom has fallen out of the Indonesian economy. Many of the nations biggest banks have gone under. Many businesses are bankrupt. In 14 months, the rupiah has lost 75 percent of its value against the US dollar. Inflation is running at 82 percent. Wages have fallen by 77 percent. Interest rates stand at 60 percent. In the nine months to September 30, the economy contracted by 14 per cent.
The food distribution system is in disarray. The price of rice has quadrupled. Many families are eating only once or twice a day. Malnutrition is having a devastating effect on the very young. More than 80 million Indonesians are now living below the poverty line, up from 22 million in 1996. The figure will reach 140 million next year, putting two out of every three people in poverty. Only 54 percent of Indonesia's children enrolled for the school year, down from 78 percent last year.
It is true that the International Monetary Fund has taken round the hat for Indonesia, garnering $US49 billion for an emergency bailout. But as IMF money has come in, Indonesian money has gone out. Wealthy Indonesians parked a staggering $US14 billion offshore in the year to March, hollowing out the economy.
No investment is coming in. Private foreign debt is more than $US80 billion. Factories and building sites stand idle. Unemployment is at record levels. This is bound to have implications for regional stability.
Indonesia's resource-rich Outer Islands may, with some exceptions, be riding out the storm. But Java hangs like a dead weight from the Indonesian balloon, tethering it to the ground.
Not surprisingly, Indonesia's economic collapse is having an impact on social order. Hardly a day goes by without reports of new disturbances, many of them violent, usually but not always on Java. Nor did it take long for the unrest, which began in the cities, to spread to the countryside.
"When the gerakan reformasi [reform movement] eased in the urban areas in June," a noted Indonesian sociologist, Professor Loekman Soetrisno, told a recent conference in Canberra, "it appeared in the rural areas." The first targets were the village heads, especially those known to have gone out of their way to collect votes for Golkar, the electoral vehicle of the Soeharto Government. The camats (sub-district heads), especially those who relied on corruption, collusion and nepotism to acquire land, also became targets.
As the cry of reformasi echoed across Java, many village chiefs were forced to step down. In one regency, no fewer than 80 villages faced a power vacuum because no-one was willing to serve as village head, once a highly coveted position, prestigious and lucrative. Then came the looting.
In recent months, mobs have attacked shops and granaries. They have raided rice fields, prawn ponds, onion patches, coffee plantations and chicken farms, in one case carrying off 15,000 chickens. They have occupied land they believe was taken illegally, including parts of the Soeharto ranch in the hills behind Bogor. In some parts of East Java, the poor have swarmed across state-owned teak plantations, felling trees at will.
In a chilling development elsewhere in the province, mysterious black-clad "ninjas" who have already killed and dismembered more than 150 sorcerers have begun targeting Muslim clerics from the Nahdlatul Ulama. Victims have often been cut into small pieces, with their body parts thrown into mosques or dangled from trees.
In the Central Java port city of Cilacap, where in 1942 the last Dutch flying boats lifted off for Broome ahead of the invading Japanese, fishermen recently set fire to ethnic Chinese shops and trawlers, accusing the owners of destroying the livelihood of traditional fishermen.
Elsewhere in the province, grave-robbers armed with knives and crowbars have broken open Chinese coffins and stolen jewellery and other valuables. In some cases, they have even stolen the coffins, which are made of valuable teak, leaving the remains scattered on the ground.
"After two months," says Loekman, "the rural reform movement mysteriously stopped and plundering began. For the urban poor and village landless, reformasi means plundering. This could destroy all that has been achieved."
There are echoes here of 1945 when Java was gripped by revolutionary violence and lawlessness in the interregnum between the collapse of Japanese power and the attempted restoration of Dutch power.
The man who finds himself at the controls as Indonesia rides out this storm is President B.J. Habibie, 62, a German-trained aeronautical engineer who likes to compare himself with an airline pilot nursing a jetliner back from a near-fatal dive.
Habibie, who came to power through a form of dynastic nomination, having been in the care and tutelage of the former head of state for the best part of 50 years, is an unlikely head of state, a diminutive, gnome-like man with a fixed grin and darting eyes. He is voluble, excitable, gregarious, impulsive, eccentric, highly educated, everything Soeharto was not. No-one doubts that Habibie is clever. But does he have the right stuff?
Is he up to the task of governing a nation of 211 million people as it struggles to contain potentially explosive social, economic, ethnic and religious tensions? Can he inspire confidence? Can he provide leadership, judgment, stability, direction? Can he animate his sometimes fractious administration?
Habibie is under pressure from modernist Muslims who want Islam to play a greater role in everyday life. He is under pressure from generals who rose to power as Soeharto princelings, obedient to the former leader's every whim, careless of constitutional and legal niceties, willing to employ violence in the pursuit of their objectives.
Some of the younger generals are prepared to admit that the army needs to clean up its act and, once calm is restored, stand back a little from the political process. Others are holdovers from the Jurassic past, discredited representatives of a discredited army, an institution now seen by many Indonesians to be red in tooth and claw.
As one diplomat puts it: "Habibie is not a powerful figure in his own administration. There is a tremendous range of views in the administration, which explains why there is so much vacillation." For the time being, Habibie is keeping the show on the road, just. But he has his work cut out. "Habibie has done better than expected," says a source in Jakarta. "But in the last few weeks there have been signs of the old Habibie we knew and loved and feared -- more flip-flopping, jobs for the boys and so on."
Habibie's "first priority" is to stabilise the rupiah. Once that happens, he says, the business climate will pick up, pumping life back into a moribund economy. In recent weeks, there has been some good news on the currency front. The rupiah, which was trading at 2,500 to the US dollar in mid-1997, has clawed its way back to 7,000, having fallen to 17,000 early this year when the market learnt that Soeharto wanted Habibie as his vice-president.
Habibie's second priority is to ensure that Indonesians have enough to eat and that food is available at affordable prices. Failure on that front may prove catastrophic. For the time being, the problem is not that there is insufficient rice in Indonesia, although it may come to that; it is that rice is not always getting to the places where it is needed and is not always available at affordable prices.
As one source puts it: "It depends to some extent on the degree of efficiency, probity and lack of corruptibility of local officials... It's very much a Java problem. But if it's a Java problem, it's a big problem."
Nor is that the end of the problems confronting Habibie. He has to live up to his promise to revamp the political system and hold parliamentary elections, a task he is attempting even as he strives to hold on to the presidency for another six years.
He has to find some way to overhaul and discipline the armed forces, while ensuring that his new broom does not sweep too clean, producing an army backlash. He has to investigate -- or go through the motions of investigating -- the Soeharto family wealth, while ensuring that there are some rocks that are not turned over, including those of the Habibie family, which grew immensely wealthy during the Soeharto era. The revamp of the political system, now well under way, is bound to have a profound effect on Indonesia.
For more than 30 years, Soeharto kept a tight lid on the bubbling cauldron of Indonesian politics. To preserve "stability" -- and his own position -- he rigged elections, bought off critics, jailed opponents and manipulated party congresses. Soeharto used the army and the civilian bureaucracy to threaten and intimidate voters. He corrupted the press. He suborned the judiciary. He stacked the parliament with family members and time-servers.
Habibie has spent his first five months in office making concessions to those demanding reform, largely, it is true, because he has had no choice.
He has spoken about the importance of democracy. He has paved the way for new general elections, which are to be held in May, or possibly June. He has abandoned the rule that says there can be only three state-approved political parties -- at the last count, Indonesia had more than 80 parties -- and drawn up new election and political party laws.
He has ended the ban on free labour unions, released some political prisoners, dropped restrictions on media freedom and apologised for human rights abuses in the past.
He has withdrawn front-line troops from East Timor and Aceh in northern Sumatra (although there are some indications that this is a bit of a sham) and established a mechanism to investigate military abuses. He has begun, very tentatively, to look into claims that members of the Soeharto family may have had their hands in the till.
As Habibie has set out to address these problems, he has had to battle a major credibility problem. Habibie prospered mightily under Soeharto, who treated him like a prodigal son, lavishing funds on his scheme to build an Indonesian aerospace industry in Bandung. He has been accused of benefiting directly from the korupsi, kolusi and nepotisme -- or NKK, as it is known for short -- that was such a feature of the Soeharto presidency. He was elected vice-president in March by a People's Consultative Assembly packed with Soeharto relatives and stooges.
He is anathema to many secular nationalists, who believe that he and key members of his group, which includes at least two prominent "green" (or Islamic) generals, have pushed the Islamic barrow to advance their own interests, undermining the cause of religious tolerance, which is fundamental to national unity.
He is viewed with scepticism by many in the ethnic Chinese community, which has traditionally played a central role in business.
He is distrusted by reformers and human rights activists, who note that his cabinet includes generals implicated in bloodbaths that claimed hundreds, and in some cases thousands, of lives. As Dr Dewi Fortuna Anwar, one of Habibie's closest advisers, disarmingly observes, the new president has "very weak political legitimacy".
Those shortcomings notwithstanding, many Indonesians seem prepared to leave Habibie where he is. What the nation needs, they argue, is a transitional leader who can hold things together until the general elections. It is too difficult and too dangerous to replace him.
That argument carries weight. One problem is that it is not always easy to keep Habibie on track. "His impulsiveness is perhaps his biggest flaw," notes one observer. "He is attracted like a moth to the flame to all sorts of kooky ideas and he won't consult with advisers or disregards advisers. This makes him a very erratic head of state." A more serious problem is that Habibie has no intention of playing the role of Kerensky, not that Kerensky had any intention of playing that role, either.
Habibie likes power. He likes attention. He basks in his new role. He wants to win a five-year presidential term in his own right, however difficult that may seem. To that end, Habibie is now behaving a good deal like Soeharto before him, drawing on the power of the presidency to shape the political landscape to his own advantage.
He piously declares that he is not going to engineer his reelection, while working behind the scenes to do precisely that. A few months ago, he leaned on General Wiranto, who is defence minister and armed forces commander, to ensure that a presidential ally, Akbar Tanjung, won control of the ruling Golkar party machine. He then used two other generals, both members of his Cabinet, both discredited by their partisanship under Soeharto, to prevent Megawati Sukarnoputri, the popular Opposition leader, regaining control of her party machine.
Nor is that all. Habibie is pushing for an unrealistic seven- month delay between the election of a new parliament in May and the selection of a new president. Opponents claim that he will use this time to stitch up votes for himself, using the resources of his office to that end, in the Soeharto tradition.
That said, none of these moves may help Habibie much. He may want to stay on as president. But he has no hope of doing so unless Golkar backs him. It is far from certain that Golkar will back him. Besides, Golkar is shrinking in importance by the day. It may still have a war chest but its regional network is starting to unravel. It will be lucky to win 20 percent of the vote in May 1999, down from 74.5 percent in May 1997.
Nor can Habibie hope to keep Megawati out of the election process. That would unleash a wave of feeling that no government could control. If the elections go ahead in May -- and there will be chaos if they don't -- Indonesia will have a new-look parliament, one which will have strong views about who should be president and one which, unless there is too much skullduggery and vote-buying, will have the capacity to make those wishes known.
It is quite possible that a year from now, possibly less, Megawati, the daughter of Indonesia's first president, will have been sworn in as the nation's fourth president, having come to office, as did her father, on a wave of popular support, however weak her managerial skills.
It is possible that Indonesia's third president, who is virtually the adopted son of the nation's second president, and who, like his mentor, has never had his popularity tested in a free election, will have been politely shown the door. For three decades, Soeharto presided over a highly centralised authoritarian state. He held power partly because he was able to deliver the economic goods, partly because he was prepared to deal firmly, sometimes ruthlessly, with opponents. Today, the economic bubble has burst and no-one is prepared to put up with a Soeharto-style nanny state.
In five months, the Indonesian power equation has begun to change in quite significant ways. The legislative branch is gaining at the expense of the executive, although it remains true that great power is vested in the president, something that may have to be addressed at some stage by constitutional tinkering.
Civilians are gaining at the expense of the politically powerful military, which has been discredited by revelations of systematic human rights abuses, including murder, torture, theft, kidnapping and, possibly, rape.
Pribumi (indigenous) entrepreneurs are gaining at the expense of the ethnic Chinese minority, which has for so long dominated the private economy.
The Outer Islands are gaining at the expense of Java, which, as the historian Dr Onghokham likes to point out, has made such a practice of plundering the wealth of its far dominions.
Civil society is gaining at the expense of the state. Non- government organisations are playing an increasingly prominent role. The press, once kept on a tight leash, is taking its task a lot more seriously, with one exposi after another, even if some publications are noted more for their enthusiasm than for their accuracy and balance. As Soeharto sits at his home in a leafy Jakarta suburb, accompanied by a pet parrot that still greets him each day with "Good Morning Bapak [Mr] President", Indonesia is in the throes of enormous change.
For Indonesians, many of them in increasingly dire straits, the hope is that something better lies down the road. It may not.
| Human rights/law |
Jenny Grant, Jakarta -- A report on the May riots has been delayed twice because military and government members on the inquiry team are opposed to the findings, sources said yesterday.
The team is split over the conclusion that the military was partly responsible for orchestrating the riots. Sources said there was also division over a suggestion that parliament should wrest control of undercover military operations away from central command. Military and government members are worried about possible consequences from the report. They are afraid and are trying to delay the release, said one source.
Another source said the eight officials on the 18-member team were trying to defend the honour of the Government and military by postponing meetings and trying to curb the findings of the group. "It's clear in our recommendations there should not just be individual accountability, but also institutional accountability from the military," said the source.
One of the major recommendations of the team is that parliament should have control over all military intelligence operations and institutions in the future. If that recommendation were implemented it would remove the military's authority to undertake covert actions domestically.
The report also finds retired Lieutenant-General Prabowo Subianto, and former Jakarta military commander Major-General Sjafrie Sjamsuddin should be held partly accountable for the riots. Mr Subianto, the son-in-law of former president Suharto, was forced to resign from the military for orchestrating the kidnapping of activists earlier this year when he headed the elite special forces. "The military officials are really afraid because we mention Prabowo and Sjafrie. The link is how the former Suharto regime tried to defend, to prolong its own status and power by using people like Prabowo to create unrest," said one team member.
The team includes three police generals and a retired military officer. Officials from the ministries of home affairs, women's affairs and defence also sit on the team which has been working for three months on the report. "Those members cannot argue with our facts, but when it comes to drawing conclusions and making recommendations, they are very defensive," said the team member.
One of the all-consuming issues has been about the rapes. "They [military members] cannot agree the rapes were part of a bigger plan," the source said. The source said the team found evidence of 67 rapes during the riots. The rapes were combined with torture and killing of the victims. A report by the Volunteers for Humanity found there were 168 cases of rape and other sexual violence during the three days of rioting. Twenty of those women died.
| News & issues |
Indonesia is struggling to find competent entrepreneurs to fill the vacuum left by ethnic Chinese who fled during the May riots. David Jenkins, Asia Editor, reports.
THE Indonesian Government does not wait until your plane touches down in Jakarta or Bali to let you know what it thinks about its ethnic Chinese minority. The visa application form asks those of Chinese descent to write their name in Chinese characters. It then asks them to fill in their government-assigned code number.
The blue-and-white Customs declaration form asks incoming passengers if they have any of the following prohibited goods: "Narcotic drugs, firearms, weapons, ammunition, laser guns, explosives, pornography, Chinese printing, Chinese medicines..."
Chinese characters are prohibited on shops and signboards. Chinese-language newspapers are banned, save for one anodyne publication put out by the Chinese affairs section of Bakin, the State intelligence co-ordinating board.
There is an "informal" 3 per cent limit on the number of ethnic Chinese students who may be admitted to State universities, including the most prestigious ones. Few Chinese are accepted by the military academy, although some do join as professionals. There are very few in the bureaucracy.
The ethnic Chinese, some of them descendants of settlers who arrived in the East Indies 200 years ago, may carry Indonesian passports and speak not a word of Chinese. They may have changed the family name from Tan to Sutanto or from Lim to Salim. They may even have married pribumi (indigenous) Indonesians or, in rare cases, converted to Islam.
But they are not quite the real thing, not quite paid-up members of the club. Worse, in the eyes of some, they are probably fifth columnists, the eyes, the ears and the "hidden hands" of Beijing or Taipei, subversive Marxists one minute, shameless capitalists the next.
Resentment of the ethnic Chinese, who account for perhaps 3 per cent of Indonesia's 211 million people but who are said to control 70 per cent of the nation's corporate wealth, is never far below the surface.
It erupted into violence in May during the final stages of the campaign to topple former president Soeharto. In Java alone, as many as 3,000 Chinese shops and houses were looted and torched. In parts of Jakarta's Chinatown whole blocks of shophouses were razed, in some cases after the arrival in trucks of powerfully built agents provocateurs, who may have been soldiers. And in a new and ugly twist, there were claims that as many as 150 ethnic Chinese women had been raped.
In the wake of these disturbances an estimated 40,000 ethnic Chinese fled Indonesia, most temporarily, others permanently. Indonesia's most prominent ethnic Chinese tycoon, Liem Sioe Liong (Salim Sudono), who built a fortune on the back of his long friendship with President Soeharto, was one of those who left. He has not returned. Nor is he expected to. "The trauma of May '98 is very deep," says Sofjan Wanandi, a prominent ethnic Chinese businessman. "Never before have the Chinese felt so totally hopeless and unprotected."
Nor did President B.J. Habibie help matters when he gave the impression that he would not be too upset by the non-return of the Chinese who fled in May because their place in business would be taken by pribumi Indonesians. Habibie has since backed away from those remarks, partly because Indonesia can ill-afford the wrath of powerful Chinese communities in East Asia and North America, partly because his nation desperately needs the capital and know-how of the ethnic Chinese.
Indonesia's ethnic Chinese, Habibie has now decreed, are no longer to be victimised. There is to be no more use of the terms pribumi and "non-pri". There is to be no more discrimination by government officials, from ministers down, on the basis of ethnicity or religion.
Provincial governments are to implement, finally, a rule that ID cards must not carry an administrative code -- in Jakarta, where the practice is well-established, the code is "OO" followed by a number -- identifying the bearer as a person of Chinese descent. At the same time, it is no secret that Habibie, who courted the nation's Muslim majority during his years as chairman of the Indonesian Association of Muslim Intellectuals (ICMI), would like to advance the interests of indigenous businessmen at the expense of the Chinese.
His point man in that endeavour is Co-operatives Minister Adi Sasono, an old ICMI figure who is seen by many as the most anti- Chinese member of a Cabinet thought to include three or four such figures.
In an attempt to advance his agenda, Habibie has arranged for BULOG, the State Logistics Agency, to cancel rice and cooking oil distribution arrangements with hundreds of ethnic Chinese businessmen and award them instead to indigenous entrepreneurs, some of whom have little or no experience in the field.
That does nothing to put Chinese hearts at ease. It might also backfire. Until May, Indonesia's rice distribution network was dominated by Chinese traders. They had the aptitude and the application to ensure that the system ticked over efficiently, despite some profiteering on their part and despite the pay-offs they had to make to an increasingly venal indigenous bureaucracy.
Those arrangements are now in disarray. Some Chinese have fled. Others have been "encouraged" to drop out of the distribution network. Across Indonesia, the Chinese are cowered and frightened, dismayed by routine reports of looting and arson, fearing that further violence may be on the way.
The most obvious way to fix the food problem would be to encourage the Chinese to get back into business, providing them with guarantees that the Government is serious about their safety. That is unlikely to happen. In post-Soeharto Indonesia the pendulum has swung decisively against the Chinese, a reaction to the favoured treatment given by the former president to prominent Chinese tycoons, some of whom lined the pockets of the Soeharto family in return for lucrative business favours.
"The emphasis now is on the small enterprises and co-operatives," says Sofjan Wanandi. "The Government is not interested in the [ethnic Chinese conglomerates]. They feel the Government is basically hostile to them."
According to some analysts, Adi Sasono has two parallel goals. One is to get food out to people in need. The other is to build a replacement business culture for the ethnic Chinese, particularly the larger Chinese groups. The Habibie Government is working, critics allege, to build a new system of patronage and political power, based on the rents and the benefits that come from State access to imported food and other subsidised items, which can be channelled through the co-operative movement.
"It is still early days," says a diplomat with long experience in Indonesia, "and the success or otherwise of this attempt remains to be tested. There are a lot of people who are extremely sceptical because the co-operatives, during the Soeharto era, were just a shell and trying to inject some substance into it will not be easy.
"But my feeling is this co-op thing will continue to be a strong ideological touchstone for people like Sasono. It will continue to be very important for them in terms of distributing largesse and receiving, in turn, political support."
While many Indonesians would support the view that a new accommodation is necessary between indigenous and Chinese businessmen, it is by no means certain that all of those favoured by Adi Sasono are up to the task of running the nation's food distribution system, at least for the time being. Nor is this the best time for experimentation and on-the-job training. Indonesia has had a string of bad harvests and has been forced to buy millions of tonnes of rice from Thailand and Vietnam. The distribution of imported and locally grown food is a vast and complex undertaking.
Another problem is that the co-operatives movement, like the bureaucracy, has been dogged by corruption and inefficiency. In one of the more spectacular recent examples of corruption, the head of the Jakarta logistics agency, retired Colonel Ahmad Zawawi, whose job it was to get rice to the hungry and the destitute, is accused of arranging the illegal export of 1,900 tonnes of rice to Malaysia.
Meanwhile, there are signs that some officials and indigenous businessmen are once again sub-contracting work out to small Chinese traders. No-one really doubts that some Chinese businessmen will eventually pick up where they left off. But the Chinese are unlikely to enjoy the influence they have had in recent years. "Things will sort themselves out," says one expert. "But I think it will be in the context of regimes which are much more consciously and avowedly pribumi in cast and thinking. And the Sino-Indonesians who don't like that can go and those who can accommodate it... will make an accommodation."
What is happening now, according to this source, is that old distribution networks are breaking up. "That reflects the sorting-out that is going on in Jakarta between the old class who benefited from the capitalism of the Soeharto era and an emerging new class of people who are seeking to replace them. And the struggle for ascendancy is going on all the time."
The lid has been lifted on Indonesian politics -- with 80 parties contesting the first free elections in 43 years. David Jenkins reports.
For a nation that has been on political Mogadon for more than three decades, these are heady days. Political parties are being organised, policy documents drawn up, coalitions discussed. The atmosphere is set to become electric as polling day approaches.
What sort of government is Indonesia likely to have after the polls in May next year? What sort of president will the legislators choose? At this stage, no-one can answer those questions with any certainty. But history provides some useful clues.
Indonesia has had only one really free election since the proclamation of independence in 1945. In that poll, in 1955, the bulk of the vote went to four main parties, two of them Islamic, two of them secular, reflecting the primordial differences that have run like a golden thread through Indonesian political life.
Muslim parties, of which there were four, carried off 43.5 per cent of the vote. The modernist Masyumi, which had strong backing in the Outer Islands, received 21 per cent. The traditionalist Nahdlatul Ulama (NU), with its base in the villages of East and Central Java, got 18 per cent.
Two secular parties won the second largest slab of votes. The Indonesian Nationalist Party (PNI), which enjoyed strong backing from the administrative elite and the abangan (nominal Muslim) peasantry of Java, won 22 per cent of the vote. The Indonesian Communist Party (PKI) won 16 per cent.
In the years after 1955, the fortunes of these and other parties waxed and waned, with more waning than waxing. Masyumi was banned in 1960. The PKI was banned in 1966. In 1973, Indonesia's nine surviving parties were herded against their will into two Soeharto-controlled coalitions, where they were expected to play the role of grateful Aunt Sally to Golkar, the army-backed "functional group".
Golkar lives on in post-Soeharto Indonesia. But it will be lucky to get 20 per cent of the vote in May 1999, down from 74.5 per cent in May 1997.
This time, votes are likely to be directed, as they were in 1955, along primordial lines. One large slab -- perhaps 30 per cent -- will go to the Indonesian Democratic Party (PDI) faction of Megawati Sukarnoputri, the daughter of Indonesia's first president.
Her group has a number of things going for it. The PDI is a lineal descendant of the old PNI, with a Christian element thrown in for good measure. It exerts a powerful, almost mystical, hold over abangan voters in the densely settled towns and cities of Java, where supporters, many of them poor, are ready to turn out en masse behind the red-and-black party colours. The party is popular, too, in Bali and in the predominantly Christian islands of eastern Indonesia.
Second, the party leader carries the magic name of Sukarno which still has the capacity to beguile Indonesian voters. What is more, Megawati has apparently been able to persuade Chinese entrepreneurs to make generous donations to her party. The Chinese, many of whom are Christian, like her brand of secular nationalism. They don't like the new Islamic face of Golkar. They are worried by Amien Rais, the modernist Muslim leader who, not very long ago, was complaining about what he saw as the disproportionate power and influence of Christians and Chinese.
Megawati has also spelt out, at last, something approaching a policy statement, one that can be summed up as "populist but pro-business". For all that, doubts remain. Megawati may be widely loved. She may inspire tremendous loyalty. But can she lead?
Megawati does not have the sure political instincts of Indonesia's two most popular Muslim leaders, Amien Rais and Abdurrahman Wahid, let alone those of her late father. She is not very imaginative, not very articulate, not very well educated. She does not have much of a policy grasp. She has yet to demonstrate that she can build a team capable of governing Indonesia, although she should be able to attract able ministers.
Nor has she handled pressure especially well. At critical junctures in the late New Order period, Megawati withdrew from the scene in the face of brutal military crackdowns against her supporters. That happened first on July 27, 1996, when police and hired thugs seized her party headquarters, triggering riots in which five people died. It happened again in March this year when the army kidnapped Haryanto Taslam, one of her right-hand men. "July 27 really shook her," notes a source in Jakarta. "It traumatised her. She was out of action for a month."
Another large slab of votes, perhaps 20 per cent, is likely to go to the National Awakening Party (PKB), the political vehicle of the Nahdlatul Ulama, Indonesia's largest Islamic organisation, with 34 million members. NU is headed by Wahid, a respected moderate who stands for religious and racial tolerance. He is, as it happens, a close friend of Megawati, and the two parties have struck up an alliance, building on their respective strengths. Support for PKB in the conservative rural heartland, especially in East Java, should complement the pro-Mega vote in urban Java and in parts of the Outer Islands.
Shrewdly, the parties have also been working out vote-swapping arrangements. If those arrangements can be made to stick at the local level, it may prove decisive, giving PDI-PKB an absolute majority in the Lower House (DPR) and sweeping Megawati into the presidential palace.
It is possible, however, that the PDI and PKB will need the support of minor parties or of the armed forces (ABRI) faction, which is to be awarded 10 per cent of the DPR seats and which may end up holding the balance of power. That may not be a problem. Sections of ABRI seem to have been cultivating both Megawati and NU, uneasy perhaps that Amien Rais has been talking up the benefits of a federal rather than a unitary state and about the need to curb ABRI's political role.
On the other side of politics are the sometimes less docile modernist Muslims, many of them members of the educated, urban middle class. Soeharto marginalised the modernists for more than 20 years. Then, in 1990, he set out to cultivate them, or at least de-fang them, using Dr B.J. Habibie, his one- time friend and eventual successor, as his point man.
No-one can be sure what difference the New Order wave of Islamisation will have on the way Indonesians vote. What is known is that at least four key parties are competing for the support of modernist Muslims. Some of the modernist vote will go to Golkar, which is now headed by Akbar Tanjung, a Habibie ally and former leader of the influential Muslim Students Association. Some will go to PPP, the "Muslim" party that served for so many years as a "sparring partner" for Golkar.
A third swag of votes will go the new Crescent Star Party (PBB), which enjoys the support of modernists who tend to be of a more militant disposition. Like the banned Masyumi, which wanted Islam to form the basis of the Indonesian state, PBB would like to see laws banning alcohol and prostitution. It also supports a Malaysian-style affirmative action program aimed at strengthening the position of pribumi (indigenous) businessmen vis-a-vis the ethnic Chinese. It may garner between 5 and 10 per cent of the vote.
A much larger swag of modernist votes will go to the National Mandate Party (PAN), which has been set up by Rais, a former head of Muhammadiyah, a modernist Islamic welfare organisation with some 30 million members. Unlike the Crescent Star Party, PAN has gone out of its way to stress that it is inclusive, secular, reformist and tolerant, a move welcomed by those who had been disturbed by Rais's earlier willingness to stir the ethnic and religious pot. With backing from Muhammadiyah members, PAN may get 20 per cent of the vote, perhaps more.
Almost inevitably, Indonesia is in for a period of government by deal-making, with no one group strong enough to win office in its own right. Moreover, a platoon-sized contingent of army officers, men who have never faced an electorate and who represent an institution which has spent three decades suppressing the democratic spirit, may play a key role in the new parliament, as king-makers and spoilers.
That may be less than perfect. On the other hand, it may provide stability during a difficult transition and will be a good deal more democratic than what has gone before.
Jakarta -- Hundreds of Moslems staged an angry demonstration here Friday to counter demands on the resort island of Bali that a minister step down for insulting Hindus.
During the protest by some 500 Moslems from different youth groups at the Al-Azhar mosque here following Friday prayers, the demonstrators waved banners insisting that Indonesia's president must be a Moslem. "President and vice president must be a Moslem", "Syaefuddin, we support you", "Megawati (presidential candidate Megawati Sukarnoputri), what is your religion?" and "Megawati as president is forbidden."
The earlier Bali protests against Food and Horticulture Minister A.M. Syaefuddin followed a statement he made earlier this month in which he implied that a Hindu could never become president of Indonesia. Saefuddin, commenting on his chances of beating popular politician Megawati Sukarnoputri in the race for the presidency next year, had said he was confident of winning because Megawati was a Hindu.
"She (Megawati) is a Hindu. I am a Moslem. Would the Indonesian people really let their president be a Hindu?" Saefuddin said. He was commenting on news pictures of Megawati participating in a Hindu ceremony.
Protests have since been mounting in Bali, where the majority of the population are Hindus, and many are supporters of Megawati, the daughter of the country's founding president Sukarno, who has Balinese ancestry on his mother's side.
"Syaefuddin's statement was not addressed to insult Hindus in Bali but specifically aimed at Megawati herself," the protestors, many of whom had their children with them, said in a statement. "The assumption that Megawati is a Hindu was based on fact that she participated in prayers at Hindu temples," it said, adding that the matter should end shortly after Syaefudding made his public apology.
Balinese took the remarks as insulting and mass demonstrations, some involving more than 10,000 people, have rocked the tourist paradise almost daily calling for Saefuddin to be sacked.
Ministers and an influential Moslem politician on Sunday attempted to pour oil on troubled waters by calling for a dialogue after angry Balinese Hindus threatened to strike if Jakarta did not sack Saefuddin. However, State Secretary Akbar Tanjung has said Habibie has no plan to dismiss Saefuddin.
Jakarta -- A group of some 80 people Monday protested at the gates of the parliament, demanding that political parties be freed from the obligation to adhere to the state ideology "Pancasila".
"Under a new political law currently being discussed (by the parliament), all political parties and mass organisation be allowed the freedom to choose their own principle," the Front for the Reform of the Sole Principle demanded in a statement distributed during the protest.
Under Suharto-era laws, all political parties and mass organisations are obliged to pledge adherance to the state ideology Pancasila -- a loose set of five tennets -- belief in one God, humanitarianism, national unity, decision-making by deliberation between people's representatives, and social justice for all.
"As a state ideology, Pancasila has become blown out of proportion because of engineering by those in power in the past who strove only to unjustly maintain their power and the status quo," the statement said. It has also been used in the past by those in power to supress criticism and to prevent Islam from turning into a strong force on the country's political scene.
The government of president Suharto, who resigned in May, had used Pancasila to quash anti-government movements, including those wanting to enforce a single religion on others.
The political law, currently being debated at the parliament, will replace a Suharto-era law, which limits the number of political parties to three -- the ruling Golkar, the Moslem- oriented United Development Party and the Indonesian Democracy Party. All three parties have been obliged to adopt Pancasila as their sole guiding principle.
More than 80 political parties have emerged since Suharto's fall, but they will not be legitimised until the new laws are passed. The group, which was predominanly Moslem, demonstrated in front of the closed gates of the parliament building, even though the house was in recess until next month.
Sitting on the ground, they displayed scores of posters, including some which read "The sole principle -- a strategy of the minority against the majority," "The Sole Principle is wrecking the moral fibre of the nation and the state," and "Religious parties do not mean disintegration." They disbanded peacefully after less than two hours, some 40 anti-riot police standing by but not intervening.
Another group of about 40 students from three private Islamic universities rallied in front of the parliament Monday to condemn the violence in East Java, where a series of mysterious killings in the past few months have left 178 dead, including 96 Moslem scholars and teachers.
The group held a joint prayer and also disbanded peacefully, but only after each protestor shook the hands of the police assuring security at the parliament's gate.
Don Greenlees -- Indonesia's promised national elections could be postponed by up to two months because of delays in putting draft electoral laws to parliament and the likelihood of a drawn-out debate over the country's new political system.
The prospect that debate in the People's Representative Council (DPR) over the draft laws will force the election to be put back to the end of July has raised concerns in the Habibie Government over the potential for a popular backlash.
A senior presidential adviser warned: "I think it would be very dangerous to backtrack... Any delay would be seen as an attempt by the Government to prolong the transition."
But DPR members from all three official parties and a number of the as-yet-unregistered new parties have signalled they will seek fundamental changes to the Government's model, including blocking plans to create individual electorates. The debate is expected to drag on until the end of January.
The Home Affairs Ministry's director-general of public administration, Ryaas Rasyid, who is charged with steering the electoral laws through the DPR, claims the Government will need six months from the date the laws are passed to prepare for the election.
"If we work hard and the DPR could finish the discussion by the end of this year, I expect the election can be done in June. But if they postpone it until January, then the election might be in July," he told The Australian.
Government advisers fear even a short delay in the current fragile political climate could heighten the risk of unrest. It could give renewed momentum to the flagging campaign by students and other groups for the replacement of President B.J. Habibie with an interim government.
Mr Ryaas acknowledged the Government bore some of the responsibility by failing to meet its own deadline of putting the draft laws before the DPR by the end of August. The laws went to the DPR three weeks ago.
The Government has broken its package of electoral reform into three components -- a law on the structure of the electoral system, a law on political parties and a law on the composition of the national and provincial parliaments. Under the Government's proposal, voters will directly elect 428 representatives from individual districts and a further 68 based on the percentage of the national vote won by each party. Another 81 will be appointed from provincial governments, and the armed forces will have 55 members.
In a sign of the Government's anxiety to keep pressure on the DPR to pass the laws quickly, Mr Ryaas warned of significant problems in holding the election next year if the DPR fulfilled threats to drop district constituencies and stick to Indonesia's current system of proportional representation. "If they change the system to become proportional, I guarantee you, it cannot be done in one year," he said.
Jakarta -- Amid a massive show of force, the military warned it will not tolerate disruption of a crucial parliament session which will draw up the political parameters of post-Suharto Indonesia.
Television reports Sunday showed thousands of police and military at a mass parade ahead of a special plenary session of the People's Consultative Assembly (MPR) here November 10-13, the first since Suharto's fall. Security for the plenary session, designed to pave the way for elections for a new president in 1999, will also be bolstered by 100,000 civilian volunteers.
Jakarta Police Chief Major General Nugroho Djajusman was quoted as telling the parade at a mid-city golf-driving range Saturday that the volunteers had formed self-defence units to ensure the success of the special session. They will bolster a turnout of some 30,000 army and police personnel, many of them on motor- cycles, to be deployed in Jakarta during the session, Nugroho said.
At the same parade, Jakarta Military Commander Major General Djaja Suparman warned of harsh action against any attempt to disrupt the session, which pro-reform student protestors have charged will be a "farce" because the MPR is packed with old Suharto-appointees.
Suharto, a former army general who ruled the country for 32 years, fell from power on May 21 amid growing protests against his autocratic rule and the size of the business empires controlled by his family and cronies.
"We'll arrest those who breach public order and the existing laws, even if they are trying to convey good messages," Suparman told the assembled troops and police, the Jakarta Post said. "We understand the protestors want to channel their aspirations, but we will take stern measures if they want to provoke anarchy and disturb public order," the Post quoted him as saying.
Nugroho said Saturday's show of force was "to show that we are ready" to secure the session and face the threat of any parties who want to disrupt it."
Political observers have noted that some of the major political and pro-reform figures to emerge as possible presidential candidates since the fall of Suharto will not be present at the MPR session as they are not members. They include Megawati Sukarnoputri, daughter of the country's first president Sukarno and head of an unrecognized but widely popular branch of the Indonesian Democracy Party, and noted Moslems Amien Rais and Abdurachman Wahid, popularly known as Gus Dur.
Education Minister Juwono Sudarsono said there was no reason to bar pro-reform students from protests as long as the demonstrations were non-violent. "They should not disrupt public order, cause destruction to civil property or clash with security personnel -- as long as these three conditions are met, I see no problem," the Indonesian Observer quoted Juwono Sudarsono as saying.
Observers here said Sudarsono's statement, more positive than those made by the military, appeared to be in line with a strategy adopted by Suharto's successor, President B.J. Habibie. Habibie -- a frequent target of the students who see him as an extension of Suharto -- has, in recent speeches thanked the student demonstrators for helping to keep the reform process on track. Armed Froces Chief General Wiranto has also spoken out in the past week in favor of "the right to expression" while insisting it be linked to "a citizen's responsibility to maintain law and order while those views are being expressed."
The MPR session will debate new laws on political parties, rules on elections, and the composition of the MPR and the lower house or DPR, to enable elections for the DPR to be held in May and a new president and vice president to be chosen by January 2000.
Habibie last week said he would stay in power until January 2000, despite calls for him to step down, saying democracy would not have a chance to get off the ground unless he nursed the election process through to the end.
[On October 24 the Straits Times reported that Suharto will be barred from attending the session. According to the Indonesian Observer, some political analysts belive he was not invited as certain legislators would have ordered him to account for his short-lived seventh presidential term - James Balowski.]
| Arms/armed forces |
Louise Williams -- Indonesian and Australian military officials say joint special-forces exercises have been deferred for "technical reasons", but Australian defences sources say Canberra has concerns over the human-rights record of Indonesia's elite troops.
A spokesman for the Indonesian armed forces, Major-General Syamsul Ma'arif, said yesterday that Jakarta regretted the postponement of exercises scheduled for next month, but that the Indonesian military would used the time to upgrade its image following damaging revelations of human-rights abuses by its troops.
"In general we regret the decision," he said. "But we still have homework to do to upgrade our image and this is time consuming, so by not having these joint exercises we can focus on these efforts."
Earlier yesterday Australia's Defence Minister, Mr Moore, said the exercises had been deferred in light of budget cuts to the Indonesian armed forces. But Australian defence sources contradicted Mr Moore's statement, saying the exercises had been postponed because of concerns over revelations that Kopassus troops were involved in human-rights abuses, ongoing investigations into Kopassus, and the restructuring of the special forces.
"Budgetary considerations are important from an Indonesian perspective, but the decision wasn't based solely on budgetary issues," one source said.
Has Australia got the Indonesia relationship right and is it getting it right for the future? We have steered a prudent course but there are times when we must make our voice more clearly heard... especially in military matters. David Jenkins reports.
At a small hill town in East Timor three years ago, the regional military commander, Major-General Adang Ruchiatna, chatted fondly about Adelaide, where he once attended a three-month intelligence course.
At the Jakarta headquarters of the Indonesian special forces unit early this year, a lieutenant-colonel presented his camouflaged calling card and spoke with similar fondness about Perth, where he had trained with the Australian Special Air Service (SAS). Before long, a number of his red beret colleagues had gathered around and were recalling their own visits to Sydney, Melbourne, Brisbane and Darwin.
In Indonesia these days, you don't have to go far to find evidence of the growing ties between the Australian Defence Force (ADF) and the Indonesian Armed Forces (ABRI). Australian units now train regularly in Indonesia. Indonesian units now train regularly here. Thanks to former prime minister Paul Keating, Australia and Indonesia have even signed a defence "treaty".
There is a lot to be said for having close relations with your closest neighbour, especially when the political and cultural gap is so wide and the potential for misunderstanding so considerable. But there can be problems when you get too close to a Third World leader who rules with an iron hand and who is thought by his people to be helping himself to the riches of the state.
There can be problems when you get too close to a South-East Asian army which spends less time time preparing to meet external threats than maintaining order within its own borders, sometimes brutally. At the time that General Adang was sitting in the town of Aileu and reminiscing about Adelaide, the Indonesian army was being blamed for yet another wave of disappearances and killings in East Timor, a territory in which hatred for ABRI knows few bounds.
At the time the Kopassus colonel was talking about Perth, a number of kidnapped opposition figures were out the back in the unit's holding cells. Five months after the overthrow of President Soeharto, Australia's defence links with Indonesia are back in the spotlight following charges that ABRI units, especially Kopassus, have been involved in the abduction and torture of political activists. Canberra has postponed two major military exercises with Kopassus. It is waiting for the storm to pass.
Did Australia get too close to Soeharto, who came to power in a bloodbath in which as many as half a million people died and who ruled, sometimes harshly, for 32 years? Did we get too close to ABRI?
On balance -- but with some important caveats -- we probably handled the relationship about as well as could be expected in the circumstances. Indonesia is a vast and immensely complex nation, the world's fourth most populous, with 211 million people.
It makes sense to have the best possible relations with Jakarta. For more than 30 years, that meant working with Soeharto. It now means working with President Habibie and whoever follows him. It makes sense to recognise that we often have a limited capacity to influence Indonesia.
That said, there have been times when we would have been wise to display greater caution in our dealings with Jakarta. There have been times when we would have been wise to be less enthusiastic, less willing to please. There have been times when our voice should have been more clearly heard.
Australia said virtually nothing when in 1965-66 the Indonesian army led one of the greatest mass slaughters of the 20th century, an anti-communist sweep in Java and Bali directed by Colonel Sarwo Edhie, an RPKAD (now Kopassus) officer who had just returned from a stint at an Australian Army staff college. Instead, we looked the other way, profoundly relieved that the regime had changed.
Australia did not publicly acknowledge that the Indonesian military was involved when Kopassus troops spearheaded the 1975 Indonesian invasion of Portuguese Timor, a massive air, sea and land operation that flouted international law and paved the way for the deaths of at least 100,000 people. It is true that we supported a UN resolution condemning the invasion. But we also sought to express our "understanding" of the Indonesian position. After 1976, when the people of East Timor were being subjected to dreadful agonies at the hands of ABRI, Australia supported Indonesia at the UN, shielding it from international criticism.
We said not a word implicating the Indonesian military when, in 1975, Kopassus troops killed five Western journalists, two of them Australians. We said not a word when Indonesian green beret troops from Battalion 502 of the Army Strategic Reserve (Kostrad) murdered another Australian journalist on the docks in Dili during a post-invasion orgy of killing and looting.
Twenty years later, we went out of our way to embrace those units. We set up a program under which the SAS has been training regularly with Kopassus. We invited Battalion 502 to "capture" Wyndham in Western Australia in a dawn parachute operation eerily reminiscent of their assault on Dili.
Australia got off to a good start with the infant Indonesian Republic. But strains appeared in the 1950s. "Our relations with Indonesia since 1945 have zigzagged constantly," says Professor Jamie Mackie of the Australian National University in Canberra. "They were very warm, very friendly in the 1945-49 period. Between 1950-65 they were under constant strain because of our disagreement over Indonesia's claim to West New Guinea, over Sukarno's non-alignment at a time when we supported SEATO, and over Indonesia's "confrontation' of Malaysia."
The situation only began to improve after the emergence of Soeharto, who made a sharp turn to the Right in 1966. Even then, relations were little more than satisfactory, rather than close.
Gough Whitlam tried to establish closer relations with Soeharto but that attempt foundered with the 1975 dismissal of the Whitlam Government and the Indonesian invasion of East Timor. Under Malcolm Fraser, there was no warmth in the relationship.
In 1988, following a negative reaction in Jakarta to a 1986 Herald article on the Soeharto family's wealth, Australian foreign minister Gareth Evans and his Indonesian counterpart, Ali Alatas, set out to put "some ballast" in the relationship so that the boat would not tip over with every minor squall.
Evans and Alatas divided up East Timor's offshore oil resources while flying over the disputed region in a RAAF VIP aircraft, champagne corks popping. Many Australians were appalled. To this day, the UN recognises Portugal as the administering power in East Timor.
Prime Minister Keating continued the policy of forging close ties with Jakarta, helped by the rapport he was able to establish with Soeharto. Keating took up two themes that were beginning to enjoy currency in the bureaucracy. From Foreign Affairs came the notion that Soeharto's rise was the best development in Australia's region in 30 years.
From Defence came the line that regional armies were often powerful institutions with close links to government and that it might be useful to get close to them, especially in Indonesia. As former defence minister Robert Ray put it in 1995, diplomats had their uses but could not "prise open the doors of conservative military establishments". Only direct and personal contact by senior officers could do that. Australia came in late on both fronts.
Keating embraced Soeharto when the New Order regime was increasingly on the nose in Indonesia. Defence, having recognised, after 30 years, that the Indonesian generals were important political players, has begun to embrace them just as their dominance looks set to be scaled back, with civilians preparing to rush back on stage.
Canberra was not blind to the changes taking place in Indonesian society. It recognised that the Soeharto regime was in decline. It knew, however, that it had to work with the regime and it could never be sure when it would collapse or what might take its place.
What of the future? "Indonesia in 1998-2003 is going to be such a different animal from the Indonesia we have been talking about for the last 30 years," says Mackie. "Clearly we are going to have an infinitely more pluralist system. We are going to have to relate not just to the government in power but have leads out to the people who might be in power tomorrow. And that will be a lot harder."
For Canberra, the question will be whether that significantly changes the strategic equation. "I think we are at a point where you can't rule out the danger of disintegration or secessionist tendencies becoming much stronger than they have been since 1960," says Mackie. "Instead of one big can of worms, you will have a lot of little cans of worms.
"We would like to be dealing with a nice tidy country where we know what we are dealing with. But we're never going to have tidy solutions in Indonesia."
| Economy and investment |
Jay Solomon, Jakarta -- President B.J. Habibie's plan to quickly sell off up to $15 billion in assets that debt-hit business groups must transfer to the government to repay loans has alarmed the International Monetary Fund, which has privately warned Jakarta the plan could damage the economy.
The Indonesian government is hashing out the terms under which banks will repay credits extended to them by the government earlier this year. Last month, the country's largest and third- largest private banks -- PT Bank Central Asia of the Salim Group and PT Bank Dagang Negara Indonesia of the Gajah Tunggal Group -- agreed with the Indonesian Bank Restructuring Agency to hand over billions of dollars of shares in about 120 companies. But those two agreements haven't been endorsed by Mr. Habibie, who said after they were signed by IBRA that the groups should pay back the credits in cash within one year rather than transfer shares to IBRA.
Bankers following the negotiations over repaying the credits -- a key part of rebuilding Indonesia's ravaged banking system -- say Mr. Habibie is being lobbied by opposing interests on how much repayment to insist on how quickly. The president is under pressure to quickly recover for the government as much badly needed cash as possible. But, the bankers say, it's unrealistic to insist that cash-strapped groups repay within a year. And should the government take over assets then seek to sell them quickly, they add, it may be forced to accept low prices.
Need for 'flexibility'
In an Oct. 18 letter to Mr. Habibie, the IMF's Asia-Pacific director Hubert Neiss wrote that there's a need for "flexibility" over the length of the repayment period given the banks. While acknowledging that the repayment period "should be as short as possible," he wrote that "if all assets were dumped in a 'fire sale' under presently depressed economic conditions, the return to the government would be very small." Mr. Neiss noted that this is why the government's own privatization program has been scaled back.
In the letter, a copy of which was obtained by The Asian Wall Street Journal, Mr. Neiss also said that a quick sale of many assets "could cause serious disruptions in the management of the companies sold, with undesirable effects on the economy."
Bankers following the IBRA negotiations say that Mr. Habibie, after getting input from Mr. Neiss, has backed away from insisting that the central-bank injections be paid back in cash within one year. But they say the president is seeking to secure a commitment from Salim, Gajah Tunggal and other groups to pay a certain percentage of the total within a year and then follow a fixed schedule under which the balance is paid from asset sales in following years. The bankers say the Salim Group, which has declined to comment, on Monday presented a divestment plan to IBRA. The IMF, in its latest agreement with Indonesia signed Oct. 19, said the first two agreements should be finalized by Thursday.
'Narrowing' gap?
"There's still a gap between what Habibie wants and what Salim and the other groups say they can do," a banker said. "But the gap seems to be narrowing."
Frans Seda, an economic adviser to Mr. Habibie, said he is optimistic that the asset-sale issue will be resolved, adding that the direct communication between Mr. Neiss and Mr. Habibie is a positive means of achieving reforms. While he said that Mr. Habibie would like to get the cash within a year, Mr. Seda added that the president "remains open to proposals" offered by the IMF, IBRA and bankers.
The IMF's letter didn't touch on what many Indonesians think is a subtext to the asset sell-off plan: a wholesale redistribution of corporate power. Nationalist politicians have openly called for a large chunk of IBRA's assets to be transferred to the Ministry of Cooperatives. The ministry -- which represents some 30 million members of local cooperatives and small businesses -- says it would then be able to redistribute the assets in a bid to diminish Indonesia's wealth gap and alleviate social tensions.
The Cooperatives Ministry's director general, Deswandhy Agusman, says he'd like to see at least 20% of IBRA's assets transferred into his ministry. Already, the ministry has been trying on behalf of local cooperatives to gain control of the country's rice and cooking-oil distribution networks, formerly in the hands of large conglomerates or the government itself.
"Wealth should be distributed to the people," Mr. Deswandhy says. Earlier, the forestry and plantation minister said private forestry and plantation companies in Indonesia must allocate a 20% stake to the cooperatives, although legislation hasn't been drafted.
Fears of eroded value
Critics of the Cooperatives Ministry cite fears that companies will erode in value under its care and that their management will lack transparency.
"The cooperatives don't have the management" to handle these companies, says economist Kwik Kian Gie, an aide to opposition leader Megawati Sukarnoputri. Mr. Deswandhy counters that "professional management" would be brought in to manage the assets. He envisions the assets being auctioned by IBRA to foreign investors, with the winners being those bidders who offer the cooperatives the largest stakes, among other criteria.
IBRA has sought to defuse nationalist pressures by insisting on an "Indonesia First" policy in any asset sales to foreigners. Among the requirements for foreign investors: retain all Indonesian employees for at least two years; offer employee ownership and incentive programs; contribute to Indonesian enterprises; and comply with U.S. government environmental standards.
But in combination with Mr. Habibie's wish to speed asset sales, the nationalist sentiment has raised fears of a central plan for reallocating wealth using the IBRA assets from ethnic-Chinese businessmen to indigenous ones. Mr. Habibie is under pressure to damp racial tensions and "do something for the cooperatives," says Mr. Seda, the president's adviser. But at the same time, he adds, "We don't want to give the impression to foreign investors that assets are being nationalized."
Pooling assets
IBRA officials say they worry that the attention focused on the asset sales could derail their plans for unloading the assets. They are trying to realize more cash by pooling assets -- such as plantation and automotive interests -- or by offering securities, such as bonds, that repay investors through the assets' cash flow. "What's important is that we realize cash as quickly as possible," an IBRA adviser says.
Plans for reselling shares of Indonesia's largest auto producer, PT Astra International, provide an example of the pooling process IBRA intends to follow, the IBRA adviser says. Three separate businessmen are set to cede their Astra shares, which together amount to more than 20% of the company's shares, to IBRA as a repayment for government loans. To avoid a sudden dumping of these shares into the market, IBRA will combine the stakes and aim to sell them to strategic investors.
IBRA has also made progress in recovering outstanding loans made to two Indonesian tycoons, Mohamad Hasan and Usman Admadjaja, the adviser says. Mr. Hasan, a long-time golfing partner of former President Suharto, will cede most of his timber concessions to IBRA as repayment for loans made to his PT Bank Umum Nasional, the adviser says, while Mr. Admadjaja will transfer large tract of Jakarta property to cover loans made to PT Bank Danamon Indonesia.