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Price of Rice vs. Price of Politics as Usual in Jakarta

Students clashed with police yesterday over Suharto's new Cabinet. Political unrest may worsen Indonesia's economy.

News from Indonesia these days is really two intertwined stories.

One is about the global economy repairing itself when something goes wrong, as it has in East Asia. The other is the tale of a longtime ruler who insists on fixing his country's problems himself, even as some of his people suggest his departure is the main solution.

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The tussle between the International Monetary Fund (IMF) and the Indonesian government is an act in the first drama. And the Indonesian students agitating for more democracy play a leading role in the second.

These two dynamics combined produce a potentially catastrophic situation. The economy in Indonesia has gotten very bad in the past eight months, but it could still get a lot worse. For one thing, wary overseas banks and firms are refusing to do business with Indonesian companies, a reluctance that ultimately stalls factories, idles new projects, and creates unemployment.

But the longer the economy stagnates, the louder come calls for political reform. And the one thing certain to make international investors even warier is the possibility of political upheaval. The result could be a collapse of what was once a much-applauded "emerging market," widening the economic turmoil in Asia and in turn hurting Japan and the US.

Key events influence both stories. Over the weekend President Suharto, sworn in last week for a seventh term in office, named longtime friend Mohammad "Bob" Hasan and his eldest daughter Siti Hardiyanti Rukmana, known as "Tutut," as ministers in a new, 36-member Cabinet. The appointments are likely to irritate the IMF, which wants to see less collusion and nepotism in Indonesia. Democracy activists are already complaining about a business-as-usual Cabinet, announced only days after Mr. Suharto said he appreciated criticism.

The dispute between Suharto's government and the IMF concerns the terms of an economic rescue package, but the deal has political ramifications. The IMF is the emissary of the rich countries that provide the money it lends to nations in danger of collapse. In exchange for the loans, these nations demand changes they feel will help promote a globalized economy of free markets and fair competition.

In Indonesia's case, many of the IMF's reforms are aimed at undoing a culture of cronyism. The problem for Suharto is that handing out those dispensations, such as monopolies in certain commodities, is part and parcel of the way he rules. Many Indonesians agree that eliminating "corruption, collusion, and nepotism" - a stock phrase here - is vital. But no one can "address these issues without affecting the whole power structure," according to Marzuki Darusman, a lawyer and former politician who works for the government's human rights commission in Jakarta, the capital.

It may be that the IMF is asking too much. Indeed, IMF officials have been sounding conciliatory in recent days, apparently in efforts to ensure its rescue package can be put into play. Suharto and other Indonesian leaders have also made statements about the need to work with the IMF. In his heart, Indonesia's leader may think he can restore international confidence without IMF backing, but many of his fellow citizens hope otherwise. "He has to face the reality that if he doesn't get the money there's going to be a big, big riot," warns Lukman Sutrisno, a prominent sociologist.

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So far this year Indonesia has seen two types of social turmoil. In perhaps 20 towns and cities, frustrated poor people rioted in January and early February over food prices, often attacking Indonesians of Chinese origin. The Chinese are a small minority, about 3 percent of the population, but they control about two-thirds of the economy, making them a target for Indonesians angry about uneven distribution of wealth.

Those outbreaks of unrest, however, have more to do with economics than politics. The student demonstrations, which yesterday led to clashes with police in Jakarta and last week in the industrial city of Surabaya, reflect a repressed demand among many Indonesians for a more open democracy.

Suharto came to power in 1966 insisting that Indonesia forget its political divisions and concentrate on economic development. Relying on expert advice and making full use of his power as a military-backed ruler, Suharto succeeded magnificently in turning around an impoverished, fractious nation.

The number of Indonesians still willing to sacrifice their voice for the sake of Suharto-imposed stability and growth is shrinking, especially since the country is nowhere near as calm and prosperous as it was just nine months ago.

"Most people think that of course Suharto has done good things," says Daniel Sparringa, a lecturer at Airlingga University in Surabaya who works with student democracy activists. "But we also believe that there is a possibility that someone else could do better."

Many other Indonesians disagree, partly out of faith in the only leader they have known for more than three decades. Thanks to the political system Suharto presides over, there is no "someone else" for the present. The opposition is divided, marginalized, and imprisoned. The legislature is under Suharto's effective control. The media is tame, chastened by a government that revokes licenses and prosecutes people under a vaguely worded law against defaming the president.

Perhaps the area where Indonesia's two strands diverge most is on considering solutions. For those who administer the global economy, the key to Indonesia's repair is stability and credibility. In a situation where Suharto appears to provide neither, the powerful nations that back the IMF may decide, in the words of a Western analyst in Jakarta, that the best result would be "another uniform on the throne." The military is intimately involved in Indonesian politics and Suharto himself is a former general who took power to restore order amid turmoil.

At the time, he had the backing of the students, but many no longer believe that another general is the answer. Says Nurhadi, a student leader in the central Javanese city of Yogyakarta, "I worry so much that the next president will be from the military. If that happens what we are fighting for will be for nothing."

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