Economic and Political Crisis Simmers in Indonesia


Despite a relative stabilization after the election of a government of the bourgeois democratic opposition to the discredited Suharto dictatorship, the crisis in Indonesia continues to simmer.

The much touted economic recovery has failed to materialize. Since last November, the national currency, the rupiah, has declined by 21 percent against the dollar, and the value of stock shares has declined by 36 percent.

In a May 17 Reuters dispatch, correspondent Jonathan Thatcher wrote from the Indonesian capital of Jakarta: “A cloud of gloom has descended over Indonesia. Its financial markets have been plunging, along with hopes that a shambling government can lead the country out of economic ruin and political bedlam.”

The chief of the Central Bureau of Statistics recently issued an estimate that the economy would grow this year by only 1.5 percent, in contrast to the projections of 3 to 5 percent by the president, Abdul Rahman Wahid, and his economics minister, Kwik Kian Gie.

In a huge country with a dynamically growing population like Indonesia, an annual growth rate of 1.5 percent would mean that the economy is losing ground rather than gaining it.

At the same time, since Indonesian workers were superexploited and repressed under the old regime, the weakening of the government has led to a swelling upsurges of strikes demanding increases in extremely low wages.

For example, workers employed by the Japanese company Sony are demanding a raise of 80 percent, and the management is threatening to abandon its Indonesian operations.

In 1999, 125 strikes were officially reported. In the first quarter of this year, there have already been 52. And government officials estimate the real number of strikes is 10 times that. Rebellions of rural workers and peasants have also taken place in many places. These are even less well recorded. But the Wall Street Journal of May 25 reported that Wahid has recruited more police “to quell looting of plantations.”

None of the political problems left pending by the fall of the dictatorship have been solved. In the first place, in the name of “national reconciliation,” Wahid refuses to move decisively to prosecute Suharto and his corrupt cronies and offspring.

But radical students, who were the spearhead of the protests two years ago that forced the dictatorship to retreat, have kept up their demonstrations demanding punishment of Suharto and the dismantling of his network of crony capitalism. They have kept the issue before the Indonesian people.

In a May 18 dispatch from Jakarta, the Business Times reported that because of the interlinking between the operations of Suharto’s crony capitalists and the capitalists supporting the new government no decisive measures have been taken against the Suharto financial empire:

“The beginnings of an economic recovery [now more than dubious] have muffled calls for the dismantling of the firms, while the family’s ties to the military and government ministries remain too strong to allow such an outcome anytime soon, analysts say.

“‘The current leadership is indecisive on whether [a purge of Suharto’s family from the corporate sector] would not upset a lot of people in their own ranks,’ said Manish Singhai, a vice president at Alliance Capital Management in Singapore….

“‘The system hasn’t come down as hard [on these companies] as many people expected it would,’ said Calvin Ho, vice president and senior portfolio manager with Citicorp Investment Bank (Singapore), which manages $150 million worth of Indonesian assets.

“While calls now for Mr. Suharto’s prosecution on corruption charges make headlines daily and foreign firms steer clear of the former first family, many Suharto firms remain largely untouched.”

Furthermore, the new government’s timid maneuvers to impose more civilian control of the military have not changed anything fundamental but are arousing a backlash among the generals. For example, the May 24 Business Times ran an interview with the army chief of territorial affairs, Lt. Gen. Agus Widjoyo, that stressed the military’s determination to maintain its own fraction in the parliament.

At the same time, the new government’s feeble pretense of investigating the violation of human and democratic rights by the military, particularly in the rebel areas of East Timor and Aceh, have satisfied no one.

Nonetheless, the United States has quietly renewed its collaboration with the Indonesian military. In The New York Times of May 25, Elizabeth Becker reported:

“The United States broke the freeze this month by inviting Indonesian military observers to joint exercises in Thailand and by completing plans this week to hold the first joint exercises between American and Indonesian armed forces in July.

“These exercises are a prelude to a much larger military-to- military program the administration will present Congress this month to reward the new, democratically elected Indonesian government for removing some of the senior military officers under investigation for the East Timor massacres and for imposing civilian control of the military, according to senior administration officials.”

Successive U.S. governments worked hand in glove with the Indonesian military dictatorship and were complicit in its repression of the Indonesian people in defense of the interests of local and international capitalists. Despite the thin pretext of reform on both sides, this relationship obviously has not ended.

The crisis in Indonesia is the result of tendencies inherent in world capitalism today. It will not end without a decisive confrontation between masses of working people and their exploiters. That confrontation is inexorably drawing closer.

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