The puppet King is dead
* Indonesia "Gone, at last" declared The Economist magazine on Suharto's resignation on May 21st, welcoming his belated departure. Western leaders rushed to jump onto the anti-Suharto bandwagon in his final days. They quietly forgot their support and encouragement in his murderous ascent to power, his dictatorial rule, his embezzlement of the nation's wealth and his genocide of the East Timorese (with arms they supplied!). He was an embarrassment now. A relic from Cold War years. A reminder of the gulf between their democratic rhetoric and their antidemocratic record. Suharto had out-served his purpose and outlived his use. B. Skanthakumar What we have witnessed is the latest stage in the unravelling of a series of alliances represented in the "New Order" regime, accelerated by the financial crisis in the region and by a vibrant mass movement.
The currency crisis in south-east Asia which began with the devaluation of the Thai baht and the collapse of its property sector in July 1997 and the domino effect on neighbouring economies drove the Indonesian government to seek financial support from the International Monetary
The run on the Indonesian rupiah, which lost 80% of its original value within ten months, reflected concerns over the level of corporate or private debt estimated at US$80 billion. Most Is owed by just 50 individuals and their holding companies. Bad loans were made by the private banks owned by a number of these individuals — loans which they made to themselves. This was on top of state or sovereign debt believed to be around US$60bn. and which will consume 24% of export earnings or US$8 billion in debt servicing payments this year alone. More, if the IMF
The Indonesian government invited the intervention of the IMF which seized this opportunity to restore its credibility in financial circles, which had been unimpressed by its earlier packages for South Korea and Thailand. It couldn't let one of the "success stories' of capitalism collapse 20 International Viewpoint #302 when it had so recently lauded it for its 78% annual growth rates.
In October 1997 a US$43 billion deal was agreed including bilateral loans from the United States, Japan, Malaysia, Singapore and Australia in return for structural reforms to the economy. These included the dismantling of private and state monopolies in wheat and Soya beans, abolition of the price ceiling on cement, lowering of tariffs on chemicals and steel and abolition of the local content rule for cars assembled in the country by 2000. Sixteen banks owned by First Family members and Suharto cronies which had incurred heavy debts were closed down.
As the rupiah continued its free fall, middle class people started exchanging it for US dollars and currencies which had a stable value. The Government's response was an advertising campaign using giant bill-boards reading "I Love the Rupiah". Suharto's eldest daughter, the politically ambitious "Tutut' was filmed exchanging US$50,000 for rupiahs. Small change for the billionaire and a small drop in the ocean for the currency markets. The campaign was a flop.
Meanwhile there was backtracking on the IMF conditions as the individuals who saw their interests threatened fought back with the main weapon at their disposal: access to the President. All of the IMF measures were a direct challenge to the dominance of companies owned by Suharto family members and their cronies. Loopholes in the agreement included the Suharto's son's monopoly in the clove industry (crucial for the country's ubiquitous kretek clove cigarettes) and the incredibly expensive national aircraft project led by Habibie.
It also allowed the continuation of the secretive Yayasans (Foundations) which are managed by the Suharto family and their friends and which have been an investment and capital mobilising vehicle
Toulo vose of di vagant mega-projects that had been dropped were reinitiated and Suharto's son Bambang, whose bank had been closed down, was issued another licence to open
It was humiliating for Suharto to seek a large financial intervention under these conditions. He had prided himself on his image as Bapak Pembangunan (Father of
The proposition that political order and stability enforced by authoritarian rule was the key ingredient to Indonesia's economic success, according to Suharto. The country had enjoyed average annual growth rates of 7-8%, and annual inflows of billions of dollars in aid and loans. The country's attractiveness as a site for trans-national investment had been one of the legitimising ideological tools of this repressive regime. IMF contribution to the crisis
Although Suharto played for time, he was obliged to sign a second agreement with the IMF in January 1998, reaffirming the original conditions. But the ink was barely dry when Suharto proposed to set up a currency board to restore stability to the rupiah by pegging it with the US dollar. This attempt to interfere with the unfettered right of currency speculators to make their fortunes was greeted with consternation in Western capitals and by international financial institutions who promptly suspended their loan disbursements. The markets got the message, and share prices on the Jakarta Stock Exchange and the value of the rupiah tumbled even further.
By March, on the eve of his "re-election", Suharto had been forced to retreat from this idea. A new round of negotiations began with the IMF and in April the government appeared reconciled to the original package with one proviso, that food and fuel subsidies be phased out instead of eliminated immediately. This announcement in early May was to trigger a round of urban riots.
The IMF plan represented a qualitative victory for the liberalisers who favoured greater deregulation of the economy, undoing the patron-client networks which characterise the relationship between the state and certain capitalists and speeding up Indonesia's integration into the world market, on extremely unfavourable terms.
It was a defeat for economic nationalists, enamoured by the East Asian model of development with its emphasis on strategic heavy industry, nurturing of a domestic capitalist class shielded from fore an eation, and export-oriented industrialisation. Inventing capitalism
At the beginning of the New Order regime, Indonesia had no significant national or more specifically indigenous (pribumi) capitalist class. The small Chinese community were dominant in the retail and mercantile sector drawing on their access to credit networks of other overseas Chinese. Thus the State had to take the lead in investment and corporate ownership. During the 1970s massive revenues from oil exports helped finance aggressive growth in the state sector, and its diversification into a range of related industries. The mechanisms for this
strategy were state corporations and the allocation of trading licences, import and production quotas, bank credit, state contracts and forestry concessions. Acquisition of these rents", which were controlled by politico-bureaucrats, became the route to instant fortunes.
The primary beneficiaries were members of the Suharto family and relatives of other leading civilian and military politicians. And a number of Sino-Indonesian conglomerates who provided the technical skills and marketing know-how in joint ventures with these individuals and military owned business groups. This last category is composed of companies nationalised by Sukarno and managed by the military with serving or retired military officials as directors and which enjoyed preferential access to forestry exploitation licences and contracts for supply to the armed forces and some government departments.
One illustration of the way this system works is that of the Bogosari company which is the country's sole flour miller. It received its exclusive licence in 1969 from Bulog, the State Procurement Agency, which is also the sole importer of wheat. Bogosari is jointly owned by the Government, Sino-Indonesian Liem Soei Liong (the country's richest man) and the exPresident's step-brother Sudwikatmono. By 1995, Bogosari was estimated to control 75% of the noodles market, 33 % of milk and 20% of baby food. It also received an estimated 30% of the value of all flour sales. Frustrations with the "First Family"
Excluded from this cosy arrangement were two other fractions of the capitalist
Some big pribumi capitalists don't have ties of kin or friendship to the politico-bureaucrats and thus are deprived of the same access to rents and state revenues enjoyed by Sino-Indonesians such as Sudono Salim (Liem Sioe Liong), Muhammad 'Bob' Hasan (Thee Kian Seng) and Prayogo Pangestu (Phang Djun Phen) or Suharto s family members.
Another frustrated group is the petty bourgeoisie which is prominent in local and regional economies. This group comprises both pribumi and Sino-Indonesians but the indigenous wing resents the conglomerates for muscling in on its sectors and is notoriously anti-Chinese.
These groups while politically estranged from the Suharto regime have also benefited from aspects of state policy. Thus state banks were instructed from the early 1970s only to supply credit to businesses where pribumis had at least 50% equity, excluding Chinese conglomerates and to offer concessionary credit on preferential terms to pribumi rural traders and small farmers.
But, although pribumi big business shares with Sino-Indonesian conglomerates the advantages in protection of domestic markets from foreign capital, it was unable to benefit fully from the deregulation bonanza in the 1980s because of the privileged access to these sectors of Sino-Indonesians and the former First
By 1997, significant sections of the capitalist class had grown tired of the old regime and more favourable to its reform.
The current economic crisis presents a tremendous opportunity for western transnational capital especially banks and investment houses to buy up south-east Asian banks and companies at bargain prices. In the first four months of 1998 alone there were more leveraged buyouts in the region than in all of 1997.
It also represents is an ideological triumph of the neo-classical growth model favoured by international financial institutions over an alternative statist model of capital accumulation. This eradication of any alternative to neo-liberal capitalism is an even grimmer prospect for the people of the region. Industrialisation
In the 1980s and faced with falling oil revenues and a rapidly rising young population, there was a shift into non-oil and petroleum products based industries. This took the form of export-oriented industrialisation in low value added sectors, such as textiles, garments, footwear and electronics assembly. This expansion was based on low waged labour, low valued currency and a labour force which (where organised) was disciplined by the 'yellow' state sponsored FSPSI (Federation of All Indonesia Workers' Unions) and the military authorities.
Indonesia *
One of the most noticeable developments of the 1990s has been the emergence of a new industrial working class based in those sectors and concentrated in three areas, Jabotabek (Jakarta-BogorTangerang-Bekasi) in West Java, Surabaya-Malang-Mojokerto-Gresik in East Java and around Medan in North Sumatra. By 1990 an estimated 8.2 million people were directly employed in manutacturing representing 11.0% of the total labour force. This includes an estimated 3.6 million women in waged factory and enterprise work.
The militancy of this new proletariat has been a positive feature of the 1990s, as evidenced by the 1994 Medan strike which led to the arrests of the independent SBSI (Indonesia Prosperity Labour Union) leadership including Muchtar Pakpahan. There has also been a steady increase in recorded strikes from 365 in 1995 to 901 in 1996 in spite of the threats by state and
At the same time there has been a rapid growth in the urban population,. Much of this urban labour force are daily waged or casual workers dependent on the boom economy and feeder industries and services to the manufacturing sector. They have been badly hit by the downturn and many may have returned to their home villages, placing a further strain on the food stocks there. In the construction sector alone, 2.8m. will lose jobs as 70% of industry grinds to a halt. Unemployment projections range from 18- 30m. in a total labour force of 90m.
In the face of this real fear of job losses and the spiralling cost of living many workers are enraged at the FSPSI's continued pro-government, pro-employer line. In early May there was a demonstration outside the FSPSI offices in Jakarta protesting the union leadership's support for the government's decision to freeze the minimum wage.
As every worker knows, this minimum wage is already well below the subsistence level and is barely respected by employers. The workers demanded a 20% increase in the minimum wage, the resignation of the FSPSI leadership and lower prices for commodities. One activist said, "Workers have no one to fight for them because the government has been on the side of employers... those who have no commitment to improving worker's welfare should leave this labour organisation" (Jakarta Post, 5th May 1998). "Let them eat Rabbit"
In the first few months of 1998 food riots spread all over Indonesia, in Java and Sumatra but also on the 'outer islands' of Sulawesi, Lombok, Sumbawa and Flores. The grievance everywhere was the same: that the spiralling price of staples like rice, cooking oil, flour, sugar and Soya beans was making it unaffordable to all but the very rich. [Some months later "Tutut' on a walk-about was confronted by complaints from cooked food hawkers at the cost of chicken and was quoted saying that people
21
* Indonesia should substitute rabbit meat for chicken. Indonesia's own Marie Antoinette... The Chinese as scapegoat
The target became the Chinese minority who form three percent of the population but dominate retail trade even in small towns and who collectively are estimated to control 70% of corporate wealth in Indonesia. These small traders were unfairly lumped together with the few but visible Sino-Indonesians who have made fortunes through their close association with Suharto and the First Family' by monopolising the sale of basic goods and exploiting the natural resources of the
In the 1980s many Sino-Indonesians entered into joint venture partnerships with Western and East Asian companies or became their sub-contractors. As employers too they became identified with the state when they called in the military to take action against workers for demanding payment of the minimum wage, for better working conditions and the right to from
Not only were their cars, shops and homes burned, but last year during the violence 55 churches were attacked or burned to the ground, often at the instigation of Muslim fundamentalist groups (Sino-Indonesians are predominantly
Despite their economic clout and relative affluence, the Chinese minority are discriminated against politically and culturally. There is an unofficial ban on their employment in government and the military, so many enter into business or self-employment instead. The formal teaching of Chinese languages is prohibited, as is the display of Chinese characters and formation of cultural associations.
Most Sino-Indonesians have adopted Indonesian names to signify their identification with Indonesia and protect themselves from state harassment. But they have remained a useful scapegoat for the economic crisis. In the recent violence, the military has encouraged violence against the Chinese to defuse and deflect anger against the regime. On a number of occasions, soldiers have kept away from mobs or stood by and watched as they looted Inside the student movement
Student protests reached a crescendo in the run up to and after the March MPR session which confirmed Suharto's "reelection" to a seventh term as President.
These protests were tolerated by the Armed Forces so long as they took place on university campuses isolated from the streets and communities where the common people live and work. However even this limited space was grasped by students used to campuses which have been heavily policed in recent years with informers reporting the activities of student radicals
The campuses were transformed into free speech forums, addressed by promi 22 International Viewpoint #302 nent oppositionists. The groups directing the protests were ad-hoc coalitions independent of political affiliation though including activists from student and reform organisations like PIJAR and ALDERA as well as the underground Peoples Democratic Party (PRD).
While often campus or area specific, the groups were in close communication with others throughout the country, using the Internet and mobile telephones exinformation, developments and co-ordinating actions. City forums were formed where delegates from all the local universities and colleges would meet daily to assess the day and plan ahead. Sympathetic journalists trained students to deal with the media, prepare press releases and produce campus
The identification of students with academic institution rather than with partypolitical affiliations was symbolised by their wearing of brightly coloured university jackets usually reserved for formal
The demands before March were for reductions in food prices and stability for the rupiah, change of cabinet and a new President. There was condemnation of anti-Chinese violence in the food riots that had swept the country and warnings that the regime was manipulating the poor by deflecting their anger away from the system and towards the Chinese and Christian minorities.
Over the last decade, students many of whom come from rural backgrounds have been involved in building alliances between students and peasants and in recent years between students and the new working class. Some urban middle class students were drawn to activism fearing that the jobs they expected after graduation would not be there. Many others became active because they felt the pains of the peasantry and the poor, and recognised their responsibility to articulate the people's grievances.
In May, several meetings were held between student and workers representatives at various campuses to formalise alliances. The movement spread and grew, throwing up new slogans and demands, using public meetings, demonstrations, street theatre and occupations of government buildings to spread their ideas. Vans of food prepared by middle class households or donated by businesses made trips to the campuses, distributing food to those within. Between May 14th and 20th, students occupied a Television station in Padang and radio stations in Malang Surabaya and Semarang which were used to broadcast their ideas. A far-from-radical opposition
The focus in Jakarta became the occupation of the Parliament building, sparking off similar occupations of regional assemblies and Governor's offices outside of Jakarta. Banners with anti-Suharto and pro-democracy slogans were displayed, and effigies and images of the dictator were burned with impunity. Something unthinkable just a few weeks earlier. In a country where insulting the President is an imprisonable offence!
The students appealed to the impotent legislators to "heed the wishes of the people." They called on legislators appointed by Suharto, in an assembly created by Suharto to... throw out
Hardly surprising. People do not discard old institutions when new ones haven't been created or cannot even be envisioned. The masses invested the country's old institutions with all their new found hopes and energies, striving for the political system to reinvent itself, believing that what was impotent could now become all powerful.
The movement had no charismatic leader, no single spokesperson. It was led by anonymous collectives of local leaders. Yet, having provided the lead, it now itself wanted to be led. It yearned for a personality recognised by the masses and of sufficient authority to mediate with the regime.
Megawati Sukarnoputri, leader of the Indonesian Democratic Party (PDI). daughter of first president Sukarno and inheritor of his secular nationalist-populist mantle could have been its icon. But she lacked the courage and the imagination to confront the military and take the attendant risk. Fearful of provoking the military and losing favour with them, she preferred to remain on the sidelines waiting for the inevitable dénouement, and then gracefully and perhaps even with the blessings of ABRI, to accept the nomination for the Presidency thrust upon her - beloved leader of the poor and forgiving friend to
With Megawati refusing to step forward, the spotlight settled on the relatively obscure figure of Amien Rais. His Muhammadiyah organisation has 28 million members and represents the modernist wing of Indonesian Islam. Rais has a chequered past and was closely associated with Habibie's political vehicle the Association of Muslim Intellectuals (ICMI). A favourite of the US embassy, Rais has clear lines of communication to retired and serving high ranking officers in the military. Thus many believed him when he called off an anticipated one million strong demonstration in centra Jakarta's Merdeka Square on May 20th relaying a warning he had received from a military source that another Tiananm
Square (referring to the massacre of Chinese students in June 1989) was in preparation.
The city centre was surrendered to the military, who watched nervously over deserted streets. Meanwhile, busloads of students proceeded to the Parliament complex gathering on its roof and steps joining those in occupation inside. Outside Jakarta there were massive demonstrations in Yogyakarta, Surabaya, Bogor, Bandung, Solo (all in Java) and Ujung Pandang (in Sulawesi). May 20th has been celebrated annually as National Awakening Day marking the birth of the anti-colonial movement against the Dutch. From 1998 onwards the day will have renewed and added significance. Illusions in the armed forces
Students displayed a disturbing ambivalence towards the mintary, reflecting the recent, immature politicisation of the movement, and their naiveté. Older activists were not numerous or influential enough to correct the students' impression that the Military could be persuaded not to support the regime through appeals to their conscience, morality and the 1945
In imitation of the anti-Vietnam war movement in the United States, students placed flowers in the barrels of soldiers' guns and tried to fraternise with them and win them over to the pro-democracy cause. Echoing the student protests between 1973-74 and 1978-79, the refrain to the army was "return to the people" calling on them not to repress the protests and to throw in their lot with the pro-democracy camp instead.
In fact, the Indonesian military is part of the regime, parent in its conception and mid-wife at its birth. The students' illusions reflect the tenacious hold of the doctrine of dwifungsi or dual function (introduced by Sukarno) which institutionalises a role for the military in civilian life.
Even those prepare to break with Suharto have yet to fully conceive of a rupture with Suhartoism. Many felt that they needed to exploit rivalries within the military high command, playing Wiranto (*the dove") against Suharto son-in-law Prabowo ("the hard-liner"). Without splits in the military high command, they reasoned, drawing on the Filipino experience removing Suharto would be extremely difficult.
However what may have pushed the regime into dumping Suharto sooner rather than later was the ferocity of the urban riots in May beginning in Medan (45th) and spreading to Palembang (13th), Solo (14-15th) and most spectacularly Jakarta (13-15th). The immediate trigger to the violence in Medan was the announcement that month of further fuel price increases which meant that cooking and public transport would also become more expensive. Petrol prices were to rise by 70% and electricity rates were to increase by 60%.
The May 12th killings of six students from the private Trisakti university, attended by the children of the elite enraged and numbed the whole country, sobering the "intoxication of fraternity" with ABRI. The students who had protested for weeks within their campus had marched onto the streets on that day. There were confrontations with riot police, who first kicked and beat the students and then shot into the crowds using live ammunition.
The next day, as students attended a memorial service for their fallen comrades, crowds of people came to the campus walls of Trisakti university urging the students to take to the streets with them. The students refused, sensing that a riot was likely to occur, and that this would provide the excuse for the Armed Forces to denounce the pro-democracy movement as "anarchists and looters' taking more severe action against them.
These involved in these protests were in their own confused and contradictory way more anti-systemic than many of the stock-brokers, bankers, middle-class professionals and erstwhile supporters of the regime who have since rallied to the Student led movement and its demands.
The objects of the riots were the emblems of the regime and its consumerist values. The air-conditioned shopping malls with their water fountains and piped muzak, the banks and automatic teller machines, the car showrooms which stocked the Timor car, pet project of *Tommy' Suharto, the fancy hotels where the new rich spent more in a night than most make in a month. Who were the rioters?
According to Gerry Van Klinken, editor of Inside Indonesia magazine. "the rioters are the urban poor who have not had political representation in the New Order. They have almost no political leadership other than the sometimes agitational preaching in hundreds of small mosques. Yes, they are anti-Chinese. More generally they are alienated by the entire modern economy."
Some 1,188 people died in the riots, according to the Human Rights Commission. Most were looters, trapped in the fires they had started. In Jakarta, the Chinese commercial district of Glodok was the object of a rampage. Chinese
Indonesia * women were targeted for rapes, sometimes by groups of men. Two women's organisations, Kalyanamitra and Mitra Perempuan, have confirmed over 100 rapes in Jakarta alone, ranging from girls of 10 to women of 55. Not a single rape has been reported to police. Partly because many women are too ashamed to be publicly identified. And partly because some victims believe that their rapists were plainclothes police officers.
The violence against women and against property has traumatised the entire Chinese community, who remember the killings of between 300,000 and 500,000 ethnic Chinese in the 1965/66 massacres which brought Suharto to power. Over 100,000 Sino-Indonesians have fled the country.
This violence was sharpest wherever there was a total absence of political organisation. In Yogyakarta, for instance, where the Muslim Muhammadiyah organisation was heavily involved in the protest movements, there was much less anti-Chinese rhetoric or violence than in
Because supermarket chains and small shops which stock food were badly hit by the riots, and owners were reluctant to reopen them, severe food distribution problems emerged in Jakarta and other cities.
The Indonesian elite worried that, if left unchecked these uprisings of the urban poor could overwhelm the military who watched on helpless or unwilling to intervene as billions of rupiah worth of property was destroyed, rocking the very foundation of the regime. The calls for Suharto to step down now came from within his own regime. No one could believe their ears when Ha-Ha-Ha' Harmoko - the sycophantic Speaker of the Parliament and Chairman of GOLKAR and one time Minister of Information -delivered an ultimatum to Suharto on the 19th: resign by May 22nd or face impeachment proceedings in the MPR. Ministers met ostensibly to discuss the economic situation. By the end of the meeting a number of them had decided to resign rather than continue to serve Suharto. Other senior figures from the civilian and military including Habibie and General Wiranto also called on Suharto that night. They did not give him the unconditional support that until recently had been forthcoming from them and are thought to have hinted that he should go now "in dignity" rather than face trial and public humiliation. He was also promised state protection and the safeguarding of his family's assets. The next day in a brief speech, Suharto asked for forgiveness, appointed Habibie his successor and withdrew from the stage.
To borrow from Benedict Anderson's classic essay "The Idea of Power in Javanese Culture", the confluence of economic calamity and social disorder signified to the regime as much as to the people, the diminishing of Suharto's power and the loss of his wahyu (divine lustre), its public manifestation. The King was dead. *
* country name here