A new opposition emerges
A June, 1984 meeting of the Inter-Governmental industry and related services and infrastructure.
Group on Indonesia congratulated General Suharto's and gas revenue accounts government on its performance in 1982 and 1983. income and 65-70% of foreign earnings.
The IGGI groups the 13 countries with the largest decline of oil prices in recent years has hit hard. Rea investments in Indonesia, and it meets annually to Gross Domestic Product growth fell to 2.25% by 1982
The 1984 meeting, held at and has declined even further since then.
The Hague, pledged some 2.5 billion US Dollars in What aroused the IGGI's admiration last June was loans and grants for the 1984/85 financial year. This Suharto regime's response exceeded the recommendations of the World In the eyes of the imperialists, Suharto set an example to other Third World countries by adopt-
The 13 member countries of the IGGI are: Aust- ing an austerity budget, slashing subsidies for domestic ralia, Belgium, Canada, France, West Germany, Indo- devaluing the rupiah and rationalising
Japan, the Netherlands, New Zealand, and laws and regulations on finance and
Switzerland, Britain and the USA. The World Bank,
INDONESIA review these investments.
oil products, investment.
for 60% of government this "difficult"
The brunt of these measures fell on the workers and the International Monetary Fund, Asian Development
Bank and the United Nations Development Program are
Indonesia's population of 160 million. These people also members.
had not shared in the 1970s investment boom. By
Indonesia's largest foreign investor is Japan, foll-
1982 some 40% of the population shared less than owed by the USA.
10% of the national income, and fell below the official
But all is not well with the country's economy.
This marked a sharp decline from the
Like other Third World countries, it has suffered severely from the effects of the capitalist world recession.
Sixty per cent of the population depends on agri-
Indonesia recorded 10 per cent annual economic culture for its livelihood while agriculture accounts for growth in the late 1970s as a consequence of a flood of
30%, or less, of national income. Additionally, much international investment following the consolidation of ot this income does not go to the people on the land.
"New Order"
regime which came
Driven by poverty, growing landlessness and underto power after the bloody suppression of workers' and employment, millions peasants' organisations in 1965-66. (2)
already overflowing cities in the vain hope of finding
However, most of this investment went into the oil work.
The 1984/85 budget maintained the offset the deficit with inflows of foreign
The new austerity general austerity measures, but granted capital.
measures were introduced in March
1983, shortly after
General Suharto was "re-elected"
ident by the largely appointed People's
Consultative Assembly (MPR).
The rupiah was devalued to increase paper earnings from oil exports, to discourage imports and to make Indonesian exports more competitive.
imate effect was to increase living costs for the vast majority of Indonesians.
The April 1983 budget cut the domestic oil subsidy, sending petrol and kerosine prices skyrocketting.
grade fuel rose by up to 70%, while the increase for higher grades was around
Following this, bus fares rose by
The cut in oil subsidy hit large numbers of people who rely on kerosene for cooking and lighting.
Fertiliser costs increased, putting more pressure lions of subsistence farmers.
Government workers' frozen for the second year in a row, and no new government housing was to be built. So, even before the full effects of revaluation were felt, millions of people's living costs had increased drampoverty Ine. late 1970s. (3) government employees a 15% pay rise. It further reduced domestic fuel oil subsid.
The World Bank wants the government to end all subsidies for fuel, fertilisers and public enterprises. (5)
One result of these measures was higher inflation up from 10% in 1982 to
15% in 1984. Suharto also rescheduled 48 major projects foreign investment worth some 20 billion
The austerity measures, together with a slight upturn in commodities prices in the second half of 1984, helped the government reduce the current account deficit by 2.9 billion US dollars. deficit had been around 4.2 billion US dollars in mid-1984.
The government was hoping to further
Embassy press release (AustBetween 500,000 and one million people slaughtered because they were suspected (PKI) or the mass organisations which the party mothere
Thousands were arrested and Suharto and other right-wing generals launched the bloodbath using the pretext of an abortive revolt by a group of pro-Sukarno army officers
October 1, 1965.
thoroughly destroyed the existing the great majority of of people have taken to the
However, offsetting the deficits of recent years with more borrowing has
According to the World Bank, Indonesia's foreign debt was a third of all outstanding external debt in East Asia and the Pacific at the end of
The Suharto regime has a total public debt of 27 billion US dollars (nearly 36 billion dollars if undisbursed loans are included). To this must be added a private sector debt of 6-8 billion
The World Bank does not consider this a problem because the loans mostly medium-to-long-term and at relatively low interest rates. However, in 1983 the bank estimated the ratio of debt-service payments to export income at 19%, approaching what is considered workers' and farmers' organisations, the Sukarno government was effectively replaced by military rule, although this was not formally consolidated
According to Mubyarto, a lecturer in econat Gajah Mada Australian Financial Review, Year For 198ter. 83. magazine, South, January 1985, p. 11.
International Viewpoint 25 March 1985
the critical level of 20%.
According to an editorial in Merdeka, a nationalist newspaper, Indonesia's Minister for Finance, Professor Ali Warhana admitted late in 1983 that debt repayments had reached 24% of export earnings. (6)
Last April's budget also marked the start of the government's fourth five-year development plan, Repelita IV. The plan optimistically projects a growth in Gross on fears of a worsening of "recent social and political tensions" in the country.'
The reference is to bombings of Chineseowned businesses and riots in Central Java late last year. These were the most overt signs of the growing mass reaction to the economic situation, but must also be viewed together with the rise in labour and organisation among the
Frustrations among the growing ranks
During the 1950s, and later, there were several further important nationalisations of foreign businesses. Sometimes when militant workers seized plants, but in every case the military moved in, evicted the workers, and took over administration of the nationalised businesses.
military seized power in 1965/66, it represented not just the interests of imperialism (the great
Domestic Product (GDP) by an average of of unemployed youth can 5% over the next five years. It also promises economic restructuring to develop the manufacturing sector. still accounts for 20-30% of GDP while manufacturing accounts for 15%. Frustration among unemployed youth
Indonesia's problem is charactersitic of most Third World countries. capital tends to invest in the raw materials area and adoptcapital-intensive techniques. The entire national economy rises or falls with the prices of these raw materials. The foreign investments do little to develop the local economy and create very few
On the other hand, there are considerable negative effects in localities where major foreign investments are situated.
One major project is a large scale at Lhokseumawe, built around a natural gas field in Aceh,
Most of the employees are foreign, living and working in high income enclaves in the midst of poor local populations.
As a result, the local population is subjected to land speculation, price-rises and a drain on the existing services network. The government is worried about the security of such enclaves due to growing local resentment.
Repelita IV seeks to resolve such problems by greater use of domestic capital to develop secondary industry around the foreign investment projects. But to date, most big local capitalists have preferred to invest their money overseas or in areas like property development. The Suharto regime's promise of looser regulations and tax reorganisation did have some effect on local capital. There were reports of a boom in office block development in the capital Jakarta, last year! That's unlikely to last for long without new investment in more productive industry.
development of a manufacturing industry is poor local demand, a product of the sheer poverty of the majority of Indonesians. of recession, this demand declines even only grow. Even before the OPEC price cut was announced, the regime's planners forecast that by 1990 there would only be 6.1 million jobs for a workforce of 9.3 million people. This optimistic figure accepts an unemployment rate of 34.4%. Current figures put the unemployment
Indonesia's deepening economic crisis is giving rise to growing dissent. And the crisis is being worsened by imperialism's demands for rationalisation of Suharto's "New Order" regime itself. The character of the new opposition in Indonesia today is being shaped by these two related pro-
While the ability of the Suharto regime to restructure the some real restructuring is taking place in
The Suharto military regime took shape under the popular nationalist Sukarno government, which ruled Indonesia from independence in 1949 to the 1965 military coup. Sukarno's rule was based on an uneasy truce between a right-wing dominated military and a militant independence movement. In this movement, the world's third largest Communist operated openly alongside more moderate
Under the leadership of Abdul Haris Nasution, the head of the Supreme War Administration (Peperti), army officers were appointed as managers of confiscated Dutch estates and enterprises. The army took over the Sumatran assets of Royal Dutch Shell. In 1957, the army was given control of the state oil company, Permina (now Pertamina).
majority of senior officers were trained in the US), but an important economic agency through which all foreign invest-
The bread and butter of Suharto and the other generals around him were the bribes and "kickbacks" that had become standard in the country's business opera-
"New Order", as the Suharto regime named itself after the coup, resulted in a partial rationalisation of this cor-
Under the New Order, all foreign investors have to work through a local agent or partner, who commands a 2-7% commission on large contracts (above 50 million US dollars). For smaller contracts, commissions can reach 10% or more. (9)
On top of that, there are bribes that must be paid to secure various licences. General Suharto's wife, Madame Tien Suharto, became commonly known as
The system's total corruption shows up clearly in taxation. A complicated system of taxes provides officials with the means to extract enormous bribes. very little tax is collected. In 1982 there were only about 600,000 taxpayers in the entire population. Now, the government says it plans to simplify the taxation system and actually start collecting tax. 1984. Published in Canberra, Australia, p. 19.
Australian Financial Review, February 8. 1985.
Many commentators have pointed to evidence that the CIA cultivated Indonesian military officers from the 1950s on. Some even suggest that the events of 1965/66 were planned and carried out under Washington's direction. cf. Southwood & Flanagan, Indonesia: Law, Propaganda and Terror, Zed Press, 1983.
South, January 1985, p. 12. NEMOP Inflation..... Taxes....
INFLASI
The recent decision by the Organisation of Petroleum Exporting Countries (OPEC), of which Indonesia is a member, to cut the price of Minas crude oil by 1 US dollar per barrel will cost the Indonesian government 280 million US dollars this year.
This places even more pressure on the Indonesian economy and has caused the Australian Financial Review to comment International Viewpoint 25 March 1985
Prices....
15
INDONESIA
Brunei Malaysia Kalimantan Bandjarmasin Sumatra Indian Ocean
Java Dili Ocussi Ambeno (Port Timor) LLL Portuguese Timor Kupung 100 mis This has been welcomed by the IGGI.
The history of the state oil company, Pertamina, provides several more illuminating examples of the regime's methods. Pertamina commands millions of dollars, but does little work itself.
foreign oil companies. Seventy-five foreign oil contractors work
When the military regime first came to power it was an alliance of a number of each of whom maintained an "empire" based on a government department or wing of the military. "empires" were held together with bribery and patronage.
After the 1965/66 coup, two generals emerged as possible military leaders, Nasution and Suharto. Suharto's control of combat units and the strategic command enabled him and his supporters to prevail. General Nasution lost his important positions and his supporters found themselves transferred to positions which left them little real power.
Since then, Suharto and a small group of his supporters have worked consistently to isolate and eliminate competition, even within the military. 1969 by reorganising the armed (Abri) under his operational control. became supreme commander. Commanders of the navy, airforce and police wings lost much of their autonomy and power.
Behind this purge seems to have been Suharto's determination to protect his position from any possible challenge. But a political difference was also involved. The group around General Nasution, while anticommunist, wanted a return to some form of civilian rule after the left was destroyed. Suharto disagreed.
He defined a new role for the military, summed up in the concept of "dwifungsi" (dual function). The military, besides its usual function, was to lead the nation in
But not even the armed forces were to be without control. The command for 16
3,000 miles
= Pacific Ocean
New Guinee Halmahera Irian Jaya am, Sulawesi Papua Darwin Australia the restoration of Security and Order (Kopkamtib) was a "temporary" extraconstitutional martial law body set up in 1965. It had the power to override police and even the defence department. It has become a permanent feature of the New
When elections were reintroduced in 1971, the most undemocratic aspects of
Democracy" retained. But only anticommunist parties were allowed to participate.
1983 saw the beginning of a new reorganisation of Abri under pressure from the changed economic situation, and once again in order to eliminate any challengers to Suharto. Dubbed "regenerasi" (rejuvenation), it heralded a general restructuring and rationalisation of the entire New Order regime.
During the oil boom, there was a lot of money around to support widescale
And in those days foreign investors felt that this was a small price to pay for Suharto's services in destroying the militant workers' and peasants' move-
But with the recession things have changed. The regime has been forced to trim some excess fat. The demand for efficiency in production also requires streamlining and centralisation of
Unbridled corruption breed intolerable levels of inefficiency.
The latest purge disposed of all the remaining factions in the army apart from Suharto's. It was consummated in March 1983 when the new cabinet was "elected" by the MPR. Three longstanding New Order leaders lost their positions.
Lieutenant-General Ali Murtopo was one of the casualties. A former minister for information, whose faction was built around the secret police (BAKIN) and the top-secret intelligence agency, OSPUS (Special Operations), he played a key role in secret negotiations with the Malaysian during the "confrontation" between the two countries in 1963. the lead up to the cabinet selection there was pressure to elect Murtopo vice-president, a position that entails no power but would have made him the successor should Suharto die or resign.
Murtopo was a former Suharto protege who became too powerful. Control of the secret police gave Murtopo's faction access to massive extortion rackets run through the secret police. These may be marked for trimming in the present economic situation.
General Amir Machmud was another whose fortunes declined. A former longtime minister for home affairs who left his portfolio to become speaker of the MPR, his ministerial powers enabled him to appoint provincial governors and subdistrict heads. This enabled him to build up a massive patronage network
Also demoted was General Mohammed Yusuf, former defence minister and armed forces commander-in-chief. He did not have a developed faction, but was a powerful military figure. He was also a suggested candidate for the vice-presidency.
In the end, a Sudanese general, Umar Wirahadikusuma, a Suharto crony from 1965/66, became vice-president.
Also displaced was former vice-president, Adam Malik, one of the few civilian leaders who remained in power after the overthrow of the Sukarno government. He died not long after the purge. Suharto attempts to ensure his survival
Suharto is now the only survivor in power of the "generation of 1945", the leaders of the struggle for independence
Having displaced the major factions leaders, Suharto set about further centralising his control of the military. A number of organisational changes were introduced, chief of which was appointment of General Benny Murdani as commander of the armed forces and of Kopkamtib. Formerly these two positions were not held by one individual. However, it must be noted that Murdani remains under direct control of Suharto, the supreme commander of the armed forces.
Being a Christian, Murdani is unlikely to make common cause with the powerful Muslim and Javanese factions against
Murdani's background is mostly in the intelligence services. He also has a reputation for heading some of the most brutal campaigns in Indonesian-occupied West Papua (Irian Jaya).
Murdani is one of a batch of younger army officers who were promoted (some over the heads of older officers) in the latest "regenerasi" of Abri. "regenerasi" refers to the process of bringing in a new generation of leaders, and this provides the rationale for Suharto's moves against the other factions.
But rather than grooming successors, Suharto is trying to ensure his own sur vival. Promotion of Murdani, a Murtopo
International Viewpoint 25 March 1985
Suharto also claims that the reorganisation is a means of reducing waste and fighting corruption. In a sense, it is, but after the latest purge, the only corruption left to fight is that of his own faction. That, of course, is out of the question. So the economic crisis continues, regime will have to launch further attacks on the living standards of workers and
As in 1969, Suharto retained the support of key military units, but perhaps more important was the powerful economic base that the president has built for himself over the years.
This base depends on close ties with a small group of ethnic Chinese businessmen who dominate local capital in Indo-
These people have been awarded the building, supply and service contracts for most major foreign-funded and statefunded projects. Suharto and his group have set up a string of partnerships with these local capitalists and have, in fact, become part of the local capitalist class.
Repelita IV is the most open promotion of these interests. local capital has been exalted.
The main way this has been done is through removal of privileges previously extended to "primubi" (native) capitalists. These privileges were introduced by the Suharto regime to cool down the situation during widespread anti-Chinesecapitalist riots in the 1970s. it was the poorer Chinese who suffered most. The billionaires retained Suharto's
While this alliance has been to Suharto's advantage in the latest purge, it has for some time provoked much of the
Anti-imperialist and anti-capitalist sentiment in Indonesia is often confused and mixed in with anti-Chinese chauvinism. This has its roots in the suppression of the left, occasional active promotion of chauvinism by the New Order regime, and the political origins and present consciousness of many of the leaders of Indonesia's
Pramoedya Ananta Toer, have their works banned. They only appear legally outside the country.
The terms "class struggle" and "imperialism" have been banned for years. And now it is even forbidden to refer to the "rich-poor gap". (10)
A few individuals have begun to discuss socialist ideas, though in guarded lan-
But, in general, the opposition movements frame their criticism in terms of immediate demands and/or the state ideology, "Pancasila". Birth of the "new order"
Its five tenets are belief in god, humanitarianism, national unity, justice and democracy based on consensus and representation.
The New Order regime uses Pancasila to legitimise its rule by identifying it with the independence struggle.
The New Order regime claims that its mission is to defend Pancasila and the joined the army in its purge of the left pected communists were attacked as being recent years, Pancasila has been pushed like never before. There is Pancasila industrial relations (which means no strikes), Pancasila as the sole political ideology for all political organisations, and even a Pancasila economic system, of which Indonesia is the model!
The fundamental thrust in all these cases is denial of class conflict and total depoliticisation of the masses.
Suharto reserves the right to interpret Pancasila, and in the last few years this
"Before the New Order was born, we saw and sensed that our national ideology was submerged by various existing ideologies, whether it was Marxism, Leninism, communism, political potential of the growing numbers of "retired" officers is to increase
This might satisfy some of the lower echelons, but it is of little value to former generals who have lived off lucrative corruption networks for
Basic class conflicts have tended to break out among workers and the unemployed in the cities rather than in the countryside in recent years. exceptions to this are the independence struggles in East Timor and West Papua.
Indonesian rural society is not subject to dramatic class differentiations. are few big landlords, and agribusiness is not an important part of the economy.
landlessness is a growing problem due to division of land with each generation and some concentration of ownership which accompanied the New Order's implementation of the Green
This World Bank and IMF-sponsored campaign to introduce fertiliser and some farm machinery created a broad layer of middle-level farmers who employed a few field workers on a seasonal basis.
This slightly better-off peasant layer government-disbursed funding and became an important polit ical base for the New Order. this layer was prominent witnessed some of the worst massacres of suspected communists, even up to 1968. move to the cities in search of work and it is here that their grievances have tended to develop and be expressed.
The huge populations of the cities helps keep Indonesian workers' wages the lowest in South-East Asia 10. Inside Indonesia, No. 3, October 1984.
Marhaenism was Sukarno's own theory for in it he sought to replace class struggle with the struggle of all the poor, suffer-
Indonesian farmer (D.R.)
new opposition.
There are two important factors shap- or religion.." ing the new oppostion. which grew in the struggle for independence was effectively smashed in 1965/66. Hence the present opposition traces its roots to elements that once supported the New Order regime or which emerged after the coup. Secondly, there has been a massive upsurge in workers' struggles in recent years. To a lesser extent, poor farmers have also begun to revolt.
Those left wingers not massacred in either demoralised imprisoned. 30.000 of these "Tapols" (detainees) were released in the 25 months up to December 1979. According to the regime, only a few remain in detention, though just how few is disputed by human rights organisations. But the present lot of the former detainees does not allow them to become politically active. They are watched closely, banned from public life and often struggle to earn a living.
Great writers among them, such as International Viewpoint 25 March 1985 socialism, Marhaenism (11), nationalism
Many Pancasila supporters saw this as a contradiction. The last three ideologies were an effective definition of Pancasila. Among the opponents of this interpretation was a group of former elite politicians around General Nasution. Fifty of them submitted a protest petition to the
Admiral Sudomo, then head of Kop kamtib, branded the Petition of 50 (as it is commonly called) a "constitutional coup" and placed the signatories under
The following year, this group submitted another petition, this time with 360 signatures. While their actions were those of a political elite, they helped set the for mass opposition around the 1982 general elections.
the Petition of 50 group is But its numbers may swell with the "regeneration" of the the Suharto regime has taken in an attempt to diffuse the
EAST TIMOR and WEST PAPUA