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Strategic Analysis:
A Monthly Journal of the IDSA
Post-Financial Crisis Indonesia: The Challenge of Survival
Shankari Sundararaman, Research Officer, IDSA
Abstract
The financial crisis has been one of the most defining events in Southeast Asia. It led to the collapse of the economy and also impacted upon the political stability in the region. One of the countries that was most affected was Indonesia, which moved from the position of leadership that it had enjoyed within the region to becoming what is being considered as the weakest link in the regional chain. The nature of the crisis and its impact on Indonesia have been the worst. This article looks at the Indonesian state in the post-financial crisis period wherein Indonesia has been challenged by the emergence of three different issues-the economic, the political and that relating to separatist tendencies. There is an overwhelming need to harness the efforts of the state into addressing these three issues.
Introduction
One of the most defining events in the post-Cold War period was the economic crisis that had challenged the Asia-Pacific region. The financial crisis that hit the region completely undermined the myth of Asian economic growth and exposed the inherent weaknesses in the structural set-up that had hitherto been ignored, due to the belief in the strength of these economies. What was even more unnerving was the impact and suddenness with which the economies fell-almost in a snowballing effect, gathering momentum as they went downhill. It has now been four years since the downturn in the economic conditions, but the effects are still being witnessed at both local and regional levels. One of the most important effects of the crisis can be seen on the political front where the very existence of some states has been challenged. A case in point is that of Indonesia-the financial crisis and its effects have hit this nation the most and the very fabic of its cohesion is under threat. With a weakened economy, ethnic tensions between the majority community and the economically more vibrant Chinese, the inter-religious/inter-ethnic riots, and the threat of centrifugal forces disintegrating the nation, Indonesia, considered the primus inter peras of the region, no longer holds the enviable position it once did.
This article tries to assess the impact of the financial crisis on Indonesia. With the end of the Cold War, the orientation in the study of international relations has shifted from one that basically focussed on traditional issues of security and strategy to include areas of economics, finance, development, and even culture. With this in view, it would be crucial to study the impact of globalisation on the domestic setting of a state in both political and economic terms. 1 This has particular reference to the Indonesian context since the financial crisis was seen to be the result of the impact of globalisation. Moreover, there is a view that globalisation as a force has the tendency to spread democracy-the shift in the Indonesian political structure from an authoritarian model to a democratic one may be attributed in some ways to the impact of the economic crisis which ushered in the winds of change for a political restructuring of the Indonesian state. 2 Keeping this theme in mind, what were the effects of the crisis on the economics and politics of Indonesia? Based on the premise that economic liberalism would be a sufficient alternative to political freedom, Indonesia adopted a growth model wherein the increase in capital economy and the benefits of the largesse from the export of surplus produce, would be enough to satisfy the populace, without any efforts to allow popular participation at the political level. Indonesia also lacked the necessary institutional mechanisms that could withstand the impact of complex changes within the domestic structure. Today, Indonesia faces a crisis on three fronts-the economic, the political and the issues related to separatism. This study takes into account some of the existing determinants that have been used to explain the Indonesian scenario-these are "the archipelago's history, its material circumstances, the cultures of its people and the way in which dominant groups and individuals have put their stamp on the course of history". 3
The challenge facing Indonesia has three facets. First is the need to restore economic growth and ensure the return of foreign capital investment. This is a difficult task given the fact that the political instability in Indonesia deters the free flow of foreign capital into the country. The issue has been addressed in Section I of this paper. Second, though the political system within the country has become more open since the Suharto period, it has still not been able to stabilise from within and transform into a democratic entity that is at ease with itself. This has been addressed in Section II. The third section deals with the overpowering urgency to address the issue of separatism which has been unleashed after East Timor's independence and takes into account the crisis in Irian Jaya, Aceh, Riau, parts of Kalimantan and the Moluccas, particularly Ambon.
I
The Economic Collapse in Indonesia
In the advancement of its economic policies, the New Order regime that came to power in 1965 after a coup that overthrew President Sukarno, chose to bring in technocrats to guide and manage the economic issues of the state. Economic development when guided by objective and scientific technocrats is expected to remain detached from the political development of the state. As a result, it does not come into conflict with the political structures of the state. The crux of the argument stems from the belief that technocrats base their policies on economic growth, with a final emphasis on the common good. When applied to the Indonesian case, the economic growth aspect gets some credibility in that the New Order regime clearly considered its place as one "in which the country had moved from a period of chaos to one of more order; and from mere ideology to more objective". 4 Application of this concept to the Indonesian scene is relevant. The state adopted sound economic practices under the New Order regime. The military, which remained the dominant feature of the political structure, supported a more scientific and objective policy by inducting technocrats, 5 who were expected to be above and beyond the purview of political and social conflict. However, in the Indonesian case, while economic gains did occur, the benefits of these remained in the hands of a powerful few. Added to this, corruption was widespread and that affected the distribution of the economic gains. When the superstructure collapsed, the political and social problems automatically emerged. Also, in the Indonesian case, the New Order was seen as a "component of an alliance between foreign capital and indigenous politico-bureaucratic forces dominated by the military." 6 The basic interpretation being that the advocacy of the capitalist system resulted in the inflow of foreign capital and the outflow of surplus commodities. The benefits of this surplus went to the ruling class, dominated by the military, while the inequities between the class structures increased. In fact, the belief was that the growing inequalities, repression as well as the isolation of the ruling class would lead to a middle class-led reaction in Indonesia. 7 Within this background, it is significant to look at the economic policies of the New Order regime.
The post-Sukarno years in Indonesia had witnessed a rapid economic development-in fact, this was the promise that the New Order regime brought with it when it came to power. The survival of the Suharto government for over 30 years can be attributed to the fact that the New Order regime provided the economic inputs which made Indonesia one of the 'emerging tigers'. In fact, two major factors led to the growth of the economy-first, the country was opened up to foreign investment. Second, the oil boom that followed the energy crisis of the Seventies and the rise in oil prices, were factors that were crucial for the development of the economy. 8 In the initial years after the New Order regime came to power, the economic direction of the state was led by a group of economists trained and nurtured under the American system, who were known as the Berkeley Group. 9 The objective of the group was to attract foreign investment into the country which had earlier been banned by Sukarno's preference to follow a socialist pattern of development. What resulted was the return of the International Monetary Fund (IMF) and the World Bank mission to Indonesia and the institutionalisation of the five-year plans. 10 As a result of these developments, more foreign aid and investment came into the country. However, two aspects of the system undermined it eventually. First, personal patronage thrived, as a result of which the senior level officials of the ABRI (Angkatan Bersenjata Republik Indonesia)-the Indonesian armed forces-were able to make huge profits. The system was such that it allowed Suharto to turn a blind eye to this increasing misuse of official power. In fact, the liberty that the senior officials had in terms of making profits helped Suharto, who enjoyed unquestioned authority. As a result, the second related issue of corruption within the administrative set-up became institutionalised, and bribery was rampant till the late Nineties. While corruption is prevalent in many societies, the Indonesian case is probably distinct because of the fact that it has become established as a 'traditional right', thus, implying that selling of favours was very much a part of the autocratic set-up. 11
In the Seventies, with the oil boom, the revenue began to look more inward and take on a more nationalistic complexion as the reliance on foreign investment decreased. In the process, several groups that were close to the ruling elite began to receive favours in lieu of their support. But by the beginning of the mid-Eighties, the pattern changed once again. The demand for oil declined, causing a severe revenue crisis for the government. The focus at this stage shifted and the measures included the deregulation of the economy and a much greater emphasis on the private sector. 12 The deregulation of the economy meant a substantial increase in the growth of the private banking sector. Since this sector was not dependent on the oil economy, it eventually led to the growth of the private businesses, which again received political patronage. During the Eighties and the early Nineties, the real gross domestic product (GDP) had remained at around 6 per cent, but had increased to over 7 per cent in the mid-Nineties. 13 The annual per capita income had risen from $70 in 1965 to $1,142 in 1996. Though these figures are impressive, they could do little to challenge the force of the financial crisis.
The Indonesian currency crisis began when there was an overall fall in the currency position in Southeast Asia. It started with the Thai currency depreciating and then moved on to affect the rest of the region which was so intricately tied in its economic successes. The Thai baht was the first currency that collapsed and the Thai government was forced to float the baht in July 1997. In the same month, changes were seen within the Filipino and Malaysian economies too and it resulted in both these countries depreciating their respective currencies, the peso and the ringgit. In fact, it was the Indonesian currency that tried to resist the changes for the longest period, but to little avail because the market pressures ultimately led to the collapse of the rupiah in August 1997. In Indonesia, the ratio of foreign debt to that of the domestic GDP was high. The problem was further compounded by the fact that the country lacked the necessary foreign exchange reserves to meet the payments of the short-term financial loans. As the crisis worsened in September 1997, the Indonesian government "postponed" projects that were worth $17 billion and placed "under review" those that were to the tune of $3 billion. 14 Sikorski states that the actual meaning of these two terms was unclear because the government had "left the door open for lobbying by companies to keep their projects on track". In November 1997, some of the projects that had been suspended were restarted-$2 billion worth of projects were given the go-ahead, but these were mainly those that were led by large American multinationals and a project that was being led by Suharto's daughter. 15 The form of patronage followed by the regime had led to the emergence of 50 large conglomerates, some of which were controlled by Suharto's children and key functionaries in the armed forces who had close links with the ruling family. Due to the deeply entrenched nepotism, several businesses that tried to compete were rendered insolvent and others were completely marginalised.
In the aftermath of the 1997 crisis, one of the areas most affected was the banking sector, leading to the liquidation of 16 banks by the monetary authorities. With the continuing fall of the rupiah, investor confidence took a severe beating, added to which the all pervasive corruption in the economic dealings of the government caused a serious lack of faith in the system-the entrepreneurs were willing to sell the fast falling rupiah, and investor confidence was so low that at one point investors simply packed up and left. The move of the IMF to close down those sectors that were considered bad, was implemented with the hope that it would restore some confidence in the financial sector, but the actual policy backfired rather badly with the result that several banks began to experience severe runs on their deposits. 16
Thus, by early 1998, Indonesia's economic miracle was fading and it had a huge debt burden of US$115 billion. 17 With many investors and large companies gaining access to the international capital markets after the early Nineties, there was an increase in the debt burden which has even been placed at US$137 billion. What really became the crux of the issue was the closure of some monopolies such as wheat, flour, soybeans and garlic, and the cut on the control and subsidy on fuel and cement. Added to this, the government had to implement austerity measures, leading to a food crisis which lies at the heart of the political unrest that engulfed Indonesia. The long-term effect of these policies was evident in the growing resentment among many sections of society which was to have a bearing on the political system in the months following the financial crisis. 18
However, the economy today is on the road to recovery. While the value of the rupiah remains low, it has helped to stimulate a boom in the export sector and the earnings for the year 2000 have been placed at $60 billion. Another indicator of economic recovery is that the GDP growth for the year 2000 was initially placed at about 4 per cent and has now been slated at 4.8 per cent. 19 The fiscal deficit has been placed at 3.2 per cent. The most heartening sign of economic recovery has been the increase in the output of food products-while it remains far from positive, the fear of a food crisis is over. Other indicators such as the stock price index which was at 276 in September 1998, moved to about 600 in December 1999. Average daily trading shot up to 1,002 billion rupiah in June 1999 from the earlier 140 billion rupiah in March of the same year. 20 An important indicator is the fact that as of September 2000, Indonesia's external debt stood at US$140.8 billion which is about US$8 billion less than what was stated in December 1999. 21 However, these gains of recovery can at best be described as fragile-since the key issue here will be that of sustainability. The recovery has been in three areas-domestic consumption, exports and investments. Two aspects have to be strengthened-macro-economic stability and investor confidence-which will remain the critical features of the economic recovery. 22
While there is some improvement in the economy which will help the pace of reform in the country, it has to include the development of broader structures that can withstand the pressures of a globally integrating economy. The challenge in that sense emerges from the ability to halt the culture of all pervasive corruption and allow for the fruits of the economic growth to be dispersed horizontally rather than vertically which was the case earlier. What remains to be seen is whether the state can recover from the political challenges that have emerged in the wake of the economic crisis. The next section of the paper has discussed this issue at length.
II
The Political Tragedy of the Indonesian State
One of the tools used in analysing the political order of the Suharto regime or the New Order state as it was known, includes the structural-functional analysis of politics and society. This deals with the creation of power and the integration of the social system within this existing power structure. When applied to the Indonesian case, it brings forth the debate as to whether the Indonesian state has been able to develop the political and bureaucratic institutions, based on complex, flexible power structures, which can help in the overall integration of a policy and society that is in a constant state of flux and transition. 23 It highlights the fundamental contradiction that exists in the Indonesian political structure which emerges from the classic debate between modern political structure and traditional political culture. 24 The centrality of this debate is evident from the personalised character of politics in Indonesia, where the structures of the political set-up have contributed to sustaining "individual officials, political factions, client-patron groups and different cultural streams", without an attempt to integrate the social and cultural forces that are a necessary part of the nation-building process. 25 This can be seen in the way in which the leadership has justified its role. The jurisdiction for Sukarno's authoritarian posture rested in the effective crystallisation of the popular consensus of the masses-that is, in critical terms, the authoritarian structure was vested in it by the endorsement of popular support. In contrast, the authoritarian structure of the Suharto regime seemed to emanate from the fact that the New Order believed that such a form of government was a necessary ingredient in the progress towards economic development and growth. 26 The concept of power within the Indonesian political structure is fascinating in its understanding of the traditional Javanese system-power is seen as that which is accorded to the ruler and not as a concept that is to be earned by the processes of due merit. The social impact of this view of power, with its emphasis on peace and unity, does not question the person in authority.
Under these circumstances, the political challenges facing Indonesia today comprise one of the most crucial factors. Political challenges emerge from several issues-the lack of a coherent indentity that can be termed as Indonesian; the centrality of the political structure and the unwillingness, if one may use that word, to allow the growth of democratic institutions; the involvement of the armed forces in addressing issues of administration and security as well as the growing attempts by separatist forces that seem to be weakening the central control of the state. These are discussed below.
The Identity Factor
The first aspect of the political structure that seems to weaken the Indonesian state is with regard to the concept of identity. Several reasons can be attributed to the fact that the Indonesian state, in 50 years, has been unable to forge an identity for itself. It is true that under the Dutch colonial period, this was difficult to achieve-what had been the Netherlands Indies automatically assumed the shape of Indonesia in the minds of those who carried forth the independence movement. The movement for freedom, led by Central Java, remained isolated from the desires and aspirations of the regional players. As such, there was neither a composite dialogue nor a vigorous debate among the groups as to what actually constituted an Indonesian identity. Even during the period of Japanese occupation, this trend continued and is visible in the framing of the 1945 Constitution wherein the notion of the Republic has been identified by the Java-based conservative, secular nationalists who have drawn on the ideas of Dutch-trained legal experts. As such, the Constitution does not foster a coherent identity. In fact, the 1945 Constitution is a brief document of 37 Articles and is extremely paternalistic and centralised in its orientation. It vested all authority and power in the hands of the president and conceded very little to the Parliament. 27 Added to this was the fact that the concept of Pancashila or the five principles of state policy (belief in God, unity of the nation, humanitarianism, popular sovereignty and social justice and prosperity for all), have placed unity as the primary goal without an attempt to address the issues of diversity that have been an inherent part of the social and political fabric of the state. Under both Sukarno and Suharto, the need to develop an identity for Indonesia was not looked into-in fact, that identity was imposed from above. 28 Added to the identity factor, one must also realise that the political landscape of Indonesia has changed in light of the fact that after the economic collapse, several regional groups have started to realise that the centralisation of their resources of wealth and the domination by the Javanese, has led to poorer development of these regions while simultaneously contributing toward factionalism between the groups themselves. 29
Political Structure, Reformasi and Elections
The second challenge emerged from what was till recently the centrality of the political struture. Looking at the way in which power was structured during the Suharto period, one can distinctly note that the filtering of power was a top-down process and not a bottom-up one. The concentration of executive power in an autocratic manner automatically stunted the development of democratic institutions and limited the role of civil society. With restrictions on political and social activity, civil society was weakened at the cost of strengthening central authority. The legal sanction for such a process was justified within the framework of the 1945 Constitution. 30 In the power pyramid, the president, was placed at the top of the structure, with the ruling family and close allies of the family coming second. After this came the military, the technocrats and the businessmen, who received patronage from the military-this group among the business community was often dominated by the Chinese. In the aftermath of the financial crisis, the Chinese community was targetted and suffered great losses. Small in terms of numbers, the Chinese dominated a large portion of the assets of business within the Indonesian economy. Next to this group, at the fourth level, was a small middle class which was growing in numbers. Though some analysts had predicted a middle class-led revolution, its strength in numbers indicates that it alone could not have brought about any political change. It is interesting to note that as long as the middle class was receiving the benefits accruing from the economic growth, there was really no attempt to change the political structure. But with time, the share of the largesse of economic development to the ruling classes began to increase and this saw the emergence of a more vibrant and politically demanding middle class in Indonesia as well as the beginning of its alienation. At the lowest order of the pyramid were the urban workers, farmers and the bulk of the population. 31
After the overthrow of Suharto, in the period under Habibie, the clamour for political change began in earnest. The interim period between the time Suharto stepped down and the elections that brought to power Wahid and Megawati was marked by the crisis of reformasi. In reality, the entire power structure after Suharto's ouster had to be redefined. The attempt at redefining power had to include several changes. First, the role of the military in political participation had to be reduced; second, there was a need to amend the Constitution; third, the state had to safeguard the increase in separatist tendencies at the regional levels; and, finally, implement laws that could strengthen the institutional mechanisms that would advance the cause of democratic freedoms and human values. With the pressure for change, the interregnum period under Habibie was witness to a weakening and less composite idea of what constituted the Indonesian state. The personalised power structure and the well entrenched networks of patronage and bureaucracy began to collapse and resulted in widening the power base, both horizontally and vertically. 32 Three groups emerged in the political struggle: those who wanted to maintain status quo and generally identified with the Golkar and the armed forces; the 'moderate reformists', who included the leaders of the main political parties-this group while seeking reform, was unwilling to completely undo the existing structure; and, finally, the radicals, led by student activists, clamouring for reformasi total. 33 For Habibie, there was no option but to accept the demands for reformasi and advocate a Western style, multi-party democracy.
With this in view, a group of seven eminent persons was asked to look into the issues of reform in the existing political set-up. Three main issues were placed under the purview of the Team of Seven, comprising legal experts and eminent personalities. First, was the issue of proportional representation. The Golkar group lobbied for changing this to a majority district system because its ranks were entrenched at the grassroot levels where they stood a better chance in the elections. The other parties in the meantime wanted the representational pattern to continue. The final decision was a combination of both these forms. The second issue was with regard to the two political bodies-the DPR which is the People's Representative Council or the Parliament, and comprises 500 members. The other body is the MPR, which is the People's Consultative Assembly-this is a supreme sovereign body. This body under Suharto comprised 500 members of the DPR and another 500 members, appointed by the president, who were regional and functional group representatives. It was the task of the MPR to elect the president every five years. The domination of the DPR by the Golkar and the representation in the MPR had successfully seen to the victory of Suharto in five consecutive elections. The team changed the composition of the MPR from 500 to 200-135 regional representatives who were to be chosen by the provincial level Parliaments, and 65 functional group representatives who were to be selected by the government. The initial selection was left to the General Election Committee (KPU) which technically came under the Interior Ministry. But it was felt that such a selection pattern would automatically strengthen the hands of the Golkar vis-à-vis the other parties. The other major change was with relation to the representation of the army within the Parliament. An anti-military sentiment was high in the aftermath of Suharto's ouster when the military had played a role in the crackdown against the protesters. There were demands that the military be excluded from the legislature. The military had played a crucial role in the Indonesian political set-up with the constitutional endorsement of the dwifungsi or the dual function which included both administration and security of the state, and its frontal organisation was the Golkar or the golongon karya which was the functional group. In fact, the Golkar was willing to reduce its representation in the DPR from 75 seats to 40. In the final analysis, the military received 38 seats in the DPR which comprised 7.6 per cent of the total seats, and 10 per cent in the provincial assemblies. 34
In the background of these changes, the Habibie government held the June 1999 elections. 35 The Indonesian Democratic Party of Struggle (PDI-P) which was led by Megawati Sukarnoputri won the largest number of seats (153) but not enough to form a government. The second largest winner was the Golkar itself-compared to its earlier record of 76 per cent, the Golkar received only 26 per cent of the votes. At the third and fourth positions were the National Awakening Party (PKB) and the United Development Party (PPP)-both were Islamist parties that drew inspiration from the largest Muslim social organisation, Nahdlatul Ulema (NU), also known as the Awakening of Religious Scholars. In contrast to the PKB which believed in a more pluralist policy under Abdurrahman Wahid, the PPP was more Islamist in outlook. The Indonesian National Army or the TNI led by Wiranto did secure 38 seats but in the final calculation, the Golkar itself was divided over the choice of presidential candidate and split its vote between Habibie and Wiranto. Thus, the attempt to form an alliance between Habibie and Wiranto failed. Megawati, who prior to the election had been closely associated with Wahid, later fell out with him. In fact, both Wahid and Amien Rais, a forerunner in the general election and leader of the National Mandate Party (PAN) which received 7 per cent of the votes, expected that Megawati would invite them to form a coalition. But rivalry had developed between them and Megawati's complacence, moreover, led to the undermining of the "Paso Communique" that had been informally knit in the run-up to the elections. One of the most important developments that occurred was the cobbling together of the poros tengah or the central axis-an amalgam of Islamist parties led by Hamzah Haz and Amien Rais. 36 With the division in the Golkar, the weight of its support also backed the poros tengah, and Wahid emerged as the president. Undoubtedly, Megawati's acceptance of the post of vice-president was a compromise deal to ensure that there was no violence from her supporters.
Abdurrahman Wahid's endorsement for the post of president came as no surprise. He was seen as the most eligible candidate for the leadership of the Indonesian state-a man of letters, he had "a strong record of endorsing religious tolerance and promoting social harmony". Popularly known as Gus Dur, or the teacher of his people, he was known to possess a charismatic and intelligent personality. Donald Emmerson describes Wahid "not as a Commander, but as a teacher who would engage his people in a dialogue that would move the country toward tolerance, pluralism and democracy". 37 This view notwithstanding, what was evident in the period since Wahid took charge was that, in spite of his track record, he was unable to work the government machinery into delivering the promises that placed him in office. The power structure under the Wahid group may not have been as clearly defined as it was under Suharto, but it nevertheless existed. While Wahid himself was at the top rung of the structure, the lower rungs were less coherent with a tendency of flowing into one another. At the second level were Wahid's supporters and members of the NU. Even though its estimated strength is around 30 million, it is concentrated within Java and was a slim dividing line between the president and the third level which comprised the main political factions, the Golkar as well as other rival civilian groups, including those intending to safeguard their business interests. The fourth level was divided into various camps dominated by the supporters and loyalists of the groups at the third level. This group combines the bulk of the masses and is most representative of the population but is divided in its support to individual leaders and power players at the third level. 38
Wahid's weakness came from his obvious inconsistency, where his public comments and the policies of the government he headed were not in consonance. In recent times, he has been described as an individual who lived in his own world. It became increasingly evident that he paid little heed to document protocol, and the legal accountability for his actions was not taken seriously, either by him or his supporters. There was mounting criticism of his arbitrary behaviour and the fact that he was shrinking into a circle of close cohorts, consisting of his family members and bizarre camp followers. In the period after becoming president, Wahid began to acquire a whimsical quality-many a times at important meetings, he fell asleep, which reflected the physical difficulties of his health and age. At the same time, in the face strong criticism, he would stage a walk out. 39 Another factor that weakened his position was with regard to the issue of corruption. Despite the many public pronouncements on weeding out corruption, the government under his leadership was unable to effectively tackle this problem. Added to this, Wahid himself was implicated in cases of corruption. First, the fraudulent withdrawal of 35 billion rupiah (US$3.7 million) from the State Logistics Agency or the Bulog, by Wahid's former masseur. The second case related to the handling of a donation made by the Sultan of Brunei amounting to US$2 million which was given as a humanitarian relief package for Aceh. The reponses to accusations against Wahid have been mixed-there is a group that believes these issues have been fabricated to undermine his leadership; the other group that believes he is capable of corruption. Added to this, the government had done nothing about various changes of corruption levelled against leaders of the former regime. It was widely felt that President Wahid had not used his office to fight the rampant corruption within the country and there was growing discontent in this regard. 40 Added to this, the Parliament and president had been unable to agree on the selection of a chief justice for a judiciary that remains one of the weakest and most corrupt institutions in the country. 41 These growing accusations and the widespread disenchantment with Wahid finally came to a head-as early as August 2000, Wahid found himself locked in a battle with the Parliament, the result of which was that he was forced to reshuffle his Cabinet to avoid the possibility of an impeachment. 42 In February 2001, this move again gained ground even though there was no concrete proof of his involvement in what are popularly referred to as the Bruneigate and Bulogate scandals. One of the significant moves challenging the authority of Wahid was a meeting of representatives of all the main political parties that took place on March 2, 2001, at the Al Azhar mosque in Jakarta. The change of attitude towards Wahid's leadership was evident from the comment made by Amien Rais, the chairman of the People's Consultative Assembly, who stated that the nation must mentally prepare itself for a change in leadership. 43
Abdurrahman Wahid's response to the impeachment proceedings that took place on July 23, 2001, was one of denial. During the lead-up to the censure vote, he even toyed with the idea of having the military declare a state of emergency and dissolve the Parliament, but this did not meet with approval from Susilo Bambang Yudhoyono, the political coordinating minister. Wahid has also used some factions of the PKB to carry out protests in his favour in East Java where the influence of the PKB backed by the NU is the strongest. His most effective weapon was the threat of national disintegration. Analysts have stated that the threat of violence appeared to be a strategy that he was using against Megawati who is known for her abhorrence of violence, in the hope that she would call off the impeachment proceedings. 44 However, the calm that Megawati exhibited in the run-up to the impeachment adequately revealed the confidence that she had in the results that were to follow. President Wahid's own responses and unwillingness to step down are being seen in the light of his ego acting up against the system that had initially entrusted the leadership of the state to him. His fall has been evaluated thus, "He lost the presidency not because he was blind and dogged by conservative forces, but because he was erratic and impossible to work with and, in the end, he alienated supporters by easily going back on his word and allowing an oversized ego to cloud his better judgement." 45
With the increasing pressure against Wahid, Megawati Sukarnoputri emerged as the alternative. An editorial in the Jakarta Post had described her as a "president-in-waiting," but her moves were cautious since there was a growing view among the top leaders of the PDI-P, that the process being set in motion against Wahid was likely to engulf her also at some point. The legacy of the problems inherited by Wahid have really not changed and Megawati's success will be as difficult as that of Wahid. Further, her being a woman is also a disadvantage for her. The fact that the Islamic parties are still knit together in a loose coalition will undermine her position. Another difficulty that is likely to arise is that in recent times, Megawati has been courting the Golkar which has been accused in several cases of corruption. This will make it difficult for her to act against these charges, which was one of the problems faced by Wahid. In fact, after the impeachment, and Megawati's appointment as president, there was an initial positive response in the markets with the rupiah strengthening from 11,300 to 9,900 to the US dollar. Two factors will remain crucial for the survival of President Megawati-the first is that she should be able to bring in the assistance of technocrats like Laksamana Sukardi, a leading economist and a close ally of hers. As minister of state-owned enterprises, he has the unenviable task of bringing more order to the economic conditions of the state and also to reorganise the Indonesian Bank Restructuring Agency. But the presence of Sukardi will ensure support from the financial agencies for he is seen to represent "reform and good governance...his choice symbolises a determination to clean things up and run them according to the rule of law." 46 The second factor that is likely to be significant is whether President Megawati will be successful in reining in the forces that divide Parliament. The only worry in this context is that President Megawati has been seen to be allying with the more conservative elements in the political fray and whether this augurs well for the process of reform is still uncertain. In an attempt to appease these conservative factions, reform must not be sacrificed. There is also a view that as far as the issue of separatist movements is concerned, she may be willing to take a less liberal stand on autonomy, and can resort to military means to safeguard the territorial integrity of the state. 47 While the political challenge is now centred on Megawati, there is a strong contender lurking in the shadows-one who stands to gain from the fallout of any furthering of political instability, namely Amien Rais. As chairman of the MPR, he is likely to garner much support. In the last election, he had emerged as the king-maker and was seen as the strongest lobbying factor for Wahid. Today, he had become responsible for leading the opinion against Wahid, and support for President Megawati. With his Machiavellian style of politics, there is every reason to believe that the next person to make a claim for the presidency will be Amien Rais.
Whatever political drama unfolds on the Indonesian scene, one only hopes that the process of reformasi which has helped to usher in the democratic changes is not suppressed. The primary concerns relate to the nature of institutions that have evolved in the country in the last five decades of independence. Continuing civil, ethnic and religious unrest in the country, weak leadership and the presence of the military in the political process are crucial. One of the interesting developments in the Indonesian political scene is that the process of popular mobilisation and regime defection that led to Suharto's ouster was a civilian led movement. The military played a more reactive role-and even agreed to a reduced role in the national and regional legislatures as well as a separation of the police or the polri. The fact that the TNI officials joined several other political parties is a statement of this change. Added to this, the military did not back the Golkar or the functional groups. 48 Although attempts have been made to distance the military from politics, it still has some percentage of seats within the Parliament; it will be difficult to distance former military personnel from political positions. The coalition power structure at the centre has found many supporters, some of whom are former military personnel and still command tremendous loyalty from the rank and file. If the coalition structure seems to weaken, it is possible that the military will see this as a harbinger of events to come in Indonesia, and will reassert its role in politics. While there have been encouraging signs recently that the military wishes to stay apolitical, how it will respond in a crisis situation remains to be seen.
III
Issues of Separatism
The final issue that plagues the political scene is that of separatist tendencies which are seen in several parts of the country. There is an overpowering urgency to address the issue of separatism which has been unleashed after East Timor's independence-regions such as Aceh, Irian, Jaya, Riau and parts of the Moluccas, particularly Ambon, are in deep crisis. In the last few years, the certitude of President Sukarno, post-Indonesian independence, regarding the unity of the intertwining chain of islands stretching between Asia and Australia, seems to have come under threat. These recent events instead seem to support the hypothesis of the well-known historian, J.D. Legge, who in his work "Indonesia's Diversity Revisited" (Indonesia, vol. 49, 1990), states that "its archipelagic character, ethnic complexity, and economic diversity, hardly made it a candidate for independent nationhood". 49 Opinion apart, even within the regime there have been references to the possibility of Indonesia falling apart if due consideration is not given to the problems that ail the fragile unity of the state. This brings to mind Benedict Anderson's description that defines the nation as an "imagined political community-and imagined as both inherently limited and sovereign". 50 The process that seemed to act as a catalyst to the upsurge in such movements is the independent status of East Timor. However, it must be clearly stated that the case of East Timor is different because it did not voluntarily accede to the Indonesian state. Annexed in 1976, East Timor had remained closed till 1988 when it was given an open status. The move for independence grew from around 1991 after a massacre at a students' rally for which the military was wholly responsible. The movement strengthened under the leadership of Carlos Belo and Ramos Horta and with recognition and support from the international community, began to assume a firmer direction when Habibie agreed to allow the people's choice to prevail. East Timor's overwhelming vote for independence in the August 1999 referendum, the clashes between militia groups and pro-independence supporters, and the subsequent emergence of an independent East Timor are factors that have contributed to the growth of centrifugal tendencies. 51 Some of these issues have been addressed below.
Aceh
This province lies at the northern-most tip of Sumatra and has had a history of rebellion against both the Dutch and the central government. From the mid-Seventies, the Free Aceh Movement or the Gerakan Aceh Merdeka (GAM), has been active. This Muslim dominated region had been an independent sultanate that had resisted the Dutch occupation-in fact, even after the conquest of Sumatra by the Dutch following the Anglo-Dutch Agreements of 1870, this small territory held out till about the early 1900s. During the Japanese occupation, the people were able to mount pressure on the Dutch, and contributed to the independence movement. In 1949, Aceh acceded to the Indonesian state but revolted in 1953, in favour of a more federal set-up. At that time, Sukarno accorded it a special regional status. 52 Under the Suharto government, the rebellion resurfaced in opposition to the central control and state patronage which was concentrated in the hands of the power wielders. With the discovery of considerable amounts of hydrocarbons, the region contributed to the oil boom, but the profits went to the Jakarta regime and the foreign companies, thus, alienating the locals. Rich migrants moving into ghettos in the region further destabilised the social balance. Two social groups emerged: one comprising the "high income, capital intensive, urban, non-Muslim, non-Acehnese" and the other the impoverished locals. 53 Though the movement grew for some time, counter-insurgency operations ruthlessly crushed the same, and by 1993, it had abated. Sporadic violence continued and began to resurface after 1997 when the military police found large caches of light weapons in the region which had links with Malaysia. When the reformasi process was set in motion, the Acehnese initially backed the civilian group but in the aftermath of East Timor, their clamour for independence become more pronounced. In the recent past, Aceh has again been in the news over the problems being faced by Exxonmobile in its oil rigs in the region. Of Exxonmobile's estimated oil ouput globally, Aceh accounts for about 2.5 per cent, worth about US$250 million. 54 The issues that are critical in this case are those of restructuring, local autonomy and the looting of the offshore facilities by the armed rebel groups in the area. As such, the unique selling proposition of Aceh-security of supply-has been undermined. This has been one of the fall-outs of the political instability in the state. 55
Irian Jaya, Riau
The region of Irian Jaya or West Papua is basically a non-Muslim area and had remained a Dutch territory till 1962. In 1969, it became part of the Indonesian archipelago after a brief UN interregnum and a referendum. From 1965, the Free Papua Movement (OPM) began its war against the Jakarta regime. Though the region opposed incorporation within Indonesia, much of the resistance was against the transmigration policy encouraged by the centre. The migration essentially took place from Java and Bali-it set off the contention between the pribumi (which corresponds with the bhumiputra concept), and the settlers. Free port rights were provided as early as 1967, and the loss of agricultural lands to the mining companies has impoverished the region and led to wide-scale environmental degradation. The tensions in the area have escalated because of the ethnic similarity between the population in Irian Jaya and Papua New Guinea, which has given the issue a more complex direction. The clamour for freedom has been expressed both through the use of violence and through peaceful demonstrations and appeals to the United Nations. 56 Riau poses a similar challenge in the East Kalimantan region, where the demand for autonomy has been expressed. Rich in oil and gas reserves, the area has seen greater demands by the local people for mining and logging concessions. There are demands for a greater share of the region's wealth and these have been asserted by the levy of taxes on goods and commodities from the region by the locals. 57
West Kalimantan
The tensions in the West Kalimantan region began to surface in a later period when the policies of transmigrasi began to affect the ethnic balance within the region. The local population, the Dayaks, are a non-Muslim community. The region has also become home to members of the Chinese community who have been engaged in mining activities. While there has been relative harmony between these two groups, the recent migration of the Madurese has led to tensions. The Madurese, a predominantly Muslim community, are intolerant of the Dayaks over issues relating to the eating of pork and the breeding of dogs, which they see as anti-Islamic. As an ethnic community, the Madurese tend to use violence for redressal of grievances and the retaliation by the Dayaks has led to some very violent clashes in the region. 58
Ambon
From around mid-1999, the region of Ambon in the South Moluccas, had witnessed tensions between the Christian and Muslim communities. A very small territory of the Southern Moluccan island, Ambon, was integral to the spice trade as it as the only source of nutmegs and cloves. During the colonial period, these islands were contested for by the Dutch, the Portuguese and the British. When the Dutch expanded their control in Indonesia, the Moluccas also came under their influence. Religious influences in this area were Muslim, Catholic and Protestant. In fact, the Ambonese Christians were favoured by the Dutch and were recruited as soldiers to manage several regions under their control. At the time of independence, the Ambonese wanted to form an independent state, the Republic of South Moluccas. But by 1950, they were integrated into the Indonesian state. The causes for vulnerability among the group arise from more recent developments such as internal migration by Muslims and loss of territory within their province. The fear that their faith may not survive the challenge of coexistence in a predominantly Muslim state has been a major cause of concern. With these factors already entrenched in the psyche of the minority community, the attacks on the Christians that occurred at the end of 2000 will do little to quell their misgivings. There is a possibility that the recent attacks will further alienate the groups within Ambon and the South Moluccas. 59
Conclusion
In the background of the above study comes the question, what lies ahead for the Indonesian state? The government that has been put together is a coalition one. This is not a government that can last for too long; when the political climate gets hotter and the stakes start to rise, this coalition, as all coalitions tend to do, will dissolve. What happens afterwards remains to be seen. Violence in the country needs to be curbed and efforts must be made to foster a sense of national identity and unity. The fundamental political question is whether plural states like Indonesia can respond to the growing pressures of ethnic nationalism and global economic integration. While in the long run, global economic integration impacts upon plural societies and can cause a crisis of management, the growth of ethno-nationalism and the challenge of managing and consolidating multi-ethnic groups as composite states has become increasingly tenuous. The challenge to nations that were once consolidated can no longer be minimised, especially from sub-nationalism which is on the increase. 60 It is along these lines that the contradistinction between the civic nation, as understood in the Westphalian system, and the ethnic nation, in the cultural sense, has a bearing on the Indonesian example. While there have been increasing calls from the provinces for autonomy and a larger share of the economic benefits, analysts are concerned about the cohesion of the state, and alternatives that can provide better central-regional understanding are being advocated. This has led several people to advocate a federal structure for Indonesia as a viable option because of the challenges to national unity, where identity has become a key factor. With the need to safeguard unity, which can also be extended to include territorial integrity as well as sovereignty, federalism offers a solution. The advantage of federalism is that it is recognised, not in terms of a fixed concept, but as an evolutionary political arrangement that is capable of balancing the tensions in the central-regional matrix. Finally, the institutions that have failed to deliver in times of crisis will continue to remain weak and ineffective as long as concerted efforts are not made not reform them. The weakness of institutions is compounded by an extremely weak presidency, and weak administrations cannot help build strong institutions or reform weak institutions. Whether this infant democracy can rise to these challenges and whether the leadership in the country can be bold enough to provide alternatives remains to be seen.
Endnotes
Note 1: The transmission of ideas between states has, therefore, moved from a narrow to a wider spectrum. In its most basic definition, the term globalisation is a trans-national process that encompasses several spheres but with an emphasis on the economic dimensions. The process includes integration at several levels-the factory, intermediate, final goods and services markets-are all integrated in the process, as a result of which any change that affects one sector has its impact on other sectors too. For details, see Aseem Prakash and Jeffry A. Hart, eds., Globalisation and Governance (London: Routledge, 1999), p. 3. Back
Note 2: Ibid., p. 13. Back
Note 3: Damien Kingsbury, The Politics of Indonesia (Oxford: Oxford University Press, 1998), p. 3. Back
Note 4: Richard Robinson, "Class, Capital and State in New Order Indonesia", in R. Higgot and R. Robison, eds., Southeast Asia: Essays in the Political Economy of Structural Change (London: Routledge and Kegan Paul, 1985), p. 297. Back
Note 5: Ibid. Back
Note 6: Ibid., p. 297. Back
Note 7: Ben Anderson, "Last Days of Indonesia's Suharto?", Southeast Asia Chronicle, Issue No. 63, July/August 1978; Herbert Feith, The Indonesian Student Movement of 1977-78 (Mimeo: Monash University, Centre of Southeast Asian Studies, 1978). Cited in Ibid., p. 298. Back
Note 8: Kingsbury, n. 3, p. 77. Back
Note 9: Ibid., p. 78. Back
Note 10: Robert Cribb and Colin Brown, Modern Indonesia: A History Since 1945 (London: Longman, 1995), p. 115. Back
Note 11: See the work by Adam Schwarz where the reference to the selling of political favours is made in the context of Indonesia. Of particular interest is the emphasis that Schwarz lays on the fact that corruption in Indonesia is often socially tolerated. For details, see Adam Schwarz, A Nation in Waiting: Indonesia in the 1990s (Boulder, Colorado: Westview Press, 1994), p. 135. Also see, Kingsbury, n. 3, p. 199. Back
Note 12: Dwight Y. King, "Corruption in Indonesia: A Curable Cancer?", Journal of International Affairs, vol. 53, no. 2, Spring 2000, p. 610. Back
Note 13: Schwarz, n. 11, pp. 49-70. Back
Note 14: Douglas Sikorski, "The Financial Crisis in Indonesia: Explanations and Controversies", The Indonesian Quarterly, vol. 26, no. 4, Fourth Quarter, 1998, p. 366. Back
Note 15: Ibid. Back
Note 16: Ibid., p. 367. Back
Note 17: Kingsbury, n. 3, p. 95. Back
Note 18: For details, see J. Winters, Power in Motion: Capital Mobility and the Indonesian State (Ithaca, NY: Cornell University Press, 1996), cited in Ibid., pp. 83-84. Back
Note 19: Scott B. MacDonald and Jonathan Lemco, "Indonesia: Living Dangerously", Current History, vol. 100, no. 645, April 2001, p. 176. Back
Note 20: For details, see Djisman S. Simanjuntak, "The Indonesian Economy in 1999: Another Year of Delayed Reform", in Chris Manning and Peter Van Dierman, eds., Indonesia In Transition: Social Aspects of Reformasi and Crisis (Singapore: ISEAS, 2000), pp. 58-76. Back
Note 21: Hadi Soesastro, "The Outlook for Indonesia in 2001: Another Crisis", Pacific Link Indonesia-Kolam Pakar, Internet Edition, http://www.pacific.net.id/pakar/hadisusastro/010125.html> Back
Note 22: Ibid. Back
Note 23: Several works are available which have discussed at length some of the findings that have been addressed. For a detailed analysis, see Donald K. Emmerson, Indonesia's Elite: Political Culture and Cultural Politics (Ithaca, NY: Cornell University Press, 1976); Karl D. Jackson, "The Political Implications of Structure and Culture in Indonesia", in Karl D. Jackson and Lucien Pye, eds., Political Power and Communications in Indonesia (Berkeley: University of California Press, 1978), cited in Robinson, n. 5. Back
Note 24: An example of this debate between the modern and traditional political cultures is well emphasised in an understanding of the whole idea of leadership. As in the case of the 'divine right of kingship' or the devaraja concept, the leadership of both Sukarno and Suharto was considered absolute, where the president was above the law. Back
Note 25: This analysis can be better understood by an assessment of the concept of nation-state. The nation, as one understands it, is a group of individuals with a common history, desires, goals, and a willingness to identify with a certain geographical territory, while the state is a more legal concept. One of the fallouts of the decolonisation process is the fact that in the newly emerged nations, plural societies have become composite states. It is important to recognise that in most cases of decolonisation, the concept of state with its legal ramifications emerged before nationalism, which is the primary requisite for the creation of a nation-state. As such, in the aftermath of decolonisation, the emergence was more in the nature of state-nations than nation-states. See Urmila Phadnis, Ethnicity and Nation-Building in South Asia (New Delhi: Sage, 1989), p. 21. Back
Note 26: Robinson, n. 5, pp. 306-7. Back
Note 27: This point is well stated in an article that was delivered as a lecture and is available on the Internet at the website of Griffith University in Australia. The Tragedy of Modern Indonesian History, An Inaugural Professional Lecture, Prof. Robert Elson, October 22, 1998, Griffith University. <http://www.gu.au/centre/gapc/html> Back
Note 28: Ibid. Back
Note 29: An example of this can be seen in the recent clashes that have occurred in the Riau and East Kalimantan regions, which are both rich in oil and gas resources. While the regions contribute significantly to the per capita income, the control has rested in the central authority. As such, the benefits of the income have not filtered down to these regions. Recent developments in Kalimantan and the tensions between the Dayaks and the Madurese is a case in point. For details, see Far Eastern Economic Review, December 16, 1999. Back
Note 30: Kathy Robinson and Daniel Fitzpatrick, "Introduction: Civil Society and Legal Institutions", in Manning and Van Dierman, eds., n. 20, p. 255. Back
Note 31: Richard W. Baker et al, ed., Indonesia: The Challenge of Change (Singapore: ISEAS, 1999), pp. 61-80. For an analysis of the power structure, also see Kingsbury, n. 3, pp. 127-46; MacDonald and Lemco, n. 19, p. 177. Back
Note 32: David Bourchier, "Habibie's Interregnum: Reformasi, Elections, Regionalism and the Struggle for Power," in Manning and Van Diermen, eds., n. 20, p. 16. Back
Note 33: Ibid. Back
Note 34: Ibid., pp. 1-57. Back
Note 35: William R. Liddle, "Indonesia in 1999: Democracy Restored", Asian Survey, vol. XL, no. 1, January/February 2000, pp. 32-42. Back
Note 36: It was the view that the Islamist parties could club together a total of 200 seats, thereby offering a viable challenge to both the Golkar and the PDI-P. Moreover, between the period of the general election in May 1999 and the MPR's election of the president, all the smaller parties were in the process of selecting the option that would guarantee them the best leverage, n. 20, p. 23. Back
Note 37: Donald K. Emmerson, "Will Indonesia Survive?", Foreign Affairs, vol. 79, no. 3, May/June 2000, p. 104. Back
Note 38: MacDonald and Lemco, n. 19, p. 178. Back
Note 39: Far Eastern Economic Review, February 15, 2001. Back
Note 40: A recent report from a German NGO has stated that Indonesia is the fifth most corrupt country in the world. While Wahid himself has been implicated in two cases, his lack of action on other cases led to the mounting criticism against him. During the time of Habibie, there was the Bank of Bali case when the intermediary consultant at the bank is said to have funneled off government money to members of the Golkar. Another issue was the postponement of the prosecution of three major conglomerates that had close links with the Suharto regime. These have been cited as glaring examples of the government's lack of response on this issue, n. 19. Back
Note 41: Ibid., p. 179. Back
Note 42: Far Eastern Economic Review, August 24, 2000. Back
Note 43: Straits Times, March 4, 2001 (Internet Edition). Back
Note 44: Straits Times, May 30, 2001 (Internet Edition). Back
Note 45: Far Eastern Economic Review, August 2, 2001. Back
Note 46: Far Eastern Economic Review, August 30, 2001. Back
Note 47: n. 45. Back
Note 48: Golkar or the golongan karya, which means functional groups, was introduced in 1967 as the vehicle of Parliament. Actually a frontal organisation for the army, it later strengthened under the influence of the army, the bureaucracy and its own civilian wing. As a concept, it was useful because of the view that functional groups comprised the quantum of national interest; it enshrined for the army a dual role or the dwifungsi, both in the administration and the security of the state. Schawrz, n. 11, pp. 31-2. Also see John T. Sidel, "Indonesia Update: Trends Toward Consolidation, Threats of Disintegration," Writenet Papers, No. 18, December 1999, p. 2. http://www.unhcr.ch/refworld/country/writenet/wn18_99.htm Back
Note 49: Cited in Robert Cribb, "Not the Next Yugoslavia: Prospects for the Disintegration of Indonesia," Australian Journal of International Affairs, vol. 53, no. 2, 1999, p. 169. Back
Note 50: Benedict Anderson, Imagined Communities (London: Verso, 1991), p. 6. Back
Note 51: For a detailed analysis of the East Timor issue, see the following: James Cotton, "The Emergence of an Independent East Timor: National and Regional Challenges," Contemporary Southeast Asia, vol. 22, no. 1, April 2000, pp. 1-22; Alexander Downer, "East Timor: Looking Back on 1999," Australian Journal of International Affairs, vol. 54, no. 1, 2000, pp. 5-10; G.V.C. Naidu, "The East Timor Crisis", Strategic Analysis, vol. XXIII, no. 9, December 1999, pp. 1467-1480; Shankari Sundararaman, "East Timor and Kashmir: Questioning the Parallels on the Issue of Referendum", Strategic Analysis, vol. XXIV, no. 2, May 2000, pp. 283-300. Back
Note 52: Sidel, n. 48, p. 5. Back
Note 53: Donald K. Emmerson, "Understanding the New Order: Bureaucratic Pluralism in Indonesia", Asian Survey, vol. 21, no. 11, November 1983, p. 1234. Back
Note 54: Far Eastern Economic Review, August 16, 2001. Back
Note 55: Ibid. Back
Note 56: Kingsbury, n. 3, pp. 166-169. Back
Note 57: Far Eastern Economic Review, December 16, 1999. Back
Note 58: Kingsbury, n. 3, pp. 163-165. Back
Note 59: Shankari Sundararaman, "Indonesia: Can It Hold?", Commentary, Strategic Analysis, vol. XXIV, no. 11, February 2000, pp. 2097-2100. Back
Note 60: Anderson, n. 50, p. 3. Back