How to understand the crisis<\/p>\n
The economic crisis befalling Indonesia has been dragging on
\nwith no hint as to when it will be over. The following two
\narticles provide a political-culture approach to the crisis with
\nan historical perspective. Dr. Mark R. Woodward,professor of
\nreligious studies at Arizona State University and Dr. Hermawan
\nSulistyo, researcher with the Indonesian Institute of Sciences
\nand executive director of Research Institute for Democracy and
\nPeace, jointly prepared the articles.<\/p>\n
JAKARTA (JP): The New Order government came to power in the
\nmid-1960s, when the Indonesian economy teetered on the brink of
\ncollapse.<\/p>\n
With his policies of international adventurism and domestic
\nrevolutionary rhetoric and lack of regard for economic policy,
\nIndonesia's first president, Sukarno, had led the country to a
\nperiod of hyperinflation and enormous balance of payments
\ndeficits, domestic social and political conflicts and severe
\nshortages of basic commodities.<\/p>\n
Those who remember those fateful years speak of shops with
\nempty shelves and villages filled with naked children because
\ncloth was in such short supply that even those who could afford
\nit had difficulty finding it.<\/p>\n
During his lifetime term, Sukarno had failed in leading the
\ncountry into a welfare state. He even spoke of Indonesia as \"a
\ncoolie among nations and a nation of coolies\".<\/p>\n
Now, those days seem archaic. Indeed, for more than 30 years,
\nthe Soeharto government has been relentless in its pursuit of
\npolitical stability and economic development.<\/p>\n
The result seems to be a period of sustained economic growth
\nand a very real improvement in the quality of life for the great
\nmasses of Indonesians, although it is now only a house of cards.<\/p>\n
These gains have not come without cost. Elections are
\ncelebrated as \"festivals of democracy\" but are, by all accounts,
\nless than fair and open. Political dissents and freedom of
\nexpression are tolerated, but within sometimes vaguely defined
\nlimits.<\/p>\n
Many Indonesian and foreign analysts as well as ordinary
\nIndonesians complain of collusion and corruption and of the
\ngrowing economic gap between the BMW and Volvo-driving nouveau
\nrich and the majority of the population.<\/p>\n
For much of the past two decades, these inequalities have been
\ntolerated, if not accepted because of the substantial
\nimprovements in the quality of life that the economic policies
\nthe New Order has provided.<\/p>\n
People have grumbled about \"high-ranking people\" in Jakarta or
\n\"corrupt Chinese businesspeople\" and have often speculated about
\nwho will be the next president, but on the whole, recognized that
\ntheir lives have improved fundamentally.<\/p>\n
The Asian economic crisis of 1997, which is still going on,
\ncombined with a series of natural disasters, including drought
\nand widespread forest fires, a series of anti-Chinese and\/or
\nanti-Christian riots and the advanced age of Soeharto have
\nrekindled old fears and suspicions.<\/p>\n
Indonesia today is very much a nation in crisis. The crisis is
\nmore than economic. Far more is at stake than the value of the
\nrupiah and the stock portfolios of Indonesian and foreign
\ninvestors.<\/p>\n
Indonesians, and particularly the Javanese majority,
\nunderstand this crisis as being simultaneously political,
\neconomic and religious. Indonesian political thinking is deeply
\nrooted in religious and mystical assumptions.<\/p>\n
When the value of rupiah fell to 10,000 against the U.S.
\ndollar on Jan. 10, a sense of panic gripped the capital. Middle-
\nclass consumers rushed to supermarkets buying basic commodities
\nsuch as rice, sugar, milk and cooking oil in enormous quantities.
\nThe panic buying spread rapidly to traditional markets frequented
\nby less-affluent Indonesians in other cities in Java, Sumatra and
\nSulawesi.<\/p>\n
Since then, looting and riots have been on the increase. In
\nsubsequent weeks, there were more reports of angry crowds
\nattacking store owners accused of raising prices and profiting
\nunduly from the crisis.<\/p>\n
The sense of panic was enhanced by the fact that it was
\nhappening during the Islamic fasting month of Ramadhan, a time
\nwhen many Indonesians purchased larger than normal quantities of
\nfood and clothing in preparation for the Idul Fitri holiday at
\nthe end of January.<\/p>\n
Some Western sources have expressed alarm that troops have
\nbeen posted in front of supermarkets in some places. These troops
\nserved much the same purpose that the national guard would in a
\ncomparable emergency in the United States. In a normal situation,
\nthere are no shortages of rice, cooking oil or sugar.<\/p>\n
Various estimates state that with the harvest season, there
\nare sufficient rice reserves to last through April. Efforts to
\nprevent speculation and hoarding by retail merchants has so far
\nmet with limited success.<\/p>\n
The dominance of ethnic Chinese in the retail sector has led
\nto increased ethnic tension, particularly in the smaller cities
\nand towns of Central Java and East Java. When the riots broke
\nout, it prompted some store owners to post signs reading Toko
\nIslam (Islamic store).<\/p>\n
The degree to which currency fluctuations effect the prices of
\nbasic commodities is clear. Prices that increased sharply
\ncontributed, perhaps more than anything else, to the outbreak of
\ncivil unrest. It is unlikely that the government will bow to
\ninternational pressure in this area.<\/p>\n
It is also clear that the middle class, which places
\nconsiderable value on imported luxury goods, ranging from goods
\nto BMWs, has seen its purchasing power eroded enormously, and
\nthat this sector of the economy, which includes, among other
\nthings, currently fashionable luxury apartments, has suffered
\nseverely and that it is unlikely to recover until the value of
\nthe dollar drops substantially.<\/p>\n
One of the most alarming economic signs was the closing of
\ngold shops because of unstable market conditions. Dealers
\napparently did not have sufficient confidence in the rupiah to
\nsell their stocks and were unwilling to purchase gold at inflated
\nprices.<\/p>\n
This is significant because a great many Indonesians, rural as
\nwell as urban, do not trust banks and keep the majority of their
\nsavings in gold jewelry or bullion.<\/p>\n
It has been reported that some shops had bought or pawned
\ngold, but would not sell it. As was true for rice markets, it led
\nto an increased ethnic tension, as most of the gold dealers in
\nJava are Chinese.<\/p>\n
Not being economists, we are not qualified even to speculate
\nabout the short- or long-term economic ramifications of these
\ndevelopments. There were, however, related developments that can
\nnot be explained adequately in economic terms.<\/p>\n
The dollar and the rupiah are symbols as well as currencies.
\nThere have been numerous calls for collective action to save the
\nrupiah by selling dollars even at a loss, popular songs about it,
\nand even pleas to pray for it.<\/p>\n
The Love the Rupiah movement is frequently reported in the
\npress and in statements by government officials. As could be
\nseen, this movement had no direct effect on the monetary
\nsituation and a little indirect effect by instilling a sense of
\nnational pride.<\/p>\n
Soeharto's recent strong remark on the IMF reform programs has
\nsparked anti-IMF and anti-American sentiments. A sentiment that
\neven in January an editorial in the Semarang's daily paper Suara
\nMerdeka compared the IMF and the Dutch East India Company. IMF
\nofficials were compared to the agents of the Dutch Company who
\nimposed \"political contracts\" on 18th century Javanese monarchs.
\nThese contracts were a form of indirect colonial rule which
\nultimately lead to almost complete foreign domination of economic
\nand political life.<\/p>\n
Foreign (American, Japanese and Chinese) as well as domestic
\nspeculators have been blamed for the economic crisis. The
\ngovernment and almost all of its opponents have indicated that
\nmeasures which would endanger the rural population and the urban
\npoor are unacceptable.<\/p>\n
The establishment has introduced labor intensive public works
\nprojects and other emergency programs to aid the newly
\nunemployed.<\/p>\n
Another indicator of the volatility of the situation was the
\nsudden rebound of the rupiah, or as Indonesia puts it, the
\ndecline in value of the dollar, after Soeharto spoke on the phone
\nwith Clinton. Financial analysts might be inclined to attribute
\nthis to an American \"vote of confidence\" in the Indonesian
\ngovernment's commitment to economic reform, but more is at issue
\nthan monetary policy.<\/p>\n
Window: Indonesians, and particularly the Javanese majority,
\nunderstand this crisis as being simultaneously political,
\neconomic and religious. Indonesian political thinking is deeply
\nrooted in religious and mystical assumptions.<\/p>",
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