New Indonesia might mix with IMF<\/p>\n
By Patrick Schwarz<\/p>\n
SEMARANG (JP): They say a picture speaks a thousand words. The
\npicture of the front runner in Indonesia's elections, Megawati
\nSoekarnoputri of the Indonesian Democratic Party of Struggle (PDI
\nPerjuangan) reluctantly shaking hands with the International
\nMonetary Fund (IMF)'s Stanley Fischer on the front page of
\nSunday's The Jakarta Post, however, speaks more like a thousand
\nbooks to a political or economic observer.<\/p>\n
Leave it up to the reader to interpret the wry smile of
\nFischer. Megawati, on the other hand, looks stately, outright
\npresidential, and brings forth dignity as only an Indonesian
\nwoman knows how. Considering the fact that she had just been
\nvirtually hit over the head with a brick by IMF heavyweight
\nFischer, this is a remarkably diplomatic showing.<\/p>\n
Now, what is this brick all about? Essentially, Fischer's
\nmission was to convey the clear message to Megawati, that, should
\nshe win the elections, she had better stick to the agreement the
\nIMF had worked out with the New Order regime of former president
\nSoeharto -- or else! And for good measure, he conveyed the same
\nmessage to representatives of Golkar, the National Awakening
\nParty (PKB), the National Mandate Party (PAN) and the United
\nDevelopment Party (PPP), just to make sure the message stuck, no
\nmatter what the Indonesian people eventually will be up to.<\/p>\n
The Indonesian people chose on June 7. And the Indonesian
\npeople are desperate to distance themselves from the crony
\ncapitalism of the former regime. While they wait for the final
\nvote counts to finally find out whether history will repeat
\nitself or whether they have succeeded in rewriting their own
\nhistory, the IMF is now going out of its way to write history on
\ntheir behalf. Not only was the IMF with its ill advice a major
\nforce behind the undoing of former president Soeharto, but now,
\nat the moment where an Indonesian democracy is about to hatch,
\nthey must make sure that the show goes on. One may think whatever
\none wishes, but to this writer, who is not Indonesian, this is
\ncolonialism of the highest order.<\/p>\n
Democratic elections are new to Indonesians. So are campaign
\npromises. PDI Perjuangan campaigned on an economic platform that
\nincluded the possibility of a fixed currency regime. Such a
\nregime imposes an enormous discipline on a future government and
\ndisplays the genuine desire to distance PDI Perjuangan from the
\nshenanigans that ran the economy under the New Order regime.<\/p>\n
But the IMF says no way. If any new Indonesian government
\nanchors the rupiah, the IMF will not disburse the remaining US$35
\nbillion it had agreed to ($10 billion has been paid out so far).
\nMost voters may not be aware of it, but even before all the vote
\ncounts are in, they have already made history of another kind.
\nNowhere in world history has an unaccountable, nonelected
\ninternational organization such as the IMF caused the politicians
\nof a sovereign country to renege on their campaign promises.<\/p>\n
IMF dealings with Indonesia are taking on almost ironic
\nproportions. The poignant -- yet harmless -- essay of Carl
\nChairul in this newspaper on June 20 expressing the uneasiness of
\nIndonesians being bullied whichever way by the IMF prompted an
\nacid response by way of a letter to the editor of this newspaper
\nby IMF director for Asia Pacific, Hubert Neiss, vehemently
\ndefending the fund's stance.<\/p>\n
No, the fund is not meddling in Indonesia's affairs and the
\nfund is only here to help and that thanks to the fund's actions,
\nthe economy is on the mend. Think of this whatever. But it
\ncertainly illustrates what Indonesians are up against when
\ndealing with the fund.<\/p>\n
The economy is in a state of total confusion. The same people
\nthat prescribed a remedy of high interest rates four months ago,
\nnow proclaim they must come down because the current movement of
\nthe rupiah demands it and the economy is on the mend anyway.<\/p>\n
Well, is it? And if it is, to whose benefit? True, the rich
\ncrony capitalists have unwrapped their Mercedes Benzes and BMWs
\nand put them back on the road as it now seems safe again to do
\nso. They have slapped their diamond-studded Rolexes back on their
\nwrists. There is some motion again at the Jakarta bourse. And
\nthanks to the movements of the rupiah, the currency speculators
\nare back at playing their profitable games.<\/p>\n
But this does not mean an economy is on the mend. If one looks
\nat the real sector of the economy, it is one vast disaster zone.
\nAnd will remain so for a very long time. Small exporters -- this
\nwriter included -- that have been running idle for more than a
\nyear, have just seen what little profit they might have worked up
\nin the last three months evaporate in front of their eyes --
\ncompliment of the rupiah's drastic rise over the last three
\nweeks. Foreign investors in the real sector of the economy,
\nnotably the manufacturing sector that would create badly needed
\njobs for ordinary Indonesians, are looking anywhere but to
\nIndonesia.<\/p>\n
The economic platform of PDI Perjuangan to anchor the rupiah
\nwould be the only viable remedy for the real sector of the
\neconomy. The sector that would benefit all Indonesians. This does
\nnot mean that other measures taken by the present government
\nbased on IMF's advice, such as the restructuring of the banking
\nsector, will have to be compromised.<\/p>\n
And that PDI Perjuangan is willing to accept the discipline
\nand transparency such a measure requires, speaks for its
\nleadership's political and economic maturity and demonstrates
\nthat Indonesians are absolutely capable of fending for
\nthemselves. Yet, they are not \"big\" enough to stand up to the
\nmighty IMF, and the country's enormous debt of US$150 billion
\ndoes not leave them much room to maneuver. Long-term monetary
\npolicies can not be turned around at a whim.<\/p>\n
It therefore speaks for the wisdom of PDI Perjuangan's leaders
\nto endorse the incumbent government's decision to play along the
\nIMF fiddle. At least for now, Indonesia, the IMF and democracy. A
\ncocktail that does not mix well. And goes down even worse.<\/p>\n
But this may change. The fund's latest meddling in Indonesia's
\naffairs that are of a political and sovereign nature is only the
\nlatest in a long chain of blunders that has raised a few
\neyebrows, notably in the U.S. Senate.<\/p>\n
Voices have heard over there, that, before the Senate votes on
\nthe confirmation of Larry Summers as the new U.S. treasury
\nsecretary, he should be held responsible for this, since the IMF
\nwill be taking orders from him in future. One does not have to
\nspeculate to conclude that this may well have implications as to
\nhow the IMF will be run in future.<\/p>\n
Now that would be some scenario! A new Indonesia, with a new
\ndemocratic government, sorting out its economic woes with a new
\nIMF. That one would go down as smooth as an eggnog.<\/p>\n
The writer is managing director of ANP Corporation, Semarang.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/new-indonesia-might-mix-with-imf-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }