2 x 22 48pt Optima Bold
2 x 22 48pt Optima Bold New Cabinet needs to negotiate on onerous debt
The new Cabinet faces a tight schedule in the following weeks. Political economist Revrisond Baswir of the Yogyakarta-based Gadjah Mada University shares his concerns. Question: What do you see as President Megawati Soekarnoputri's priorities?
Answer: Her priority should be the management of the budget which is related to many things that are right before us, such as the Paris Club meeting (in September), the meeting of the Consultative Group on Indonesia and also the government's budget proposal for 2002. The Paris Club talks are related to the 2001 budget; if we fail (to negotiate for debt rescheduling) at the Club we could experience a default.
We need here a grand design on how to manage such matters. What is the fundamental solution of the government regarding our maturing debts? Are we going to ask for amnesty or is there another way? This needs to be clear.
The threat of a deficit is there because of our these debts, both (to lenders) inside and outside the country. Domestic debts reaching Rp 53 trillion must be paid this year to Bank Indonesia (central bank). With BI's interest rate of some 17 percent the amount could reach Rp 60 trillion.
Interest for overseas debts which must be paid this year alone will reach at least Rp 23 trillion ... The government also has the burden of the earlier rupiah value of Rp 9,600 to the dollar this year. This means until the end of this year the rupiah must stay below Rp 9,000. All such problems are in front of us -- which must be resolved before September. The Australian government and the World Bank has signaled that it will consider amnesty of part of Indonesia's debts. Your comment?
Our debt should indeed be wiped out. The World Bank has all the information showing that Indonesia has fallen into a very heavy debt trap. So if the World Bank says it will conduct a study it wouldn't be about how deep we're in debt; it would be more likely on the prospects of Megawati's Cabinet. If the government is friends with the International Monetary Fund it will receive positive signals from them. They also want to see whether the government can hold out to 2004 and what the political map of the Cabinet is like. If they are satisfied with everything they should be helping us wipe out our debt.
So Megawati's government should immediately follow up on this green light from the World Bank?
Of course. The amount of foreign debt compared to our gross domestic product has reached over 100 percent; this is the strongest indication of our debt trap.
At the same time the government has a domestic debt of Rp 600 trillion. The burden of installments for our due foreign debts this year is around US$14 billion. Meanwhile next year the burden of debt installments to our export revenues will reach 54 percent; this means a continuous, annual threat to our foreign exchange reserves.
So I see no choice for Indonesia other than to try to obtain debt amnesty. We should not be ashamed of being declared as having defaulted on our debt payments, given the circumstances. The World Bank and Australia seem to be taking into account the corruption under the New Order regime.
This is indeed the strongest reason (for appealing for amnesty). So our request for debt forgiveness would not only be because of the above condition but because of our historic reality that such huge debts have not reached the people because of the corruption of the New Order elite. This is categorized as odious debt.
We should be grouped under the "heavily indebted poor countries" which get a reduction of 60 percent on debt repayments. Thirty-five countries are now in this category.
With a targeted deficit of 3.7 percent from the gross domestic product for this year, the government must seek income by getting as much as possible from state firms, mainly through privatization. What are the prospects of privatization of state firms in the near future?
If Megawati's Cabinet is really market friendly, there's a big possibility that the pace of privatization will increase. This means contributions from state firms (to state revenue) will no longer be from distribution of dividends but from the sale of private firms. What about the relation to other policies?
The success of privatizing state firms is related to other policies. If the Cabinet is market friendly the response will be a stronger rupiah which will eventually attract investors to come here.
Our sacrifice would be having to let go of the state firms because foreign investors will clearly buy the firms whatever their price in rupiah. Investors in strategic sectors will first conduct due diligence studies before bargaining for the firms. I'm sure the state firms will still be bought at the lowest price levels.
What about the role of the Indonesian Bank Restructuring Agency (IBRA)?
Their contribution is expected but the main priority is restructuring the organization and revamping their work program. The impression is that IBRA is too messed up. An overhaul is needed although the target of its contribution to the state budget can still be determined. The government is also slated to increase fuel prices again this year given subsidy reduction.
This is quite sensitive. The fuel prices will depend on the development of the rupiah and interest rates. I think subsidies and the fuel price are still debatable; is an increase really needed to cover the deficit or is another review needed, given that some things are not yet clear on the actual production costs of Pertamina.
What about the fiscal balance between Jakarta and the regions?
Very early in her term Megawati has had to face this problem in the form of the CPP Block contract (with PT Caltex Pacific Indonesia) .... This is a good start. So (the government) should not harbor any wish to reduce regions' revenue, because regions of course want more, not less. In general the Megawati government should also resolve the implementation of regional autonomy and pay attention to issues around Aceh, Papua (Irian Jaya) ... and other potentially restive areas.
The government must realize that the crucial issue raised by resource-rich areas affects investors' interest. Pride and identity are important but the Acehnese would not raise their voice if they didn't know there were gas resources there; likewise people in gold-rich Papua and oil-rich Riau.
Megawati's government which seems to be compromising and pragmatic has promised to please the market. This will lead to a paradox; even the military may be used to face the regions, which will face the demands of the local public.
Wiping out corruption is also important in securing investors' trust. What can this government do?
Megawati's government is compromising here and there, accommodating a number of political forces, so we can't expect much regarding corruption. The paradox is while the government has to be market friendly, corruption and money politics continues to be widespread.
Combating corruption is related to decentralization of the fiscal balance. By reducing the concentration of funds at the center, the possibility for abuse of state funds at the center becomes smaller.
It's true that giving regions the authority to manage big funds can also lead to corruption but at least the management of local administrations is closer to their people, enabling better control. Strong monitoring by the public must be established.
I'm worried about the influence of (Megawati's) Indonesian Democratic Party of Struggle (PDI Perjuangan) which gives too much emphasis on the notion of unity, which may imply reducing the spirit of giving a chance to regional administrations. The party could very well sponsor efforts to amend the regional autonomy law. (Asip A. Hasani)
2. 5Riswanda --
Megawati juggles need for professionals, appeasing opponents
2 X 20 36pt NCSBi New Cabinet makeup: To please and appease
Lecturer in politics Riswandha Imawan of the Gadjah Mada University in Yogyakarta looks at the result of what he says is a careful balance in the new, "transitional" Cabinet composition.
Question: How do you view the Cabinet lineup?
Answer: It clearly shows President Megawati Soekarnoputri's careful effort to place figures that pose a low threat of resistance from among the public.
The structure is not that different from the Cabinets of former president Abdurrahman Wahid (Gus Dur); it's not slimmer. Megawati seems to be avoiding confrontation. She wants to embrace all political groupings. She also seems to realize that she doesn't have much time to realize her Cabinet's program. Therefore, she seems to regard her Cabinet as a transitional one.
That she picked figures of various backgrounds also shows that she's avoiding many people getting annoyed. The appointment of Faisal Tamin (former chairman of the Association of Indonesian Civil Servants KORPRI) as State Minister of Administrative Reform, Ali Marwan Hanan (of the United Development Party, PPP, the largest faction in Muslim-oriented axis force) in charge of cooperatives, and Bachtiar Chamsah (of PPP) as Minister of Social Affairs are examples.
Yet, she did not assign them for key positions. She realizes very well that the ministers in charge of cooperatives or social affairs won't directly affect the heart of her leadership as well as the core of the political dynamics. Therefore, she picked only professionals for key positions.
Key positions are those directly related to the core tasks of the Cabinet, which include economic recovery, restoring security, handling the threat of disintegration and upholding supremacy of the law.
The appointment of Susilo Bambang Yudhoyno as Coordinating Minister for Politics, Social and Security Affairs is an example. Indeed he's a (retired) military officer, yet he's an intellectual in uniform. He knows very well the concepts of politics, social and security affairs. The appointment of Dorodjatun Kuntjorodjakti as Coordinating Minister for the Economy is another example ...
What about the appointment of Yusuf Kalla as the Coordinating Minister for People's Welfare?
I wonder why Megawati picked him, especially considering his background as a businessman as well as former minister of industry and trade, whose orientation was profit. Now he must switch his orientation to a non-profit one.
The assignment of Matori Abdul Djalil as defense minister also could be a problem in the future. Megawati's not just demonstrating her gratitude to Matori, but has also considered what was repeatedly said by former defense minister Mahfud M.D., that Gus Dur's has said the position should be for civilians. This way, Megawati wants to avoid the resistance that would ensue if the position was given to a military officer.
But by choosing Matori Megawati will need more time to reconcile with Gus Dur's supporters -- Matori has also become a problem for them. Moreover, people can also see ... that the appointment was based mostly on the close friendship (between Megawati and Matori).
Likewise the appointment of Said Agil Munawar as Minister of Religious Affairs. He was the one who said we could have a woman as president during the controversy regarding a woman president. I fear she's just showing gratitude.
Could such considerations for choosing ministers harm the Cabinet's performance?
I prefer to say, "no". The position as, say, defense minister, does not directly influence the heart of political dynamics here. The key position is the military commander. So I can only conclude that the Cabinet formation was based firstly on professionalism, second, balance of political power, third, balance of regional power and fourth, in return for services rendered.
And the impact on the Cabinet's overall performance?
As long as professionals are in key positions, it will not have a bad impact. Budiono (Minister of Finance) and Rini Suwandhi (Minister of Industry and Trade) are both experts in those fields. Purnomo Yusgiantoro (Minister of Mining and Energy) has expertise in management and mining ... For education, we have Malik Fajar in charge of education ... The outstanding development of universities under Muhammadiyah (second largest Islamic organization of which Malik is an executive) is proof of his great work. He has a clear vision on how education should be developed. His reputation as a rector, too (of Muhammadiyah University in Malang) is very good.
What is annoying is the appointment of Bambang Kesowo as State and Cabinet Secretary. I cannot understand why Megawati decided so, especially given people's suspicion that Bambang still holds the New Order mentality. Combining the two positions could only result in power centralization, which could again make the presidency a sacred institution.
Also of annoyance is the appointment of (former legislator from the military faction) Hari Sabarno as Minister of Home Affairs and Regional Autonomy. He has no track record in the field. Megawati will need more time to learn about the ministry ...
What about the new State Ministry of Communication and Information?
It will certainly receive strong reactions, especially from the press. So an explanation is needed on what it deals with ...
Yet, overall the new Cabinet lineup is market friendly, especially with Kwik Kian Gie (Minister of National Planning/Chairman of National Planning Development Board) and Laksamana Sukardi (Minister of Finance)Menteri negara BUMN not finance minister) in it. The world sees them as reliable sources for economic analysis on Indonesia.
But regarding Kwik, if everything is decentralized and the Development Board is not as it was before, Kwik's expertise will not be fully utilized there. (Sri Wahyuni)
3. 5Defense --
Security threats: Chinese dragon or uncle Sam's cabin? 1 x 40 36pt Optima Bold India's security threats, from China to U.S.
NEW DELHI: George Bush plans to go in for Nuclear Missile Defense (NMD) to ensure his country is not taken by surprise by a rogue state. India itself faces this problem. A nuclear holocaust by any miscalculation or intense hatred of a country considered hostile will be the end of a civilized world.
Violent reactions are naturally expected from Russia, once a super power and still a powerful nuclear state; and China with ambitions to dominate Asia. Every country determines its perception of threat and plans its defense accordingly. Weak nations seek allies as happened after World War II, creating alliances such as North Atlantic Treaty Organization (NATO) and Warsaw pact. With the break up of the USSR, the US is the only super power, militarily and financially. And they have no intention of losing this status.
The strong criticism of America by our experts and opposition political parties is surprising. Their main fear is that America will become the sole super power and our endorsement will adversely affect our relations with Asian allies. No names, however, are mentioned. To be frank we have no friends in Asia or the world. It is incomprehensible that our experts are ignorant of our recent history since 1947. Vajpayee has clarified that the aim of NMD is to ensure safety of the world against any misadventure by a rogue state. Bigotry and blind hatred developed over the years does not help in international relations.
There are no permanent friends or permanent enemies. Only the country's interests are permanent. Our governments since 1947 flourished on slogans and sermons oblivious of threats to the country. Let's look on our relations with China and Pakistan. Nehru, of the imperious temperament, was intolerant of any advice. He ignored Sardar Patel's 1950 suggestion to beware of China. His gospel of non-violence, panch-sheel and Hindi-Chini- Bhai-Bhai became the hallmark of our foreign policy. The Chinese occupation of Tibet in March 1959 opened his eyes but it was too late. The final humiliation came in November 1962 when China launched an unprovoked attack in Arunachal Pradesh, which shattered Nehru both physically and mentally.
At this hour of humiliation only two powers, America and Britain came to our assistance, the two countries derided by us. Our friends in the non-aligned movement, Nasser of Egypt and Tito of Yugoslavia advised us restraint. For the Russians the Chinese were their fraternal brothers and the Indians just friends. Let us never forget this.
The Chinese again intruded in Arunachal in 1986 and occupied Sum Dorong Chu Valley and still lay claim to Arunachal, Sikkim, Darjeeling and 90,000 km, not yet specified, besides having occupied Aksai Chin area. Recent reports by our ministry of defense that every major city in India is within the reach of Chinese missiles and that China is augmenting Pakistan's capabilities in its striking power to include submarine launched ballistic missiles, in order to achieve its goal of being a superpower in the Asian Continent, somewhat akin to the South East Asia Co-Prosperity sphere the Japanese had dreamt in World War II.
It is not only India that is wary of China but Vietnam and Japan as well. Jane's Fighting Ships 2000-01, the most authentic source of information on armed forces, throws light on the latest Chinese activities against India and Vietnam. "In 1998 Beijing wrested control of a number of Vietnamese islands in Spratly Islands in the south Pacific and hence the latter has beefed its military presence fearing a repeat episode." None of its neighbors trusts China and I say this because of my impressions during one year's stay in Vietnam, Laos and Kampuchea.
Though weak these countries are proud of their heritage and refuse to accept Chinese lordship. In the 1970s, Vietnam was invaded twice by the Chinese.
Nearer home, "Tension in Indo-China Border" in Jane's Intelligence Digest in November 2000 is an eye opener. In the 18 months China committed over "100 incursions especially in Ladakh and Arunachal Pradesh at an alarming level."
Chinese naval activity in the Pacific and nuclear submarines seen in the Indian Ocean left no option except to adopt a pro- active policy by India. No wonder Vajpayee's government was forced to declare China as enemy no 1 and Pokhran tests II and III ordered in 1998. What a hue and cry was raised in India then by political parties. But all kept silent when China became a nuclear power. The CPI had not even condemned China during the 1962 war.
According to the Jane's Digest even Japan is alarmed at the Chinese activities in the Pacific and Indian Oceans. This is leading to changing political equations in Southeast Asia. Even Malaysia and Singapore are apprehensive. India has already established regular defense consultations with Vietnam and Japan and held joint naval exercises including Malaysia in 2000. Singapore has also agreed in principle to join such exercises and one of its senior ministers felt that China and Pakistan are rogue states. Recently our foreign minister during June this year had also visited Australia and New Zealand. There will be no peace unless we either surrender to Chinese demands or we seek allies to checkmate China.
The Chinese ambassador to India has advised us not to support the NMD. The Ambassador also feels that Russia, China and India share similar views on world issues -- the latest kite flying exercise. China has suddenly woken up to realities when its hegemonism in Asia is threatened. India must be naive to fall in their trap. Leftist intellectuals and prominent writers appeal for a settlement. But on what terms? Why do they not appeal to the Chinese to return Tibet to the Tibetans and openly declare that they have no designs or claims on our territory?
One eminent writer has called our "endorsement of NMD as demeaning", another thought it "long on flowery rhetoric, short on realism". Our former foreign secretary, Salman Haidar wonders "how closely we have weighed the implications of our decision on our traditional friendships and established ties." But he is silent on who these traditional friends are. We have none. The NDA government is trying its best to have some.
With the kind of foreign policy expertise that we have we suffered humiliation in 1962, and find ourselves in a mess in Jammu & Kashmir and in the northeast. Surprisingly, the world ignores Chinese hostility against India. I pose the following question: rather than entering the Chinese Dragon or co-habiting with the Russian bear, would it not be safer to enter what some writers have derisively called "Uncle Sam's Cabin"? We gratefully accepted this shelter in 1962. Now we have the strength somewhat to stand on our legs after Pokhran tests II and III, and it should not be easy to kick us around.
Hatred of India is the raison d'etre of Pakistan's existence. It fought four wars with India between 1947 and 1999, and is waging a proxy war for over a decade. China developed close relations with Pakistan since 1966 on the basis of the old statecraft -- your enemy is my enemy. Thanks to China's nuclear and missile technology, Pakistan has attained nuclear status. During Chinese premier Zhu Rongji's recent visit to Pakistan in May, he lauded Gen. Musharraf for the 1999 coup and praised him for establishing stability in Pakistan. As a quid pro quo the General endorsed China's fear of the NMD and TMD (Theater Missile Defense).
Trade, commerce, and cultural relations are not feasible between India and Pakistan while the two armies face each other in J&K and Pakistan is engaged in proxy war against India. General Musharraf has often threatened a nuclear war. Power is too serious a matter to be left in the hands of generals, and absolute power corrupts absolutely.
During the 20th century two generals changed the future of their countries and enhanced their prestige the world over -- Gen. Kemal Ataturk of Turkey and Gen. De Gaulle of France. Let us hope Musharraf succeeds as the Ataturk of Pakistan, an ambition he expressed after his coup in October 1999.
4. 5Troops -- U.S. troop withdrawal 2 x 15 36pt NCSB U.S. should pull out of the South: N.Korea
SEOUL: North Korea is yet again calling for the withdrawal of U.S. troops from South Korea. Or, for the 121st time since 1948 -- if a quasi-governmental think tank is correct in its calculations. Still, the latest call was particularly noteworthy, coming after a lengthy silence and alleged acquiescence by Pyongyang. The problem is, the ongoing fuss seems set to amount to little more than another political dogfight.
During a weekend summit highlighting his almost month-long train visit to Russia, North Korean leader Kim Jong-il re- emphasized that the American troops should leave Korea, saying it is "very urgent" for peace and security in the Korean Peninsula and Northeast Asia. President Vladimir Putin expressed understanding of the North's position, albeit wisely stopping short of supporting it.
The reversal put President Kim Dae-jung into an awkward position. President Kim had frequently said his North Korean counterpart showed tacit approval of the American military presence even after unification at their historic summit in June 2000. The opposition lost no time to criticize the President, saying he either lied to the people or was cheated by Kim Jong- il.
Neither should necessarily be true, though. Most voters would like their elected leader to be neither a deceiver nor a dupe. Rather, the North Korean strongman might have changed his mind in the face of hardball tactics by the new U.S. administration. Or he just referred to the U.S. troops' presence in the capacity of a peacekeeper than occupying forces.
In any case, the latest change in Pyongyang appears to be strategic rather than fundamental. The North has often hyped up its propaganda whenever there arises the need for cementing internal solidarity or appeasing hard-liners. Officials and analysts here view it as an eye-for-an-eye tactic to dilute Washington's proposed agenda of conventional arms reduction.
Also noteworthy in this regard is the U.S. response -- or lack of it -- to the latest development. This in part reflects the U.S. confidence in its role as a non-regional balancer, which it believes is recognized by all regional players. Former U.S. president Jimmy Carter recalled here Tuesday even the late North Korean founder Kim Il-sung acknowledged the American presence in a different, smaller form.
The rival political camps should stop their childish and unproductive bickering over this and other inter-Korean issues. Their "politicizing" of the South-North relationship has gone beyond the tolerable level. The ruling party should no longer monopolize the northern policy as a means of staying in power. Nor must the opposition try to trip up the government in every trivial step.
Fundamentally, the 37,000 American troops' presence here is a matter between the United States and its host -- South Korea. No third parties can or need to have a say in this. More frankly, the decision is almost entirely up to Washington, the sole superpower in post-Cold War era, based on its global geopolitical strategy.
A recent report by Rand Corp., a conservative U.S. think tank, well illustrates the point. To the relief of most Korean nationalists, the paper envisions the earlier-than-expected pullout of U.S. ground troops from Korea and Japan for relocation in Southeast Asia. The new strategy, based on possible reunification of the two Koreas, is aimed at encircling China, America's potential new rival.
The study specifically cited three expected outcomes: diverting expenditure saved from reduced ground forces to developing new weapons, such as a missile shield; weakening the alliance between North Korea, China and Russia; and stepping up pressure on South Korea for arms purchases. And all of these are based on deepening of regional conflicts instead of easing them.
Few Korean with a modicum of national identity -- even the diehard anti-Communists -- would welcome the presence of foreign troops on their soil for good. The latest debate on the North's position here also comes amid increasing frustration and discontent with the U.S. military presence, along with the growing hosting costs, environmental degradation and other violations.
Koreans have a long, shameful history of calling in foreign soldiers under the pretext of national security, but actually out of hatred and distrust of rival compatriots. Until when will we need foreigners to seek partisan interests at the expense of our own people? In this vein, Kim Jong-il should recognize it is only the rapid reconciliation between two Koreas that can undermine the rationale for a U.S. troop presence