Front-end loading -- Susilo's best political option
Meidyatama Suryodiningrat, The Jakarta Post, Jakarta
It has not been a good year for Indonesia's first democratically elected president.
Before the end of the year, Susilo Bambang Yudhoyono will again have to decide on a policy that is likely to cause "misery" for millions by reducing the fuel subsidies further and thus raising fuel prices again, after a 30 percent increase in March.
Though the exact figures for the second price hike this year have yet to be determined, Indonesians are facing the prospect of an accumulative 50 to 60 percent increase in fuel prices by the year's end.
In any other developing country, the government would be toppled by having to impose such "unsympathetic" policies. The May 1998 mayhem and the fall of President Soeharto, which were preceded by fuel price hikes remain fresh in citizens' memories. This grim fact undoubtedly adds to Susilo's indecisiveness on this issue. But it is a decision Susilo has to make, and soon.
From a political viewpoint, it is also the best strategic option available. Peculiarly, despite what some may initially predict, it involves the least risk for sustaining his long-term political clout.
The fact that the hikes come at the end of the year (January at the latest), is awful timing. It is a period filled with tripwires that can be politically destabilizing.
The final months of the year have traditionally been a period of high inflation, high mass mobility, increased urban migration and frequent religious unrest.
Demonstrations in protest of the planned increases are already popping up on the streets and can easily be radicalized by the usual labor discontent as a result of possible unpaid Idul Fitri bonuses that many companies will be unable to pay in October.
However, unlike 1998, Susilo still has control of the political levers, even though he does not have much control over the economic ones. Despite backbench grumbling, he retains majority support in the House of Representatives. There are a few political opponents who can engage in a destabilizing maneuver, which can place Susilo's presidency in jeopardy.
More importantly, the yearning for political change is simply not in people's hearts. Indonesians are still burdened by reform fatigue. They simply are not prepared to go through another political upheaval. Less than a year ago, he was sworn in with the kind of legitimacy and mandate no other president previously had. That political currency remains of worth today, albeit with slightly lesser value.
Given the lethargy of his government, Susilo's administration has also lost the market's confidence. Hence, there is absolutely nothing to be gained politically by not raising fuel prices.
By approving the increases now, Susilo can begin to regain market confidence. Once the market looks up, prospects for the economy as a whole will gradually improve.
With or without the fuel price increases, Susilo's popularity rating is bound to fall after the highs of last year's election campaigns.
A proven political dictum heeded by politicians around the world is that of "front-end loading". That is to issue unpopular policies at the beginning of one's term in office.
The public has a short memory, and Susilo is barely a year into his presidency. No matter how cruel policies are presently perceived, discontent can be defused by populist policies closer to election time.
It is better to be popular at the end of his presidency than at the beginning.
These conditions, however, are dependent upon certain short- term caveats.
The first is that the impending fuel price hikes are "significant" enough to ensure that no further increases are imposed in 2006.
The second is a legible sprinkling of some "sweets" for the people such as welfare subsidies and other assistance to the poor so the government can make a stronger case that the money saved as a result of the fuel subsidy cut are truly being distributed to the public. The government has already begun this, and plans to disburse in October over Rp 4.5 trillion in direct monetary assistance to poor families.
Plans to raise civil servants' wages by mid-2006 also helps in this respect.
The third caveat is a more recent political development. The government must ensure that it thoroughly resolves the issue of oil smuggling. This issue directly touches on the public's sense of justice. It is one thing for the whole nation to be suffering together, it is another when certain people are known to be profiting from the misery.
If these conditions are met, there is no reason why this government by next September will not be looking at a slightly better outlook.