Front-end loading -- Susilo's best political option

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.