Good governance or illusion? (2)

This is the second of two articles on the possibility of Indonesia emerging with good governance following the International Monetary Fund intervention.

By Makmur Keliat

SURABAYA (JP): Belt tightening economic measures, imposed through cutting government subsidies and the budget, will bring about differing impacts on different social strata.

It is true that many developing countries have designed and established unproductive large-scale projects such as monuments, conference centers, modern clinics, resort hotels and highways in big cities.

If developing countries follow the IMF's prescription, all these kinds of "beacon" projects would of course need to be eliminated. However, in most cases this cannot be manifested as it reflects a political illusion. The reason is politically obvious.

All these prestigious projects are generally very close to the vested interests of people in power. Consequently, belt- tightening policy is only undertaken to the cost of the poor, namely by reducing their consumption level. In most cases, this is imposed through reducing government subsidies on gas, education and health services.

Indeed, the report that was released by the Willy Brandt Commission in 1980 already strongly criticized IMF policy. In the report, the commission said that IMF policy has taken the side of developed countries (the North) and sacrificed the economic interests of the poor in developing countries (the South).

IMF policy on occasion has also created political turmoil in developing countries. The report even further pointed out that "The fund's insistence on drastic measures, often within the time framework of only one year, has tended to place unnecessary and unacceptable political burdens on the poorest, on occasion leading to an "IMF" riot and even to the downfall of governments."

Regardless of the possible political impact, some observers have pinned their hopes on the prospect of great change in Indonesia. They have surmised that the drastic depreciation of the rupiah could possibly bring a new mood to the way the government behaves.

For them, the sudden fall of the national currency is teaching the ruling government a lesson in the importance of good governance in managing the Indonesian economy.

However, it is important to note that the term good governance itself was not picked out of the air, but popularized by the World Bank and the IMF in the 1990's.

The term refers to efficient public services, independent legal institutions and accountable public funds.

All are perceived as inevitable requirements for the acceleration of economic growth. For this purpose, the state would only play a minimal role in the economy and democracy would be necessary to institutionalize the accountability of public funds.

Accordingly, there has been a shift in IMF and World Bank policy with regard to the correlation between democracy and economic growth.

While the previous impression was that economic growth should precede democracy, now economic growth and democracy are considered as two sides of one coin, because without democracy how can a nation savor the idea of public fund accountability?

The widespread belief is that poor economic management always goes hand in hand with the excessive role of the state in the economy. Under these circumstances economic policies launched by the government do not represent the people's interests.

They are nothing less than an extended arm of those who control the state. To put it in other words, they are not an outcome of rational choices made by technocrats.

There is also the conception that the excessive role of the state in the economy has a strong tendency to create a self- willed government.

Though economists and technocrats may have been formally appointed ministers, it is a mistake to assume that they are puppeteers and the government their puppet.

The ground reality is the reverse. Their placement in the cabinet structure is largely aimed at using them as a rubber stamp to justify government economic policy.

It is merely for political parlance if some argue that the economic policy launched by the government is the genuine voice of economists.

What is happening at the empirical level is that unproductive profit-seeking activities, such as discriminative tariff treatments for certain industries and rent-seeking practices through monopoly facilities for certain business, have become rampant.

Hence, it is highly advisable that people exercise effective control of the state, since it is presumed that the apolitical attitude of the people will create a misleading democracy and lead the state to misuse its power.

If people become active in struggling for their rights, it will be they who control the state and not the other way around.

Some political scientists, and those who champion democratization working through various non-government organizations, are convincingly behind this idea.

They see that the time is ripe to speed up the process of people empowerment on the grounds that the government is presently not so strong and is being put under strong external pressure to resolve the monetary crisis.

Therefore it will be interesting to observe whether Indonesia in the coming days is truly heading toward good governance. If it is so, then we should properly say, welcome good governance. If not, then it would also not be an exaggeration to say, welcome political illusion.

The writer is a teacher at the Department of International Relations, Faculty of Social and Political Sciences, Airlangga University, Surabaya.