Habibie no economic savior, says sennior economist

Habibie no economic savior, says sennior economist

MELBOURNE (Reuters): A senior Indonesian economist said
yesterday he doubted the nation's battered economy could recover
with new President B.J. Habibie at the helm.

Hadi Soesastro, of the Jakarta-based Centre for Strategic and
International Studies, said Habibie lacked the political and
moral authority to be more than a caretaker leader.

"It's so difficult to imagine that he would be able to restore
confidence," he told reporters in Australia at the launch of a
major report on East Asia's economic crisis.

"That's because he was hand-picked by Soeharto and ... doesn't
have the political legitimacy."

Former president Soeharto quit last month, answering popular
calls for him to end his 32-year reign as the archipelago of 200
million people plunged into political chaos.

Habibie, his vice-president, took over the presidency.

Since then, Habibie has responded to calls for political
liberalization by releasing some political prisoners and has
signaled elections will be held by the end of 1999.

"I think he's trying very hard, but this government lacks
legitimacy -- that's the main problem," Soesastro said.

"Unless the legitimacy is there, this government cannot do
much and in fact there's a danger that this government ... would
react to popular pressure in order to gain legitimacy.

"So, therefore, there's no clear policy that's coming out.
It's going to be reactive. It's coming from all directions. It's
something like a free-for-all."

He said Indonesia was unlikely to return to economic growth
for four to five years.

Its economy is forecast to shrink between 10 percent, the
official figure, and about 20 percent in calendar 1998, he added.
Soesastro's Centre for Strategic and International Studies is a
privately funded think-tank.