How to love one's country in a time of crisis

How to love one's country in a time of crisis

By Goenawan Mohamad

With the current monetary and economic crisis continuing
unabated, what would be the most appropriate stance for
Indonesians to take? Intellectual, poet and former newsmagazine
editor Goenawan Mohamad offers his view on the question.

JAKARTA (JP): I was brought up with a belief that "Indonesia
is inside you". In other words, things that hurt the country also
hurt you, at least psychologically. But this patriotic talk may
sound bloated and empty to many, especially because often I
forget to ask myself which Indonesia I am talking about.

Trying to figure out how to love the country in this time of
anger and frustration, I gradually came to the conclusion that
there is not one single Indonesia. The rupiah crash is testimony
that what you see are actually two different countries: an
Indonesia of dollar debtors and an Indonesia of the deprived.

This is a point I would like to suggest, in response to
nationalist flag-waving arguments against the virtue of inviting
a foreign institution like the IMF to bail Indonesia out.

The 1998 crisis is a costly lesson of how not treat the
country like a putting green. Someone told me that it is the
economist that sees the analogy between the Asian way of managing
economies and the way people meet, play and do business with each
other in a golf club. I never play golf, so I am not sure how apt
is the description. But Indonesia's large foreign debt indicates
that there is something "clubby" in the manner Indonesia's major
economic players circulate billions from one place to another.

There are conflicting stories about Indonesia's foreign debt.
One estimate says that more than half of the foreign borrowing
belongs to the private sector. The Wall Street Journal gives a
different picture.

The newspaper says that a closer examination of the
composition of Indonesia's foreign debt shows that a much larger
portion is owed by the government or guaranteed by the government
for state-owned enterprises than previously thought.

Whatever the truth is, it is easy to imagine that there are no
more than 200 people (out of 200 million) involved in the deal.
They are a coterie of top government people and business leaders.
Theirs is the Indonesia that is now being pressed to grab as much
dollars as possible to serve the debt.

Accordingly, the dollar has been in high demand, and its
exchange rate has climbed to a menacing height. The result is our
current slump, sending millions of people down to poverty line
and insolvency. Given the political format of the country, the
other Indonesia -- the Indonesia of the deprived -- has no way to
influence the course of events, although it is fast becoming a
vast territory of victims. Apparently, the two Indonesias
(one belonging to 200 people, and the other to the 200 millions) are like
distant neighbors who hardly care for each other.

Not very long time ago, the theory was that the "Asian
miracle" was due to what MIT's economist Lester Thurow describes
as "communitarian capitalism" that is different from, and
preferable to, U.S. capitalism. What he has in mind are the
Japanese and Korean models. Today the Asian crisis suggests
that nothing is "communitarian" about the system. The clubby
cooperation between private corporate groups and government
institutions has bred complacency at best -- and the public,
including shareholders, are kept in the dark. They are even
intimidated not to ask questions. Sooner or later is the next
stage, which is a corrupt system of crony capitalism.

Indonesia of the dollar debtors is precisely a system of this
kind. It is a country where nobody seems to care about
accountability. Bankers have lost their capacity for judgment and
never call a loan; they even take bribes from borrowers, with a
result companies accumulate a large amount of bad debt. The
Indonesia of the dollar debtors is also a country where
project-costs are marked up to 50 percent to make it possible for
corporate executives to bring millions of illegitimate greenbacks
into their personal accounts. At the end of the day, it is the
national economy that gets the brunt. The first victims are
always the weakest.

The trend is made worse because the "unholy alliance", as
senior economist Sumitro Djojohadikusumo calls it, goes further
up involving people close to the most powerful seat in the
Republic. Last year, for instance, there was high-powered
pressure to both private and state banks to give loan to the
"national car" project, and the scared bankers followed the order
without doing normal checks on the investment plan.

Today you read the story of Steady Safe, a taxi company that
received a $265 million loan from the once-prestigious Peregrine
Investments Holdings Ltd. Two years ago Yopie Wijaya, the taxi
man, took Tutut, the first daughter, as his business partner
before he knocked at the Peregrine's door for money. Today the
Hong Kong-based company collapsed; the loan is bad.

An economist friend once told me of the different impacts
between two acts of embezzlement. One is when somebody takes
money from the state treasury (he steals $15 million and it is
bad, but that's all). The other is when a powerful person sets up
a monopoly company (he makes the same amount of money, but the
result is a highly distorted market). This unchecked rent-seeking
practice has grown to such a colossal proportion that it has made
Indonesia financially bloated and institutionally damaged.

Obviously, this is not the Indonesia that I, for one, would
care to defend. In fact, this is the Indonesia that many have
been trying to do away with; it is the real culprit of our
painful downturn. Regrettably, reform-minded people both inside
and outside the government have no real power to get rid of it.
Hence the significance of the IMF deal.

The IMF package agreed by President Soeharto is no panacea for
good governance. But the way I see it is that it is not only
about $43 billion. In itself it is not a promise of political
reform, but it may lead to the weakening of political patronage.
To be sure, it is imposed by a foreign institution; it is also
painful, and it is not perfect. But from the hardship it entails
the people will have a better argument to urgently demand for
more symmetry of sacrifices from the powers that be.

In short, the IMF deal is a sad, if not "evil", necessity. To
use nationalist rhetoric against the package may bring Indonesia
back to the apologists of ersatz capitalism and its dubious
achievements.

As a concluding note, let me draw an analogy from a more
dramatic event in history. Following the defeat of 1945, the
Japanese were put under an American-imposed constitution. Most
Japanese took it as a chance to build a more democratic society,
which was to them preferable to the nationalistic flag-waving
"Nippon". The rest is their own determination to make the
experiment a success.