'Just a little wheel in the IMF machinery'

'Just a little wheel in the IMF machinery'

By Yenni Djahidin

WASHINGTON, DC (JP): For a man who has brought billions of dollars
into the Indonesian economy, his appearance is hardly glamorous
and his office looks simple and neat.

Dr. Hubert Neiss, the Asia and Pacific Director of the
International Monetary Fund (IMF), gives the impression of a
quiet and serious person, but one that always has a smile on his
face.

The Austrian economist, who will retire soon from the IMF,
said his involvement with Indonesia goes beyond his work. He said
he is concerned about Indonesians, which he demonstrated by
personally inspecting staple prices in the markets of Jakarta's
slums.

Neiss, 64, a frequent visitor to Indonesia especially in times
of crisis like now, says he knows he is in Indonesia when he gets
off the plane and the heat and humidity slap him in the face.

"I don't say I don't like it, but I just have to get used to
it," he said in an interview at his office here last week.

The soft-spoken economist, who likes playing the violin, wants
people to see him as an IMF official who is trying to work with
the Indonesian government on programs for economy recovery. He
said it was a big mistake to see him as an "Indonesian minister".

Neiss visits Indonesia again this weekend with IMF deputy
managing director Stanley Fischer. Their main agenda this time is
to talk to leaders of the political parties who are likely to
form the new coalition government after this month's general
election in Indonesia.

In the interview, Neiss talked about his impression of
Indonesia, the people and the officials he has dealt with. The
following are excerpts of the interview:

Question: What do you like about Indonesia?

Answer: This is a place where I have to work. I don't go on vacation
because I like the temples and the beaches and the dances. I go
there because I am engaged with very intensive discussions.

Q: You were in Indonesia as an IMF representative in 1973. What
was your impression of Indonesia then?

A: Yes, I lived there for two years with my family. I got quite
familiar and quite attached to the Indonesian way of life.

I like the people. They are usually quiet and serious, but
they also like humor and are very pleasant. I learned the
language at that time, but I forgot most of it.

Q: What places do you like in particular?

A: I like to go to the countryside. Irian Jaya or Bali, at the
time when rice is being planted or harvested. This is something I
don't know from my own country. Of course, I like the Indonesian
culture and tradition, the music. Gamelan, the flute, the violin.
Javanese music is quieter and thicker. The Balinese are livelier
and more aggressive. I like both, but I prefer the Javanese
music. And, I like the dances. The Balinese dances are more
colorful, more luxurious. I prefer the Balinese dance, the
Ramayana dance, other dances, Barong and Kecak. And I also like
the temples, the Hindu and Buddhist temples. When I was there,
Borobudur was just being restored.

Q: Given your frequent visits to Indonesia over the past year,
many people joke that you are the actual president of Indonesia,
because you set the economic policies...

A: This is a big mistake, of course. I am just an official of the
IMF. I am happy enough to work with the Indonesian government.
But I can't dictate what happens in Indonesia. I can help to
negotiate the program every month which the Indonesian government
is free to agree or not to agree to. I have to persuade them, I
have to give them good reasons. We have to win their trust so
they know that there is a reason. And then we have to convince
the IMF executive board that this is a good program and it needs
financial support. So, I'm just one of many wheels in the
machinery of how an IMF program works. It takes a lot of people
to make this work. It takes many government advisors from many
countries, the IMF staff, the World Bank staff, the ADB staff.
Papers have to be produced. It takes the whole executive board to
study the program every month, discuss it and decide.

I'm just a little wheel in this whole machinery.

But my interest and involvement in Indonesia goes beyond the
purely financial and economic matters.

Q: Can you elaborate that?

A: For instance, I was very interested in the rice situation in
Indonesia. That's something that IMF usually doesn't review. So,
we had many discussions. If you remember in July and August,
there were speculations, rumors of an impending famine. Rice
stocks were low, rice was being smuggled away to Singapore. The
distribution system was not working well because the Chinese
(shopkeepers) had left. So, this was a very serious situation.

Something that normally doesn't occur within the normal work
of an IMF official, but I was very concerned about it. I went to
the market (Tanah Abang) every morning and checked the rice
prices with the merchants. I checked them every morning during
the crisis. First, I didn't believe the price because in the
statistics we had the price per kilogram, but they had price per
liter. So, we sorted it out afterward.

So there are many things that make this work more personal,
more unusual, more intriguing.

Q: Can you describe your relationships with Indonesian officials
like Soeharto, B.J. Habibie and Ginandjar Kartasasmita?

A: First, it's a working relationship. But it will never work if
there wasn't a measure of personal trust, respect of each other's
opinions. That I think is necessary.

Q: What do you think about Soeharto?

A: I only met him twice. He was very reticent. He was not very
communicative, very reserved. The communication was not as close
to be really effective. He had a translator, which makes it more
difficult to get them personally in a relationship. Probably to
have a closer relationship with Soeharto you would have to know
him for years, meet him for years, work with him, deal with him.
With Habibie, it was immediately an open relationship.

Q: So it's easier with Habibie?

A: Oh yes.

Q: What do you think of Habibie?

A: I think he will suddenly go into history with some significant
achievements during a difficult period. I don't speak it for
politically liberalization. Political prisoners were freed, press
freedom was begun, political parties could be formed, and labor
rights were signed. And most people forget he created a framework
for a transition taking place. The timetable, the date. So, on
the political side, I think this is very significant.

On the economic side, and this is where I really can talk with
some knowledge, he has taken over the (IMF) program and was
determined to implement it. In critical periods, he personally
made sure that important decisions were made. And the record
speaks for itself. Every monthly review was sanctioned by the
executive board of the IMF, and as a result every month for the
immediate period, a billion dollars were disbursed. This is a lot
of money. The IMF board is very critical. They would not pay the
money if the government policies were only half-hearted.

When there is a new government and whatever the new government
will be, this government will not inherit an economy in ruins.
They will inherit an economy that has stabilized, that has been
partly rebuilt in capacity, and that is probably on the way to
recovery. Don't forget the night when Habibie took over, the
exchange rate went to Rp 16,000 to the dollar. Yesterday, it was
Rp 7,800. Reserves were down then, now they are up again.
Interest rates were 70-80 percent. Today they are around 23.5
percent.

So, things have improved and Habibie could muster all the
international support that Indonesia needed.

Q: You seem to get along well with him? What about other
government officials

A: One reason is he is very open to everybody. He doesn't have
any formalities. He is very open and very spontaneous. The second
reason is he speaks German and so do I. And occasionally we had a
little chat in German. I have good experience working with
Indonesian officials. I like to work with Ginandjar, he is very
efficient. And of course I like to work with my old friends,
Prof. Widjojo Nitisastro and Ali Wardana, who are still very
important people in the formation of economic policies.

Q: What about opposition leaders?

A: That was very important. Otherwise, the economic program would
be a playing ball in the political arena to the detriment of
policy-making. Every opposition party would attack this or that
part of the letter of intent. So, to preempt that, I made great
efforts to explain to various opposition leaders. Also to the
professors in the universities, the students, the union leaders.
And to exchange views with them.

Basically, they agree with the strategy and therefore if they
will form the government, they will not throw everything
overboard and start something different. It will be continued.
That is very important for a smooth recovery.

And also the markets know, so confidence is back. Everybody
knows that if there is a different government, they will not
overturn everything. Maybe they will do things differently here
or there, but they will basically continue. They will continue to
restructure the banks, they will continue with corporate
restructuring, they will have careful monetary policies so
inflation doesn't emerge. And for a while there will be an
expansionary budget policy, partly to cover expenses of the
social safety net. And this is the present strategy and I don't
think it can be fundamentally different.

Q: You are confident that whoever takes power will continue the
program?

A: They will continue the basic strategy and they will continue
to have a relationship with the IMF. It has not been a
politically controversial issue.

Q: Can you tell me what your philosophy is in life?

A: I have never thought about it.

Q: What is your personal ambition?

A: I don't think I have any ambition, that's for sure. If I had,
it would be too late. You know, you have to start very, very
early.

Q: Are you going to retire soon?

A: Yes, I will retire in January. In the IMF, everybody has to
retire when he is 65. It's mandatory, except for the managing
director, who can stay longer.

Q: What's your plan after the IMF?

A: Frankly, I tell you I don't know yet. I don't know yet but if
possible, I would like to continue for a couple of years to work
on the Asian countries. But in what form, in what way, I don't
know. I don't even know whether there is such a thing. I haven't
had much time to explore. I have work to do.

Q: Do you know who will take over your position?

A: Yes, of course. It will be one of the deputies. But there
hasn't been any official decision.

Q: How did you end up with the IMF?

A: Thirty-three years. It will be 33 years next January.

Partly by coincidence. I studied here for a while in the
States. I got a master's degree at the University of Kansas. I
had a scholarship. So I always had the idea that maybe at some
stage I may come back to it. And when I finished my studies in
Vienna, I entered the Austrian Institute of Economic Research,
and was there for five years. I was quite happy. One weekend, my
boss gave me a newspaper and said, "there's an economic article,
can you read it over the weekend, and give an assessment," which
I did. But after reading the article, I turned the page and there
was a little advertisement, and it was in English so it caught my
eye. It said the IMF was looking for economists, and people who
are interested should write to the Austrian National Bank. So I
didn't want to write to the Austrian National Bank ... I wrote to
the IMF directly in English and said, "I have read your
advertisement, and I'm interested. Please ask me what you require
and tell me what you offer." And, they wrote me back and didn't
answer any of those questions. But said "somebody from Washington
would be in Vienna at that time and would interview you." So I
went to this interview. I never seriously thought this would get
anywhere. All was forgotten. But weeks later, I got a cable
offering me a job with the IMF in the European Department,
starting January 1. It was November. At that time, we
communicated by cable. So I said, "great." And they offered two
years. I wrote them back. "I'm happy to come, but January 1 would
disturb the Christmas vacation. Could I start February 1?" They
wrote yes, and that's what I did.

Q: What year was that?

A: It was 1967, and I started working in the European Division.
After two years, I was offered to stay for a period of time. I
said, well, two years is a bit short, and we haven't got used to
it. It said that I ought to stay for another two years. And then
after four years, I was offered to come to the Asian Department.

I started as an economist, at the lowest rank. At the Austrian
Institute, I was already higher. But I made some progress, and
then I went to the Asian Department. They offered me to become a
division chief. In that division, the only important country at
the time was Indonesia. Then there were a few islands, Tonga and
Western Samoa. So I started to go on missions to Indonesia. But I
wasn't leading the mission. I got the offer to come to Indonesia
for two years, 1974 to 1975.