Medicine to cure crisis

Medicine to cure crisis

Indonesia's monetary crisis began in July 1997. Seven months
later the country is still floundering, unable to find the path
toward recovery, or so it would seem if one considers the current
value of the rupiah, the price of staple goods like rice and
cooking oil, and other recent events. What is wrong?

Indonesia's economy is critically ill and needs treatment. The
world's leading "economy doctors" have diagnosed the patient and
said that a radically new and healthy lifestyle is required in
the banking system, government and business sectors.

Last November reform was prescribed. Cut nepotism, cronyism,
collusion and bribery out of the body politic. But the patient
was reluctant to accept this radical option, instead opting for
half measures like the closure of a few banks. By January,
deteriorating health made it clear that the patient was not
following doctors' orders. The doctors returned, explaining that
because the disease had progressed, a more extensive course of
therapy was required. This time, simple pledges to eliminate
corrupt, nepotistic and wasteful national projects would be
insufficient. This time, commitments had to be kept. The ailing
patient finally agreed to surgery and projects were eliminated.

The English author G.K. Chesterton once wrote "we cannot judge
religion by those who do not practice it, just as we cannot judge
a medicine by those who do not take it". Could it be that the IMF
proposals were criticized before they were seriously tested? When
announcing the reform package last November, the IMF predicted
that it might take Indonesia's economy several years to recover.
Two weeks later critics were claiming the reform package had
failed to rejuvenate the rupiah and was not working.

But has the patient really taken the medicine? Why, to borrow
Chesterton's analogy, have some been so quick to condemn a
medicine that has not yet been taken? Who can enumerate concrete
measures so far taken to eliminate nepotism, cronyism and
collusion? Where are the procedures guaranteeing transparency,
accountability and fair law enforcement?

Such procedures have not yet been developed. In fact the IMF
pill has not yet been swallowed. Recovery would perhaps be closer
had genuine reforms been instigated at an earlier date.

Indonesia now risks losing IMF aid designed to rescue her from
a protracted and chronic economic illness through a powerful
minority's fear of the treatment plan. Advocates of a currency
board are counseling patience and trust toward the idea of such a
system, but why not first show patience toward the IMF plan? If
the patient prematurely rejected the first prescription for
reform, where does a guarantee of compliance with the terms of a
second prescription come from? The underlying obstacle to
recovery -- let us not forget this -- is a lack of confidence in
the government's ability and political will to eradicate the
corruption, nepotism, cronyism and collusion that have brought
the Indonesian economy to its knees. How can recovery begin
unless there are credible signs of change? Those waiting for
signs are losing patience. Our critically ill patient is losing
the battle against time.

DONNA K. WOODWARD

Medan, North Sumatra