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