Military-backed New Order still reigns

Military-backed New Order still reigns

By Olle Tornquist

This article is based on a paper presented at an international
seminar, Toward Structural Reforms for Democratization in
Indonesia, held in Jakarta from Aug. 12 to Aug. 14. The seminar
was organized by the Indonesian Institute of Sciences and the
Ford Foundation. This is the first of two articles.

JAKARTA: Soeharto is gone. His New Order regime remains. But
it is undermined and disintegrating. Its perfidious survivors try
to relegitimate their wealth and positions. Its anti-Communist
supporters from the mid-1960s, who turned middle-class dissidents
in the 1970s, try to recover their losses. Its less compromising
younger critics (and principled intellectuals) try to recover
their losses.

And its less compromising younger critics (and principled
intellectuals) try contradictory ways of promoting a fresh start.
So while common people suffer, various factions of the elite
quarrel, and the market and the West hesitates. It is time to ask
why it all happened, and what chances there are for a more human
order. What is the Indonesian lesson?

The thesis in vogue is that the Indonesian problem was about
too much politics and too much state, too many regulations and
too little market. While the dissidents could not beat the
regime, and others could not resist its patronage, it was only
the market and the International Monetary Fund (IMF) that finally
stood up against the dragon, brought down Soeharto and created an
opening for democracy. Now there must be privatization and
deregulation and the opening up for foreign companies.

These, of course, are but ideological half-truths. A critical
analysis indicates instead that the actions of the market and its
supporters were politically disastrous, contributed to a
socioeconomic catastrophe, obstructed democratization and only
accidentally helped do away with Soeharto.

To begin with, the economic crisis did not result from
excessive regulations but from bad regulations, and from too
little popular influence. Bad regulations that were exploited by
special interests with the state, business and international
finance, and too little popular influence capable of holding such
special interests in check. As elsewhere in East Asia, the
serious problems did not develop until private interests became
stronger and deregulation increased. Then the regime was unable
to coordinate the new groupings and could only hold down
discontent among the new middle and working classes.

Further, once the Indonesian crisis had erupted during July
and August, conventional economic measures did not work. Many
observers began to realize, therefore, that the basic problem was
political rather than economic. Critical analyses of the mid-1996
ousting of Megawati, riots and the crackdown on the democracy-
movement were no longer ignored. Critical analysis concluding
that dissidents were too poorly organized to make a difference
yet had to be supported since the regime was totally unable to
regulate conflicts, reform itself and prepare an "orderly"
succession.

But even though it became increasingly apparent that the
crisis could only be solved through fundamental political
changes, little was done to support rapid development of the only
alternative -- the democracy movement and the moderate
reformists. Soeharto's monopolies were no longer appreciated, but
temporary stability was.

"If you were only able to give us an alternative," the West
derogatorily told democracy activists who faced an uphill battle
after decades of repression and "floating mass" politics.

Worse, the West itself had actually been contributing to those
difficulties of generating an alternative. Much of Sukarno's
authoritarian nationalism in the late 1950s was because the Dutch
refused to give up their colonial interests, the CIA supported
separatist movements and the West wanted to prevent the
communists and their unique modern interest-based mass movements
from wining liberal democratic elections. Then Western powers
paved the way for the military takeover and the massacres in 1965
and 1966.

Their favorite liberal and so-called socialist administrators
did not have a strong enough social and economic base to make a
difference, so the United States in particular turned to the army
instead.

According to the conventional Cold War wisdom of the West (and
professor Huntington's then forthcoming "politics of order"
theory), the army would serve in policing and containing the
masses, thereby allowing liberal middle class experts to run the
country. But as we know, once the left had been massacred, and
many others jailed, harassed and domesticated, it was rather the
army generals who took over, with the middle-class experts as
their servants.

And yet the repression, corruption and nepotism that followed
were also sustained by political and extensive economic support
from the West, including loans issued on the basis of political
guarantees rather than on well-founded economic evaluations.
Neither the International Monetary Fund and partners nor various
corporate leaders had anything decisively negative to say about
Soeharto's Indonesia until hours before the crisis broke out. On
the contrary, Indonesia was on the World Bank's top 10 list of
promising emerging economies.

Moreover, as the Indonesian crisis evolved from September 1997
onwards, the West not only abstained from betting on democrats
and moderate reformists to tackle the basic political problems
but instead referred the matter to neo-classical IMF economists.
From October onward their narrow-minded recipes diminished
confidence in Indonesia's ability to avoid an economic breakdown
(Officials in the IMF and the World Bank later admitted this
themselves).

The situation deteriorated. Soeharto had to look for
alternatives, but also to create additional problems by
nominating a vice president whom nobody would prefer to himself,
Habibie. By January 1998 the currency fell beyond imagination,
the economy came to a standstill, people began to protest, anti-
Chinese riots spread and the regime was on the brink of collapse.
According to the World Bank, no country has suffered a similarly
harsh economic backlash since World War II.

In fact, however, the economic backlash was like the U.S.
bombing of Baghdad during the Gulf War. Soeharto was as able to
turn the negative into a positive, putting the blame on the
Chinese business community and the West's free-market recipes, as
it was difficult for the West to find an alternative to his
authority and his politics. He was reappointed president in March
and formed a provocative kind of combat government with his
daughter Siti "Tutut" Hardijanti Rukmana as de facto prime
minister and an absolute majority of family friends and loyalists
in other posts.

The writer is professor of politics and development at the
University of Oslo.