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.