Warning to Abdurrahman

Warning to Abdurrahman

Whatever thoughts President Abdurrahman Wahid entertained in
having his international advisers parade to his office over the
weekend, one thing was glaringly apparent. The show outstandingly
failed to deliver what we reckoned to be his most important
objective -- bolstering public confidence in his leadership,
which has been dogged by the issuing of the legislature's
memorandum of censure earlier this month.

Judging from the summary statement given by the four foreign
advisers after a few hours of talks with the President and
Indonesian economics ministers, it was clearly evident that the
advisory panel did not even bother to talk subtly in delivering
their assessment and blunt recommendations.

The advisers, consisting of Singapore's Senior Minister Lee
Kuan Yew, former U.S. Federal Reserve chairman Paul Volcker,
former senior Japanese diplomat Nobuo Matsunaga and a former
executive of the German central bank Ulrich Cartellieri, did not
mince words in describing the formidable challenges facing the
Abdurrahman administration, warning of the vulnerabilities of the
budding recovery.

They told the government to mend its relationship with the
International Monetary Fund, the leader of Indonesia's economic
bailout program since November 1997, accelerate the reform
measures and put the political uncertainty to an end in a bid to
restore investor confidence in the future of the crisis-hit
country.

They warned against premature complacency over last year's
almost 5 percent growth, pointing out that the main locomotives
for the 2000 economic recovery -- robust U.S. growth and the oil
market boom -- would most likely slow down this year.

Nothing actually is new in the advice prescribed by the
international advisers. Their recommendations only served to
validate what has repeatedly been said by most politicians and
domestic analysts over the last few months. But instead of
accepting the recommendations as well-intentioned advice, chief
economics minister Rizal Ramli seemed to have been irritated,
treating the criticism mostly as being part of a smear campaign
to discredit the government.

Rizal often flaunts last year's economic recovery to support
his claim that everything is on the right track in so far as the
government reform policy is concerned. He seems so overtly buoyed
by the economic pickup last year that he tends to brush aside the
IMF's postponement of its loan disbursement simply as a petty
annoyance. Being a foreign-trained analyst, he seems too clever
not to realize that the postponement means much more than a
deferred cash injection, namely an international vote of no
confidence in the government's willingness and capability to
implement the reform measures already agreed on. Whether we like
it or not, the IMF is now the only credible international judge
of Indonesia's economic outlook.

What makes things even murkier is that Abdurrahman, the first
democratically elected president of the country, who is supposed
to be a canny politician, instead of acting quickly to capitalize
on his political support to push through painful reform measures,
rapidly squandered his popular legitimacy. He even caused
political uncertainty by choosing to pick on the House of
Representatives for meaningless bickering at a time when the
government badly needs the full cooperation of the legislative
body to implement the reform measures that are sorely required to
remove the causes that brought about the multidimensional crisis
the nation is now mired in.

With or without a "pushy" IMF, as Rizal last week described
the oversight conducted by the multilateral agency, the
government must implement the bank, corporate, judicial and
administrative reform measures that make up the essence of the
government's letter of intent with the IMF. Without these
measures, the nation will never get out of its deep crisis.

Immediately after his appointment to the Cabinet last August,
Rizal immediately drafted a new reform agreement with the IMF
simply to demonstrate that the reform measures were formulated
and determined by his economic team in Abdurrahman's new (second)
Cabinet. But now, when many reform policies have fallen behind
schedule and, more worrisome, some of them are in danger of being
reversed, the government cannot simply put the blame on the IMF.

The blunt warning from Abdurrahman's international advisers
should jolt the government into acting in a firmer and speedier
manner so as to implement the reform agenda. Otherwise, the
economy will plunge into an abyss with more devastating political
and social repercussions than those experienced by the nation in
1998.