Which new President: Does it matter?

Which new President: Does it matter?

Richard Robison, Jakarta

When the new president is finally confirmed later in
September, she or he will confront the immediate task of
assembling enough power to rule effectively. More fundamentally,
though, is the task of arresting a seemingly inexorable slide
into the sort of 'savage capitalism' that often accompanies
parliamentary systems in their early years.

This will not be an easy task and certainly not one that can
be addressed by the sort of technical and policy fixes advocated
by the World Bank and other development agencies through programs
of good governance and capacity building. The problem, instead,
is one of power and politics.

Put simply, because the democratic revolution in Indonesia
was not the consequence of any political or social revolution, it
is inherited by many of the very forces of the previous regime
for whom the function of the state is seen as one of allocating
power and wealth rather than legislating and regulating. No
politically effective reformist force yet appears on the radar
screen.

As we have seen in the cases of both Abdurrahman Wahid and
Megawati Soekarnoputri, post-Soeharto presidents have been
ineffective reformers not least because of the power of these
entrenched interests. In any case, they possess few resources
that might be potentially used against to impose reforms.

Unlike Soeharto they must win elections and mobilize support
in legislature. This means building complex alliances in a
legislative assembly indifferent or hostile to reformist
programs. Nor does a new president command the sort of fiscal
resources Soeharto was able to call upon to fund economic
projects or reformist initiatives independently.

At the same time, the apparatus of administrative power
established by Soeharto remains more or less intact. Some
elements, especially in the army and the judiciary now constitute
a stubborn rearguard against social and corporate reform.

Most important, the programs of political, fiscal and
administrative decentralization have shifted the balance of power
further away from the center.

Regions and provinces are now emerging as competing centers
for revenues and authority, imposing their own fiscal and tax
regimes. Importantly, decentralization has allowed governments to
fall even more deeply into the hands of regional and provincial
predators for whom the idea of public interest and collective
goods is entirely foreign.

This phenomenon is not, as understood by the World Bank and
other neoliberal commentators, a problem of a failed state. As an
example, the accelerating destruction of national parks and
forests cannot be blamed on poor resources and weak institutions.
Rather, it is a process central to the interests of elites often
organized and facilitated by regional officials and politicians
themselves.

Yet, democratic reform and decentralization are expected to
enhance the power of popular forces and interests against
oppressive states. And it is true that both NGOs and various
political alliances, together with the media, have in some cases
been able to force rapacious and corrupt officials from office in
a way never before possible. Does this not provide the basis for
a new political alliance that might enable a president to
outflank both the remnants of the Soeharto state and the new
predatory interests?

While the prospect of any president entrenching her or his
power by leading a progressive revolution against predatory
elements of the elite is a fanciful proposition, the possibility
of a different sort of reorganization of power through a new
populist social contract is not out of the realms of possibility.

In this matter, the experience of Thailand's prime minister,
Thaksin, is instructive. Replacing prime ministers who closely
followed IMF reform prescriptions, Thaksin has not only
instituted a more nationalist economic policy but has directly
confronted the power of regional political and business interests
in the parliament.

He built a national political party to bypass regional power
brokers and put in place a new social contract at the grass roots
level that linked centralized, national power with the sources of
votes through grants to villages, new health policies and other
populist policies. Money politics was re-centralized.

While such a scenario is not progressive it does provide the
basis of a new alliance in which a president might triumph over
parliament and regional power brokers. Certainly it is an option
that might be attractive to Susilo Bambang Yudhoyono who has
little strength or influence within the national legislature and
few resources in the regions to match the vast networks of Golkar
or the PDI-P. It would, however, be a high-risk option requiring
courage and decisiveness.

At the same time, the task of defeating Yudhoyono may
precipitate what is really a logical alliance - that of the two
secular, nationalist and statist parties; Golkar and PDI. Such a
power block at the center would significantly boost any president
by providing a majority in parliament and a potential basis for
an assault on the contending centers of predatory power in the
regions.

But there are important differences with the Thai case. Most
important, Thaksin's agenda is directly to establish the
political ascendance of national business through the Thai Rat
Thai party. It is backed by a powerful and wealthy set of
interests.

By contrast, neither Golkar nor PDI in Indonesia constitute a
cohesive set of interests. Nor do they represent the center
against the regions. Rather, they represent long strands of
political alliance that extend down into the regions and
provinces and include complex business and political elites.
Business today in Indonesia may fund politics but is entirely
incapable of organizing a party in their interests to capture
power.

At one level, the changing nature of business in Indonesia
will be ultimately critical in the political outcome. On the one
hand, damaged by the crisis, no longer with access to state
generated monopolies and easy credit, there is a trend for
Indonesian business to be found increasingly in such areas as
property and development, or in small scale insurance and
finance, local and regional trading and in the more sinister
black areas of the economy. These are natural allies for
predatory politics, regional political bossism and 'savage
capitalism'.

But we should not dismiss the prospect of a growing
integration with a new Southeast Asian and mainland Chinese
economic and corporate expansion. The fact that a large share of
the assets sold by the now defunct Indonesian Bank Restructuring
Agency (IBRA), including banks, have been purchased by firms from
Singapore and other Asian countries rather than from the West
demonstrates that Asian countries may be more able to negotiate
the vagaries of the new business climate.

We might speculate that a new process of globalization linking
Indonesia more closely to the larger economic agendas of Asia
will be more pervasive and thus more capable of transforming
Indonesia than Western corporate investment. If some elements of
big Indonesian business is reconstituted as partners and brokers
within this new relationship they too, will become more
internationalized.

Thus the future for Indonesia may be conceived not as the
oligarchic regionalism of, say, the Philippines, nor as the
centralized populism of Thailand but more in terms of the
organized and centralized capitalism of Malaysia.

The writer is professor of political economy at the Institute
of Social Studies in The Hague. He has recently co-authored with
Vedi Hadiz, Reorganizing Power in Indonesia: The politics of
oligarchy in an age of markets (published by Routledge, London).