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).