Writing on the wall

President B.J. Habibie's staunch supporters may understandably take International Monetary Fund (IMF) and World Bank pressure for a speedy and satisfactory resolution of the Bank Bali scandal as a game of power politics, capitalizing on the case to damage Habibie's chances in the November presidential election. To many politicians and businessmen long acquainted with the old system of patronage-based business, IMF Asia-Pacific director Hubert Neiss' warning of impending disaster and World Bank vice president for Asia and the Pacific Jean-Michel Severino's threat that aid to Indonesia could be discontinued may also come across as an exaggeration of what appears to them simply a normal business transaction or a shady, yet legal, business deal, at the worst.

However, non-governmental organizations see the stance of the two multilateral institutions as still too soft as it appears to ignore the political dimension of what is now notoriously known as Baligate. The International NGO Forum on Indonesian Development seems to expect the two agencies to strengthen and broaden their demand for direct investigations into all politicians, Cabinet ministers and close associates of President B.J. Habibie implicated in the case with an apparent hope that the end-game would finally hit Habibie himself.

The NGO demand once again demonstrates how civic organizations have entirely lost trust in the current government, including the legislative and judicial branches, and how they pin such great hope on the two multilateral agencies to bring their financial leverage to bear on the government, hitting at its most weakest part -- the state budget.

One cannot blame the NGOs for such a cynical attitude. After noticing how the Habibie administration has stalled for more than one year in regard to the investigations into former president Soeharto and his cronies, how could one expect Habibie to act firmly and quickly on the Bank Bali scandal, in which some of his trusted aides have been implicated?

Yet it is too early to speculate whether the Bank Bali case will be declared closed after the prosecution of some sacrificial lambs. But judging from the uproar at the House of Representatives, persistent outcry in the mass media and harsh criticisms by major political parties, in addition to the threats by the two multilateral agencies, we are not yet so pessimistic, even though it is now almost one month after the high-profile scandal was first disclosed to the public.

The IMF and the World Bank are strongly demanding that the findings of the investigations by independent auditors PricewaterhouseCoopers be fully disclosed to the public and that all those found to be involved in the scandal be brought to court. Compared to their usually subtle warnings of the past, the two institutions appear to mean business this time.

The magnitude of Baligate is such that Neiss' warning of a worse-case scenario is not an overblown statement of the likely devastating impact of the case. First of all, the scandal is seriously threatening to subvert the World Bank and IMF-led multibillion dollar bailout program. Aid suspension by the two agencies, which set opinion for all other foreign donors, would most likely lead to the withdrawal of most international support for the country.

Baligate has damaged the economy, as can be seen in the weakening rupiah, and has tarnished the image of President Habibie, as demonstrated by the mounting public demand for his resignation.

Those who tend to underestimate the impact of the scandal and try at all costs to sideline it simply as an ordinary criminal and civil case seem to be oblivious to the blunt fact that Baligate is actually a window on how appalling is the actual state of private and public sector governance. That such a huge, blatant embezzlement of state funds occurred after the economy hit rock bottom shows that very little has changed.

The scandal once again laid bare all sorts of bad public and corporate governance, loudly proclaiming that corruption, collusion and nepotism -- the underlying causes of the economic crisis -- remain the hallmarks of the government and the private sector. A government with such characteristics obviously cannot survive much longer. A worsening economic condition would bring such a bad government down, as it did with the Soeharto regime, since it is the framework of laws, rules, ethics and code of conduct that is the most crucial determinant of a country's economic progress and its degree of social cohesion and decency.