Change of Fortune Tears at Indonesians’ Fealty

For 30 years, Indonesia could do no wrong in the eyes of the international business community.

It was Southeast Asia’s most powerful playmaker, a model of economic development and political stability, a haven for foreign investors who came to praise President Suharto’s wisdom.

While times were good, Indonesians--and foreign investors--were willing to overlook a lot: the $40-billion Suharto family fortune built on skimming and nepotism, the lack of political development and democracy, the feudalistic style of a leader who ruled as part king, part CEO.

Indonesians and investors were, after all, reassured time and again by the World Bank and others that Suharto’s Indonesia was sound economically and poised for continued economic growth.

So now, as the economy suddenly unravels and social unrest threatens, shopkeeper Lofti Sastro finds himself slightly shocked and saddened to assess the performance of the president and the local currency with the words, “Suharto broken, rupiah broken.”

It all happened so fast that he feels more confused than angry. He does not understand how highly paid international bankers could say one week that Indonesia was as healthy as an ox, the next that it was in economic tatters, he said Saturday.

*

What he does understand is that his food bill has tripled in two months, his son was laid off from a factory job and his future looks very uncertain.

Like most Indonesians, he has grown tired of Suharto and wishes the president would just fade away. He says this with reluctance because he loves his president for many things--lifting the nation out of poverty, raising the education standards, giving Indonesia a leading voice in Southeast Asian affairs--but in the end, he noted, “32 years is a long time to be president. Too long.”

Suharto, 76, doesn’t see it that way.

On Tuesday, he will win a stacked election in the 1,000-member People’s Consultative Assembly for a seventh five-year term and begin anew his battle with the International Monetary Fund to rescue Indonesia--the world’s fourth most populous country--from economic, and perhaps social, disintegration.

The 11-day assembly that culminates with his “election” is widely viewed by Indonesians as a charade, designed largely to endorse whatever Suharto wants it to endorse.

Nonetheless, Suharto, a onetime bank clerk who came to power as an army general, is sparing no precaution to ensure that the 20 million residents of greater Jakarta do not ruin the festivities.

Assemblies of more than five people, including weddings, are banned through March 18, and 25,000 military troops are on duty in Jakarta, under the command of Suharto’s son-in-law, Lt. Gen. Prabowo Soemitro Subianto.

Schools and universities are closed, and a magazine editor has been called in for questioning after depicting Suharto as the king of spades and writing: “No matter how many times we turn the card, President Suharto will still be elected.”

*

Thousands of university students in Jakarta and scattered cities have ignored the ban and held daily, peaceful protests on campus, calling--as they have for years--for democracy and for Suharto’s resignation. Army troops ring the campuses but make no attempt to interfere. Nor have they attempted to stop countryside riots directed primarily against Chinese shopkeepers.

The riots, which claimed five lives, stopped suddenly two weeks ago as if on command, leading to speculation in Jakarta that the government condoned, if not organized, the disturbances in order to divert attention from Suharto’s troubles and justify Suharto’s plan to give himself what he calls “special powers,” as yet undefined, to deal with the economic crisis.

Despite the riots, this is turning out to be an oddly peaceful election by Indonesian standards.

Last May, for instance, the elections that gave Suharto’s Golkar party a landslide victory claimed 200 lives as police clashed throughout the country with demonstrators demanding democratization. And though the country might be simmering today beneath the surface, Indonesians are carrying on with a remarkable sense of calm and normalcy.

In Jakarta, Southeast Asia’s most populous capital, hotels, restaurants and shopping malls are enjoying steady, if not booming, business.

Traffic is in its normal state of gridlock. Soldiers are keeping out of the way, and “Devil’s Advocate,” starring Keanu Reeves and Al Pacino, is drawing well at the Hollywood2. On the streets there are no food lines, no beggars, no hint of tension.

“Everything went so well for so long, I’m not sure the full extent of what bad shape the economy is in has really sunk in yet,” one government official said. “There is still a feeling someone--the IMF, our neighbors, the West--will come to the rescue, or Suharto will pull a rabbit out of the hat.”

Exactly what Suharto’s game plan is mystifies even the most seasoned Asian and Western diplomats.

Three times he has pledged his commitment to the 50-point reform package demanded by the IMF in exchange for a $43-billion international rescue package. Each time he has used mirrors and half-steps to avoid full compliance, contending that the IMF antidote is not working.

*

“If you do not fully follow the doctor’s prescription,” said Derek Fatchett, a European Union emissary, “and, instead of three pills during three days, you take only one pill in three days, you cannot say the prescription is not working.”

The IMF is scheduled to make a second, $3-billion payment to Indonesia on March 15, but the organization has decided to postpone that target date for the funds because of the elections and uncertainty over Suharto’s commitment to economic reforms.

Indonesia’s finance minister, Mar’ie Muhammad, said any delay will adversely affect all regional currencies.

Clearly, economists say, in his “yes-no-maybe” responses to the IMF and Indonesia’s creditors, Suharto is playing a poker hand, hoping to negotiate less-stringent conditions and keep the family fortune--as well as his reputation--intact. But while he fiddles, Indonesia is in danger of burning.

The rupiah has lost 70% of its value, Indonesia’s private and public sectors owe $127 billion, unemployment and prices are soaring, and virtually every major company in Indonesia is technically bankrupt. Of 280 stocks listed on the Jakarta Stock Exchange, only nine are valued at more than $1.

When Thailand’s economy bottomed out last summer, Indonesia, then still flying high, contributed $1 million to help out the beleaguered Bangkok government.

With Thailand now committed to IMF reforms and having taken steps toward recovery, former Prime Minister Chuan Leekpai stopped off in Jakarta last month and, as a sign of the times, returned the favor: He promised Suharto a delivery of free medicine Indonesia could not afford.