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ASIET NetNews Number 19 - May 24-31, 1998
Political/economic crisisStudent protests pop up again in Indonesia Students continue with demonstrations
Human rights/lawAgriculture could rejuvenate economy Deal shores up Habibie's role Soeharto son quits board of fading empire Into the void No tears as the Suharto empire crumbles Habibie under pressure from new protests Ground zero economy
PoliticsTop cops abducted anti-govt activists Nine university students missing Trisakti students intimidated, afraid to testify 137 dead in crackdown by army, says report
Arms/armed forcesFocus shifts to wealth of Habibie
Economy and investmentOur men in Jakarta Military chief faces down one threat
Suharto family's business links IMF assesses new Indonesia government
| Democratic struggle |
Jakarta -- Anti-government student protests flared again in Indonesia on Thursday, one week after the army evicted demonstrators from the Parliament complex in Jakarta.
Several hundred university students showed up at the main gate Thursday morning as President Habibie met inside with Parliament leaders to discuss his plans to reform the political system.
Habibie took over the top job on May 21 after a wave of protests and riots forced then President Suharto to resign last Thursday after 32 years of authoritarian rule.
Habibie has promised new elections after reforming laws governing polls and political parties.
But the students said they don't trust Habibie, a longtime friend and aide to Suharto, to oversee that process.
The students carried banners that said "We're sick of slogans from state leaders," and wore head bands that read "Total Reform," as they chanted "Bring down Habibie right now."
Three student leaders tried negotiating with police commanders to allow them inside the Parliament grounds, but they were refused.
Dozens of local journalists, meanwhile, protested outside the Information Ministry demanding greater press freedoms.
Under Suharto, criticism of the government was rarely permitted and some journalists and publications were banned.
Other protests reported in Java
In the eastern Javanese city of Surabaya, about 2,000 students have occupied the grounds of a local government building for the past three days demanding Habibie step down.
"We will stay here until a special session of the People's Consultative Assembly is called," said Ida, a student from Unitomo University.
The assembly, made up of 1,000 legislators and government appointees, has the power to choose a new president.
In the central Javanese city of Yogjakarta, about 200 students rallied Wednesday. As more than 2,000 students were ejected from the Parliament in Jakarta last Friday night, many vowed to return, saying that protest was the beginning of a campaign for completely changing the political system.
On Wednesday, a delegation of 20 students from two Jakarta universities met separately with leaders of the ruling Golkar Party and the armed forces faction in the House of Representatives. Also, 52 lawyers filed a class action suit in Jakarta's Central District Court on Wednesday against all members of the assembly appointed for the 1998-2003 term, the Jakarta Post said Thursday.
The suit contends their memberships are invalid because they were not fairly elected, and seeks to nullify any decrees, including the appointment of President Habibie, they passed.
Jakarta -- Students in many cities continued rallying for reform yesterday, with most demanding a fresh presidential election through a special session of the People's Consultative Assembly (MPR) and the trial of former president Soeharto for alleged abuses of power.
In Yogyakarta, thousands of students held separate rallies in university campuses, expressing gratitude for Soeharto's resignation but calling for an investigation into the alleged wealth of the former president. "Reveal, in a transparent manner, how Soeharto amassed his wealth," said one student in a rally at Indonesian Islamic University.
The same call was made separately by a group of 300 students who called themselves the People's Committee for Reform at Gadjah Mada University campus. The students said Soeharto must not be allowed to wash his hands of the policies which brought about the crisis now facing Indonesia.
"Don't let him go without facing the law," said one student in the demonstration that ended peacefully after two and half hours.
Also in the city, a group of 1,000 members of Yogyakarta Moslem Students League held a rally calling for an extraordinary session of the People's Consultative Assembly (MPR) to demand Soeharto account for his leadership and his alleged wealth.
The group also demanded that the "transitional administration" under President B.J. Habibie hold general elections within three months. They said the current MPR was a product of political engineering, and that a fresh election was needed to establish a better government.
In Surabaya, East Java, 200 students from four universities marched to the local legislative council to demand a special MPR session and legal action against Soeharto.
Calling themselves "Children of Reform", the activists said their fight had not ended with Soeharto's resignation and Habibie's appointment. They said they would continue to press for a special session and "total reform."
"A special session would be the constitutional way to transfer power, because Soeharto would then have to account for his work during his time in office," said one of the students.
In Semarang, the capital of Central Java, hundreds of female students from various universities gathered at Simpanglima Square to express gratitude for "national unity, and the peaceful and orderly transfer of the national leadership. " The students, Moslem girls wearing green veils and headbands emblazoned with "KAMMI" (Association of Moslem Students Action Front), began their rally at 11 a.m., chanting Allahuakbar (Allah the Greatest) and shalawat (praises for Prophet Muhammad).
They brought posters and banners which read: "Praise be to Allah, Soeharto resigns." The students dispersed peacefully an hour later.
In Medan, the capital of North Sumatra, around 5,000 members of the Nationalist Students Movement (GMNI) and 35 non-governmental organizations grouped in an alliance called Pro-Democracy Solidarity, held a rally at the provincial legislative council.
Orating speeches and waving banners, the youths demanded that an extraordinary session of the MPR be convened as soon as possible. Habibie's government was transitional in nature, born in an emergency, and was not in line with the Constitution.
The students also demanded that Soeharto be held accountable for mistakes made during his administration, and that the MPR investigate his alleged wealth.
The students then called on the MPR to initiate total reform in political, economic legal and social and culture fields.
The protesters made legislators Hazrul Azwar, Leo Sukardi and Aminullah Purba join their demonstration, then chased them when they attempted to leave to say their Friday prayers at the mosque.
One of the student leaders and lecturers from St. Thomas Catholic University later apologized to the Moslem legislators.
| Political/economic crisis |
John Mcbeth, Jakarta -- Already feeble at the start of 1998, Indonesia's ability to feed its 200 million people has weakened further in recent months. The triple whammy of a severe drought, an economic slump and political turmoil have exposed fundamental flaws in the country's strategy for agriculture. The net result: 1.5 million Indonesian families face acute food shortages and malnutrition (although not famine), says an April report published jointly by the World Food Programme and the Food and Agriculture Organization.
This is a far cry from 1984, when then President Suharto was awarded the FAO World Food Prize for pulling his country towards rice self-sufficiency. Over the past decade, however, Indonesian agriculture has been in steady decline. At the root of the problem, claim critics, is a government policy that ignored farming in favor of export-oriented manufacturing, big-ticket infrastructure projects and costly hi-tech experiments.
"We have ignored our own strength," says Bungaran Saragih, director of the Centre for Development Studies at Bogor Agriculture University.
That is changing fast. Even before the May drama that ended Suharto's 32-year rule, it had dawned on senior government officials -- including B.J. Habibie, who has now succeeded Suharto as president -- that agriculture could help rejuvenate Indonesia's limp economy. Indeed, some argue agriculture could well become the only genuine growth industry in the three years that Indonesia is likely to take to get back on its feet, reports the latest edition of the Far Eastern Economic Review published Thursday.
"Agriculture should be the backbone for future growth," Ginandjar Kartasasmita, the coordinating minister for economy, finance and industry, told the Review recently. "We have to draw up a new strategy, particularly in horticulture. In the past we paid too much attention to manufacturing."
That attention will come none too soon. After growing 4.7% in 1997, the economy is now in dire trouble. Credit Lyonnais Securities Asia forecasts a vicious contraction of as much as 9% this year, with further shrinkage in 1999. Domestic demand, too, is headed downwards -- to a 13.5% contraction in 1998, compared with 4.4% growth in 1997 -- Credit Lyonnais Securities Asia predicts.
Focusing on agricultural development has several advantages. First, it will create jobs -- a particularly beneficial side- effect, as up to half of Indonesia's 88 million workers are expected to be either jobless or underemployed by the end of 1998. It's also not as capital-intensive as some manufacturing industries, and it doesn't depend as much on foreign capital, currently in very short supply. A healthier farm sector could also help reduce Indonesia's import bill, now swelling with food purchases. Food imports have been rising for some time. In 1996, the most recent year for which hard numbers are available, they made up 8% of total imports, up from 6% more than a decade earlier. Purchases are estimated to have continued growing in 1997 and are forecast to do so again this year. Indonesia is already a major rice importer, and buys as much as a quarter of the world's traded rice. Dependence on expensive corn imports, meanwhile, has led to an 80% contraction in the chicken industry, which uses corn for feed. And purchases of soybean have quadrupled the price of tempe and tofu -- two staples that have been transformed from "poor man's beef" to rich man's delicacies.
Increasing rice output will be hard. Agriculture Ministry officials expect this year to produce only 45 million metric tons of paddy -- well below the initial target of 53 million tons, and probably the smallest harvest since the mid-1980s. Other experts believe the real figure will be closer to 40 million to 42 million tons. Once milled, paddy produces only about two-thirds of its weight in grain.
Suharto's growing impatience with the government's failure to boost rice production, and his concern over the decline in agricultural land, led to his approval three years ago of a $2 billion to $3 billion rice-development plan in the swamplands of Central Kalimantan. So far, only 10% of a targeted 400,000 hectares is in production, and there are doubts about the technical viability of the project, which isn't due for completion until he year 2007.
Corn is another headache. When the price of imported feed soared in mid- January, many small and medium-sized poultry farmers went out of business. Officials expect the chicken industry to recover to 50% of pre-crisis levels by mid-year, but that still leaves agricultural planners pondering long-term solutions. Indonesia currently grows about 6 million tons of corn annually - well short of its potential -- compared with a consumption rate of 7.5 million tons.
Clearly, the old strategies that brought about rice self- sufficiency lost their relevance as farmers wanted to diversify into other crops, says an independent Western agricultural economist. What is needed now, he contends, is a complete retooling of agriculture. That's a view shared by almost everyone. "Indonesia's agriculture has tremendous scope for increasing productivity and expanding output, but that potential can only be achieved under agricultural institutions and policies different from the ones prevailing today," says Jorge Garcia- Garcia, a specialist on agriculture with the World Bank.
Greg Earl, Jakarta -- President Habibie appears to have fended off attempts to quickly replace him with a deal yesterday to delay any meeting of the country's presidential election college until at least the end of this year.
The breakthrough for the new president came as the dominant political group of the Soeharto era Golongan Karya (Golkar) split ushering in a period of extreme political volatility with up to a dozen new parties already mooted this week.
The House of Representatives Speaker, Mr Harmoko, yesterday announced, after a meeting with Dr Habibie, that a consensus had been reached not to hold a meeting of the People's Consultative Assembly (MPR) until a package of new election laws had been drafted in preparation for a new election.
Radical reformers and Habibie opponents had been manoeuvring for a fast special MPR session, which could have replaced Dr Habibie and would have diverted attention from restoring the health of the country's economy.
The Harmoko approach was endorsed by a member of the opposition ginger group that won Dr Habibie's support for widespread political reforms at the weekend and is now working towards a series of reform laws.
A prominent lawyer, Dr Buyung Adnan Nasution, said he favoured delaying a special MPR until reforms were pushed through under the Habibie Government rather than risking an unpredictable new president emerging from the MPR.
A leading opposition figure, Amien Rais, agreed saying the existing members of the MPR body were appointed under the Soeharto regime and had no credibility to choose new national leaders.
But the result is that Dr Habibie has a clear timeframe now to put his stamp on the country and possibly win public credit for overseeing a reform program that has already surprised many observers.
Mr Harmoko said the special session would be held by the beginning of next year but some time after that would still be needed for the general election, which conflicts with the demands by anti-Habibie figures for a special session within two weeks and a general election before the end of this year.
The delay has made it harder for the dominant Golkar Party to retain a major role in Indonesian politics with a key faction this week splitting away to form a new party.
Some political analysts had thought the remnants of the Soeharto establishment might coalesce around the well-organised Golkar to form a conservative party which could still play a dominant role in the country's politics. But in a development which underlined the fragmentation now under way a former Soeharto women's affairs minister, Mien Sugandhi, announced she was leading a breakaway faction after the Golkar business wing was reported to be considering establishing itself as an independent party.
The developments occurred as International Monetary Fund officials consulted a wide range of opposition groups yesterday and top Asia official Hubert Neiss said he believed the new government had already embarked on positive reforms.
Meanwhile, the central bank, Bank Indonesia, was last night set to announce it was taking management control of Indonesia's largest private bank Bank Central Indonesia in a dramatic escalation of the collapse of the banking system.
Louise Williams, Jakarta -- President Soeharto's richest son, Mr Bambang Trihatmodjo, resigned from the board of his Bimantara business empire yesterday as scores of protesters outside the company's headquarters demanded trials for the Soeharto clan.
Public pressure is mounting both inside and outside Indonesia for retribution for the nepotism and corruption which handed relatives and friends of former president Soeharto lucrative business opportunities during his 32-year rule.
A United States State Department spokesman said the Government was considering an inquiry into the Soeharto family's assets in the US in case the Indonesian Government or individual citizens tried to claim them.
Contracts signed with Soeharto family partners by foreign companies - including British Aerospace, Rolls-Royce, PowerGen of Britain and RTZ - were also coming under scrutiny as officials of the new Habibie Government ordered reviews of past tender bids.
As about 50 noisy protesters shouted outside the Bimantara building, Bambang and Mr Indra Rukmana, the husband of the eldest Soeharto daughter, Mrs Siti "Tutut" Hardiyanti Rukmana, announced their resignations to the board.
Shares in the Bimantara Group, which has interests in the media, chemical and property, are trading at one-third of their value two months ago, and Bambang told reporters he was resigning because of the group's falling profits. However, he made no mention of whether he would sell his 38 per cent stake in the company. Bambang is the wealthiest of the Soeharto children, with a personal fortune estimated at more than $US3 billion ($4.8 billion). The Indonesian Government moved to seize control of the management of Bank Central Asia (BCA) - owned by Indonesia's richest man, Mr Liem Sioe Liong, and two of Mr Soeharto's children - after a 10-day run by depositors pushed it to the brink of collapse.
The Central Bank governor, Mr Sjahril Sabirin, called on the public to stay calm and end excessive fund withdrawals from the battered banking system. He revealed that the Government had already pumped close to $US2 billion into the banking system this month alone. The BCA, once the jewel in the crown of Mr Liem's business empire of food, cement, trading and transport companies, has a nationwide network of 8 million customers but became the target of mob violence earlier this month when mobs rampaged through Jakarta and other cities demanding Mr Soeharto's resignation. A minority share of BCA is owned by Tutut and her eldest brother.
The run on the Indonesian banking system saw 17 per cent of all domestic deposits withdrawn last week and the percentage may reach as high as 40 per cent by next week. The Indonesian Government guaranteed all deposits earlier this year in an attempt to stabilise the over-supplied and under-capitalised banking sector, which means it is now committed to printing vast sums of money to pay out depositors, pushing the economy dangerously close to hyperinflation.
Allowing BCA to collapse with millions of depositors still unpaid could trigger a new round of public opposition to the Habibie Government, which has been in power for less than two weeks.
"Hyperinflation is just around the corner," one analyst said. "They should put a stop to this and just close the bank down."
But another said: "They are probably going to end up printing money to keep banks like BCA open. While it may not be the right course, President Habibie may not have much choice."
By John McBeth, Michael Vatikiotis and Margot Cohen in Jakarta -- The Javanese King has gone, long live the President -- but how long will B.J. Habibie remain president?
The answer lies in the interplay of forces revolving around the three main players in the post-Suharto era: armed-forces chief Gen. Wiranto, Coordinating Minister for Economy and Finance Ginandjar Kartasasmita, and Habibie. They, in turn, are in a race against time to establish legitimacy before the newly potent student movement runs out of patience in its quest for reform.
In the confused early dawn of this unexpected new era, it's not at all clear what the outcome might be. What is clear, though, is the magnitude of the vacuum left by a leader whose relentless accumulation of power over three decades has left Indonesia with no strong political institutions or mechanisms to fall back on.
The political upheavals that led to his overthrow have exacerbated Indonesia's economic problems and stalled the rescue programme led by the International Monetary Fund. The economy is expected to contract 10% this year, unemployment is already estimated at 14 million, or 15% of the workforce, and inflation is running at 60%. Privately held foreign debt is estimated to be as high as $70 billion and the banking system is collapsing. The economy's downward spiral could jeopardize an orderly transition to a stable new leadership. At the same time, the unresolved leadership questions could prevent a real economic recovery. "We have to recognize that the economic measures will only work and be really effective if there is political stability," IMF Asia Director Hubert Neiss said on May 26 after arriving back in Jakarta to explore ways to revive the rescue programme.
Relief that Suharto's May 21 resignation ushered in a peaceful transition is giving way to the realization that Indonesia's agonizing climb out of the political and economic void has only just begun. Can it manage both at the same time?
This is posing a frustrating dilemma for those who struggled to bring about political renewal. "Habibie represents the old regime, so we want change as soon as possible. Yet everyone understands there should be special consideration to deal with the economy," says businessman-activist Arifin Panigoro, sitting in his living room, from where he kept student protesters fed and watered during their occupation of parliament.
The broad coalition of students, intellectuals and professionals who helped push Suharto out of office want to fashion the framework for a multiparty democracy within a year, followed almost instantly by parliamentary and even direct presidential elections. But they fear economic hardship will distract the government from the task of building a new political system, delaying elections.
Certainly, Habibie's lack of popular legitimacy and elite support are not conducive to a stable political situation, or even prudent policymaking. Although key opposition figures like Amien Rais seem willing to allow the new president a grace period, many of the student groups who spearheaded the campaign against Suharto are bent on pursuing "total reform." Translation: Dump Habibie too. "Habibie is part of the Suharto regime," says Annas Alamudi, a 21-year-old activist at the University of Indonesia. "Although he promised to make changes in the electoral laws, we are sceptical that he will make any real changes in the system."
Habibie is balanced at the top of an awkward triangle of power. He is caught between dependence on the military led by Wiranto and the key economic ministers led by Ginandjar. Neither man has demonstrated unequivocal support for the new president. Indeed, the military has privately signalled that its tolerance of Habibie derives only from the constitutional manner in which he succeeded Suharto.
Gen. Wiranto, who is also defence minister, is popular because of the perception that he tolerated the student protests and prevented clashes with the security forces. He has also promised to punish soldiers found guilty of shooting dead six demonstrators. And he has consolidated his authority, mainly through the swift removal of Army Strategic Reserve commander Lt.-Gen. Prabowo Subianto, Suharto's son-in-law.
Although engaged with civilians behind the scenes in searching for a peaceful transfer of power, the military is reluctant to fill the void Suharto left behind. It also has an innately cautious approach to political reform. The military's head of social and political affairs, Lt.-Gen. Bambang Yudhoyono, says he believes that reform is the answer to the country's problems. But he also urges caution, saying a national consensus is needed to support any changes to the political system. The armed forces have been deeply involved in the nation's political and economic life under the doctrine of dwifungsi or "dual function." The army has yet to respond to demands that its special position be changed -- but it is unlikely to accept a diminution of its role.
The second important centre of power is Ginandjar, who heads the economic ministers, made up mostly of holdovers from Suharto's cabinet. He represents policymaking continuity, which is probably an advantage in dealings with the IMF. But his association with Suharto's corrupt regime also raises concerns about the revival of cronyism.
Ginandjar is thought to have presidential aspirations and has called for new elections to be held "as soon as possible." He told a press conference on May 23: "One thing is for sure, we have to have a new government with a new mandate from the people." Most analysts saw his statements as a bid to woo reformers and the IMF alike. Seated on either side of him were members of his new economic team, the nucleus of a 36-member cabinet Habibie had named the day before. Ginandjar's apparent pre-emptive strike infuriated Habibie, says an aide to the president. But it also forced him to make a commitment to elections "as soon as possible" himself. Habibie had at first appeared to be dragging his feet on the political-reform issue. In his initial policy statement on May 21, he referred only to "gradual" reform and seemed to be asserting his constitutional right to remain in office until 2003.
Habibie, Indonesia's first non-Javanese president, became active in politics only after Suharto asked him to head the Indonesian Association of Muslim Intellectuals, or ICMI, in the early 1990s. Since then, Muslim activists have seen him as a vehicle for pushing a new political order -- one less reliant on the military and reflecting more fairly the interests of Muslims and non- Javanese. As a protege of Suharto, Habibie seemed a good stalking horse for change. Now, he brings a mixed bag of progressive and conservative political actors to centre stage, but the Islamic background of many of his followers worries the ethnic-Chinese minority and many non-Muslims.
Given his background, scepticism about the new president is hardly surprising -- despite positive early moves like the release from prison of opposition politician Sri Bintang Pamungkas and labour leader Muchtar Pakpahan. Habibie's failure to recognize the sense of urgency behind reformist demands has reinforced widely held doubts about his political skills. "This guy just doesn't have any political sense," says Sarwono Kusumaatmadja, a former environment minister and one-time secretary-general of the ruling Golkar party. "He has a marvellously clear tunnel vision. He has a habit of uttering bloopers without being asked."
Most Indonesians have an even murkier vision of what politics is all about. The vast majority of the population has never been allowed more than fleeting participation in Indonesia's political life over the past 32 years. "This will be real politics for the first time," notes a senior Western diplomat. "Ambitious people competing for influence in an atmosphere where before it was impossible. The chance of that playing out smoothly is zero."
Sarwono has similar qualms. "People won't have difficulty in identifying the moral principles," he says, but when it comes to the nuts and bolts of politics, "no-one knows how. We've been thoroughly brainwashed and misled."
But Indonesia needs a new political system before elections can be held. That will require extensive revisions to five pieces of legislation, covering the structure and composition of the House of Representatives, the People's Consultative Assembly, mass organizations, political parties and general elections.
Emil Salim, a former minister and a voice of moral authority throughout the political crisis, insists that many of these issues have already been debated within the government. "We're not starting from ground zero," he says. That is certainly true with the all-important electoral law. A confidential study by the state-funded Institute of Social Sciences is already being considered by parliament as a possible basis for new electoral legislation.
Commissioned by Suharto in 1994, the study (a copy of which has been seen by the REVIEW) suggests a combination of district voting and the existing system of proportional representation. It also lays down residency criteria for candidates and limits the presidency to two five-year terms -- a proposal the military leadership has endorsed. "In principle, all the points were accepted" in late 1996, says the editor of the study, Mochtar Pabottingi, "but Suharto said it wasn't time yet."
The study's authors had envisaged the government embarking on a phased reform programme beginning with the May 1997 parliamentary elections and culminating in 2007 with an end to military representation in parliament and the lifting of restrictions on the number of political parties. "What we want to do now," smiles Pabottingi, "is crush 10 years into six to 12 months."
The contours of Indonesia's post-reform political landscape can only be guessed at. But one organization seems doomed to disappear in its present form: the ruling Golkar machine. Forced to play on a level field at last, and bereft of Suharto's patronage and government largesse, only a third of Golkar's 325 legislators would win votes in a fair election, analysts estimate.
Some analysts also see a dangerous combination of political opportunism and social pressure obstructing the path to economic recovery. University of Indonesia economist Sri Mulyani Indrawati fears the Habibie government, eager to court popularity, will pursue expansionary macroeconomic policies that could tilt the country towards hyperinflation. "The political position of this government is that they have to please people," she says.
The influence in the cabinet of populist figures like Cooperatives Minister Adi Sasono could see the introduction of government-funded schemes to help small and medium-sized enterprises. Meanwhile, the Islamic constituency may have to be pacified with a programme to direct business into indigenous Indonesian, or pribumi, hands.
Whether Habibie stays through to early elections or is felled in a power struggle, the fact is that post-Suharto Indonesia is still evolving, which makes stability hard to see on the horizon. And it may well be that Indonesia's youth will have to go onto the streets again -- if only to remind the elite that the time for dithering over reform is over.
Salil Tripathi, Jakarta -- The highway stretched to the horizon. It was empty save for some shattered glass, burned tyres that had disintegrated into a heap of ash, and scattered bricks. The traffic lights at the toll plaza flashed amber; the tollgates were raised skyward in abject surrender.
Snaking from Jakarta to its western suburbs, this was no ordinary toll road; it is owned by Siti Hardijanti Rukmana, daughter of former President Suharto, through her company Citra Marga Nusaphala Persada. As Jakarta burned on May 15, a cheerful toll- collector enthusiastically waved through, free of charge, the few cars that zipped along the highway. Further along, newly jobless village ruffians had set up their own barricade and were collecting an arbitrary toll, mocking the Suharto-family monopoly. For the moment, at least a part of the multibillion- dollar Suharto money machine had screeched to a halt.
Once order had been restored following Suharto's resignation, however, the toll collectors were back in business, the makeshift barriers dismantled. But for how long will Suharto family members be able to cling to the assets they built up during his rule?
"Removing Suharto is a simple matter -- relieving the children of their businesses will not be very easy," warns Michael Backman, an Australian economist who has written extensively about Indonesia.
An immediate expropriation of the family's wealth is unlikely, no matter how popular that idea may be among Indonesia's poor, who see the First Family wallowing in the fruits of corruption and nepotism. Among the reasons are the opacity of their business links and the implicit political protection Suharto's successor, President B.J. Habibie, guarantees. Not only is Habibie beholden to Suharto but also 20 of the 36 ministers in his "reform" cabinet served in Suharto's last administration.
Yet there is little doubt that Suharto Inc. will eventually unravel, given the family's inevitable loss of political clout and the iron laws of economics. Foreign investors and Indonesian tycoons alike will no longer feel it necessary to team up with the Suharto children to get ahead in business, and may try to pull out of current relationships. Nor can the family expect to win more juicy government contracts: Officials are already starting to abrogate existing ones. And, like so many other Indonesian companies, the Suharto children's businesses may simply not be able to survive their crushing debt burdens. But don't expect the country to sport a modern, transparent economy any time soon: Its ruling class is teeming with politicians, bureaucrats and generals who are keen to build their own empires. "The problems of collusion, nepotism and corruption are not yet over," observes Syahrir, a Jakarta-based economist.
Indeed, Habibie's own family empire, estimated to be worth about $60 million, extends into chemicals, construction, transport, communications and real estate, notes Backman. (Those businesses include several joint ventures with Suharto children.) And other key politicians, including Ginandjar Kartasasmita, newly reappointed as coordinating minister for the economy, finance and industry, and Hartarto Sastrosoenarto, coordinating minister for development and national reform, have seen their families' fortunes grow while they have been in office, Backman adds.
But their inroads into business pale next to those of the First Family. Although Suharto himself doesn't have any known, direct business interests, his six children, half-brother Probosutedjo and cousin Sudwikatmono wrapped their tentacles around a sprawling array of businesses during his 32-year rule. Their empire includes toll roads, satellite communications, broadcasting, car-making, power projects, domestic airlines, taxi services, water-supply utilities and trading ventures. The family has also formed joint ventures with prominent Indonesian-Chinese groups such as Salim and Barito Pacific and with the armed forces.
These ties form a tangled web. Suharto's eldest son, Sigit Harjojudanto, runs the Hanurata Group with his brother-in-law, Lt.-Gen. Prabowo Subianto, the ambitious officer whom armed- forces chief Gen. Wiranto demoted after Suharto's resignation. Second son Bambang Trihatmodjo controls the Bimantara Group, the biggest of all the known family businesses. Youngest son Hutomo Mandala Putra, or Tommy, runs Humpuss. Suharto's daughters are also in on the act. The eldest, Siti Hardijanti Rukmana, or Tutut, controls the Citra Lamtoro Gung Group, which includes the Jakarta toll road. Second daughter Siti Hedijanti Herijadi runs a finance company and chairs the Capital Markets Society of Indonesia, while youngest daughter Siti Hutami Endang Adyningsih co-owns Tutut's Citra group.
Few of the hundreds of family-owned companies are publicly traded, though, forcing analysts to guess at the Suharto clan's total worth. In 1996, SocGen-Crosby Securities estimated the family's business assets in Indonesia at about 11 trillion rupiah, or $5 billion at the then exchange rate. An estimate from the American Central Intelligence Agency puts the family's total wealth at about $30 billion.
Bankers believe most of the family's money has been transferred overseas -- to buy ranches, property in Singapore and negotiable instruments with private banks. Although Probosutedjo says all of the children are in Indonesia, well-informed sources say Tommy was in Singapore the week his father stepped down and that Sigit has been in London for some time.
Many of the Suharto businesses are classic rent-seeking activities: The children simply acted as middle-men, collecting money without contributing much. They injected little management expertise and capital -- but proffered free access to the corridors of power, making it easy to win government contracts and licences. Now, they face a backlash.
Most of Tommy's businesses -- the clove monopoly, the almost- defunct domestic airline, Sempati, and the Timor car plant -- fall into this category. The International Monetary Fund's bailout programme for Indonesia specifically demands that several of these monopolies should be opened to competition. Similarly, Bambang and Tutut supply state oil monopoly Pertamina's refined products to international markets, and own pipelines that distribute oil and gas within the country. In the last days of the Suharto presidency, parliamentarians demanded that these lucrative contracts be scrapped. Habibie may be complying: The mines and energy ministry has just called for a review of Pertamina's oil procurement and exports, which could put paid to Bambang and Tutut's sweet deals. And days after his father stepped down, Sigit's contract to supply water to the capital was cancelled by Jakarta's municipal government.
A former research head of a Jakarta brokerage says Tutut's toll- road business is particularly susceptible to takeover: The state owns the land, the investment is complete, the road is built and the traffic is guaranteed. What's more, the business is profitable. Moreover, Tutut's ability to secure new roads is now weakened, and the existing contracts diminish in value as they edge closer to their expiration dates. Her investment is relatively small, which might make it easy for someone to make her an attractive buyout offer.
Indeed, without the shade of the banyan tree that guarded them, the children are now uniquely exposed. Future business opportunities for the children will likely dry up. By law, most multinationals in Indonesia were required to have a local partner. And in Indonesia's impenetrable business environment, the Suharto name spelled access, prompting dozens of foreign companies to sign up with the family. A few examples: Lucent Technologies, Siemens, Freeport McMoRan, Edison Mission Energy and NEC.
In the post-Suharto era, though, being identified as one of the children's partners will likely be a liability. Bruce Gale, regional director of the Political and Economic Risk Consultancy in Singapore, says multinationals will be exploring ways to cut their ties, perhaps offering to buy out the children.
The family might leap at such proposals: The children's companies are swimming in debt. Wilson Nababan, president of CISI Raya Utama, a Jakarta-based credit-analysis firm, estimates that they could owe as much as 40 trillion rupiah -- $4 billion at current exchange rates. Local banks which have previously been strong- armed into providing seed capital to kickstart the children's businesses (and, later, working capital) aren't likely to write off the debts -- especially now that Suharto and the leverage he could bring to bear are gone.
Tommy's plan to assemble Indonesia's national car, the Timor, with help from Korean car maker Kia, epitomized the rampant cronyism that Suharto Inc. represented. The project has crashed, and the site of the planned car-assembly plant is no more than an empty parking lot. When Tommy sought loans of 750 million rupiah last year to build the plant, four state-run banks were expected to take the lead in its financing -- and did, offering 385 million rupiah. According to SocGen-Crosby, 12 private banks picked up smaller instalments. With his father no longer at the helm, even Indonesia's timid state bankers may summon up the necessary courage to call in Tommy's loans.
Overwhelming debt threatens to topple even the children's value- added companies, such as Bambang's Bimantara group, which has earned grudging admiration from consultants and brokers. The company hired skilled managers and engineers but still it faces daunting problems. In January, Hyundai Motors postponed indefinitely an expansion of its joint-venture car plant, citing poor market conditions. Bimantara was to make an advanced-model Cakra car, based on Hyundai technology. Meanwhile, Bambang's petrochemical plant, Chandra Asri, which makes ethylene and polypropylene, will find it difficult to survive because of a global glut of such products, business analyst Nababan says. World Trade Organization strictures against protective tariffs will merely complicate its task.
Even Bimantara's most promising venture, the television network, Rajawali Citra Televisi Indonesia, could be at risk. Manggi Habir, research director of Bahana Securities in Jakarta, gives the good news: "They are leaders in advertising revenue, they have good programming skills, and they enjoy good ratings from audiences." But the bad news is that advertising spending in Indonesia fell 90% from a year earlier in the first quarter, according to a Singapore-based advertising agency. Another reputable company in Bambang's stable is Satelindo, the mobile- phone operator in Jakarta. It gets top marks from executives who use its service, which is based on advanced technology from Deutsche Telekom, one of its foreign investors. But like other Indonesian businesses, it has huge foreign debts.
The family's banks are in trouble, too. The Suharto family owns 30% of the Salim group-controlled Bank Central Asia, Indonesia's largest private, unlisted bank. More than 120 branches of the bank were targeted for looting in Jakarta's recent unrest, and rioters smashed more than 1,200 automatic teller machines. Later, rumours that the bank was unable to pay depositors triggered a run of withdrawals. Industry analysts estimate its unhedged foreign debt to be about $1.5 billion -- enough to wipe out its balance sheet, Nababan says. BCA owns stakes in other Suharto family-owned banks that are saddled with bad debts.
Few Indonesians will shed tears over the Suharto children's losses. Ordinary people now bear the burden of the worst excesses of the Suharto era, which saw their average per-capita income drop to $300 after boosting it as high as $1,200. "It is back to Bangladesh for many of them, and that hurts," says Kevin Evans, research director at ANZ Grindlay's Securities in Jakarta.
Now many Indonesians are crying out for revenge. Gobind Dayaldas, an exporter who saw his $500,000 consignment of textiles looted in Chinatown during the riots, says adamantly: "The family must apologize to the people and return to the people what they took from them." He's not alone. Tuti Indrawati, a 20-year-old biology student who camped out at parliament in the days leading to Suharto's downfall, says: "There should be a public trial of Tommy, Tutut and Bambang. They've got rich and we got poor and now we Indonesians have to face the crisis and pay for their loot."
Still, the country has more pressing needs than bringing the Suharto children to justice. "This is not the time for a witch- hunt," stresses an Indonesian-Chinese banker, dismissing calls for a public trial and jail terms for the children. "This is the time to convince the rest of the world that we are a mature nation and that we can responsibly negotiate our way out of this crisis."
Louise Williams, Jakarta -- The Habibie Government scrambled yesterday to set a timetable for political reforms, including new elections next year, as fresh student protests flared in the capital and provincial cities.
After a 90-minute meeting with President Habibie and members of his Cabinet, the Speaker of the Parliament, Mr Harmoko, announced an extraordinary session of the 1,000-member People's Consultative Assembly would be called at the end of this year, or early next year, to draft political laws ahead of fresh general elections.
An immediate extraordinary session is a key demand of students and reform groups who say Mr Habibie and many members of his Cabinet are linked to the former Soeharto regime and must be replaced as soon as possible.
About 400 students yesterday returned to the Parliament building, where protests by tens of thousands of students forced Mr Soeharto to resign the presidency last week.
Tanks and soldiers barred entry to the Parliament as student chanted: "Bring Habibie down right now."
At other campuses students hung banners saying: "Habibie is the protege of Soeharto, reform has not yet begun", and the prestigious University of Indonesia announced new protests today after a one-week lull.
In the key industrial centre of Surabaya about 3,000 students have been occupying the grounds of a government building for three days, calling for the extraordinary session of parliament to be convened immediately.
But Mr Harmoko said the session would not be called until late this year or early next year, and even then more preparation time would be needed for general elections.
Mr Harmoko said preparation for elections could be completed by next year, but pro-reform groups are suspicious of the Government's control over the political process and want an immediate session of the Parliament to replace Mr Habibie and many other Soeharto loyalists before redrafting the political laws.
The 500-member Parliament is part of the 1,000 member People's Consultative Assembly, which is dominated by appointees of Mr Soeharto, and remains the nation's highest decision-making body.
"Habibie was hand-picked by Soeharto and has no power-base of his own. This transfer of power will not bring about the necessary reforms demanded by the public," said Mr Jusuf Wanandi, an analyst with the Centre for Strategic and International Studies.
"Habibie is a controversial figure without experience as a political leader, he is opposed by many influential groups in Indonesia. Military leaders are not happy with his presidency, they accepted it only because it was Soeharto's wish."
Mr Wanandi said a parliamentary session should be called within a month to elect a new president and vice-president of a transitional government mandated to prepare new general elections and revive the economy.
The ruling Golkar party, Mr Soeharto's power-base, showed its first signs of unravelling with the announcement that one faction has broken away to form a separate party.
One of Golkar's founding factions, the MKGR, has split under the leadership of the former minister for women's affairs, Mien Sugandhi.
"We established the MKGR party to anticipate change brought by the reform campaign and the planned establishment of new laws on political parties."
Present laws limit political participation to three government- approved parties.
Removing Soeharto was the easy part. Now Indonesia must grapple with his legacy of three decades of corruption and cronyism. Louise Williams reports.
Every day for the past two weeks Adi has stood in front of the charred shell of his electronics store in Jakarta's normally frenetic Chinatown district, the nauseating smell of burnt plastic lingering in the air.
"I have not even one single unit of my stock left, and I hadn't even paid for it," he says, gesturing at the destruction.
"So, all I have is debt. I am scared, but I can't run away because I have no money. We can't get any more stock because now suppliers demand cash. I can't reopen, so I have to sell my family possessions just to eat."
Adi's shop lies in the ruins of Glodok Plaza, formerly the teeming hub of Jakarta's electronics trade, in a commercial district that had turned over the equivalent of $17million a day. He and his friends shake their heads in disbelief, gathering more out of habit than with any sense of purpose.
"The rupiah is now meaningless. What can we buy with it?" asks another shopkeeper of the ailing Indonesian currency, his own shop optimistically offering a couple of salvaged rolls of electrical wire for sale.
Much of Chinatown remains boarded up, its shopkeepers unwilling or unable to reopen, after their shops were burnt and plundered by the mobs that raged through the capital for two nights and two days earlier this month. And as the smoke clears it is apparent the damage goes way beyond the estimated $400million lost when thousands of shopping malls, shops, supermarkets, homes, cars and motorcycles were torched.
The Indonesian economy, too, lies in ruins and the very real prospect of hunger and poverty poses a serious risk to stability as the post-Soeharto political power struggle is played out.
Overlaying the political machinations is the inevitable economic shake-out. The two groups that dominated the economy before the fall of Soeharto -- his political cronies and the ethnic Chinese business class -- are in retreat.
The managers of companies owned by the Soeharto children have fled, the stock market is dumping crony shares, crony contracts are being torn up and a run on banks this week saw long queues at automatic teller machines late into the night.
For the cronies there is the fear of reprisals as the public clamours for the punishment of those guilty of economic crimes. For ordinary Chinese traders the fear is different. The ethnic Chinese were the main targets of this month's riots because their dominant position in commerce and their relative wealth have made them the historical scapegoats during political upheavals. As the economy continues to decline they fear they may be hit again.
But, for the economy, the impact will be the same. The two groups that had the entrepreneurial skills and capital essential for economic growth are under threat. International investors, too, are nervous. Many threw in their lot with the Soeharto clan, enjoying the smooth progress through the bureaucracy that a single signature could ensure. "What we have, in effect, is ground zero," says Bruce Rolph, head of equities at Bahana Securities. "The economy as we knew it has been largely wiped out. We have a banking system that is almost non-existent; we have a property sector that is near worthless. Shares in companies don't have any value, because there is no equity left, so they are more like warrants on future recovery prospects.
"We have to accept that there has been no experience like this in any major country since World War II. This is not just a cyclical slowdown; this a structural break with the past."
So devastating are the new post-Soeharto economic forecasts that growth has been revised down to as low as minus 20per cent, a contraction that could push more than a quarter of Indonesia's 200million people below the poverty line and strip three-quarters off the spending power of those still in work. As a shortage of raw materials bites and working capital dries up, factories are locking their gates. The oversupplied banking sector, now relying on the Government to print more and more money to cope with the rush by depositors to withdraw their funds, must be rationalised.
Jakarta still looks like a modern high-rise city, but with private foreign debt at more than $125billion most of the new developments have not even been paid for. As the Jakarta City Council announced that idle city real estate projects might be turned into market gardens, and soldiers marched in to help till the land, foreign banks faced the reality that much of the outstanding debt will never be repaid. New unemployment projections range from 18million to 30million, out of a workforce of 90million, in a country with no social security safety net.
The destruction and looting of shops and warehouses and the disruption to transport systems have already pushed prices of basic goods up by 20 to 70per cent. One supermarket chain estimated it had only three to five weeks' worth of food stocks left in an economy that has run out of money to pay for imports. This week, the director of the Retail Traders' Association, Steven Sondakh, said he had asked the Government to consider making military trucks and troops available to guarantee food distribution.
"The situation is frightening and very sad; you can only imagine this happening in Africa, not in Indonesia where the country is so fertile and rich," he said.
A businessman warned: "We are now talking about people being able to afford only four basic foods: rice, oil, soya bean and sugar" - a daunting reality evoking memories of the hardships of the mid-1960s. It is true that the rapid decline of the Indonesian economy that began in August last year precipitated the spectacular political confrontation on the streets that forced the resignation of President Soeharto last week. Riots began in January over access to food as prices soared, and demonstrations were fuelled by calls for price decreases as much as for political reform.
The dramatic loss of confidence in an economy that had enjoyed more than 25 years of 7per cent annual growth and was once the darling of the international lending institutions has been largely blamed on the corruption, collusion and nepotism that Soeharto's unchallenged power bred.
But, as pressure mounts for the dismantling of Soeharto's political system, a parallel dismantling of his economic system is also under way.
During Soeharto's rule economic and political power were virtually inseparable. Those closest to the President enjoyed access to fabulously lucrative contracts without having to engage in competitive tender bids.
When Soeharto came to power in 1966 the nation's minority ethnic Chinese dominated commerce, just as they had done during the Dutch colonial period when native Indonesians were barred from doing business. Some of the Chinese entrepreneurs, such as the nation's richest man, Liem Sioe Liong, formed crony partnerships with Soeharto's indigenous political elite and the officers of the powerful armed forces, offering business acumen in exchange for business opportunities.
For many years economists have warned that the 180 or so giant conglomerates that controlled the economy under Soeharto were creating a dangerous gap between the super rich and the poor and were distorting the economy because small and medium-sized entrepreneurs could not compete against the preferential market access the cronies enjoyed.
On Thursday night, the central bank announced it was taking over the supervision of Bank Central Asia (BCA), the nation's largest private bank, owned by Liem Sioe Liong. It was a move unimaginable only a week ago.
For an entire week thousands upon thousands of depositors had queued for hours to withdraw their cash. Last week, 17per cent of all the money in the Indonesian banking system had been withdrawn. The BCA run may have pushed that figure up to 40per cent, according to Rolph. "The Government can only print more money. This is no longer people putting money under their mattresses; they are stuffing them with it," he said.
"The more money the Government prints, the higher the danger of tipping over into hyperinflation."
The Government has guaranteed all deposits in domestic banks in an effort to restore confidence, and has raised interest rates to more than 60per cent to attract deposits. The central bank refused to say how much it pumped into BCA this week, but money supply has risen from about 23trillion rupiah at the beginning of the year to 45trillion rupiah. The Government guarantee also raises the issue of why the bank's owners are not being forced to sell their assets to pay back small depositors.
The fate of the BCA is closely linked to Indonesia's largest food producer, Indofoods, which is part of Liem Sioe Liong's Salim Group. Rumours on financial markets yesterday suggested that the group, which has heavy foreign debts, was trying to borrow money from the BCA bank but was blocked by the central bank.
But big problems for Indofoods would immediately affect food availability. The group controls 96per cent of the instant noodle market, as well as a large share of the market in cooking oil and basic condiments such as soya sauce and tomato sauce.
"Everyone is scared of being accused of corruption, collusion and nepotism," said Mari Pangestu, an economist. "There is a big public demand for the trial of economic criminals. But if you move too suddenly in the interests of justice and then you don't have an alternative source of noodles, then you will have a disruption in the supply of basic foodstuffs." A business consultant, Laksamana Sukardi, said: "The cronies who ran the economy might have come back [after the riots] to survey their losses, but they are not even thinking of continuing their businesses. They are already prepared with money and houses overseas. They don't care about their houses and furniture here, they can just leave with no bags.
"We need replacement entrepreneurs, and it is very difficult to find them. My concern is that production is virtually at a standstill. There is a shortage of raw materials for the factories, managers have left, the retail traders have been burnt down and no-one is willing to put up working capital."
The International Monetary Fund flew back into Jakarta this week to reassess its $US43billion bail-out package. Sharp rises in fuel and petrol prices under the IMF package first triggered rioting in the Sumatran port town of Medan, which spread to Jakarta. Hubert Neiss, the fund's Asia-Pacific director, warned Indonesia's problems were so extensive there would be no quick recovery.
Many analysts continue to argue that the country's long-term economic prospects are good, particularly if a new legal and political system is established to regulate business and provide protection for investors. Indonesia has the abundant natural resources and large workforce for economic success.
But, over the next one or two years, says Rolph, "the Indonesian economy is going to go back to being a much more basic Third World economy than it was even a week ago, let alone six months ago".
In the end, it could be Soeharto's legacy that carries Indonesia through this treacherous transition. Under Soeharto, agriculture was transformed during the so-called "green revolution", when farmers were given access to new rice strains, irrigation, fertiliser and pesticides that greatly increased rice harvests and allowed the country to achieve rice self-sufficiency. At the same time, a highly successful family planning program kept population growth low. The education system and network of health clinics set up under Soeharto will come under pressure in the recession, but these gains cannot be wiped out overnight like the value of shares in Soeharto family companies.
For decades millions of Indonesians have been pouring into the cities in search of the opportunities the booming industrial economy was offering, and sending money home to the rural villages. Now those villages will be asked to absorb many of the urban unemployed.
Who will steer Indonesia through this terrible recession is not yet clear. Few are expressing faith in President B.J. Habibie, because of his close links with the cronyism of the Soeharto era.
But, says Laksamana, economic conditions are going to get much worse. "So we need a leader who has credibility and is respected by the people, so he or she can call on the people to be prepared for more suffering.
"If the leader does not have credibility then they will say, "Look, you enjoy your life, but if you ask me to suffer more, you can go to hell'."
| Human rights/law |
Jakarta -- Hot on the heels of an admission that its own soldiers are believed to have shot dead six student protesters, the Indonesian armed forces yesterday announced that senior police officers under its command were involved in the kidnapping of anti-government activists.
The admissions were a swift response to calls during the height of the demonstrations earlier this month for a transparent inquiry into the fatal volleys and the disappearance of several protest leaders.
According to Reuters, armed forces (Abri) spokesman Wahab Mokodongan said yesterday that a military investigation had identified senior police officers suspected of involvement in the kidnappings of anti-government activists.
He would not elaborate, saying investigations were continuing.
The armed forces, which includes the police, has been investigating allegations that several activists were abducted and tortured in recent weeks. The military had previously denied any involvement.
Yesterday, too, Abri chief General Wiranto told reporters that the courts- martial of eight soldiers and six officers suspected of being involved in the killing of six Trisakti University student protesters at the height of the unrest would start next week.
"I will order that the military courts begin as soon as possible.
"They will begin next week," he said.
He was speaking to reporters after a ceremony at which Lieutenant-General Prabowo Subianto, head of the army's strategic command (Kostrad), took up his new post as head of an army college.
The students' deaths during anti-government protests in Jakarta two weeks ago sparked a wave of rioting in the capital which helped to end 32 years of rule by Mr Suharto.
Even before the courts-martial, information on the shootings had begun flowing from the National Commission on Human Rights.
The Jakarta Post yesterday quoted a member, Djoko Soegianto, as saying that the police present at the Trisakti University incident did not use live ammunition.
Although this then placed the spotlight on the soldiers, the commission did not elaborate on its findings. The Post also reported that the commission had issued a statement which said that a number of people were still missing and that several witnesses had been threatened and now refused to give testimony.
The commission urged the military investigation team to guarantee the students' safety.
Nine students of Djuanda University (Unida), Bogor, West Java have disappeared following an incident on 9 May during which a police officer was killed. Initially, 29 were unaccounted for, but 17 have now returned home and three are under arrest. But nine are still unaccounted for.
The police officer died and another officer was beaten up when university students were holding free-speech forums supporting the movement for reform. The police therefore carried out a large number of arrests of students and local residents.
The Legal Aid Institute has set up a Defence Team for Unida Students, together with several human rights and legal aid groups in the city.
The team has called for the release of the three students now in custody or at the least for them to be placed under town arrest so as to permit them to continue with their studies.
The National Human Rights Commission said in a statement issued Wednesday that human rights had been violated towards students at Trisakti University who were being prevented from speaking freely. Several students at the university said they had been threatened by unknown persons who warned them not to give evidence to the Commission.
The Commission's secretary Baharuddin Lopa said they had gone to the university Tuesday to take statements.
"However, there were no meetings because they said they had received threats warning them not to give testimony to anyone,' said Lopa. This would prevent the Commission from getting a fully accurate picture of what had happened [at the time of the shootings on 12 May}.
The threats had been conveyed to the witnesses over the phone to their homes by persons who did not identify themselves. The Commission has reported this to the Military Police with a request that the witneses be given protection.
Lindsay Murdoch -- Three churches claim they have obtained evidence that Indonesian soldiers are responsible for the deaths of at least 137 people during a military crackdown in Irian Jaya over 18 months.
The report, presented yesterday to the Indonesian Human Rights Commission in Jakarta, detailed how at least 11 villagers were shot after returning from the jungle. About 90 of the deaths occurred this year, the report said.
Most of the deaths were caused by hunger and sickness following displacement from their homes by the military operation, launched after anti-Indonesian rebels took 26 people hostage in 1996.
The report by local parishes of the Catholic Church, Indonesian Evangelical Church and the Christian Evangelical Church, claims that Indonesian forces based in the province have burned 13 churches, 166 homes, two health clinics and 29 other buildings.
Churches are the only outsiders to keep in contact with the province's remote villages.
The report said the military crackdown was designed to re- establish government control after the hostage drama, during which the Indonesian armed forces were forced to withdraw from the region.
The armed forces regarded villagers as hostile because they provided sanctuary for the rebel Free Papua Movement, which took 26 hostages - seven of them Europeans - in early 1996 and held most of them for five months.
The drama ended when Indonesian troops, led by now deposed President Soeharto's son-in-law, Lieutenant-General Prabowo Subianto, launched a rescue operation. Two Indonesian hostages were killed by the rebels during the attack.
Following Mr Soeharto's ouster from power last week, Lieutenant- General Prabowo was removed from his job as commander of the elite Army Strategic Reserve (Kostrad).
Ms Janet Hunt, the executive director of the Australian Council for Overseas Aid, described the report as "disturbing" and said the Indonesian Government, often represented in Irian Jaya by the army, appeared to be on a permanently hostile footing with the local population.
She urged the Australian Government to seek the immediate withdrawal of units responsible for the deaths.
| Politics |
Terry Friel, Jakarta -- The wealth of new Indonesian President Jusuf Habibie and his family is beginning to draw the same attention that helped bring about the ouster of his predecessor Suharto.
In more than 20 years as a government minister, Habibie and his family have amassed a fortune estimated at US$60 million [joyo note - this is ludicrously low estimate! +/-US$300 million family net worth is said to be closer to the mark, though some estimates run as high as $500 million] through diversified interests in chemicals, construction, real estate, transport, communications, and even a crocodile farm.
At the same time, Habibie has presided over state industries and agencies accused of squandering billions of dollars of public money, including the national aircraft programme.
Much of the Habibie money comes from supplying the government companies he controlled as research and technology minister, including the multi-billion dollar national aircraft company.
Habibie's sons and other relatives have also secured key positions in state businesses and agencies.
"When it comes to crony capitalism, Habibie is a mini-Suharto," economist Michael Backman said on Sunday.
"The one redeeming feature about Habibie is that he has fewer children than Suharto," he told Reuters by telephone from Australia.
The Suharto empire far outstrips the Habibies -- some newspapers estimate Suharto, his six children and other relatives control assets worth US$40 billion.
The flagship of Habibie's business empire is the Timsco Group, a conglomerate headed by Habibie's youngest brother, Suyatim Abdulrachman Habibie, known as Timmy.
The new president's two sons, Ilham Akbar, 35, and Thareq Kemal, 31, Habibie's younger sister Sri Rahayu Fatima, and several other relatives are also involved in the family businesses. Other relatives have businesses of their own. Timsco, set up in 1977, controls more than 80 companies and is ranked as Indonesia's 64th largest conglomerate.
Timsco makes a large part of its money from supplying a range of goods to state aircraft firm Industri Pesawat Terbang Nusantara (IPTN), which has soaked up almost US$5 billion of public money.
However, IPTN's future is now clouded after the International Monetary Fund (IMF) demanded the government halt funding for the company as a condition of a US$41.2 billion international financial bailout package.
Habibie, 61, and Suharto, 76, have been close friends for years and the two families' business empires have also worked closely, setting up scores of money-spinning partnerships.
Joint ventures between the two empires include a piggery-poultry farm on an island near Singapore that supplies almost 10 percent of that island nation's pork.
Other partnerships include chemical plants on the islands of Java and Sumatra and a tie-up with US telcommunications giant AT&T Corp.
Indonesian newspapers only months ago would not have dared question the business dealings of the president and his associates. But the stunning reversal in Suharto's fortunes, spearheaded by students protesters who had demanded his head for leading Indonesia into a severe economic crisis, seems to have smashed old taboos.
After just four days in office, newspapers have already begun questioning Habibie's business interests, saying that, like Suharto, he has a reputation for handing out favours to friends and family.
"Habibie...is not only short of political legitimacy, but is perceived as an anti-market personality who favours nepotism and crony capitalism," the Jakarta Post said in an editorial on Saturday.
After being appointed vice president in March, he promptly named his brother, J.E. Habibie -- a former ambassador to London -- to replace him as head of the Batam Development Authority.
The Habibie empire has extensive business interests in Batam, an island free- trade zone near Singapore.
Ilham is executive vice president of IPTN and Thareq was operations manger for the government's 1996 air show.
Habibie's close friend and colleague Rahadi Ramelan was brought into the cabinet in March as the new research minister when Habibie became vice president and was made trade minister in Habibie's first cabinet on Friday.
As the family empire grew with the help of government contracts, Habibie presided over state industries -- most notably IPTN -- which have cost taxpayers billions of dollars in losses, subsidies and tax concessions.
Backman said he did not expect Habibie to cast adrift the business philosophy of the now discredited Suharto rule.
"The elevation of Habibie to the presidency will see the Habibie family companies shoot into the stratosphere," he said. "Anyone who thinks he is a breath of fresh air is mistaken."
| Arms/armed forces |
Allan Nairn -- As the Suharto dictatorship collapsed, suddenly, on May 21, the Indonesian Armed Forces (ABRI), scrambled to safeguard their police state. Rather than have Suharto quit as a scheduled mass protest surged through the streets, the ABRI commander, General Wiranto, threatened the students with a "Tiananmen," and then persuaded Suharto to resign quietly.
Although many students did not seem to realize it, the ABRI leaders were frightened. They knew that if millions took to the streets and the army lost control, the question would become not just Suharto's rule but their own political survival. As it happened, ABRI dodged the bullet: Suharto left, and so did the students, pushed out of the parliament building they had held for five days.
Afterward, General Wiranto, consulting nonstop with the US Embassy, moved to cover some of ABRI's bloody tracks. He demoted Lieut. Gen. Prabowo, Suharto's hated son-in-law, and moved boldly to blame him for all ABRI offenses of recent months. The US government, through The Washington Post, announced on May 23 that it had discovered that Prabowo was behind recent "disappearances" of Indonesian activists. Two days earlier, on May 21, The Nation had released an article that named the ABRI units involved in the abductions -- some of them under Prabowo's control but all of them under Wiranto's [see Nairn, "Indonesia's 'Disappeared,'" June 8 cover date]. In the Post piece, US officials professed shock and "anger" at Prabowo, and said the embassy had been working "to gain the activists' release."
This was in contrast to the actual US position. As one embassy official described it for me at the height of the disappearances: "Prabowo is our fair-haired boy; he's the one who can do no wrong." In fact, Prabowo's units that participated in the disappearances -- particularly KOPASSUS Group 4, which US officials singled out for blame in the Post -- were, from the start of the abductions, in close and friendly liaison with US intelligence. Reached at his Jakarta home the night after Prabowo was replaced, Colonel Chaiwaran, the Group 4 commander, confirmed to me that he deals with Col. Charles McFetridge, the Defense Intelligence Agency (D.I.A.) attachi at the US Embassy, with whom, he said, he speaks in Indonesian.
Although Chaiwaran denied it to me, other ABRI people say he has said that Group 4's men have been trained by US intelligence, a claim that US officials privately confirm. Last year, during the run-up to the staged elections, KOPASSUS, with US support, was expanded from 3,000 to 4,800 combat troops. According to an article by Col. John Haseman, formerly D.I.A. attachi in Jakarta, this was done "with an eye on potential domestic instability." The Pentagon built up KOPASSUS with more than twenty-four JCET training exercises and backed Prabowo's plan to obtain US helicopters. The United States openly lauded Prabowo after a 1996 hostage-rescue raid in West Papua in which, a knowledgeable official says, his men murdered eight civilians after alighting in a helicopter falsely (and illegally) marked with the Red Cross sign.
Although Prabowo's personal relish for atrocity is legendary (a Timorese man told me of having his leg and teeth broken by Prabowo), high-level US officials paraded him this year as the political crisis gathered steam. In January, Defense Secretary William Cohen praised the "very impressive...discipline" of KOPASSUS. Assistant Secretary of State Stanley Roth took Prabowo along twice when he went to prison meetings with Xanana Gusmao, the leader of the resistance in occupied East Timor, where Prabowo has done his most extensive killings.
No less consistent has been US support for Prabowo's professional rival, General Wiranto, whose units were also JCET trained and who has been hailed as "a man of integrity and a true Indonesian patriot" by Adm. Joseph Prueher, chief of the US Pacific Command. On March 4 Admiral Prueher told Congress that the US military was on alert for "early signs of instability" in East Asia, including "labor disputes." Five days later, the ABRI intelligence unit, BIA, which is under Wiranto's daily control, picked up nine labor activists who had called for an increase in the minimum wage. One US official told me some of the activists were tortured and noted that in previous weeks BIA had staged a series of break-ins and ransackings at the offices of labor, student and women's organizations. He added that in East Timor, BIA was using a new tactic: breaking the hips of prisoners.
On March 8 Lieut. Gen. Yunus Yosfiah, one of the key men of the Wiranto faction, told students that ABRI would not "tolerate any campaigns for drastic political reform." (Yosfiah, now Information Minister in the new government, has been implicated in the 1975 murder of five foreign journalists in East Timor.) The following night, a US official, speaking off the record in Jakarta, told me that ABRI was about to launch a thorough crackdown.
Even as we spoke, Haryanto Taslam, Megawati Sukarno's chief field organizer, had already been run off the road and taken to a torture center under the control of BIA, with participation from KOPASSUS Group 4. As abductions continued and as Wiranto's spokesman, Brig. Gen. Wahab Mokodongan, mocked the victims -- "perhaps the people who are said to have disappeared are wandering around in the jungle" -- knowledgeable officials told me that the activists' situation was thoroughly known to Colonel McFetridge of the D.I.A. and to the embassy C.I.A. station. Yet it was not until mid-April, after a crisis caused by public protest, that the State Department went to Prabowo and pushed for the release of some activists. Even after that, the Pentagon continued to provide new JCET training, and State kept pressing the democracy movement to back a new government formed around ABRI. Today, as Prabowo has been thrown over and the United States has thrown in with Wiranto, ABRI remains wary of the potential for mass upheaval and has started releasing some formally arrested political prisoners. But many dozens of "disappeared" remain missing in East Timor, as do at least five of the abducted Indonesian activists (Sonny, Rian, Herman, Bimo Petrus and Suyat).
The Cipto Mangunkusumo Hospital in Jakarta reported this spring that unknown and mutilated bodies were turning up along railroad tracks. It is perhaps ominous for some of the missing that when Megawati -- searching for Taslam -- went to a top ABRI commander she was told an absurd but chilling tale. Some of the "disappeared," the general claimed, were actually BIA infiltrators who had penetrated the democracy movement and had now returned to base. The implication: Their associates should not expect to see them again.
Allan Nairn has reported frequently on Indonesia. Research support was provided by the Investigative Fund of The Nation Institute.
John McBeth, Jakarta -- One of the first casualties of the post- Suharto era was the former president's ambitious son-in-law, Lt.-Gen. Prabowo Subianto. Outflanked by his boss, armed-forces chief Gen. Wiranto, Prabowo was removed from his command of Indonesia's main combat force and assigned to head a staff college in Bandung.
By all accounts, he took his demotion badly -- at one point strapping on a sidearm, summoning several truckloads of troops and confronting guards at the presidential palace as he tried to win an audience with new President B.J. Habibie. He left empty- handed -- but the incident may nevertheless have been the closest Indonesia came to its nightmare scenario: confrontation between military units with competing loyalties.
It was a far from graceful comedown for the fiery 47-year-old, who partly on the strength of his Suharto connections had risen rapidly to become the army's youngest three-star general. At the same time, it was a victory for Wiranto, an astute political player who doubles as defence minister.
He will need it: Complex challenges lie ahead for the armed forces, including the impact of political reform on dwifungsi, the concept that enshrines the military's role in political life. Another test may involve religious tolerance: Despite his success in heading off a dangerous rift, Wiranto was later forced into a damaging flip-flop in naming Prabowo's successor. His first choice, a Christian, was dropped amid signs that his selection had offended Muslim sensitivities.
Ever since he became armed-forces chief in late February, Wiranto had sought to check the disrupting influence of Prabowo, who is known as much for his temper as for his soldiering skills. It was no easy task, given Prabowo's backdoor access to the palace and the way Suharto liked to play one officer against another to preserve his hold over the military.
In the last hours of Suharto's presidency, however, Wiranto is believed to have won the ageing leader's approval to remove Prabowo as head of the Army Strategic Reserve, or Kostrad. Also sacked was Maj.-Gen. Muchdi Purwopranjono, who had stepped into Prabowo's old job as commander of the 6,500-strong Special Forces Regiment, Kopassus, when Prabowo was promoted to Kostrad two months ago.
Prabowo appears to have learned what was afoot late on May 20, the night before Suharto resigned. In a foretaste of the palace incident, he, Muchdi and a strong security escort turned up at the home of Army Chief of Staff Gen. Subagio to enquire about a meeting Subagio had had with Suharto earlier that evening. "It was like a raid," says a prominent official who learned of the incident from a witness. "Subagio had guests and they were really frightened." The official says the younger generals left after talking to Subagio.
Prabowo was formally relieved of his post the following morning. He then appealed directly to Suharto, who a short time earlier had read his resignation speech. According to insiders, Suharto admonished Prabowo for making trouble. Eldest daughter Siti Hardijanti Rukmana and other family members are said to have joined in the criticism. (Prabowo is married to Suharto's second daughter, Siti Hedijanti Herijadi.) Rebuffed, Prabowo later handed over his command directly to Subagio.
However, this didn't stop him making repeated efforts to see President Habibie. The sources say Prabowo went later in the day to Habibie's house in the suburb of Kuningan and asked him to reverse the transfer order and reshuffle the military leadership.
Prabowo clearly didn't get what he wanted. On the afternoon of May 22, he showed up at the presidential palace in full battle gear, armed with an automatic pistol and accompanied by "truckloads" of special forces troops, according to sources who were inside the palace. A tense verbal confrontation ensued with members of the Presidential Security Squad as Prabowo demanded to see Habibie. According to the source, Prabowo agreed to hand over his pistol in return for admission to the building. But he was later persuaded to leave -- without seeing the president -- by Maj.-Gen. Sintong Panjaitan, one of Habibie's military aides.
The incident triggered an alert throughout the city. Kostrad troops hastily re-erected barbed-wire barricades at the approaches to the palace complex and armoured columns were redeployed in some areas. Habibie himself moved to the state guest house adjoining his presidential office, where he remained overnight, but there were no further incidents.
During the weekend of May 23-24, Wiranto visited Prabowo at his home in Jalan Cendana, a stone's throw from Suharto's residence. What was said is not known, but family friends insist that Prabowo intends taking up his Bandung post. They also say he has denied involvement in the May 12 shooting of six students at Trisakti University and the kidnapping of pro-democracy activists -- two cases in which the special forces have been mentioned as possible culprits. Prabowo couldn't be reached for comment.
For Wiranto, however, the headaches weren't over. He initially appointed Maj.-Gen. Johny Lumintang, the highly regarded assistant for operations, to replace Prabowo. But only 18 hours later, Wiranto reversed himself, moving West Java regional commander Maj.-Gen. Djamari Chaniago into the position instead. Military spokesmen later portrayed Lumintang as merely a caretaker, but it appears Wiranto came under political pressure over the fact that Lumintang is a Christian -- one of only a few among top officers.
Wiranto apparently didn't want to fight that battle at this stage, despite his reputation for basing promotions solely on merit. Still, the decision could come with a cost. "Every Christian in the armed forces is going to see this as a personal affront," says a military observer.
One of Wiranto's immediate tasks is also to sort out where the military stands on political reforms. Initially, the generals said changes should be "constitutional, conceptual and gradual." But that's hardly likely to satisfy civilian leaders now. Most are impatient for the introduction of new laws governing elections and political parties as a prelude to early parliamentary and possibly presidential polls.
By taking a backseat role in Suharto's demise, the armed forces appear to have lost the initiative to proponents of a civil society, who see little room for military representation in the new parliamentary order. "I hope the military understands it will have to let go dwifungsi or otherwise reformation will be meaningless," says Mochtar Pabottingi, the architect of a political-reform blueprint now being studied by the House of Representatives. "I hope they realize the legitimacy they had is no longer there."
| Economy and investment |
Richard Borsuk, Jakarta -- The investigation of businesses linked to former Indonesian President Suharto's family and friends has widened, opening on several new fronts.
Mines and Energy Minister Kuntoro Mangkusubroto has broadened the scope of his department's probe into the Suharto family's sizable role in Indonesia's vital oil-and-gas industry. Cooperatives Minister Adi Sasono, a close aide to President B.J. Habibie, has told a Jakarta newspaper he wants an audit of a transaction early this month under which cooperatives bought 35% of a retail chain from Mr. Suharto's youngest son. Also, Investment Minister Hamzah Haz said authorities will review special tax breaks given to some companies, as these might have stemmed from "collusion and cronyism."
Also on Tuesday, Bank Indonesia Gov. Sjahril Sabirin confirmed that the central bank has been injecting funds into PT Bank Central Asia, which has been hit by a run on deposits; it is owned by the Salim Group and two children of Mr. Suharto. (The Salim Group is chaired by a longtime friend of Mr. Suharto, Liem Sioe Liong.) And French water company Lyonnaise des Eaux denied statements by Jakarta city authorities that its contract with the city water utility -- which involves the Salim Group -- has been canceled.
Prisoners freed
In political developments Tuesday, two prominent political prisoners -- labor activist Muchtar Pakpahan and dissident Sri Bintang Pamungkas -- were set free from a Jakarta jail. Mr. Habibie toured parts of Jakarta badly damaged in the May 14 riots, which helped lead to Mr. Suharto's resignation as president last week and the ascension of Mr. Habibie, his vice president, to the post. The new president's economic ministers prepared for talks with the International Monetary Fund over amending a $43 billion bailout package for Indonesia's staggering economy.
Tuesday's moves and statements affecting Suharto family-connected businesses indicate that the backlash against businesses linked to the former president is growing. This backlash, fueled by popular anger at Suharto government policies that enriched many of the then-president's family members and friends, is being anxiously watched by business executives, especially by companies that have partnerships with family members and close friends.
In the past decade, many foreign companies teamed up with Mr. Suharto's children and associates. In some cases, the foreign partner sought out family members as partners, seeking to cut through Indonesia's notorious bureaucracy. In other cases, foreign investors joined hands with the children on the belief that the only way to win needed licenses or be awarded a project was to team up with people close to Mr. Suharto. Data aren't available on how many companies have set up such ventures, but analysts say there are few sectors untouched by the practice.
Who's on the other end?
In one case so far in the oil industry, a US company has confirmed it is meeting with Indonesia's state oil concern Pertamina to disclose the shareholdings in its production-sharing contracts. A spokesman for Mobil Oil Indonesia Inc., a unit of Mobil Corp., said Pertamina "is checking who we are working with." The spokesman confirmed that PT Humpuss Patragas, a company controlled by Mr. Suharto's youngest son, Hutomo "Tommy" Mandala Putra, has a stake in one of Mobil's contracts for producing liquefied natural gas.
Pertamina is also looking into stakes held in three areas where contractors are exploring for oil and gas. These are an exploration area in Central Java, partly owned by Mr. Hutomo, and two -- in South Sumatra and East Java -- partly owned by Mr. Suharto's eldest daughter, Siti Hardijanti Rukmana. A local unit of Atlantic Richfield Co. of the US is a major shareholder in the East Java area.
Mr. Kuntoro, the energy minister, said Monday that Jakarta is reviewing oil- and gas-related marketing contracts between Pertamina and Suharto-family companies. On Tuesday, a Pertamina official said the minister has also launched an investigation into Suharto-family holdings in contracts for oil- and-gas exploration in general. "So far, we are only looking for data about the percentage holdings of these [Suharto family] members," the official said.
Mr. Sasono, the cooperatives minister, was quoted Tuesday in Bisnis Indonesia, a Jakarta daily, as saying his department is investigating another transaction involving Mr. Hutomo "for the sake of justice." On May 4, a group of government-sanctioned cooperatives agreed to acquire 35% of PT Goro Batara Sakti from Mr. Hutomo and another businessman for 140 billion rupiah ($13 million). Mr. Sasono said he suspects "irregularities" in the sale. One Goro outlet in Jakarta was looted and damaged during the May 14 riot.
'Review' of tax breaks
The "review" of tax holidays awarded to Indonesian companies by Mr. Suharto -- announced by Investment Minister Hamzah -- could potentially affect firms other than those linked to the former president and his friends. Mr. Hamzah said he will review the breaks "which may involve collusion and cronyism elements under the old government."
Last August, Mr. Suharto gave tax holidays to six projects including a $1.3 billion pulp mill led by his longtime friend Mohamad "Bob" Hasan and a $2.3 billion petrochemical project organized by businessman Hashim Djojohadikusumo, whose brother -- Lt. Gen. Prabowo Subianto -- is married to the president's second daughter.
The longest tax holiday, for 10 years, was given to PT Kiani Kertas, Mr. Hasan's project in East Kalimantan. Mr. Hashim's project, in East Java, got a seven-year exemption from tax. (Construction of that partly completed project was halted earlier this year because of financial problems.) Getting a seven- year tax holiday was a $715 million copper smelter under construction near Surabaya. Investors include Freeport McMoRan Copper & Gold Inc. of the US
In March, Mr. Suharto awarded tax holidays to an additional 10 companies, but this time the list wasn't announced. Businessmen say the 10 include several projects involving friends of the former president.
[Belinda Rabano and Tara Suilen Duffy of Dow Jones Newswires in Hong Kong contributed to this article.]
Seth Mydans, Jakarta -- Indonesia's political upheaval has worsened its severe economic problems, and a high-level team from the International Monetary Fund arrived here Tuesday to explore ways to restart its rescue package.
The country's political and economic crises have become dangerously intertwined, and the fund's Asia director, Hubert Neiss, said on his arrival that the country must urgently address its leadership questions if it is to begin a real recovery.
"We have to recognize that the economic measures will only work and be truly effective if there is political stability," he said. "Along with political stability, it is important that the trust of the people in the government is restored, the support of foreign governments is obtained and market confidence is returned."
But the politics today are far from stable. President B.J. Habibie, who took office on Thursday when President Suharto resigned under pressure, promised Monday to hold a new election. But he did not set a date and the promise has only accelerated a widening struggle over the future leadership.
Rather than an orderly transition to a stable leadership, there is the possibility of political chaos as long-suppressed forces jockey to fill the vacuum left by the sudden departure of the strongman who governed Indonesia for 32 years.
New political parties have begun to form and the formerly illegal labor movement and newly potent student movement have marshaled their forces. Opposition figures debate ways to hurry a transition of power, and the military waits in the wings, its agenda still uncertain.
Neiss said he would assess the situation as quickly as he could and report to the fund's board, which must decide whether to resume disbursements from its $40 billion rescue package. They were suspended on Friday, after Suharto stepped down.
On the same day, the US treasury secretary, Robert Rubin, said it would be premature for the fund to resume disbursements as long as the political situation remained unclear.
Mari Pangestu, a leading economist here, said the IMF, the World Bank and international investors remain wary of Habibie's government, although he has installed a credible economic team.
"The greatest fear is that we will have months of uncertainty," she said. "Certainly the economic conditions have gotten much, much worse." Apart from the political questions, Neiss will find a severely weakened economy, and the fund will need to lower its estimates of the country's potential, economists said.
Foreign-exchange reserves have fallen dangerously low and the government has compensated by printing new money, driving up inflation to a projected 47 percent this year, one foreign economist said.
The country's private foreign debt, estimated as high as $70 billion, remains an intractable problem. The banking system is on the verge of collapse, its peril heightened Tuesday by a run on the country's largest private bank, Bank Central Asia.
That bank, which is partly owned by two of Suharto's six wealthy children, was a prime target of rioters two weeks ago, reportedly closing 122 offices and losing 1,250 automatic teller machines to vandals and thieves.
Surveying the wreckage, private economists have dismissed an IMF estimate of recent trends showing a 5 percent contraction in the economy. Various estimates now put the shrinkage at anywhere from 10 percent to 25 percent.
Ms. Pangestu estimates that unemployment will rise to more than 15 million this year, or nearly 20 percent of the work force. With food prices rising sharply, she said, this means that as many as 58 million people will soon be in poverty, far above the 22.5 million at the start of the year.
"You aren't going to see any investment coming in for a while," she said. "The more you look at the numbers, the gloomier it gets."
The situation is compounded by the worst drought in half a century, which has parched harvests and made it necessary to spend huge amounts of scarce foreign currency on imported food.
In a speech on Monday after his first cabinet meeting, Habibie acknowledged the need for stability to attract foreign investment and aid.
"We must honestly admit that our success in overcoming the economic crisis depends largely on foreign loans, especially to finance imports of raw material and spare parts," he said. "Foreign loans are influenced by our success in stabilizing domestic political life."
His chief economic minister, Ginandjar Kartasasmita, said over the weekend that Indonesia would cooperate with the IMF. Since the rescue package was first agreed to last October, Suharto delayed and equivocated, promising reforms and then retreating, time and again.
In a challenge to his own government, Ginandjar agreed with critics who say Habibie's government cannot provide the needed confidence. "One thing is for sure," he said. "We need to have a new government with a new mandate from the people. This means general elections as soon as possible."