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    Southeast Asia
     May 23, 2006
Don't count on a Suharto accounting
By Bill Guerin

JAKARTA - Indonesian President Susilo Bambang Yudhoyono had successfully distanced himself from his past association with former strongman Suharto's corrupt government. Now, he faces a historic decision that could make or break his administration's corruption-busting credibility with the masses who voted him into office on a reform platform.

Sections of Jakarta's political and bureaucratic elite are eagerly pressing to dissolve the corruption charges leveled against former president Suharto, 84, who was forced from power after violent popular protests in May 1998. Yudhoyono is under mounting political pressure to draw a line through the dark days of Suharto's 32-year tenure and grant the medically ailing former leader he

once served as a cabinet minister amnesty on humanitarian grounds.

The end of Suharto's so-called "New Order" regime in 1998 was marked by massive rioting and the deaths of hundreds of pro-democracy protesters. It also heralded the beginning of Indonesia's tumultuous and fractious democratic era. The doomsday scenarios of disintegration, social chaos, civil war or even a military coup predicted after Suharto's unceremonious fall from grace have all notably failed to materialize.

At the same time, neither have the robust economic growth levels hoped for from Indonesia's new, and in many other ways flourishing, democracy. Corruption, collusion and nepotism have all continued apace under Suharto's successors; the verdict is still out on Yudhoyono's young administration, and political analysts say his decision on whether to grant Suharto amnesty will send a strong signal about his willingness to tackle endemic corruption issues.

Suharto's legacy is steeped in controversy. Under his leadership, Indonesia's economy rose steadily, with as much as 60% of the population lifted out of some of Asia's most abject poverty. His authoritarian tenure was also attended by boom times for his family, his cronies and the conglomerates they ran, often under special government privileges. Those now bidding to rehabilitate his image have focused brightly on Suharto's many economic accomplishments.

By the 1990s, Suharto's family members had cornered various sectors of the local economy. Only after Suharto's fall did the colossal wealth of his family and close business associates come to be known. Suharto has stood accused in court of embezzling some US$600 million from state coffers. That may be the tip of the iceberg: independent watchdog groups estimate he and his cronies may have spirited away billions of dollars. And there are still many unanswered questions about the dozens of lending institutions that went bankrupt in the wake of the regional financial crisis, many of which were owned by Suharto's associates.

A 1998 decree by the People's Consultative Assembly, the highest legislative authority in the country, commanded the government of president B J Habibie to eradicate and investigate corruption by "former state officials, their families or cronies and private businesses as well as conglomerates, including former president Suharto". Since 2000, however, the ex-strongman has successfully evaded prosecution over the course of three different administrations for the reason that he was medically unfit for trial. He recently underwent colon surgery and has suffered from a series of strokes.

Untried crimes
The pending $600 million embezzlement case is one of many crimes for which the former president stands formally and informally accused. For instance, the Commission for Missing Persons and Victims of Violence (Kontras) claims that Suharto should also be held accountable for alleged crimes against humanity.

Kontras accuses Suharto of massive human-rights abuses that resulted in the deaths of more than 500,000 people during the communist purge in 1966 after the abortive coup against former president Sukarno, and Kontras coordinator Usman Hamid contends that those crimes will never be solved if, somewhat ironically, Suharto is pardoned on humanitarian grounds.

Suharto's political legitimacy relied heavily on his regime's ability to provide stability and economic development. Within months of taking power, he started a sweeping program of economic reforms to stabilize prices, boost the agriculture sector, open up the economy and lure in foreign investment. His New Order regime spent vast sums on new primary schools, health clinics and improving rural infrastructure.

Manufacturing accounted for less than 10% of gross domestic product in 1966; by 1996, that figure had exceeded 25%. The average annual GDP growth rate was about 7% between 1966 and 1996 - without doubt an amazing policy achievement. By 1996, poverty rates had dropped dramatically to 11% from more than 60% when he first took power, while national life expectancy had increased by some 20 years. The global spike in oil prices in the 1970s helped more than treble per capita income.

Conversely, the seven years of democratic rule that began in 1999 have failed to provide a significant economic boost. Instead, the new reform era has been continually dogged by rising unemployment. Lagging exports and investment have been intensified by arbitrary regulatory and compromised legal situations that democratic politicians, for whatever reasons, have largely failed to tackle.

In the post-Suharto vacuum, party politics reigned supreme, where loyalty among politicians was not with the voters, nor the president, but rather in assuring the survival of the wealthy and powerful elite. The direct presidential polls in 2004 saw Yudhoyono's landslide win over these more established and gradually discredited political parties, including Suharto's former party, military-backed Golkar.

Significantly, a June 2004 survey by the International Foundation for Election Systems found that in choosing candidates, voters were concerned about keeping prices low (31%), controlling corruption (29%) and creating jobs (19%). Since taking office, Yudhoyono has tried to answer those voter concerns by focusing on improving the economy and administrative and regulatory reform - albeit to varying degrees of success.

Moreover, Yudhoyono moved to distance himself from the New Order regime, which he served for decades both as a senior military official and as a politician. He has rarely commented on the previous government's transgressions or the Suharto corruption trial - even though such groups as Transparency International have ranked the former president as one of the most corrupt politicians on the planet.

Under parliamentary pressure, indications are that Yudhoyono is now poised to allow Suharto's bygones to be bygones. His attorney general has in recent months stopped his previous periodic sparring matches with Suharto's lawyers. Some question now whether those argumentative bouts were mere political showmanship.

Vice President Jusuf Kalla said last week that the government "understands" Suharto's situation. "I think we should no longer speak so much about [the corruption trial]. We should respect him." For that to transpire, Yudhoyono and parliament would need to issue a formal decree abolishing the legal process now in motion against Suharto - potentially a politically explosive move.

If that happens, some political analysts believe there could be renewed bouts of social unrest, only this time targeting Yudhoyono's government for participating in a perceived whitewash of Suharto's alleged economic crimes.

Peeved public perceptions
It's still unclear exactly how a formal pardon by Yudhoyono would go down with the broad population. The politically charged issue notably arises at a time the economy is stuttering. and Yudhoyono's popularity is clearly on the wane.

A poll published last week by the usually reliable Indonesian Survey Institute showed that Yudhoyono's approval rating is now at an all-time low, mainly due to concerns about his administration's handling of the economy. Of 700 people surveyed in nationwide face-to-face interviews late last month, only 37.9% were satisfied with the government's performance, compared with 64.7% a year ago. More than 72% of those polled said they were unsatisfied with Yudhoyono's overall economic performance.

The Suharto case deepens his dilemma. Yudhoyono's early success and credibility in fighting corruption would be dealt a severe blow by declaring an amnesty that failed to require that Suharto's family return their allegedly huge ill-gotten gains to state coffers. Amid continued frustrations with the slow pace of reforms, such a move could mobilize the many well-organized social movements and also turn the newly emboldened local press, which to date has been mainly generous in its news coverage, against Yudhoyono's government.

After Suharto underwent extensive colon surgery on May 10, the attorney general in effect announced that Suharto was a free man and that charges would be dropped because of his deteriorating health. The next day, when it was clear Suharto would survive the procedure, Yudhoyono opted to move the issue to the back burner. He cited waves of opposing and supporting voices that "are getting higher and that could lead to conflict" and said he would not make a decision on the issue "until the right time".

So long as Suharto remains alive and under threat of prosecution, those who grew rich with his help and who today remain entrenched in government, big business and high society know that their interests are still vulnerable. Indonesia's vast wealth was pillaged during the Suharto years, a fact that many reform advocates are not willing to forget.

Suharto, once popularly known as Indonesia's "father of development", was able politically to justify his family's growing riches by his government's ability to deliver rising living standards and relatively broad-based economic growth. Still smarting from the 1997-98 Asian financial crisis, the gap between Indonesia's politically connected rich and unemployed poor is now very much widening again.

A political compromise that allows Suharto, his family and former cronies to keep the estimated billions of dollars they pilfered during his reign is clearly unacceptable among the small, but vocal, politically active sections of the population. Yudhoyono faces a decision that will clearly make or break his government's credibility among the masses who just two years ago so enthusiastically voted him into office in the name of reform.

Bill Guerin, a Jakarta correspondent for Asia Times Online since 2000, has worked in Indonesia for 20 years, mostly in journalism and editorial positions. He has been published by the BBC on East Timor and specializes in business/economic and political analysis related to Indonesia. He can be reached at softsell@prima.net.id.

(Copyright 2006 Asia Times Online Ltd. All rights reserved. Please contact us about sales, syndication and republishing .)

Indonesia's economic reform tightrope (May 19, '06)

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