JAKARTA - Just hours after the December
2004 tsunami battered Indonesia's coastal areas,
Vice President Jusuf Kalla jumped into action.
Kalla unilaterally summoned the relevant ministers
and from the ground began delegating relief
efforts from the worst-hit province of Aceh.
Kalla signed an executive decree on
December 30 authorizing the formation of a
national disaster relief team. Extraordinary times
called for extraordinary measures, and the
Indonesian government was widely lauded for its
response to the massive humanitarian crisis. But
it was not lost on many political observers that
Kalla had overstepped his constitutional authority
by issuing a de facto vice presidential decree.
The unusual power dynamic between
President Susilio Bambang Yudhoyono and Kalla has
since led to much speculation that
Indonesia is effectively
being guided by two leaders rather than one.
Similar to the executive branch dynamic that has
emerged in the United States between President
George W Bush and Vice President Dick Cheney,
Indonesia's charismatic vice president is
single-handedly guiding many of the country's key
policy decisions.
Kalla, a highly
successful entrepreneur, was one of the chief
financiers of Yudhoyono's successful 2004
presidential election campaign. He is also now
chairman of Indonesia's most powerful political
party, Golkar, which underpinned former strongman
Suharto's 32-year rule and continues to represent
powerful vested interests in the military. Kalla
has required a return from his investment in
Yudhoyono's rise and has emerged as the country's
most powerful vice president.
Kalla's and
Golkar's support gives Yudhoyono nominal control
over the legislature, a majority his Democratic
Party sorely lacked when he first assumed the
presidency in October 2004. At the same time,
there is a growing perception among government
insiders that Kalla's huge influence has recently
become more of a threat than a complement to
Yudhoyono's authority, and that the second-most
powerful man in Indonesia is busily building a
political power base aimed at defeating his
current boss at the next presidential polls, which
must be called by 2009.
The 64-year-old
Kalla claims publicly that he has no ambition to
become president, often saying that by 2009 he
will be too old to run and that his ethnic
background would hinder his ability to garner
votes from the majority Javanese. Those denials,
of course, look past Golkar's extensive political
reach at the grassroots level and the fact the
party is now heavily invested in Kalla's political
ascent.
From the outset of Yudhoyono's
term, the two veteran politicians are said to have
agreed to a division of labor. Kalla was tasked
with managing the economy while Yudhoyono handled
broad issues related to politics, security and
national strategies. Kalla currently leads the
government's infrastructure team and, according to
local businessmen, has acted to accelerate several
key construction projects. Kalla's authority over
trade and industry projects allows him to make
decisions without consulting the president,
government insiders say.
Also, Kalla has
appeared to overstep those agreed boundaries -
particularly in instances where a high-profile
decision or appearance has acted to enhance his
public image. For instance, he played a key role
in brokering last year's peace deal in Aceh
between rebels and the government, and he
continues to actively monitor the implementation
of that internationally watched accord. He had
earlier played peacemaker in his home province of
Sulawesi, though that pact between combative
Christians and Muslims has not held up as well as
expected.
"In several policy formulations,
the position of the president is inferior to the
vice president," said Eko Budhihardjo, rector of
Semarang's Diponegoro University. At times,
"[Yudhoyono] is even subordinate to the vice
president". Yudhoyono had initially decided to
postpone fuel price hikes planned for last year
until after the Muslim fasting month of Ramadan,
but then abruptly raised them "when the vice
president repeatedly stressed that the increase
must be in October 2005", Budhihardjo said.
With Yudhoyono's permission, Kalla
recently became the first vice president to hold
an official state ceremony for a high-ranking
foreign guest. Indonesian diplomatic protocol
requires that only presidents host such
high-profile events, but Kalla in late April was
allowed to borrow presidential guards and cannons
to welcome a visiting South African deputy
president.
Ambitious
businessman As a businessman, Kalla has
always been ambitious - at times apparently to the
extreme. He turned around the family-owned
business he inherited from near bankruptcy and
over three decades transformed it into one of
eastern Indonesia's biggest conglomerates. More
recently, Kalla has come under the spotlight for
recent projects in the power and construction
sectors that members of his family are allegedly
involved in, some of them even situated in his
home territory of Sulawesi.
Asked about a
potential conflict of interest between his public
office and his family's business interests, Kalla
often explains he is not in a position to prevent
people close to him from doing business. For
Kalla, that line of defense hasn't always held up.
In April 2000, then-president Abdurrahman Wahid
fired Kalla from his post as industry and trade
minister, allegedly for "corruption, collusion and
nepotism" in a US$75 million Japanese-funded
contract to connect with power lines the Central
Java town of Klaten to the West Java town of
Tasikmalaya.
The claims were never
substantiated, but in June that year Wahid
cancelled the project and demanded a new bidding
round on the grounds the company that had won the
December 1998 tender had a "poor track record".
The company was the Bukaka Group, an engineering
group then headed by Kalla, but now managed by his
younger brother, Achmad Kalla.
Nowadays,
the company is back in government business.
Together with two small, state-owned enterprises
and Siemens Technology Inc, Bukaka recently won a
tender for a $498 million project to develop
technology for the soon-to-be-built Jakarta
monorail. The engineering company also won a
multimillion-dollar construction project to build
a seven-kilometer stretch of a planned
114-kilometer toll road connecting the towns of
Cikampek and Palimanan.
Bukaka has also
recently won an estimated Rp1.6 trillion ($176
million) project to build a 200 megawatt
steam-powered, electricity-generating power plant
in south Sulawesi, where the electricity produced
will be sold to the State Electricity Company
(PLN) in south and central Sulawesi at a generous
set price of between 4.3 and 4.4 cents per
megawatt.
The Bosowa Group is owned by
Kalla's brother-in-law Aksa Mahmud, who is also
deputy speaker of the Peoples' Consultative
Assembly (MPR). In April, Kalla headed up a
delegation to China to oversee the signing of a
cooperation agreement between the Bosowa Group and
a Chinese company to develop Jakarta's new mass
rapid transportation system (MRT). One of the 14
companies involved in that project is PT Bukaka
Trans System, which is part of the Bukaka Group
Kalla-linked companies have also won
projects for the construction of 11 kilometers of
the Makassar toll road in Sulawesi, a contract
worth an estimated $49 million. Sources with
knowledge of several meetings to evaluate a $94
million project to expand Hasanuddin Airport in
Makassar, Sulawesi, say Kalla has stressed the
importance of giving priority to local
contractors.
Muted
nationalism Kalla has largely refrained
from publicly airing nationalistic sentiments. But
foreign investors and economic analysts believe
that he favors more economic nationalism than the
foreigner-friendly Yudhoyono.
Kalla has
been more public in his opposition to
privatization for privatization's sake. And in
February he unilaterally called upon US mining
giant Freeport McMoRan Cooper & Gold to triple
the amount of revenue it is currently
contractually obliged to share with the government
to accommodate spiking global commodity prices.
Kalla's somewhat unorthodox economic views
have at times brought his macroeconomic management
into question. Pressed recently on the
government's slow pace of privatization - proceeds
from which could help cover the budget deficit
rather than seeking new short-term loans from the
Consultative Group on Indonesia (CGI) - he
replied: "All our assets have been sold by the
previous government. What are left now are the bad
ones." Kalla has steadfastly defended the
controversial appointment of State Enterprises
Minister Sugiharto, who has been more antagonistic
to foreigners when voicing his blatant resistance
to privatization.
International economists
maintain that Indonesia desperately needs new
foreign capital to help develop the country's
abundant natural resources, which if more
efficiently drilled and mined would earn the
government badly needed foreign
currency-denominated revenues. At the same time,
Kalla, who generally still has the support of
local and foreign business groups, pressed for and
won changes to the national investment law that
has opened the way for more foreign investment in
certain extractive industries.
He has been
notably less aggressive in pursuing changes to the
2003 labor law, which provides strong protection
to labor considerations, including provisions
making it difficult to sack workers. Earlier in
the year a draft revision of the law that allowed
for the use of more temporary workers and cut
severance payments stirred angry nationwide street
protests and paralyzed many business activities.
Yudhoyono at first publicly backed the
controversial amendments as a way to promote more
foreign investment, while Kalla remained notably
silent on the hot button proposal. House of
Representatives speaker Agung Laksono, who also
notably serves as deputy chairman of Golkar,
officially asked the government to drop the
proposal and by association put Kalla on the
popular side of the debate without ruffling
Yudhoyono's feathers.
Almost two years
into Yudhoyono's five-year term, many political
analysts believe Kalla has effectively
outmaneuvered the president in dealing with
potentially sticky domestic issues, particularly
ones that pitch foreign and domestic interests.
Yudhoyono's soft-spoken style, a big part of his
electoral appeal in 2004, is now adversely
compared to Kalla's perceived entrepreneurial,
risk-taking brand of leadership.
Yudhoyono
and Kalla both served as senior ministers under
the previous Megawati Sukarnoputri administration,
but resigned their posts ahead of the 2004
presidential election. Kalla recalls that when
Yudhoyono stepped down the two made a personal
pact that whoever made it as president would give
the other a chance in his administration. "Then we
hugged each other," Kalla said.
Kalla
later left the Golkar party, led then by the
embattled Akbar Tandjung who was trailing badly in
the polls, so that he could become Yudhoyono's
running mate. The pair won a landslide executive
mandate in 2004 in the country's first-ever direct
presidential and vice presidential elections.
Despite their resounding presidential and vice
presidential electoral victories, Yudhoyono's
small Democratic Party overall won a mere 10% of
the popular vote, and even aggressive coalition
building could not cobble together a legislative
majority.
Golkar party chief Tandjung, who
commanded 23% of legislative seats, set up a
formidable opposition coalition that included
Megawati's Indonesian Democratic Party of Struggle
(PDI-P), the National Awakening Party and a number
of smaller parties, and even before the newly
elected legislature was convened he threatened to
bring Yudhoyono's promised reform agenda to a
standstill.
Two months after the new
administration took over, and just two days before
the tsunami disaster on December 26, 2004, Kalla
was overwhelmingly elected as Golkar's new leader,
sidelining Tandjung who had led the party for more
than six years. With Kalla as Golkar's leader,
Yudhoyono was suddenly assured of a parliamentary
majority and a strong mandate to press ahead with
his reform agenda.
Friend or
foe? Kalla is on record as admitting that
the strategy to target Golkar's leadership was
actually directed by Yudhoyono. "If that was the
president's wish, I accept. I took it as a
responsibility."
However, Jakarta-based
political analysts note that as leader of
parliament's largest faction, Kalla has from
behind-the-scenes slowly but surely chipped away
at Yudhoyono's authority. Mohammad Qodari, of the
Indonesia Survey Institute (LSI), described
Kalla's victory as "a double-edged sword" for
Yudhoyono, saying the move effectively acted to
"accumulate all the power in Kalla's hands".
Political chaos in previous post-Suharto
administrations, particularly during the
short-lived tenure of former president Wahid, cost
Indonesia dearly in terms of market perception and
foreign investor sentiment and in some domestic
quarters cast democracy in a bad light. Yudhoyono
and Kalla have together regained some of that lost
confidence, but conservative forces in the House
of Representatives, which under the amended
constitution is not restrained by executive veto
power, have recently piqued new investor concerns.
Kalla has played both sides of the
legislature and to his credit has pushed through
some controversial and arguably necessary economic
measures. He was pivotal in lobbying legislators
to enlist support for the politically unpopular
fuel subsidy reductions last year and also for
hammering out terms for the internationally
praised Aceh peace accord.
At the same
time, the MPR has stalled in debating and passing
legislation central to Yudhoyono's reform drive.
In 2005, the MPR had agreed to a target of passing
55 new laws, but by the end of the year only 12
bills made it through the legislative morass. This
year the target is 43 new bills, but so far no
significant reforms have been passed. In fact,
Yudhoyono has on occasion played his trump card
and issued presidential decrees to speed up the
pace of his more urgent reform initiatives.
If Kalla is indeed a future presidential
contender, his views toward democracy are
significantly different from Yudhoyono's. After
years of military service, including controversial
tours in East Timor while under Indonesian
military occupation, and later stints as a
low-profile cabinet minister, Yudhoyono was
throughout loyal to Suharto's authoritarian
government. Yudhoyono won his liberal stripes in
2001 when as top security minister he declined to
invoke a state of emergency when requested by
Wahid, who at the time was facing impeachment
proceedings.
In contrast, perhaps, Kalla
has recently called for a more "efficient
democracy", arguing that Indonesia's brand of
democracy is marred by lingering widespread
perceptions that the government is corrupt and
inefficient and in the new democratic era must
face constant criticism from the media and
detractors. "This is not democracy. Let's just
make democracy more efficient and ... support what
we agree upon."
Kalla has since backed a
Golkar-led move to create a simplified two-tier
election system, which it claims would cut costs
and improve efficiencies. "The public will have
less headaches and the government will spend less
money on concurrent elections and thus things are
expected to be more efficient," Kalla has said.
Some political analysts fear that with
Golkar's well-established political and business
machinery, a new electoral system could be
designed to the party's favor and potentially give
Kalla a big edge at the next presidential polls.
If such polls were held today, political
analysts predict that Kalla would likely win. A
recent survey by the Indonesian Survey Circle
(LSI) disclosed growing resentment about unpopular
policies made by Yudhoyono's government, including
the recent scrapping of fuel price subsidies and
planned amendments to the labor law. Only 37% of
survey respondents said they approved of
Yudhoyono's job performance, his lowest rating
yet.
Yudhoyono rose to power by promoting
himself as "a man of the people", thus
capitalizing on Megawati's perceived failure to
improve living standards for the country's massive
poor population. Now, inflation is edging up at
double-digit rates and unemployment is rising
again. Increasingly, the same complaints that
marred Megawati's administration are being leveled
at Yudhoyono's government. As the political
temperature rises, a politically ambitious Kalla
could be tempted to more publicly distance himself
from Yudhoyono's more controversial policies.
If so, it is possible that the
Yudhoyono-Kalla power dynamic could in the coming
months intensify into a full-blown executive power
struggle.
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
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