Pl SC 1400 Indonesia #2 1965-

- With the suppression of the attempted coup (by the PKI) in 1965 and the bloody pogroms that followed the event, the influence of the PKI would be greatly reduced in Indonesia. The hundreds of thousands that died in the slaughter of October/November of that year were a sign that the military was not prepared to countenance communist influence on the archipelago.
- Between the autumn of 1965 and March of 1967 (when Sukarno was formally removed from power) a consolidation of power took place under the military that changed the basic orientation of politics in Indonesia. The PKI, which prior to that time, had been the world’s third largest communist party, was virtually eliminated from Indonesian society, through the mass murders that took place throughout the countryside and the removal of leftist elements within the military and within the government.
- As mentioned in the last lecture, Sukarno ruled in name between 1965 and 1967 (he was replaced in Match of 1967 by Suharto, initially on an interim basis, made more permanent in 1968) , only for the following three years, before he was formally replaced as Indonesian President by the new “President for life” Suharto. Suharto was elected President in March of 1968, and in June of that year, he selected his own cabinet and took de jure as well as de facto power. Again, there was strong incentive to exploit Sukarno’s personal prestige, which remained high, even during the time of difficulty. Finally, there were some relevant cultural factors at play in this equation, where the Javanese cultural predisposition’s of Suharto and the other leading military figures rendered them reluctant to completely humiliate the man who had been presented as the father of the nation. However, the reluctance of Sukarno to go “gently into the night” caused the military to reconsider this caution. In March of 1966, Sukarno surrendered virtually all of his remaining powers, and the army probably would have been content to see him continue as a figurehead for the foreseeable future. However, through the year (1966), Sukarno became increasingly critical of the new directions in policy, and in March of 1967, the Parliament, which was not dominated by the army supporters of Suharto, stripped Sukarno of his title. This had been preceded by show trials of some of Sukarno’s most prominent Ministers, which were intended to discredit the hero of the independence movement.
- Suharto was now in control, and he proclaimed a “New Order” for Indonesia. Beyond a general shift to the right, what did this new order mean for Indonesia?

2. The New Order
- One of Suharto’s first chores, and this began in the fall of 1965, was to purge the military of its leftist elements and to replace them with his own people, this was particularly true of the officer corps. As we shall see later on, the military gained a great deal of influence under Suharto’s rule, to the point where they became almost a second state, something that was particularly true on the outer islands, the military became a de facto government, to the great economic advantage of its officers. Also, something called the Operations Command for the Restoration of Security and Order (KOPKAMTIB) was created to supervise domestic political movements and to deal with any potential challenges to national security. Of course, this gave the body a particularly wide berth, and turned it into a wing of the government, in this case personified by Suharto. While in power, Sukarno established a state ideology called five pillars (mention the relevance of this for Islam), which stressed Belief in One God, Nationalism, International Co-Operation, Democracy, and Social Justice. Of course, these concepts are vague enough to mean virtually anything, so Suharto was able to maintain that he was following the path taken by the previous leader, when, in fact, he would differ from it in several important ways. Now we will turn to the ways in which Suharto followed, and then deviated from the Sukarno legacy:


I. Distrust of Western Democracy
- First, in terms of similarities, Suharto inherited Sukarno’s distrust of Western democracy. The principle political party – GOLKAR, which was formed to contest the elections of 1971 – became a literal appendage of the government, with it becoming increasingly difficult to separate Golkar from the functioning of the state. The two main opposition groupings, one of which was Muslim and the other secular, were forced to combine (in 1973) into two main opposition parties, which were artificial arrangements riven by factions. The old muslim parties became the United Democratic Party (PPP) and the others became the Indonesian Democratic Party (PDI). Thus, prior to the essential collapse of the Indonesian economy in 1997, neither had been able to mount an effective challenge to Golakr’s political hegemony. This also played out in the press; however, while Sukarno had censored right wing political voices, Suharto turned his attention to the papers on the left.
- The fact that this followed the pattern set by Sukarno was a little disconcerting to the advocates of democracy, who wondered why it had failed to take hold in Indonesia. One potential answer is cultural, where in Java, the sultan had traditionally enjoyed unchallenged political power, and any efforts by those to limit this power was seen as being antithetical to the power of the nation – personification of rule.
- Also, Indonesia remains a poor country, and there is a school of thought that argues that a certain level of socio-economic development has to emerge before the society can democratize – primarily consisting of education and wealth. Mention Cardigan’s dictum about democracy and the ability to vote oneself rich. It is also a society with severe cleavages, which tend to occur along the lines of ethnicity and wealth, discuss the importance of cross-cutting cleavages to democracy. Anyway, the idea existed that the Indonesians needed some form of guidance that went beyond the chaos of democracy. Also, concerns about Islam as a political force. Finally, the events of autumn of 1965 were not lost on the Indonesian people, while these were largely sponsored by the military that made up the basis of Suharto’s support, there was a strong desire to avoid a return to this sort of chaos – reveals the depths of antipathy within Indonesian society.

II. Continuation of Deliberation
- Suharto also continued Sukarno’s policies of deliberation, in the sense, that for legislation to be passed, the opposition parties would have to give their consent at the committee stage, otherwise it would not be considered. This meant that the legislation would be consensual, yet this would occur below the surface, meaning that the government would essentially public policy debates with the opposition parties, thus solidifying its image as indistinguishable from the state and depriving the opposition of the right to lambaste it over issues.


- Pronounced differences between the two.
- The primary differences between Sukarno and Suharto rest on three main areas: the success of the latter in entwining himself to the state, economic policies, and foreign policy.

I. Consolidation of Power
- Suharto proved to be much more successful than Sukarno in creating viable, long-term support bases for his rule. While the latter had relied on his ability to vaccilate between the Communists and the army as the foundation of his authority, the former placed himself firmly in the camp of the army, while also seeking support from the state bureaucracy and various interest organizations. Yet, this control would largely emerge after 1973 (oil shocks – oil and gas accounted for 65% of Indonesia’s export earnings by the 1980s). Oil company was state run and the profits could be used as carrots to reward supporters. Also relevant to note that the middle classes viewed Suharto with a certain degree of trepidation, but the alternative seemed to be considerably worse. Change in governmental policies, toward a harsher form of authoritarianism, in the 1970s, came following a riot at Malari, during the visit of the Japanese Prime Minister Tanaka in January of 1974. Crackdowns on protesting students, opposition leaders and opposition newspapers. Worth remembering that this came at a time when world oil prices were in the process of quadrupling, so Indonesia had $ to spread around in society.
- We should not presume that the army was irrelevant under Sukarno, it had been an important force of national unity (and national loyalty) in an archipelago divided by territorial and ethnic issues. Yet, it was under Suharto that the military would truly achieve prominence, as a virtual parallel government. Also, it was a parallel government which dominated the national leadership, this meant that it could greatly influence national policy and local civilian authorities would have to conform to the wishes of the military rather than vice-versa. Throughout the country, government appointments, contracts, licenses to log, mine, etc. were dependent on the good will of the military, which meant that it had a very powerful tool to reward its supporters and punish those who did not support it. Importance of the military in a society perceived as being under threat. Argued that the military has both military and socio-political functions (Dual function).
- While Suharto shared Sukarno’s essential hostility toward political pluralism, he chose a different vehicle to promote his leadership. Under Sukarno all parties had to essentially accept his leftist rhetoric, under Suharto they had to promote the goals of economic modernization and development on his terms. In neither case was the opposition expected to entertain serious thoughts of winning an election. The vehicle for this rule was to be Golkar (organization of functional groups), which while defined by the army, consisted of professional, occupational, and social groups. This relationship was largely to be one of patron-client, with the state serving as the patron and the interests serving as the clients. Mention the Confucian culture of the mainland and the notion of corporatism.

II. Economics
- In economic terms, Suharto accepted an entirely different paradigm for growth than that advocated by Sukarno. Remember that Sukarno came to office spouting anti-colonial rhetoric and ended up nationalizing foreign holdings and snuggling up to Moscow and Beijing. Suharto reversed this course almost immediatelly, offering compensation to the foreigners that had seen their property expropriated and encouraging foreign investment, believing that this was the most reliable path to economic development. Of course, this would involve deep corruption within Indonesia and the virtual definition of the country as the locus of “crony-capitalism”, but this is something that I will discuss in detail later.
- While offering compensation for seized assets and drafting new laws on foreign investment (1967), Suharto retained the state companies that had been created by his predecessor, esp in the extractive sectors. These became dominated by the military and by the cronies of Suharto. Foreign investment expanded rapidly following the introduction of the 1967 law, taking in over $1 billion between 1967 and 1973. This is not a colossal sum in today’s money, but keep it in context (for example in 1967, Indonesia’s total income from exports was $595 million). Not only the law, but the political stability promised by the government encouraged the rapid investment of capital. This investment would normally take the form of joint ventures, where the Indonesian component would consist of the military with their political connections and local Chinese businessmen. Also worth noting that Indonesia has large oil and gas reserves, and the 1970s and 1980s were good times to have such resources. As mentioned above, the world oil prices quadrupled in 1973 and tripled in 1979 (two oil shocks), this place enormous monetary resources in the hands of the state and in the hands of the state oil company, rise in the role of the state and of those who were willing to play along, and a decline in economic and political influence of private forces. One of the key components of the Suharto government (others identified by your text include (repression of vocal opponents, co-option of others, ideological indoctrination) was the promise of economic growth, first fuelled by oil, then as a site for low tech manufacturing (which came to replace oil as the largest export earner), during the Asian economic miracle.
- During the period between 1967 and 1976, Indonesia had an average annual growth rate of 7%. Between 1970 and 1997, the economy grew by an average of 6% and per capita income increased from around $80 to $1300.
- However, the role of the state companies would decline along the world oil prices in the middle part of the 1980s (began in 1982 and accelerated in 1986). The government set out to deregulate the economy and to encourage the development of private companies (who still relied on the state for favors). Fortunately for Indonesia, and for Suharto, this occurred at a time when the Japanese, Korean, and Taiwanese companies were looking to ship production offshore due to rising labor costs at home, so Indonesia became a haven for low tech manufacturing..

III. Foreign Policy
- Also, concurrent with these economic changes occurred a substantial re-orientation of Indonesian foreign policy which went from being pro-Communist – Suharto had described a Jakarta-Beijing axis of power, to one that preserved some of Indonesia’s autonomy while leaning in a Western direction. The military believed that the PRC, the PKI and the ethnic Chinese community were essentially of one mind, and that the events in Indonesia were being orchestrated by Beijing. This also served as a continued justification of the exercise of power by the military, as this was presented as a threat that was not only internal. The Foreign Minister, Adam Malik was able to forestall a complete rupture of relations between Indonesia and the PRC for two years (also, the Chinese held some residual hope that Sukarno would be able to mount a comeback), but the twin events of the coming of the GPCR in China (and the resulting changes in the Ministry of Foreign Affairs in that country) and the political orientation of the Indonesian government meant that pressure was building in both countries, and the Chinese charge d’affaires was expelled from Jakarta (the Chinese had recalled their ambassador in May of 1966) was expelled in April of 1967.
- In essence, Indonesia’s foreign policy was more anti-Chinese than unequivocally pro-Western, diplomatic relations were maintained with the Soviet Union and North Vietnam, which might be seen as a victory by Malik over the harder line forces within the military. However, this did not prevent Indonesia from received large sums of aid from the United States, though they were careful to balance aid from Washington with that from Japan and from Western Europe through the 1970s (each accounted for about 1/3 of the total in the 1970s). Since that time, Japan has become the largest investor and aid donor to the archipelago.
- Suharto did ratchet down the tension with Malaysia, which had been encouraged from the early 1960s by Sukarno (concerning territorial issues, but also had political undertones), and in August of 1967, the Association of Southeast Asian Nations was formed in Bangkok, with members including Indonesia, Thailand, Singapore, Malaysia, and the Philippines in a flexible grouping that intended to promote stability in the region and economic development (has since developed into something more, will get into this if time permits). Mention the concern that the rest of Asia has regarding China and its regional influence. Viewed as a serious threat throughout the 1950s, 1960s, and 1970s, even though during the latter decade, Beijing’s attentions were largely focused on domestic matters. Since the 1970s, the view of China has changed a little, due to the modernization policy. The PRC is now seen as an enormous economic opportunity by the wealthy countries (and a rival for investment and low tech production for the developing world), and this focus on economics tends to be applauded by the other Asians. Yet, there are residual concerns about Chinese intentions (whether they are benign or not). Indonesia normalized relations with the PRC in 1990.
- Of course, it is very difficult to speak of Indonesia’s foreign relations during the Suharto era without mentioning East Timor, which they invaded in December of 1975 (one day after Gerald Ford’s visit to Jakarta). In 1974, the government of a newly democratized Portugal ordered a withdrawal from all of the colonies (mention the events in Angola and Mozambique), and East Timor entered a period of political confusion. In December of 1975, Indonesian troops invaded, and one year later the territory was annexed as Indonesia’s 27th province. Condemned by the UN, birth of the Revolutionary Front for an Independent East Timor (Fretilin). Issue settled last spring, more on this in a moment.

Conclusions about the Suharto Era
- Personal rule. By the middle part of the 1970s, assisted by the oil boom and the concerns of the middle class about a return to the Sukarno era, Suharto had consolidated personal power and became a key dispenser of patronage. However, this would change in the 1980s. The collapse of the world oil prices greatly reduced the ability of the state to play sugar daddy, but the newly emerging private forces still depended on the state for favors, while their bargaining position had improved, it was still not a contest between equals. Transition in the economy from being based on extraction to one based on light industrial production. Should not discount the role of private forces, as it rose tremendously through the 1980s, but it is still important to keep this in context.
- While Sukarno was certainly not a liberal democrat, in the sense that we might use the word, under Suharto, the role of the state and of the military became much more pronounced. Remember that Sukarno had to appease both the Communists and the military, Suharto was faced with no such difficulties, he had to keep the military happy (which, through corruption was relatively easy) and to placate the newly emerging forces of private wealth. Yet, the latter was benefiting very much from the status quo and greatly feared the return of the chaos of 1965.
- Banning of newspapers and harassment of the opposition by the security forces. For example in 1997, Megawati Sukarnoputri was banned from contesting the general election and was removed as leader of the PDI. Indicative of the fear the government had of things spiralling out of control and of the latent power of the opposition. Power that would become active over the next two years.
- Authoritarianism accompanied by crony capitalism, Indonesia, like Singapore, and also like Malaysia has some of the forms of democracy (regularly scheduled elections, yet Golkar predominated within this system) without having the actual possibility of power shifting within the society. Even in the 1997 election, Golkar received 74% of the vote (it did not slip below 60 for any of the elections between 1971 and 1999). Yet, the media paid scant attention to the opposition parties, the civil servants were expected to vote for Golkar, and the village headmen understood that the amount of assistance they would receive from the government depended on the turnout during the election. Golkar also had the resources to provided particular benefits to loyal supporters (farm animals, farm implements, etc.) . However, as mention earlier, this was not a political party in the Western sense (issue positions, etc), in fact they would not classify themselves as a party at all, but rather a “functional group”. Their primary appeal, beyond the perquisites offered, is that they pledged economic development, and, until 1997, this pledge was met.

Indonesia 1997-


- Over the past three years Indonesia has been increasingly perceived as a country in crisis. Rioting occurred sporadically throughout 1997 and 1998, and led to the eventual resignation of Suharto, since that time, the country has had two presidents BJ Habibie and Gus Dur, and still teeters on the brink of insurrection. During this time, the economy has also suffered mightily, with Indonesia being the worst hit of the Asian countries – while there has been some recovery, it is still behind the levels enjoyed in 1996. Finally, there is the threat of regional dissolution, with East Timor already gone and separatist impulses also strong on Irian Jaya and Aceh. We will conclude our examination of Indonesia by examining the economy political and territorial developments of the past three years.

1. Economic
- As mentioned earlier, Indonesia suffered seriously during the Asian Flu of 1997, and saw its GDP drop by nearly 14% in 1998. The clannish network surrounding Suharto and the incestuous relationship between government and business in the country reminded many of the outside investors of the first of the dominoes to fall, Thailand, only the problems in Indonesia seemed to be more acute. Accordingly there was a major collapse in the value of the Indonesian currency, the rupiah went from 2909.4 to the dollar in January of 1997 to 10,013.6 in January of 1998, in other words it was worth less than a third of its value one year earlier. For Indonesian firms who had large amounts of external debt (denominated in dollars) this suddenly meant that their loan repayments had more than tripled. Many of them were simply unable to cope (even with the IMF infusion of $43 billion of aid) and went bankrupt, this rippled throughout the economy and caused the precipitous decline. Since that time, the economy has enjoyed a slight recovery, 1999 GDP growth rates were 5.8% (2000-5.1%), still has not recovered to the levels prior to the 1997 crash, and the rupiah (as of Feb 7, 2001) was trading at 9,646 to the dollar. At the present time, the estimates of the GDP per capita in Indonesia vary between $2500 to $3000, at purchasing power parity.
- Remember, the essential arrangement between Golkar (read Suharto) and the Indonesian people seemed to be that the former would provide growth, the events of 1997 shattered this. Riots through the year, pogroms against the ethnic Chinese and an increasing public dissatisfaction with Suharto, his family and the connected businesses. The corruption, that was deemed tolerable during times of economic growth, during the times of trouble (unemployment, etc.) manifested into direct political challenges against the Suharto government.

2. Political
- Under increasing pressure from the mounting street violence Suharto resigned in May of 1998. He was replaced by an old friend B.J. Habibie, who attempted to provide some stability to the country, continued the negotiations with the IMF, agreed on a referendum for East Timor (in 1999 and the locals voted for secession), and mounted an investigation into the amount of money gained by the Suharto family during the previous 30 years. However, the Indonesian people judged this effort to be half-hearted, at best, and the parliamentary elections of June, 1999 saw Golkar’s share of the vote plummet from the 70%+ of the 1997 election to around 21%. Ties to Suharto were simply too great for Habibie.
- Remember, that under the Indonesian system, the President is appointed by something called the People’s Consultative Assembly (MPR), which consists of the 500 members of parliament, plus 200 others (135 selected by the 27 provincial parliaments and 65 are appointed by the National Elections Commission.
- Following the 1999 elections, it seemed quite likely that Megawati Sukarnoputri would become Indonesia’s President, as, her party, the Democratic Party (PDI), received the highest % of the votes (33%). However, she was clearly unacceptable to the military (remember that the parliament consists of 425 elected seats and 75 which are appointed by the military) and others within the political leadership. Also, appointing Habibie would have caused the riots to intensify and provide the impression that naught had changed in Indonesia. Actually, he withdrew from the race just prior to the vote Therefore, Abdurrahman Wahid (Gus Dur) became the president. (Vote 373-313).
- Abdurrahman Wahid (Gus Dur), is a highly respected figure. A respected Muslim cleric, who has also said that their should be no linkage between Islam and politics. He is the former head of Indonesia Largest Muslim Organization (Revival of religious scholars – 34 million members). Also, he is a friend of Megawati’s from some time back, and quelled the street protests that followed her loss by naming her as Vice President. Especially important in this case as he is nearly blind and has already suffered two strokes. Question of whether the military would allow her to take office.
- Gus Dur is attempting sweeping reforms of the military (who are hated in many of the outlying provinces), and nearly fell victim to a coup in January of 2000, after he said that General Wiranto (former head of the military)should resign his cabinet position over allegations of his involvement in the massacres in East Timor. Helpful steps have been taken to separate the military from civilian life, but the matter is certainly not settled (explain how Junior officers come to expect the perks they have seen their seniors enjoy).
- Political question is far from settled in Indonesia, yet it seems to be a much more democratic place than three years ago.

3. Territorial
- Much of Indonesia’s natural resources are held in the outer (non-Javanese) islands, and there is a strong belief in places like Aceh and Irian Jaya that they are simply not receiving their fare share of the proceeds from the cultivation of these resources. This was especially true under the Suharto government, where his extended family and tight network of associates controlled many of Indonesia’s largest companies. For example, Aceh controls 40% of Indonesia’s Liquified natural gas, of which it is the world's’ leading producer. Located on the northern tip of Sumatra, The population of this province is 97% muslim. Long history of rebellion against rule from jakarta, first against the dutch and now against the indonesians. Received a ton of investment $ during the Suharto era However, much of this went to create industries that would be staffed by migrating Javanese.
- Irian Jaya, now known as Papua, comprises the Western half of the island it shares with Papua New Guinea. 60% of the residents are protestant, province has seen numerous ethnic clashes over past three years between Christians and Muslims. Again, the Javanese migrants create a great deal of resentment. Not as economically developed as Aceh, but the idea of the Javanese profitting from their resources is one that goes down hard on this area.