Critical Countries: Indonesia: Testing Time for the “New Order”

Shortly before President Suharto was sworn in last March for a third five-year term as President of Indonesia, he delivered a major state of the nation speech to the People’s Consultative Assembly.The trials of his second term, Suharto said, “have made us more mature and more realistic. These experiences have done away with wishful thinking, especially the illusion that development is not a struggle . . . . We grow more conscious that in implementing development we are sometimes confronted with alternatives – which road should we take so we reach our goal safely. At times this choice isn’t between the good and the bad, but only which is less bad than others.”

Little more than a decade ago, Suharto and the Army took power and ended the “guided democracy” of the Sukarno era as well as Indonesia’s flirtation with the Soviet Union and China. At the time, Suharto made a monumental strategic decision – gambling the development of the world’s fifth most populous nation on a partnership with the free market economies of the United States, Japan and Europe. His New Order brought political stability and some economic progress. Indonesia took more effective control of its own oil and other natural resources. Soon soaring oil prices brought a wave of optimism that convinced many that Indonesia might be able to hoist itself dramatically and suddenly from poverty. But then came a worldwide recession. The engine of Suharto’s development program, the state oil company Pertamina, derailed, wrecking the illusion that somehow oil would prove a magic balm for the nation’s problems.

Today, as Suharto begins what will probably be his last term, his New Order is facing a testing time. Indonesia’s problems of population, food and jobs are looming more starkly than ever; around them center many of the themes voiced by his detractors at home.

The years ahead are likely, as well, to plumb the West’s commitment to official aid programs, and to test anew the commitment of private enterprise to a responsible role in a nation that has always held a special allure for those seeking riches from the East. Suharto’s third term is shaping up as a test of the very worthiness of the West as a partner in development.

II

The stage for all this was set early in the New Order, when Suharto brought in a team of Western-educated technocrats to run the nation’s economy. These included a host of highly able officials, ranged under Widjojo Nitisastro, head of the national development planning agency, BAPPENAS, and sometimes called by Westerners the Berkeley Mafia.

Under their guidance, Indonesia faced up to formidable problems and recorded some impressive achievements. Over the course of a decade, real gross domestic product grew at an average of about seven percent a year to more than $44 billion in 1977. Inflation, which was running at more than 600 percent during the final days of Sukarno, has been wrestled under control, now running at about ten percent a year. Foreign trade has exploded; gross exports of $10.6 billion …

source : http://www.foreignaffairs.org