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Indonesian Transition:
Challenges and Expectations

Muqtedar Khan, Ph.D.

Megawati Sukarnoputri has finally fulfilled her destiny to return to the Presidential palace on her own right. The Indonesian Presidential palace was her home for two decades, 1945-1965, when her father also the father of Indonesian independence, was President. She sure would have preferred a better time to realize her lifelong dream. At the moment Indonesia is facing some of the gravest economic and political challenges of its short history.

Indonesia’s economy has still not recovered from the Asian crisis. Indonesia is a textbook case of what all can go wrong with globalization. Economic liberalization allowed foreign capital to come in but also allowed it to bail out as soon as the first signs of a possible crisis loomed. Capital flight and decline in investor confidence dried up foreign direct investments and Indonesian economy was reduced to about one third of what it was in 1996. While anti-globalists blamed capital flight for the crisis, globalists blamed Indonesia’s inept banking system for the crisis.

Megawati’s first task would be to continue the IMF initiated restructuring of the banking system as well as restore investor confidence. This will not be easy given the state of US and Japanese economies.

Most anti-globalization activists argue that economic crisis have extensive social and political consequences. Their best case in point is Indonesia. Once the economy collapsed political violence, ethnic strife, religious conflict and secessionist movements simply exploded. In just a few years the government has piled up an international debt in the vicinity of $70 billion.

Megawati’s second task will be to stabilize Indonesia and maintain its political integrity. Megawati has a reputation for being strongly nationalist and may very well allow the Indonesian army greater freedom to suppress resistance in places like Aceh. But this will attract international condemnation and may not bode well for her diplomatic and economic goals.

Finally Megawati will have to sustain the consensus in Indonesian politics that removed Wahid and installed her as President. Her biggest challenge would be bridging the gap between Islamic parties and secular nationalists.

Megawati is neither a charismatic nor politically very astute. Her only assets are her lineage and the fact that in the last elections she had got more votes than any other candidate including Wahid. Her only ally is her legitimacy and perhaps the military, which would find her nationalism useful for their purposes.

The silver lining in the current Indonesian transition is the surprising durability of Indonesian democracy even in the face of political and economic emergency. The constitutional script was played out and Megawati was handed power.

Indonesia is 80% Muslim and it now joins Pakistan and Bangladesh as Muslim democracies who have had a woman head of state. Muslims are often accused of marginalizing women from the public arena, and for not producing democracies. But Indonesia, the largest Muslim nation (with 180 million Muslims) has exposed both the fallacies. Some cynics may argue that she is president because of who her father was. I would like to remind them that the same could be said of the current president of the world’s oldest and the best democracy.

Another remarkable aspect of Indonesian transition is the second instance of an Islamist leader giving up power in keeping with democratic norms. The first instance was when N. Erbakan of Turkey gave up his Prime Ministership. Many critics of Islamic resurgence have argued that Islamists only believe in one vote one time. This slogan was used to justify the intervention of the military junta when Islamists won elections in Algeria. Erbakan and now Wahid have disproved this Islamophoebic hypothesis that Islamists are insincere about democracy.

American response to the transition has been positive. President Bush has welcomed the new developments. However there remains a gap between how the State Department and the Pentagon wish to respond. The Pentagon wishes to rush in and resume its extensive ties with Indonesian military. Indonesia is an American ally against the rising military power of China in the Far East. It is also the guardian of the shipping lanes of the region.

The State Department is more cautious. They wish to see Indonesia comply with several demands, including legal proceedings against military personnel allegedly involved in atrocities against East Timorese.

It is in the interest of the US to ensure that not only Megawati prevails but also that Indonesia recovers rapidly. Indonesia is pivotal to Asian stability and American national interests in the region uneasy over increasing Chinese and Russian collaboration. In this case clearly US military and economic interests clash with US desire to improve human rights in Indonesia. A stable and not so free Indonesia is any day better than one where chaos and anarchy reigns freely.

Megawati will have to manage her diplomatic relations as delicately as her domestic relations. If she can stabilize Indonesia and bring in some foreign aid/investments immediately then she may survive. Being the only alternative can take her to the Presidential palace but it will not be enough to keep the mansion.

It remains to be seen if Megawati will prove to be Indonesia’s Indira Gandhi.