Indonesia: An Indira Gandhi in the Making?

Megawati Sukarnoputri has finally fulfilled her destiny insofar as she has managed to return to the Presidential palace on her own right. Indonesia’s Presidential palace was her home for two decades, from 1945 to 1965, when her own father, Sukarno — who was also the father of Indonesian independence — served as the country’s first 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 in its short history.

These challenges include the simultaneous occurrence of economic collapse, political violence, ethnic strife, religious conflict and secessionist movements, plus a monumental foreign debt in the vicinity of $70 billion.

But all these “other” problems aside, Indonesia’s economy has still not recovered from the Asian crisis. Indonesia is a textbook case of what all can go wrong when a still feudalist society tries to cope with the age of globalization.

First, under its brand of post-colonial feudalism, a lot of Indonesia’s “capitalism” still suffered under high degrees of graft, corruption and illicit family control of industrial activities. In fact, Indonesia’s grave, homemade corruption problems were recently documented on The Globalist in another article by Alexei Bayer.

Then, economic liberalization under the banner flag of globalization, allowed foreign capital to come in. And to make matters worse for Indonesia’s people, it also allowed foreign investors to bail out as soon as the first signs of a possible crisis loomed.

Next, capital flight and declining investor confidence dried up foreign direct investments. As a result, Indonesia’s economy was reduced to about one-third of what it was in 1996.

While anti-globalizers blamed capital flight for the crisis, globalizers blamed Indonesia’s inept banking system for the crisis. The Indonesian people, meanwhile, were haplessly caught in the middle.

Megawati’s first task would be to continue the IMF-initiated restructuring of the banking system as well as to restore investor confidence. This will not be easy given the state of U.S. and Japanese economies — both of which played pivotal roles in this nation of 207 million people.

Most anti-globalization activists argue that economic crises have extensive social and political consequences. They consider Indonesia their best case in point. That connection, of course, is also why the fate of the Megawati presidency is so pivotal for the entire global economy.

President Megawati’s second task will be to stabilize Indonesia and maintain its political integrity. Ms. 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, Ms. Megawati will have to sustain the consensus in Indonesian politics that removed her predecessor, Abdurrahman Wahid, and installed her as President. Her biggest challenge in this regard is bridging the gap between the country’s Islamic parties and its secular nationalists.

That won’t be easy, as Megawati is considered neither a charismatic nor politically very astute leader. Her primary assets are her family lineage — and the fact that in the last elections she had got more votes than any other candidate, including the departed previous President 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 Sukarnoputri was handed power.

What makes this state of affairs intriguing is that Indonesia’s population is 80% Muslim and that 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 of those assumptions as fallacies.

Some cynics may argue that Ms. Megawati 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 Necmettin Erbakan of Turkey gave up his Prime Ministership in 1997. Many critics of Islamic resurgence have argued that Islamists only believe in one vote one time (and then never again).

This slogan was, for example, used to justify the intervention of the military junta in Algeria when Islamists won elections. Erbakan, and now Wahid, have disproved the Islamophobic hypothesis that Islamists are generally insincere about democracy.

The U.S. response to the transition has been positive. President Bush has welcomed the new developments. However, there remains a gap between how the U.S. State Department and the Pentagon wish to respond. The Pentagon wishes to rush in and resume its extensive ties with Indonesian military.

Indonesia is a U.S. ally against the rising military power of China in the Far East. It is also the guardian of the shipping lanes of the region. Indonesia is pivotal to both — Asian stability and U.S. national interests in the region. There is clear unease over increasing Chinese and Russian collaboration.

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

In this case, U.S. military and economic interests clearly clash with U.S. desire to improve human rights in Indonesia. Ultimately though, it is in the interest of the United States to ensure that not only Megawati prevails, but also that Indonesia recovers rapidly.

A stable — and not so free — Indonesia is any day better than one where chaos and anarchy reigns freely. Under those circumstances, President 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 and investments rather quickly, then she may survive. Being the only alternative has taken her to the Presidential palace, but it will not be enough to keep the mansion.

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