International Business: Indonesia
Indonesia's Wahid Gets Off to a Flying Start
The President is sidelining the army and reassuring investors
Indonesia's new President, Islamic cleric Abdurrahman Wahid, may have such poor eyesight that his daughter has to lead him through the corridors of the presidential palace. But being virtually blind with a history of strokes has not kept Wahid from having a vision for his government based on compromise and a swift move away from corruption.
In his first days in office, Wahid, 59, made a clean break from Indonesia's oppressive past. Allaying fears about his ill health, he delegated considerable governing power to Vice-President Megawati Sukarnoputri, and put the economy in the hands of her advisers. That defused tension among millions of Megawati supporters incensed by her failure to win the presidency. Because a third stroke could incapacitate Wahid, he wants her at his right hand in order to pass on his consensus-building skills, says assembly Chairman Amien Rais. "Megawati is a fast learner," says Rais.
Wahid showed his knack for compromise by including some of Indonesia's old guard in his new government and by curtailing the army's influence. His speeches focused on economic growth and bureaucratic reform, and economists were impressed by the lack of nationalist rhetoric. "This really is a new beginning," says Charles Wheeler, analyst at MMS International in Singapore.UNITY. Everyone, including Wahid, recognizes that Indonesia faces a struggle. The daunting list of priorities includes restructuring dozens of bankrupt banks, reforming the civil code so that contracts are respected, and renegotiating multibillion-dollar power plants deals with foreign investors. That's not to mention cleaning up after a series of financial scandals and the debacle in East Timor.
Wahid's cabinet choices send a message of national unity. The team includes two reputable ministers from the Suharto era. But it's also heavy with members of Suharto's opposition. The men who will take primary control of the economy, Kwik Kian Gie and Laksamana Sukardi, come from the Megawati camp. Kwik will be supreme economic czar, holding the title of Finance & Economy Coordinating Minister. He has indicated support for the painful restructurings demanded by the International Monetary Fund as part of its bailout of Indonesia. Sukardi is Capital Investment & State Enterprises Minister, which puts him in charge of recruiting foreign investors for a multibillion-dollar privatization program.
The complex deal that Wahid cut with the military could go a long way toward political stability. For the first time in Indonesian history, the post of Defense Minister went to a civilian: former Education Minister Juwono Sudarsono. Indonesia's chief military officer, General Wiranto, discredited by his troops' rampage in East Timor in September, will take a cabinet position as Defense & Security Affairs Coordinating Minister. Diplomats say Wahid intends to modify the once ceremonial post into a job similar to the U.S. National Security Adviser. Wiranto will no longer command troops but will play a key role in Indonesia's defense strategy.PROBE. To make sure Wiranto would go along with the deal, Wahid asked him to choose both the defense minister and the armed forces commander. He picked Sudarsono, who was once deputy governor of Indonesia's army staff college. And he chose the navy's Admiral Widodo to command the armed forces--the first time a nonarmy man has held the post.
Now that Suharto's opposition is firmly in power, the investigation into the origins of the Suharto clan's wealth, alleged to come from billions of dollars in kickbacks and shady deals, is again under way. Wahid's pick for Foreign Minister also represents a break with the past. Former Foreign Minister Ali Alatas had spent 11 years serving Suharto and Habibie and was closely associated with repression in East Timor. New appointee Alwi Shihab, an Islamic-studies scholar close to Wahid, immediately announced a resumption of diplomatic and trade ties with Israel.
Wahid is also tackling the inefficient bureaucracy. He immediately abolished the State Secretariat, which effectively ran government ministries under Suharto, as well as the Information Ministry, which monitored and censored the media. The National Planning Agency, whose role is shrinking as the provinces get more autonomy, is also in doubt.
Wahid's decisiveness could have repercussions. But at least he has started what looks like a normal, working government--something Indonesia sorely needs.By Michael Shari in Singapore