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Indonesia's Wahid Gets Off To A Flying Start (Int'l Edition)


International -- Asian Business: Indonesia

Indonesia's Wahid Gets Off to a Flying Start (int'l edition)

The President is bypassing the army and soothing 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 power over day-to-day governing to Vice-President Megawati Sukarnoputri, and put the economy in the hands of her closest advisers. The move defused tension among millions of Megawati supporters incensed by her failure to win the presidency in the Oct. 20 vote by the national assembly. 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 focus on economic growth and bureaucratic reform. "We have to make economic recovery our first goal, our primary goal," Wahid announced. Western economists were impressed by the lack of nationalist rhetoric. "This really is a new beginning," says Charles Wheeler, analyst at MMS International in Singapore.

Everyone, including Wahid, recognizes that Indonesia faces an uphill struggle. A daunting list of priorities generated by the government cites restructuring dozens of bankrupt banks, reforming the civil code so that contracts are respected, and renegotiating the price structure of multibillion-dollar power plants 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 the right signals to a nation looking for unity. The team includes two reputable ministers from the Suharto era. But it's also heavy with members of Suharto's opposition. "Wahid has to be careful to see that all factions are represented," says Arief Budiman, professor of Indonesian studies at Melbourne University in Australia.

The men who will take primary control of the economy are Kwik Kian Gie and Laksamana Sukardi, who come from the Megawati camp. Kwik, an ethnic Chinese, will be supreme economic policy 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 will put him in charge of recruiting foreign investors for a multi-billion-dollar privatization program of Indonesian industries that faltered under Suharto.

The complex deal that Wahid cut with the military could go a long way toward building 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 that 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.

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 non-army man has held the post. Widodo is seen as a moderate.NO FUNNY BUSINESS. 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 other illegal deals, is again under way. The new Attorney General is Marzuki Darusman, a human rights lawyer who was key in denying a second term to Suharto's successor, former President B.J. Habibie. "We will not tolerate any monkey business anymore," he told reporters. Wahid already ordered the arrest of Habibie fundraiser Setya Novanto in connection with the disappearance of $80 million in the Bank Bali scandal.

Wahid's pick for Foreign Minister also represents a break from 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 the resumption of diplomatic and trade ties with Israel.

Other appointments appeared to appeal to various constituencies. Wahid, head of the 34 million-member Islamic organization Nahdlatul Ulama, picked Yusril Mahendra, a hard-line Islamic party leader, as Justice Minister. But analysts expect any hardline views to hold little sway, especially since Wahid has steadfastly opposed the imposition of Islamic law and Islamic banking practices.

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 future of the National Planning Agency, whose role should shrink as the provinces get more autonomy, is also in doubt.

Wahid's decisiveness could have repercussions. Allies of Habibie, who is implicated in a report on high-level corruption, could stir up trouble. Provinces such as Aceh, site of enormous Mobil Corp. gas fields, may refuse to drop their bids to secede. But at least Wahid has started what looks like a normal, working government--something Indonesia sorely needs.By Michael Shari in Jakarta


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