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INDONESIA'S CRISIS
Will economic crisis plunge Indonesia into social and political crisis? March 13, 1998 |
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Questions asked
in this forum:
How likely is a revolution if the economic situation continues to worsen? If things continue to worsen and riots become violent, how important of a role will the military play? Why should the IMF and the international community bail-out his regime? What about the social costs of the crisis for the Indonesian people? Is the U.S. prepared to the end its support for Suharto ?
NewsHour Backgrounders
February 27, 1998
The reasons behind Indonesia's falling rupiah
February 3, 1998
Examining the ripple effect of Asia's economic crisis.
January 16, 1998
Treasury Secretary Robert Rubin discusses plans to help Asia's economies.
January 9, 1998:
Indonesia's reluctance to follow the IMF plan sends markets tumbling.
November 25, 1997:
Asia's leaders search for answers at the APEC meeting.
Browse the NewsHour's coverage of Asia and the economy.
Outside Links
APEC's homepage.
The Center for Strategic International Studies.
For the past three decades, Indonesia
has been one of Asia's most powerful economies. During this period, its economy grew at an average annual rate of seven percent. But when financial turmoil struck the region last July, Indonesia's economic achievements quickly unraveled.
Since then, its currency, the rupiah, has lost nearly 80 percent of its value. Banks and major companies have collapsed overnight. Unemployment has increased dramatically and food prices have skyrocketed. Riots have erupted across the country, most of which are directed at ethnic Chinese, who make-up three percent of the population, yet control approximately three-quarters of the nation's wealth. If economic conditions do not improve, many experts warn Indonesia may plunge into social and political chaos.
Standing at the center of the current crisis is President Suharto.
For the last 32 years, he has ruled the world's fourth most populous country virtually unchallenged. Following a bloody military coup in 1965 that killed an estimated 500,000 people, Suharto, then the country's Major General, emerged as Indonesia's leader. Since then, he has overseen every aspect of Indonesian society, including its remarkable economic growth.
But his handling of the recent economic crisis has failed to restore confidence both at home and abroad. Many contend that his reluctance to adhere to the International Monetary Fund's prescribed reforms has exacerbated the current crisis. And despite his repeated promises, President Suharto has failed to dismantle the monopolies and cartels that control the economy, many of which are run by his family and friends.
Furthermore, his plan to peg the rupiah against the U.S. dollar has provoked international criticism.
Continued defiance of the IMF plan may prompt its board to suspend future payments of its $33 billion loan package, potentially causing even greater chaos in the region.
On March 10, President Suharto will be easily elected to his seventh five-year term. Despite the emergence of opposition parties, including one headed by the daughter of the last president, none of these groups pose as large a threat as the growing economic turmoil.
In the meantime, President Suharto is taking no chances. Following the outbreak of riots, he reshuffled the military, placing his most loyal ally in charge of the armed forces and his son-in-law in command of the army's strategic reserve. As it was from the army that Suharto seized power in 1966, he is carefully reinforcing his support at the upper echelons of the military.
In June, President Suharto will turn 77. Although President Suharto's health has been questioned in the past, it is the worsening economic crisis that experts say poses the greatest threat to his regime. But for many, the future of President Suharto and Indonesia itself seems to hang in the balance.
Answering your questions are Mr. Edward Masters, Mr. Ralph Cossa and Mr. John Hughes.
Mr. Masters, former U.S. ambassador to Indonesia during the Carter administration, is currently president of the U.S.-Indonesian Society.
Mr. Cossa, who has twenty-five years of experience in formulating U. S. security policy in the Asia-Pacific and Near East-South Asia regions, is Executive Director of the Pacific Forum at the Center for Strategic International Studies
Mr. Hughes, former publisher and editor of the Christian Science Monitor, is a Pulitzer prize winning journalist for foreign correspondence. He is author of Indonesian Upheaval and currently works for the Deseret News in Utah
How likely is a revolution if the economic situation continues to worsen? If things continue to worsen and riots become violent, how important of a role will the military play? Why should the IMF and the international community bail-out his regime? What about the social costs of the crisis for the Indonesian people? Is the U.S. prepared to the end its support for Suharto ?
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