Indonesian campaign against price subsidy cuts grows
By Pip Hinman
JAKARTA — Around 500 members of the People's Democratic Party (PRD) protested outside the Presidential Palace on February 21 to demand that the Indonesian government abandon its plans to cut fuel and electricity subsidies. PRD members travelled to Jakarta from all over the country.
It the first national protest action undertaken by the PRD since July 1, when a protest it organised outside the Electoral Commission was fired upon by the military. This time, despite the menacing presence of 300 palace guards, the protest was peaceful.
All major TV stations gave the action prominent coverage, as did the newspapers the next day. Three of the PRD's central leaders — party chairperson Budiman Sujatmiko, Petrus H. Harianto and Faisal Reza — managed to meet in private with Indonesian president Abdurrahman Wahid to demand the decision to cut subsidies be reviewed.
"The president said the government could not stop the cuts to subsidies on fuel and electricity because if this was done, it would face difficulties in obtaining funds from the International Monetary Fund", Budiman told a press conference afterwards.
Budiman said that the 20% cut to the fuel subsidy and the 35% cut to the electricity subsidy would dramatically worsen the living standards of the majority of people. According to a February 21 PRD statement, the price of petrol will increase by 10% and electricity by 29.5%.
In a new agreement with the IMF for a three-year, US$5 billion loan, which will be delivered in stages according to the success of the Indonesian government's austerity measures, Jakarta has agreed to make big cuts in social spending.
According to a February 4 IMF press release, the three-year program is designed to "reinvigorate bank, corporate and other restructuring policies crucial to sustaining an economic recovery". The IMF and the Indonesian ruling class are dreaming of an annual growth rate of about 4% by 2002, with an inflation target of below 5%. In 1988, real gross domestic product contracted by 14.2% and average inflation was 64.7%.
On February 18, the government approved the new law to cut fuel and electricity subsidies. This law, which will come into affect on April 1, will mean that the majority of people will face a big increase in their cost of living because not only will they pay more for fuel and electricity, but the price of all essential items will also increase.
"The government claims this policy will bring economic benefits. However, it is really only concerned to boost the profits of the capitalists as it is aimed at continuing the privatisation of key state industries such as the state electricity company", said Sujatmiko.
The government is trying to look less harsh by only increasing electricity costs for those who use 900 watts or more. "Everyone's cost of living will still rise as companies will pass on the increase in production costs to the consumer, forcing the poor to subsidise the rich."
The PRD leaders pointed out to Wahid that in many Latin American countries where the IMF had applied similar structural adjustment programs (SAPs), the result was an increase in poverty. SAPs are "welfare for the rich", said Sujatmiko.
Wahid told the PRD delegation that they did not need to go to the trouble of organising such actions, and added that his door was always open for them to come and talk. He defended his government's austerity push by arguing that the government would work to reduce the country's dependency on the IMF. He repeated this two days later to a visiting Japanese business delegation.
That same day, however, Wahid put police on "full alert" to quash a rumoured a mass demonstration he said had been planned for that day. Military officials later played down the president's statement, saying that he wanted to reassure the group of visiting investors that he was in charge.
Economic crisis continues
While the so-called "democratic" Wahid government may have enjoyed mass support in its first few months in office, there are signs that this may end. A dramatic rise in the cost of living will deepen the financial and economic crisis which has engulfed Indonesia since the end of 1997.
Millions more people have been forced into poverty by widespread factory closures and layoffs. One international organisation, Helen Keller International, has reported that malnutrition has increased in Indonesia over the last few years and kills an average of 450 children a day.
While a tiny portion of the US$5 billion IMF package comes in the form of grants to be used to fight corruption (US$520 million), the cuts to the fuel and electricity subsidies form the central part of the neo-liberal conditions attached to the economic "rescue package".
The IMF is mindful of the widespread protests in Medan and Sumatra in May 1998, sparked by the last fuel price rise of 71%, which led to the downfall of Suharto. It has warned the Indonesian government to "maintain social stability" and to proceed with the austerity drive in stages.
In other unpopular moves, the government is planning to cut the education budget and to raise the taxes on cigarettes and cement. The student and labour movements are organising protest campaigns against these anti-people measures.
On February 13, a small student demonstration organised by the Student Action Front for Reform and Democracy (FAMRED) outside the attorney general's office was attacked by the military. Several students were injured.
Corruption
The PRD has called on the government to halt corruption, nepotism and cronyism, a move which would increase government revenue significantly. Up to 50% of potential tax revenue is not collected by the state.
The PRD is not surprised that the new government is continuing the economic agenda of its predecessors. The government contains many former Suharto-Habibie cronies and a number of unelected military appointees. This is the reason why the military budget has been left untouched in the government's drive to restructure the economy to make Indonesia more attractive for big business investment.
"It is clear that the new government is more interested in boosting the profits of the multinational and Indonesian corporate sector at the expense of the majority of people whose lives are set to become even more difficult", Sujatmiko told Green Left Weekly. He added that the government needed to maintain good relations with the military, which will be needed to quell rising discontent.
Rather than cut subsides on essential items, the PRD has called on the government to cancel the foreign debt, refuse to rescue insolvent banks, nationalise Suharto's and his cronies' assets at home and abroad (Time magazine estimates Suharto's properties are worth US$16 billion), nationalise the military's enterprises, reduce the military budget (which is larger than the education, social welfare, agriculture and forestry budgets), clean up corruption in state-owned enterprises and the bureaucracy, and put corrupt officials on trial.
The PRD has pledged to continue to organise against the subsidy cuts. The party has called on "people to form committees at all levels and in all sectors to reject the increase in fuel and electricity prices, join the mass protest actions on the streets, and form united fronts between democratic organisations such as the students, trade unions, peasant organisations, non-government organisations and political parties".
Solidarity messages can be sent to the PRD at <prd@centrin.net.id>.