Indonesia: Opposition grows to IMF plan
Mounting pressure has forced the Indonesian government to delay implementing key elements of an economic restructuring package negotiated with the International Monetary Fund (IMF). The April 1 budget did not include a controversial fuel subsidy cut, nor the promised wage rise for senior civil servants.
The partial backdown highlights the Indonesian elite's nervousness about the social and political repercussions of the austerity program, a condition of the IMF's US$5 billion three-year loan. However, the budget did contain cuts to electricity, telephone, education and transport subsidies.
The elite has good reason to be worried. On April 1, thousands of students and workers across Indonesia rallied in opposition to the plan and mass leaders have vowed to step up their campaign against it (see article below).
The IMF loan, agreed in January, is to be delivered in tranches, as the "reformist" government of Abdurrahman Wahid and Megawati Sukarnoputri implements the IMF's conditions.
With little progress to the IMF's liking to date, the second tranche of US$400 million due on April 4 has been delayed until May. The IMF has also hinted that the Paris Club of creditors at its April 12 meeting may refuse Indonesia's request to reschedule US$2.1 billion of its foreign debt. Indonesia's total foreign debt is some US$200 billion, with private debt making up US$65 billion.
The IMF package has provoked much public debate. Muhammad Ma'ruf, editor of Pembebasan (Liberation), the newspaper of the People's Democratic Party (PRD), told Green Left Weekly: "There was a slight improvement in the economy last year, but that has now reversed. The government's neo-liberal austerity program is leading to other crises: there's been a big rise in unemployment; inflation has increased to 29%; there has been an increase in public service costs by between 30-75% and there have been many more strikes by workers and protests among small farmers."
Some of Wahid's chief political rivals are adding fuel to the fire. House of representatives speaker and Golkar party chairperson Akbar Tanjung told a seminar organised by Strategic Intelligence two weeks ago, "The government does not have a sense of urgency in economic fields". He criticised the President for sparking further economic uncertainty by talking up possible coup attempts and differences between him and the military.
Some of Tanjung's criticisms are being repeated by the IMF and its backers. On a visit to Indonesia in March Stanley Roth, US assistant secretary of state for East Asia, advised the government to make haste with its economic restructuring program, for its own sake.
Roth made no bones about the US's and IMF's chief preoccupation: Jakarta needed "to take the steps necessary to deal with the formidable economic problems that can get the private sector functioning again".
But he also underscored what seems to be a growing concern among Indonesia's main Western backers — Jakarta must get its economic house in order or risk more social and financial stability.
Elite nervous
The build-up of mass pressure was a key factor in the Wahid government's partial backdown. On March 30, Dita Sari, president of the Indonesian National Front for Workers' Struggle (FNPBI) and spokesperson for the newly formed People's Committee for Justice (KEKAR), vowed that the campaign would continue until the austerity measures are abandoned.
The People's Committee for Justice comprises the FNPBI, the National Student League for Democracy (LMND), the Indonesian Workers Prosperity Union (SBSI), the Workers' Committee for Reform Action (KOBAR), Anti-Fascist and Racist Action (AFRA) and Tionghoa Youth Solidarity for Justice (Simpatik).
Those unions grouped under the FNPBI umbrella have rejected the government's offer of a 25-30% wage rise, saying that a 100% increase is necessary. Senior public servants were to be given pay rises of 2000%.
Ma'ruf told Green Left Weekly that LMND and other student groups have organised pickets outside the ministry of education to protest cuts to the education budget which will push up fees at some state universities by 300%. He said FNPBI and LMND plan to continue their demonstrations in the lead-up to May Day.
PRD branches across Indonesia are also campaigning against the subsidy cuts. On March 31, many targeted state parliamentary offices for their protests, to highlight the support that the government and other parliamentary parties are giving to the IMF-driven austerity program.
The PRD has met with MPs who seek a cancellation of the subsidy cuts and has even received invitations from bourgeois economists to participate in discussions.
Hypocrisy
The PRD has lashed out at the five big governmental parties — Golkar, Megawati's Indonesian Democratic Party of Struggle, National Mandate Party, Star and Crescent Party and National Awakening Party — which claim to be reform-minded but nevertheless support the IMF-Wahid austerity package.
"Not one of the five big parliamentary parties has spoken out against this oppressive economic policy", said Ma'ruf.
"They have again shown their hypocritical character; when the people's opposition grows stronger, they pretend to be on the same side", he said, referring to statements by, among others, Amien Rais, the People's Consultative Assembly speaker and leader of the National Mandate Party, who has argued that the government should prioritise raising the wages of low-ranking civil servants.
Even the Indonesian United Democratic Party (PUDI) led by Sri Bintang Pamungkas, a dissident and political prisoner under the Suharto regime, has supported the IMF-government deal. According to Ma'ruf, it argues that getting as much foreign investment as possible is the only way to overcome the economic crisis.
Alternative program
An April 1 statement from the PRD's Central Leadership Committee (KPP-PRD) put the government's decision to delay some of the cuts down to its inability to come up with a compensation package for the poor and its fear of the opposition campaign.
"Several times the government presented a plan to the parliament to distribute fuel subsidies to the poor — the coupon method, monetary compensation — but they were knocked back because of concern over corruption at the operational end", a KPP-PRD statement said.
The party has warned the people not to be swayed by this latest Wahid manoeuvre, saying "In reality this policy of delay means that the government has not cancelled the decision". Government officials say the fuel subsidy will be cut within three months.
The PRD says that while the price of fuel, electricity and transport are yet to be worked out, prices of basic goods are sure to increase as the cuts are passed onto the consumer. Already, prices of kerosene and cooking oil are going up as speculators begin to stockpile.
The PRD's extra-parliamentary campaigning for an alternative economic program has also bought it new notoriety.
The programme was launched by PRD leader and former political prisoner Anom Astika on a TV chat show on March 29. The programme, which includes the seizure of the illegally accumulated assets of Suharto and his cronies and a progressive income tax, received positive coverage from Kompas, Indonesia biggest circulation daily newspaper.
According to Ma'ruf, the party is looking at a longer-term anti-cuts campaign which involves different sectors.
"We're planning to set up anti-cuts 'posts' on campuses and in neighbourhoods, so that they become both places where discussion can be had as well as serve as locations from which people can be mobilised to campaign against the austerity drive", he said.
BY PIP HINMAN