Crisis In Indonesia: A Bankruptcy Before Globalization¹⁾

Edi Cahyono²⁾

A. Introduction
The impact of capitalism crisis is mostly worst on the people in underdeveloping countries. In June 1997 a widespread economic (or financial) crisis resulting from capitalist overproduction began in Malaysia with a currency collapse, which then spread to other Asian "tigers." Countries such as Thailand, the Philippines, Indonesia, South-Korea faced this condition and some other countries felt this 'national bancrupcy' too. There are now no more Asian Tiger and Newly Industrialised Countries (NIC). Capitalism crisis did not just hit The South but it happened too in the North especialy in countries such as Brazil, Mexico, Argentina, Turkey, and Russia.

Indonesia consists of over 13,000 islands in the South Pacific. However, 60 percent of the 210 million Indonesian people live on just one island-Java, where the capital, Jakarta, is located.

Downtown Jakarta is a modern city of soaring office buildings and hotels. It is surrounded by desperate slums where millions live. The average income is US$3,300 a year, but 8 percent of the population lives on US$1 or less a day in what is considered one of the world's richest countries in natural resources.

Student demonstrations began in February 1998 as massive layoffs and the collapse of the country's currency³⁾ further impoverished workers, students and unemployed laborers. The program of these students is "eliminate KKN"-collusion, corruption and nepotism.

Since the crisis 18 million people loss their job. If the government fail in creating new jobs, Indonesia will face real problem: big crimes. Creditor institutions such as the World Bank, IMF and ADB, for instance, put social service program in its Letter of Intent (LoI) i.e. poverty alleviation in its privatization of the state bussiness (BUMN) program. Today's crisis is realy worst, but decisions for the solution are still dominated by and dependent on the U.S. imperialism.

The crisis forced Soeharto to step down from his presidency at 20 Mei 1998. For three decades Indonesian society had lived under the repressive Suharto regime. This regime had banned all independent organizations of the workers, peasants, students, intellectuals or any other sector of the masses. Significant changes happened after Soeharto stepped down. A great political euphoria pushing the people to establish political parties and unions. 150 political parties were established, although only 48 parties were entitled to contest in the elections for positions in Parliament (MPR/DPR). Unions are growing very fast; more than 140 unions were established during these last two years. Almost all of the unions are genuine.

This positive climate is significant for pushing Indonesian society to step forward towards a democratic life. Words like: ‘banned,’ ‘stopped,’ 'bridled' etc. mostly disappear. Indonesian people today ‘own’ their political space to propose whatever they want.

However, catching democratic space is not that simple and easy. 32 years under an authoritarian regime had resulted in a lot of disturbances coming from exponents of the New Order regime (as it was called) who don't want the change. We can find riots, bombings and other kind of teror as facts that some of the Indonesian people still don't want democracy and reform.

The New Order was a regime that depended on foreign loans. "Development" policy could only be realised when the government received foreign loans and investments. This construction had trapped Indonesia into indebtedness; and investments could only be run if there were foreign capital. The result was, Indonesian debts that was inherited from the New Order era (both government and private sector debts) are big enough, i.e. amounted to US$ 143 billions. US$ 75 billions are the responsibility of the government (Soeharto regime) and US$ 68 billions are responsibility of the private sectors the majority of which were connected to the Soeharto family's abundant bussinesses and their cronies.

Unfortunately, the 'development' that conducted in Indonesia has created a large gap between the rich and the poor, resulted in excessive labour exploitation, environmental exploitation and thus degradation, and also a loss of control of the natural resources as well as a growth without economic democracy and political participation.

Another factor that needs to be considered is 'globalization.' On one hand, globalization has a positive side of benefitting entrepreneurs and traders because it gave them a chance to enter the world market. Besides, globalization can be seen as something that will provide a challenge for competition among entrepreneurs. On the international level, head of the states arrange meetings such as the APEC meeting (Asia-Pacific Economic Cooperation), in fact arrange everything that relates to the opening of every country for international merchandise, trade and investment. In other areas we find the same cooperation such as AFTA (Asia Free-Trade Area for South-East Asia), NAFTA (North-America Free Trade Area for North Atlantic areas). Meanwhile, since 1970s there have been significant rounds of meetings called GATT (General Agreements on Tariffs and Trade), a forum which was in 1995 promoted as an organization called WTO (World Trade Organization).

APEC, AFTA, NAFTA, and WTO are in fact merely bussiness matters, but the use of local state authority has been used as a way of arranging and making bussines go more smoothly. For example, a forum like APEC is introduced as a consultative forum on the regional level to promote "more open trade, greater economic co-operation, investment expansion and a stronger multilateral trading system".⁴⁾ Or, as the ‘Declaration of Common Resolve’ (November 1994) states: "to continue to reduce barriers to trade and investment to enable goods, services and capital to flow freely among our economies."

During every meeting, every institution involved are forced to accept a number of deals related to investements and international trade, especially in the interest of entrepreneurs. They also talked about workers but not in a way in which to protect the interest of the workers. The APEC Ministerial Meeting Statement eve stated that: "APEC would then be a larger labour market stretching beyond the border of its member economies. We therefore must be equally prepared to facilitate movement of skills and workers across national boundaries."⁵⁾

Labour problems seemed to have been discussed only if international concerns want to pressure Third World countries to follow some scenarios that they have pre-arranged. This kind of pressure happened to Indonesia in the past, when the US threatened to stop the GSP (General System of Preference) facility if the Indonesian government still did not respect the worker's right to organize. This show of "good will" from the US had always appear whenever they found trouble in their trade and investment.

The Reform (reformasi) regime, under Wahid's presidency, realizes that globalization is not a good choice for the Indonesian people, but it seems that he is not yet in the position to make decisions to stop globalisation that opens local market and eliminates tariff.

Conflict among religions, etnics, etc. are real conditions that had happened since The New Order regime had been in power and until today. Some of the conflicts were genuine. However, it can be said that most of the conflicts happened after unkown people (third party) provoked and pre-conditioned the conflict. Albeit with great difficulties, a number of investigations conducted by YLBHI, Kontras, the Komnas HAM etc. indicated that New Order exponent had been involved in pre-conditioning the conflict after Soeharto resigned. The bombs that exploded in Jakarta and Medan, the riots in a large number of small towns are the ways they used in order to stop the democratization process that have just started in Indonesia today.

Indonesia's unity were shaken-up when the Acehnese and the Papuan people want their freedom, especially after East Timor received by accident the ‘facility’ to be freed. The cause for the wish to separate from Indonesia are clear, i.e. series of murder and killings by the military, whereas the military are actually assigned with the task of guarding investments in both areas in the name of the state.

Natural resources were taken-over, while local people live in misery. Example is the condition of the environment at the site of PT. Freeport Indonesia. On the one hand local people still live in pre-historic era (living by hunting, ethnic-tribal war, ‘un-dressed’ etc.), on the other hand, the Freeport is a giant company that ocupies 100 kilometers square of gold and coal mines in Timika, Papua, since 1967. The company even acquired a new licence in 1991 to increase the mining area into 2,6 milions ha. The success of PT. Freeport Indonesia did not automatically mean a change for the local people's life. Actually, the Papuan people has been staging protests to PT. Freeport since 1991 when Freeport renewed their bussinees through a second contract called the "2^nd Working Contract between PT. Freeport Indonesia and the Indonesian Government." They took the problem to the attention of the national Parliament (DPR). But parliament has never showed their care or concerns to the need of the Papuan. The same problem had happened in Aceh, particularly in the exploitation of Arun natural gas. An Acehnese once said, "if we are allowed to conduct the exploitation of the Arun-natural-gas by ourselves, [it is possible] that we have been able to construct our main road covered with gold". The discription is an indication of how big the benefit that had been taken over by entrepreneur is.

Local natural resources had been taken over, while the local people had been killed (extrajudicial, summary or abritary arrest execution), kidnaped (forced or involuntary Dissappearances), arrested (Illegal Detention), tortured (Tortured and Other Cruel Treatment). These human rights violence have always involved the military. The military have always used the excuse that they have to eliminate 'armed enemy’ such as the Free Aceh Movement (GAM) for Aceh, and the Free Papua Organisation (OPM) for Papua. These were in fact vertical conflicts-not horizontal-between the state (represented by the military) and the local people. The military promoted the areas of Aceh, Papua and ex East Timor as their Military Operation Zone (DOM).

The religious conflict (between Christians and Moslems) in Ambon-Maluku is a way to shift vertical-conflict into horizontal-conflict. Conflict in Maluku Island has been happenning for more than 2 years. It started in Ambon city at 19 January 1999 and spread to other neighbouring areas in North Maluku. There is practically no peace there until now.

Burning of houses, mosques/churches; torturing, killing, etc. are inseperable facts from the riots. The involvement of TNI (military) are very clear when investigators found the role of provocators-the sniper.

Other conflicts had happened in several other Indonesian towns, although in less big-scale compared to the conflict in Ambon-Maluku. The medium for creating the riots varied, from the issue ‘magic healer' in Banyuwangi (East Java), Tasikmalaya (West Java); ethnic enmity between the local Dayaks and the Madurese migrants in Sanggau Ledo (West Kalimantan), anti Chinese sentiments in Jakarta, to the issue of [anti] Islam in Tanjung Priok (Jakarta), the North Coast (Central Java), Ketapang (Madura), Situbondo (East Java), Banjarmasin etc.

Conflicts in Aceh, Ambon-Maluku, and former East Timor had forced the local people to move out to other areas (forced internal displacement). Their land now has been taken-over by the new authorities. It means that the conflicts has created a new problem of ‘re-allocation of land-owners.’ This not a simple problem. If the old-owners-the displaced peoples- came back to the area, a new conflict will emerge: ‘land conflict’.

The economic crisis that hit Indonesia since the mid-1997 has an impact in the opening of democratic space (see explanation above). Then the parliament has chosen Abdurrahman Wahid (Gus Dur) as the president (this position was made possible by a coalition of Islam-based parties called-Poros Tengah-which refused to let Megawati Sukarnoputri take the presidency position). Wahid is a democrat as well as a liberal. His position as President gave him the power to disband Parliament regulation (Tap MPR) that banned PKI and communism ideology.⁶⁾ He also opened a possibility for cooperation with countries like India, Israel and China, which was impossible during the previous period of power.

However, a number of persons in parliament didn't like what Wahid administration has done, so they started to find fault with Wahid on whatever he does, and cornered him. Recently they have used "Scandal" issues. Firstly the issue of a donation from Sultan Brunei (Brunei-gate) and secondly the use of Bulog funds (Bulog-gate). In both cases Wahid has been blamed and accused of coruption. These issues had been used to create a necessity to hold a special session of the MPR (the National Assembly) which will be held on August 1, 2001.

The Wahid administration has been trying to free the Presdient from these charges. A number of cabinet reshuffle were done including a change in the positions of State Secretary and the Attorney General as well as the Chairman of the Supreme Courts, in order to make it more difficult for the Parliament to try to stop Wahid.

The diminishing of foreign exchange reserve pushed Wahid administration to take several unpopular decisions such as increasing the prices for electricity, telephone, oil, clean water etc. These decisions automatically increased the prices of other goods increase significantly. Unfortunately, the decisions had also pushed the people to go to the street to protest and strike, such as those happened in Jakarta, Bandung, Surabaya, Semarang, Medan etc.

Price increase is a consequent of the realization of ending the subsidies as mentioned in the Letter of Intent (LoI) between the International Monetary Fund (IMF) and Wahid administration. The LoI includes SAP (structural adjustment program). The IMF set a number of conditions for the loan, including price increase, ending subsidies on some necessities, and canceling government development projects that actually provided a lot of employment. IMF wants to open the economy to the full control by multinationals, and thus demanding an end to subsidies and all social spending. In short, IMF wants to destroy social and political stability.

On the IMF's advise, the government have to increase their income from taxation. The people are burdened with payment of debts inherited from the New Order era. From 1997-1999 the government received 64 trillion to 117 trilion rupiah from tax. Tax from the capital market increased by 65%, i.e. from 20 trillion to 33 trillion rupiahs. And for the year 2000 the government received US$ 900 million (9.4 trilion rupiahs) from Indonesian people working abroad (migrant workers) only.

For three decades Indonesian society has lived under the repressive Suharto regime. This regime has banned all political activities of the people including workers initiative to build unions.

Now, in the Reform era, there are 140 unions, and 40 unions federation working in the national level. But the condition of unions are weak. Firstly, it is true that there is now space to organise and arrange strike. And we can find a lot of protests held by unions today. But a lot of protests have always ended with riots. The protesters destroy buildings, or burn tires, cars, etc. It looks as if they only want new chaos rather than trying to win by proposing what they want through bargaining procedures. This not a people power, this more a kind of vandalism.

Secondly, significant global capitalist regulations/policies have not been studied yet, although these policies are in fact will be used directly to regulate companies here. To mention one of the regulation is the regulation on codes of conduct.

Actually, the crisis has resulted in a number of conditions:

• mass lay off
• repression of the state by using military and police power.
• decline of labour market.

While, on the other hand, globalisation had pushed for:

• Individual contract
• Early retirement
• Flexible workers
• Subcontracting.

Globalisation is realy a big problem. Individual contract, for instance, makes it impossible for the workers to build their own unions. On the other hand, individual contract had been used by expatriates to work in Indonesia. Almost all expatriates are skilled workers. They work side by side with local workers. But they are given much better wages than local workers. All the conditions above have left the workers with no space for better life-politically, culturally, economically-these unfair conditions will in turn encourage working-class struggle.

The struggle will continue precisely because there is no viable long-run option for imperialism or Wahid's successors in Indonesia.

The IMF has been operating on the premise that it must have a political change in order to 'fix' the economic situation. But the idea of 'fixed' is not the same as that of the masses.

Whoever succeeds Wahid will either make the economic situation worse for the masses or have to resist the IMF program. Either option opens the road to renewed struggle.

The IMF program is to break up the Indonesian monopolies so that the U.S. and other imperialist monopolies can have undisputed rights to exploit the Indonesian workers. Labour-intensive projects are to be terminated. Subsidies on food, fuel and other necessities of life are to be ended so the money can be recycled back to Wall Street. Bankruptcies are to be promoted.

There will be no political solution. Should the Indonesian military be able to work out a 'transition,' it will lead to greater mass economic suffering and greater struggle.

While in the factories we still find,

It needs a 'people's power' solution. In Indonesia, the pent-up anger and frustration after the long nightmare of fascist military rule are coming up against a decrepit and weak ruling class. This struggle will not be easily put aside.

Education is the only good options to find underlying problems faced by the Indonesian people. Through education we can do a re-thinking of the meaning of relations among the people, political organisations and parties, unions, etc. And we can try to find better solution in responding to a separation as proposed by Aceh, West Papua etc., and how to make the Acehnese and the Papuan reconsider the relations of their provinces to the central government (but it is not easy).

For workers, education is still needed to increase their skill especially in running their unions. The backwardness of worker's basic education-almost all workers that work in factories never finished their high school-has put them as the loser. They have yet to acquire the skill to bargain with the capitalist; they also have to know about government policy on labour. Those capacities are needed to put worker's comparative advantage to the capitalist. Union is the best tool to bargain collectivelly with the capitalist. But union will be nothing if the people working there are weak.

Thank you