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B.J. Habibie: Indonesia's Interim President?
Stephen Sherlock
Foreign Affairs, Defence and Trade Group
25 May 1998
Introduction
On 21 May, Indonesia's long-serving President, Soeharto, resigned and
was replaced by the Vice-President, B. J. Habibie. Habibie is a figure
closely associated with the Soeharto regime and has only a limited power
base of his own. The key question surrounding Habibie's presidency is
thus whether he regards his position as interim or if he will attempt
to maximise the length of his term. If, as seems increasingly likely,
he moves for early elections, the extent of electoral reform will be a
major issue of contention. This note sketches out the major elements in
Indonesian politics whose demands will place the greatest pressure on
Habibie as he attempts to resolve Indonesia's economic and political problems.
Background: The Crisis of May 1998
After months of economic downturn and political instability, events in
Indonesia came to a crisis in mid-May 1998. Major price increases following
the abolition of fuel subsidies (to meet the conditions of the International
Monetary Fund (IMF) reform package) set off an explosion of popular anger,
expressed in rioting and looting, resulting in the death of around 500
people. On 12 May, riot police fired on a demonstration at Trisakti University
in Jakarta, killing six students. This gave added impetus to the already
growing student-led mass movement calling for the resignation of President
Soeharto, an end to corruption and nepotism and for political reform.
These events brought about the final collapse of support for President
Soeharto, whose popularity had been waning for several years and which
began to crumble with the onset of major economic problems from the second
half of 1997. In the wake of the riots and demonstrations, mounting pressure
from elite elements for the President to step down culminated in calls
by the Speaker of the Parliament and by 11 Cabinet ministers for Soeharto
to relinquish power. On 20 May, Soeharto declared that he would call new
elections but would not be a candidate. He did not say, however, when
the elections would be held or under what electoral arrangements. This
move, together with the call by Muslim leader, Amien Rais, not to take
to the streets, succeeded in preventing the huge popular mobilisation
planned for the next day. But the resounding rejection of Soeharto's plan
by almost all elements in Indonesian politics forced the President, on
21 May, to announce his resignation.
Can Habibie Survive as President?
Although his appointment was in accordance with Indonesia's constitution,
Habibie is in a politically weak position because of his association with
the rule of ex-President Soeharto, because he his not part of the influential
Javanese elite and because his abilities are not well regarded by many
of the key players inside Indonesia or internationally. If President Habibie
is to succeed he must reach an accommodation with a range of interests.
The Military
The Armed Forces of Indonesia (ABRI) has been a central player in Indonesian
politics since independence in 1949. ABRI could be a critical source of
opposition if Habibie's presidency were to weaken in the coming weeks
and months. The ABRI Chief, General Wiranto, has formally declared his
support for Habibie and has removed Soeharto's son-in-law, Subianto Prabowo,
from the key position of commander of the Strategic Reserve. ABRI leaders
have, however, made little secret of their dislike of Habibie. Habibie
has no military background (unlike former General Soeharto) and his main
power base, apart from his close relationship with Soeharto, has been
the Association of Muslim Intellectuals (ICMI). ABRI has long been suspicious
of popular organisations outside its control, particularly those with
an Islamic character. Habibie has also been resented because his organisations
have moved into traditional areas of ABRI influence such as defence equipment
procurement.
The Pro-Democracy Movement
While no clear leadership elements emerged during the anti-Soeharto protests,
the driving force behind recent events was the mass pro-democracy movement
led by students and supported by non-government organisations and labour
and Islamic groups. Most of the student activists regard Soeharto's resignation
as only the beginning of political change in Indonesia and hold Habibie
in contempt as a symbol of the discredited old regime. Although the movement
has lost some of its momentum, it is likely to continue to campaign against
Habibie's presidency and for the calling of truly democratic elections.
Muslim Organisations
The end of Soeharto's presidency has given renewed prominence to Islamic
organisations such as Muhammadhiya and Nahdlatul Ulama (NU), which were
forced to eschew a political role under the New Order. Both organisations
claim a membership of between 20 and 30 million, but they have limited
capacity for mass mobilisation. Nevertheless, Amien Rais of Muhammadhiya
and Abdurrahman Wahid of NU have emerged as significant opposition figures.
Both Rais and Wahid were consulted by Soeharto before his resignation
and Rais is a particularly adroit politician who has used the crisis to
manoeuvre himself into domestic and international prominence. Rais has
said he would give Habibie 'three or four to six months' to demonstrate
his commitment to political reform. 'Fundamentalist' Islam holds little
appeal to most Indonesians, but Islamic ideas have taken an increasing
hold in recent years and are certain to play a more central role in a
democratic Indonesia. Habibie may attempt to use his strong connections
in certain Islamic circles to gain support for his presidency.
The International Community
The downfall of the Soeharto regime came about because of an externally-precipitated
economic crisis. A crucial test for President Habibie will be his capacity
to reassure international investors, financial markets and the IMF that
he can achieve political stability and economic reform. His government
has received only qualified support from powers such as the US, which
expect President Habibie to make early progress on political and economic
restructuring. Habibie's reputation as a Soeharto protege, an eccentric
economic nationalist and sponsor of economically inappropriate schemes
will make it difficult for him to overcome international scepticism.
Habibie's Main Tasks
Political reform and democratic elections. Pressure for
reform of Indonesia's political institutions is now irresistible, but
the extent of change will be a matter of keen debate. The student movement
argues for full Western-style democracy, but other players, such as ABRI
and Golkar (the semi-official political party to which all government
employees must belong), may attempt to retain some of their special role.
The task for Habibie will be to reconcile such competing interests. Habibie
will come under major domestic and international pressure for parliamentary
and presidential elections in the near future. Another key political issue
is the release of political prisoners. Habibie has pledged to hold elections
within 6 to 12 months and has released 2 prominent political prisoners.
Economic stabilisation and reform. An urgent task for Habibie
will be negotiations with the IMF to restart the flow of financial assistance
which is vital for a recovery in the value of the rupiah (which fell back
to its lowest levels during May) and for overall economic stabilisation.
A clear commitment to reform of Indonesia's financial sector and a change
in the relationship between the state and private business interests is
also a prerequisite for both immediate recovery and longer term growth.
The new Government will have to deal with the extremely sensitive issue
of fuel and food price rises without jeopardising the reform program.
Growing food shortages may occur in the coming six months.
Conclusion
President Habibie may interpret his role as facilitating a transition
to new political arrangements or he may attempt to consolidate his own
position. The indications are now that Habibie will not try to maintain
power. Given the forces against him, such an attempt would not succeed.
The depth of the economic crisis in Indonesia was largely the result of
weakness in the Indonesian political system and economic recovery is unlikely
to be achieved unless the country's political problems are resolved.
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