By IPS Correspondents
JAKARTA, May 28 1998 (IPS)

When he formally assumed Indonesia’s presidency in 1967, Suharto inherited an economy in shambles, much like the desperate state this sprawling archipelago finds itself in today.

At the time, the strategy employed by Suharto the tactician was to enlist a team of American-trained economists to rein in runaway inflation that reached 1,000 percent that year, stabilise the rupiah, get a handle on foreign debt, attract foreign aid and encourage foreign investment.

Per capita income was less than 100 U.S. dollars and nearly 70 percent of Indonesians lived under the poverty line.

More than three decades later, the 76-year-old Suharto has come full circle. On May 21 he left the seat of power in much the same environment he assumed it — with the economy in disarray and the country in uncertainty.

Today the economy is in free fall, with inflation reaching 50 percent. Per capita income of 1,300 U.S. dollars has fallen to 300 dollars in less than a year’s time.

But up till the time the Asian financial crisis undercut a power base grounded on growth, Suharto, often called the father of Indonesian development, had transformed it into a tiger economy.

In hindsight, these achievements may temper many Indonesians’ harsh judgment of his record, even if they condemn his stifling of political activity, trampling of freedoms and corrupt rule.

“It is too early to write an accurate history of Mr Suharto. The full effects of his legacy cannot yet be seen, ” said Adam Schwarz, author of the book ‘A Nation in Waiting: Indonesia in the 1990s’.

“But for those plotting Indonesia’s future as well as for Indonesia’s friends abroad, it is worthwhile to begin the effort of disentangling what worked in Mr Suharto’s New Order government and what didn’t,” he added.

“Suharto deserves credit for long-established social and political stability that is a prerequisite for the continuity of national development,” said Abdurrachman Wahid, chairman of the Nahdlatul Ulama, the largest Muslim organisation.

The pragmatic economic management his administration adopted, increases in investment and labour productivity, export power and steadily-growing non-oil and gas industries powered Indonesia to more than 7 percent average annual rate of growth until 1996.

From 1965 to 1988, growth and a successful family planning programme combined to raise Indonesia’s GNP per capita by a robust 4.3 percent a year.

That period saw huge investments in power, telecommunications and infrastructure. Oil wealth funded the construction of schools, health centres and mosques, and nine-year compulsory education provided to virtually all male and female Indonesians.

Indonesia reaped a massive windfall in the surge in oil prices in 1973. In 1974 alone, high oil prices earned Indonesia 4.2 billion U.S. dollars, or one-sixth of GDP at the time.

The government focused heavily on agriculture, reflecting Suharto’s rural upbringing and his memory of how rice shortages had destabilised Sukarno’s regime. From 1974-1984, Indonesia moved from being the world’s largest rice importer to self-sufficiency — an achievement that has also been reversed now.

Suharto’s success in fixing the economic basketcase left by his fiery predecessor Sukarno, Indonesia’s founding father, was a key reason why Suharto, despite his authoritarian rule and dismal record on human rights, enjoyed good standing abroad.

In September 1997, the United Nations Development Programme (UNDP) gave Suharto a citation lauding the country’s anti-poverty record.

To this day, Indonesia’s record of whittling down poverty is unmatched. Its poverty incidence fell from 60 percent of the population in 1970 to 11 percent in 1996 — even while the number of Indonesians rose from 116 million to 200 million.

Suharto survived a challenge to his leadership in January 1974, when riots erupted in Jakarta and revealed the degree of public unhappiness with the rising economic dominance of foreign investors and ethnic Chinese businessmen. The military tried to lean on Suharto then, but he outmaneuvered them.

Meantime, Suharto moved to better use oil wealth to subsidise new industries like steel, cement and chemicals. Responding quickly to a plunge in oil prices in the mid-eighties, he began diversifying dependence on oil and building Indonesia’s export muscle.

For more than three decades, Suharto’s largely secure rule had provided an investor-friendly environment.

But that stability was shallow and cracks began appearing as Suharto aged and became more isolated, rich-poor gaps widened and Indonesians resented the wealth and patronage enjoyed by his friends, family and allies in the military.

Suharto’s repression, ranging from his government’s imprisonment of dissidents to his military’s annexation of East Timor and human rights violations there, undermined his rule — though these had precisely been meant to strengthen it.

Institutions of government, including parliament and a political system that had the state sanctioning the existence and activities of ‘oppostion’ political parties, hardly took root during Suharto’s regime.

Hari Sitompoel, a journalist with the English-language daily ‘Indonesian Observer’, says Suharto was strongly committed to small people like farmers “but he failed to control the interests of his allies, cronies and family members”.

This was why car showrooms and hotels believed linked to or owned by Suharto’s children and business pals were attacked in the riots that occurred ahead of his resignation.

“There is no doubt that unchecked corruption tolerated and encouraged by Mr Suharto deeply affronted Indonesians, undermined the competitiveness of the economy and weakened the effectiveness of the bureaucracy by eroding the legitimacy of the government,” Schwarz added.

Suharto, who had never faced a popular vote in his life, drew much of his legitimacy and staying power from the economic growth he delivered. When this growth was eroded by Asia’s crisis, he became vulnerable.

The crisis’ painful effects breached the social contact in place in Indonesia — that Suharto would continue to deliver better times. His biggest achievement, economic progress, began to unravel — and quickly.

Suharto nurtured Indonesia’s economic growth, but in the end, decades of stifling dissent and democratic institutions came back to haunt him.

Still, there may not be one, final verdict on the legacy of the man whose shadow loomed large and long across Indonesia.

Indonesians will remember Suharto in various ways. Students are demanding that he be tried for corruption and even hanged. But Muslim intellectual and artist Emha Ainun Najib says he should be credited for knowing his time was up.

Argued Najib: “If he wanted to, he would have been able to announce a state of emergency with which he could keep everyone’s mouth shut. But he conquered himself and wisely decided to step down.”

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