Tagarchief: Indonesia

April 2001

April 2001

April 2001

Emerging flashpoints Q1 2001

Conflicts anno 2001

The world is still ridden with several conflicts, conflicts which continue since a number of years. Or conflicts which seemed to have diminished but flared up again. The world has not become any more secure since the end of the super power stand off. On the contrary the world has become less stable and prone to new and enduring conflicts which are out of control. International diplomatic pressure can not end or even mediate in these conflicts. Any mediation is all to often simply used to improve the situation of all parties involved. It is a tactical decision to join any mediation or negotiations and not a decision to end the conflict.

Nearly all continents on the earth are victim to one or more conflicts. And the poorer the area the more likely a conflict will be present or about to start. Conflicts are not about politics anymore, they are about power, money, ethniticity and/or religion. This makes the majority of the conflicts even more brutal and long lasting.

To name a number of conflicts, on the Indian sub-continent, the fight between the Tamil minority, the LTTE, and the government in Sri Lanka. The fight between the Kasmiri independence movements against the Indian government. The fight in Afghanistan between the Pushtun Taliban and the coalition of movements in the northern alliance. And the communist insurgency in Nepal, which is getting worser every month.

In South America, in general there are problems with the drugs/criminal organisations which undermine the countries in the northern part of South America. And the more serious problem, namely, the fight between two leftist organisations, the FARC and the ELN, againt the government in Columbia.

The former territory of the Soviet Union. The fight between the Chechnian minority against the Russian government in Chechnya. The fight in Uzbekistan, Kyrgyzstan and Tajikistan against the IMU, an islamic movement fighting for the establishment of an Islamic state in Uzbekistan.

The problems in South-East Asia and Pacific Asia. The fight between the Karen and Shan minorities in Myanmar against the government. And the regular clashes at the border with Thailand between the Myanmar army and the armed forces of Thailand if the Myanmar security forces cross the border in pursuit of the Karen and/or Shan resistance movements The fight in the Philippines between the government and the Islamic/Moro movements in the south of the country. And the Philippines are facing a resurgent communist party, NPA, who are gaining strength and are increasing the actions against the government, often in cooperation with the Moro movements.

The African continent is facing probably the most intensive and deadliest conflicts.

The fight in Guinea between the Guinean armed forces and rebel movements out of neighboring Sierra Leone. The fight in Sierra Leone between the government with support of the ECOMOG and the forces of the RUF. The socalled first Great War of Africa in the Democratic Republic of Congo, DRC. The DRC is deeply divided by several movements with external support who fight eachother for the control of the country and its wealthy resources. The fight in Uganda between the several opposition movements and the government who want to eliminate the current government. The struggle between the Tutsi dominated government and the surpressed Hutu majority in Burundi. And finally the decade long fight in Angola between the government controlled MPLA and the rebellious UNITA.

These are the largest and intensive conflicts in the world and the world seems to get a couple of new conflicts added to the already to long list. Beside the here mentioned conflicts there a number of conflcts which are relatively small and are therefore not listed . Never the less these conflicts are dangerous and deadly but will probably be contained, remain small of scale and probably have a chance to be ended on the short term

The new or better intensified conflicts are on the Balkan, in the Middle East and in Indonesia. And these might if Murphy’s Law has a part in it become really dangerous and involve more countries.

Balkan

The last decade has not been a peaceful decade on the Balkan. The fragmentation of Yugoslavia did not happen without any problems. With the exception of Slovenia, all other new countries experienced problems in becoming an independent country. At first the problems with the Serbian dominated government in the former Yugoslavia about the establishment of an independent country. And secondly, there after the worsest of both, the internal struggles between the several ethnic groups in the societies of Croatia and Bosnia.

The last victim of this kind of conflict is Macedonia. The Albanian minority in the country with rather large support from Albanians out of Kosovo, and probably even on their instigation demand to be equally treated by the Macedonian government.

Another UCK kind of army/movement has become active in Macedonia. This organisation came out nothing. It was established within about two weeks. They call themselves, National Liberation Army, NLA. The NLA is probably led by Albanians out of Kosovo but is recruited mainly in Macedonia.

The first operation of the NLA was at the same time the birth of the organisation. The NLA occupied some hills in Macedonia and started to attack a couple of towns, Tetevo and surroundings, with long range ineffectual shootings. The NLA is hoping to receive massive support from the Macedonian-Albanians in their fight against the Macedonian government. The Macedonian-Albanians have until now an attitude of wait and see what is going to happen. Even if they support the idea behind the actions of the NLA. At the moment they are not certain about what to do, they support them because they are Albanians but do not yet accept the violence they use.

The reaction of the Macedonian government has been gradual. At first the Macedonian government reacted with police forces to end the problem but later they sended army units with heavy equipment to defeat the NLA. In the beginning the police and army forces returned fire from the build up areas and did not enter the mountains where the NLA was firing from. Attempts to seal the area were made but they were not be very succesful to defeat the NLA. Later on the Macedonian forces were moving into the mountains where they trapped the NLA. The strength of the NLA force which is fighting the governement is estimated from as low as 50 fighters to as many as 300 NLA fighters. As the Macedonian army moved into the area the majority of the NLA fled the area but a part remained and digged themselves in. This will be however a matter of time until they will be removed. The use of the heavy weapons have been limited until now for the danger of civilian casualties and not to receive any comments of the media and the west that they were using excessive and indiscriminatory violence to force out the NLA.

The KFOR in Kosovo is at the same time busy to seal of the border between Kosovo en Macedonia to make any support out of Kosovo difficult if not impossible.

The danger of this new action of the NLA in Macedonia is the idea behind these new operations. They are not fighting for equal rights, the Macedonian-Albanians are supposedly treated as second class civilians which they are certainly not, they have been treated different in the past but since then the situation has improved and will continue to improve.

The NLA is essentially having a hidden agenda. They want to create a great Albania, consisting out of the Albania, Kosovo, the territories with a large number of Albanians in Macedonia and the Presevo-Medevo area in Serbia which is also inhabited by a majority of Albanians.

These ideas were already visible in the Kosovo conflict but was downplayed by all involved parties. The NLA is planning a replay of the Kosovo conflict, first start a civil war, which includes the help of the whole population and there after create large number of fugitives and stories of massacres to force the international community, read NATO, to intervene and create a defacto independent new country.

The family/clan structure of the Albanian society, with the vendetta thinking, will promote the support of the NLA but the price paid could proof to be to high.

It will be not that easy this time to get the support they had in the Kosovo conflict. The Albanians had in Kosovo the advantage of being the victim of the bad Serbians, a long time of suppression and a number of years of peaceful resistance.

The cards in Macedonia are totally different, it is true the Albanians were suppressed in the use of their own language and culture just after the beginning of Macedonia as an independent country. But at the moment there had been made progress to the improvement of the conditions of the Albanians in Macedonia. They can use their own language, have their own schools, even an university, can live according their own customs, have a large political freedom in their own region and are represented in the national government. So they are hardly the second class civilians the NLA claim them to be. They have received everything short of an independent Albanian state from the Macedonian government.

The NLA can and will start a new guerilla war in Macedonia, get even some support out of the local population and inflict damage to the government and the relations between the moderate Albanians and the government but they will not be as succesful as in Kosovo. Militarily and politically they will be much weaker and need to fight on their own, with the only supporters in Kosovo and Albania proper. They might have large stocks of weapons and ammunition in Kosovo but fighting a long conflict is an expensive business and the resources are limited.

They certainly will not receive international support and even large number of refugees will not impress that much anymore, as they can only go to Kosovo and Albania and live over there in poverty. And most importantly the refugees, Albanians will be blamed for their own miserable position. But considering the policy and objective of the NLA movement they will not care to much about the well beingof the local population as they consider their objective as the higher value, and much more important to achieve.

The problem of this conflict is that if the impossible should happen, the desintegration of Macedonia, then you would get an area wide conflict. Several countries would want to claim a part of Macedonia, and there would be several overlapping claims. The following countries would be willing to claim a part; Albania, Greece, Bulgaria and Serbia. Greece is the strongest of the four, but alliances could make the conflict really nasty and long. This is the large scale scenario.

The small scale scenario is that the NLA will continue their war against the Macedonian government, involve it in a longer guerilla war and some how achieve to gain their own nation or a greater Albanian nation with parts of Macedonia. This will leave a crippled Macedonia behind with the neighboring countries aspiring also some territorial changes. In the end leaving an economic unviable nation behind. Or ofcourse that the NLA can get support from other Albanians and even Albania proper and pull these two countries in a low to mid intensity long drawn conflict. With both sides getting as much support as possible from other countries. And eventually drawing them into the conflict.

The only policy to implement for Macedonia is to defeat the NLA rebel forces and to win the hearts and minds of the Albanians. The defeat should be intelligent as a scorched earth policy and to much killing of civilians will only increase the strength of the NLA. The hearts and minds policy should give the Albanians the same rights and an equal treatment in Macedonia. In this case it is benificial to do so as a generous attitude is te only way to built a lasting peace. But the NLA or violence in general is unacceptable as any negotiation on the basis of the threat of violence will only increase the demands of Albanians, and they will never get enough whatever they are offered.

Middle East: Israel and the Palestinian question

The much promising peace process in the Middle East collapsed after the Al Aqsa intifadah got on his way and the majority of the cooperation between the Israeli government and the Palestinians ended. The mutual cause, the achievement of peace in the region, ended as the insecurity in Israel and the frustration in Palestine took over control.

The peace process which was already slowed down because of the lack of progress in the implementation of the accords which were agreed upon on during previous negotiations. The socalled big offer of former prime minister Barak to the Palestinians was an unacceptable offer for the Palestinians, Arafat. They could have never agreed to that as East-Jerusalem, the return of the Palestinian fugitives from the neighboring contries and the return of 90 % + of the West Bank without conditions are an absolute minimum which should be fulfilled.

The visit of Ariel Sjaron to the Temple Mount, Al Aqsa, was the sign for the Palestinians to show their frustrations with Israel and the peace process. The escalation of violence in the time following the incident destroyed all further hope on a fast and easy end of the Israeli-Palestinian conflict.

The Palestinians first escalated the violence by attacking several kibbutz and Jewish settlements on the West Bank. They fired with assault rifles/machine guns at those places and the Israelis reacted harshly at the attacks but by now the Palestinians are preparing another kind of intifadah. The Palestinians want to end the attacks for the moment and change their tactics and have another peaceful, if you can call it that way, resistance. The Palestinian people should be involved again to make life very hard for the Israeli security forces. A popular revolt without using violence is always very difficult to control. It will take a higher toll on the Palestinians but the security forces will get all the blame if there are any casualties.

From a media viewpoint this strategy will bring them a good press and put Israel in the corner of the ruthless and suppressive occupation power. The effectiveness of the attacks of the Palestinians, or better of the Tanzim and the Hamas, was not very high. It has not been very damaging for Israel only irritating and it gave them an excuse to close down the Palestinian territories, destroy the local economy and suppress all resistance with all means available. This means the use of armoured forces and rocket launching helicopters. Not very appropriate to defeat the Tanzim and the Hamas but very impressive. The Palestinian case was however not be promoted by the agression of the Tanzim and the Hamas and it even did not bring to much international support. Even no widescale Arab support, only words that the Arab nations supported the Palestinian claim and position but no real support.

That is probably the main reason why the Palestinians, the Tanzim, decided to change directory of their actions. Peaceful resistance is less impressive but much more beneficial to the cause.

Any public statements that the Palestinians will return to violence on the very short term as a reaction to any Israeli attack on Palestinian people and property is mere a public relation play to garner more support in the population and to satisfy the hardliners in the PA.

At a later stage the Palestinians can always return to a more aggressive position towards the Israeli security forces, especially if they were to use the succesful tactics which were used by the Hizbollah in Lebanon. But at this stage it would be to early as the Israeli position is still to strong and would first need to be softened up.

This will deliver international support and progress for the Palestinian cause. And it will put Israel in a worse position militarily and politically, undermine the moral of the security forces and the Israeli society as an end to the Palestinian uprrise would not be feasible and this would improve the position during any negotiations. As peacefull resistance is not really violence, it is just very uncomfortable and difficult to deal with. The Palestinians would to be protrayed as the good guys, and civil disobedience and peaceful demonstrations make this possible. The Israeli security forces will inevitably overreact and use excessive violence and will be portrayed as the bully and occupier.

To really reach this the Palestinians, Palestinian Authority, have to create a bigger difference between the Palestinians, PA and the Tanzim and the Hamas. The Hamas is having a different ideology and will continue to use violence, bomb assaults, against the Israelis. This would be bad for the PA in any possible negotiations but on the other hand beneficial to keep the pressure on Israel. A twin track policy, uncoordinated and without any relations between eachother what so ever, could be the best for the Palestinians on the medium to long term and not considering the costs in human life. The Hamas as the uncontrollable religious fanatics and the PA as the moderate and reasonable opposite.

The continuation of the violence, shootings, and even possible incursions of the Hizbollah would be on the other hand undermining the Palestinian position. It would deliver the security forces an excuse to use all means available and could even lead to the involvement of Syria in the conflict. A widening of the conflict to the neighboring countries would be just as useless as the continuation of the violence. It will bring no international support to the Palestinian cause, it will only be beneficial to the Israeli position.

A new conflict in the Middle East is always possible but this should not be overestimated. An Israeli attack in response to an act of terror of the Hizbollah on Syrian targets might call for a Syrian reaction. The military potential of Syria is at the moment however limited and certainly not capable of fighting against the much superior IDF. So an escalation is not very likely. And in the first place Israel will only attack Syrian targets in Lebanon if they might pose a direct danger to Israel or the IDF and not out of retaliation. The political consequences of an attack might be worser that the military consequences.

That is why the target selection in Lebanon has to be very careful and only aimed at the Hizbolllah and Lebanese targets more or less connected to the Hizbollah.

Indonesia

The problems in Indonesia are not only limited to troubles in the outer provinces/islands were independence and autonomy movements are putting heavy demands on the Indonesian government. They are willing to use, as they do, violence to support their demands.

Ethnic and religious differences are also playing a major role in the problems in the outer provinces/islands. The local population is ventilating their problems with the migration policy of Jakarta. The large number of migrated people, who very often live in better circumstances, are being targeted by the local population. This is further aggrevated by the fact that the migrants are supported in return by socalled Jihad fighters from Java to protect and support the migrants in the troubled areas. This is fuelling the conflicts in these areas to a large extent.

There is another probably even larger threat to the stability in Indonesia. The government of Indonesia is at the moment relatively weak. The current president, Abdurrahmann Wahid, is under pressure because of several scandals and his rather indecisive style of government. There are demands that he should withdraw. This situation is further worsened by the fact that the economy of Indonesia is still very weak and dependent on foreign aid, loans, to survive.

The greatest danger in Indonesia is however that all political organisations have their own kind of militias and these are more than willing to fight other parties if they consider that their man has been treated unfairly. And it is rather simple to make them feel unfair treated as only not to agree with them is enough to get their attention and to feel their displeasure. This displeasure will be felt by the agression which they are more then willing to use.

Indonesia received last month an impression of what could happen if the differences between the parties would come into existence. The militia of Wahid, or to be correct of the organisation, Nahdlatur Ulama, NU, of which he is chairman, went on to the streets and destroyed party offices of political opponents in the East and the center of Java. If Wahid woud be removed from office, it could be likely that there would be an explosion of violence.

There are 4 major parties in Indonesia which could create chaos and ofcourse a fifth group, the armed forces, which also could play a decisive role. Some kind of civil war is certainly possible. Even if the security forces, the armed forces and the police, should be able to restore order on the short term with the use of excessive violence. But it could turn out different if the disorder could spread and the security forces would be slow in their reaction. And there would always be the question of loyalty in the security forces. It could happen that parts of the armed forces join of the fighting parties. Civil war could be much more close than is anticipated.

The four parties are the NU, 40 million members, with its Banser militia. The Banser militia also played a major role in the past, in 1965/66, as about half a million alleged communists were killed in the socalled left coup d’etat. There is also a considerable threat from the NU with the Banser militia. The militia is very loyal to the NU and have no doubts about the justness of the NU. The Banser militia is mainly recruited out of the Pesantren Islamic schools. So this could even deliver a religious quantity to the possible struggle. And the NU is willing to use the Banser militia to reach their goals. As have been proven in history.

The second, the old Golkar party with its old structures. Not as strong anymore as it used to be but still an important party in any possible struggle for power.

The third is the party of the Muhamadiyah led by the chairman of the Peoples Congress Amien Rais. The Muhamadiyah is an like the NU an Islamic organisation with 28 million members. The relations between the two are not very good as they fight for about the same people and goals. The Muhamadiyah is only sometimes claimed to be a little more fundamentalistic than the NU.

The fourth party is the PDI-P of vice-president Megawati Soekarnoputri with the Satgas militia. The militia is already used for all kind of guard and support jobs but Megawati has until now not made any use of the Satgas in political problems. At least until now, this might change in an all out conflict between the major political parties if Wahid would be forced to leave office.

As long as Wahid is president the situation will remain relatively calm. There might be demonstrations but not an all out conflict for power. But if Wahid would be forced to go, things could change overnight. A kind of civil war could erupt between the four major parties about who would succeed Wahid. Megawati would try to get power with support of the political system but none of the others might be willing to accept Megawati as president. Or will try to achieve control by the use of their militia. Or the likeliest the Banser militia will out of frustration start to revolt and this could put the whole country into jeopardy.

A civil war is the most likely result of the ejection of Wahid, if he is not prepared to go by himself. The security forces should be able to restore order but it is uncertain if the officers corps cannot agree to a new leader. And even more important, if the NCO’s and soldiers do not agree with the decision of their commanders. There is also a chance that the security forces will be split in several factions each supporting one of the parties involved. This would severely undermine Indonesia as the movements in the outer provinces/islands would be more than willing to use this internal weakness of the central government to draw more control from the government.

The highly dangerous combination of unrest in a number of provinces in the country and the fragmented leadership in the center might destroy the country. The problems with the several seperatist movements in the countryside is putting enough tensions on the integrity of Indonesia. A conflict in the center of government between the major parties would mean the end of Indonesia as we know it.

The armed forces could use this troubled sitiation as a last bid to recover the power they have lost in the recent years but this is a really dangerous attempt as they are not the same as before the changes. Command structures have changed, alliances broken, there is certainly not the old used to be loyalty present. And more importantly the economic situation will not leave much room for dangerous experiments which are sort of mixed with suppression and military rule.

The problem in Indonesia is, can they solve their problems politically or face a civil war. The civil war scenario is very much likely as all involved parties are ready to start and fight a civil war. The political system and the parties participating in it have the key to the future of Indonesia. But somehow they are to busy with promoting their own position and cause, which will make a conflict about power more likely.

 

Standaard
October 2000

October 2000

October 2000

Islamic Fundamentalism

The increase of Islamic fundamentalism in South-East Asia

Islamic fundamentalism, a radical and strict implementation of the the Islamic faith and its holy book, the Koran, has become a very popular religion and has been able to attract ever more followers in the Islamic world. What started in Iran, as the religious caste under the leadership of Ayatollah Khomeini, could take over power, developed into a dynamic in which the Islamic case could spread all out over the Islamic world. With Iran as a lightning example and with active support of Iran all countries in the Arab and Islamic world saw the emergence of Islamic fundamentalistic organisations as the Islamic Brotherhood, the Jihad, Hamas and Hezbollah.

The Islamic fundamentalist organisations have in general a three tiered policy. Firstly, to attract the people for their case by providing free education, medical services, food and sometimes even employment. They give the people hope and a goal in a world, a country, which does not care about and provide to much to the people. The majority of the countries with a large number of Islamic inhabitants are run by autocratic governments which are very often incapable, corrupt, suppressive and are only very generous to their own group or clan. The Islamic fundamentalistic organisations have become that popular because they are the only charity organisation in the country who do actually something for the people, even if they have a hidden agenda, e.g. a clear political objective.

Secondly, to undermine the government by the infiltration of fundamentalistic personalities in the government hierarchy and then especially in the security apperatus, state department, treasury and regonial and local entities.

And thirdly, by which they are so much feared all around the world, by the application of violence to all kind of perceived national and international enemies. The attacks of the fundamentalistic organisations are not only aimed at the security and other kind of controlling government services but also at economic targets and all kind of persons, including foreign tourists, which might be perceived as enemies of the Islam or the achievement of their objectives.

Islamic fundamentalism has found inroads into various countries in the Middle East, Africa and in Asia. Their influence, role, differs from suppressed oppositon and often terrorist movement, influential interest group, political party to dominant ruling party. Iran and Afghanistan are examples of the last group and the Islamic Brotherhood in Egypt an example of the first.

All fundamentalistic movements have some kind of relation with eachother. There are regular meetings and they support eachother with advice, material, money, armement and men. The level of support will vary but if possible it is very intensive and large. The only exception might be the relations between Afghanistan and Iran which can be called as bad if not outright hostile. The countries are neighbors which have some differences in the interpretation and execution of the religion, call their case the right one and are after the same group of clientele.

A new and relatively underdeveloped area of interest of the Islamic movement is South-East Asia. Large groups of Islamic people live in this region who have become dissatisfied with the government and feel unfair treated by those governments. The right circumstances to promote the fundamentalistic case.

Islamic fundamentalism in South-East Asia

The Islamic religion has established itself a long time ago in South-East Asia, it has become in some countries or regions the dominating religion. The religion did not play a very important role in the live of the average South-East Asian civilian but this changed very quickly. As the economies of the South-East Asian countries deteriorated and political and social instability increased the peoples of the region remembered, re-discovered, the religion which might offer an escape from the misery which encountered them. The attraction became even stronger as the western world could be blamed for everything bad and worse happening in their region or in the world for that matter. A concept invented by and very often used by Islamic fundamentalistic organisations. The west as the evil and decadent aimed to destroy the right and good Islamic faith and people.

The Islamic people of Malaysia, Indonesia and the Philippines became more religious in the time of hardship and according the fundamentalistic conviction they could blame the world for their misery. Islamic fundamentalism offered a chance for improvement of the political, economical and social situation of the people. The return to the old rules and values has been especially beneficial for the self-esteem of the people. It could be improved and the association in a group provided a platform to receive comfort and support and to operate against the ruling government. In short it offered alternatives, leadership, support and hope for a better future.

Islamic fundamentalism have and will change Malaysia, Indonesia and the Philippines. The way it will change and what will be the implications of more fundamentalistic rule in those countries will be dependent on the level of true Islamic government, the duration of the economic hardships and the hostility between the different religions and ethnic groups in the region.

If the Islamic government is like that of Iran or Afghanistan the changes will be very large and will fuel the hostilities between the different groups. If the hostilities take to long and have caused to much hatred among the population any peaceful co-existence will become very difficult. Not to talk about the international reactions to the atrocities. It will destroy any investments into the region. Those countries would be considered as to insecure and to unreliable on the short to medium term as an investment opportunity. The consequences of Islamic fundamentalism should not be underestimated, in a worst case scenario it will destroy any chance of progress.

The Philippines

Since many years the Philippines suffer from an insurgency in the south of the country. The Islamic majority in the south of the country, Mindanao and the surrounding islands, demand more autonomy or even independence from the Philippines which is a Christian country. After an agreement was reached with at that time largest muslim organisation, the Moro National Liberation Front, another smaller but more radical muslim organisation, Moro Islamic Liberation Front, refused to join the agreement. The MILF continued to fight the government and could for some time, with the acceptance of the government during the extensive negotiations period, built their own infra-structure with several training camps in the area.

The struggle however continued during the negotiations only the intensity varied somewhat. In a near equal development the negotiations collapsed, and the fighting between the two sides increased. The government was succesful in the fight as the majority of the MILF camps could be taken over by government forces, thus severely hurting the fighting capability of the MILF. The return to the jungle was the only option for the MILF after the recent defeats. But never the less the MILF remains a force to be reckoned with. They are still capable to launch small scale operations and subsequently keep large number of forces occupied and damaging the economy of the region.

Beside the MILF there are several other organisations fighting the Philippine government. They all demand an independent Islamic home land for the muslim population and they are not willing to settle for anything less. These organisations like the Abu Sayyaf Group, most are less succesful ASG copies, are rather extreme in their conviction but they are also very criminal. The majority of their time is used by criminal activities like kidnapping. The ASG became recently very well known because of the kidnapping of several tourist from a Malysian holiday island and the large ransoms paid by Libya to liberate the hostages. One might question the Libyan sincerity as Libya has a record of supporting all kind of terrorist organisations especially if they fight the west and are of Islamic origin.

The Philippines will have a lot of problems with the dissatisfied muslim minority in the country. The majority of the muslims will feel comfortable with the autonomy they have received on Mindanao but a minority will continue fighting the government. The MILF can be controlled at some level but the ASG kind of organisations are much more difficult to defeat as the criminal activities make them very attractive to the youths in the region and their organisation structure and scale make them difficult to destroy. For every one destroyed a new one will emerge just as fast. The criminal activities of the ASG kind of organisations are much to tempting in the economical underdeveloped region of the southern Philippines were poverty and unemployment are all around.

Malaysia

The Malaysian federation is a country with an Islamic majority. The Islam is the largest religion which is having an increasing impact on the society. Elements of the Islamic law, the Sharia, have been introduced in the Malaysian legal code. This to satisfy some conservative elements in the Malaysian society but also to control the population and to limit the influence of fundamentalistic organisations.

The Asian economic crisis and the subsequent political instability of the government of dr. Mahatir bin Mohamad caused a lot of discontent in the population. The opposition in the country had been virtually suppressed by many years and Islamic fundamentalism offered in this stiuation not really an opportunity, as its major political objectives had been fulfilled by the government. The government policy of introducing Islamic rules and traditions in the society and the economic progress destroyed any real organised opposition.

The opposition could only find a home in cult like organisations like the Al-Ma’unah, the Brotherhood of Inner Power. The Al-Ma’unah is originally an organisation associated with martial arts and traditional medicine who only later and by a small group started to embrace the idea of an islamic state. The followers of the Al-Ma’unah, about 1.000 people, are from the whole Malaysian society with a majority coming from the middle class and former military people. The group is not really a political organisation and hardly a terrorist organisation. Only a small group within the Al-Ma’unah are belonging to the group who demand a political change.

This small group who demand an Islamic state are the most active oppostion in Malaysia and are suspected of doing more than just political opposition. They are certainly willing to use force to reach their goals.

These members are suspected of robbing weapons, ammunition and explosives from the Malaysian armed forces and they are allegedly willing to use them. The people who staged the largest robbery of arms in Malaysia could be apprehended very quickly after the theft but the radicalisation and the intensity of the battle at the arrest of the criminals made the government very worrisome about the threat of the Al-Ma’unah.

The activities of the majority of the opposition movements could be controlled until now but the dissatisfaction about the policy of the government increases in the society. The level of organisation is still rather rudimentary but this could change on the short term if no changes in the government are made.

The opposition and the dissatisfaction in the population is increasing and will have to be channeled otherwise it will explode right in the face of the government without that they have the opportunity to end it. The opposition organised in the Al-Ma’unah have a clear political objective and they are willing to use every method available for them. The Islamicification of the society is just part of their strategy, the organisation of the opposition and to force the current government out of power are equally important, if not more important.

The violence, instability, will most likely increase in Malaysia on the short term as the population will probably get more disappointed by the government and the opposition will become larger and more aggressive. Islamic fundamentalistic ideas will play a role in it to attract people and keep them in line. This will however automatically mean more power to the fundamentalists and a closed and intolerant society.

Indonesia

Indonesia, the most populous Islamic country in the world is experiencing several problems in the large and divided country. The Asian economic crisis has had the worst effects in Indonesia. Not only its economy, financial system and currency collapsed but also the integrity of the country has been severly undermined. Ever more ethnic groups and some regions of the country want to have more autonomy or even independence from Indonesia. The centralised state which used to run the country out of Jakarta is having ever more difficulties to control, satisfy, the peoples living outside Java.

Groups in the country, with overt and covert support of the government, are rallying against the ethnic groups in the country who demand autonomy or independence. With the use of violence, beating, raping, killing, burning and looting, the groups operate against the ethnic groups. This has been and is happening on the Moluka island group, West-Papua, Borneo, Sumatra and on Celebes.

It has become a normal procedure in Indonesia to react on problems with violence against ethnic/religious minorities. As the Asian crisis started, the ethnic Chinese were blamed and proscecuted by groups of Javanese. Soon after the Christian people from the Molukas who were living in Jakarta and on Java were targeted.

As the problems in the outer regions, Molukas, Celebes, Sumatra, Borneo, West-Papua and on East-Timor, became more present and active, the reaction was the same. The Javanese, Muslims, who migrated to the outer regions, or for that matter neighboring islands, started to terrorise the regions in an effort to stop the autonomy/independence ideas. These groups were later reinfoced with people from Java to increase the strength and fighting power of the groups in defeating the autonomy/independence movements.

The Islam was and is increasingly used as a weapon against the ethnic minorities in the regions who demand autonomy or independence. This support for these groups became only possible as the Indonesian society could become more fundamentalistic.

The crisis caused a lot of poverty in Indonesia which offered a fertile ground for the fundamentalistic Islamic organisations who became ever more radical. By putting the blame for the crisis at foreign organisations and countries, like the financial institutions and the U.S.A., the Indonesian Islamic organisations quickly found friends with other fundamentalistic organisations in the world.

The Indonesian politics and society, at least the Javanese and the muslim communities throughout the country, could become ever more fundamentalistic. The Islam will provide a bound between the muslims and an instrument to maintain as much power as possible for the current political hierarchy and system.

The Indonesian fundamentalists are not the fundamentalists as we know them out of the Middle East or Afghanistan, they are dressed and behave like the average Indonesian, Javanese. But their retoric and policies are just like that of the Islamic Brotherhod or the Iranian mullahs.

Other ethnic and religious groups will most likely have not a bright future on the short to medium term in Indonesia. They pose a to big threat the current power structure in Indonesia. The larger groups/islands could eventually get their way as they are to far away, geographically, or are to large as a group. But the smaller groups and islands will not stand a chance against the agression of the fundamentalistic organisations.

Indonesia still believes it can control the Islamic fundementalistic organisations, who are doing the dirty work for them, but they will proof to be wrong. The power, influence and stamina of the Islamic organisations will be stronger and more effective then anticipated. They will demand a reward and they will most likely get it as the popular support for these organisations will most likely increase. They deliver hope and an opportunity to improve the lives of the ordinary citizens and they actually did something, something the politicians could not do.

The Islamic fundamentalistic organisations slowly undermine the government structure of Indonesia which is very complicated and dependent on personal relations. This complicated structure gives the fundamentalists a perfect opportunity to manipulate all people of influence and execute their policy. The Islamification of the country with all territories of Indonesia firmly under central control, e.g. the rule of Islamic Jakarta.

If the current politicians do not act immediately to end the violence with all means available, if they do not pacify the outer regions with acceptable agreements to all concerning parties, if they do not initiate programs to stimulate the economy to create some progress for all groups in all parts of Indonesia and if they do not put the country’s interest above party politics the Islamic fundamentalist organisations will get ever more influence and a take over of power will then be inevitable.

Standaard
June 1999

June 1999

June 1999

Indonesia revisited

Indonesia, a divided country

A short review

Indonesia have received more than their fair share of troubles in recent times. They were not only severely hit by the Asian economic crisis, admittedly this was largely home made, but the contradictions in the country seemed to erupt or intensify beyond everything that was thought possible.

The majority of differences, latent conflicts, which were existent in Indonesia could be pacified until the beginning of the economic crisis by the fantastic economic growth and progress and by an accepted system of more or less silent suppression. A strong government based on the much glorified Asiatic values was the best system for Indonesia at least this was the common thinking in the booming years. This semi-dictatorial system of government delivered to nearly all people some kind of economic bonus. Only a few groups of people refused to cooperate in some way or the other in the Indonesian miracle. These were in course mercilessly prosecuted and suppressed as became clear in Irian-Jaya and on Sumatra and especially in Aceh.

The booming economic development and the activities of the Indonesian security forces could create some kind of artificial security in Indonesia but this could only last that long as the regional and economic circumstances remained positive.

The economic crisis destroyed all old and vested alliances and the societal structure of Indonesia. The currency devalued, companies went bankrupt, unemployment risen to unknown levels, the traditional political and economical elites ousted and maybe the most dangerous of all old soars, contradictions, in the 100+ peoples and 1.000+ island country became active again.

Indonesia anno 1999

As the old government and the majority of the political and military leadership was removed from office an interim government under the leadership of president B.J. Habibi took over the helm. The economic crisis continued but it bottomed as the first international financial support packages arrived, things did not get any worser at least economically.

The political situation on the other hand stayed in the wild waters of uncertainty as the power position of the government was questioned and antagonists to the government Golkar party and the Indonesian federation became more active.

President Habibi managed to create some economic stability but the upcoming elections and the ethnic and independent induced movements all over the country created widespread political and social instability.

The delayed elections which are planned for the beginning of June 1999 will not bring the much needed political stability to rebuild the country. There are a number of problems of diverse nature which will prevent the much needed national support. There is first the legitimacy problem of the government. Second the large number parties which fragmentate the opposition. Third the ethnic tensions. And fourth the independence movements on a number of islands or regions. The third and fourth problem go sometimes together which makes the situation even more explosive.

The government

The government is under siege in Indonesia. The political inheritance from the Suharto regime and the performance of the Habibi government is undermining the position of the government, its institutions and its representatives.

The government of Indonesia is still linked with the wrong doings of the Suharto regime. The unfair and often wrong economic policies and the harsh suppression of any kind of opposition by the security forces has made the government disliked. This triangle of government institutions, the Golkar party and the military and security forces, ABRI, are governing the country and the majority of those people are more or less Suharto people, or are at least perceived as such. The highest leaders and the most extreme cases are removed from office but the lower echelons are still present.

President Habibi has introduced some improvements in the economic field and in the treatment of the opposition but more out of necessity than out of conviction. The changes have created some disagreement in the government between what we like to call the reformers and the traditional groups like the armed and security forces.

The reformers in the government want to modernise the country with the introduction of accountability and a western style economic policy. The traditionalists do more or less agree with this policy because it is necessary to rebuilt the country. The changes in the composition of the government structure and parliament is questioned as it diminishes the influence of the traditionalists and the all powerfull military. The security policy and especially the ideas of autonomy or even independence for some parts of Indonesia are totally unacceptable to the traditionalists. For them this is a death sin against the fundamental principles of a united Indonesia.

The inheritance of the former regime, incompetency of the current government and the rift in the government are considerably undermining the position of the government and its abilities to deal with the many problems which exist in Indonesia.

The multitude of parties

The opposition in Indonesia is very fragmented if one is considering the number of parties which want to take part in the elections. There 183 parties listed for the elections. You can view them on the internet at http://www.detik.com/analisa/199808/19980828-0950.html.

A large number of these parties do not have a lot of support and/or are limited to just one group or region. The majority are focussed on just their own particular interest. Consequently they will not make a big impact on the elections and only a couple of the larger parties will be represented in the new parliament. And a coalition of these rather different parties will form the new government.

But even the larger parties are very fragmented in Indonesia. The governing Golkar party, which has a large following with everybody who is some way connected with the government, does not have enough support in the society to keep their important position. The rift in the government is thereby undermining the position of Golkar. Golkar is further significantly undermined by allegations of the use of violence against the oppostion and they might even be not allowed to take part in the elections.

The other large parties, the Partai Demokrasi Indonesia, PDI-P, under the leadership of Megawati Sukarno-Putri, the Partai Kebangtikan Bangsa, PKB, of Abdurrahman Wahid often called as Gus Dur leader of Hahdlatul Ulama the largest muslim organisation in the country, and the PAN of Amien Rais, leader of Muhammdiya the second largest muslim organisation in the country, will have a larger impact on the elections.

They have created some kind of alliance in the time to the elections. This allaince is very opportunistic as the policy of each of them is to different to remain valid after the elections. But in the months before the elections, Indonesia did not experience the expected violence between the many parties. This is mainly the result of the close cooperation between the three large parties, PDI-P, PKB and PAN.

The elections in Indonesia are largely an affair of personalities. Megawati Sukarno-Putri, Gus Dur and Amien Rais are all strong personalities and the election campaigns are around them. This has made cooperation in the time before the elections very easy and beneficial. They have all the same goal the removal of Golkar and Habibi who are not very popular in Indonesia. If that goal is achieved the cooperation will prove to be much more complicated as the ideology of each differs and party politics will start playing an important role again.

The parties in Indonesia can be divided into two main groups, the Islamic oriented parties and the Pantjasila oriented group. The Islamic oriented parties are mostly moderate parties which want to some extent a more islamic dominated society. This should however not be mistaken with the Middle Eastern versions of Islam kind of countries.

The Pantjasila oriented parties are all based on the five values for unity in Indonesia, Believe in God, humanity, social justice, nationalism and people’s sovereignity. These principals are the foundation of the Indonesian state ideology since its existence as one nation. The goal of all these parties, including the PDI-P, is essentially a same kind of Indonesia as existed before the economic crisis except without the corruption and the Suharto style of nepotism but with more democracy.

Ethnic conflicts

Indonesia is a country consisting out of many islands and each island has one or more kind of people living on it. The majority of the people are of muslim religion but the original population of many islands are of christian or animist faith.

The Indonesian archipel have known for centuries migrations of people between the islands. The number of people migrating were mostly low and the slow. The newcomers integrated more or less in the society without creating to much friction. The newcomers were different and remained so but there was no hostility as they did not compete in the economy and had just little political influence.

The Indonesian government had thereby for many years a policy of transmigration. The transmigration had firstly the goal of eliminating the over population of the island of Java. Java is essentially the main island of Indonesia. The political and economical leadership is located on Java and all important ideas and movements originated on Java since the days of colonialism. And secondly it should improve and accelarate the development of the other islands. And thirdly it should change the composition of the population of the most important islands in favour of the Javanese.

This transmigration policy worked well in the beginning but as the numbers of Javanese on the islands began to rise dramatically and started to dominate the islands the attitude of the original population became more hostile. The Suharto regime and the economic progress could suppress the hostile attitude on the islands but some hardliners, the people and organisations who also demand autonomy or independence, on the islands and especially the economic crisis turned the situation against migrants and even violent.

The economic competition, the struggle for political power, the rise of the idea of muslim identity and the economic crisis as a multiplier made any small difference and problem in Indonesia escalate into a contradiction of national importance or even survival.

On Java the muslim majority against the Christians and the Chinese minority. On the Moluku islands between the original Christian population against the muslim migrants. On Sulawesi, Celebes, between migrants and the original Dayak population. And so on, nearly all islands with a larger migrant community are in turmoil.

Autonomy and independence

As a federation Indonesia has a large number of different people living in the country. Some of the areas and people were inherited from the colonial days, some peacefully added to the federation others however were outright conquered by Indonesia.

Until the economic crisis the federation could be kept together by the economic progress, the financial support the government good give to the areas, especially the poorer regions, and by the suppression of any opposition to the Indonesian rule.

The carrot and stick method had worked well for some areas but a number of hardliner opposition groups continued their struggle for more autonomy or even independence.

The economic crisis and the internal power crisis of the government gave a number of groups the opportunity to ventilate their thoughts about the future of Indonesia and particularly the future of their region. The majority of the islands would like to receive some kind of autonomy within Indonesia. This wish has become stronger because of the ethnically inspired violence on the islands. The peoples of the Moluka islands, Sulawesi (Celebes), Borneo and a number of other small groups demand more influence, political power, in the government of the island or region.

The situation on Sumatra is more difficult. There are some people who want more autonomy but their number is falling. As ever more people and especially the organised groups demand secession from Indonesia. The southern part of Sumatra is more autonomy minded but the more north you go it will get more independent minded. The region of Aceh is the most fanatic in their struggle for independence. Sumatra or parts of Sumatra, like Aceh, possess enough natural resources to make an independent state economically viable.

The most fanatic groups fighting for independency on Sumatra are the GPK, the GAM and Aceh Merdaka. The withdrawal and softening of the policy of the Indonesian armed forces, especially the Kopassus special forces, from and on Sumatra have not brought the independence movements to the negotiation table. On the contrary, they have used the weakness of the government to their advantage and intensified the fight for their goals.

Some of the conquered parts of the Indonesian state are also not pacified. On Irian Jaya a small organisation, OPM, Organisasi Papua Merdaka, continues to fight the Indonesian occupation. The OPM has become relativily stronger as the Indonesian forces have been weakened by the economic crisis. The OPM weak in men, arms and support has seen some opportunities by a combination of increased military pressure on the Indonesian government and diplomatic pressure to get some promises from the government about the future of Irian Jaya. Something like the autonomy/independence referendum like the one on East-Timor.

Another more violent and complex problem is on East-Timor. Indonesia conquered East-Timor after the former colonial power Portugal left East-Timor. The East-Timorese never accepted the Indonesian occupation and resisted it from the beginning. Only because of the widely and inhumane use of the security forces Indonesia could keep control of the region. The muslim Indonesian forces and migrants and the in majority Christian East-Timorese gave the conflict an additional explosive character.

After a prolonged fight between the Indonesian security forces and the Fretilin, the East-Timor organisation which is fighting for independence, the economic crisis and the subsequent changes in the government forced the government to look for an alternative policy. The Indonesian government turned their policy by180 degrees and offered East-Timor on the short term a referendum with the choice of autonomy or independence.

This was greeted by the Fretilin and others supporting the independency but they warned in the mean time for negative side effects. They demanded the disarmement of the people which were armed by the government to protect themselves against the Fretilin. Because these people would oppose the autonomy or independence as they would loose their position in the East-Timorese society. They would not hesitate to use their weapons to frighten people in the elections who support the independence and fight the results of the elections.

This offer of Indonesia could also be a way to show East-Timor and the international community that they are necessary in the region to maintain law and order. They are the factor between order and the chaos of war. But the autonomy/independence offer has been opposed by the traditionalists and the armed forces in Indonesia as they are afraid of a domino theory. All Indonesian people/islands would now demand autonomy or independence about which they are partly right. The traditionalists are however to weakened by the economic crisis to oppose the policy of the Habibi government. But Habibi has most likely received an enemy for live by this offer and has split the government into two groups.

The problems in East-Timor are far from over. The Indonesians still control the region and the future looks bleak as the pro- and anti- independence supporters are prepared and waiting to attack eachother. They are just waiting for the signal to begin.

Summarized it can be stated that Indonesia has a number of people living in regions which would like or even demand more autonomy and even some of them independence. The position, at least the power position as the majority of the regions have also been hit by the economic crisis, of the several peoples living on the islands have been improved as the government of Indonesia have become weaker and entangled in many social and economical problems which demand their fullest attention.

The many peoples country Indonesia is however dominated by the Javanese who are also in fact governing the country until now, 1999, by the triangle of the semi-allies of the Suharto-clan, the Golkar party and the armed forces, ARBRI. They are all more or less bounded to the pantjasila ideology of a united Indonesia. All those autonomy and independence sounds out of the provinces are unnatural for the government and they vehemently oppose them. All changes in the form and structure of Indonesia are forced up on to them by the economic crisis and the internal political weakness. The increased attention to the muslim religion and identity is in the meantime increasing the tensions between the several religions and the many different peoples.

Future expectations

The situation in Indonesia is not likely to improve on the short term. There are a number of social and economical problems which surfaced after the economic crisis of 1997. These problems were increased as political, ethnic and religious differences on Java but more dramatically on the many other and non-Javanese islands erupted.

Ethnic and religious inspired violence happened all over the country. This will continue until all people are living in their own homogenous area and the economy will show substantial strength.

The political structure and security organisations became under pressure and started a transformation and a cutback of functions. The government had become weaker and the demands for more autonomy and independence became louder and are uncontrollable by the government. The economic and political weaknesses had and has made the goverment unable to cope with the demands out of the regions in particular and the many social and economical problems in general.

The current government of president Habibi has and will not be able to solve the many problems of social, economical and political nature. They need to create political and social stability to have economic stability. This will prove difficult to attain as long as the economy remains weak. A vicious circle from which it will be difficult to escape without foreign support and more important substantial offers to the peoples outside Java. Which in turn would dissatisfy the Javanese.

The same is valid for the opposition as they are committed to the pantjasila ideology of a united Indonesia, as is the Habibi government, or the muslim oriented parties which want a united Indonesia with an islamic flavour. Both will alienate the many peoples living in the provinces, e.g. the many islands of the archipel.

The elections will not bring the solution to the problem as all the major opposition parties are Javanese and as mentioned before committed to an united Indonesia. Difficult choices have to be made which will meet a lot of opposition from the majority of Javanese muslims. But democracy is more than just the representation of the interest of one group it is also the protection of the minorities. And as long the PDI-P, the PKB, the PAN or for that matter Golkar do not understand and apply the idea of protection of the minorities they will not be able to keep Indonesia together.

If the main Indonesian parties and the government cannot control the muslim mob and remain ignorant of the wishes of the many peoples in Indonesia political and social stability will be impossible to accomplish. Only an Indonesia as a federation were all, Java, Sumatra, Borneo, Sulawesi (Celebes), Moluka islands and so on are fairly represented will be able to return to a strong and united Indonesia as it seemed to be before the economic crisis of 1997.

There will be a big and decisive task for the new government in Indonesia if they want to return Indonesia to the tiger countries of south-east Asia. If they fail to solve the big problems of Indonesia it will most probably mean a different and smaller Indonesia in the next milennium.

On the short term the military and the internal security services are able to subdue any movement which want to change the structure of Indonesia. None of the independence movements are something of an equal opponent to the military. But the political costs, national and international, and the economical consequences might be prohibitive high to execute a ruthless suppression of the independence movements in Indonesia. A political solution is the only opportunity for Indonesia to survive as an united nation on the long term.

Standaard
June 1998

June 1998

June 1998

Change in Indonesia – Asian addition

Change in Indonesia

The economic crisis seems not have reached the bottom. After a short and respectable recovering in the first quarter of the year things turned bad again. The problems in Japan and especially the continuing disaster in Indonesia was the main reason for the renewed depression.

The lagging Japanese economy, the near insolvent banks and the limited actions of the government are responsible that Japan is not able to take the lead in the reconstruction and build up of the South East Asian economies. And we should not forget that the South East Asian economies are to a high degree connected with eachother. The mutual exports to eachother range from 40 till 60 % of the total of each country. With Japan and China being the most important partners.

The other probably bigger reason for the downturn is the severity of the Indonesian crisis. The austerity measures, the cutting of all subsidies, of the Indonesian government have made live for the ordinary citizen very expensive. The social unrest which started after the second round of price increases have led to the resignation of Suharto as president of Indonesia.

The number of questions have risen after the resignation of Suharto. Are the changes in the government and in the economy enough to satisfy the demands of the population and the international investors. Is the new government able to restore order on the long term.

Law and order, economic and fiscal regulations and trust in the government are preconditions to stabilise Indonesia. And a strong Indonesia is necessary to make any South East Asian economic resurrection lasting longer than one summer.

Political change

The crowds in the major cities in Indonesia went on the rampage after the increases of the prices became public. The situation of the already pressed poor people of Indonesia became unbearable. Supported or even initiated by some criminal gangs large scale looting started. The better off, especially businesses of Chinese descent were targeted by the crowds. There are even some rumors that some government organisations were involved in the beginning of the looting. But there is no substantial evidence to support that theory.

The intensity and scale of the demonstrations by the students of Jakarta increased. The popular uprising and the inactivity of the police against the lootings were the reasons that the demonstrations moved out of their campusses and took over the streets.

Military forces had in the mean time took over control in Jakarta and restored order in the capital. But they permitted the students to demonstrate and opposition groups to operate against the Suharto regime.

Under pressure from the street, the military and even his own Golkar party, Suharto decided to give up power. The new president was going to be B.J. Habibi which is a staunch ally of Suharto, the whole career of Habibi was arranged and supported by Suharto. Habibi the former minister of industry and technology is reknowned for its very expensive modernisation plans like a turbo-prop aircraft and a jet powered aircraft in the design stage. Most of Habibi’s policies were very ambitious but also economic doubtfull.

Habibi is an important player in the Suharto clan but he does not possess that much support in the military and business community in Indonesia. Habibi is therefore considered as an intirim president, the promised elections should deliver a stronger figure.

The first acts of government of Habibi was to restore order, build some confidence in the world by eliminating some business connections with companies of the Suharto clan and replace the majority of the Suharto clan out of the important government positions.

The retirement of Suharto had in the mean time created some stabilisation in Indonesia. The currency did not loose substantially more in value for a couple of days, order could be re-established in the country and the protestors against the Suharto regime could return home with the good feeling of having gained a (small and partial) victory.

Habibi is not the president to lead the country for a long time. He does not possess the political, economical and above all military support to be president for a long time. He is the care-taker to stabilise the economy as much as possible and to get as much as international support as possible at better terms or at least at a better time table. Habibi will try to convince the IMF to make the promised funds of up to $ 43 B. available at easier and better conditions. Or better at less stringent conditions. This would buy the Indonesian government some extra time to solve the crisis on their way.

The IMF will most probably stick to their demands to create political stability and to change the political and economical organisation in Indonesia before new funds are released. With some luck they might be a little lenient on the time table.

Political and economical changes are however unavoidable and they have to be implemented as much as possible. But if the austerity measures could be implemented at a slower pace the hardships to the people could be lesser. If the above mentioned IMF funds would also be available and if the economy would return to a more promising situation the transition would be more acceptable.

The political future

It will be difficult to predict the outcome of the coming political struggle in Indonesia. There are three or four major players which could rally enough support to take over government if the promised election would take place. And some kind of personal change will be very likely, by true free elections, an election in the peculiar Indonesian system or by simply putting a strong figure in command by the armed forces.

The mostpowerful person in Indonesia is without doubt minister of defence and CoS, general Wiranto. General Wiranto has at the moment the support of the defence forces, he enjoys the respect of the socalled Islamic faction and the nationalistic faction. The existence of both factions does not mean that the army is divided it only gives a rather crude indication of preferred policies which exists in the army.

All changes in Indonesia have to be approved by the army. They are the most important power factor and the decisions are born out of a kind board of directors of the most important people in the defence forces. The influence of Wiranto in this group is considerable, especially because he could eliminate the closest and probably the most ambitious allies of Suharto out of the most important positions in the forces. For example the son-in-law of Suharto Lt.-Gen. Prabowo who was the commander of Kostrad and the commanders of other elite units like Kospassus and of the Jakarta army district.

At the moment it seems as Gen. Wiranto does not have any political ambitions. The goal of Wiranto and the army is to preserve the unity of Indonesia and make any change as peacefull and gradual as possible. Any violence and revolution-like activities will be suppressed by the army.

The peculiar Indonesian form of democracy will try to implement this gradual change. They will get the support of the defence forces in this course of action. The candidates who want to become the next president are Amien Rais, Emiel Salim, Golkar chairman Harmoko, Megawati Sukarnoputri and possibly Abdurrahman Wahid. The candidates have all some kind of popular support but the problem with some of them is the inability to transform the popularity in to political power. Especially Rais and Megawati are hit by this problem.

Amien Rais is the leader of the city based muslem organisation Muhammadiya. He has played an important role in the resignation of Suharto. He is somewhat of an opportunist and populist. He used the possiblilities of this crisis the excell his case. He was a member of the new alliance who had a shadow cabinet. He supported the students in their demonstrations. And he rallied his members to take part in several big other demonstrations. The speeches of Rais were moderate and acceptable to the majority of the Indonesians but his writings show a different person. He is a much more fundamentalistic writer, he agitated against zionism, imperialism, westernization and secularization. Rais has a lot of support but his policies could be unacceptable to the defence forces and the world community.

Emiel Salim is a former minister and a candidate of the vice-presidency. He is moderate in his policy but lacks the support to make a succesfull pass at the presidency.

The chairman of the Golkar party, Harmoko, was also active in the resignation of Suharto. He was a close ally of Suharto and one of the last to demand his resignation. The normal very loyal Golkar had to preserve their authority and that was the major reason to join the movement against Suharto. Harmoko could eventually get the support needed to become the next president. He has the right political and military connections to become a promising candidate.

Megawati Sukarnoputri, the daughter of former president Sukarno, has been one of the first and clearest opponents of the Suharto regime. She already tried to become president in the last election. This was countered by some rather unfriendly acts of the Suharto regime. She did not receive enough support in the elections and was rather quiet in the recent demonstrations and activities against the Suharto regime. Beside the failing of Megawati to be an active player in recent demonstrations, she never had a lot of support in the countryside and used probably most of the goodwill in the last elections to be a viable candidate in the next elections.

The last and most doubtfull candidate is Abdurrahman Wahid the leader of Nahdlatul Ulama, the largest muslem organisation in the country. The Nahdlatul Ulama receives most of its support out of the country side and they have been very reluctant to support the demonstrations and the resignation of Suharto. Wahid is very good strategist and kept his cards close to his chest. The moderation of Wahid and his organisation, the connections with the military and the backing of a large organisation could place him in a promising position to become the next president. But he could prefer it to maintain a background position and support another candidate.

It will be difficult to predict who will win but all candidates have conform to the ideas of the defence forces of a gradual transition of Indonesia to a more open society with a more western like administration and legal system. In essence the Indonesian unity and identity have to be preserved and the nation/government and economy reconstructed to bring prosperity to all Indonesians.

Asian addition

The economies and financial situation of South East Asia is still in depression. The growth figures of most countries have shrunk to a couple of percents at best. A number of countries will even experience shrinking economies. The currencies in the region have not made any progress to their old levels. The Asian crisis is more severe and more difficult to eliminate than was expected.

The IMF policy to demand political stability and to introduce western-like financial legislation, accountancy rules and government spending in combination with financial support packages will create a better business climate and growth prospects in the future but it is not enough to solve the crisis.

The depressed economies and devaluations of the curencies will be difficult to turn around. The region is highly interdependent. This means that the whole region must see an improvement to get out of this situation.

The most important economic partner in the region is Japan. Japan is the investor, lender, technology provider and customer of the Asean countries. Asean is an organisation in the Pacific-rim area of which nearly all countries in that region are member or associate-member.

But not only the Asean countries are victim of crisis, also Japan is hit by a crisis, however of different character. Lagging consumer spending, economic stagnation, banks with bad loans and an indebted and distrusted government are the problems of Japan. Japan could make a turnaround if the government would introduce a viable long term government policy on taxes, fiscal and criminal legislation, the elimination of the Yakuza(Japanese maffia) involvement in the economy and changes in the bureaucracy. Japan has all requirements to become an economic healthy country, the people have the highest amount of savings in the world and their industrial capacity is first class.

Japan is the linch-pin to the economic improvement in the Asian area. If Japan brings its house on order it could become a market to the struggling Asian economies. The well being of Japan is also of importance to the world economy, if Japan would experience a serious economic crisis, the whole world would feel it. The recovering of Japan would start a cyclical improvement all around Asia. With the additional benefit that the Asian countries could pay back the loans to Japan which is the biggest lender and investor in Asia. It would therefore be in Japan’s intrest to support Asia.

If Japan implements the above mentioned measurements it would become the powerhouse it was before the crisis. As an economic worldpower it could help the other Asian countries in the economic recovering. With a strong Japan, international support to the Asian countries would make much more sense.

As the crisis in Asia is for a large part the result of overborrowed companies which cannot fullfill their financial obligations, the only solution is to revitalise the companies. This has to be done by the rescheduling of debts, the reorganizing of the banking system, the stabilisation of the currencies and the creation of national and international markets.

The Asian countries with currency and other economic problems have therefore to do their share to get out of the crisis. They have to implement reorganisations in the business community, especially the financial sector, introduce fiscal and account legislation, eliminate bureaucracy, corruption and monopolies and create a stabile political and economical climate to attract international investors.

Standaard
June 1997

June 1997

June 1997

Indonesia, a country at the crossroads – Lean but not mean – A financial update

Indonesia, a country at the crossroads

Indonesia the island rich country with many peoples and cultures are at a point where the upcoming new intelligentsia/elites are questioning the right to govern of the sitting government. In the last thirty years or so the country has been under the rule of president Suharto and his Golkar party. The regime can not be described as a social democratic example but the achievements of the last three decades are remarkable.

Indonesia has transformed itself from a poor underdeveloped country, with a per capita income of under 100 U.S. dollar to a developing country with a capita income of over 2.500 US dollar in 1996. It even can be considered as one of the new tiger economies with annual growth figures of over 8 percent.

The economy and the businesses are doing fine but the people of Indonesia also did get a share of the wealth. Hunger has been eliminated, housing has been improved and all get a basic education. And the people who are living in larger towns or cities are even getting a higher education.

There are problems of creating enough jobs in Indonesia but if the economy can maintain the growth of the last years things will work out allright.

The many youngsters who have experienced no hunger, have received a higher education but also have some difficulties in getting a job are questioning the integrity and capabilities of the ruling regime. Which admittedly have been involved in nepotism and are creating a state where large groups are maid dependent on the government by jobs and subsidies.

The irony of it all is that those who benefitted most of the Suharto regime want now some change, the youngsters with the support of the opposition want to change the government. They are convinced that the social-, political- and economical situation can be improved if they are in power. They do not have the patience to wait and are now trying to convince to people of their ideas by talking but also by violence.

But the regime of Suharto partly through thier policy of grants still receives a lot of support in the countryside. And this with the support of the armed forces, the bureaucrazy and the better off in the cities will guarantee a majority in the election for the president and his Golkar party.

It is still to early for the opposition to claim victory, they are not yet able to change the outcome of the election. Suharto will get the chance to continue the work it started three deades ago. This will be good for the business community because the unrest created by the opposition during this election is not very good for Indonesia and in particular to the business and the trust needed to to attract capital from abroad.

The Indonesian society has been changed and the youngsters of now will get a chance to introduce some of their ideas and limit the the power of Suharto and his family but not so radical as wanted. They will have to wait for another five to ten years to gain enough support to replace Golkar. But notwithstanding all that Indonesia is already at the crossroads to a new era where the country will move towards a developed democratic society with a strong opposition party.

Lean but not mean

During the last ten to fifteen years the business community has been shaken by reorganisations. The companies had to change to survive in a increasing global competition. In essence sales had slumped, cost increased and competition from cheap labor countries increased.

The recession forced a lot of companies to adjust to these new circumstances. Even the largest of companies were forced to rethink and evaluate their strategy, organisation and products. A lot of consultants came up with theories of re-engineering, core-activities, cost-reduction and the capital market also wanted their share with shareholder value.

The companies in need responded mostly to the advice of the consultants by a combination of cost-reduction and selling companies which did not belong to the core-activities of the company.

Cost-reduction translated itself into the elimination of the labor cost because they are relativily expensive and above all very easily implemented with quick results on the balance sheet. The sale of parts of the company which were accumulated during the fat years and the hype of diversification also increased the profit and reduced costs.

The little tricks, of cost cutting and selling off, which were used worked out well on the short term, the stock price went up, the profits increased and the company looked good again.

After five to seven years the sales and profits went down again and the same was true for the stock price. And again more cost could be reduced by firing more staff and by the elimination of costs like research and development, cleaning and catering and so on. The same trick worked again. But it was not a solution to save the company on the long term. It was simple a way of downsizing in capabilities which improved productivity but at the cost of lesser possibilites for the future.

The theories of re-engineering, cost-reduction and only keep on core-activities are good to use to become lean and mean. But the way in which they were used only resulted in a lean company without any strategy or vision for the future. And to survive on the long term it is necessary to become both lean and mean but not to lean because there is some fat necessary to introduce innovative processes and products.

The idea about lean and mean is eliminating unnecessary costs to improve productivity and to become mean by creating an efficiënt and effective production base and at the same time invest in the future by maintaining a credible R&D department which is in touch with the customers to satisfy their needs and wishes.

A company has to have a well defined strategy, a flat organisation, a balanced financial policy, an open and sensitive R&D capacity, a flexible production capability and a custom minded sales department. It is easy to define the conditions for a successfull company but often difficult to implement. Which became clear after a number of companies had to reorganise themselves several times to maintain the same return on investments.

If to much attention has to be given towards the balance sheet and share holder value a company will become lean but not, which is as important, mean. If companies do not respond to the demands of the future they will miss the train and a second chance is nowadays impossible.

A financial update

The markets performed well last month. May was this year not the month of “sell in May and go away”. Nearly all markets where in a winning mood, with the exception of the CAC 40. The CAC 40 experienced a downturn after the first round of the election showed up with bigg losses to the conservatives and a possible take over of the left. But what will happen in the coming months is still open.

The forecasts for the economies of the world are promising for the Americas, Europe, including Eastern Europe and Russia, Japan, Hong Kong, Philipines, Taiwan, Malaysia, Australia and under circumstances Indonesia. The other forecasts for the other South East Asian countries are bleaker. They will not be able to achieve the same growth figures as before.

Even if the U.S. stock market is expensive there a number of stocks which continue to offer growth. On our short list of U.S. stocks are the following listings: Citicorp, J.P. morgan, American Express, Bell South, Compaq, Motorola, Sun Computer, Sun Microsystems, Lucent Technologies, Procter & Gamble, General Electric, Textron, Pfizer, Eli Lily, Exxon and Boeing. As promising companies we also advice AT&T, IBM, Schlumberger and Texaco.

The Japanese stock market will continue the growth which started to take off this year. The companies we still like: Sony, NEC, Matsushita, Mitsubishi Corp., Mitsubishi H.I., Toyota. Two other companies which we like to include on our list is Canon and Yamanouchi Pharma.

In Europe we also still see some possibilities. In the United Kingdom we upheld our advice for Beecham Smithkline, British Aerospace, British Airways, British Petroleum, Cadbury Schweppes and Barclays Bank. Further we see some potential in British Telecom, Glaxo Wellcome and Tesco.

The German stock market is being influenced by the precarious situation of the German government budget. But the following companies will still show some growth; BMW, Daimler Benz, Allianz, Deutsche Bank, Dresdner Bank, Siemens, Bayer, Hoechst, VEBA, Viag, and Thyssen. But also RWE and Metro are promising, and if you want a more risky investment Hochtief is what you are looking for.

The biggest gainer of last year is Switzerland and one might ask how long they can continue this. The pharma giants Novartis and Roche will continue to be good investments. This is also valid for UBS.

Another difficult market is France. The French elections damaged the growth of the French stock prices. And these could loose even more ground if the socialists will win the the election. The damage could be limited if the socialists would continue with the policies to introduce the Euro and support the European integration. The CAC 40 will be an interesting market in June because the big slide of May will restore in June. The level of restoration will however depend on the policy of the party which will win the elections. June will consequently be a very good time to buy into the CAC 40. Companies like Elf-Sanofi, LMVH, L’Oreal, Carrefour, Canal +, Soc. Generale and Total will offer some very good growth chances.

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