Not Just Another Recession
Why the Global Economy May Never Be the Same
THE CENTER CAN HOLD
Anyone skimming recent Western reporting on Indonesia could be forgiven for assuming that the world's fourth most populous country is on the verge of disintegration. The recent secession of East Timor is unlikely to cause a chain reaction, however. The geographic and cultural patchwork of Indonesia may shrink, but it is not about to unravel.
A vast archipelago through whose waterways pass two-fifths of world shipping, Indonesia has recently undergone a series of political reforms that could eventually lead it to become that rare thing, an Islamic democracy. Its size, location, and natural resources make it a potentially formidable obstacle to any Chinese attempt to gain hegemony over Southeast Asia. The scale and diversity of the Indonesian economy enhance its importance for the larger region and make urgent its resurrection from the Asian financial crisis. Whether Indonesia will survive in something resembling its present form is thus a topic of concern well beyond the South Pacific.
Since its economy began to fail in 1997, Indonesia has witnessed several thousand deaths from political violence. This number will mount as unrest continues. But although the toll is tragic, it is not enough to destabilize a country of some 216 million people. And although separatist movements have gained ground in several outlying provinces, they do not yet command enough resources or support to impose their will on the government. The country's periphery is restive, but the provinces remain Jakarta's to lose.
THE YEAR OF LIVING DANGEROUSLY
Many observers who forecast Indonesia's disintegration see East Timor as both omen and model. Indonesia's 1975-76 invasion and annexation of the eastern half of the island of Timor was finally reversed in 1999. The East Timorese voted overwhelmingly for separation from Indonesia in U.N.-supervised balloting last August, and Jakarta ratified the divorce the following month. The U.N. Transitional Authority in East Timor (UNTAET) has been charged with preparing the territory for independence.
But East Timor is a very small place -- not much more than half a million people on fewer than 15,000 square kilometers of land. Excising that territory from the vast eastern underbelly of a country that is 1.9 million square kilometers large has left but a tiny scar. Indonesia has not only survived the surgery but emerged with its prospective health improved.
To be sure, the operation was botched. On September 4, the U.N. announced the results of the referendum: Jakarta had lost by a four-to-one margin. Violent reprisals by government supporters quickly followed, destroying an estimated 70 percent of East Timor's urban infrastructure. Hundreds of pro-independence East Timorese were killed, and hundreds of thousands more were intimidated into fleeing to western Timor. The Indonesian army's role in the violence ran a short gamut from acquiescence to connivance.
Whether or not the government recognized it as such, however, the loss of East Timor was actually a net gain for Indonesia as a whole, because it could only help sustain the latter's two fragile recoveries -- from authoritarian rule and from economic recession. Between mid-1997 and mid-1998, Indonesia's per capita GDP shrank by 16.2 percent. Jakarta could ill afford to continue its two-decades-long repression of the East Timorese. However bloody and belated the separation was, relinquishing the territory removed an impediment to crucial political and financial support from foreign donors and lenders sensitive to human rights.
Indonesians who opposed giving up East Timor feared a "domino effect" in which other provinces would follow East Timor out the door. Such a move would set an example for other regions, they warned. Jakarta needed to stand fast to avoid an exodus that would destroy the country. Granted, such an exodus could still occur. But six months after the People's Consultative Assembly in Jakarta canceled East Timor's provincial status, the rest of Indonesia remains intact -- troubled (in some places, violently so), but still one country.
Why? Compared to Indonesia's other provinces, East Timor is unique. A Portuguese colony for nearly 500 years, it was never part of the Dutch East Indies, the entity that eventually became Indonesia. Nine out of ten East Timorese are Catholic, whereas nine of ten Indonesians are Muslim. In 1975, a change of regime in Lisbon triggered the beginning of the end of the Portuguese empire. Free from Portugal's control, political rivalries in East Timor spiraled into civil war. One cannot say how successfully the East Timorese might have managed their independence had they been left alone, but it can hardly be said that the Indonesian invasion of December 1975 rescued the East Timorese from themselves. It did make it clear that Suharto, then Indonesia's president, and his fellow generals had decided to smash the partition that had long kept separate the two halves of Timor. The United Nations never accepted East Timor's absorption into Indonesia. Washington gave only de facto acquiescence, without approving of Suharto's methods. To the extent that nationhood is the product of a shared past, therefore, Indonesia is more Indonesian without East Timor than with it.
More than 3,000 kilometers northwest of East Timor lies the province of Aceh (pronounced "Atch-eh"), which is widely held to be the next most plausible candidate for independence. But if Aceh does leave Indonesia -- more accurately, if it is permitted to do so -- such an outcome will flow not from any East Timor precedent but from distinctive local conditions and Aceh's interactions with Jakarta.
The Acehnese differ from the East Timorese in nearly every respect. Both encountered the Portuguese early in the sixteenth century, but Aceh did so as an expanding sultanate that refused to succumb to colonial rule. No part of the archipelago that became the Dutch East Indies took longer for the Dutch to pacify.
Centuries before the Europeans' arrival, Aceh's location on the northwestern end of the island of Sumatra exposed it to Islamicization by Muslim traders. Acehnese sometimes call their homeland "the front porch of Mecca," due to its relative proximity to Saudi Arabia. Aceh's population is about 97 percent Muslim, a figure that may actually have risen recently as non-Muslims, fearing turmoil, have fled.
Aceh's natural wealth is also distinctive. Indonesia is the world's leading exporter of liquefied natural gas (LNG), and two-fifths of the country's LNG exports originate on Aceh's northern coast. In contrast, although UNTAET has signed an agreement with Australia to develop petroleum resources beneath the Timor Sea on behalf of the future sovereign state of East Timor, the new nation's share of the eventual annual revenues is expected to amount to only a few million dollars. As for industry, Aceh's was much more advanced even before the torching and looting of East Timor's infrastructure in 1999.
Aceh's autonomous identity as an Islamic state and its natural resources do make secession more plausible. No regionalist leader articulates a harder anti-Jakarta line than Tengku Hasan M. di Tiro, the titular head of the Free Aceh Movement (abbreviated gam in Indonesian). Di Tiro avows his fealty to Aceh's past and enmity toward the "imperialist" Javanese (who account for about half of Indonesia's population and have disproportionately dominated its institutions). Seemingly obsessed by history, di Tiro refers frequently to the long Acehnese struggle against the Dutch and then the Javanese. He considers himself a head of state -- the 41st ruler of Aceh since 1500. The 34th through 40th, he notes, all died in the struggle against the Dutch, but he detests the Javanese more than the Europeans whom they replaced. More brutally and duplicitously than their predecessors, he insists, the Javanese repressed and exploited the real Acehnese nation in the name of an imaginary one. "I myself," he told me, "am older than this so-called Indonesia." (Indonesia's first president, Sukarno, declared the country's independence in 1945, when di Tiro was 15.) When asked what sort of government an independent Aceh might have under his leadership, he referred to an Anglo-Acehnese commercial treaty signed in 1603. He also cited Aceh's natural-gas reserves as proof of the viability of its independence.
Despite di Tiro's confidence, Aceh's exit from Indonesia is hardly inevitable. From 1968 to 1998, when he finally resigned, Suharto's authoritarian "New Order" transformed the economy and society of the entire country, including Aceh. By erecting an industrial enclave near Lhokseumawe, the province's second-largest city, Jakarta unwittingly stimulated gam recruitment. Rural Acehnese resented the disparity in wealth between themselves and the Javanese brought in to staff the modern complex, and disputes broke out over land rights and pollution. Above all, the Acehnese objected to having "their" valuable resources siphoned off to Jakarta. But the answer to these grievances need not be independence. Jakarta could rechannel revenues back to a truly autonomous Aceh, possibly inside a federalized Indonesia. So the natural wealth that could make Aceh's independence more viable could also make the matter more negotiable -- if Indonesia's political center is willing to ease its grip on the periphery.
Economic growth during the "New Order" diversified the Acehnese. A relatively secular and technocratic elite grew up around the university in the provincial capital, Banda Aceh. Migrants left for Java to pursue studies or careers. Di Tiro's name still garners respect in Aceh, but during his decades-long exile in Sweden, parts of Acehnese society passed him by. Inside the province, nongovernmental organizations have sprung up to represent social groups -- students, women, entrepreneurs -- with an interest in peace and justice as well as sovereignty. Educated, professional, and commercial Acehnese abhor the Indonesian army, which has abused citizens with such impunity for so long. But they are also impatient with gam's intransigence and violence.
Nor will religious issues necessarily lead to secession. The Acehnese are devout Muslims, but the overwhelming majority of other Indonesians are Muslim, too. This should mitigate in Aceh the sense of alienation that has contributed to unrest among religious minorities elsewhere in Southeast Asia.
After Aceh, the province many observers consider most likely to secede is Papua -- formerly known as Irian Jaya, but renamed by Jakarta in a symbolic concession to local identity. Half as populous as Aceh, Papua sprawls over the easternmost end of Indonesia, covering the western half of the island it shares with Papua New Guinea. The province's two million inhabitants are spread across a territory more than seven times larger than Aceh and nearly 3,500 kilometers away. Some three-fifths of Papua's population is Protestant, but the potential for political solidarity is limited by the diversity of a dispersed population. In February, the leaders of 11 Papuan Protestant denominations demanded justice but disavowed violence, and remained neutral on independence.
Many inhabitants of other islands (notably Java) have migrated into Papua to exploit its local resources. This has complicated ethnic Papuans' ability to claim that their interests and those of the territory are one and the same. Unlike the Acehnese, ethnic Papuans speak hundreds of distinct languages, and the province's mountainous terrain further limits the ability of the sovereignty-seeking Free Papua Organization to mobilize a united front against Jakarta.
Like Aceh, Papua is rich in natural wealth, but unlike Aceh, its economy and infrastructure lag far behind those of Indonesia proper. Here again, the fruits of local resources are tasted mainly in Java, and the gulf between productive enclaves and backward hinterlands motivates resentment and secessionism. The rift in wealth and status is even greater in Papua than in Aceh and thus is potentially more destabilizing. But the sheer size of the gap in Papua also magnifies the local allure of Jakarta's attempts to bridge it, thereby potentially helping Jakarta's agents co-opt and divide pro-independence elements.
Aside from Aceh and Papua, other provinces on the lengthening list of potential defectors include Riau and East Kalimantan. All four of these peripheral regions combine natural wealth with small populations to generate per capita incomes far above the national average. This lets local elites believe that their homelands can make it on their own, but it also enables Jakarta to elicit local support by returning to these provinces some of the substantial revenues now taken from them.
Central authorities rightly worry about losing income from oil and gas reserves in Aceh, Riau, and East Kalimantan. But the restructuring of Indonesia's economy toward manufacturing and services has greatly reduced the proportional contributions of oil and gas to national revenue. By 1996, such receipts accounted for only 21 percent of central government income. Compared with the outer islands, Java's larger population, better infrastructure, and more diversified economy have made it the most important origin of national revenue.
The havoc done to Indonesia's economy by the East Asian financial crisis in 1997-98 steeply increased Jakarta's need for income. Indonesia's public obligations now equal its GDP, and some three-fifths of its national budget is earmarked to servicing this massive debt. But if the current economic recovery can be sustained, the urgency will decline. So, too, will the efficiency of currently exploited hydrocarbon fields, including the shrinking reservoir of gas that has bolstered the economic hopes of the Acehnese.
In Riau and East Kalimantan, pro-independence moves and views have thus far been relatively mild. The prospect of autonomy within Indonesia is much more popular in these places than in Aceh.
Horrific violence in a fifth province, the outer island of Maluku, has led observers to warn that it too might break away. But the waves of killing and destruction there have not been directed against Jakarta. They stem mainly from the collapse of a delicate balance of economic and political power between Muslims and Christians. In Maluku, resentments have been fierce, but they have been aimed not so much "vertically" (against national authority) as "horizontally," in deadly, escalating exchanges between local communities. People in Maluku had many reasons to be disappointed with faraway central authorities, but one chief grievance was in principle entirely resolvable: Jakarta's failure to intervene impartially and effectively to help end the violence.
ENTER GUS DUR
What all these facts imply is that the fate of Indonesia's troubled periphery remains in the hands of Jakarta. By late 1999, in contrast, many analysts still believed that part of the periphery was about to leave. They were especially perturbed by an incautious remark made in November by Indonesia's new leader, Abdurrahman Wahid. Wahid had been elected president in October by the People's Consultative Assembly -- itself largely a product of the country's democratic national election five months earlier, the first such contest in 44 years.
After East Timor's vote for separation, Wahid said it would be unfair not to let Aceh have a referendum, too. Wahid's comment shocked people by seeming to endorse the domino theory. If Jakarta felt obliged to treat all the provinces similarly, whatever one of them gained would have to be granted to the others. Consistency would scuttle the country even if diversity did not. But this fear proved groundless. Not even the liberally minded Wahid -- let alone other Indonesian leaders -- was prepared to apply the East Timor precedent to the rest of Indonesia. Wahid soon explained that in the referendum that he envisioned, the Acehnese would be allowed to decide only whether to apply Islamic laws inside their province, not whether to withdraw from the republic.
In the few months since his presidency began, Wahid (better known by his nickname, Gus Dur) has often made off-the-cuff comments that have required backtracking and clarification. He "has been very skillful in solving problems created by himself," wryly noted one Indonesian newspaper. Assembly Chair Amien Rais, a possible successor to Wahid, has said that for Indonesians, "there are three mysteries in life: when they are going to die, the weather, and what their president is going to say or do next."
The more Wahid changes his mind -- or at least his words -- the less Indonesians will believe anything he says. So his presidency could self-destruct, and disarray in Jakarta might then stoke separatism in the regions. But Wahid's inconsistency can also be an asset. Indonesia has only recently emerged from decades of deadening autocratic consistency. Throughout his long rule, Suharto refused to give power to the regions. In this context, many Indonesians find Wahid's policy shifts refreshing -- if only because they evoke possibilities of change after stasis.
There is also more than a little method in Wahid's madness. His headline-grabbing unpredictability keeps his enemies off balance and the spotlight on himself. Media attention magnifies his influence, and he uses self-deprecatory humor to advance his views. In the end, those views reflect Gus Dur's sense of himself not as a commander but as a teacher -- engaging his people in a dialogue that will move the country toward tolerance, pluralism, and democracy. In the meantime, he has begun addressing the army's intrusive and repressive habits -- but he has not stopped security forces from cracking down hard on gam in Aceh. The first policy wins him points in regions where the army is hated; the second sends a clear antisecessionist signal to the one region where such hatred may be greatest.
Keeping the country together will require more than counterinsurgency and civilian control of the army. Jakarta will also need to meet a third challenge: decentralization. In mid-1999, new legislation shifted political and economic power from the center to the regions. But these laws still have not been put into practice, and the regions are impatient. Wahid's skills are political, not managerial, and differences between his ministers have corroded their ability to work as a team. Now, bold steps are needed. If Indonesia is to retain its present borders, it may even have to reinvent itself as a federal state.
After World War II, the Dutch experimented with federalism as a way to retain influence in the East Indies and isolate Sukarno's Java-based republic. Many Indonesians still shun the "F word" because it smacks of colonialism. Wahid nevertheless hopes to introduce much of the substance of federalism without using the name.
Wahid has kept up a punishing schedule of travel abroad, partly to solicit aid and investment but also to line up support for keeping Indonesia whole. He has tried especially hard to mobilize neighboring and Muslim states against Acehnese independence. The success of this campaign so far has enabled Jakarta to ask gam, in effect, Why seek sovereignty if it will only isolate you?
In Southeast Asian international relations, realpolitik has traditionally trumped moralpolitik. Neighboring states dependent on the region's biggest and potentially most powerful country will think twice before risking its ire by supporting its dismemberment. One might think that China would encourage provincial defections to cut the republic -- a potential rival -- down to size. But China's leaders have so far been more concerned about upholding in Indonesia the principle of single-state sovereignty so crucial to how they view their own country. Accurately or not, they worry that the dominoes from an Indonesian collapse could tumble northward: Aceh or Papua today, Xinjiang or Tibet tomorrow.
Jakarta would be wrong, however, to think that foreign governments will always be allergic to secession. Washington has assured Jakarta of U.S. support for Indonesia's territorial integrity, arguing that East Timor was a special case. But the more brutal Jakarta's attempts to hold Indonesia together, the less enamored of Indonesian sovereignty Washington will become. Moralpolitik can be sidelined, but it will never go away; human rights activists and their allies in Congress will make sure of that. Wahid's minister of regional autonomy, Ryaas Rasyid, is especially sensitive to this prospect. He actually ranks Papua above Aceh as a candidate for exit. The Papuans are Christians, he reasons, and thus more likely in the long run to garner Western sympathy than the Muslim Acehnese.
Papuan history may be cited to back Rasyid up. Compared with Aceh's participation in the Indonesian Revolution, the circumstances of Papua's entry into Indonesia were more controversial -- indeed, more like East Timor's. The western half of New Guinea was not added to the Republic of Indonesia until 1962-63, when diplomatic pressure and a military campaign mounted by Jakarta obliged the Netherlands to turn the territory over, so long as this was eventually shown to be an "act of free choice." In 1969, Jakarta "kept" this promise by manipulating selected tribal leaders into agreeing, without a vote, to affiliate with Indonesia. Other things being equal, this history will make it harder for Jakarta to resist giving the people of Papua a new and truly free choice between futures.
Indonesia's future in the near term depends partly on the survival of Wahid. At 59, he is comparatively young for a head of state. But although his stamina is impressive, he suffers from high blood pressure, diabetes, and the aftereffects of two strokes. He is blind in one eye and has only 20 percent vision in the other. Wahid's presidency is scheduled to run to 2004, but if he becomes incapacitated, Vice President Megawati Sukarnoputri is slated to replace him. She lacks Wahid's political skills, however, as well as his Muslim credentials and possibly his willingness to experiment with federalism by another name. Her chief rival, Assembly Chair Rais, is a committed Muslim who clearly favors decentralization. But just as Sukarnoputri's presidency would worry some Muslim politicians, Rais' would disturb many non-Muslim leaders.
Indonesia, then, will survive. Aceh and Papua may not remain inside it, but their farewells, if they happen, are unlikely to set in motion a process that reduces the republic to the island of Java. Adaptations to differing localities and demands can still usefully be made, even at some cost in consistency. Barring another economic collapse, co-optation by Jakarta can be effective. Revenues from resources can be shared. Decentralization can be adopted. A pseudo-federal system can be tried. Centripetal diplomacy can work. But these "cans" cannot be turned into "wills" without sustained, focused, and adroit behavior by a central government that is weak, divided, and embattled on many fronts at once.