Indonesia: Corruption scandals

SBY government’s honeymoon spoiled

Susilo Bambang Yudhoyono (SBY) hoped for a bit of a honeymoon after being re-elected in the Indonesian presidential election in July 2009. Instead, his government has faced a series of scandals surrounding the Corruption Eradication Commission and the bailout of the PT Bank Century. SBY won with 60.8% of the vote, while the Megawati-Prabowo ticket received 26.8%. The Jusuf Kalla-Wiranto ticket received 12.4%.

There was barely any difference between the candidates who all come from one or another wing of the establishment. SBY’s vice-presidential running mate, Boediono, was Megawati’s finance minister before becoming SBY’s economy minister in 2005. SBY had been a minister in the previous Megawati government. Wiranto and Probowo were formerly armed forces commanders. Working people have no enthusiasm for SBY but, in the absence of any real alternative, voters decided to stay with the incumbent on this occasion.

Susilo Bambang Yudhoyono (SBY) – honeymoon cut short

The only minor disagreements were on economic policy. The US had backed the SBY ticket as the best to implement the neo-liberal reforms necessary to open up the country to foreign investment. Megawati and Kalla put forward more populist and protectionist programmes aimed at protecting local capitalists.

The issue of corruption was also a feature. Corruption is a normal part of capitalist society, but in an underdeveloped country like Indonesia it is widespread. Trillions of rupiah are spent legally and illegally every year by big business to buy political influence. SBY had pledged to fight corruption in his second term. In reality, he has no interest in attacking some of his closest backers and has done as little as possible. Unfortunately for him, corruption has been forced to the top of the agenda creating tensions within the new ruling coalition and fuelling popular anger among the poor and working class.

It has been alleged that more than $600 million of government funds were given to Bank Century, on condition that part of it was used to fund SBY’s election campaign. SBY and Boediono (the central bank governor at the time) are both implicated in the scam. Bank Century’s management had been riddled with corruption and had purchased millions of dollars worth of risky bonds. The official reason for the bailout was that, had the bank failed, the debts could have spread to other banks, the stock exchange, and could have caused severe problems for the entire Indonesian economy.

While the workers and the poor have major concerns about the economy, they were not at all happy about the government bailing out bankers while they continue to live in poverty. Public outrage started to develop, especially as the cost of the bailout rose by the day. One newspaper estimated that it was the equivalent of building more than 13,000 new schools!

These problems have been quickly followed by scandals around the Corruption Eradication Commission (KPK). The KPK had been set up by SBY to deal with the graft that is so common at all levels of the bureaucracy, especially at the top. The KPK, however, has not targeted them. There have been several prosecutions, but mainly of lower-ranking officials.

But, when the KPK was forced to go after some police officers and officials in the attorney general’s office, some sections of the establishment tried to undermine its effectiveness. Among other things, the chairman of the KPK was arrested as part of investigations into an alleged murder, and it was claimed that several KPK officials had received bribes. During court proceedings, taped phone conversations have implicated several high-ranking officials, and even mentioned that the president was working to undermine the KPK. The tapes rocked the nation and have seriously undermined the government.

SBY has responded by calling for investigations into the police and the attorney general’s office but, at the same time, he has watered down the powers of the KPK. SBY is also working hard to keep the full story surrounding the Bank Century scandal and his election funding hidden.

The saga has exposed the deep-rooted corruption within Indonesia’s ruling elite. The public has started to turn against the police, public prosecutors and the government. SBY’s approval ratings are in freefall. From a high of 70% early in 2009, some polls now show that he has less than 40% support. Editorials in Indonesian newspapers have called him weak, and people have started expressing their anger in a series of protests. On 28 January, thousands took to the streets to mark the 100th day of SBY’s second term. About 10,000 people gathered across Jakarta, including at the presidential palace and parliament, where they called for a full investigation and for key ministers to resign. Facing a heavy police presence, demonstrations were also held in 20 other cities including Medan, Yogyakarta, Makassar, Surabaya, Solo and Bengkulu.

The newly-formed Indonesian People’s Opposition Front (FOR) was one of the groups which organised the presidential palace protest, using the slogan: ‘Change the regime, change the system!’ FOR is an alliance of trade unions, student unions, small farmers, women’s organisations, human rights groups and left political parties. It is planning more protests over the coming months.

SBY responded by trying to shift attention away from the crisis by warning against ‘violence’ and a ‘return to 1998’. Clearly, the spectre of 1998 and the mass protest movement which led to the downfall of the Suharto dictatorship still haunts the ruling class in Indonesia.

Things are not getting any better for SBY. While Indonesia seems to have weathered the economic storm better than most of its neighbours, the reality is that the economy rests on very weak foundations. Growth rates have fallen from 6.1% in 2008 to an expected figure of around 4% in 2010. Official unemployment stands at around 8%, but more than 70% of the labour force work in the informal sector. The economy is largely based on low wages, with the current minimum wage set between $84 and $140 a month. However, more than half of the 230 million people in the country live on less than $2 a day.

The government introduced a $7.1 billion stimulus package last year which included cash handouts, tax cuts and higher wages to more than a third of government employees. This has helped, temporarily, to offset rising prices, and has propped up consumer demand. It has also massively increased the budget deficit. The government’s own conservative estimate is that the budget will not be freed from deficit for at least the next five years. In order to reduce the deficit, savage cuts will be implemented driving people even further into poverty.

Falling oil prices have allowed the government to reduce fuel prices whereas, previously, cutbacks to state subsidies would have led to higher fuel costs, provoking protest movements such as those in 2005 and 2008. While protests and industrial action have so far been limited, such is the anger brewing that this may not last. A steady stream of job losses and price rises are adding to the social tensions. Another economic downturn or further corruption scandals could set the country alight.

Although Indonesia became an independent nation in 1945 and formal, parliamentary democracy has been in place since the fall of the Suharto regime, none of the major problems facing workers and the poor have been solved. Democratic rights are still being undermined while poverty continues to increase. Just as under Suharto, a tiny minority continue to plunder the county’s wealth and resources. If this situation is to change, it is vital that the lessons are learned from past struggles.

The movement which led to the overthrow of Suharto is one such example. The mainly student protests of 1998 led to the resignation of one of the world’s most brutal dictators. Then, as now, there was a lot of debate as to what position the developing left forces in the country should take, how best to remove the corrupt regime, eradicate poverty and introduce real democracy.

These tasks are tied up with the socialist transformation of society. A socialist system based on public ownership, planning and democratic control is best placed to use the country’s resources to provide for the masses. Democratic control and management by workers is the only way to eradicate corruption and give people a real say over their lives.

In the late 1990s, however, many on the left maintained that the movement had to limit itself to purely democratic demands. They argued that, given the fact that Indonesia was an underdeveloped country, a period of ‘capitalist development’ was needed before there could be any talk about introducing socialism.

This led many on the left to support so-called ‘progressive’ bourgeois candidates in the elections, including Megawati Sukarnoputri herself, who were seen as lesser evils. Yet, after twelve years of ‘capitalist development’, poverty and social inequality have only worsened. Many of these alleged progressives have proven themselves to be loyal servants of big business and just as corrupt as Suharto, particularly Megawati.

In a period of renewed economic crisis, capitalism can only continue in Indonesia by demanding more and more sacrifices from the working class and poor. Therefore, the struggle against corruption and for genuine democracy is inevitably linked to the struggle for an end to capitalism. Calls for reforms without highlighting the need for socialism will only sow illusions in the already discredited capitalist system. That is why, while being the best campaigners against corruption, the left today needs to take an independent class position and outline a clear socialist programme based on the interests of workers and the poor.

Neither SBY nor any of the establishment parties have a programme that is capable of taking things forward. The only way to lift the majority of people out of poverty and to eliminate corruption is on the basis of democratic socialism. Workers and the poor need to reject all of the capitalist parties and fight for a system that puts their interests first. The tensions that are developing in Indonesian society are bound to sharpen in the period ahead. Through the course of struggles, more and more people will see the need to build a party that fights for democratic socialism and is unashamedly based on the idea that working people are best situated to implement lasting change.

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