Down to Earth No.76-77, May 2008

Suharto's Legacy

This May marks the tenth anniversary of Suharto's fall from power. The former president, who headed a military regime which ruled Indonesia for 32 years, died in January this year aged 86.

The death of General Suharto is not the end of an era. The drama of Suharto's last weeks clearly showed that the New Order remains a powerful force in the country. Many of the laws, policies and practices implemented during his 'New Order' government, continue to influence Indonesia today - despite more recent political reforms.

Suharto was forced to step down as president on 21st May 1998 amid mass protests, economic chaos and political paralysis. Criminal charges over corruption and human rights abuses were dropped on health grounds, although the former president continued to play golf, give interviews and receive visitors. During his last weeks, streams of dignitaries - including former heads of state, ASEAN representatives and senior government figures - came to pay their respects at his bedside, while leading Indonesian politicians called for sympathy and understanding rather than proceeding with prosecutions. Many obituaries, even in the international media, talked of Suharto as a great statesman who brought stability and prosperity to Indonesia. Such reports ignored the social and environmental damage caused by his Orde Baru regime.

Joined at the hip

Suharto seized power in 1965 unleashing an anti-communist purge in which at least 500,000 people were killed. Between 50,000 and 100,000 people were imprisoned without trial for up to 14 years and many thousands more were stigmatised by accusations of links with the banned Indonesian Communist Party.

The Suharto years were characterised by authoritarian rule in which the armed forces played a dominant part. The policy of dwi fungsi gave the military a domestic political role in addition to its defence function. Democracy was suppressed for over three decades in the name of managing and maintaining internal security by limiting political parties, censorship and the imprisonment of opponents. A substantial proportion of seats in both houses of Indonesia's parliament were allocated to the military and all armed forces personnel and civil servants could only vote for the ruling political party - Golkar. Even today, the army's territorial command covers the whole archipelago with a hierarchical control system from provincial to village level that parallels the administrative bureaucracy.

In 1975, Indonesia invaded and annexed East Timor. Over one quarter of the 700,000 population died in the civil war and famine that ensued. Tens of thousands of people were killed by military action against pro-independence movements in Aceh and West Papua. Widespread human rights abuses, including disappearances and murders, took place in these disputed territories and elsewhere in Indonesia. Army Special Forces are believed to have been responsible for a wave of 'mysterious killings' of petty criminals by death squads in the early 1980s. Throughout the archipelago, conflicts between communities and companies over land and resources were suppressed - sometimes brutally.

Indonesia's legal system - in effect, part of Suharto's power base - was ineffective due to corruption and patronage. The murder of rights activist Munir in 2004 and repeated cases of gross human rights violations by the armed forces in West Papua, including the killing of Papuan leader Theys Eluay in 2001, show how the culture of impunity still persists.

The 'father of development'

As the self-styled 'Father of development', Suharto's policies were firmly founded on economic liberalism. Indonesia's initially poor, largely rural economy was transformed into one of south-east Asia's 'tiger economies' by export-led growth based largely on the ruthless exploitation of natural resources and workers. The state claimed control over the country's land, forests and minerals and handed out huge, long-term concessions to big business.

Multinational companies were eager to get their hands on Indonesia's natural wealth, especially on the preferential terms offered by Suharto's US-trained economists. Freeport MacMoran got the exclusive rights to mine a massive gold and copper deposit in West Papua; Exxon-Mobil exploited the Arun gas field off Aceh; Rio Tinto developed gold and coal mines in East Kalimantan. These companies have made annual profits of billions of dollars, while benefiting from the repressive human rights situation, the denial of indigenous rights and lax environmental controls. They could hide behind the government and the local military in the event of any challenges from local communities over land rights, violence, sexual abuse or pollution. Paramilitary police protected their sites, a pattern which still persists today in some places.

Patronage to the president's family and supporters, including the military, was a key part of Suharto-sponsored crony capitalism. A classic example is that of Mohamad 'Bob' Hasan, who provided supplies to (then) Col Suharto's troops in the 1950s, became a timber tycoon with exclusive rights over the export of plywood in the 1970s and was trade and industry minister in the 1990s. As head of several timber trade monopolies, Hasan was Indonesia's de facto forestry minister for decades. He also controlled foundations which were part of the Suharto family's money making empire, such as the Nusamba Group which had shares in the Freeport-Rio Tinto Grasberg mine (see DTE 38). He was convicted of corruption in 2001 after an investigation into forest mapping by one of his companies.

The costs to forests and forest peoples

Between 1965 and 1997, Indonesia lost an estimated 40-50 million hectares of its forests to logging, conversion to agriculture, mining, infrastructure projects and urbanisation. In addition to the reduction in biodiversity, this forest destruction represents the loss of the homes, cultures and livelihoods of tens of millions of people living in and around these forests. Indigenous communities were deprived of access to their customary lands and resources.

Furthermore, the New Order's imposition of a standard system of village administration throughout Indonesia suppressed almost all traditional models of local governance. In many cases, this has caused irreparable damage to communities' cultural integrity. Where renewal and regeneration is still possible, this process will probably take at least a generation.

Arguably Indonesia's biggest social and environmental disaster was the transmigration programme. Between 1969 and 1999, around 4.5 million people were resettled - mainly from Java, Madura and Bali - to transmigration sites on the 'outer islands' with massive financial support from the World Bank and other international donors. Some sites proved to be suitable for agriculture and developed into thriving new communities, but at the expense of the indigenous people whose customary lands were taken without consent and at the cost of forest destruction. Overall, the programme failed in terms of poverty alleviation, agricultural development and reducing population pressures. Many transmigrants were worse off due to unsuitable soils, lack of access to markets and inadequate planning and abandoned their new homes for the cities.

The massive influx of Indonesians into West Papua, due to state-sponsored transmigration plus 'spontaneous migration' (encouraged by the government), has had particularly severe impacts on the economic and social status of the indigenous population. Papuans have been marginalised in their own land. Suharto's policy of allowing national and international companies to rape the disputed territory's natural resources has increased the Papuans' sense of injustice and fuelled demands for independence (see also Papua/extractives article).

During the 1970s and 80s, oil and natural gas exports helped to fuel an unprecedented period of economic growth with annual increases in GDP of over 6%. The USA, along with much of the rest of the world, turned a blind eye to Indonesia's corruption, nepotism and poor human rights record because of the New Order's strong anti-communist stance and its high economic growth rate. The World Bank has described the Suharto dictatorship as a 'model pupil'. Other international bodies such as the IMF and FAO claim that Suharto's policies reduced poverty and helped to create relative prosperity. But, while Indonesia's wealth from forests, gold, coal, oil and gas were stripped to benefit national and international conglomerates, maternal, infant and child mortality rates remained high. Today, with official estimates of poverty at below 17%, tens of millions of people continue to struggle to make a living below or just on the official poverty line.

The Central Kalimantan Mega Rice Project
In 1995, (then) President Suharto initiated a one million hectare project in the peat swamp forests of Central Kalimantan.
This controversial project planned to move more than 300,000 families from Java to central Kalimantan to help make Indonesia self-sufficient in rice. Indigenous Dayak communities were displaced as forests were cleared and canals dug to drain the land, but transmigrant farmers soon found that rice would not grow there.
The combination of dry peat and dead timber led to further disaster when fires followed the long dry season in 1997. Weeks of thick smoke affected people's health and the burning peat contributed significantly to increased global carbon emissions.
The project was officially abandoned in 1999, but the whole area remains devastated and local people have been deprived of their livelihoods. The drainage canals have made it easier for illegal loggers to remove any remaining timber from the area. The project, known locally as the PLG, has cost the Indonesian government at least US$500 million, not including recent announcements of plans to rehabilitate the area.

Where did all the money go?

The New Order's economic successes were exposed as a house built on sand in the financial crisis that hit south-east Asia in 1997. The IMF brought in a package of severe economic measures in return for a 'rescue package' of loans and public pressure soon forced Suharto to resign his presidency. Other ASEAN countries recovered relatively quickly whereas Indonesia has suffered a decade of economic depression with massive unemployment and increased poverty. The poor were hardest hit, but some of new middle classes became poor. Natural resource exploitation was stepped up to help pay off the huge debts that mounted up during the Suharto years.

Suharto's elite had created financial empires by investing the profits from raw materials into manufacturing industries, real estate and banking. By the early 1990s the new banks were little more than private funding vehicles for their tycoon owners. These and many other businesses borrowed abroad in US dollars. The government also took on international loans to cover budget deficits and to fund various public works projects. When the crash came, Indonesia was left with external debts of nearly US$140 bn, roughly half of which was private. As part of the 'rescue measures', the post-Suharto government took responsibility for some banking debts, including those of forest-related companies.

Although Suharto purported to live simply, he controlled a business empire worth billions of dollars. Through a complex system of foundations, he and his family received kickbacks for government contracts and siphoned money from state enterprises and charities. His wife was called 'Madame Tien percent' in joking references to her alleged commissions on business deals. His six children and even his grandchildren became billionaires through their involvement in a wide range of business sectors and commodities including pulp and paper, cement, plywood, cloves, toll roads, power plants, cars and banks.

Suharto sued Time Magazine for reporting he had stashed away US$15 billion in foreign bank accounts - and won the case in Indonesia's Supreme Court. Nevertheless, in 2007, Suharto topped the list of world leaders who had stolen from state funds. The list, compiled by anti-corruption NGO Transparency International and quoted by the United Nations and the World Bank, estimates that he had embezzled between US$15 billion and $35 billion. Banks in the UK, Switzerland and Singapore are suspected to be holding the stolen money.

Doubtless, patronage to the Suharto family and supporters (including his children's luxurious lifestyles and dubious business deals) accounts for some of the missing billions. Nevertheless, some of Indonesia's wealth was squandered on its bloated bureaucracy and the New Order's political vehicle, Golkar. Military operations in East Timor, Aceh and West Papua were also a drain on the economy.

'Leakage' of government spending and international aid estimated at 20% to 30% during the Suharto years was recognised by the World Bank and other international financial institutions who turned a blind eye to it. There was a furore when this figure was leaked from an internal Bank document in 1998. Nevertheless, corruption remains endemic. Indonesia continues to be rated as among the worst places in the world to do business. A Transparency International survey of international business people and country analysts in 2007 ranked Indonesia as 143rd of 179 countries.

The dangers of nostalgia

There are already some signs that Indonesia's 240 million population is growing disillusioned with the steps towards democracy that have been taken over the last ten years. There is more press freedom and political parties proliferate, but long-awaited reforms, including on land, have yet to be delivered. Corruption is still rife and there is a yawning gap between Indonesia's rich and the 100 million or so people who live in poverty or at imminent risk of doing so.

However, any attempt to stir up 'Suharto nostalgia' and promote the return to a more authoritarian regime, needs to be strongly resisted. It is important to learn from history and to expose and remember the crimes of Suharto and his cronies against Indonesia's people and their environment, rather than to forgive and forget. There should be no impunity for relatives and associates who benefited financially from corrupt dealings. Those responsible for the killings and human rights violations should be called to account.

Indonesia's politicians are still following a Suharto-style model of export-led growth based on plundering Indonesia's rapidly dwindling natural wealth. The expansion of large-scale concessions, including oil palm and pulpwood, risks ecological disaster, increased social tension and economic boom and bust. Megaprojects, such as plans to develop 1.5 million hectares of plantations along Kalimantan's northern border, threaten to repeat the PLG disaster (see box, above) while making fortunes for local tycoons. Measures to mitigate climate change seem to be regarded more as a new lucrative opportunity than as a means to protect forests and forest peoples' livelihoods. Indonesia's environmental protection legislation needs to be fully implemented by national and international companies who should be held to account by an independent, properly trained judiciary. There must be more transparency about the business interests of politicians and the military. Above all, Indonesia needs to build a new paradigm of development based on recognition of human rights and sustainable, equitable livelihoods.

Suharto regime called to account
Jakarta-based human rights activists are trying to set up a People's Tribunal to coincide with the tenth anniversary Suharto's fall. The idea is to address Suharto's record with the overall aim of seeking international justice, for example through the International Criminal Court in the Hague, given the weaknesses in Indonesia's political justice system and the climate of impunity. The concept is loosely modelled on the international war crimes tribunal initiated by peace activist and philosopher Bertrand Russell in the 1960s in response to US military intervention in Vietnam.
Indonesia's Human Rights Commission (Komnas HAM) has set up inquiry teams to investigate human rights violations under the New Order. Several retired generals (backed by minister of defence, Juwono Sudarsono) are refusing to cooperate in these proceedings. Representatives of civil society have pressed the president, Supreme Court, parliament and the Constitutional Court to support Komnas HAM's position, which is part of its statutory mandate, but no state institution has chosen to do this so far.

For information on Indonesia's transmigration programme and the Central Kalimantan mega-rice project see DTE Special Report, July 2001.

(Sources: Washingtonpost.com 10/Sept/07; Jakarta Post 19/Sept/07, 8/Jan/08, 16/Jan/08, 27/Jan/08, 28/Jan/08, 6/May/08; The Guardian 28/Jan/08; New YorkTimes 28/Jan/08;
soeharto-online.blogspot.com/2008/01/suharto-ex-dictator-of-indonesia-dies.html;
news.bbc.co.uk/1/hi/world/asia-pacific/1222147.stm;
http://rainforests.mongabay.com/20indonesia.htm;
www.transparency.org/policy_research/surveys_indices/cpi/2007;
siteresources.worldbank.org/INTEAPHALFYEARLYUPDATE/Resources/550192-1194982737018/ID-EAP-Update-Nov2007.pdf;
www.unicef.org/infobycountry/indonesia_statistics.html#0)

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