| Subject: Joyo Exclusive: Wolfowitz's
Jakarta Years: Suharto Apologist, Economic Cronyis
Joyo Exclusive
March 29, 2005
Wolfowitz's Track Record on Economic Policy and Human Rights Is Poor
By Jeffrey A. Winters Assoc Prof of Political Economy Northwestern
University
In an effort to downplay his more recent hawkish profile as the #2 man
at the Defense Department, Paul Wolfowitz, nominated by George Bush to be
president of the World Bank, has pointed to his tenure as ambassador to
Indonesia as evidence that he is well suited to lead the world's largest
institution focused on development.
In fact, Wolfowitz's record as ambassador in Jakarta provides some of
the most damning evidence against him.
In 1997 the Indonesian banking and financial sector imploded under the
weight of gross mismanagement, non-performing loans, and debilitating
corruption. As ambassador to Indonesia, Wolfowitz helped set the stage for
this collapse of the Indonesian economy, a tragedy that plunged tens of
millions into abject poverty.
Specifically, in 1988 Indonesia implemented one of the most reckless
deregulations of a banking sector ever undertaken. Pushed by the World
Bank, the IMF, and Wolfowitz's Economic Policy Support Office (EPSO) at
the U.S. embassy, Indonesia's technocrats opened the floodgate for local
crony conglomerates to set up private banks across the country and take in
deposits from a trusting public.
Wolfowitz and his EPSO staff talked up the wonders of liberalization.
The deregulated banking system would mobilize capital more efficiently,
jobs would be created, and the economy would soar.
Left out of the formula was any Indonesian government mechanism or
capacity for supervision and safeguards for the banking and financial
sector. Ideologues like Wolfowitz could only see a need for the state to
get out of the way. But what Indonesia's depositors really needed was a
stronger state role to set rules and boundaries for bankers' behavior.
The foxes were running wild in the financial chicken coop, and no one,
including Ambassador Wolfowitz, pressured the Indonesians to design
safeguards to protect the public's deposits.
These policies were a timebomb set in 1988 and finally triggered in
1997 when the Thai baht collapsed. Indonesia's banking system had to be
bailed out, the public took on crushing levels of new debt, and the
Indonesian population suffered miserably. Eight years later, Indonesia is
just barely back to where it stood before the crisis hit.
Wolfowitz is certainly not solely responsible for the devastating
effects of the 1988 deregulation. But he was one of a handful of key
actors pressing the Indonesians forward on a reckless and risky path,
driven by simplistic free market ideologies summed up in the now
discredited "Washington Consensus."
Turning to the question of human rights and democracy, ambassador
Wolfowitz's record from his Indonesia days is even worse.
Prominent Indonesian activists and leaders of NGOs are already on
record stating that when he was ambassador, Wolfowitz never met with them
or visited their offices to lend moral support as they struggled for
freedom from the repressive Suharto regime.
But the single most important political moment of Ambassador
Wolfowitz's years in Jakarta -- the visit of President Reagan in 1986 --
shows that he played a crucial role in shielding the Suharto regime from
any close scrutiny of its human rights record. He also helped keep
democratization in Indonesia off the front-burner of U.S.-Indonesia
relations.
Reagan's handlers dubbed his swing through Asia the "winds of
freedom" tour. As the Reagan entourage was on final approach to Bali,
Indonesia, Ambassador Wolfowitz was scrambling to get the Indonesian
government to grant visas to two Washington-based reporters from Australia
who were flying with Reagan. The New York Times reporter, Barbara
Crossette, had already been deported the day before for writing an article
critical of the regime.
Wolfowitz's role was particularly telling in this mess. According to
Los Angeles Times reporters Jack Nelson and Eleanor Clift, "Paul D.
Wolfowitz, the U.S. ambassador to Indonesia, had urged the Indonesians to
withdraw the ban on the journalists for fear that it would draw attention
to the human rights issue. Administration officials had emphasized that
Reagan had no plan to raise human rights with Suharto and would prefer
that the issue not be raised publicly."
Wolfowitz's efforts to get visas for the journalists were not to defend
press freedom, but rather to make sure that Suharto and Reagan would not
be embarrassed by talk about human rights violations, and by having the
world see the Indonesian dictator behaving as dictators often do.
"In a press briefing book compiled for the President's trip,"
the Times article noted, "the Administration said that 'although
problems remain, there were improvements in the human rights situation in
Indonesia in 1985.' In fact, Reagan's visit comes in the aftermath of a
crackdown on dissidents." [note 1]
Reagan's trip cast more world attention on Indonesia than the country
had seen in a decade -- in fact, since President Ford's 1975 stop in
Jakarta on the eve of Indonesia's bloody invasion of East Timor. It was
the single most important opportunity ambassador Wolfowitz would have to
raise the issue of dictatorship and human rights abuses in Indonesia.
Instead, he toed the hawkish line of the Reagan administration and kept
the focus exclusively on economic and regional security issues.
The Indonesia Times quoted Wolfowitz as saying that "economic
issues would be on the forefront on the agenda of the talks between the
two presidents." [note 2]
The Australian journalists, immediately taken into custody in Bali and
deported, were being blocked because of a recent article another
journalist had written back in Australia. The article accurately described
the Suharto dictatorship's abuses of human rights and focused on the
Suharto family and cronies as being corrupt.
The Telegraph reported that, "Mr. Wolfowitz had described the
[Australian] newspaper article as 'bad' and told a press conference on his
arrival in Jakarta that the U.S. would handle the sort of situation it
created with the Indonesian Government by playing down the article and
trying to ignore it." [note 3]
Wolfowitz's cowardly behavior prompted a rare rebuke from the head of
the Australian government. The Advertiser in Australia reported that
Wolfowitz was specifically singled out for criticism by Australian Prime
Minister Bob Hawke for his comments. Hawke "did not hesitate to
attack… the new U.S. Ambassador to Jakarta, Mr. Paul Wolfowitz."
[note 4]
Wolfowitz not only undercut the Australian journalists who focused
attention on a murderous and torturing American ally in Southeast Asia,
but he lectured the Australians on how to handle an embarrassing flap like
this -- play it down, ignore it.
In a Lexis-Nexis search of every mention of Wolfowitz in the press
during his years as ambassador, there is not one instance where he is
quoted as speaking up on human rights or democracy in Indonesia. Instead,
he is consistently apologetic for the Suharto regime, always turning the
focus toward matters of business, investment, and the local and regional
stability the iron-fisted Suharto helped promote.
[Note 1] Los Angeles Times, April 30, 1986, "Indonesia Bars 2 on
Reagan Press Plane."
[Note 2] Quoted in Xinhua General Overseas News
Service, April 29, 1986.
[Note 3] The Telegraph, April 24, 1986,
"Hawke Blasts Bali Visa Action."
[Note 4] The Advertiser, April
25, 1986, "Hawke Drops Kid Gloves and Slams Indonesia," by Peter Costigan.
see also
Background on Paul Wolfowitz, Indonesia and East Timor
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