| Subject: Business Week: Indonesia: A Pariah State? Business
Week International September 27, 1999
INDONESIA: A PARIAH STATE?
As the world recoils, a political crisis may unfold in Jakarta
By Michael Shari in Jakarta with Sheri Prasso in New York
It has become one of the most disheartening horror stories in global diplomacy. Just
four months ago, Indonesia seemed to be finally putting its shattered economy and
political system back on track. Millions of Indonesians celebrated the downfall of
strongman Suharto by overwhelmingly voting against the ruling party in the first
democratic elections in four decades. The Indonesian military, under the seemingly
enlightened leadership of a soft-spoken, surefooted general named Wiranto, appeared ready
to yield to civilian leadership. Thanks to reforms mandated by the International Monetary
Fund, the economy showed signs of recovery. And the long-brutalized population of East
Timor won the right to vote for independence from a lame-duck President who craved
international respect.
The world community -- the international lending agencies, the United Nations, Western
governments -- wanted desperately to believe Indonesian military and political leaders
when they said that all these reforms would be carried out. The unfolding tragedy of East
Timor has shattered that belief.
Even as Jakarta promises to allow foreign peacekeepers to restore order, the horror has
not ceased. By the latest U.N. estimate, rampaging militias and Indonesian soldiers have
slaughtered at least 7,000 civilians for exercising their right to vote on Aug. 30. A
staggering 600,000 people -- three-quarters of East Timor's population -- have been
forcibly driven from their homes. The U.N. is trying to verify reports that hundreds of
Timorese are being loaded onto ships -- and dumped into the sea. ''It reminds me of
Rwanda,'' says a shaken senior U.N. official, referring to the mass ethnic cleansing in
that African nation.
Whatever the motives of the hardened men who run Indonesia, it is clear that the damage
to this Asian giant will be immense. Nothing is certain any longer -- the country's
passage into democracy, its economic recovery, even who is running the government now.
With relations with the IMF already inflamed over a banking scandal, Indonesia is on the
verge of being cut off from new loans that are needed to stabilize the financial system.
Indonesian economists have lowered forecasts for this fiscal year, from 2% growth to
negative 0.8%. Ethnic Chinese businessmen, still traumatized by deadly rioting in 1998,
are moving funds offshore again, putting pressure on the rupiah. As the international
backlash mounts, Indonesia is close to being branded a pariah state.
A new political crisis may loom in Jakarta. Withering international criticism of Armed
Forces Commander-in-Chief General Wiranto could undermine his hope of becoming a leader in
Indonesia's next administration. And the military, analysts fear, could try to seize power
if it comes under too much pressure. That could send the economy into a new crisis as
confidence collapses and international aid halts. Already, on Sept. 13, new Deputy Armed
Forces Commander-in-Chief Admiral Widado told top officers from Indonesia's 27 provinces
that the assembly charged with selecting the next president in November may be postponed
because of nationwide unrest. ''The military is becoming very dangerous,'' says Luksama
Sukardi, aide to presidential front-runner Megawati Sukarnoputri.
Adding to the pressure is the likelihood that the U.N. will form a war crimes tribunal
to investigate the East Timor massacres. One question will top the agenda: Was there a
clear chain of command from Wiranto's office in Jakarta to the provincial commander in
Dili, Timor's capital, and down to the district chiefs, who organized and paid the
militias? ''We will gather more evidence from atrocities committed in just 10 days in East
Timor than in the past 24 years,'' predicts one U.N. official.
Certainly, many of the parties involved, the U.N. included, had reason to expect the
worst. Wiranto said in private meetings a week after the referendum that he knew from the
start that East Timor would be a bloody mess.
The genesis of the crisis was Jan. 27, when Habibie said he would give the Timorese a
chance to vote for independence. The U.N., which did not acknowledge Indonesian
sovereignty over East Timor after the former Portuguese colony was invaded in 1975, wanted
the vote to go ahead. If it were not held while Habibie was in power, it feared, later
governments could renege. With world attention on the vote, they hoped the army would not
intervene.
But the U.N.'s referendum organizers foresaw trouble the moment they touched the ground
in February. They immediately sent detailed reports to superiors in New York and Jakarta
saying that the army was openly organizing pro-Jakarta militias and supplying them with
weapons and ''uniforms'' of baseball caps and black T-shirts. Copies went to Western
embassies and the Indonesian military headquarters.
One report describes a visit by U.N. Mission in East Timor (UNAMET) head Ian Martin in
June to the Liquisa district. Martin stumbled upon non-Timorese Indonesian regulars
training newly inducted members of an anti-independence militia. ''Nobody ever had any
illusions about the military's backing of the militias,'' explains a U.N. official. LEAP
OF FAITH. In meetings in Jakarta and New York before the referendum, U.N. and Indonesian
officials kept negotiating on security measures. In late April, Jakarta agreed to a
one-man-one-vote format using secret ballots. But in return, it insisted that only
Indonesian troops be allowed to provide security. That meant trusting Wiranto to control
the army and the militias. ''It was a leap of faith,'' admits Tamrat Samuel, UNAMET's
senior political affairs officer. ''But if we had insisted on the withdrawal of the
Indonesian army, it would have been a dealbreaker.''
The U.N. also appears to have miscalculated the extent to which East Timor's 78.5% vote
for independence would anger the army. The top brass only went along because they expected
the vote to be indecisive, says Harold Crouch, an Australian National University expert on
Indonesia. They also figured the militias would intimidate many Timorese into not voting.
The army then would have a pretext to challenge the vote when parliament met to ratify the
results in November. If that failed, then the army would seek to partition Timor, creating
some Indonesian districts from areas where pro-independence sentiment seemed weak.
But UNAMET scuttled the plan. A day before the Aug. 30 vote, its staff rejected a list
of poll observers presented by two anti-independence political parties on grounds that
they didn't have time to give them ID badges. The real reason, says a U.N. official, was
that ''the list of names included known militia members.''
Then, U.N. poll organizers trucked all the ballot boxes from 13 districts to the Dili
museum, dumped their contents on the floor, and mixed them up so that the army could not
tell which districts were more in favor of independence. Senior UNAMET officials insist
that this move, which outraged officers, was the voters' best defense against army
meddling. When the final tally came in, ''the army was shocked,'' says Crouch.
There's little doubt that the militias were set up, run by and even manned by army
regulars out of uniform. One source, who drove two hours from Dili to the town of Aileu
shortly before the vote, met the district chief, a retired army colonel now in the civil
service. The official commanded the town's pro-independence militia out of his office. In
Dili, ''the militias were hanging around the army headquarters and drinking beer in the
hall like they owned the place,'' he recalls. He saw soldiers issuing M-16s to militiamen.
The army has denied arming militias; Wiranto only admits his troops were ''psychologically
impaired'' from fighting ''rogue'' military elements. He didn't respond to interview
requests.
After violence flared, Wiranto sent in six battalions of regular army reinforcements
that were supposed to suppress the militias. But refugees who were later evacuated to
Darwin say these troops took off their Indonesian army uniforms at night, donned black
T-shirts, and fought alongside the militias. One refugee told a vote monitor that some of
these Indonesian soldiers lobbed hand grenades into a church where they were hiding from
the militias. Lefidus Macau, executive secretary of a pro-independence group, says
soldiers wearing army uniforms without shoulder patches fired into his house in Dili for
two hours on Sept. 5 as some 30 refugees lay flat on his floor.
A U.N.-sponsored tribunal on who triggered the killings in East Timor would certainly
humiliate Wiranto. That won't topple him from power. But it may make it very hard for
Indonesia's allies, notably the U.S., to deal with a regime that includes the army's
commanders.
Wiranto already seems to have taken control of the government. On Sept. 8., he started
calling daily meetings at 5 p.m. with Habibie and the armed forces chiefs of staff at the
presidential palace using agendas set by his staff, rather than the President's.
Meanwhile, the Megawati camp -- which had been wooing Wiranto for the vice-presidency
-- has turned chilly toward the general now that his reputation has been soiled by East
Timor. ''Now the military needs Megawati more than she needs the military,'' contends
Megawati aide Sukardi.
The question is whether she can succeed in asserting her independence from Wiranto --
or whether the armed forces chief may go for an outright coup. Wiranto has sacked generals
who were believed to have orchestrated riots and gang rapes in Jakarta that accompanied
Suharto's downfall in May, 1998, such as Strategic Reserve Commander Prabowo Subianto,
Suharto's son-in-law. But recently, Wiranto has brought several Prabowo allies back into
his inner circle. They are men who could support a violent action if they felt the army
was too threatened by events. GROWING ANGER. If the U.N. does take on the military, it
could complicate Indonesian politics even further. While outside forces and investigators
will be welcomed as saviors in East Timor, many Indonesians will regard them as intruders.
''Abroad, Wiranto is being portrayed as a butcher, but here people don't see it that
way,'' says Jakarta Post Managing Editor Endy Bayuni. ''They go back to the Jan. 27
agreement and say whatever happened after that is Habibie's fault, not Wiranto's.''
The buildup of anger and humiliation does not bode well for business in Indonesia.
Standard & Poor's has downgraded Indonesia's currency rating, citing ''reports of
growing tension between the military and the Habibie administration'' and the risk that
international aid ''may be curtailed for an extended period.'' On Sept. 10, a group of
prominent ethnic Chinese businessmen from Indonesia met in Singapore to compare notes on
how much capital they were pulling out and where they were putting it, says the chairman
of an Indonesian conglomerate who attended the meeting. Bankers in Jakarta figure a
resurgence of anti-Chinese sentiment is possible and that some officials might provoke it
to divert attention from the humiliation of the army and the government.
East Timor has long been treated as a local tempest that could never destabilize the
entire country. For Wiranto and everyone else involved, that could prove to be another
tragic miscalculation.
East Timor: How It Happened
JANUARY Indonesian President B.J. Habibie offers East Timor a referendum on
independence. Pro-Jakarta militias start getting organized.
FEBRUARY U.N. officials hit the ground in East Timor, detect evidence of Indonesian
troops cooperating with pro-Jakarta militias.
APRIL U.N. negotiators reach agreement on democratic voting system, but must allow
Indonesian troops to provide security.
AUGUST Ballot is held on Aug. 30. Turnout is more than 90%. Votes are counted centrally
in Dili, preventing army from identifying pro-independence districts.
SEPTEMBER After the U.N. announces 78.5% vote in favor of seceding from Indonesia,
pro-Jakarta militias begin orgy of violence. Wiranto sends six battalions to East Timor.
On Sept. 12, Habibie invites U.N. peacekeepers to East Timor to stave off economic
sanctions. U.N. estimates of death toll: 7,000. URL:
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