A face-lift for Habibie

By Faiza Rady

However, this time round it was to commemorate the second anniversary of the bloody 1996 crackdown on the Indonesian Democratic Party (IDP).

Two years ago, Suharto ordered Megawati Sukarnoputri, daughter of former President Ahmed Sukarno, the celebrated founding father of Indonesia, to be ousted from the IDP leadership for taking a public stand against his brutal, autocratic rule and corrupt administration. Following Megawati's ouster, supporters protested by occupying the party's Jakarta headquarters. Then on 27 July, the military and police raided the building. In the mêlée that ensued, at least five people were killed and scores were reported missing.

Although the IDP was allowed to rally in Yogyakarta for the commemoration, the police denied the party permission to march in the capital Jakarta on Monday, claiming grave security concerns. Megawati promptly retaliated, accusing Habibie's administration of reneging on its earlier promises to grant the Indonesian people freedom of expression, among other long-suppressed civil rights.

Following his unexpected ascent from the vice-presidency to the top job in May, Habibie has in fact worked hard to distance himself from Suharto's infamous legacy. He has tried to build a political base by assuming the persona of a democratic populist president. "From his first day in office he has set an energetic pace and a populist tone that are in sharp contrast with the style and substance of Suharto," reported The New York Times. "He has amazed people with his enthusiastic public style of leadership, visiting marketplaces, touring riot-damaged neighbourhoods and holding long news conferences."

Beyond ostentatiously campaigning in style with both eyes firmly focused on next year's May elections, Habibie has pledged to introduce political liberalisation and other reforms, including the convening of a special legislative assembly that would revise and expand the current system of representation. As a result, political parties of all tendencies are wildly mushrooming. In a country that legalised only three political parties over three decades, 30 parties have registered in the past six weeks.

In addition to posturing as a democrat and a political reformer, Habibie has proposed an ill-defined plan to grant some vague form of autonomy to East Timor. Suharto invaded the oil-rich island in 1975.

In an attempt to further divest himself from the Suharto legacy, Habibie has freed some political prisoners and engineered well-publicised preliminary talks over East Timor's future status under the venerable auspices of the UN umbrella. "I am very optimistic that a solution can be found," UN Special Envoy Jamsheed Marker said last weekend following a meeting with Habibie, the Roman Catholic Bishop of East Timor, Carlos Ximenes Belo, and imprisoned independence fighter, Jose Xanana Gusmao.

Habibie's most recent democratic aura notwithstanding, his long-term political viability remains highly questionable. "He is still in a survivability mode. Let's not talk about credibility yet," The New York Times quoted Indonesian human rights lawyer, Marzuki Darusman, as saying.

Despite concerted and arduous efforts to shed his past image, Habibie is in effect still perceived as Suharto's yes-man. A life-long protégé of the dictator, raised and politically groomed in the man's shadow since the early days of his youth, Habibie served as cabinet minister for 20 years before Suharto appointed him to the number two post. A German-trained aeronautical engineer, Habibie's only claim to fame was his absolute compliance with the fallen dictator and a propensity for dabbling in grandiose capital-intensive industrial schemes.

As research and technology minister, Habibie controlled the state aviation and weapon company IPTN, which has soaked up an estimated $5 billion of public funds with no tangible returns.

Habibie's last extravaganza during his tenure as vice-president involved a multi-billion dollar project to build a 100-passenger jetliner, even after the East Asian economic crisis had hit Indonesia with a vengeance. It finally took the full impact of the International Monetary Fund's (IMF) pressure to halt Habibie's oftentimes self-serving ventures at the height of the crisis.

While serving as a minister, Habibie and his family reportedly amassed a vast fortune, estimated at $60 million, through diversified holdings in the chemical industry, construction, real estate, transport and communications. The family holdings includes the Timosco Group, a conglomerate managed by Habibie's youngest brother, Suyatim Abdulrachman. The Group controls more than 80 companies and is ranked as the country's 64th largest enterprise. It is notorious for having established a monopoly over government contracts, notably supplying IPTN with goods and services.

Against this staggering backdrop of clan-based monopoly capital accumulation, coupled with blatant nepotism and influence peddling, it becomes evident that Habibie has a vested interest in keeping the economic power structure intact, while dishing out a projected panoply of political reforms, incidentally required by the International Monetary Fund (IMF) as a loan conditionality.

While focusing on political liberalisation as the alleged remedy to social upheaval, the IMF approved Indonesia's bailout loan of some $40 billion -- without considering that their 'reform' dictates hinged on the very same premises which were instrumental in unleashing the economic crisis.

In the case of Indonesia the IMF's prescriptions included in particular capital account liberalisation, resulting in the accumulation of unproductive national and foreign speculative capital -- flight-prone at the slightest hint of investor 'nervousness.' "This led to a situation whereby massive amounts of capital went, not to productive investment in manufacturing or industry, but to high-yield areas with a quick turnaround time, like real estate, car financing, and massive credit creation," sociology professor and author Walden Bello told a US House of Representatives committee.

The accumulation of speculative high-yield capital induced a cycle of increased investment and property development projects, resulting in the over-extension and indebtedness of the banking system. After capital flight hit Indonesia when the foreign debt reached $137.4 billion and the stock market crashed by 22 per cent, the house of cards finally collapsed. The national currency, the rupiah, depreciated by 400 per cent against the US dollar over the last nine months, which partially contributed to a spiraling inflation rate of 50 per cent. The collapse of the industrial and service sectors also resulted in massive lay-offs affecting an estimated 10 million workers.

"The medicine dished out by the IMF is the same as ever," explained economist Alan Woods on a web site dealing with economic issues. "Loans are given on condition that the entire burden of the crisis is placed squarely on the shoulders of the people ['austerity']. Growth must slow down, unemployment must grow, factories and banks must close, interest rates must rise, budgets must be balanced, and living standards reduced."

This is the medicine Habibie stubbornly continues to dish out.