Indonesia On The Brink

By Terry McCarthy/Jakarta

This is the second year of living dangerously for Indonesian President Suharto. During the first, in 1965, he coolly rode out a coup, followed by massacres that killed 500,000 people, and emerged as the country's leader. In this one, economic ruin threatens to topple him. Yet as the rupiah plunges into worthlessness, the nation's debts go unpaid, the International Monetary Fund suspends emergency aid, and students riot in universities, he blithely has himself reappointed to his seventh five-year term as President.

No dangers appear to faze Suharto. When he stood up to proclaim how he would save the nation last week, he calmly planted his chin on his chest and without once raising his eyes or changing his expression, began to read: "The era we are about to enter is filled with changes...continue the enhancement of what is already satisfactory...tighten our belts... I ask you for your prayers." Fifteen minutes later he sat down, his eyes flickering closed. He had done it again: the smiling general had confounded everyone. He had said precisely nothing.

After 32 years in command, Suharto has become a master of concentrating all power in his hands by keeping his opponents off balance. He has long manipulated appointments in the military and the government so that no challenger to his power could ever emerge. But if Indonesians have come to expect his cryptic utterances, Suharto's inscrutable manner has unnerved international lenders trying to hammer out concrete programs to restructure the country's banking system and reschedule corporate debt. "What is this man about?" asked a Western banker in Jakarta. "Anytime you think you have a solution, he reshuffles the cards, and you have to start all over. It's brutal."

Late last week there was a spurt of optimism when the IMF said it was sending a team to Jakarta for talks on reviving the aid package. But by Saturday the mood dampened again as Suharto announced his new Cabinet and for the first time included a family member: his eldest daughter, known as "Tutut," who has extensive business interests. The new Trade Minister is chief crony Bob Hasan, a golfing partner dubbed "the Plywood King" for his control of the timber trade.

Suharto has been playing hardball with IMF chief Michel Camdessus for months over a $43 billion bailout agreement to restore confidence in his economy. Jakarta has repeatedly reneged on reforms, particularly those requiring the dismantling of lucrative monopolies controlled by Suharto's children and close friends. By telling the IMF that he wants aid on his terms and not theirs, Suharto has effectively bet Indonesia's entire economy, a wager so outlandish that foreign bankers in Jakarta have trouble concealing their admiration for his audacity even as they despair of his cavalier approach to balance-sheet realities. His brinkmanship has scared the IMF, which sees its worldwide credibility put at risk, and terrified other Asian countries, which fear that Suharto could suck their economies down with him.

Behind all the arguments about defaulting, restructuring and re-establishing capital, there is nearly universal puzzlement at what motivates Suharto to put his country, and himself, at such risk. Part of the answer can be found 275 miles east of Jakarta in the central Java village of Kemusu, where he was born. There, for centuries, peasants have done the bidding of the village chief in exchange for his protection, governed by a social code as intricate as the shared irrigation system. Deeply superstitious, the men of Kemusu have changed little in the half-century since Indonesia won its independence from Dutch colonizers. Any leader, village chief or national President must wield unchallenged power or appear weak and incapable.

Suharto never forgot his formative values, even as he rose in the ranks of the army and came to rule in the aftermath of the deadly coup. "He was conditioned by this village," says Notosuwito, a half brother of the President's and village chief of neighboring Argomulyo since 1969. Sitting at his desk signing forms and smoking clove-scented cigarettes, Notosuwito explains that he himself has 50 retainers. They work for him, and in return he makes sure they are fed, that their daughters marry well, that they have money if they are sick. "It is similar with Suharto," Notosuwito says. "He has an obligation to the people below him. It is certain he feels sad about this crisis, but he never shows his sadness to the people. He will struggle until he dies for the welfare of his people."

But who are "his people"? That is the crux of Indonesia's tragedy: Suharto is determined to remain President for as long as it takes to solve Indonesia's economic crisis, but he refuses to acknowledge that his family, with its tentacles deep into the nation's business interests, is part of the problem. "None of the economists around him dare to tell him the truth," says Mochtar Buchori, a newspaper columnist in Jakarta. "None have the courage to tell him, 'No, you are wrong.'"

Suharto's kinglike grip on power mesmerizes all his subjects, and so far no one has dared to openly challenge him. But as he nervously surrounds himself with family and cronies, the living is getting dangerous once again.

--With reporting by David Liebhold/Jakarta and Bruce van Voorst/Washington

With reporting by David Liebhold/Jakarta and Bruce van Voorst/Washington