Demise of Suharto Is Part of a Regional Trend
International Herald Tribune
May 25, 1998
Alan Dupont 

The demise of President Suharto after 32 years in power is an event of seminal importance not only for Indonesia but also for the broader region. He is the latest and most prominent political casualty of a trend toward greater democratization that is transforming the nature of politics in East Asia.

This transformation has been under way for at least a decade, transcending national boundaries and East Asia's diverse political and social systems. It has been characterized by the emergence of "people power" as a potent new political dynamic in the Philippines, South Korea, Thailand and now Indonesia.

In these states, seemingly well-entrenched authoritarian regimes backed by the armed forces have crumbled, often with surprising rapidity. They have been replaced with governments more in tune with the aspirations of ordinary people.

Reversions to authoritarianism cannot be ruled out. But recent events in Indonesia confirm that the underlying trend in East Asia is toward participatory government and the empowerment of the region's previously quiescent middle classes. This trend cuts across political, religious and ideological divides. With the notable exceptions of Burma and North Korea, every state in the region has become more open and democratic than it was 10 or 20 years ago.

Significantly, the trend away from old-style authoritarianism is occurring at a time of leadership transition in East Asia. Since China's Jiang Zemin consolidated his power in 1997, Thailand, Vietnam, South Korea and Indonesia have installed new leaders (and the Philippines has just elected one). Political change is likely to occur in Cambodia, Malaysia, Taiwan and Japan over the next 18 months.

The way in which Mr. Suharto was pressured to step down will imprint itself on the collective consciousness of a new generation of Asian leaders. The lessons are clear. Unless leaders preside over governments that are politically responsive, financially prudent and economically competent they will find it increasingly difficult to retain power.

Another aspect of Mr. Suharto's downfall that has ramifications beyond Indonesia is the way in which the political prerogatives and policy options of national governments are being circumscribed by what Prime Minister Mahathir bin Mohamad of Malaysia has darkly referred to as "outside influences" — global financial markets and institutions like the International Monetary Fund.

To the consternation of many in the region, the IMF has played a central, if unintended, role in bringing the Suharto era to a close by insisting that Indonesia meet stringent economic and financial standards before being granted access to the $43 billion IMF rescue package. The resultant price rises aggravated the political crisis and directly contributed to the demonstrations and rioting that precipitated Mr. Suharto's resignation.

Already there are calls for the IMF to adopt a less interventionist role and to take greater account of political realities before tendering advice and offering assistance. The Indonesian experience is likely to strengthen the determination of those who want to establish a regional alternative to the IMF that would be less intrusive and less dominated by the United States and Western financial interests.

The capacity of Indonesia's new government to get its economy back on track is critical to the economic health of the wider region for two reasons.

In the eyes of international investors, Indonesia is emblematic of East Asia's economic malaise. Investor confidence in the region will not return until Indonesia shows clear signs of economic recovery.

There is also concern about the Indonesian exposure of Japanese banks and financial institutions. Japan is Indonesia's largest foreign investor with outstanding loans totaling around $23 billion. If the Indonesian economy does not recover soon, much of this debt may have to be written off. This would place added stress on Japan's already ailing financial sector.

If Japan descends into recession, the region's economic and political illness will enter a more virulent phase, raising the prospect of further instability and uncertainty.

Indonesia's domestic turmoil will strike another blow to the pride and confidence of the Association of South East Asian Nations. Barely 12 months ago ASEAN was riding high, buoyed by burgeoning economic growth and the belief that it was on the verge of achieving its aim of a united and prosperous Southeast Asia.

Now the group must contemplate the temporary loss of Indonesian leadership as its largest and most influential member enters a period of introspection and domestic uncertainty. Indonesia's problems will diminish ASEAN's political and economic authority, and reduce its ability to act as a strategic counterweight to the region's ascendant power, China.

For all these reasons, Indonesians are not the only ones with a vital stake in the outcome of the reform process now under way in their country.

The writer, director of the Asia-Pacific Security Program at the Australian National University's Strategic and Defense Studies Center, contributed this comment to the Herald Tribune.

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