Time for Suharto to call it quits Indonesia's financial crisis: Three decades of dictatorship carried stability too far for this Southeast Asian "tiger."

January 13, 1998

PRESIDENT Suharto brought three decades of stability in which Indonesia's worst poverty ended and its economy took off. He has been a stalwart ally to the United States. He also squashed dissent and assembled vast personal wealth.

He is 76 and has no political heir. He is planning to be elected to a seventh term as president in March, by a consultative assembly of one thousand hand-picked members which can also revise the constitution. He has not been well. Indonesia never had a peaceful transition. He has become what's wrong.

Rarely has stability been so self-undermining. Indonesia needs foreign confidence, investment and loans. These are not forthcoming when no one knows what will replace General Suharto's rule, or whether currently favored companies, connected to his six children, will remain favored. An International Monetary Fund bailout was negotiated, calling for business reforms and a budget surplus.

The general's budget last week did not reflect the real world, projecting revenue from fictional economic growth. Indonesians rushed in panic with their last rupiahs to hoard rice.

Indonesia is the fourth most populous country, with 200 million people. Yet its midsummer financial trauma did not drag down the rest of the world, because its gross national product is slightly smaller than that of Finland, a country of five million people.

Indonesia is an immense archipelago stretching across three times zones. Its majority is Muslim. It has a history of ethnic strife targeting the Chinese minority who control commerce. Violence could undo decades of progress. There was an ominous riot in a provincial city this month.

The budget fiasco cast doubt on the ruler's grasp on reality. President Clinton then called him on the telephone, after which spending projects for Suharto-related companies were canceled. The administration and the International Monetary Fund are mounting high-level visitations this week to offer support and insist on reforms. The IMF reportedly will relax its demand for a budget surplus this year if structural reforms are carried through.

President Suharto could best serve his country by retiring with honor.

No one expects democracy overnight. The army which put Suharto in power would pick a successor to be rubber-stamped in March. But it is time to open up the economy free of favoritism, to open discussion to dissidents of various stripes and to begin an evolution to democracy.

A clear blueprint for such a transition would be the best way to avoid civil strife, insure world backing, restore the rupiah and avoid calamity for 200 million people.

The wisest way President Suharto can exercise his power now would be to relinquish it in an orderly manner.

Pub Date: 1/13/98

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