Indonesia's last chance to heal Stubborn Suharto: Dictator extending rule, may renege on economic reforms.

March 01, 1998

THE MEETING of the People's Consultative Assembly of Indonesia, starting today, is the last chance President Suharto has to commit his nation to reforms to end its economic crisis, meet International Monetary Fund requirements, diminish his family's stranglehold on the national wealth and promise the people a better future. There is scant hope that he will.

When the assembly winds up March 11, "electing" the military dictator to a sixth term as president and presumably his anti-reform crony, B. Jusuf Habibie, as vice president, it may be too late. The last hope is that President Clinton's latest emissary, former Vice President Walter F. Mondale, can talk bluntly enough to have an effect on the old autocrat.

Twice, Mr. Suharto has committed to IMF-demanded reforms that include ending public deficits, ending cartels monopolizing commerce enjoyed mostly by his six children, letting banks fail and repaying public and private debt. The phased implementation of IMF's $43 billion loan bailout is based on good faith. But twice he has suggested he didn't mean it. He used a proposal by Johns Hopkins Professor Steve H. Hanke, tying the value of the rupiah to the dollar, as a substitute for structural reform.

Once an invaluable ally in the Cold War, General Suharto resembles Zambia's former President Mobutu Sese Seko and Iraq's President Saddam Hussein in blandly ignoring his commitments. Because Indonesia's 200 million people represent a colossal potential for unrest and social breakdown, the dictator nTC apparently thinks the world community would not allow extended food and ethnic riots in his country.

Wrong. The world's governments and electorates would not countenance a bailout that merely shored up the Suharto family wealth.

The money that fled Indonesia -- much of it Indonesian -- will not come back until it is guaranteed social peace, an orderly transition to a post-Suharto regime and full compliance with IMF economic reforms. Then, and only then, would Dr. Hanke's model of a currency board be worth considering.

Time is running out for Mr. Suharto to avert a catastrophe. He has all the power. No one else can do this for him.

Pub Date: 3/01/98

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