Civil Society in Indonesia

Jakarta governor candidates Adang Daradjatun and Dani Anwar sit next to Fadloli Muhir. (squid697/Flickr)

New York, April 25, 2001
In partnership with Synergos Institute.

Hadi Soesastro, Executive Director, Centre for Strategic and International Studies (CSIS), Indonesia

S. Bruce Schearer, President of Synergos
Nicholas Platt, President of Asia Society

S. Bruce Schearer

Global and Citizen leadership and part of our reason for organizing this space is exactly to have the kind of event here that we are going to have tonight. So we are just delighted and we are delighted to be hosting it with the Asia Society. I’ll step aside for two seconds and we can proceed to hear more about the society and its programs. But just briefly for those of you who may not know much about the Synergos Institute, we are a fifteen-year old institute, which was founded by Peggy Dulany, who is with us tonight, the Chair of our board. We are glad to have you here tonight Peggy. And Synergos’ mission is to work together with others in Asia, Africa and Latin America, to combat poverty. We are in the strong belief that people living in difficult situations are the ones who are fundamentally best equipped to deal with problems. So our approach is to try to strengthen the capacity of civil society that local partners in these countries are already building, to work with communities to find solutions to the poverty in their community. We do this through leadership programs, where we train leaders to be better bridging leaders to bridge the business sector, the government sector, the non-profit sector, to create larger scale alliances to combat poverty. We work off the strengthening of grant making foundations. We are meeting capacity and financing capacity in civil society or working at the community level. Recently, we have a global philanthropists circle, which seeks to mobilize contributions of all the wealth that has been accumulated through the global endowment in the last ten year or so and see that it is put to use in some of these civil society level activities in Asia, Africa and Latin America.

So it’s a pleasure to have you all here. The only problem that I have with this room is that we can’t get in a big circle. It is the spirit of this evening and the other discussions that we have is that you are all participants in this discussion. It is not a one-way process and our speaker tonight has a lot to tell us but we are looking forward to a great dialogue after this. So rather then my introducing, I am going to introduce Ambassador Nicholas Platt from the Asia Society. Welcome, it is so nice to have you.

Nicholas Platt

Having our two organizations so close at hand, with overlapping objectives is a very good thing for all of us. It is my pleasure to welcome Hadi Soesastro. On behalf of the Synergos Institute and the Asia Society. Hadi is an old friend of mine; we have been through things together through his organization, CSIS in Jakarta, for almost twenty-eight years when I was in government. In any case, we have one of Indonesia’s leading civil society representatives here tonight.

He's now, the executive director at the Center for Strategic and International Studies, he is a member of the Asia Society’s International Council. He is on the editorial for a number of important economic journals, the ASEAN Economic Bulletin, the Bulletin of Indonesian Economic Studies. He has written extensively on issues that relate to energy, international trade, regional cooperation, economy and security and role of technology in development. He has been active over the years in the Pacific Economic Cooperation Council, which is a venerable cooperation council that has the forerunners of APEC and is a member of the International steering committee of Pacific Trade and Development. He has also been involved in a lot of track two activities throughout the region, via the Council for Security Cooperation in Asia and the Council for Asia-Europe Cooperation. He is a lecturer at the University of Jakarta in Indonesia and Irian Jaya University. He has taught at Columbia. He has taught at ANU in Australia, in Canberra. He is a member of the Indonesian National Economic Council and the Advisory Council of Abdurrahman Wahid from December 1999 to September 2000 and recently he has been elected board chairman of the newly established TIFA foundation of Jakarta, whose main objective is to strengthen civil society of Indonesia. That will form the basis of his talk.

Since the end of Suharto’s rule in 1998, Indonesia has been in a critical state of transition toward democracy. For the first time in Indonesia’s history, Indonesian has both have a freely elected Parliament and a democratically chosen President. However, the institutions have yet to really gel. Financial crisis has taken its toll and usually reached a cover from that and there are regional conflicts that need to be resolved and a host of human rights issues to sort out. Tonight Hadi will give us an update that was assigned to Indonesia and the challenges that were made towards achieving full participation in the democracy. The rise of civil society in Indonesia involves a new dynamism as it involves the challenge of promoting democratic values and instituting cultural, civil ideology, political liberties and you will hear about those initiatives to achieve those goals. This evening’s program is part of a new initiative by the Asia Society. It is called Asia Social Issues Program. It a public education initiative that looks at critical social challenges, poverty, human rights, environmental degradation and migration, women’s issues and the solutions that are being generated in Asia to address them. I am very pleased and honored, to acknowledge the efforts of the Synergos Institute in working with civil society groups in Indonesia and throughout the region, for their capability-building initiatives and also for bringing Hadi Soesastro to New York. This is a long introduction but he deserves it. Let’s welcome him.

Hadi Soesastro

Good Afternoon, ladies and gentleman. I would like to thank Synergos and also Asia Society and also Ambassador Nick Platt for the introduction. I am very honored to have been invited to come and speak here on a subject that is very close to my heart and if you listen carefully to the introduction given, it is not the area of my research interest. In fact, I consider myself now as a participant in this whole development of civil society in Indonesia. So, basically, I would like to talk to you on this subject as a participant in this process. In doing so I would like to give you a background, a context for which civil society is now given such great importance in the country.

The context, of course, is the democratization process in Indonesia. A process which, when we began, following the fall of Suharto, we knew it is going to be a long process, a difficult process, but we were not aware. We were only made aware once we started the process, how difficult it is and lately also how risky this process is. It is still so fragile and of course the major risk is that we might see a reversal in the process. And civil society in Indonesia today defines its main function as trying to prevent this reversal. It is the number one priority for us. You know, we can’t even think of like five ten years ahead. We are participants in the democratization process, which is of course important. But for today and I think still a few years ahead, its main role is trying to prevent a reversal for that. And why is it so? Why is there a danger of a reversal? This certainly has to do with the circumstance with which we embark upon this democratization process. It happened almost overnight. You know there was no planning whatsoever. Nobody expected Suharto to release its power the way it all happened. It is history. But we were left with a situation in which the institutions that existed in the country before; it was Suharto, Suharto was the institution. It crumbled. There were no institution that could in fact take over the task of maintaining stability in the society and all these things. They were all not there, in terms of institutions. And I think from that time on many of us believed that after all there is some kind of resilience, aid to society despite the depression for many, many years. Perhaps there was still some social capital that was left, that helped us sort of overcome the difficulty, the chains. But once we set out to embark on the process, I think that then that we began to realize how weak the foundation is, how fragile this process is going to be because the institutions that effect Suharto began to develop in the late sixties, the early seventies was already destroyed, partly by himself, but it last fifteen years or so of his rule when he took everything to himself. So he became the institution. So the challenge for the Indonesian society now is in fact, to create, to recreate those institutions. To develop in fact, new institutions.

Democracy can only blossom when you have the institutions. The process, I think, is far from smooth partly as a result, because there is no blueprint, it all come as a sudden. And second, there is no leadership in guiding this process. Leadership is so important because this society was formed for thirty years under a particular system tending towards authoritarianism and once that is gone the pendulum tends to swing to the other extreme. And therefore you need an enlightened leader to bring to the center. We thought that Abdurrahman Wahid, Gus Dur, was the person that was best suited to do so. In the last years of Suharto, you may remember that he was one of the fighters for democracy. He established the democracy forum for the democracy and he spoke out. We know from his writings, from the many talks he had given that he had strong views about a pluralistic society, about the role of religion in society. And he has been considered to be an enlightened leader and when he became President we all had very high hopes that he could find that kind of leadership. Unfortunately the whole environment was not conducive, does not support, does not provide the kind of support. And I would like to give you a little bit of background on this.

According to the Indonesian constitution of 1945, which is the constitution that we have, which was drafted in a hurry and therefore, the founding fathers, the drafters of the constitution, considered it as something of a temporary nature. They thought that once Indonesia became independent, then after a while people should sit down and draft a new constitution. The attempt was made in 1950 and it failed. So, in 1950 Sukarno then issued a decree that said we will just go back to the 1945 constitution. And for many years it was considered to be a taboo even to talk about amending that constitution, let alone to talk about the drafting of a new constitution. But the basic flaw of the 1945 constitution of Indonesia is that it does not provide sufficient room for democracy to develop because it gives the President so much power and the executive, the government is given a very dominant position, dominant role. So amending or changing the constitution should be important part in the old democratization process, but then the problem is that it is not easy to draft a new constitution, particularly not within six months, under the circumstances that we were in. So the constitution was amended but not fundamentally. So we still have a presidential system. All the powers are vested in the executive branch with the president, no room for checks and balances.

The political reality however is so different, with the opening up of the political system after Suharto left and no political loss introduced allowing for new political parties to be established. So prior to the 1999 general elections from three political parties, almost overnight we had one hundred and forty-five political parties. Of course they had to meet certain criteria to be able to take part in the general elections and of the hundred and forty some odd numbers only forty-eight made it. So we had forty-eight participants in the elections. And it was almost certain that no single party could have a majority. In the previous elections you always have one dominant political party, Golkar, having sixty, seventy, or maybe, I’m not sure, maybe eighty percent of all the votes. This changed overnight with so many political parties competing. The largest political party, the largest votes was about thirty-four, thirty five percent, which was Megawati's political party. Again, while her party got the largest numbers of votes, it was not automatic that she would become president. This is also part of the constitution. It is not direct election of the president but the general elections. Of course, it is an election of members of the parliament, the house of representatives. In addition to the House of Representatives, now an additional two hundred people who then form the People’s Consultative Assembly, which is the highest body in the country, which will then elect the president. Somebody said it is based on the idea of the Supreme Soviet of the past to bring in different representatives of the large Soviet Union into this assembly. We had something similar to this. So it was left to the People’s Consultative Assembly, of which about thirty percent of the members are not elected they have been appointed and in the past it was appointed by Suharto.

So what you have, according to the constitution, we still have a presidential system. The President will then create his cabinet, form his cabinet. But because of political realities, up to Abdurrahman Wahid,which then became president, was elected president, only because of a compromise. The two other contenders who had larger votes, they were later on excluded and Gus Dur came in because he was going to prevent a civil war between those two contenders; Habibie on the one hand and Megawati. So Gus Dur came in; somebody whose political party owned eleven percent of the votes. So when he had to form the cabinet, of course he had to bring in all the others. So, in terms of the nature, the cabinet becomes something of a parliamentary one. There is according the constitution it is a presidential system but in reality it became a parliamentary system and the problems that we are facing today, with the parliament and the People’s Consultative Assembly trying to oust the president on the basis of a no-confidence vote is in fact not in accordance to the constitution. It is in the Parliamentary system that you can do so.

So in order to do this the Parliament is going through an impeachment process, which is also not in accordance with the constitution. And the basis for the impeachment is this so-called Bulog and Brunei. It is a financial scandal in which apparently the President was involved. But since it is very difficult to prove these things. And in fact the Bruneigate is something different from the Bulog It was a gift from the South of Brunei where the President failed to announce or open it and so on. But it is based on a very shaky ground that Parliament has announced this. As a result it has basically seen as a political move on the part of certain groups to get rid of Abdurrahman Wahid. The different groups also have different agendas. But one shouldn’t forget, and I think that it is very important to note that Gus Dur was nominated president by the so-called central axis parties consisting of Muslim parties. And, of course, they expected something of Abdurrahman Wahid after he became president. They were afterwards very disappointed because Abdurrahman Wahid did not want to play according to their tune and also there was not sufficient, I think, Gus Dur did not, it is not exactly like that, but in the process, a number of personalities from the central axis, which were previously in the cabinet, were replaced by Gus Dur.

So this was seen as an attempt by Gus Dur to limit the influence of their group but to also limit the access of that group to financial resources. Because what happens under this new thing, we can call it the era of politics in Indonesia, it was the era of development, not it is the era of politics, in which the interest of most, if not all of, the political parties, the politicians, is how to get access to state funds in order to pay for their activities and to win in the next general election. And the sources of funding, is only the government, so you have to be in the government to get access to those resources. So basically it is a struggle for resources, for robbing the government, basically. This is the main problem. But those are the more systemic factors that result in this situation. But Gus Dur, personally, also was not helpful in this because of his very unpredictable behavior, his very loose tongue in making comments about all kinds of things about anybody. He is so indiscrete about things. And so he does not only frustrate his political enemies but even alienated many of his friends. So he has become a single fighter today and his major allies, is Megawati, or was Megawati until a few weeks ago.

Megawati holds the key to Abdurrahman Wahid future. But this does not mean that she will necessarily become the next president. It depends on the process. But basically while she no longer can be regarded as a strong ally of Gus Dur, she is still very hesitant to see Gus Dur ousted. I think, if one understands Megawati, what she expects is that Gus Dur will say that he will no longer be able to manage these things-because he is a terrible manager, he is a very ineffective leader and he cannot govern-that I think everyone agrees. But he is not willing to give the power to Megawati; as many has already suggested since August last year. He is not ready to. He considers not only a challenge but his responsibility to stay in his job and he believes that he has been given the mandate from heaven and he is going to stay at least till 2004. So that is his position. Megawati, as I said before, is very hesitant. It depends on the nature the nature of the transfer of power but she is not going to take it from Gus Dur. People who are close to Megawati understand why. She still remembers vividly what happens to her father, Sukarno. And also being influence by some cultures of the Hindu religion, her grandmother is from Bali. She believed in karma. She thought that what happened to Suharto was karma because he did it to Suharto so she did not want to repeat the same thing and that is why she is so hesitant. She is only going to accept the leadership position if it is handed to her on a silver platter by Gus Dur himself. But that is not likely to come.

So, the big risk that we are seeing in the coming few days, maybe weeks or month, is that the political process will try to force Abdurrahman Wahid out. And this is likely to lead to some blood bath. I hate to say it but the possibility is there. You have strong supporters of Abdurrahman Wahid from East Java, from his organization. Mostly the peasantry and people from the countryside who does not understand this political problem but all they see is that people are trying to oust Gus Dur for political reasons. So that is very risky. We are in a very risky situation. If this doesn’t happen on the thirtieth of April, maybe the second of May or so. The thirtieth of April is when the Parliament, the House of Representatives can see to begin a discussion on the second sanction. It is part of the so-called impeachment process. The fact that the meeting takes place is considered by a number of Abdurrahman Wahid supporters in East Java, already, as a sign of forced attempt to get him out of his present position. And so we don’t know what the reaction is going to be.

Abdurrahman Wahid himself is not helpful in this case because while he made a number of statements asking his followers to comedown and to go to Jakarta. But on the other hand, he could always say that he understands why they are so angry. And so this has resulted in what in Indonesia people call the mob politics, using the mob to sort of influence the outcome of political gain and this is of course a very dangerous game. And civil society is at a loss. They had so much hope in Abdurrahman Wahid and saw in him the person that could lead us into democracy. But now that he is making use of mob politics, it is something totally unacceptable to many of us. So civil society, in fact, is put into a dilemma, and therefore it has not been saying anything about this struggle for power. Because on the other hand many have been supporters of Gus Dur, now a little bit is a solution because he did a lot and encouraged mob politics to develop in the country. The alternative is equally not attractive especially to civil society. Whether it is true or not, but the perception is that Megawati is not supportive of political reform. In fact, she blocked constitutional reform in the People's Consultative Assembly last time. She was not supportive and in fact also blocked the attempt to introduce direct presidential election. Her party also was the one that was against the move to limit the terms of the involvement of the military in politics. These all do not appeal to civil society in Indonesia. So they are facing a dilemma because the alternative to Abdurrahman Wahid is also not attractive to them. So there isn’t much civil society thinks it can do now. And many of us are at a loss but the attitude that we have taken is that it is like if somebody is sick. You can’t cure it; there is no medicine. So you have to sweat it out. That is the attitude that we are taking, that it can’t happen. Because while we think that the best strategy is just to sweat it out and if Gus Dur is not provoked, maybe he will not react to the way he is reacting now. So we want to see all this provocation being eliminated. Let’s all sit down and try to understand.

But of course certain political parties have different agendas and by now I think that many of them, the main agenda of many of them is just . And so you can no longer talk and I don’t think there is a possibility of a political compromise. So, we are also trying to limit the damage if this happens. Many of my friends are going to various places to try to talk to people and make it known how important it is for us to prevent this because we do not want to see any reversal of this democratization. But civil society is, of course, not very strong yet so it is a major task. That is the political scene.

Maybe I will talk a little bit about two other aspects that also are not helpful to the process. One is what happens in the economy and the second one is on the big decentralization experiment that we have in the economy. Let me begin by saying there is a discussion going on but it goes on in limited amounts, you know, a few of us. And the big question is this. Do we have to look for a new economic development type. Given that the strategy of development was adopted before has led to the financial crisis and an economy that has been vulnerable and a lot of corruption has been going on. Is there a different type? Another group would say no because the basic concepts of economic development in Indonesia is still valid; because you have certain characteristics that are desirable. For instance, a very prudent and disciplined macroeconomic policy. Maybe what needs to be injected is a greater sense of justice. And so the talk is about the democratization of the development strategy that we have. You know, make it more democratic so that issues of justice, equality and so on. Governance, because governance is of course an important problem. So that is it, the debate. And it is not settled but I think the mainstream feel is for the democratization of the development model that we have already adopted.

The democratization of the economic development requires the creation and the nurturing of new economic institutions. Unfortunately, this is also not happening because our agenda continues to be focused on the recovery process. So the reform process is not at the forefront because the economy is basically; if one cannot say that in a crisis, but the economy is still sick. And the recovery program has been very slow. The reasons for this slow progress are twofold. One has to do with our capacity to manage the economy given that we have a totally new government in place and the problems are so huge. The capacity is just not there to manage. Second, there is the problem with the International Monetary Fund. What was supposed to be a working partnership with the Fund, became a problem of continued bargaining, hard bargaining on both sides. And this was of course not helpful to the process. We invited the International Monetary Fund to come here. The main criticism that you may have heard is perhaps it was not totally justified because it was Indonesia’s decision to bring it. It was a wrong judgment on both sides, on the Indonesian side and that of the IMF.

That basically when we wanted the IMF to come in and help us in late ’97 we thought that all that was necessary was to restore confidence, having the IMF support us with a pledge of forty billion or so, it was very large. The assumption was, of the negotiators on both sides, that it would scare away the speculators. And that both the Indoensians and the IMF were so confident that we would not have to make use of the forty billion dollars. It was simply a matter of restoring confidence. But there was then one problem namely, that this arrangement did not help restore confidence, in fact it destroyed even more the confidence. And the reason that again, there was some history with this. When the IMF was brought in, it was the Indonesia side and some in the government that already felt hopeless in pursuing the deregulation for the reform of Indonesian, it started in the mid 1980s. In the early 1990’s there was a reform that peaked but also there was, it stopped, the whole process stopped and the reason was that Suharto was against it. Because the many reforms that needed to be introduced involved the business activities of his children, his family and his cronies. So nothing could be done. So when the crisis came, a few people in the government said &quote;Oh, this is a blessing in disguise. Let’s people put all the structure and reform programs also in the IMF program so that Suharto will accept this.&quote; Because he did in fact in 1983, in 1986 when the country was sort of in a crisis he was willing to make the tough decisions, the necessary decisions. So all of us were aware of this. It was a risky strategy that Suharto would again repeat what he did in the past. We all forgot that in 1983, all the big projects that were terminated were state-owned projects. This time around it was those of the children so he behanved totally differently. So it backfired, because immediately when Suharto was confronted with the reform package, he saw what was in there and he made a statement explicitly saying that the technocrats were trying to undermine him. To some extent they were undermining his policies but I know that the intention was to save Suharto from continuing to go in that direction. They were hoping this would bring him to his senses. But to make things short we had this package. That in fact, at the beginning, the IMF was very unhappy, saying that it is none of my business dealing with all this structural reform programs. All I need to do is the macro economy, stabilization, and strengthening of the financial sector. The IMF didn't want to talk about the state-owned enterprises, the monopolies and all the other issues that were in the package. So basically, Indonesia was trying to use the IMF to clean up the system. It was a wrong judgment.

That was the beginning of the two things. One is that IMF involvement did not help to restore confidence because each time you do not deliver what you speak. And so the markets were always reacting negatively. And the whole the process of bargaining led to in fact, a more complex program each time, we did not deliver what was promised in the plans. And so the whole time it led to a more complex program; it was reviewed and amended. And, in a sense, also, given that we did not implement the first package, led the IMF to tighten the second package. So initially there were ten points in the program, it became like fifty points after it was and then by January in 1998, it became one hundred and fifty points. So the accusation, when dealing with Indonesia is that IMF is trying to micromanage the while thing. They want to be involved in everything. Now, if it was the same team that negotiated with the IMF before, maybe it would have worked because you know each other well. But we have had two governments since and three or four cabinets. And each time there is a new cabinet, a new economic side, they want to reassert, this position and say I am in control of things. And so, on the Indonesia side they raised their voice. Therefore it has become a very unproductive process. Not helpful to the whole economy and reform program. Now is there good news in all this? At the beginning of this year many of us have some optimism because what happened last year in the year 2000 is that under all these circumstances the economy was growing at close to five percent last year. And there is an explanation for this. You can, in fact, look at the economy from a totally different perspective now. It is a dualistic economy in a sense.

But now you have a sector of the economy which is still sick and another part of the economy that is considered to be the healthy economy. Since the beginning of the year 2000, you have this healthy economy coming up and consisting of small and medium enterprises, of course the export-oriented sector as well. So even some us are talking about the phenomenon of the decoupling of economics and politics given the continued political bickering you have seen part of the economy that continued to develop. So you all are hoping that the entrepreneurship has been unleashed also in this process. It will stay there and will continue. But if the banking sector collapses again, which is one danger presently, then of course this will effect this healthy economy. So there is still a risk in it. But the point I want to make is that with all these difficulties you do see, get entrepreneurship and the spirit in the country is still there. New enterprises are coming up. They are a small and medium sized and so on. They are a very dynamic sector. And so long as the government is not trying to do something to this sector I think that we will be able to continue.

So the point is that we are all not giving up on the country having seen that in many places there is the dynamism Maybe social capital is back in some parts, somewhat misguided and destitute and my last point about decentralization. The positive aspect of decentralization is that the philosophy itself when we introduce this is to bring the government closer to the people, so the people can participate in decision making and so on. Totally different from the very centralized structure that we had in the past in which the people are just an audience. They were just the audience. Everything was done by the central government. Now hopefully this will also help things. The negative side of this is that in some regions, regional autonomy is seen as--not only the power is given to the regions but the regions are now given back to the indigenous people of the region. You can hardly find a region in Indonesia in which the population is only confined to the indigenous people of that region. And so this killing of Madurese by Dayak in Kalimantan and some of the problems and other reflections of this narrow understanding of regional autonomy. So going back to primordial instincts. The people who considered themselves as being indigenous in that region. I suppose they want to see outside with the migrants and so on. The Madurese in Kalimantan have been there, some of them for generations and still that is happening And two, I think the lack of leadership has not been helpful. And again civil society is being called in to try to do something.

We are very concerned that we have to do all these things. The expectation is a little bit, of course, too high for civil society to play this role but you can’t rely on the political system as it is now. The political parties are so weak, all they are interested in is money, politics, business and so on. So, it is a tall order. It is a major challenge and therefore the strengthening of civil society is a very important agenda for Indonesia today and we are very happy. I think there is a lot of support coming these days for these activities. Including in fact part of the reason for my coming here is that we have been given support from major foundations in the United States to undergo activities of strengthening civil society through local people’s organization, local non-governmental organizations in these various regions. It is not only to look at the big national issues, national problems. Because NGOs too have to even involve themselves in the drafting of the constitution. You can’t leave it to the politicians and many other things in the region. I have spoken already enough. I think I should stop here and get your point of view.

S. Bruce Schearer

I have a feeling that you have not only given us the fruits of your scholarship but the fruits of the passion of your heart as well. We have to make a choice out of this now. We have a reception on the other side where we can all have a chance to talk together and we are looking forward to that and I know there is much to be said amongst all of you as well as with Mr. Soesastro. We will take three or four questions. If you have any pressing issues you will have to make a compromise now between the conversation now and the reception afterwards. So please.


Thank you very much for your talk. There is no mention of the Chinese who had their part under Suharto. And then with problems, they got raided. What did investment--you would imagine that entrepreunership foreign investment were affected. Is there a call for it or is there a suspicious kind of wariness?

Hadi Soesastro

I don’t think it can be generalized. But those that have been in trouble are because they have expanded and become so a part of where the business has collapsed. The other is because of their close association with the palace. Some are in trouble, some who were able to buy their way back into political power, are still safe from it, but of course the public continued to watch what they are doing. While many of them wants to come back, but I think that the atmosphere at the moment is such that...a few measures have been introduced to prevent them from getting their business back; not necessarily because it was going to be taken over and taken to different groups. This was the agenda under the previous government. Not now. But simply, just from an ethical point of view, many thought that they had been responsible for these kind of things. Of course you can’t, shouldn’t see it like that. But you can’t generalize on this because many others whose businesses survived because it was prudently managed and did not rely on facilities given to them by Suharto. It had it's proper place in this. Part of this new entrepreneurship that has come up also involved new businesses but different Chinese, Indonesian, not the workers.


You said that Megawati may not be the president. I am interested in how you think the political events are going to play out in case she does not become president. Do you think that Gus Dur will continue or do you think political power play will continue?

Hadi Soesastro

I think that is not mutually exclusive I think Gus Dur continued maybe is the outcome of this political process that is accompanied by the threat of violence. And so at the end depending on, in this case, who wins, Gus Dur thinks he still has the upper hand, that he is still strong. He could use this mob politics and scare the others. Megawati, while people say that she doesn’t have a strategy, I think that she has allowed her party to be involved in this process of impeachment. She didn't block it until now. She may at the last minute block it. But what she was hoping is that the threat of continuing the process would influence Abdurrahman Wahid. So that is still an attempt. Maybe she will not succeed in doing so. Who knows? But if she is successful and at the last minute Gus Dur withdraws then I think we will be able to pretend major tensions to prevent a civil war. But Megawati would also not get enough support from the other political parties. I think as a matter of principle she has refused to develop an alliance with a number of political parties. So she can only rely on very few. She can only rely on Gus Dur’s party, the National Awakening Party, Golkar, I don’t know, maybe, to some extent and the military. But the central axis, I think she doesn't want to touch it. So we don’t know. It is uncertain. It is all going to happen in the next few weeks.


I would like to join all of us in congratulating you on a remarkably frank and complete picture. What I derived from it and I'll ask you a question about it, is a hopeful, a positive view of the future. The political parties as you have describe them are doing here what they do in every other country. All they want is power and whatever means, in the situation as you describe. However, I would like to ask you, in your judgment, if you think the risks are greater then the prospects. My feeling is very positive. That is after hearing you. I don’t know how you express your own view.

Hadi Soesastro

The danger is that there can be an accident. And the cost of an accident under current circumstances can be very large. But otherwise, I still do believe that there is still sense in the country. The non-governmental activities that have come up in the country. I know many of my friends have left their professional jobs and so on simply to take part in these activities. I try to do this but the danger is of course that there is this accident and I will try to describe this by the accident resulted from the fact that the politicians, they want to go is the game of chicken.


How do feel about democracy and the making of the Indonesian state. Is it possible to have democracy in Indonesia at the same time that some parts of the country threaten to secede, could we have a Northern Ireland situation?

Hadi Soesastro

Well it should be in one package, but to give you an honest answer, if you talk to exponents of the NGO community, especially the younger ones. If this choice, if you are being confronted with this choice of democracy or unity you go for democracy. You will hear comments from this younger generation saying that if the Acehnese wants to be free, become independent why should we prevent them from doing so? Maybe you would not hear this twenty years ago in Indonesia, not in my generation, not in Megawati’s, but the younger ones have this view. In fact on East Timor too, before the option was given to them that you talk to NGO’s, the young people saying that a country is created for the well-being of its people. If the people think that they can’t--why should they be a part of it? Now I don’t want to generalize that this is the view of NGO’s but I think if they have to choose they will opt for working so that the democratization process will not be delayed.


Changing the legal system, part of creating accountability and transparency comes from strengthening the legal system. And I wondered what efforts are being made?

Hadi Soesastro

You got me on that. That is one of the most difficult aspects of the whole thing. The legal system is already destroyed basically. I am involved in a study on building economic institutions and if you want to think about a consistent framework of it, the way we look at it. The legal system is the an essential part of the functioning of modern economic institutions. When we undertook this study, the more we studied this; we have reached the question, is there a different way of organizing ourselves? Taking into account the fact that the legal system is not working, is not function and will not do so for many years to come. Is there a different way of handling things? I don’t have an answer but I just want to respond to you by saying that it is a big problem and we don’t know where to start. We have asked somebody for advice. But the advice that was given to us flush the whole system. Build a new, a totally new one. Apparently Estonia did this and it was successful. But Estonia is a mess more than Indonesia. But we are also not giving up. For instance, the foundation supporting the NGO’s has put legal reform as one of its major priorities knowing that is going to take a long time, looking at specific things. For instance, to document court cases, nowadays we don’t know what the basis is of our decisions and now we want to send people out to sit in this court cases and document them to make it transparent.