REDEFINING BUSINESS |
July 20, 2001
Tougher Than She Looks
Talk about passive aggressive. Vice President Megawati Sukarnoputri declined
President Abdurrahman Wahid's invitation to crisis talks last week aimed at
avoiding his impeachment, pleading previous commitments. Instead, she gave a
speech blaming the nation's woes on its failure to pick the right people for
the right jobs, without mentioning any examples. Once again, Megawati left
critics wondering: Will she ever take a clear public stance on anything? But
behind the scenes, 185 staff in the vice presidential compound are keeping
tabs on the machinery of government and mapping out policies, acting
essentially as a shadow presidential office. Leaders of her party are
cultivating allies in parliament. Her husband recently returned from a trip
to Washington, where he met government officials and members of Congress. The
Sphynx of Indonesian politics may be frustratingly reticent and cautious, but
she is getting ready to rule.
The biggest guessing game these days in Jakarta is not the fate of Wahid.
Most now expect the president to be pushed from office, or at least stripped
of his powers, by the People's Consultative Assembly, Indonesia's highest
legislative body, which convenes on Aug. 1. The political and business
communities are fed up with the mercurial president -- with his lack of
attention to the nitty-gritty of policy making and his constant foreign trips
while Indonesia's economic and social fabric frays. Within weeks, Megawati,
daughter of the country's founding president Sukarno, will probably be leader
of Indonesia. But what kind of leader will she be; what will she do to fix
the economy; can she hold the country together without a military crackdown?
Simply put: Will she be better than Wahid?
There are reasons to think the answer is yes. Sure, there are fears that
Megawati lacks the skills to run the country. Doubters cast her as a dull
housewife. But she has built and rebuilt her party into Indonesia's largest.
She has gathered a staff which has made the vice president's office an oasis
of efficiency. She has been willing to push ahead with economic reforms,
despite her nationalist instincts. She has shown remarkable respect for due
process and rule of law. All that has raised hopes that she will be able to
restore some coherence to a government that has lost course over months of
political infighting. If Megawati manages that alone, her administration may
count as a success. Says Jim Castle, president of the American Chamber of
Commerce in Jakarta: "A modest program well implemented is better than
nothing."
Indonesia badly needs some calm and consistency. The economy is struggling
with rising interest rates and a falling currency, while restructuring
following the 1997 financial crisis crawls forward at a snail's pace.
Separatist conflict in Aceh and communal strife in Kalimantan and Sulawesi
continue to claim lives. But ever since parliament censured Wahid, first in
February and then in May, setting the stage for August's impeachment hearing,
politicians in Jakarta have remained focused on the president's fate. After
Megawati and the leaders of all other major parties snubbed Wahid's crisis
meeting last week, the president again threatened to declare a state of
emergency if his opponents do not back off, this time setting a deadline of
July 20. But both the military and police have said they will not support
such a declaration; the impeachment train seems unstoppable.
Megawati's refusal to outline any post-impeachment vision has frustrated
business leaders -- and worried the international community. However, her
team is quietly mapping out a plan behind the scenes. Bambang Kesowo, her
chief of staff and a career civil servant with a degree from Harvard law
school, has created a professional bureaucracy around Megawati that gives her
an overview of the entire government. In contrast, Wahid virtually dismantled
the once-powerful State Secretariat, and his improvisational, lone-wolf work
style often leaves his aides scrambling in his wake. (Such is the orderliness
of Megawati's office that Wahid's aides have been known to drop in to look
for copies of documents they had misplaced.) The professionalism of her staff
fits in with what Kesowo says will be the focus of her policy: "To normalize
political and economic life and stop the country from disintegrating."
Megawati's first priority, says Frans Seda, one of her key economic advisers,
will be to restore the government's credibility. Job one will be to repair
relations with the International Monetary Fund, which has delayed payments
under a $4.6-billion bailout for more than six months. "It's not the IMF
money that's important, it's the credibility it brings," says Seda, one of
the few people to have served in the cabinet under both Sukarno and Suharto.
(An IMF team is in Jakarta now for talks.) Cabinet positions have not been
decided, but Seda says economic portfolios will be reserved for technocrats
rather than shared between politicians of PDI-P and any coalition partners.
One concern is whether Laksamana Sukardi, a PDI-P member and former Wahid
minister who is Megawati's chief economic guru, gets a post. If he does, even
though he is widely respected, other parties might demand their share.
Whatever the shape of her cabinet, it is likely to impose fiscal discipline.
As chair of the Wahid cabinet's economic policy committee, Megawati pushed to
cut the budget deficit, which has ballooned because of the falling rupiah and
rising interest rates, back to its original forecast of 3.7% of GDP. Among
the tough steps she espoused: Rapid cuts in fuel subsidies, despite the
danger of a backlash from the poor. Megawati also brought in to budget
meetings Emil Salim and Widjojo Nitisastro, members of Suharto's "Berkeley
Mafia" of technocrats, many educated at the University of California,
Berkeley, who in the late 1960s helped restore economic health from the mess
left by Megawati's left-leaning father. "It's a good sign that she's leaning
towards those sorts of advisers who have experience in government and
understand how to deal with the IMF and the World Bank and the foreign
investment community," says James van Zorge, a Jakarta business strategist.
But the economic reformer is also an economic nationalist. The Indonesian
Bank Restructuring Agency (IBRA) holds billions in corporate assets
transferred to the government in return for bank bailouts. When it tried to
sell 25 palm oil plantations to Malaysia's Kumpulan Guthrie, farmers
protested against the foreign buyers. Megawati's PDI-P led opposition to the
deal in parliament and helped hold it up for months. As president, she could
slow the process even more. Seda says the pace of future sales has not yet
been decided, but adds that hasty deals now might fetch poor prices. That
does not bode well for a rapid unwinding of IBRA's assets.
While Kesowo is helping formulate policy, PDI-P party chiefs like Taufiq
Kiemas, her husband and a businessman, and Arifin Panigoro, an oil baron and
former stalwart of Suharto's Golkar party, are sorting out the politics.
Taufiq visited Washington in May, where he told congressional leaders and
Bush administration officials that Megawati is a democrat who will play by
constitutional rules. He wants to ease concerns that she would give free rein
to the army to stamp out separatist movements in Aceh and Irian Jaya.
Panigoro, PDI-P's parliamentary leader, is building a coalition that will
help Megawati get her program through the legislature, a key failing of the
politically inept Wahid.
Megawati is called a lightweight by Jakarta intellectuals. But those who know
her say she has sharp political instincts as well as the emotional and mental
toughness needed for leadership. Megawati was raised in a palace but hasn't
had an easy life. Her parents split when she was young. She was in her early
20s when hundreds of thousands were killed in the mayhem surrounding
Sukarno's overthrow, searing into her a fear of chaos. Within months of her
father's death in 1970 and while she was pregnant, her first husband, an air
force lieutenant, was killed in a plane crash. A second marriage to an
Egyptian diplomat was annulled. Taufiq, her third husband, spent four years
in jail under Suharto for his pro-Sukarno views.
In 1996, Suharto orchestrated Megawati's ouster as an opposition party
leader. At least five people were killed in the melee. But Megawati re-formed
her party and won a third of the seats in the 1999 parliamentary polls, the
largest of any political grouping. Says Jeffrey Winters, a veteran Indonesia
watcher at Northwestern University in Chicago who knows Megawati well:
"People who try to portray her as a gardener and a housewife have really
missed the essence of what she is." This is one tough-minded lady, he says.
But while the indications are positive, business is frustrated by Megawati's
refusal to come out and say what she plans. "We need political stability,"
says Sofyan Wanandi, chairman of the Gemala Group and head of an Indonesian
Chamber of Commerce committee on economic recovery. "Every day you wait, you
create new uncertainties." Already, he says, dealers are refusing to take
goods from wholesalers because business conditions are so uncertain.
Megawati's advisers say she is hamstrung by more than her natural reticence.
Also at work is a near-fanatical desire to follow rules and procedures. As
long as Wahid is in office, Megawati feels it would be improper to set out
her future program. "If she talks too much now, that would be a conflict of
interest," says Taufiq. He and others close to her also say she worries that
any comments she makes now could inflame the country.
Whatever her abilities, Megawati got where she is because of who she is. "She
is the flag carrier of the Sukarno name," says Yusuf Ronodipuro, one of her
father's colleagues in the independence movement. Because of that, Megawati
is seen as the champion of the country's downtrodden poor. It is her greatest
political asset, but it also raises the stakes -- for herself and for
Indonesia. "If she betrays them," says Eros Djarot, a filmmaker and a
political adviser during her 1999 election campaign,"it will be like a
typhoon." No wonder then that one friend says Megawati these days looks like
the weight of the world has fallen on her. Governing the country her father
created would challenge the greatest leader. Right now, even Megawati cannot
know if she is up to the task.
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