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New Member Spotlight
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(Continued from page
1)
meetings in Cuba. Its believed the new civilian defense minister, Dr. Juwono Sudarsono, received the cold shoulder from the Clinton Administration during his April visit to Washington (where he had no official appointments) because he had not displayed an ability to manage the military's behavior in West Timor. Intimidation apparently still exists at refugee camps and East Timorese pro-integration militias may be receiving support from military units for cross border incursions. All this points to a certain level of US mistrust or anxiety matched in Indonesia by Muslim political groups opposed to Gus Dur's courting of trade relations with Israel and his willingness on principle to allow the legality of the Communist Party. Gus Dur is now publicly stating that there are plots afoot to unseat him. His coalition partners utter the usual denials.
ECONOMIC AFFAIRS Whatever one's views on the IMF, it has certainly proven its worth as the ultimate watchdog of the economic measures necessary to pull Indonesia out of its worst crisis in 32 years. The manner in which the Wahid government scrambled to meet recent deadlines to qualify for a $400 million loan disbursement demonstrated that a lack of coordination among his economic ministers and perhaps some complacency in the face of high oil prices and a consumer rebound had set in. Its not that ministers and other economic leaders hadn't been voicing their ideas of what to do, but when one Minister can publicly challenge another -usually of a different political party--you begin to see the failings of the coalition that elected Gus Dur. One senses that the "traveling" Gus Dur had expected he wouldn't be needed to coordinate the disparate elements and eliminate gridlock. His recent intervention has helped but will he maintain his vigilance. Perhaps the recent appointment of the venerable technocrat Widjojo, reprising his act of 30 years ago, will set things right. He was part of Indonesia's delegation to the recent IMF meetings in Washington and has widespread respect. How he manages his relationship with the Kwik Kian Gie, the Coordinating Minister for Economic Affairs, will be key. In another display of a lack of Cabinet solidarity, the Minister of Justice successfully blocked (for the time being) the President's reasonable idea that foreign judges be considered for positions as judges in bankruptcy cases. IBRA has lost several of these cases, and its becoming apparent that many career judges are either incompetent or corrupt. But firing the well respected Laksamana Sukardi as Minister of Investment and State Owned Enterprises smacks of intervention from politically connected vested interests groups
REGIONS The gridlock extends to the provinces where local governments and courts are taking positions opposed to the central government. Some are prematurely asserting their newfound autonomy and revenue raising abilities by imposing questionable new taxes on extraction companies (as in the Newmont case). Newly elected local legislators are calling for contract reviews and renegotiations. We're bound to see more of this until the central government fully implements its 1999 laws on regional autonomy and revenue sharing. Many are questioning whether the provinces have the necessary human resources to professionally take over from central authority. Given that the professionalism of central government officials is often itself questioned, one can imagine decentralization adding insult to injury to many investors.
LOOKING AHEAD Foreign investors, a major key to recovery, await some kind of a track record on: IBRA asset sales, restructuring of bank and corporate debt, judicial reform in commercial cases, and the removal and prosecution of bad judges as well as debtors and delinquent bankers. Indonesia doesn't have to hit home runs on all these issues; singles will do. If blame is placed on the intervention of "foreigners" (i.e. World Bank, IMF, and international funds) this (Continued on page 5)
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