Indonesia:
The Fall of Suharto

Aug 25, 1998

On Thursday May 21, 1998, Indonesian President Suharto announced his resignation after a thirty-year reign as leader of one of the most heavily populated countries in the world: 202 million people spread over a surface area of 736,000 square miles divided up between some 17,000 islands. Java, the most densely populated, represents only seven percent of the territory but contains 60% of the country’s population.

Only two months earlier, Suharto had been re-elected for the seventh time by the People’s Consultative Assembly, half the delegates of which, admittedly, had been designated by Suharto himself.

In the two months between these two events, the 77-year-old dictator was abandoned by everyone.

The parliament, although completely dominated by the government party, Golkar, threatened to remove him from office if he did not resign; Golkar’s chairman asked him to step down, as did the representatives of the two other authorized parties which, two months previously, had designated him as the only candidate to succeed himself; his ministers abandoned him and—most important of all—the army itself opened the door of the parliament to students calling for the president’s resignation. Finally he was abandoned by the United States, which had supported him for 32 years; American Secretary of State Madeleine Albright exhorted Suharto to "resign to preserve his legacy." Suharto acquiesced a few hours later.

Everything thus happened very quickly. And yet the growing discredit of the regime had long been apparent. Of course, Suharto was old and sick and it was necessary to consider what would follow. But discontent had been growing with the increase in corruption and nepotism in the regime. Moreover, Suharto increasingly had been seeking the support of those Muslims most favorable to the setting up of an Islamic state, provoking growing concern among a broad section of the bourgeoisie and even the army.

So long as the Indonesian "economic miracle" continued at a growth rate of around seven percent per year, discontent in those social layers which benefitted from this situation remained under the surface, despite a few scattered outbreaks of anger.

Since last autumn, however, repercussions from the financial speculation in Southeast Asia have led to the collapse of economies, revealing their fragility. The man who was known as the "father of development," and whose dictatorship was accepted by the bourgeoisie and the petty bourgeoisie so long as it offered them some prosperity, suddenly became a liability. The constant student demonstrations since February 1998 illustrate this change of mentality. More seriously still, the poorer classes were reduced to dire poverty by price increases and unemployment: the risk of a real social explosion became greater with each passing day.

Student protests, which were prolonged and increasingly radical, with demands for Suharto’s resignation and for an end to the price increases, opened a breach into which popular anger, which was far more dangerous, could rush. After the price increases at the beginning of May, not only did the student movement swell further, but there was also rioting in the shopping areas of big cities, particularly the capital, precipitating the fall of the regime.

Even if it is true that there were provocations making Chinese shopkeepers the target of popular hostility, this rioting and looting took a form which undoubtedly went far beyond the expectations of its instigators. For the rioters did not simply direct their anger at Chinese shops, they also attacked businesses belonging to the Suharto family and symbols of the wealth of the country’s richest people. The Ministry of Social Aid, headed by Suharto’s daughter, was ransacked; cars manufactured by the dictators’ sons were burned; branches of the country’s main bank, the BCA, jointly owned by two of Suharto’s children and the leading Chinese businessman, Liem Sioe Liong, were ransacked, and Liong’s residence was burned to the ground. In the space of one week about a thousand people were killed. The fear of a wider popular uprising led the rich and the country’s dignitaries to soon abandon Suharto, in the hopes that this would bring a return to calm.

Faced with the threat of a popular uprising, Suharto’s fall was rapid! Under pressure from all sides, he resigned, negotiating his departure with the army. His place was taken by the vice-president who had been designated by Suharto, B. J. Habibie, a stalwart of the regime.

The old dictator had proved incapable of maintaining order and began, on the contrary, to constitute a catalyst for popular unrest. The United States—which had supported him for so long because he had once broken a popular movement with bloody repression and brought Indonesia back into the imperialist fold—now wanted to get rid of him. So too, did all governments in the western world and Southeast Asia, trying to bring about a return to calm and preserve their own interests. With the situation in this whole region of the world explosive since the economic collapse, a popular uprising developing in Indonesia could be contagious.

What future for this regime, now that its leader has been ousted? Whatever the future may hold, it will be produced in part by the forces on which this regime rested, even as far back as its origins in 1968 when Suharto, with the backing of the United States, had put a sudden and extremely bloody end to the regime of Sukarno, his predecessor.

Sukarno and Third-Worldism

Sukarno was Suharto’s only predecessor at the head of the Indonesian republic, which had proclaimed independence in 1945.

Indonesia had been a Dutch colony since the 17th century, but the Japanese army drove out the Dutch during the Second World War, in 1942. Sukarno, who collaborated with the Japanese authorities, made himself known throughout the country as an opponent of Dutch colonization and an advocate of the country’s independence. Despite Indonesia’s declaration of independence, August 17, 1945, after the defeat of Japan, the Netherlands conducted a four-year war, attempting to reconquer the country. The United States, whose own interests were served by the ending of the old colonial empires, finally threatened the Netherlands with an end to the aid accorded as part of the Marshall Plan if it did not reach a negotiated agreement with Sukarno. The agreement was signed in 1949.

Sukarno had already demonstrated that he was reliable and ready to maintain order. In 1948, at the beginning of the Cold War, Sukarno had sent the Indonesian army to violently repress an uprising at Madiun, led by the Indonesian Communist Party (the PKI). The subsequent repression resulted in some 10,000 deaths; the leaders of the PKI were killed.

The United States had all the less reason to fear Sukarno because, while Sukarno wanted political independence for his country, his program did not call into question its social structure and its economic links with the west. Neither did he address the social problems of the poor classes. And, in his struggle against the Netherlands, he had sought assistance from the United States.

His ability to obtain concessions from the former colonial power, as well as to get the United States to put pressure on the Netherlands, rested on the support he had gained in the fight against the Dutch. That fight gave him immense prestige, so hated was the colonial power because of everything the population had endured under Dutch rule.

He therefore continued to champion nationalist claims against imperialism, but that was not always sufficient in a country bled dry, plundered and ruined by the colonial power. To keep the population lined up behind him increasingly he relied, on the one hand, on the army and, on the other, on the PKI. During the 1950s, he had allowed it to develop into a mass party which defended Sukarno’s policy among the poorer classes.

In the eyes of the United States, this was a dangerous game at a time when the United States was itself was engaged in struggles in this region of the world with China (and later with Vietnam). The U.S. government intervened in Indonesian politics in many ways to try to avert the danger. Admittedly the United States knew that the PKI was not a revolutionary party, but the simple fact of organizing the exploited and giving them the means to improve their fate was totally intolerable for imperialism in these underdeveloped countries, the attraction of which lay in shameless exploitation of the labor force. On the international level, the United States had no intention of allowing Indonesia to go over to the Soviet bloc, as China had. The policy of non-alignment (with neither the west nor the USSR) already constituted a breach in the blockade which the United States was imposing on the Soviet Union and China. Moreover, Indonesia took the lead of other countries going in this direction, when it organized the 1955 Conference of Non-Aligned Nations in Bandung, with around thirty countries from Africa and Asia in attendance.

Sukarno’s regime illustrates perfectly both the limits of so-called Third-Worldism, as well as the attitude of imperialism toward regimes which pretend to be backed by the masses and play off one bloc against another.

A new crisis quickly arose with the Netherlands. The 1949 agreement transferred the whole of what was known as the Dutch East Indies to the republic of Indonesia, except for western New Guinea which was symbolically retained by the Netherlands. Its future was to be negotiated later. This territory, which at the time appeared to offer no economic interest, was the object of increasingly radical nationalist claims on both sides, with the result that war broke out again and relations became tense between Indonesia and the United Nations, which refused to acquiesce to Indonesian claims. In 1957, Sukarno relied on the support of the working population of New Guinea to put pressure on the Dutch, who were expropriated. The army took over or regained control of all ex-Dutch possessions, companies and plantations.

At the same time, a rebellion massively supported by the CIA, which was worried about the development of the PKI, broke out in the islands of Sumatra and Borneo, even declaring an independent government. The rebellion was not crushed by the Indonesian army until 1961. From that point on, Indonesia received economic and military aid from the Soviet Union.

The size of the country, its scattering among thousands of islands, and the diversity of its religions, ethnic groups and customs, obviously all constituted a source of weakness for the regime. But they also gave Sukarno the possibility of playing on the many antagonisms. The two basic pillars of the regime continued to be the army and the PKI, giving Sukarno’s Bonapartism a left-wing tinge. But Sukarno used the animosities which existed between the ethnic communities, the religious conflicts between Muslims, Christians, Buddhists and Hindus, the divisions between the existing powerful Muslim parties, and the fight against autonomists, to present himself as a unifying figure, the "father of the nation." This did not solve the country’s contradictions, but Sukarno rode on top of them, maintaining an equilibrium whose center of gravity gradually shifted.

In the years from 1957 to 1969, the role of the army was reinforced both economically, by its control over the expropriated Dutch companies (the army officers who managed them personally enriched themselves and provided the army with funds which enabled it to become increasingly independent from the regime itself), and politically through its fight against the Dutch and against the secessionist rebellions. The army supported a hardening of the regime, which became increasingly repressive.

In this period, Sukarno restored the presidential constitution of 1945, parliament was dissolved, local authorities appointed, certain parties banned, censorship re-established and strikes prohibited. This is what Sukarno called "monitored democracy." The PKI was one of the authorized parties but was affected by the restriction of democratic rights.

The United States, having failed to overturn the regime by means of rebellions, made a last attempt to bring Sukarno back under its authority. It put pressure on the Netherlands to cede western New Guinea, which was then reintegrated into the republic in 1963. The IMF offered Sukarno massive aid in exchange for a certain economic liberalization. Agreements were signed on May 26, 1963.

However, Sukarno then launched into a new battle, this time with Britain over the planned creation of a Greater Malaysia, which he presented as a threat to Indonesia because it was being formed on Indonesia’s doorstep, including the British territories of northern Borneo in particular. The IMF canceled the promised aid. British and American property was then expropriated in turn.

Faced with imperialist pressures, Sukarno looked for support within the country from the army and certain authorized parties, including the PKI. He had promulgated an agrarian reform in 1960, an entirely symbolic one, it is true, but one which the PKI used as a pretext for mobilizing the peasantry, farmers and agricultural workers, in order to have the reform applied. The situation was particularly critical when the bad rice harvest of 1963 caused famine in the spring of 1964 and led to full-scale uprisings in the countryside. In February and March 1965, violence in the countryside reached its height: fanatical Muslims fighting in the name of the Koran succeeded in stirring up the peasants against each other and against the PKI. Successive conflicts and massacres occurred in Java in August 1965.

The policy of Sukarno and his supporters in the PKI was going much too far for the rich and for the army.

In 1965, Indonesia left the United Nations and developed closer relations with China: there was even talk of creating a Jakarta-Hanoi-Peking alliance to rival the United Nations—at a time when the United States was launching into its massive intervention in Vietnam.

There was obviously no question that the United States would allow things to carry on like this. Its policy of "containment," more than ever on the agenda, meant it would not let a country as important as Indonesia go over to the Chinese and Vietnamese side in Asia. What is more, with Sukarno and the PKI seeming to be playing with fire in the countryside, Sukarno was losing the support of the rich and the army without really gaining that of the people. The situation was therefore more favorable for an attempt to put an end to the experiment.

The CIA had developed a web of contacts within the army. On the rumor that generals were fomenting a coup against Sukarno, young officers took the initiative, on September 30, 1965, of arresting six generals, who were killed. Suharto, the number two in the army, reacted immediately, put down the rebel officers and directed an unprecedented repression against the PKI, which it accused of being responsible for the events.

This was an appalling massacre which went on for months, unleashing the brutality of all reactionary forces and enabling the rich, who had been deeply shaken, to take revenge, not only against the PKI, which was annihilated, but also on progressive elements inside the PNI (the Nationalist Party of Indonesia) and all worker militants. There were also pogroms against the Chinese community (which dominated business), fomented by fanatical Muslims (who in many cases also had an economic interest in this as competitors). The number of victims is still not known to this day: estimates range from 500,000 to one or even two million dead. In addition, tens of thousands of people were arrested, many of whom were kept for over ten years in prisons or camps. Executions of prisoners arrested for "communism" in 1966 went on for 20 years! Even today there are prisons still holding victims of this repression.

Suharto presented his action as a means of coming to Sukarno’s assistance. But in annihilating the PKI, he had demolished one of the two pillars of the regime. There remained the other pillar, the army itself, of which he was the leader... He was proclaimed as head of the government in 1966, then ousted Sukarno from the presidency and officially took his place in 1968.

Suharto’s support came not only from the army and the United States. It also came from the well-off classes, who had been frightened during the revolt in the countryside and had been adversely affected by the economic blockade and the resulting impoverishment of the country. Fundamentalist Muslims formed commando groups to carry out massacres in villages. Students joined the army in attempts to bring down Sukarno.

Sukarno’s policy made such a disaster inevitable: his nationalism led him to make growing attacks against imperialist interests and even to pretend to be against the wealthy classes in Indonesia. He had frightened them and made enemies of them. Having done this, he needed to go all the way and reduce them to impotence. But to do that, there was no other way but to rely completely on the popular classes, in the name of their interests. But Sukarno not only refused to attack existing social structures, he even refused to make any concession whatsoever to the masses. On the contrary, he used the popularity he had acquired in the anti-colonial struggle to get the working population to accept more and more sacrifices. Workers on the plantations and other nationalized businesses were increasingly subjected to pressure from the army to accept sacrifices in the name of the national struggle against foreign powers. The land problem, meanwhile, was in no way solved for the poor peasants of Java. The whole country was plunged into an economic crisis, the burden of which rested on the poor.

The Indonesian Communist Party

The most tragic thing about events in this huge country is that there was a powerful communist party, the PKI, the most powerful in this region of the world after the Chinese Communist Party. But the PKI was completely unable to prevent the bloodbath or even to offer the slightest resistance.

The PKI, which was created in 1920 and had suffered many repressions, was, by 1945, a small organization of a few thousand members. After hesitating for a time between support for and opposition to the post-war governments, and after suffering two brutal repressions in 1948 and 1951, the PKI chose to support Sukarno and even to place itself under his protection.

It grew rapidly, winning more than six million votes (16.4%) in the first general election in 1955, and 7.5 million votes (27.4% of the total vote) in local elections in 1957, becoming the country’s leading party ahead of the nationalist PNI and the moderate Muslim party, Nahdlatul Ulama (N.U.). Sukarno not only held no further elections after this, he also replaced elected local leaders with appointed dignitaries.

Beyond the electoral successes of the PKI, however, were its organizational successes which are impressive. In 1963 it claimed two million members, not counting the various associations and organizations which it effectively led. For example, the most important union confederation, SOBSI, which had two million members in 1960, was led by the PKI, as was the country’s biggest peasant organization, which in 1962 claimed 5.5 million members and was present in nearly half the villages in the country (and in almost all villages in Java). It led student associations, cultural associations, neighborhood associations, a women’s movement and many others. In 1965, the PKI claimed three million members and 20 million with the sympathizing organizations. Allowing for exaggerations and double membership, the number of its members and sympathizers can be estimated at 10 million. Whatever happened in Indonesia was not because the working class in the towns and on the plantations was not organized. It was undoubtedly one of the most organized working classes in the Third World and fought to improve its lot: many big strikes took place up to the end of the fifties; in the countryside, land occupations took place spontaneously to farm essential food crops.

The problem, however, was the policy defended by the PKI, which did not give the working class an independent political line, and which, on the contrary, strove to put it in tow behind Sukarno.

The PKI claimed that it wanted to conduct the national struggle along with the social struggle, saying that it was important not to alienate the nationalist "feudals" in the countryside or the national bourgeoisie. According to the PKI, the only places where it was possible to make demands were on foreign companies; but, obviously, when their owners were expropriated, workers should no longer go on strike anywhere or occupy the land. Strikes were prohibited.

The need was to produce as much as possible for the national economy. Committees were set up wherein representatives of the SOBSI collaborated with the army to increase productivity. The occupation of foreign companies was carried out at the initiative of the union linked to the PNI and not SOBSI, which did not join the movement until a few days later. And when the army hastened to take control of all the Dutch companies, including those which the workers had occupied themselves, the PKI allowed it to do so and accepted the authority of the army. In 1957, the PKI approved the establishment of the state of emergency, arguing that the bourgeoisie was using extra-parliamentary means against the regime and that the regime had to defend itself. It called on the people to support the army against the Dutch and the rebels; it agreed to let its veterans’ association, the main one in the country, with 300,000 members, be amalgamated with the other veterans’ associations and placed under the leadership of the army.

When the army pushed Sukarno into getting rid of the parliament, banning several parties and ruling as a dictator, the PKI accepted everything. In 1959 its own leaders were arrested and interrogated by the army, and its newspapers were banned, including the union papers, but the PKI supported Sukarno’s "monitored democracy" and appealed to him to obtain the right to hold its conference in 1960 when the army wanted to prevent it from doing so. The new regulations concerning parties required that each one should submit a list of its members with name, address and position in the organization: the PKI agreed to these requirements and submitted its list in February 1962.

The PKI, which had been careful not to demand an agrarian reform, used Sukarno’s law to encourage peasants to mobilize and apply it, and even launched the slogan "the land for those who work it"; but when the peasants rose up in the countryside in 1964 and 1965, the PKI was quick to reverse its policy and divert responsibility for the confrontations onto party cadres, asserting that they neither understood not obeyed its policy. The PKI was very careful not to provide leadership for the revolt, which lasted for months.

Despite the rumors of a coup which were spreading, the PKI did nothing to prepare the masses for this or even to protect itself—apart from asking Sukarno for the creation of a fifth force of armed militias, something the army opposed.

The PKI, like Sukarno, did not want to use the strength of the exploited and the oppressed fighting for their own interests. It was a nationalist party which wanted to build a national economy and hoped to come to power thanks to Sukarno’s support. It acted as Sukarno’s advocate among the working class, and its policy consisted in encouraging the masses it influenced to support Sukarno’s policy. In not seeking to arm the exploited with a policy of their own, the PKI left them at the mercy of other social forces and the army. But while these forces, the Indonesian rich and the army itself, were seeking to obtain a bigger share of the country’s economy, they naturally preferred an agreement with imperialism to economic ruin and the assaults of the poor.

It should be said in passing that the policy of the PKI, which had sided with the Chinese CP against the Soviet CP, dramatically illustrated the fact that "Maoism"—which, we should recall, claimed to be genuinely revolutionary as opposed to the Soviet CP, which had become "counter"-revolutionary—led the working class into the same massacres as did the Stalinist policy.

The United States, meanwhile, considered Indonesia as a key country in this region of the world, economically because it was a supplier of raw materials and politically because it was likely to destabilize the whole region. For the U.S., the development of the PKI and the organization of the poor masses was a constant concern. Whatever evolution its policy went through, its underlying aim was to combat this organization: the U.S. first lent support to Sukarno in order not to drive him to seek the support of the population; then it attempted to overthrow his regime by giving massive support to secessionist revolts which nevertheless failed; finally it gave its full support to Suharto’s bloodbath which rid Indonesia of the PKI for good.

The CIA itself admitted that the this repression in Indonesia was one of the worst mass murders of the 20th century. Nonetheless, the New York Times hailed the bloodbath as "a ray of light" in Asia, while Time magazine saw Suharto’s accession to power as "the best news for years for the West in Asia." Nixon’s visit in 1969 consecrated the good relations between the two countries. Indonesia had rejoined the United Nations, and Suharto returned the British and American property which had been seized to their owners and compensated Dutch owners. He received massive aid from the major powers, particularly the United States and Japan.

Suharto’s Political Longevity

Suharto’s regime was able to hold out for so long because he had the support of the Indonesian rich and the backing of the western powers and Japan.

In a certain sense, Suharto repeated Sukarno’s Bonapartist policy, but the center of gravity of the equilibrium on which his regime rested was much further to the right. Suharto adopted for himself some of the symbols with which Sukarno had marked his regime, particularly the Pancasila, the five-point slogan which proclaimed, among other things, the secular nature of the state. The constitution itself, which allows the balance of different forces to be played upon, was scarcely changed. And while the army was still the essential pillar of the regime, Suharto replaced the PKI with Muslim religious parties, both to balance the influence of the military and to give himself a means to control the population.

To fight against communism, he prohibited atheism and introduced compulsory religious education, thus developing the dominant religion, Islam (followed by 80% of the population). He even offered an increasingly large place, via the Association of Indonesian Muslim Intellectuals (led by Habibie), to Muslims advocating an Islamic state. To the extent that he offered them a number of concessions, he opposed the army, which advocates secularism.

All of this explains why Muslim parties grew stronger and can now pose as a possible alternative; Amien Rais, the leader of one of the biggest Muslim organizations (with 28 million members) is, moreover, now presented by the western press as the main figure in the opposition.

The regime’s brutality did not worry the major powers, who allowed Suharto to seize East Timor, a Portuguese possession, in 1975 and carry out a full-scale genocide there against the population. 60,000 people were massacred in the space of a few months. American, French and British military hardware was generously provided to Suharto, allowing him to intensify the massacres still further. By 1980, the number of people killed was estimated at 200,000 (one third of the population of East Timor). This massacre is still not over today. The fact is that East Timor contains oil reserves. Australia was the first country to officially recognize Indonesian domination over Timor in order to be able to sign a contract for the exploitation of these reserves, in which the western oil companies also joined.

Nor did the widespread corruption of the regime bother foreign investors, provided that their interests were guaranteed. The possibility of unlimited exploitation of Indonesia’s raw material wealth, with cut-rate labor, was clearly the main consideration. And Suharto openly welcomed foreign capital, which has stakes in highly profitable national or private industries. Hundreds of foreign companies are thus associated with the plundering of the country’s wealth, such as wood, for example. Indonesia is still the world’s second biggest producer of plywood, but in 10 years time it will have to import it, because its tropical forest, the second biggest in the world, will have disappeared. Natural gas, of which Indonesia is currently the world’s leading exporter, will have run out five years from now. Of course, after that there is oil, plus many other valuable minerals.

The American company Freeport, for example, exploits the biggest gold deposit in the world in Irian-Jaya (former western New Guinea). The mine is also rich in silver and copper. 17,000 people work there. In 1992, 35 million dollars worth of metals were exported. Freeport is the biggest Indonesian tax-payer, but the company has devastated the region. The Papuans are reduced to famine and hundreds of children have died from copper poisoning. And the violence against those who resist is unprecedented.

Thus the plundering of the country by foreign companies is continuing just as it did in colonial times, and probably even more intensively.

For 32 years, in fact, Suharto’s regime made Indonesia the safest country in South East Asia for foreign investment. There are many western or Japanese corporations which took advantage of this safe haven, including Total, Coca-Cola, British Petroleum, General Electric, Honda, British Aerospace and many others.

The country’s economy, which for ten years had been growing at an official rate of seven percent per year, rested in fact on an intensive plundering of resources and on an ocean of debt. Indonesia’s total debt amounts to 140 billion dollars, half of which, private debt, is accounted for by some fifty people in Suharto’s entourage. However, the bourgeoisie and even the local petty bourgeoisie have also profited from this economic boom.

Admittedly the biggest share went to Suharto himself and his family, together with the handful of families with which he was allied. His personal fortune now amounts, according to Forbes estimates, to 16 billion dollars, and the combined fortune of his family comes to some 40 billion dollars.

As early as the beginning of the fifties, Suharto began to amass a fortune as an officer in Sukarno’s army. He linked himself to two Chinese businessmen, Liem Sioe Liong and Bob Hasan, who took responsibility for supplying his division with food, uniforms, medicine, etc. At the beginning of the sixties, as a general in charge of Kostrad, the Strategic Reserve Army, he set up a military foundation which went into business on his behalf and on behalf of his army corps. After becoming the country’s leader he increased his business: American food aid, for example, was a major source of enrichment via a monopoly of flour processing and of the marketing of almost all wheat supplies. In the course of time, he and his family associated themselves with American multinationals such as Freeport and Mobil Oil and around a hundred foreign companies, particularly Japanese ones. He controlled no less than forty businesses (flour mills, cement works, toll-paying roads, fertilizer factories, lumbering concessions, oil plantations, etc.) in association with the same two Chinese businessmen, one a Buddhist and the other Muslim, who followed him in his rise and who also own huge financial and media empires, and who have gone into large- scale business in this whole region of the world and beyond, as far as Australia, the United States and Europe.

Suharto’s wife was nicknamed "Mrs. Ten Percent" because of the commissions she systematically took on big contracts, but Suharto’s six children are even greedier. Using state-owned companies free of charge to start their own businesses, they ended up associating these companies with their projects by forming joint ventures from which they took all the profits. Practically all national companies, in branches as varied as oil, public works, the pharmaceutical industry and telecommunications, together with the military foundations, many of which were controlled by Habibie, found themselves associated with Suharto’s children’s businesses. And Suharto’s children took advantage of the role their father played in bodies such as the ASEAN, the Non-Aligned Movement, APEC or the Association for Defence of Islamic Countries to spread their tentacles into Malaysia, the Philippines, Burma, South Korea, Taiwan or China.

Their activities involve all profitable sectors: road construction, water distribution, power stations, communications networks, mining, oil and lumbering concerns and sea and air transport.

The families linked with Suharto’s family have extended their activities as far as the cotton plantations of Kazakhstan or have combined with Hoechst to construct a textile mill in Portugal. Mention should also be made of Habibie and his family, who have always been linked to Suharto and have conducted business with him, and whose children share business interests with Suharto’s offspring. Having been Minister of Research and Technology for twenty years, and as such at the head of ten of the country’s biggest state companies, Habibie made wide use of this to develop his grandiose and above all very costly projects in the aviation industry in particular, and the manufacturing of military equipment under French (Aérospatiale), Spanish, Belgian or German license.

These dozens of interlinked conglomerates, and the hundreds of companies which they comprise, still leave room in a big country with a population of 200 million for the enrichment of a class of local property-owners of varying degrees of wealth who constituted the main support for the regime. Foremost among these are army officers, who since 1957 have acquired a major share of the country’s economy, directing hundreds of companies and foundations in all branches of the economy and using the profits to enrich themselves and provide for the needs of the army.

All of this is based on brutal exploitation of the labor force. In 1997, before the monetary crisis broke out, the legal minimum wage was $2.46 a day. This sum represents only 60% of the minimum required to live, according to the government’s own estimates. Moreover, only 30% to 60% of employers (depending on the region) comply with this legal minimum.

The speculative storm which hit Indonesia last year, along with all the countries of South East Asia, could only have disastrous effects on the population’s standard of living. The rupiah lost 80% of its value compared to the dollar, considerably increasing the cost of living. Foreign investors who had lent money have tried to obtain reimbursement and no longer lend. Many companies have gone bankrupt, throwing millions of workers onto the streets. Industrial workers (8.5 million people) have been dramatically affected, but so too have office workers. Seventeen percent of the active population is expected to be unemployed by the end of the year, and fifty-eight million people will then be below the poverty line. Anger was triggered by the ending of subsidies on paraffin and petrol, electricity and transport, which caused prices to leap up by 25% to 70% at the beginning of May.

In one year the standard of living of the working population has been suddenly taken back 35 years.

The middle classes and the local bourgeoisie, hit hard by the price increases and bankruptcies, criticized Suharto for depriving the country of IMF credit, when he refused to dismantle as the IMF requested, the industrial and commercial monopolies his family specializes in. And when Suharto proved incapable of stemming the riots, he immediately lost all support.

What Future?

The problem for Indonesia’s ruling classes, for its army and for imperialism, is to find a political solution which can defuse popular revolt and get the poor to be patient and accept their fate while making as few concessions to them as possible.

This is certainly not easy. It all depends in the final analysis on the depth of popular discontent and mobilization.

Both the present interim president, Habibie, the army itself and the leaders of the opposition all fear a popular explosion and agree on the need to try to calm things down. This is no doubt the reason why the vice-president designated by Suharto has finally been accepted by everyone, if only temporarily, in order to win time and prepare for a peaceful transition.

It is possible that Habibie’s appointment will not be enough to maintain calm for long, because Habibie, who is closely linked to the Suharto family and its business, has little credibility.

Judging from what the press says here, however, there are many other candidates for power, eager to defend the interests of the rich: first of all is the army, which does not want to be left out either economically or politically. A more political solution could come from the Muslim religious parties, which are admittedly divided between the supporters of secularity and advocates of a more or less Islamic state, but which enjoy genuine popular support. Then there is Sukarno’s daughter, who could bring together all the many people who still support the former dictator.

All of these politicians, who differ in many ways, perhaps offer a range of alternative solutions for the bourgeoisie. What can be said, however, in view of the past, is that they all share a fear and contempt for the masses, who are considered at best, by the most radical, as stepping stones to power. And if they succeed, not only will they not change Indonesian society nor the fate of the masses, but they will make the population pay for the economic catastrophe which has hit the country.

The dramatic situation in which the working class finds itself objectively demands a political force which will embody the political interests of the poor masses, which will enable them to defend themselves effectively against the greed of the property-owning classes, and which will offer them perspectives in the struggle to end the longstanding oppression of imperialism.

We do not know whether such a force exists or even if it could be created in the course of this crisis, if it persists. But it is certain that this is the only way.