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Warning: Indonesian Government to Fall
2100 GMT, 010523
Source:
Stratfor.com

Summary

After less than two years in office, the besieged government of Indonesian President Abdurrahman Wahid will collapse, likely this summer. Warning signs are clear: price hikes in fuel, crackdowns and the isolation of the president. The military will seek to prop up a successor government, likely led by the vice president. But intelligence indicates that Indonesia's military is weak and will be unable to re-establish control as far-flung provinces break away.

Analysis

On their face, the details emerging from Indonesia appear to be incremental steps in the country's long journey toward collapse. The economy spirals downward and social unrest ripples through street demonstrations and religious violence. In Jakarta, President Abdurrahman Wahid has until the end of May to respond to a second censure by Indonesia's lower house of Parliament before it considers impeachment hearings. Implicated in two financial scandals and criticized for erratic leadership, Wahid seems to balance perpetually on the brink of losing power.

But these details obscure a larger, looming reality. Wahid's government is likely to fall sometime this summer, no later than autumn. Two important events have shifted the ground under Wahid's feet. First, he persistently undercut the military that once guaranteed the power of the president. Second, Wahid played so many political factions against one another that now none will stand with him. Already the military is warning civilian leaders, cracking down on separatists and arresting opponents.

Yet Indonesia's great secret is the weakness of its security forces. For decades, they ruthlessly held the republic together. Today, however, intelligence indicates that the 300,000-man army is a mere shell of its former self. Civil unrest and recent deployments have eroded discipline; field units ignore rules of engagement and even open fire on other forces. An outbreak of violence across the country will make it impossible for the army to hold the nation of 17,500 islands together.

Separatist movements in the provinces, allied with local business and military interests, will move to seize advantage. Upheaval in the outermost islands will pose problems for energy companies and will threaten to spill refugees into Australia, Papua New Guinea and Malaysia. Governments in these neighboring nations will be forced to consider action. The security of the sea lanes that link the Indian and the Pacific oceans will become uncertain, as will the security of U.S. and other naval forces that pass through these narrow bottlenecks of ocean.

The President's Unwitting Hand

The likely fall of the Wahid government is intricately linked to the deterioration of the country, beginning with economic collapse of 1997 and punctuated by the fall of the dictator, President Suharto, in 1998. A brilliant blind man who once stood above the country's fractious politics, Wahid was to have shrewdly led a caretaker government.

But Wahid's grasp on power has always been weak. He won the presidency not by popular vote but through political deals. Initially backing Megawati Sukarnoputri for the presidency, Wahid shifted when it became apparent that the Islamic parties, including his own, the military and the former ruling party Golkar would snub her. All along, Wahid's legitimacy has perched precariously on the perception that he is the only acceptable compromise.

Yet the president has steadily, if unwittingly, undercut his own regime. His original cabinet became impotent through internal squabbling. Wahid's own style of governing, playing one faction against the other and knocking the legs out from under perceived opponents, kept an opposing power center from forming.

This approach has steadily isolated the president. By dividing the army and the police - the security apparatus - and by prosecuting certain officers, Wahid has created a military incapable of supporting the president. After steadily opposing the military on various fronts, Wahid reportedly is preparing to reshuffle its top officers, and military leaders have warned him not to make such a move.

The censure proceedings now unfolding perfectly illustrate the president's isolation. Less than a year ago, Megawati, the vice president, reined in her own party to avoid impeachment proceedings. But Wahid never truly ceded power to her as he had pledged publicly.

And in the past week, Megawati herself signaled that she is prepared to let the president fall. At a televised political rally May 19, Megawati for the first time said she is prepared to heed her party's call and become the next president.

The Economy and the People

Beyond the intrigue among the political elite in Jakarta, larger forces are taking shape against the government.

A variety of intelligence culled from different sectors of Indonesian society indicates a collapse of confidence in the political elite in Jakarta and a sense of panic over the domestic economic situation.

There is little confidence not only in Wahid but also in alternative leaders, such as Megawati, according to one source who is a local analyst of Indonesian politics. Another source, a businessman in a rural area of West Java, indicated that there is so little confidence in the country's political system that there is only one important issue right now: economic survival. A recent survey by Media Indonesia indicated that Indonesians now would prefer the dictator Suharto to the democrat Wahid by a factor of 26 to 1.

The political stalemate is now part of a vicious cycle, reinforcing poor economic conditions and steadily eroding stability. Forced by a cash crunch, the government is considering raising fuel prices as early as next month; the same move by Suharto in 1998 helped trigger the popular uprising against him.

The Wahid government finds itself in a catch-22. Indonesia has had IMF loans canceled, and this in turn has sent the country's credit rating sprawling. The World Bank and the Japan Bank for International Cooperation have subsequently canceled loans, all in the past month, because of the inability to reduce poverty. The currency, the rupiah, has steadily fallen. Indonesia will find it difficult, in turn, to service its foreign debt, which totals about $145 billion, according to Quest Economic Database.

The situation cannot go on indefinitely, and the summer of 2001 will be pivotal. Jakarta's budget for 2001 was based on a ratio of 7,800 rupiahs to the dollar. As the currency devalues, so does the government's ability to pay its teachers, postal workers and other state workers. It is rumored that the government will be too broke to pay its civil servants as of November 2001. This would only add force to a building social backlash.

A Nervous Region and a Strained Military

Regional governments are clearly nervous at the events shaping up in Indonesia.

The governments of Malaysia and Singapore have offered advice for stabilizing the situation, going so far as to advocate a return to a semi-autocratic rule. For Australia's part, recent reports suggest Canberra has withheld information on Indonesia's military abuses - likely an effort to swiftly rebuild international ties to the military on the perception that it is the one force capable of binding the nation together.

In fact, there are signs that the military is preparing to reassert its influence after two years in exile and shakeups by the Wahid government. A closed-door meeting in March brought together 95 senior army officers, who apparently discussed the military's waning ability to deal with the political and social instability in Indonesia. Less than two weeks after the meeting, the Indonesian government officially declared the Free Aceh Movement a separatist group, giving the army greater leeway in dealing with Aceh's problems.

On May 22, the military issued a blunt warning. "The military has asked the political elite to decide the most appropriate political compromise," said Lt. Gen. Agus Widjoyo, one of the military's most senior officers. "Every stance that we take is based on our concern for the nation." His statement carries particular weight: He has been a top officer since the fall of Suharto and is in command of all territorial affairs.

Recently, security forces arrested several leaders of separatist or violent groups, including a Dyak tribal leader in Kalimantan, a Maluku separatist leader and the leader of the Laskhar Jihad, a Muslim militia from Java currently deployed in Maluku province. A separatist leader from Irian Jaya went on trial on subversion charges May 14. Security forces are increasing in Borneo along the Malaysian border and in West Timor along the border with East Timor. Indonesia's army is also gearing up for a massive security sweep in Aceh province, and there are reports in the Indonesian media that leaders of the Free Aceh Movement may soon be arrested.

But the Indonesian military of today, known as the TNI, is a far cry from the nearly monolithic force that held Indonesia together and ruthlessly destroyed the opponents of Suharto. The military's power has diminished in recent years because of logistical problems, the severing of the police from the army, foreign embargoes and the strain of recent deployments.

The fallout of the 1997 Asian economic crisis is still felt within the TNI, which has suffered a serious decay in capabilities, according to sources familiar with the institution. The civil unrest of the past few years has kept units in states of near constant deployment, leading to an erosion of military discipline; lower units often ignore rules of engagement such as the prohibition against firing on police units. Human rights violations are on the rise. And security forces, particularly the newly independent police, appear unable to respond effectively.

While security forces are still stronger than any single rebellion, a simultaneous outbreak of violence across the country would be impossible for security forces to handle, according to these sources. Security personnel are often cited taking sides in local conflicts, sometimes leading to infighting among the security forces, according to a variety of local media reports. In Malaku, for instance, soldiers have sold arms and supplies to different sides of this religious conflict, according to the International Crisis Group.

The weakening of the military in the post-Suharto era makes it likely that the armed forces will focus their attention on Jakarta in the event of a change in regime. This shift in forces and attention would let problems in other areas, primarily in the outlying provinces, begin to boil over.

Protests and demonstrations in Jakarta have broken out regularly amid the political instability of the government. During Indonesia's June 1999 parliamentary elections, there were several clashes between party security forces and supporters, some resulting in deaths. Other violent clashes between supporters and opponents of Wahid have broken out during times of parliamentary debates over Wahid's actions. August has been a particularly prime time for upheaval.
Disintegration

If the security forces, already stretched thin, are forced to redeploy in substantial numbers to Jakarta, few forces would remain to hold Indonesia together.

Indonesia's political system has already effectively collapsed, with the government so focused on infighting and positioning that it is unable to deal with economic and social affairs of state. The government's fledgling regional autonomy program, prematurely enacted, is raising tensions between the center and regions as Jakarta has ordered more local control over government services without significantly increasing operating budgets.

With security forces pulled back to protect the Indonesian core of Java, central control over the outlying provinces will degrade. Local and regional military-economic elite, already nominally present in many areas, will act to protect their interests, particularly with regard to Indonesia's natural resources. Indonesia will not experience the rapid disintegration of the former Soviet Union, but it will continue to decline for some time before its ultimate collapse.

As Indonesia ticks, its neighbors are hoping for a controlled detonation. For countries like Papua New Guinea, Malaysia and East Timor, which share land borders with Indonesia, this national disintegration presents a serious security problem. All share ethnic and social ties across their respective borders, heightening the chances for spillover. If the Indonesian security forces are unable to maintain order in Irian Jaya, Kalimantan or West Timor, intervention by neighbors is likely.

Indonesia's disintegration presents a particularly troubling picture for Australia. Canberra recently has embraced an enhanced security role in Asia, with Indonesia one of its most important concerns. Australian forces were strained in reacting to East Timor, and they are incapable of tackling a systemic Indonesian collapse. Canberra's primary task will be to keep the unrest, violence and refugees from spilling outside the areas of Indonesia and away from the Australian coast.

Ultimately, Indonesia's neighbors are not prepared for its disintegration, nor are they capable of preventing it. But with the economic and political situation already collapsing, Indonesia stands on the brink. Without an economic or political miracle, it will slip from this precarious position in the coming months.

For more information visit Stratfor.com

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