Indonesia's Quiet Revolution

Lex Rieffel

From Foreign Affairs, September/October 2004

Summary:  Beyond headlines dominated by terrorist cells and separatist insurgencies, the world's largest majority-Muslim country has undergone a profound transformation in recent years. Reformers have quietly but brilliantly overhauled the country's long-intractable political system. The government that takes office in October will be the people's choice more than ever before-and will have an unprecedented opportunity to set Indonesia on the road to good governance and economic prosperity.

Lex Rieffel is a Visiting Fellow at the Brookings Institution.

The five leading Muslim parties won a combined 36 percent of the vote in the 1999 election, outpolling Megawati's party by almost two points. Last April, the same five parties held their collective share at 35 percent but increased their margin over the single strongest party, Golkar, to more than 12 points. These numbers suggest that a coalition of Islamic parties supporting a single ticket could have won the presidency. But such a coalition is unimaginable. The Islamic aliran breeds leaders with an independent streak who would rather lose than unite behind a competitor.

Although most of Indonesia's leading political parties go back several generations, they should be viewed as new parties created (or re-created) during Reformasi and defined more by personalities than by issues. As the parties become more institutionalized, they will begin to occupy more distinct zones in the political spectrum. Under strong cultural pressure to avoid confrontation, the smaller parties are likely to join broad cabinet coalitions rather than combine with others in an opposition group. One possible outcome is an extended period of rule by PDI-p or Golkar, along the lines of Mexico's PRI (the Institutional Revolutionary Party). Another is that half a dozen parties will rearrange themselves into a new pattern every five years, with only minor changes in the overall direction of policy.

MILITARY SHADOW

The Indonesian armed forces (known by their acronym, TNI) still cast a long shadow over the political life of Indonesia today. In most accounts, the TNI is portrayed as the dominant force in government policymaking, with an effective veto over important decisions. The fact that retired generals led two of the tickets competing in the July 5 election reinforced this view. On closer inspection, however, the TNI looks operationally lame and well past its prime.

The TNI's image as Indonesia's supreme power has a solid basis in history. It is still revered for its role in winning independence from the Netherlands in 1950 and given credit for the stability and economic growth of the Suharto era. But as an institution, the TNI has been declining for 20 years or more. Its share of the national budget has fallen to less than 4 percent, compared with more than 25 percent in the early years of the Suharto regime. This is equivalent to less than one percent of GDP-half of what most of the TNI's Southeast Asian counterparts get.

Under Reformasi, the military has also become weaker operationally. This is in part an outcome of various reforms, including the formal separation of the police from the armed forces. It has also resulted from problems recruiting and training high-quality officers and procuring new equipment. There is currently no plan to develop the TNI into an effective fighting force subject to civilian control. At the beginning of 2003, the minister of defense issued a white paper that sought to set a reform agenda, but it glossed over fundamental issues such as the large amount of off-budget funds that go to the military (an amount some estimate to be twice as large as its formal budget allocation).

Since independence, the TNI has maintained a command structure that parallels the civilian government down to the village level. Although it stresses the importance of defending the nation against external enemies, it has deployed its forces mainly to combat domestic insurgencies. Indonesians generally support the TNI's actions to suppress insurgencies in Aceh and Papua, but the TNI's approach appears more consistent with permanent occupation than winning the hearts and minds of the people in these regions.

The TNI's economic influence has also waned in recent years. Since the birth of the Indonesian nation, military units have operated a mix of legitimate and illegal businesses. In the 1970s and 1980s, a sprawling network of military foundations and cooperatives sprang up, running a range of murky activities and drawing on questionable sources of funding. The TNI's resulting economic power probably peaked in the mid-1980s and then declined as the network of businesses owned and controlled by Suharto's relatives and close friends gained prominence. Counterintuitively, the vacuum in the economy resulting from the collapse of Suharto, Inc., has been filled by thousands of small and medium-sized enterprises, not by the military. In contrast to other Asian countries such as South Korea and Thailand, not a single successful military-operated business can be found in the top ranks of Indonesian companies.

As a political force, the TNI is often portrayed as single-minded in pursuit of narrow interests. The military's participation in this year's election campaigns, however, belies such cohesion. Although active military personnel were ordered to remain neutral-to the point of waiving their right to vote-retired military officers were highly visible as candidates and supporters. Instead of coalescing behind a single party, however, they were scattered widely among all 24. This pattern reflects opportunism on the part of former officers (who see in politics the prospect of large financial rewards for minimal effort) and of parties (which find that military experience gives a candidate fund-raising clout and organizational acumen). Meanwhile, a strong undercurrent of opposition to military leadership represents a credible check on creeping militarism.