Arizona Journal of International and Comparative Law Spring, 2001 Article INDONESIA'S ODYSSEY: A NATION'S LONG, PERILOUS JOURNEY TO THE RULE OF LAW AND DEMOCRACY Jared Levinson [FN1] Copyright © 2001 by Arizona Board of Regents; Jared Levinson I. INTRODUC

  18 Ariz. J. Int'l & Comp. L. 103 Arizona Journal of International and Comparative Law

  Spring, 2001 Article

  

INDONESIA'S ODYSSEY:

A NATION'S LONG, PERILOUS JOURNEY

  

  Copyright © 2001 by Arizona Board of Regents; Jared Levinson

  I. INTRODUCTION Indonesia is a nation in search of a path to political, social, and economic stability. Abdurrahman Wahid, Indonesia's President, faces harsh criticism from many political factions in Indonesia. Wahid's promises to create a less corrupt, more competent government have failed to produce enough concrete results to satisfy the needs of many Indonesian people. A poll taken by Tempo news weekly found that sixty-five percent of those people polled want the legislature to hold a session to remove the President. Questions about the firing of two cabinet ministers led the Indonesian Parliament to summon Wahid before the legislature to explain his actions. In July, Wahid appeared before the Indonesian parliament to explain his conduct. Intense criticism from the Indonesian parliament compelled Wahid to turn over day to day management of the government to his vice-president, Megawati, and reorganize his cabinet. As these leadership changes take place, Indonesia continues to suffer the horrific impact of the 1997 economic collapse that has left 35 million Indonesians *104 unemployed and one hundred million people living at or near poverty level. The streets of Jakarta are filled with the plastic tents of people selling everything from home cooked food to suitcases, as Indonesians struggle to survive economically. Children approach cars at stoplights in Jakarta ringing small bells on little sticks and begging for money. In other locales in Indonesia, such as Aceh and the Muluku Islands, separatist and religious violence tears at the nation's stability, leading to the deaths of thousands of people. Amidst these turbulent circumstances, Wahid, Megawati, and the Indonesian Parliament must develop a clear coherent set of policies to lead Indonesia to a place of stability and growth. It will be the purpose of this article to examine the political, economic, social, and legal situation in Indonesia and discuss solutions to Indonesia's problems. The answer to Indonesia's crisis lies in firmly establishing the rule of law and democratic institutions. It should be noted that these reforms of the legal and political system cannot be accomplished merely through a purely "legal" analysis. Rather, much of the legal reform that is required deals with political, economic and social issues.Thus, one must examine the law in the context of the political, economic, and social crisis plaguing the nation. As this Article will discuss, the long, autocratic rule of Suharto, the destruction of most government institutions, and the pervasive form of corruption that has afflicted Indonesia for over thirty years must be fully understood and accounted for in creating change. Establishing the rule of law in a nation where the rule of law has not existed for many years will be a highly complex process, not only encompassing the creation of new laws and legal adoption of a new attitude of true respect for the importance of the rule of law and democracy for the first time in Indonesian history.

  II. THE STRATEGIC IMPORTANCE OF INDONESIA Indonesia is the fourth most populous nation in the world with a total population of 204 million people.It is an archipelago comprising 13,667 islands *105 covering a land area of 1,919,317 square kilometers including 93,000 square kilometers of inland seas.Approximately seventy percent of Indonesians live in rural areas.Indonesia is comprised of four major ethnic groups, Javanese (forty-five percent), Sundanese (fourteen percent), Madurese (seven and one-half percent), Coastal Malays (seven and one-half percent), and other groups (twenty-six percent).Muslims constitute eighty-seven percent of Indonesians, six percent are Protestant, three percent are Roman Catholic, two percent are Hindu, one percent are Buddhist, and one percent have other beliefs. Indonesia possesses critical strategic resources. Indonesia is a member of the Organization of Petroleum Exporting Countries (OPEC) and receives a significant flow of income from its oil production. Indonesia also produces a substantial amount of steel, aluminum, cement, forestry products and cigarettes. Agricultural production includes sugar, coffee, peanuts, soybeans, rubber, oil palm, and coconuts,and employs fifty-five percent of the nation's workforce.

  

The strategic location of Indonesia, which lies between the Pacific and Indian

  Oceans, makes it an important nation for the U.S. military. The U.S. military has long maintained ties with the Indonesian military by supplying weapons and training.

  The termination of the U.S. military presence in the Philippines in 1992

  created concern for the U.S. as well as nations in Southeast Asia.Following the U.S. departure from the Philippines in 1992, the U.S. entered into bilateral security arrangements with other Association of Southeast Asian Nations (ASEAN) including Indonesia, Singapore, and Malaysia.According to a report by the Institute for National Strategic Studies and National Defense University, these bilateral security *106 arrangements allowed "access for U.S. naval ships and aircraft to commercial facilities in those countries. These arrangements hold the promise of greater sustainability of the U.S. regional presence at lower cost with ancillary security and economic benefit to ASEAN partners."The collapse of Indonesia as a nation would seriously threaten these regional security arrangements. Indonesia provides a counter-balance to the other large nations in the region including China, Russia, Japan, and India.Important strategic shipping lanes to the industrial states in northeast Asia would be threatened. Despite the existing value to other nations in keeping Indonesia a stable and unified country, some scholars have proposed that Indonesia should nonetheless be broken up, and that each region should be granted independence and allowed to set up its own government.While it might be true that under Dutch colonial rule, the islands of the Indies were brought together under a single administration because it was simply more efficient,these once disparate societies have since become interdependent and cannot risk the potentially devastating impact of division. The break up of Indonesia would result in economic and political collapse that could also have serious economic ramifications for neighboring nations in Southeast Asia.

  The resulting turmoil could cause a massive exodus of refugees from

  Indonesia to neighbor states, destabilizing the entire region.Such chaos could tear apart the Association of Southeast Asian Nations and lead to more conflict in Southeast Asia. There is great concern that Indonesia could experience the same type of bloody

  Tun Razak commented, "[t]he biggest security threat facing the region (Southeast Asia) is the breaking up of Indonesia and we cannot allow that to happen." This concern was echoed by Australian foreign minister, Alexander Downer, who stated, "We don't want to see the Balkanization of Indonesia ... It would create a very significant regional crisis. We in the outside world want to encourage dialogue and a peaceful resolution of differences. The violent option is *107 totally unacceptable. There is no need for bloodshed."While it is clear that the break-up of Indonesia would be very dangerous for the region of Southeast Asia, the road to stability and democracy will involve the resolution of a complex set of legal, political, economic, and social problems.

  III. THE RULE OF A CLERIC: PRESIDENT ABDURRAHMAN WAHID AND THE VOLATILE POLITICS OF INDONESIA

  The events surrounding the 1999 election have shaped much of the political landscape of Indonesia. In August 1999 the first popular election in thirty-two years was held in Indonesia.Megawati's Indonesian Democratic Party, (PDI) party,

• *108 which "espoused a broad nationalism appealing to secular-minded Muslims and

  non-Muslims ..." received a plurality of thirty-four percent of the popular vote.

  Golkar, Suharto's old party, led by then President Habibe finished second

  with twenty-two percent, down from its normal sixty-five to seventy percent. Wahid's National Awakening Party (PKB) finished third with thirteen percent of the popular vote.The Development and Unity Party (PPP), a Muslim party received eleven percent. However, the actual election of the President is made in the People's Consultative Assembly (MPR). Wahid and Megawati have been close friends for many years.

  Wahid pledged his support to Megawati.The night before the vote, Wahid made a deal with the Muslim parties who formed a coalition led by Amien Rais.

  The Muslim parties, Golkar, and a majority of the military members united

  behind Wahid.The Muslim parties were concerned about Megawati's commitment *109 to Islamic goals and were concerned about having a woman President.As a result of this deal, Wahid was elected President of Indonesia by the parliament. Megawati was elected Vice-President. As part of the coalition deal made by Wahid and his allies, Wahid's first cabinet was comprised of thirty-five ministers from five political parties.The cabinet members often had different agendas and political ambitions based on party faction. As a result, the government was divided and unable to produce a clear, coherent set of policies.In August 2000, Wahid reorganized his cabinet. He reduced the number of cabinet posts from thirty-five to twenty-six.Wahid loyalists, formed to reduce the infighting that existed in the first cabinet dominate the new cabinet.Wahid is a moderate Islamic leader, who has consistently preached religious tolerance between all groups. As one Catholic religious leader stated, "Wahid is the best we can have ... [h]e is very open, very democratic, [[and he has] very good principles on human rights." Wahid has demonstrated great dedication to democracy in some areas. The most notable change in Indonesia is the remarkable transition from government *110 control of the press and speech to a free press and wide-open discussion of any topic. Under Suharto's rule, newspapers were shut down and publishers imprisoned for criticizing the government. Today, newspapers publish stories that can only be described as being on the far reaches of tabloid journalism. All these activities take place without retribution by the government. Despite these attempts at reform,

  Nurchoslish Madjid have expressed their concern about Wahid's governance. Sjahir has called for Wahid's resignation charging that Wahid has condoned corruption in office,including reports of officials at the subcabinet level taking bribes. Moreover, Wahid himself has been implicated in two major scandals. One scandal involves the alleged theft by Wahid's masseur Suwando of four million U.S. dollars from Bulog, the government food distribution agency.Bulog Deputy Chairman Sapuan is being tried in a Jakarta Court for his part in the Bulog scandal.

  Suwondo has denied that Wahid had any involvement in the Bulog scandal. Suwondo claims that the money was a personal loan from Supuan.The second scandal involves Wahid's receipt of two million U.S. dollars from the Sultan of Brunei.The MPR voted in August to investigate both scandals.Charges of nepotism have also been levied at Wahid. He appointed his brother as a special adviser to the Indonesian Bank Restructuring Agency (IBRA). After an outcry of nepotism, his brother resigned from his post at IBRA.

• *111 The recent interpellation session in the Parliament was another example of

  democracy in action. During Suharto's regime, the Parliament merely placed a rubber stamp on Suharto's initiatives. The fact that the President of Indonesia could now be summoned before the Parliament and answered the summons by making an appearance serves to redefine the role of the MPR. However, some question whether intervention by the MPR will be sufficient to remedy problems generated by Wahid's style of governance. Wahid's background is as a highly respected Muslim cleric. At his Muslim institute, Wahid could speak as he chose, issuing orders to young followers at his discretion.

  

However, being President requires a different approach to leadership. Wahid

  has often times had difficulty adjusting to the confines of his presidential office. He often speaks off the cuff making inconsistent and sometimes controversial remarks.

  While this style of leadership may have worked well for a cleric, it has not served well for the leader of a nation of 210 million very diverse people.

  Wahid's leadership style is described as chaotic. He has been accused of being largely incompetent on economic issues, quite aloof and unpredictable, and to falling asleep in cabinet meetings and parliament sessions. His physical blindness has been cited as a problem, leaving him dependent on others to read documents for him. Wahid's dependence in these matters has led to charges that his family, friends and aides can exploit him. As one Indonesian military leader noted, "What we need is a leader, what we have is a cleric."

  IV. "THE FIRST THING IS THE RULE OF LAW" When asked what needed to be done to cure the many ills plaguing Indonesia, one Indonesian military officer replied, "The first thing is the rule of law."At the heart of Indonesia's problems lies the thirty-two year absence of competent, honest legal institutions. The system of "crony capitalism" run by Suharto and his cronies lies at the root of the Indonesian economic crisis. Suharto controlled Indonesia with the economic support of a small group of wealthy Ethnic Chinese businessmen. This system was enforced by the Indonesian military that imprisoned or eliminated Suharto's political opposition. One Indonesian citizen stated that it was nice to be able to discuss her country in private without facing the *112 fear of death. A. Suharto's Legacy Suharto controlled the legal machinery and the destiny of a nation. The Suharto bankrupt regime, one only has to visit the Suharto museum at Tam Mini, a park in Jakarta, which features exhibits from all regions of Indonesia. The Suharto museum is filled with many gifts given to Suharto during his reign. It is filled with priceless jade carvings, works of expensive art from all over the world owned by Suharto, and a floor devoted to Suharto and his late wife Madame Tien. The museum, built by Suharto's cronies, demonstrates his arrogance. Not only was Suharto thoroughly corrupt, but he flaunted his corruption for all to see. His museum is a monument to the excesses of political dictators everywhere. The economic activity of Suharto, has late wife Siti, his children, and Indonesian bankers who made a massive number of improper loans financed his cronies. Siti was known as "Madame Ten Percent", reflecting her share of all public contracts.

  Suharto and his family accumulated a financial empire estimated at more

  than $25 billion.It was virtually impossible to conduct business in Indonesia without dealing with Suharto, his family, and their business cronies. The Indonesian economic system was a complex web of corrupt deals and political payoffs. Suharto centralized all power in Jakarta with himself as the supreme leader. *113 A U.S. Library of Congress study described the Indonesian political system stating:

  

"Since independence the nation has been centrally governed from Jakarta. In

  a system in which the lines of authority, budget, and personnel appointment run outward and downward, regional and local governments enjoy little autonomy. Their role is largely administrative: implementing policies, rules and regulations. Regional officialdom is an extension of the Jakarta bureaucracy. In the early 1990s, there was neither real power sharing or upward political communication through representative feedback." Most natural resources were located in less populated areas. Suharto extracted these resources for use in the more heavily populated areas, particularly Java. In the process, the central government controlled local revenues and finances leaving little power for provincial and local governments.The Indonesian banking sector was poorly supervised by the central bank, Bank of Indonesia. These circumstances led to the collapse of the Indonesian banking sector resulting in economic chaos in Indonesia. The effects of the financial collapse have included massive poverty, a high rate of unemployment, and starvation for millions of Indonesians. Deadly riots and political protests are now common. These events caused the downfall of Suharto, but at the price of further political, economic, and social upheaval. Suharto also controlled the legal system, including all judicial appointments. Judges earned a living by selling justice to the highest bidder.The legal system was simply another arm of Suharto's corrupt machine. It is out of this environment that a new legal system must be constructed in Indonesia.

  B. "Corruption: The Child of Every Regime" Corruption colors every regime. Like an old tree, its strong roots spread everywhere. From the Old Order to the New Order to the Reform Order, corruption has *114 continued. The State Audit Board (BPK) announced yesterday that state losses in ministries and other government agencies amounted to US $838.54 million in 2000. The largest single loss was from the presidential secretariat, in which 57.93 percent of the total budget allocated for it had disappeared. Reform has become a scapegoat for political ambitions. Law enforcement is fully colored by political motives. Various institutions have been established, many regulations have been issued but corruption and efforts to fight it have become two different things. In this republic, corruption is the child of every regime. levels of Indonesian society. There are no simple answers to the problem of corruption in Indonesia. However, there are a number of concrete steps that can be taken by the Indonesian government and the Indonesian people to combat corruption including: 1) strengthening the Parliament; 2) reform of the justice department, judiciary, and police; 3) creating tougher anti-corruption laws and active prosecution of corrupt persons; 4) better pay for low and middle level government employees to reduce graft; 5) making greater use of foreign experts to help fight corruption; 6) increased transparency in all government actions and whistle blower protection for corruption informants; 7) encourage and support private groups and the news media in exposing corruption; and 8) creating a new attitude among the Indonesian people to aggressively fight corruption.

  1. Corruption Continues Within Indonesia's Legal System The unreliable nature of the Indonesian legal system has been a major factor cited by business people for not wanting to invest in the nation. In June 2000, Wahid met with US businesspersons who demanded that the legal system be reformed before they would invest in Indonesia. Within Indonesia, businesspersons frequently complain about the corrupt nature of the courts and the instability that results in business negotiations. One Indonesian attorney described the courts as "unpredictable."Court decisions are mainly a function of money and politics, just as they were under the Suharto regime. *115 A well-connected, well-financed insider is likely to prevail even if the written law is to the contrary.

  The July 31 Memorandum of Agreement between the IMF and Indonesia requires greater reform of the judiciary. The Memorandum points out that seventy percent of the Judges in Jakarta Courts have been replaced as of mid-July 2000.Wahid also replaced sixteen Supreme Court justices in September 2000. There has been an increased focus on the corruption in the judiciary. A joint investigative team has been established in the attorney general's office,and an Ombudsman as been appointed to investigate corruption in the judiciary. Attorney General Marzuki Darusman argues that he is committed to fighting corruption, but he has stated that because of past corruption "it will take about five to ten years for the (justice) system to be able to reasonably function."Teten Masduki, the coordinator of the Indonesian Corruption Watch argues that Darusman has failed to effectively combat corruption in Indonesia.Indonesian Corruption Watch issued a statement that there is widespread corruption in the Attorney General's Office including "prolonging the examination process, bargaining, issuing instructions to stop investigations, setting charges with light sentences, delays in making appeals to the Supreme Court, and refusal to carry out execution of court verdicts." Far more emphasis needs to be made on prosecuting corrupt businesspeople and government officials. Virtually no major figures involved in the corruption that led to the downfall of the Indonesian economic system have been prosecuted. Teten Masduki commented, "[a]mid the people's strong desire to create a clean government free from corruption, collusion, and nepotism (KKN), the Attorney General's Office has done nothing significant in fighting rampant KKN. Yet the Office is the institution holding the key to the opening of corruption cases for trial in the courts."It is essential that corrupt judges, police, and other officials be prosecuted for corruption.

  2. The Impact of Corruption on Parliament

• *116 The consequences of the lack of true legal authority can be seen in all facets of

  Indonesian life. Indonesia's parliament has not been a true lawmaking body for over

  Sciences stated, "[b]oth Suharto and the Dutch colonial administration systematically prohibited people from participating in politics and the bureaucracy." The parliament lacks the experience and resources to engage in true lawmaking activities. Most legislative initiative is left to the executive branch. For the parliament to function effectively, a staff of experts needs to be engaged to advise members on the complex legal, economic and social issues confronting them. It has been suggested that the Parliament establish a standing committee of experts to assist with drafting legislation.These experts could be recruited from both Indonesian and foreign academic institutions, private think tanks, and consulting firms. Both inside and outside Indonesia there are many highly qualified, competent experts in law, economics, social issues, finance and other areas who could provide solid advice to the members of the Indonesian Parliament. Despite the problem of corruption in Indonesia, there are still many good people in the nation who are well respected and possess knowledge that would benefit the Parliament and the people of Indonesia. At present, legislators rely on experts in the executive branch for this information.Seventeen of the eighteen bills passed by the Parliament between October 1999 and September 2000 were initiated by the executive branch.

  

For democracy to flourish, Indonesia will need a strong Parliament to balance

the power of the President.

  Parliament's effectiveness has been further weakened by failure of its members to wisely use the current power available to them. The eleven political factions comprising parliament frequently spend much of their time engaging in partisan fighting that does nothing to promote real solutions to Indonesia's problems. The focus of Indonesian politics is still on the President. The Parliament, although offering criticism and engaging in investigations, has failed to produce any type of real legislative agenda. While Indonesia needs a strong President in troubled times, it also needs a competent, fully functioning Parliament that offers real alternatives to the President's plans. The recent interpellation session may have *117 served some useful purpose in forcing Wahid to change the direction of his administration, including appointing a new cabinet. Unfortunately, the constant political battle between Wahid and his opponents is centered more on personalities than any real discussion of the issues facing Indonesia. The rule of law and policy substance has taken a backseat to political expediency at a time when Indonesia can least afford to be adrift in a sea of political chaos.Jimly Asshiddiqie, a constitutional law professor at the University of Indonesia stated that the interpellation session was more "a show of force" than a true act of democracy. The political leadership of Indonesia must overcome their partisan differences to heal the nation. The people of Indonesia should continue to demand more action from their leaders and vote them out of office if leadership is not forthcoming. As an editorial in the Jakarta Post stated: "[t]hroughout the Assembly session, we witnessed time and again how virtually every politician fought to serve their own personal ambitions or their parties interests. None managed to subordinate their personal or party interests of the nation ... What this country does not have is good leadership, one with vision and statesmanship. Until the day that this kind of leadership emerges, this country will be forever condemned to one crisis after another. Institutional reform of the Parliament and judicial system are essential. Mark Baird, the World Bank Indonesia Country Director, stated, "an active parliament is probably going to be one of the key instruments of the new democracy in Indonesia that's going to ensure proper safeguards on the activity of public *118 servants." The Parliament has established a commission to monitor the wealth of state officials. The commission has created a thirty-page financial disclosure form that has been

  MPR and DPR, and the Supreme Court. However, under the current anti-corruption law, state officials found guilty of corruption can be dismissed from their jobs, but not members of Parliament. The only sanction for members of Parliament is a moral sanction.A new anti- corruption bill is pending in Parliament that places the burden on state officials to prove the propriety of their actions.Tougher anti-corruption laws are needed to tighten corruption standards and force state officials to account for their conduct.

  3. Battling Government Corruption It is absolutely necessary for Indonesia to create a competent, more honest functioning bureaucracy. Suharto's systematic effort to eliminate any alternative to his rule has left Indonesia with a state bureaucracy that is incapable of properly managing the nation's affairs. Even if Wahid wants to diffuse power throughout the bureaucracy, he is incapable of doing so because there is no competent, law biding structure with which to work. As Daniel Lev, an Indonesian expert at the University of Washington, stated: "[t]here is really nothing left to work with ... [t]here's corruption everywhere." Former Chief Economic Minister, Kwik Kian Gie has stated that he was in a battle with "black conglomerates" who controlled the decision making process in Wahid's government. Kwik stated: "[t]hey have their own people and slaves everywhere, including the IBRA where their main problems are located."One Indonesian businessperson described Kwik's situation, stating that Kwik was confronted with rampant corruption all around him, making it impossible for him to *119 implement economic reform. The case of Laksamana Sukardi, former Minister of State Enterprises is instructive.

  Laksamana attempted to take legal action against Texmaco, a conglomerate, run by powerful Indonesian tycoon Marimutu Sinivasan, alleging that he obtained illegal loans at state banks with Suharto's help. Sinivasan campaigned against Laksamana's action, giving a $250,000 contribution to Nahdlatul Ulama, an Islamic organization once run by Wahid.As a result of his effort to pursue legal action against Texmaco, Wahid fired Laksamana from his ministry post. Texmaco then received additional financial support from the government. Wahid's lack of legal knowledge has led to confusion on key legal decisions. In October 2000 Wahid issued an order to delay the prosecution of three wealthy businessmen, Marimutu Sinivasan, chairman of Texmaco Group, Prajogo Pangestu, chairman of Baraito Pacific Group and Syamsul Nursalim, chairman of Tunggal Group.Former Minister of Justice and recently appointed Supreme Court Justice Muladi criticized Wahid's actions.Muladi stated: "... Wahid should have asked the Attorney General or Minister of Justice before making any statements relating to legal affairs, or people will again be startled by his confusing statements."

  

  Because of the highly corrupt nature of the Indonesian judicial system, it is necessary for Indonesia to seek the assistance of foreign consulting firms to audit the expenditure of state funds by government agencies. Private foreign consultants have been used to make an objective assessment of the state of Indonesia's financial institutions.Foreign consultants could also train Indonesians in proper audit procedures. President Wahid has correctly requested the assistance of the U.S., Swiss, and New Zealand governments and the IMF and World Bank to supply technical assistance to attack corruption in Indonesia.The assistance of foreign *120 governments would be to gain "information and cooperation to

  Another way to reduce corruption is to end the power of the large conglomerate monopolies that were established during the Suharto era. As discussed earlier, Suharto and his cronies had a strong grip on all facets of economic life in Indonesia. For example, former Minister of Mines and Energy Susilo Bambang Yudhoyono commented on the corrupt nature of his ministry and mining practices during the Suharto regime, stating: "The government is controlled by the people. And business should not dominate the government."Former Minister Yudhoyono commented that legislation has been proposed "... to eliminate monopolies and introduce a much higher degree of competition."There is also a great need to increase transparency in all government actions and whistle blower protection for informants who expose corruption to prevent their intimidation. For the police and other lower level state employees, much of the endemic corruption is the result of low pay.At the end of each month, when the police need money, they stop vehicles for phantom violations to elicit money from people.Lower government officials supplement their low incomes by soliciting bribes from people seeking government services.It is necessary to raise the level of pay of the police and other lower state officials to end the practice of soliciting bribes to supplement their low pay.As Mark Baird, Indonesia Country Director for the World Bank correctly concluded: Personally I believe, it will be very hard to get a major change in the public service without changes in wages. How can you expect a civil servant to live on a wage, which is not livable, and not be susceptible to corruption. To me, this is asking the impossible.

• *121 Fighting corruption will involve strong action by the Indonesian people and

  news media. A number of private anti-corruption groups have been created in Indonesia both in Jakarta and in the regions.One such group, Indonesian Corruption Watch was created by social activists, retired judges, lawyers, and journalists.Indonesian Corruption Watch has been successful in documenting corruption in state-owned companies, including Pertamina, the state oil company, Garuda Indonesia Airlines, and Bulog, the State Logistics Agency. In addition to the efforts of these private actors, the media must continue to exercise its newfound freedom to expose stories of corruption in the government. The media has been active in reporting such stories, including the two major scandals facing President Wahid. The Indonesian media must continue to develop into solid investigative journalists. However, the most important reform is to change the attitude of complacency in Indonesia about corruption. Both in the private and public sector, there needs to be a firm commitment to implement and enforce measures to create more honest and open institutions. Katherine Marshall, Director, East Asia and Pacific Region for The World Bank, argued that the Indonesian government needs to make a commitment to "fence off social safety net programs" adopting a 'Not Here, Not Now' attitude toward social programs that benefit the poor. Unfortunately, very often, efforts to end corruption are treated lightly by public officials and the business community. Among many good people in Indonesia, there is an air of resignation about the corrupt nature of the nation's institutions. The author had an opportunity to join a group of businesspeople in Jakarta for a survey conducted by the World Bank, which dealt in part with corruption. One businessperson at the meeting stated sadly afterward, "Nothing will come of it."

  If Indonesia is to survive as a nation, the many good people of Indonesia

  will need to work hard through legal, political, and economic reform to eradicate corruption. In February 2001, House Speaker Akbar Tandjung, a Golkar party member (Suharto's party), stated: "Politically, the House supports all efforts to fight such huge material losses on the state."Let us hope that in 2001, something comes of it. The actions of Wahid's administration have damaged the credibility of the *122 Indonesian government. The tolerance of continued corruption further limits the ability of the bureaucracy to have a truly effective role in governing the nation. It also inhibits the willingness of foreign investors to invest major resources in Indonesia. There is a fundamental need to bring an end to the system of corruption, collusion, and nepotism (KKN) that still plagues the Indonesian government. At present, the concept of good governance is more of a slogan than a reality in Wahid's Administration.

  V. RESTRUCTURING GOVERNMENT

  A. Devolving Power to the States Another major problem confronting the Wahid government is how to devolve power to the provinces, districts, and municipalities. Under Suharto the wealth of the nation flowed from the outlying provinces to Jakarta. The regional governments were seriously weakened in terms of power and structure. In order to quell the independence movements in numerous provinces like Aceh and Iran Jaya, Wahid is attempting to buy unity in Indonesia by granting a greater share of revenues from coal, oil, gold, and other mining operations to the provinces beginning in January 2001.The provinces, districts, and cities have long resented the corrupt wealth of the central government. As noted Indonesian economist, H.S. Dhillon commented, "We need to build centers of excellence in the provinces."This would include creating solid educational and health care institutions.

  There are two key laws regarding decentralization, 1) the regional autonomy law, which divides the balance of power between the central government and the regions, and 2) Law on Fiscal Balance between Central and Regional Government, which regulates the financial relationship between the central government and the regions.

  

Under the Regional Autonomy Law, power over eleven key areas will *123

pass from the central government to the country's 346 districts and municipalities. The districts and municipalities will assume authority over key areas including health, education, cooperatives, forestry, trade, agriculture and mining.

  including foreign affairs, defense, the economy, justice, and religious affairs. Under the Law on Fiscal Balance Between Central and Regional Governments, the central government will share twenty five percent of all its revenue with the provinces, districts and cities. Twenty-two and one-half percent will flow to city and district governments and two and one half percent to the provincial government.

  

One major problem is that the five resource rich provinces, Riau, Aceh, Iran

  Jaya, East and Central Kalimnatan will be the chief beneficiaries of decentralization, increasing the imbalance between regions.In exchange for this arrangement some subsidies from the central government, such as region subsidies used to pay salaries of employees of regional governments will be ended. Central government aid for elementary education, health facilities, clean water and roads will continue. However, the provincial governments are not well prepared to handle the influx of new wealth. The provinces have a shortage of trained bureaucrats, lawyers, and accountants to handle new financial and legal responsibility.The central government is shifting 1.7 million bureaucrats to the provinces in an effort to deal with the situation.Due to the intense districts, and cities lack appropriate government structure to manage their new powers. Furthermore, the resource rich regions have no incentive to preserve their environments because they now have even greater financial incentive to exploit natural resources.One example of environmental harm has already occurred in *124 East Kalimantan, where a regent auctioned off its forests to the highest bidders.Complicating matters is the fact that the decentralization laws are poorly drafted with many details of exactly what powers are being transferred or how the various levels of government will interact with one another. For example, paragraph one of Article 7 states: 1) the responsibilities of the region include the responsibilities in all sectors of government except responsibilities for foreign affairs, defense and security, the administration of justice, monetary fiscal matters, religion and responsibilities in other sectors. The responsibilities in other sectors mentioned in paragraph one include policies on national planning and control of national development at a macro level, funds for fiscal balance, the state administrative system and state economic institutions, the development and the empowerment of human resources, the efficient use of natural resources along with strategic high technology, conservation and national standardization. As Gary Bell points out in his article on decentralization, the powers in paragraph one given to the regions conflict with the powers given to the central government in paragraph two. Article 10 gives power over natural resources to the regions, yet Article 7(2) gives the central government power to control the "efficient use of natural resources, ... [a] confusing and contradictory proposition." There are also widespread concerns that the lack of clear direction will result in more corruption at the provincial, district, and city level.As Robert Simanjuntak, an economist who helped draft the policy stated, in the rush to devolve power to the provinces, the central government is "shifting corruption from Jakarta to the outer provinces ... Indonesia's dilemma is that we are threatened with disintegration."

  

• *125 Another problem plaguing the decentralization plan is the fact that the

  Indonesian government has failed to document in detail the identity and needs of its own people. As one Indonesian businessman stated, "Nobody knows who the people are or what are their needs."There is a need to create a nationwide identification program similar to the U.S. social security system so that the government can properly identify the real needs of the people of Indonesia.

  B. Reducing Military Power Over Government Affairs The creation of a functioning democracy requires a reduced role for the military in government affairs. As Chairman Hendardi of the Indonesian Legal Aid and Human

  

Rights Association argues, "[w]e can't build democracy if those who have the guns

  also have political power ... The military and police will have a bargaining position with the president to make decisions related to human rights decisions ...."

  

The Parliament voted in mid-August to maintain the military's presence in

  the MPR until 2009.The Indonesian military has abandoned the principle of "dwifungsi" meaning the military has a dual role of both governing and defending the nation. It had previously been thought that the military role in the national *126 legislature would be phased out before the next election in 2004.One military leader interviewed indicated that the role of the military in the MPR should end. One member of Megawati's PDI-P party argues that the continued role of the military the TNI is the "most prepared" institution in society to hold the nation together.

  

  However, Arbi Sanit, a political scientist commented: "What political aspirations? They have said they won't get involved in politics any longer. This is a back and forth game, they're (politicians) licking their own spit."The territorial structure of the TNI and its control of the intelligence apparatus place the military in a strong position to take power in the event that Wahid is unable to resolve the separatist forces afflicting Indonesia. The military maintains units in every province, district and sub-district in Indonesia.The strong presence of the military was evident to the author as he traveled through Indonesia. Military barracks are to be seen in every area of Indonesia. Intelligence is largely controlled by the military and continues to focus on political and social affairs. The complexity and power of the military role makes it difficult for Wahid to deal effectively with TNI as Indonesia attempts to create a functioning democracy. After years of oppressive rule by Suharto with the assistance of the military, TNI is politically unpopular. Nevertheless, the military still has the ability to act if TNI leaders believe that Indonesia is on a path to chaos. Democracy in Indonesia remains fragile. It is highly unlikely that TNI would allow Indonesia to crumble and dissolve. Lt. General Agus Widjoyo summed up the military view of civilian rule; "We still have problems absorbing the ideology within our chain of command ... [t]his should not be seen negatively ... (Resistance to civilian control) ... grows out of concern for the survivability of the Republic of Indonesia."

• *127 Wahid has asserted greater control of the military by appointing new leaders

  for TNI and a civilian Minister of Defense.Wahid successfully replaced General Wiranto as Commander in Chief of TNI.In his first cabinet, Wahid also appointed six cabinet ministers with military backgrounds, but they do not "form a solid bloc behind General Wiranto." The chain of command within the military is badly divided into two camps, one camp devoted to General Wiranto, is resistant to change, and the second camp supports Lt. General Agus Wirahadikusmah who wants to make major reforms in the military.

  

Reformers suffered a setback when Wirahadikusmah was replaced as head

of Kostrad, the army's strategic reserve command in August 2000.

  Wirahadikusmah argues that the territorial structure of the military should be eliminated to reduce its political power.Wahid met with great military *128 opposition when he attempted to appoint Wiaradikusmah as deputy army commander.TNI leaders presented a united front against Wirahdikusmah. Army Chief of Staff, General Endriartono announced that Wirahdikusmah would face disciplinary action for improper conduct.Wahid has attempted to occupy a middle ground by appointing General Susilo Bambang Yuhoyono as his coordinating Minister for Security and Political Affairs.General Yuhoyono is generally viewed as being a reformer, but he advocates gradual change in the status of the military. Wahid is walking through a political minefield in his dealings with TNI. The military will continue to play a major role in Indonesian politics until a truly functioning civilian government can be properly organized and demonstrate it can maintain stability. Like Indonesia itself, TNI is divided along ethnic, religious and political lines. The Indonesian Defense Minister has reportedly stated that 128 soldiers defected in the Muluku Islands and joined in the partisan fighting. In some cases, army commanders may not have control over their troops.Some reports indicate that military forces in the Malukus are acting in concert with the Laskar Militia, a Muslim insurgent military force that sent three thousand members into the Malukus allowed violence to occur through inaction or active participation. Local activist groups in Aceh have accused the military of killing and oppression in the region. One military officer, Lt. Colonel Sudjuno, who is accused of complicity in the killing of sixty-two people in West Aceh in July 1999, has simply vanished. The military reported for some time that he was being held in custody. It is now known that he has been missing since November 29, 1999 when he left on vacation. Sudjuno was the key witness linking higher officials in the chain of command to the killings by militia forces in West Aceh. Eight lower officers, who face trial on charges stemming from the July 1999 incident, may not be tried because their trials cannot proceed without Sudjuno's testimony.