Tuesday IBD article very negative on Habibie (Indonesia) too:
E D I T O R I A L Good Luck, Mr. Habibie
Date: 5/26/98
As the saying goes, Indonesia's new president is going to need it. Like the
captain of the Titanic, Habibie must navigate dangerous waters in the next
few months. But judging from his record, he's not much of a skipper.
Owing his surprise presidency solely to his 46-year friendship with former
President Suharto, Habibie does not have much of a power base.
The demonstrators see him as a Suharto clone, many Muslims don't trust
him, the poor don't care about him, and the military has given him only
grudging support - which could be withdrawn at the drop of a tank round.
And from this shaky position, Habibie must forestall further violence, turn
the economy around and reassure foreign investors. Lotsa luck.
On the last point, he's already said he'll pursue the reforms the International
Monetary Fund wanted in exchange for a $43 billion bailout package.
But it was these same reforms that led to the riots against Suharto's regime.
Decontrolling food and energy prices while at the same time devaluing the
rupiah meant savings were wiped out in an inflationary flood.
And the decontrol put the cost of the basics of living - food and energy
-out of the reach of the nation's poor.
To be sure, Jakarta, and more importantly the Suharto family, must get out
of the economy.
Suharto's six offspring must begin to sell off the more than 1,000
companies they own. They must end their monopolies of exportable items
like oil and tropical hardwoods. They must relinquish their grip on the
nation's financial system.
But Habibie - despite his words to the contrary - is likely to have little
stomach for such moves. He himself controls industries that depend on
government contracts.
In addition, the military has made it clear that it will protect Suharto and his
family from retribution, which could be defined as ending their monopolies.
In his new Cabinet, Habibie tried to hew to a middle course. He dumped
Suharto's daughter, Siti Hardiyanti Rukmana, and Suharto's golfing buddy,
Mohammed ''Bob'' Hasan.
But he kept Suharto's economics minister, Ginandjar Kartasasmita, who
was pushing for true economic reforms, and appointed new people to the
ministries of finance, trade and industry, and investment and capital.
Unfortunately, a middle road may be the long road. If Habibie tries to stay
in power with concessions to the Suhartos, to the military and to his own
wallet, he will only prolong the inevitable pain.
A better course would be to follow the example of the Czech Republic.
When faced with the task of converting from a tightly controlled
government and economy to freedom, President Vaclav Havel and his
then-finance minister, Vaclav Klaus, took the plunge immediately.
The Czechs' shock therapy was painful, but only for a year or so. And
today, the Czech Republic enjoys one of the lowest rates of unemployment
in Europe and a solidly growing economy along with political freedom.
Other successful conversions include Hungary, Estonia, even Poland.
Another radical step for Habibie would be to thumb his nose at the IMF,
while at the same time choking off inflation. The IMF's cures are worse
than the disease and serve to create dependence, not growth.
Saying ''thanks, but no thanks'' to the IMF and making a top-to-bottom
overhaul of the rules of the economy could provide some hope for the
world's fourth-most-populous nation.
At this point, though, Habibie shows no signs of such radical leadership.
He seems to be Suharto lite and is probably a transitional figure at best.
Quick, open and fair elections -which will require the assent of the military,
a questionable assumption -could produce a leader with courage and
wisdom.
It might even be Habibie. But we're not holding our breath.
1998 Investors Business Daily, Inc.
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