Indonesia's Crisis: The Lesson for China
Summary:
Indonesia, as we have long predicted, is coming apart. This
process has a great deal of relevance to China, whose army, like
Indonesia's, was accustomed to making lots of money and now resents
the fact that the good times are over. In both countries, making
money became the basis for military loyalty to the regime, which in
turn needed the army as guarantor. But in China, as in Indonesia,
the military is no longer making money, and China has banned its
officers from business. Now Beijing is creating international
tension to soak up the military's energy and resentment. But in
the end, the guarantor of the regime can bring its death, leaving
warlords poised to take power.
Analysis:
We have long argued that the Asian economic meltdown, as its
ultimate legacy, would politically reconfigure Asia. We meant this
in both the international and domestic sense: Nations would behave
differently after the meltdown than they did during the past
generation of extraordinary prosperity. The reconfiguration of
Sino-American relations is an obvious manifestation of this. But it
is the domestic political changes that are the most profound and
will have the most impact on international relations. It should be
obvious that an economic transformation of the magnitude we have
seen cannot help but have equally dramatic political consequences.
Asia is obviously a diverse region. It goes without saying that
the economic meltdown will affect Japan's politics dramatically
differently than Malaysia's. However, events during the last week
have drawn our attention to one area of commonality: the effect of
the economic crisis on the military in China and in Indonesia.
These two countries are not usually lumped together; they differ in
profound ways. But they share this: they have both used their
military forces for three missions - protection against foreign
enemies, enforcement of internal security and development of the
economy. During the previous generation, the latter role became
more and more important for both the Chinese and Indonesian
militaries.
But Asia's recent economic crisis, the states and circumstance have
forced both militaries to de-emphasize their economic roles. Not
only are the militaries not happy about this, but their unhappiness
could destabilize their respective regimes. Quite apart from the
truly disturbing prospect of an Asia dealing simultaneously with
both Chinese and Indonesian instability, there are important
lessons to be learned from the way in which each country used the
military and the consequences of that use.
The fundamental roles of both the Chinese People's Liberation Army
(PLA) and the Indonesian armed forces (TNI) was originally the
same, to serve as the foundation of a regime governing a restive,
multi-ethnic populace engaged in building a cohesive nation-state.
Although circumstances were different in China and Indonesia, there
was great commonality of purpose.
On the one hand, the armies in both countries were designed to
guarantee internal security so that the state could construct its
control mechanisms in safety. On the other hand, the army -- as
one of the few genuinely national institutions -- was an instrument
of nation-building. By recruiting members throughout society, these
armies served as a means for upward mobility and as a tool for
integrating diverse elements into a cohesive whole. As was the
case in many new societies, the military served not only as a means
for stability, but also as a tool of modernity.
The Chinese and Indonesian armies played similar roles in
controlling the social instability created by their charismatic
leaders. Beginning with the October, 1965, backlash against the
communists, the Indonesian military steadily asserted itself, and
under the leadership of then-Gen. Suharto, the legacy of
Indonesia's founder Sukarno steadily diminished. The PLA intervened
to crush the Mao-inspired Great Proletarian Cultural Revolution.
The PLA's intervention not only stabilized a China that was
oscillating out of control and moving toward chaos, but it created
the framework that led to the victory of Deng Xiaoping over Maoist
forces and set the stage for the implementation of Deng^s economic
reforms.
Both China and Indonesia moved cautiously toward engagement with
the outside world's economic system. Both Deng and Suharto held
the reins tightly on the process of development. But as economic
development began to accelerate and involvement with international
finance developed, both Deng and Suharto had to involve their
militaries, not only to control the process but also to facilitate
it.
In developing countries, the military is frequently the most modern
institution in society. Preparing for war requires two things.
The first is some degree of familiarity with technology and the
principle of technological development. In societies in which the
understanding of better and worse technology is fairly abstract,
the military -- which lives and dies by better and worse technology
-- is frequently the most capable of evaluating and adapting it.
Second, as the largest integrated organization in the country, the
army has to some degree mastered the management and coordination of
large numbers of personnel in dispersed locations, cooperating to
achieve the same end.
Thus, the Indonesian and Chinese armies had a more intimate
understanding of technology and a more efficient means of
organizing production than other institutions. In a China, where
the Cultural Revolution had torn out the heart of the nation's
managerial class, and an Indonesia in which the managerial class
had either been Dutch or had emigrated, turning to the military to
facilitate economic development was a natural choice. Moreover, in
two xenophobic countries where economic development necessarily
meant dealing with suspect foreigners, a commitment to national
security was another reason to rely on the military.
There was another issue: Both the Chinese and Indonesian regimes
depended on the loyalty of their military to survive. If economic
development was to take place, the officer corps had to be
permitted to participate in it. If, having saved the regime, the
officers were to see other segments of society prospering while
they were excluded, the inevitable dissatisfaction would threaten
the regime's survival. It was simply good politics to allow the
military to participate in the economic development process.
Thus, social reality and politics combined to turn both the Chinese
and Indonesian militaries into economic entities. As time went on,
the senior officers in both countries became businessmen, both as
individuals and as organizational leaders. From the village level
to the largest deals, the military participated. Military
officers became the linchpins not only of small-scale business but
of multi-billion dollar projects involving huge foreign investment.
In both countries, the armies became intimately bound to the ruling
families, the banking system and the system of facilitation and
corruption that distributed wealth.
Indeed, their most important function was the collection and
distribution of wealth. While great wealth concentrated at the
top, during the boom times it frequently trickled down through the
army, through enlisted personnel on projects, hiring local labor,
money transferred to local officials, and supporting family and
friends linked to the military. All of this made the military
indispensable in the use of wealth as a means of stabilizing and
building loyalty to the regime.
Economic growth in the early 1990s pushed ideology out the window.
Both the weaker ideology of Indonesian nationalism and the much
more robust Maoist socialist ideologies lost relevance during the
boom times. The army's security function declined, as increased
wealth was seen as the permanent path to the regime's survival.
And, given the ideology of global finance, reasonable military men
found doing deals with foreign banks far more relevant than
preparing to fight foreign armies. The economic development mission
supplanted the security mission in both China and Indonesia. What
was left was the military officer as businessman.
All of this worked perfectly until the bottom fell out of the
economy. Having abandoned ideology as a driver and national
security as a mission, what was left was private economic
calculation. Officers in both countries had become used to asking,
over the past decade, "What's in it for me?" For most of the
decade, the answer was "quite a lot." The regime could no longer
give this answer. Indeed, rather than distribute growing wealth,
the regime now had to allocate growing misery.
More important, the regime had to rely on the military for
protection in the face of tremendous resentment from the masses,
who had never received anything but crumbs during the boom. Having
now realized that those crumbs were all they would get, the
bitterness was intense. The regime, which had broken the social
contract they had entered into with the military, now called on the
military for protection. Times were now tough, and the military was
asking, "What's in it for me?"
The Chinese responded by ordering the military out of businesses.
This was both politically and structurally absurd. The PLA was so
deeply into business that disengagement would inevitably increase
the pressure on the economy, not to mention destabilize the
political situation. Nevertheless, the regime clearly understood
where the economy was headed, and therefore knew that it had to
pre-empt the military to minimize resentment and mobilize the
military to defend the regime. China has renewed ideological
campaigns, resurrecting the notion of socialism long after the
military had ceased to resonate to it. Much more important, the
regime generated a national security threat both domestically and
from foreign sources. It is no accident that the regime happily
went into confrontation with the United States. It understood that
the military, even if it was left cold by neo-Maoist rhetoric,
would resonate to patriotism and to foreign threats.
The Indonesians, with less room to maneuver, confronted a much more
serious problem. Their military had neither ideology nor a
credible foreign threat to supplant the sense of betrayed economic
entitlement. The regime has used East Timor as a reminder of how
much worse things could get. The expulsion of the military command
from East Timor would leave them with no means of livelihood. East
Timor is an opportunity for the regime to demonstrate to the army
what can happen in the rest of Indonesia if the military fails to
hold the country together. Having few other cards to play, Jakarta
wants to convince the army that saving the regime is a savvy
economic move.
In both China and Indonesia, the burning question is the same.
Having suffered massive economic reversal, having been barred by
reality and edict from economic life, will the military simply
return to the primary mission of national security against enemies
foreign and domestic? To be more precise, will they return to
those missions effectively, or will they return to those missions
while they bide their time as an institution and as individuals.
Business has a corrosive effect on any military organization. The
principles of self-interest and the principles of self-sacrifice
are not compatible. A generation of military officers has had
self-enrichment as its primary mission. The economic collapse has
closed off opportunities that these military men saw as their
entitlement. Now the regime, having failed the military, is
mobilizing them to save the regime. It is a tough sell.
There is a path, well known in Asia, which combines the military
mission with the doctrine of self-enrichment. It is called the
warlord. The warlord is a businessman who uses military force as a
means of enterprise. Warlords arise when the central regime loses
credibility and power devolves to regional forces. Since the
military is the most organized social force, it naturally picks up
power when it is lying in the streets. This is particularly true
when military commanders have had the experience of making vast
amounts of money in business.
Warlords are not alien to Asia. The Indonesian and Chinese cases
are natural incubators for this phenomenon. In China, it would be
merely a reversion to a fairly common social form. In Indonesia,
where relatively benign warlords have ruled the countryside for a
generation, it is what would remain if you lopped off the top of
the regime.
No one knows what direction things will go, particularly in China,
where power struggles are becoming as opaque as they were before
the opening to the West. Nevertheless, signing an order banning
the PLA from doing business and enforcing it are very different
things. As difficult as it is to believe, it appears to us that
China is flirting with the same disintegration we predicted for
Indonesia two years ago. The very force that held China together,
the PLA, may now be in the process of pulling it apart.
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