The focus of the Asian economic crisis has been concentrated on Indonesia over the last few days, as the International Monetary Fund (IMF) mounted a rescue of its earlier rescue package, egged on by visiting senior United States officials. This vast archipelago of 13,000 islands and 200 million people, the world's fourth most populous country after China, India and the US, has also been one of the strongest growing economies in recent years. When things go wrong there many other states will be affected, given the extent of Indonesia's trade and international indebtedness.
The fact that there is a strong hint of fin de regime about the Suharto government - all the more so after this IMF package, which strikes hard at his family's monopolistic control of perhaps half of the economy - is also exciting much comment. As the cost of these cutbacks, restructurings, job losses and price increases becomes clearer to its population in coming days, there are likely to be further political and social protests. Some of these could be combined with ethnic tensions reminiscent of those that underlay the conflicts in the mid-1960s which brought President Suharto to power. It was followed by a bloodbath in which an estimated 500,000 people, most of them Chinese communist supporters, were massacred.
There can be no doubt that the latest IMF package targets the Suharto monopolies more effectively than that put in place last November. It postpones grandiose infrastructural projects, phases out state-supported monopolies, cancels plans to build a national car and airplane facility controlled by family members or cronies, reduces fuel and food subsidies, overhauls banking structures and reduces trade barriers. Clove and sugar monopolies are to be broken up, as are power plants controlled by Suharto family members. But the IMF has been criticised for the way in which 16 banks were closed down under the first rescue plan, and there is some attempt to mitigate the social costs of the retrenchment plan.
It very much remains to be seen whether the changes announced by Suharto have the intended effects. The power structure over which he presides does not lend itself easily to radical change or overhaul. The military are an all-powerful prop to his regime, with extensive interests in the economy, and will not take kindly to its unravelling. Already the ruling party has nominated Suharto for a seventh presidential term in the forthcoming elections by an electoral college dominated by his nominees.
But opposition forces have been emboldened by the recent events and are calling for his departure. They have been led by Ms Megawati Sukarnoputri, the daughter of the man overthrown by Suharto, 32 years ago. She will have much deep-seated dissatisfaction to draw upon. Workers exploited by cheap and repressive employers, environmental degradation which this summer led to the dark cloud over south-east Asia, protests by students and journalists against censorship, impoverishment caused by the collapse of the Indonesian rupiah by some 75 per cent against the US dollar over the last six months - all these provide fertile ground for social and political protest movements. Whatever the benefits of economic restructuring, it would be a mistake to discount this side of the IMF rescue package on such a large and strategic country.