By Fred Goldstein

All classes in Indonesia are now passing through an extreme crisis as imperialism, through the instrument of the International Monetary Fund, tightens its financial noose around the Suharto regime.

The immediate issue between world finance capital and President Suharto is whether he will fully comply with IMF demands--to liquidate large enterprises under his family's control, close down weak banks and strengthen the others, and, above all, impose austerity measures upon the masses.

Suharto has been maneuvering with the IMF and the Clinton administration for over a month. He is trying to evade Draconian measures for fear of great financial loss to his family and cronies--and the even greater fear that his regime could collapse as a result of mass unrest.

One measure of the growing crisis came when Suharto deployed 20,000 soldiers in the streets of Jakarta to bolster the 20,000 police already there. They'll stay for 10 days while the puppet parliament swears him in for his seventh five-year term.

There have been rebellions against both hunger and the Suharto dictatorship in at least 25 Indonesian cities. In areas where the military and police are spread too thin to control the situation, masses of people have stripped stores and warehouses of food and other goods.

To ward off rebellions, the government has killed at least five people. Troops have arrested student and union demonstrators. At the same time, however, the government has distributed free food to the population from government warehouses.

The tactic of distributing food will soon be jeopardized by dwindling government stocks and the fact that the regime's hard currency supply has dipped to around $10 billion. Indonesia cannot get credit on the international market for rice, cooking oil and other staples in desperately short supply. In addition, Indonesia is suffering its worst drought in 50 years.

In this situation the IMF, under orders from the Clinton administration, has suspended payment of $3 billion that was due in March as part of a $40 billion bailout plan. The plan was designed to let Indonesia start to pay back $70 billion in loans that international banks made to Indonesian banks and corporations, and another $60 billion or more in government debt.

The IMF refused to provide the funds because it opposes a scheme presented to Suharto by Steve Hanke, a Johns Hopkins University professor and fund manager/currency trader. Hanke has proposed that Indonesia set up a currency board that would peg the rupiah to the dollar.

The rupiah has fallen from about 2,500 to 10,000 to the dollar in the last seven months. The currency board scheme would guarantee exchange of rupiahs for dollars at about a 5,000-per-dollar rate.

The IMF and the imperialist banks and governments have denounced the scheme. They claim it would bring about a collapse of the banking system. They are even more infuriated because Suharto discussed it without IMF permission.

Whatever the consequences of a currency board might be, the real dispute is about how the international banks are going to get their $130 billion. They want every nickel of the country's resources to be used for that purpose first.

If they are worried about banks going under in Indonesia because of a currency board, it is because they fear for their money.

What has shocked the United States and the rest of the imperialist governments is Suharto's resistance. He is, after all, a creature of the CIA and the Pentagon.

They guided him in carrying out the 1965 coup against the Sukarno government. In that coup, the military slaughtered between half-a-million and a million communists, labor unionists and progressives in what has been called the second greatest crime of the century.

The CIA gave the Suharto forces a huge database of names and addresses of those to be hunted down and killed. The rivers literally ran red with blood.

To this day the military rules with an iron hand. Out of 300,000 soldiers, only 100,000 are on traditional military duty. The rest are in territorial units. They maintain "order," monitoring political parties, government-approved unions, religious groups and social organizations.

Two years ago Megawati Sukarnoputri, daughter of the overthrown President Sukarno, tried to lead an open political opposition. Suharto's military suppressed the effort. That led to violent mass protest.

The United States created this monster. Now Washington has to deal with him.

President Bill Clinton phoned him four times. Treasury Undersecretary Lawrence Summers met with him. So did Defense Secretary William Cohen.

Suharto signed an agreement with IMF head Michel Camdessus. Most recently, he was strong-armed by Clinton's special emissary, former Vice President Walter Mondale. Mondale went there because it was rumored that Suharto was planning to appoint an anti-IMF cabinet.

According to a report in the March 7 New York Times, Mondale laid down the law in a private conversation with Suharto:

"The markets, Mondale said, would vote with their dollars when Suharto chooses his next economic team. Translation: Install a bunch of IMF-bashing cronies and your economy will be washed into the South China Sea."

But Suharto has still not given in.

The U.S. imperialists' problem is that they regard Suharto as a used-up, discredited puppet who is standing in their way by challenging the IMF, testing its credibility as a world financial power. But the worst of it is that Washington has no popular figure waiting in the wings--no one like Corazon Aquino in the Philippines or Kim Dae Jung in south Korea who is able to split the military and push Suharto out.

That is the price of having created this totalitarian, fascist regime.

Despite the repression, however, mass discontent is spreading across this country of 200 million people at a rapid rate. Demands for food and for Suharto's resignation are beginning to appear together.

As the opposition swells, the IMF loans are becoming hotly contested in many quarters.

Many bourgeois elements, and even some militant labor unionists imprisoned by Suharto, are appealing to the IMF to withhold the loans until Suharto agrees to uphold human rights and labor rights. Inside the United States, sections of the labor movement and Congress echo these demands.

It is essential that the working class be clear about what course to pursue. The struggle in Indonesia--to the extent that it is re-emerging after the total decimation of all communist organizations--is shaping up to have some opening for bourgeois democracy and ousting the fascist regime. In such a struggle, the workers can and should unite with all forces fighting to topple Suharto.

But the struggle should be first and foremost to enhance the rights of the workers and the masses in general. This requires an absolutely independent position.

It is harmful in the extreme to raise expectations that the IMF can become an advocate for the workers. The IMF is a collection of international hit people for the world's bankers--the most anti-working-class assemblage imaginable.

There would be no need for a new IMF loan if the international bankers were not demanding that their money be repaid immediately.

Should Indonesia's first order of business be to pay off the parasites that have been sucking out the wealth created by the masses? The country is hungry. The masses are unemployed.

The first order of business should be to suspend repayment of the debt and turn every financial, industrial and agricultural resource to solving the economic crisis facing the people.

This is a minimum program for the workers within the framework of the current struggle.

And what of the food question if the IMF does not give money? Mass organizations should get the food from the hoarders and distribute it on the basis of need.

Every acre of agricultural land should immediately be set to use to ease the food crisis, removing Indonesia's dependence on the world capitalist market as much as possible. If any landlords refuse to join in the effort, they can be compelled to comply.

And what of the need for hard currency and trade? Millions of workers have lost their jobs in the last seven months. Factories in the industrial belt around Jakarta are lying idle. The workers would certainly be willing to go back to work and produce whatever is needed domestically and for export. If the capitalists don't want to open up the plants, then the workers can.

Of course, this is the earliest phase of a struggle that has been brewing beneath the surface for decades. And nothing can be accomplished without dealing with the military, without organization, without a party, a strong mass movement and an armed struggle. But the first thing to be made clear is how to join in the general democratic struggle without appealing to imperialism.

The only way to avoid having imperialist domination with democratic trappings, as exists in the Philippines and in south Korea, is to rely on the masses.

- END -

Via Workers World News Service
Reprinted from the March 19, 1998
issue of Workers World newspaper

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