Habibie’s Goal of Reform May Hasten His Demise

JAKARTA, Indonesia —  President B.J. Habibie’s well-intended but ill-executed plan to let East Timor vote on independence has become a national liability that could affect Indonesia’s economic recovery and may cost Habibie his political career, Western analysts said.

Habibie’s surprise offer, made in January, was never popular domestically and did not have the backing of the military. But many Indonesians had convinced themselves that East Timor was divided on the issue of independence and might reject it in favor of continuing as Indonesia’s 27th province, with wide-ranging autonomy.

The vote--nearly 80% chose independence in the U.N.-organized election Aug. 30--stunned the rest of Indonesia, like a dagger thrust into the heart of its nationalistic pride. The next day, anti-independence militias believed to be directed by the army ran amok in East Timor. As bloodshed mounted, Indonesians cast about to find a culprit who could be blamed for all that had gone wrong.

Their collective finger pointed at Habibie. A weak president generally disliked by the powerful military, Habibie said he accepted “full responsibility” for events in East Timor, but that has not softened the drumbeat of criticism from friend and foe alike.

While the Observer, a moderate daily newspaper, said Habibie had “gambled recklessly and lost,” former Environment Minister Sarwono Kusumaatmadja called Habibie’s independence offer “impulsive.” Habibie’s main presidential opponent, Megawati Sukarnoputri, criticized the leader for letting his generals exert pressure to keep East Timor part of Indonesia.

The East Timor debacle comes amid the deepening “Baligate” corruption scandal, which political analysts said in itself could deny Habibie the reelection he seeks at the national assembly in November--as well as, possibly, the leadership of his Golkar party.

Baligate refers to the transfer of about $70 million in public funds from Bank Bali--a private bank being sold as part of Indonesia’s economic restructuring--to a firm owned by Golkar’s deputy treasurer, Setya Novanto. Opposition politicians believe that the money was destined for Habibie’s reelection war chest, a charge Habibie denies.

Both the World Bank and the International Monetary Fund have warned that Jakarta’s $43-billion bailout package is jeopardized by the scandal and by military excesses in East Timor.

Economists also are concerned that the recent violence will curtail foreign investment. “Who’s going to invest in a country where the military can’t keep law and order and is, in fact, involved in carrying out violence against an unarmed civilian population?” one Asian economist asked.

The lack of investor confidence was reflected in the stock market and the rupiah currency, both of which plunged in the wake of East Timor’s violence.

Western diplomats credit Habibie with engineering important political reforms since replacing his strong-arm mentor, President Suharto, who was forced from office amid public protests in May 1998 after 32 years in power. Habibie’s hurriedly conceived independence-or-autonomy plan for East Timor was, most analysts believe, part of his attempt to be seen as a reformist president.

But Habibie didn’t foresee the military’s inability or unwillingness to provide security in East Timor, and he underestimated public fears that the country could be Balkanized if East Timor’s decision to split from Jakarta encouraged separatist movements in Aceh, a northern province of Sumatra, and Irian Jaya, the western half of New Guinea.

Most Indonesians share two unshakable beliefs: that this archipelago of 13,000 islands that encompasses many cultures and languages is one united country and that the military that fought for and won independence from the Dutch in 1945 is the nation’s reliable guardian.

Even with the power vacuum created by Suharto’s resignation, the common perception was that the 400,000-strong military was the one institution in Indonesia that was cohesive, while the government itself faltered in indecision and bickering.

But Western diplomats now believe that the inability of Gen. Wiranto, the armed forces chief, to control troops in East Timor and the likelihood that rogue generals are sparking the bloodshed in the province indicate that the military as an institution is no less fragile than Indonesia as a nation.

Although East Timor’s death toll may be in the hundreds, Indonesians generally have been muted in their criticism of the army and in their sympathy for the victims, who are widely viewed as ingrates for rejecting association with Jakarta.

“Indonesia realizes its international credibility has taken a huge hit because of East Timor,” a Western diplomat said. “But Indonesia also knows its economic and strategic importance gives it clout. Most Indonesians I talk to believe they will have to put up with a few months of Western condemnation, then it will be back to business as usual.”