Washington Times, March 16, 1998
JAKARTA, Indonesia - Japanese and Western leaders yesterday opened a new campaign to wring concessions from President Suharto, who a day earlier bucked world opinion by naming his daughter and his closest friend to key Cabinet posts.
But Japanese Prime Minister Ryutaro Hashimoto gave no sign after a surprise meeting with the president that Suharto, 76, had budged from his determination to tackle his country's economic problems on his own terms.
Further appeals are expected as teams from the International Monetary Fund and the U.S. Treasury Department arrive over the next few days.
Suharto agreed to tough economic reforms in January in exchange for a $43 billion IMF bailout. But backsliding by the Indonesian leader has led the IMF to postpone the next $3 billion payment at least until April and threatens the whole plan.
With Japan's own teetering banks exposed to some $22 billion worth of debt in Indonesia, Mr. Hashimoto reportedly came to Jakarta to appeal to Suharto in an "Asian" manner.
Certainly his account of the meeting was very Asian, and it telegraphed how little satisfaction he received.
"I wish to emphasize agreements rather than disagreements," he told reporters after the 2 1/2-hour session. "At least I believe neither the president's face nor my face was taut and tight as the president saw me off to the car."
Mr. Hashimoto quoted Suharto as saying: "I hope that the international community will be flexible. I am also prepared to be flexible." But Western lenders are unlikely to be impressed with the outcome of the meeting or with Suharto's new Cabinet.
The appointment on Saturday of a whole new economic team "is a clear signal to the IMF and the world that nobody is going to tell Suharto how to run his country," one Western diplomat said. "It's business as usual."
By naming timber baron Mohammed "Bob" Hasan as the country's new minister of trade and industry, Suharto appeared to be waving a red flag in the faces of foreign lenders desperately seeking some sign of good faith.
Critics say Mr. Hasan, Suharto's confidant and golfing companion, represents the worst excesses of "crony capitalism." His monopoly of the lucrative plywood industry was singled out by the IMF as an example of the "special interests" that helped create the current economic crisis.
Nor will Suharto's cause be helped by his decision to name daughter Siti Hardianti Rukmana, better known as Tutut, to the post of social welfare minister.
The move is likely to inflame domestic critics who have become increasingly outspoken about the domination of the economy by Suharto's children. Mrs. Rukmana heads a company that controls many of the nation's toll roads.
A proposed power plant in which another of her companies is a partner was among the high-priced infrastructure projects the IMF demanded be canceled
Mr. Hasan is part of an economic team that places new faces in all the key portfolios.
Finance Minister Mar'ie Mohammed is replaced by former Director-General of Taxes Fuad Bawazier, a supporter of the president's controversial plan for a currency board. Ginanjar Kartasasmita, an outspoken nationalist, takes over as coordinating minister of the economy.
"A challenge as big as this requires extraordinary hard work," an exhausted-looking Suharto said in a nationwide television address Saturday. "All the people hope this ongoing economic and financial crisis can soon be solved."
In other key Cabinet posts, veteran Foreign Minister Ali Alatas retains his job, while Kuntoro Mangkusubroto takes over the important mines and energy portfolio.
Most of the new ministers with economic responsibilities are members of the Economic and Finance Resilience Council, a special panel Suharto appointed to tackle the crisis. Informed sources say the council has met just a few times.
Mr. Hasan, the first ethnic Chinese to be named to the Indonesian Cabinet, holds vast interests in the largely protected timber industry, heads the country's largest automobile manufacturer and handles the business interests of two wealthy charities headed by Suharto.
He is also one of the richest people on earth, ranking 107th on the Forbes magazine list, with an estimated wealth of $3 billion. Suharto is sixth on the list with an estimated net worth of $16 billion.
Mr. Hasan's ties to the president go back to the days when Suharto was an army colonel and the Chinese businessman did favors for the young officer. Hasan won his first timber concessions shortly after Suharto came to power in the mid-1960s.
Though his plywood monopoly was dismantled earlier this year in response to the IMF demands, it was quickly replaced by a system, later scrapped, that required exporters to pay a fee to his organization.
There was also an attempt to force them to transport their goods on ships owned by another of his companies
Credit: SPECIAL TO THE WASHINGTON TIMES
Copyright Washington Times Library Mar 16, 1998
