Blowback, Second Edition: The Costs and Consequences of American Empire

There were good reasons why the United States would want to keep General Suharto in power. In the early years of his rule, Suharto contributed greatly to regional stability, while bringing at least a modicum of prosperity and optimism to the Indonesian people. The greatest single success of the green revolution occurred under Suharto’s rule: in 1984, Indonesia achieved self-sufficiency in rice production. During Suharto’s rule Indonesia’s per capita income rose from around $75 in 1966 to almost $1,200 in 1996; former president Sukarno’s belligerence toward Malaysia was ended; and Indonesian diplomats played an instrumental role in the creation in 1967 of ASEAN (the Association of Southeast Asian Nations), which has proved to be by far the most important regional organization in East Asia.

Like the government of another American-supported autocrat, Ferdinand Marcos of the Philippines, Suharto’s government developed over time into a kleptocracy—firms still controlled by members of his family are said to be worth many billions of dollars; but unlike Marcos his achievements were formidable. He not only brought a measure of political stability and economic growth to Indonesia’s diverse islands, he also restrained Islamic militancy, while allying himself with indigenous Chinese entrepreneurs. It can be argued that without his type of strong rule, Indonesia would have been rife with separatist movements (of the very sort now gaining strength) and the likelihood of conflicts with other ASEAN nations would have been far higher. The current decline of Indonesian economic and, possibly, political power certainly means that China is more likely to assert its political primacy in the region.

The U.S. government was aware of these dangers, and therefore when, in 1997, international financiers began to exploit the Indonesian currency and foreclose on their short-term loans, leading American officials loudly proclaimed their backing of Suharto, signaling their lack of desire to see him overthrown. This position was, however, undercut by a politically uncoordinated agent of American power, the International Monetary Fund (IMF), which agreed to lend huge amounts of money to Indonesia to help meet its debts, but only if it imposed economics-textbook prescriptions for reordering its economy.

The IMF, it must be noted, is staffed primarily with holders of Ph.D.s in economics from American universities, who are both illiterate about and contemptuous of cultures that do not conform to what they call the “American way of life.” They offer only “one size (or, rather, one capitalism) fits all” remedies for ailing economic institutions. The IMF has applied these over the years to countries in Latin America, Russia, and East Asia without ever achieving a single notable success. Nonetheless, the IMF’s officialdom assumed a triumphalist posture toward Suharto’s government, denouncing its “crony capitalism” and using its failings to trumpet the benefits of Anglo-American neoclassical economics over an Asian model of economic development. They ignored the fact that Suharto, while enriching members of his own extended family and firms that cultivated their good graces, also granted ordinary Indonesians food and fuel subsidies. On May 4, 1998, the IMF ordered these subsidies stopped. This alone made political instability inevitable.

On May 8, the United States ordered JCET activities suspended in Indonesia after the Nation’s Allan Nairn, at this potentially embarrassing moment, exposed the nature of the Pentagon’s covert assistance program for Kopassus. By mid-May 1998, U.S. officials had started to signal changes in their position and begun to leak to the press statements not for attribution indicating that the IMF’s reform program would not work unless Suharto were replaced. Senators like John Kerry of Massachusetts and Paul Wellstone of Minnesota echoed this demand on Capitol Hill. All of this was taken in Indonesia by powerful ABRI generals as a signal that they should act to secure the country and their positions in it. At the same time, students of Jakarta’s prestigious Trisakti University saw an opportunity to achieve a measure of democracy and took to the streets in orderly demonstrations, demanding an end to the privileges enjoyed by Suharto’s relatives. Amid growing turbulence in Jakarta, President Suharto left Indonesia for a state visit to Egypt, and the country’s top military officer, General Wiranto, left the capital on May 14 and flew to eastern Java for a divisional parade. In this context, Indonesia erupted.