Suharto Resignation

[Catherine Rubeo]

Suhartos grip on power weakened following severe economic and political crises stemming from the 1997 Asian financial crisis. The economy suffered a flight of foreign capital, leading to a drastic drop in the value of the Indonesian rupiah, which severely impacted the economy and people's livelihoods.

Suharto was re-elected to his seventh term by the People's Consultative Assembly in March 1998. Increasing political unrest and violence undermined his previously firm political and military support, leading to his May 1998 resignation. Initially under newly installed President Habibie, a period of political reform ("Reformasi") followed.

Having consolidated power in 1967 in the aftermath of the attempted coup in 1965 which was launched by middle-ranking officers in the Indonesian army and air force but officially blamed on the Communist Party of Indonesia (PKI) resulting in purges, the government of Suharto adopted policies that severely restricted civil liberties and instituted a system of rule that effectively split power between the Golkar organisation and the military.[1]

In 1970, price rises and corruption prompted student protests and an investigation by a government commission.[2] Suharto responded by banning student protest, forcing the activists underground. Only token prosecution of cases recommended by the commission was pursued. The pattern of co-opting a few of his more powerful opponents while criminalising the rest became a hallmark of Suharto's rule.[citation needed]

In May 1980, a group called the Petition of Fifty (Petisi 50) demanded greater political freedoms and accused Suharto of misinterpreting the Pancasila state ideology. It was signed by former military men, politicians, academics and students. The Indonesian media suppressed the news, and the government placed restrictions on the signatories, some of whom were later jailed.[6]

Following the end to the Cold War, Western concern over communism waned, and Suharto's human rights record came under greater international scrutiny. In 1991, the murder of East Timorese civilians in a Dili cemetery, also known as the "Santa Cruz Massacre", caused US attention to focus on its military relations with the Suharto regime and the question of Indonesia's occupation of East Timor. In 1992, this attention resulted in the Congress of the United States passing limitations on IMET assistance to the Indonesian military, over the objections of US President George H. W. Bush. In 1993, under President Bill Clinton, the US delegation to the United Nations Human Rights Commission helped pass a resolution expressing deep concern over Indonesian human rights violations in East Timor.

In the second half of 1997, Indonesia became the country hardest hit by the 1997 Asian financial crisis. The economy suffered a flight of foreign capital leading to the Indonesian rupiah falling from Rp 2,600 per dollar in August 1997 to over Rp 14,800 per dollar by January 1998. Indonesian companies with US dollar-denominated borrowings struggled to service these debts with their rupiah earnings, and many went bankrupt. Efforts by Bank Indonesia to defend its managed float regime by selling US dollars not only had little effect on the currency's decline, but also drained Indonesia's foreign exchange reserves.[12] Weaknesses in the Indonesian economy, including high levels of debt, inadequate financial management systems and crony capitalism, were identified as underlying causes. Volatility in the global financial system and over-liberalization of international capital markets were also cited. The government responded by floating the currency, requesting International Monetary Fund assistance, closing some banks and postponing major capital projects.[13]

In December 1997, Suharto for the first time did not attend an ASEAN presidents' summit, which was later revealed to be due to a minor stroke, creating speculation about his health and the immediate future of his presidency. In mid-December, as the crisis swept through Indonesia and an estimated $150 billion of capital was being withdrawn from the country, he appeared at a press conference to assure he was in charge and to urge people to trust the government and the collapsing rupiah.[14]

Evidence suggested that Suharto's family and associates were being spared the most stringent requirements of the IMF reform process, and there was open conflict between economic technocrats implementing IMF plans and Suharto-related vested interests, further undermining confidence in the economy.[16] The government's unrealistic 1998 budget and Suharto's announcement of Habibie as the next vice president both caused further currency instability.[17] Suharto reluctantly agreed to a wider-reaching IMF package of structural reforms in January 1998 in exchange for $43 billion in liquidity (with a third letter of intent with the IMF being signed in April of that year). However, the rupiah dropped to a sixth of its pre-crisis value, and rumours and panic led to a run on stores and pushed up prices.[17][16] In January 1998, the government was forced to provide emergency liquidity assistance (BLBI), issue blanket guarantees for bank deposits, and set up the Indonesian Bank Restructuring Agency to take over management of troubled banks in order to prevent the collapse of the financial system. Based on the IMF recommendations, the government increased interest rates to 70% pa in February 1998 to control high inflation caused by the higher prices of imports. However, this action restricted the availability of credit to the corporate sector.[18]

Despite the worsening economic situation, during the 1998 General Session of the People's Consultative Assembly, Suharto was unanimously re-elected president, with vice president Try Sutrisno being replaced by minister and longtime confidant B. J. Habibie.[10] Suharto's choice of Habibie was poorly received, causing the rupiah to continue its fall.[19] All the while, he stacked the new Seventh Development Cabinet with several of his own family and business associates. The government's increase of fuel prices by 70% in May triggered rioting in Medan, North Sumatra.[20] With Suharto increasingly seen as the source of the country's mounting economic and political crises, prominent political figures, including Muslim politician Amien Rais, spoke out against his presidency, and in January 1998, university students began organizing nationwide demonstrations.[10]

A demonstration at the Bandung Institute of Technology saw 500 demonstrators, and by March, larger demonstrations had occurred at other universities. Including the University of Indonesia and Gadjah Mada University.[21] On 9 May 1998, a police officer, Dadang Rusmana, was reported to have been killed at a demonstration at Djuanda University.[22] These demonstrators were protesting against massive price rises for fuel and energy, and were demanding that President Suharto step down.[23][24]

On 9 May, Suharto left Indonesia for a Group of 15 summit in Cairo, Egypt. Meanwhile, at Jakarta's Trisakti University, university students planned to march towards the Parliamentary Complex, but security forces refused to allow them to leave the campus of the university.[25] Students then conducted a sit-in outside the gates of the campus, there men in Mobile Brigade Corps uniforms appeared on the flyover overlooking Trisakti. They fired at the students, killing four (Elang Mulia Lesmana, Heri Hertanto, Hafidin Royan, and Hendriawan Sie), and injuring dozens more.[26]

The student's deaths sparked mass violence and riots throughout Jakarta the following day, forcing Suharto to return on 14 May. Despite Suharto's return, riots occurred throughout the city. In Jatinegara, East Jakarta, a Matahari department store was barricaded and torched, killing around a thousand people. In Glodok, West Jakarta, mobs attacked Jakarta's Chinatown, with store owners being forced to pay local thugs to protect them from violence. Riots also occurred near the port of Tanjung Priok in Northern Jakarta, the city of Tangerang, Banten, and Kebayoran Baru in Southern Jakarta, with Chinese owned property being the main targets.[27] Over a thousand and as many as five thousand people died during these riots in Jakarta and other cities such as Surakarta. Many victims died in burning malls and supermarkets, but some were shot or beaten to death. The riots destroyed thirteen markets, 2,479 shop-houses, 40 malls, 1,604 shops, 45 garages, 383 private offices, nine petrol stations, eight public buses and minivans, 1,119 cars, 821 motorcycles, and 1,026 houses.[28]

Indonesian Muslims who physically looked Chinese were attacked by rioters, despite not identifying as Chinese at all and only having one distant Chinese great grandfather. An Indonesian Muslim woman who had 5 sons, Ruminah, mentioned she had just one Chinese grandfather who married a local Muslim woman and she did not identify as Chinese at all or speak Chinese but she and her family were constantly harassed and hated by their neighbours just for their Chinese physical looks and her hair salon was ransacked and one of her sons died in a fire at the mall during the riots.[29]

At the time, the Indonesian military had been split into two differing factions. The "red and white" nationalist faction led by Armed Forces commander General Wiranto, and the "green" Islamist faction headed by Prabowo Subianto.[30] Prabowo, who was the commander of Kostrad (the strategic reserve, the division in which Suharto himself took power during the 1960's), was friends with Muchdi Purwopranjono, who ran the Kopassus (special forces), and another, Syafrie Samsuddin, headed the Jakarta Regional Command.[31] During the riots, both Muchdi and Syafrie failed to order their troops to quell the riots, and a report subsequently emerged that Syafrie had actually been in radio contact with the gangs terrorizing the city. It is possible that Prabowo hoped the riots would discredit his rival Wiranto and result in Suharto appointing Prabowo to head the armed forces.[32]

3a8082e126