Published: Sep 22, 2007
Globalisation offers only disaster to Indonesia's poor. Student demonstrators should extend their protest to the powers governing their economy

Wim F Wertheim

During the 1990s the word 'globalisation' has become a fashionable word. Literally it only means a worldwide spread, which could pertain to many different things including the spread of ideas. When the term 'globalisation' is used by politicians or the media it is mostly about the spread of market influence in economic and political life over the whole world.

However, when we speak of the Third World (which was the most important area of work for Gerrit Huizer and myself for the past 25 years) then globalisation has absolutely nothing to do with that kind of world.

The so-called 'Asian flu' which broke out in the financial world proves that whereas global players play at a sort of hazardous game, it has very serious consequences for the still poor peoples of East and Southeast Asia.

What has been happening in Indonesia during the last year, affecting its economy and social cohesiveness, may serve as a warning for the present near-religious belief in the benefits of the market being promoted on a global scale.

IMF restructuring

In reality there has not been much change under President Habibie. There are no massive protests against the real causes of the economic crisis. Yet if one follows the process which led irrefutably to the fall of Suharto, one should realise that it was a direct consequence of a damaging requirement by the IMF to restructure the economy.

One of these demands was the scrapping, or at least gradual elimination, of the long-standing government subsidies for energy, which existed to keep costs down for the population. The government was thus responsible for the massive increase of 50%- 70% in prices by withdrawing the subsidies.

Globalisation of the economy, introduced by western business, had absolutely no concern for the interests of the Asian population. The only purpose for Indonesian as well as foreign investors, bankers and creditors, was to make sure they could realise the return of their loans of millions that they had so carelessly advanced.

In this rage of western globalisation the IMF and the World Bank play a crucial role. A 'free market' has nothing to do with reaching a certain 'free economic trade' for the seriously impoverished population of Indonesia and other countries affected by the 'Asian flu', but has only the purpose of making investment in Asia advantageous for western bankers and investors.

The important journal Derde Wereld has devoted a special issue to the question: 'Are the World Bank and the IMF ready for the 21st century?'. One citation from it is as follows: 'As lender of last resort for countries with liquidity deficits, the IMF insures the investors against financial losses, and demands from the poor that they pay the price.'

The same issue of Derde Wereld says frankly: 'The IMF has been making a true religion of its neo-liberal economic policies. Consequently it is considered sacrilegious to ask questions about the basic principles of this new religion.' Anyway, neither the IMF nor the World Bank, established in the USA at the end of World War II, were bodies which represented the whole world; they were only products of the Cold War which had just started.

As far as Indonesia is concerned, the Wall Street Journal has all of a sudden discovered what people who studied the country already knew 20 years ago, namely that the usual praises of Indonesia as being one of the young Asian tigers were based on pure wishful thinking, and that the World Bank itself was not innocent of the creation of this image.

We can now easily see that all the misery which the population of Southeast Asia experience at the moment is for a great part the result of the whole process of globalisation that has been enforced by the western world - and that the IMF as well as the World Bank also have to share in the creation of this world disaster.

I would like to pose the crucial question: Is it possible for the Indonesian populace to expect something positive from a new multi-billion dollar loan from the IMF? For let us realise, it would only be a loan. And this will have to be paid back in the future, with interest. There is no way that the IMF or the World Bank will just cancel the debt of a Third World government from the 'goodness of their heart'. Jan Breman has said the same thing: 'The World Bank's aim is to protect its own outstanding capital and to have it returned with profit if possible. It does not differ in the least from an ordinary bank.'

It is clear that the present Habibie regime, supported by the military echelons, is again ready to adjust to the IMF decisions. This brings the important question: Will the spirit of this year's Indonesian opposition develop within the foreseeable future into an all-embracing resistance that might be able to withstand the foreign pressure and the demands of the IMF?


We may certainly view the students' actions, which were so instrumental in Suharto's resignation, as a form of struggle for emancipation. What is still lacking is an ideological motive for a resistance that goes further than 'reformasi' of the state apparatus and which strives for a change on the political level.

It must be understood that in the first place it is not a question of substituting people at the top of the government, but of knowing what powers govern the economy. This must involve breaking a taboo that during the years 1965-66 became the basis of the 'Orde Baru' and that for 32 years has been considered inviolable.

In a very important doctoral thesis, the Dutch sociologist Saskia Wieringa demonstrated in detail that from the beginning of October 1965 the Indonesian military elite manipulated public opinion by systematically accusing the PKI of being responsible for the murder of the generals in which Suharto himself was closely involved. In this media campaign, Gerwani - the left-wing movement for the emancipation of women and closely linked with the communists - was portrayed as a group of godless prostitutes who attended the murders and had participated in all sorts of animal lusts. This was the signal for the terrible murder of communists when more than half a million innocent people were butchered.

This reign of terror has resulted in the fact that still very few people in Indonesia dare to state publicly that communist or socialist ideas might be a basis for a final solution of economic problems.

Under these circumstances it can not be expected that all of a sudden a new Indonesian government will come to power that can withstand the demands of the IMF on principle. At the most one could hope for a stronger nationalist-oriented government, which could emulate the Malaysian prime minister Mahathir Mohamad, who is trying to withstand the IMF's demands. But it is still too early for the development of a truly 'globalised' struggle for emancipation by the peoples of the Third World from the powers of Washington.

This article is extracted from the last paper Professor Wertheim wrote. He died, aged nearly 91, on 2 November 1998. Chris Williams was the translator.

Inside Indonesia 57: Jan-Mar 1999