Indonesia was one of the countries being observed. President Suharto was a stanch anti-Communist. He killed a Communist-provoked coup in 1965 while he was head of the army and earned his reputation then. He didn’t hesitate to use force and 30,000 - 50,000 people died in battles crushing the coup. Suharto took over as president in the aftermath of the killings and arrests in 1968.
Economic hitmen were dispatched to Indonesia at that time (early 70’s) with the job of creating the economic studies to secure funding from the World Bank, USAID, and the Asian Development Bank. And this worked. The loans benefited US corporations and the rulers of Indonesia but left the country increasingly indebted, of course (if you remember the philosophy behind economic hitmen).
Official statistics reported great economic growth from the 70’s up until the Asian collapse in 1997. Economic growth of 9% (GDP) every year, solid banking sector, foreign exchange reserves of $200 billion, low inflation, etc. But remember the “results” were less than forecast (that’s how it works to keep the country indebted; you must over forecast the economic response to the loans to ensure defaulting), and when you look closely, these gains came at the cost of increased abuse of cheap labor, a proliferation of sweatshops, and the abuse of the environment by western companies given licenses to do what would be illegal in Western countries. The official minimum wage rose to $3/day but it was ignored by corporations. In 2002, 52% of the population lived on less than $2/day. Indonesia had the highest foreign debt of all Asian countries. It was at 60% of GDP from 1990-1996 (before the collapse). So all the glowing figures only described what a very small, wealthy percentage of the population was experiencing.
Sweatshops proliferated with groups like Nike, Adidas, Fila, Polo, Ralph Lauren, Lotto, Levi, the Gap, Old Navy, Reebok, etc. People lived in poverty, in slums, earning wages below the poverty line. Suharto and his dictatorship came under the eye of NGO groups condemning the serious human rights violations, violence, violations of international law, the sacrifice of democratic principles to satisfy multinational corporations and the ruling class around the president.
East Timor, ruled by the Portuguese for four centuries, is predominantly Roman Catholic (different from Indonesia) and is rich in oil and gas with gold and manganese. It declared independence from Portugal in 1975. Nine days later, Indonesia invaded and slaughtered 200,000 people. Well, documents from the National Security Archive show, now, that we (the U.S.) supplied the weapons for this invasion and that President Ford and Secretary of State Kissinger met with Suharto on December 6, 2975 and agreed to the planned attack. The Carter administration blocked declassification of the files in 1977. You can check out a 2005 interview of Joao Carrascalao (brother of former governor of East Timor) on “Democracy Now!” with Amy Goodman. There was a 25-yr pattern of deceit to keep the details of this planned invasion of East Timor from the American people.
Again you see the pattern, dispatching the military was presented as justified to halt the spread of communism; in reality the rebels were driven by a desire to be free of the Suharto regime and turning to China was a last resort. Supporting Suharto helped corporations since he had a desire to control the entire Indonesian archipelago. There are case after case of armed clashes in Borneo, New Guinea, the Molucca Islands, etc. which we (people like me) believe to secure these resource rich places for use by multi-national corporations in this northern tip of Sumatra (an oil and gas rich part of the Aceh province).
Indonesia grew and went deeper into debt to finance the demand for hotels, construction, restaurants, banking, services, etc. all for the wealthy class and foreign companies. In 1997, Southeast Asia was covered in a haze of poisonous smoke from forest fires that were out of control in Indonesia (a result of EHM-induced corruption according to John Perkins). Other ethnicities including the famous Bugi (where we get “boogimen”) had their lands taken and cultures destroyed. Then in 1998 with the worsening economic climate, Suharto took on an IMF Structural Adjustment Package. Now, this is a reason why people don’t like the IMF: the IMF recommended that he drop fuel and food subsidies and other social services to decrease spending which he of course did. This disproportionately affects the poor and the lower class. People took to the streets. The wealthy, fearing the masses, demanded change themselves! Suharto was forced out in 1998 (in May). Clinton’s administration severed ties with the Indonesian military. Then in 2004, the tsunami hit which brought the US back in. Remember that not only do friendly dictators help out US corporations or wars and invasions, but natural disasters. Tons of money is earmarked for US corporations and multinational corporations, restaurants, hotels, communication and transportation networks, insurance companies, retail chains, etc. instead of investing in local businesses, ma-and-pa businesses, local enterprises and restaurants, etc. I’m hoping to work to reverse this as much as possible when working with USAID this year.
The tsunami was especially hurtful because Aceh province had resources for which corporations were exploiting the area and the tsunami helped bolster this. There was a group in Indonesia called GAM (the Free Aceh Movement), a local organization that fought for the Aceh people to share in the profits generated from the oil, gas, and other resources, some degree of local self rule, and other rights. The tsunami wiped out their communication and transportation networks. Even though secret talks had began in 2004 between the government and GAM, and GAM had gained a bargaining position, they lost the position with the tsunami. The government flew in with fresh troops from unaffected areas and were bolstered by US military personnel and mercenaries and ex-CIA operatives. The pretext for the military was the necessary relief of disaster victims, but the goal not promoted in the media was to quench GAM. The Bush administration reversed the Clinton administrations 1999 decision to sever ties with the military and sent $1 million worth of military equipment to Jakarta in January 2005. The New York Times even reported that Washington seized on the opportunity after the tsunami, that Secretary Rice has moved to strengthen American training of Indonesian officers, and that the army’s utmost concern seems to be keeping a stranglehold on the armed forces of the Free Aceh Movement. Tired by efforts to rebuild and recover from the disaster as well as exhausted by mounting pressure from the Indonesian army and the US, GAM signed a one-sided peace treaty with the government.
When I was in high school and a college student I didn’t understand why people protested against the WTO, the IMF, and the World Bank, among others. Now, I’ve read, researched, and talked to people, and it’s amazing what you find. I can’t condone a multi-national organization/bank making countries reduce social services and food subsidies to service interest on a debt, to decrease spending, or to simply qualify to receive a loan in the first place. It’s reprehensible to do that or require for a developing country with high unemployment, poor educational and health infrastructure and human resources, and little capital. But this is what happened.
The 1997 Asian collapse was known as the “IMF crisis” if you can believe it. People blamed the IMF for “fast-track capitalism” -- eliminating restrictions on capital, encouraging privatizations, maintaining high interest rates, and attempting to hedge currency risk by pegging currencies to the dollar (I’ll talk more about this next week when we move to the Middle East and Economic Hit Men). Country after country experienced an economic collapse, and the reverberations were felt even in the U.S. if you remember.
So then the IMF came up with a rescue plan. It would offer these Structural Adjustment Packages (SAPs) similar to what was forced on Indonesia by Suharto. Each country was required to allow local banks and financial institutions to fail, largely reduce government spending, cut food and fuel subsidies and social services to the poor, and raise interest rates even higher. Countless number of women and children died of malnutrition, starvation, and disease during this time. Others suffered adverse long-term effects from lack of housing, health care, education, etc. This is when the collapse continued to grow reaching the US and North and South America and Europe (sometimes globalization hurts).
Now, check out what analysis has confirmed. The countries that refused to yield to IMF demands did the best. South Korea, Thailand, and Indonesia were hit very hard with repercussions in Laos and the Philippines. But China did not yield to IMF demands. China channeled foreign investment into factories rather than securities which shielded it from future capital flight and providing employment and other benefits. India, Taiwan, and Singapore all defied the IMF and their economies remained ok. Malaysia followed the IMF, experienced a recession, then turned its back on the SAPs and had an economic rebound.
