Suharto's Best Move May Be To Bow Out Now

Jakarta's power elite loves to gossip about who might succeed President Suharto. The grapevine works overtime every fifth year when the Indonesian strongman prepares to go to Parliament to renew his mandate, as he must again in March. The goal is to guess whether a tame general, a Suharto relative, or someone else will become Vice-President, and thus the elderly leader's legal successor, should he die in office.

The game suddenly turned deadly serious in early December when the 76-year-old leader--long plagued with kidney and heart problems--fell ill with an unspecified condition. On doctor's orders, he canceled a trip to Malaysia for an Association of Southeast Asian Nations (ASEAN) summit. Suharto appeared on national TV to allay fears about his health. But he looked pale and sat cross-legged on the floor, suggesting he could not stand for long. Financial markets went into a funk. Indonesia's stock market and the rupiah crashed to record lows.

UGLY HISTORY. What dismays markets is the receding prospect that Indonesia will get the reforms it needs to pull out of its financial tailspin. The country has never had an orderly transfer of power. Suharto came to office 32 years ago in a murderous coup. Now, according to the rumor mill, if Suharto survives until March he will refuse to acknowledge the new Vice-President as his legitimate successor. The lack of a clear heir apparent is a recipe for a bloody power struggle between Suharto's family and the army.

If he wants an orderly succession, say political analysts, Suharto's best option is to resign before March. Constitutionally, he would be replaced by current Vice-President Try Sutrisno, a retired general who has army support and is considered less venal than rivals. "This is a critical juncture in our history where a political solution is the only answer. It's no longer [just] an economic problem," says prominent Indonesian lawyer Mulya Lubis.

A growing number of Indonesia's 200 million population agrees. But Suharto has other ideas. He still apparently resents Try's appointment, imposed on him in 1993 by the army. He wanted to keep a pliant incumbent in office. Recently, Suharto has insisted he wants his daughter Siti Hardiyanti Rukmana, or Tutut, to succeed him regardless of who is Vice-President.

GRAVY TRAIN. But the Suharto dynasty is a large part of the problem. Suharto's six children are major beneficiaries of the crony capitalism that plagues Indonesia. The International Monetary Fund wants Suharto to curb his family's influence in return for a $40 billion bailout of Indonesia. But the Suharto offspring are fighting to stay aboard their gravy train. Their dad can't--or won't--stop them from mocking the IMF, thus undermining Indonesia's efforts to rebuild its international credit and credibility.

Worse still, the Suharto children are endangering the bailout by flouting its conditions. Despite Indonesia's pledge to rein in infrastructure outlays, for instance, one daughter is plowing ahead with a power-plant project on Java. Meantime, son Hutomo Mandala Putra, or Tommy, insists on keeping control of the ruinously costly national car program.

The family's excesses are fanning discontent as Indonesia faces a recession after years of 8% growth. Unemployment is soaring. More than a million construction and factory workers may be laid off. Instead of returning to drought-struck villages, they could become an explosive political force.

Suharto's illness aggravates an already serious crisis. A wise choice of a successor now is his last chance to restore stability--and confidence in his battered country.

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