Indonesia: The Plot Thickens, and the Economy Dangles

Political turmoil raises the odds of an investor exodus

There is a constitutional crisis looming in Indonesia, and if it plays out the way some observers predict, it could spell still more political and economic chaos for the huge, hapless nation. On Apr. 30, Parliament voted to censure President Abdurrahman Wahid for a second time on corruption charges. That was a constitutional precursor to formal impeachment proceedings. But officials in the presidential palace say that if Wahid is impeached, he may refuse to hand power to Vice-President Megawati Sukarnoputri. He's already vowing to dissolve Parliament and rule alone.

Moreover, even if Wahid gives up power gracefully, there is no guarantee that Megawati will succeed him. Maneuvering behind the scenes is powerful Islamic leader Amien Rais, who could well challenge Megawati for the top job. Many Indonesians suspect Rais harbors ambitions of turning Indonesia into an Islamic state--a scenario that would further divide an already fractured nation where majority Javanese Muslims coexist uneasily with minority Chinese Christians and indigenous tribes. In interviews, however, Rais has denied that this is his goal.

The continuing political uncertainty is doing nothing to help the ailing economy--and it is spooking both foreign investors and the ethnic Chinese business class. Rather than working to try to lift his nation out of its slump, the blind cleric-turned-President is putting much of his energy into clinging to power. No surprise then that Wahid rejected a face-saving compromise that would let him remain in office as a figurehead while all executive powers revert to Megawati.

OUT OF TOUCH? To hear palace officials tell it, Wahid is increasingly out of touch with political reality. Not only does he consider the impeachment process "illegal" but he is also threatening to do what President Sukarno, Megawati's father, did in 1959: issue a decree dissolving Parliament and declaring himself President for life. Observers say the army would never countenance that.

Megawati, meanwhile, has the support of the military. But she also has a determined opponent in Rais, who leads the Central Axis coalition of Islamic parties in Parliament. The Axis succeeded in disqualifying Megawati from the presidential race in October, 1999--though she won a plurality of the vote--by claiming that the Koran bans women from serving as presidents. Members of Parliament from Megawati's Indonesian Democratic Party for Struggle say Rais and other similarly minded politicians have offered to reinterpret the Koran and back Megawati's bid for the presidency this time, but Megawati's people reckon the offer is not sincere.

Although Megawati's party is the largest in Parliament, it holds just a third of the 500 seats. That's why she is obsessed with shoring up her legitimacy by following the constitutional process, which could keep Wahid in office for months more before an impeachment vote. The fact that the impeachment process has never been tested and that Rais oversees the highest legislative body in the land, a group separate from Parliament called the People's Consultative Assembly, does little to bolster Megawati's confidence. "She wants to be President but does not want to go too fast," says Satrio Permadi, a member of Parliament from Megawati's party and a close adviser. "If she follows these constitutional steps, she'll be O.K."

Ultimately much depends on what the army wants. The generals are making it clear they won't side with Wahid if he clings to power. They control 38 seats in Parliament and voted in favor of the first motion to censure Wahid for corruption on Feb. 1. They abstained from the Apr. 30 vote on grounds that the impeachment process had become "overly politicized." But if push comes to shove, the top officers are expected to side with Megawati, largely because of their personal friendships with her--an asset that Rais lacks entirely.

Barring an unforeseen move by Wahid, the impeachment process will go forward as mandated by the constitution. By May 29, the President must respond to the Apr. 30 censure motion. Then he has 60 days to prepare for the impeachment vote. After that, no one knows. The upshot: months more political uncertainty--the one thing Indonesia can least afford.

By Michael Shari in Jakarta

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