Indonesia's Crisis Manager

Susilo Bambang Yudhoyono, President, Indonesia

Susilo Bambang Yudhoyono knew he faced awesome challenges when he became Indonesia's first directly elected President last October. The ethnically diverse, fledgling democracy he leads spans 17,000 islands, and is a key terrorism staging ground, a corruption mecca, and an economic underachiever. Some 16% of the mostly Islamic population of 224 million lives in abject poverty. About 40 million are unemployed or labor in insecure temporary jobs.

Then, just two months into his term, the Dec. 26 tsunami slammed into Aceh Province and other sections of Northern Sumatra island, killing 128,000 and leaving half a million homeless. "The tsunami for Indonesia was kind of a wake-up call and also a test -- a test for our solidarity," Yudhoyono recalled in a recent interview with BusinessWeek (see BW Online, 7/4/05, "Yudhoyono's "Triple-Track Strategy"). "It was a powerful unifying event."

The 55-year-old Yudhoyono deserves a special place on this year's Stars of Asia list for the crisis management skills he displayed in marshaling the Indonesian military, police, and other agencies in the weeks after the disaster. He resisted calls from nationalist leaders and conservative religious clerics to keep foreign aid operations and media out of Aceh, a politically sensitive region where the government and separatist groups have clashed for decades. Quick response times and decisive leadership saved lives by keeping survivors fed and roads open and by getting medical teams in place to prevent the post-tsunami epidemics of cholera and dysentery many had feared would kill thousands. Some $1.2 billion has been distributed to victims and spent on new infrastructure in Aceh.

Of course, Yudhoyono will ultimately be judged on how well he manages long-term reconstruction. The price tag for 2,000 schools, 200,000 new homes, and new roads is expected to top $5 billion by the end of the decade. Former President Clinton has praised Indonesian efforts so far, but local critics such as ex-President Abdurrahman Wahid question how much aid will actually reach those in need. "Corruption is still rampant," he contends. Yet it is hard to deny that Yudhoyono, a retired general-turned-political reformer, is a standout among Indonesian Presidents in the post-Suharto era. He is far more articulate and focused than his immediate predecessor, the aloof Megawati Sukarnoputri. And in his few months in office, he has achieved more reform than Megawati or two other presidents, Wahid and B.J. Habibie, who took over after the fall of Suharto in 1998, ending decades of authoritarian rule.

Yudhoyono is cracking down on corruption and on al Qaeda-inspired terrorist cells lurking on the archipelago -- factors that scared off crucial foreign investment. On top of that, the $225 billion-plus economy is showing signs of life. After averaging subpar 4.5% annual growth between 2000 and 2004, gross domestic product grew at a 6.4% annual rate in the first quarter. Foreign investment doubled, to more than $5 billion, through April.

A fluent English speaker who comes across more as a policy wonk than a rough-hewn military man, Yudhoyono grew up in humble circumstances in East Java. An officer's son, he proved a quick study at the Indonesian Military Academy and later picked up an MBA at Webster University in St. Louis. He also earned a doctorate in economics from Indonesia's Bogor Institute of Agriculture. Hence his nickname: The Thinking General. But make no mistake, Yudhoyono can crack heads if need be. As Minister for Security & Political Affairs under Megawati, he hunted and arrested terrorists connected to the 2002 terrorist bombing of a popular nightclub in Bali that left nearly 200 dead, many of them Australian tourists. Yudhoyono's government has jailed local politicians, including mayors and a provincial governor, on corruption charges. Even his harshest critics concede this is no political shadow play. "We can see he is serious," says Rama Pratama, a former student protester and Parliament member with the opposition Islamic Justice & Prosperity Party.

Instead of a feared enforcer, however, Yudhoyono makes it clear that he would much rather be remembered as the leader who had the right stuff to lead Indonesia to prosperity. He has reached out to separatist groups in Aceh to end the long-running, bloody conflict there. And Yudhoyono is keen to keep Indonesia's Islamic parties and religious leaders on a moderate track. He also knows that much hangs in the balance within the developing world and among the Arab states, should the Indonesia experiment with democracy end in tears. "The Indonesian people have a dream that we can someday show the world that Islam and democracy can live together," says Yudhoyono. For the first time since the overthrow of Suharto, Indonesia has a leader who just might pull it off.

By Brian Bremner and Assif Shameen

Before it's here, it's on the Bloomberg Terminal.