Thank you very much, Diane [Glazer] and not just for such a generous introduction but for laying out a lot of the groundwork for my talk here with you.  It was a very nice summary of a lot of the major saliencies of recent history in Indonesia and the problems it faces, and I appreciate that very much.  Greetings to all members of the Los Angeles World Affairs Council and a special greeting to [Consul General] Handriyo Kusumo-Priyo.  May you have a very happy residence in the United States. 

The simplest, sharpest question that I want to pose at the outset is: will Indonesia, after nearly six years of tremendous crises, reform or regress? 

But let me go back into the last six years a bit.  In July 1997 the Thai baht crashed and a lot of other things began crashing with it.  At the same time, the temperature of the currents in the Pacific began going crazy and El Nino began to hit—there were droughts and with them enormous fires.  The largest fires anywhere in the world in the 20^th century struck Indonesia across the next several months and, if that weren’t enough, there were a lot of social inflammations that had been building in Indonesia under Suharto.  His unpopularity was rising and there was much social flammability in Indonesia.  So, think of it as three fires:  the currency melting, the forests flaming, and the people on fire, too. 

By May 1998, all of that came to a head with the riots in Jakarta that brought down a dictator who had been in power for 32 years.  Only Fidel Castro had been in power longer, and Fidel is still there.  But Suharto went, and since then there have been three presidents, two of them Muslim—Abdurrahman, known as Gus Dur, followed Habibie and then, by impeachment of Gus Dur, in came Megawati Sukarnoputri, the daughter of Sukarno, the first and revolutionary president of Indonesia.  So, most of its history has been a matter of Sukarno and Suharto.  Now we have a lot of change and the question is how much of it will be continued reform and how much is going to be regression back into less creative habits?  I’ll talk about that in terms of military culture, business culture, political culture, and we may have time for a little psychological culture.

Military culture first.  How much reform, how much regression is going on there?  The good phenomena are that the army has now been split out of the bureaucracy, where there used to be thousands of military officers placed there by Suharto, you get them out and back into the uniforms of professional soldiers.  They’d also been reduced in the parliament and by 2004, the next major national election, they will be out of parliament altogether.  That’s a good thing.  Don’t we, most of us Americans, think the army does not need a guaranteed bloc of the parliament, either for the sake of a good parliament or a good army?  So that’s headed in the right direction.  Thirdly, the army’s ties to the Suharto political party, Golkar, have been formally cut and that’s also positive.  The old slogan of the dual function of the army, which meant that it was supposed to help develop the country as well as to protect it, is no longer used.

So there are signs that Indonesia is catching up with the idea of a professional army.  At the same time there are signs that it is not.  They still have a territorial structure, which means, as one very brave Indonesian newspaperwoman commented, “the military is everywhere. They’re like an army of occupation.”  Which is a pretty insulting thing to dare to say in one’s own country of one’s own military.  The territorial structure is still there and so are turf battles with the police.  Police and military functions have been separated, which is another good thing, but then you find military and police vying for control of different businesses including gambling houses and other activities that, in a setting with people as well-dressed as this I don’t want to talk about.  So, these are not good signs. 

Seventy percent of the income of the Indonesian army is off-budget.  Would you tolerate that?  Would you allow the Pentagon to allow that to happen?  I know you wouldn’t, but in Indonesia what can be done about it?  I do want to make clear that in my view the fact that only 30 percent of the Indonesian army’s money can be audited is a very dangerous factor.  If you can’t audit them, you can’t govern them.  They’ve got an ungovernable army, which makes for a country difficult to govern. 

Human rights violations by the Indonesian military are in our newspapers.  I don’t have to describe them further here but maybe I should quote the commander of the army directly on important matters of policy.  A reporter asked him in a gathering probably no bigger than this an apparently innocent but really penetrating question when he was appointed: “what will you do with protestors?”  His four-word answer, “Shoot rioters, exterminate provocateurs.”  He doesn’t waste words.  That’s a very tight policy statement.  And if that weren’t quite enough, he allowed himself somewhat later to congratulate some army officers who were convicted of killing a separatist in Papua, who was alleged by the military to have had a heart attack after dinner with some of them and that’s why his car had plunged off the cliff.  The coroner’s report said that his tongue protruded centimeters from his mouth.  I’m not a physician but I don’t believe that’s the usual symptom of a heart attack.  The army then changed its story and the eventual defense plea was “accidental asphyxiation.”  Well, for asphyxiating someone seeking the independence of Papua some officers were given sentences and the general said, “they were heroes.”  So he meant it when he said, “exterminate provocateurs.”  He called the men who did that heroes. 

I’m trying to give you a mixed picture of the Indonesian military culture as time goes on, and I’m sorry if I’ve dwelled a bit upon things that don’t get into our newspapers, but [they] deserve to be in the consciousness of American citizens who think seriously about international affairs.  

What about business culture?  My book talks about examples of what I came to call “split-level free enterprise.”  I believe from introductions and short conversations that I’m in the company of a great many business people here tonight and you’ll be wondering what I mean by a term like “split level free enterprise.”  Here’s what I mean.  I’ve met, I believe, a lot of wholehearted entrepreneurs and free enterprise people.  I would talk with leading Indonesian industrialists and financiers and I would get the impression from them of their reading of American financial gurus and business management experts and leaders in our business culture.  I heard a lot about Peter Drucker, whom I happen to read a lot and think very highly of.  I was told by one industrialist that several years ago his idol was Jacques Nasser of Ford, and by a famous businesswoman that her model was Jack Welsh before he became, instead of an example, a kind of dis-example of certain things.  But they were all sincere as they were talking to me about these examples and inspiring American models, and I thought, that’s great, that’s promising.  Then I would find out more and more about how they ran their companies and they ran them on very different principles—or lack of principles. 

There is, I’m sad to say, very little rule of law in Indonesia, very little transparency of business transactions, and very little accountability and that’s the reason I use the term “split-level.”  Now, all of this behavior is fairly well known, and so the International Monetary Fund [IMF] in the period of the crisis and since, well aware that lack of rule of law was significant deterrent to reinvestment, issued a lot of letters of intent cosigned by the Indonesian government, 18 of them in six years, 17 of them mentioned creating special commercial courts.  There must be something they can do about bankruptcy, settle claims, resolve disputes, get at least some fundament of commercial laws established so that we can proceed and money can come back and regenerate Indonesian growth which had been growing previously.  Sadly, it is now admitted that that experiment is largely a failure.  Indonesia is above only one in [terms of] transparency and that’s Nigeria, which is not the country you want to compare yourself with.  It is an enduring problem because until the rule of law and transparency get moving in Indonesia investment will hesitate. 

Korea recovered from its financial crisis, got back its pre-crisis GDP in two years.  Thailand, also hard-hit in that crisis, got its GDP back to pre-crisis level in four years.  Indonesia is not yet back to its pre-crisis GDP.  I hope for the best and I hope for it soon, but my hopes are more strongly in political culture, which is growing and changing, than in business culture, which is slow to change and military culture which I fear may be even regressing. 

Two big things are happening in politics and the constitutional life of the Indonesian people.  One is the devolution of power to the provinces.  The Indonesians were tired of over-centralization under Suharto, which allowed all the key decisions to be made by him.  He was hardworking.  He stayed up late.  He signed everything, he heard everything, he heard problems thrashed out and he decided.  That’s too much for a nation of 220 million people for real leadership.  Effective coordinated efficient leadership power has to be better distributed than that, and Indonesians believe that and it’s happening.  Power is being devolved to the provinces.  The biggest experiment in the world in decentralizing government is now going on in Indonesia, so watch it with interest and try to get good reports. 

The second great factor is that Indonesia is having its second open national election in a row—two in a row for the first time in its history.  It had one in 1955.  Sukarno didn’t like what followed and then shut it down, gave Indonesia a “guided democracy.”  The election of ‘99 was genuinely open and free.  Jimmy Carter certified that it was and he’s an honest man.  He had a hard-searching group of observers all around Indonesia and there was an international group of Indonesian observers of their own elections—it was a huge effort.  Now in ‘04 we will have the second in a row and that’s good; the first direct presidential election.  There’s a lot to be said about that which I don’t have time to say.  I want to pick out just one figure to show you that there are new forces at work in Indonesia in the hopes of leading Indonesia and that’s a candidate—forgive me for referring to a personal friendship here—a candidate named Nurcholish Madjid.  Cak Nur is his nickname.  He is a Muslim leader and television commentator and sort of a political wise man, a kind of combination of religious figure and Walter Cronkite at the same time a trustworthy man, still young.  People were besieging him to run for president.  “No, no.  Nobody would vote for me except my wife,” he said.  But now he’s announced for next year as an independent candidate, and the Indonesians are saying “at last he’s coming down from the mountain,” and they’re welcoming, welcoming this candidate as an independent man, an incorruptible man, who has declared 10 points that he stands for: the rule of law, transparency, accountability, more education, to mention just four.  I believe he’s an element of great hope.

What happens to such an independent man in such an often-convulsed country?  One thing that could happen is that he would be bypassed.  No party would think, “Well, let’s take Cak Nur.  He’s famous, he’s loved, he’s trusted, but we’re a political party, we can’t do anything that daring.”  Another thing that could happen is that he says, “you take my ten points if you want me.  There’s no bargaining on that.  I’ll bargain with you on how we conduct things, I’ll bargain with you on who’s going to be the party vice president, who’s going to be the treasurer, and how we fight this or that.  That’s bargainable, but not these ten points.”  And some party or some coalition might say yes to that.  Yes, all ten points, then they devour him.  I can’t tell you how, I don’t want to imagine how, but you can imagine voracious political appetites and operations anywhere in the world including our own beloved United States that lead men and movements in directions they didn’t quite intend.  A third thing that could happen is that he wins.  Oh, then, God help him.  I’m being facetious and I’m serious at the same time, because, winning he would still have to be the same man he was and he could not bring democracy to Indonesia by being [unchanged].  That won’t happen because he is a man of integrity, he is himself, he’s not going to rule by edict.  He would try to rule by the kind of process by which he has lived and all the gains would have to be incremental.  It would all have to be sweated out, it would all have to be old fashioned arm wrestling in order to get anything done.  I would wish him the best were he to win, and don’t ask me for a prediction because I don’t have the faintest idea what will happen. 

I hope to have given you a balance in your mind against the unhappy behavior of some or many in the army, and the deplorable behavior of some in business who should know better.  I hope to have given you a picture of a lot of Indonesian citizen hope registered in changes in administration, changes of the constitution, and their hope projected into the elections ahead of them, starting in April 2004.  It would be unfair to leave you dangling there, so let me give just my present crude projection and my imagination of what might happen and then invite your questions.  If you put in your mind, because I’ve given you quotes on these men, General Ryamizard fighting with Cak Nur, who would prevail in a fight?  I don’t know, but we must reckon, Indonesians must reckon, with the power of the General as expressing himself as harshly as the man I quoted, as a man of goodwill, a man of good heart, a man of integrity, a man of good intentions, a man of good hope.  I imagine, however, that struggle might come out; Indonesia will continue to be a nation far sounder and stronger than Nigeria.  Whose provinces are behaving without considering the central government, or Pakistan where Islamic generals are in the preponderance, unlike Indonesia where they’re now a minority that don’t want to be associated with anything as blamefully, hatefully, murderous and useless as the bombings in Bali.  So that has had an effect, kind of an inoculating effect, against ultra-Islamism in Indonesia. 

Are we going to see a nation surging ahead to become a Singapore on a small scale? or surging ahead into a corporate authoritarianism, like China, which is doing quite well right now?  No. Indonesia is sort of in-between in size.  Sixty times as big as Singapore and one-sixth the size of China, and it will find its own way and do its own thing.  It is, I think, more likely to become a semi-anarchic democracy like the Philippines, another country I’m very fond of, but with a greater danger of what I call anarchic fascism because of the army’s uncontrollability in budget and its apparent uncorrectability in human rights. 

So, what do I think?  Before anybody asks me “are you an optimist or a pessimist” I will tell you.  I’m an optimist in a one-year perspective.  The election of ‘04 will pull Indonesia ahead in all respects that we’ve just spoken.  I’m an optimist also in a 20-year perspective.  Five more free and open elections in Indonesia may [prove] an irreversibly sound democracy.  [But] I have to admit also to being a pessimist from day to day, because I don’t know what the army is going to do.