Suharto Resigns

When the news finally came, hundreds of students occupying Jakarta's sprawling parliament complex wept, hugged and chanted: "He's gone, he's gone." They had brazenly defied the army, vowing not to leave until Indonesian president Suharto resigned. In the end, the old general gave way.

Suharto Resigns

When the news finally came, hundreds of students occupying Jakarta's sprawling parliament complex wept, hugged and chanted: "He's gone, he's gone." They had brazenly defied the army, vowing not to leave until Indonesian president Suharto resigned. In the end, the old general gave way. Smiling almost shyly into the television cameras, he quietly told his shattered nation that he had decided to step aside after 32 years of ironfisted rule, and would be replaced immediately by his close friend, vice-president B. J. Habibie. "If there are many mistakes and shortcomings on my part," Suharto said, "I ask the people of Indonesia to forgive me." Then, he turned, saluted and stepped into history, leaving behind a bankrupt country teetering on the edge of anarchy.

Millions of Indonesians celebrated the departure of the 76-year-old dictator. Protesters and soldiers embraced. Outside parliament, a man held aloft a naked baby boy who, barely old enough to talk, raised an innocent fist to the sky as the crowd shouted: "Long live reform." The 61-year-old Habibie appointed a 36-member reform cabinet that for the first time included members of the opposition. He also outlined a sweeping program to end "corruption, collusion and nepotism." Many Indonesians, however, dismissed the new president as Suharto's puppet. "I still cannot endorse the new government," said Muslim opposition leader Amien Rais, "until I see that the new cabinet is completely free and dedicated to reform."

Suharto's regime began to unravel last fall when - like Thailand and South Korea - the country could no longer pay its foreign debt and its currency collapsed under the $200-billion load. The International Monetary Fund came to the rescue with a $60-billion bailout. In return the government was forced to undertake harsh economic reforms. But the Indonesians revolted when government subsidies on fuel prices were lowered. And on May 12, when the army killed six rioting students in Jakarta, the city erupted. Looters torched hundreds of buildings, including some belonging to Suharto's family and the country's ethnic Chinese community who control most of the wealth on the archipelago of 202 million.

The protests reached the parliament last week, where students demanded Suharto's resignation. For three days, they danced to the beat of jungle drums and showered shredded government documents from the windows like confetti. As the Indonesian Woodstock began to gather political momentum, they gained the support of legislators and even Suharto's own party. Habibie, a former technology minister - whose greatest asset had been his loyalty to Suharto - emerged as the compromise replacement. But when the students, who also wanted Habibie to resign, refused to leave, the army moved to back the new president, and soldiers stormed the building. No shots were fired and most of the young protesters fled. "As long as there is corruption," said one defiant student, "our fight will go on."

In fact, few observers believe Habibie will last. The next president, they say, may emerge from a power struggle in the military between Defence Minister Gen. Wiranto, chief of the army, and Suharto's son-in-law Lt.-Gen. Prabowo Subianto - both of whom have powerful support in the army. Wiranto is popular with the public because he has professed to believe in reforms. Prabowo, by contrast, has been accused by pro-democracy groups of being a hardliner who still supports Suharto.

While international leaders voiced support for the new leader, behind the scenes they questioned whether Habibie is capable of implementing stalled IMF reforms. He is known for massive spending on pet projects, including $2 billion to develop an Indonesian passenger jet. There is no time for such indulgences now. Indonesia's banking sector has collapsed and the rupiah has lost 80 per cent of its value. "It's going to get a lot worse before it gets better," said Chiang Yao Chye, head of Asia Pacific research for the Canadian Imperial Bank of Commerce in Singapore. There is also no guarantee the IMF will proceed with its rescue plan - although if it does, it will likely phase the reforms in over time. "Indonesia is a unique case," said Josh Mendelsohn, chief economist with the CIBC in Toronto. "They never intended to fully carry through with the reforms in the first place."

The political fight over Suharto's future may also overshadow economic reforms. The opposition wants to haul the former president into court and strip him of his family fortune, which is estimated to be worth about $23 billion. "He must give up his family wealth," said one 20-year-old student. "Whether he goes to jail will depend on the depth of his sins." Suharto may be out office, but with the protesters vowing to return, Indonesia's turmoil was far from over.

Maclean's June 1, 1998