Wednesday, December 30, 2009

How is Indonesia’s democracy doing?

Author: Larry Diamond, Stanford

Since the mid 1990s, the proportion of countries in the world that are democracies – countries that meet the standard of at least electoral democracies in the sense that they can choose their leaders and replace them in free and fair elections – has stagnated, at around 60 and 62.5 per cent.

The world is experiencing a democratic recession. There are three dimensions of this.

Firstly, there is levelling off of in the extent of democracy.

Secondly, there has been a rise in incidence of democratic breakdown in the world. Of the 29 democratic breakdowns since the third wave of democratization began in 1974, 17 (59 per cent) have occurred since 1999.

Thirdly many of these democratic breakdowns have happened in places that can be considered big, strategically important states, powers in their regions, and peers of Indonesia.

Indonesia is now labelled by Freedom House as a ‘free country’ – although this is a somewhat misleadingly broad category. Nevertheless, Indonesia is doing better today than any of the democracies that lost democracy were at the time they lost it.

A worrisome trend is the recent erosion not only of democracy but of levels of freedom. The last three years – 2006, 2007, 2008 – are the first three successive years since the end of the Cold War when the number of countries declining in a given year in their levels of freedom exceeded the number of countries improving their levels of freedom.

The fact that Indonesia is holding its own at a relatively good level of political rights and civil liberties is itself a noteworthy achievement.

While Indonesia’s civil liberties, political rights, and levels of governance have improved since 2005, it still has levels of governance, by a number of measures, which are in some respects in the category of vulnerability. The trend recently has been to suggest that Indonesia has either consolidated democracy or is very far along the path of doing so. There are grounds for being a little more sceptical.

Nevertheless, the level of public support for democracy in Indonesia compares favourably compared to other regions of the world. Globally there is a growing ambivalence toward democracy.

In East Asia and Africa only about half of respondents, in various surveys, on average rejected all of the 3 authoritarian options put to them: the military coming back to power; one party rule; and getting rid of parliament and having a strong ruler decide everything.
The cause of this is basically the reputation a government has in respect of bad governance.

So, how do Indonesia’s levels of governance and democracy fare in these comparisons?

A common story is that Indonesia began, at its moment of democratic transition in 1998, with pretty bad governance on most measures.

One measure of governance is economic performance. Indonesia’s average rate of GDP growth during the past decade has been respectable compared to a set of other significant emerging market democracies regionally and globally.

Indonesia’s Human Development Index (HDI) score, perhaps the most meaningful measure of economic development – incorporating standards of living, health, and education – improved almost 10 per cent between 1995 and 2006, reaching 73 per cent. This rate of improvement is greater than many of its peers, such as the Philippines and Thailand, and Indonesia has now almost caught up with the Philippines in terms of its HDI score.

A number of measures of governance used by the World Bank are also useful.

In 1998 Indonesia was in the bottom quintile in the world in terms of its level of voice and accountability. Only about 7 or 8 countries have improved their voice and accountability score as dramatically as Indonesia has. It now outranks several other countries, even Turkey surprisingly, and has overtaken the Philippines as well. But Indonesia is still out ranked by some more established democracies in East Asia.

In control of corruption Indonesia’s improvement in performance has been even more dramatic. But it started from an incredibly low level at the 9th percentile that it is still in the bottom third in the world. While Indonesia has now taken a higher position than the Philippines in terms of control of corruption too, it clearly needs to go further.

The rule of law in Indonesia has barely improved at all, and is still very weak. This is something we should worry about. And this is why we should exercise some caution in advancing a judgement that democracy in Indonesia is now consolidated. Even with respect to some not very well performing countries in the region, in terms of rule of law Indonesia finishes dead last among the democracies or quasi democracies in Asia.

Indonesia has of course improved it Freedom House score dramatically more than any of the countries in the sample. But again, it started from such a low level that it still has ground to catch up despite the improvements.

On the rule of law and political stability, things got worse between 1998 and 2003. Here you can really see the impact of the Yudhoyono presidency in terms of bringing about, or at least witnessing, significant improvements in the quality of governance.

An encouraging sign is how Indonesians view and value democracy relative to their peers in 5 other Asian countries. On a scale of 1 to 10 – with 10 being most democratic – survey participants were asked ‘to what extent they think their country is a democracy today?’ Indonesians gave an average score of 7 out of 10. Asked ‘to what extent do you want your country to be a democracy?’, Indonesians ranked very highly giving an average score of 8.5 out of 10.

Asked whether they supported democracy, 65 per cent of Indonesian said yes. And asked whether they were satisfied with the current democratic system 59 per cent answered yes.

Also, 56 per cent of Indonesians rejected authoritarianism. This is a reasonably healthy figure. If this was increased to 70 per cent, and was sustained for a prolonged period of time, we could more surely say that democracy has been consolidated. But it is premature to say it is already consolidated. Nevertheless, given the history and turbulence in Indonesia this is a surprisingly high score.

Support for liberal values is surprisingly high in Indonesia at 47 per cent. This vastly outstrips Thailand and the Philippines. Since this is usually highly correlated with education and economic development, and given limited years of experience with democracy, Indonesia is way ahead of where you would expect the country to be on the liberal values scale. They are much closer to Korea and Taiwan. And this is the single most telling indicator.

Looking in historical terms, and in comparative terms, what Indonesia has achieved in the last 10 years (in terms of the development and improvement of democratic institutions, a critical and substantial base of public support for democracy, of trust in public institutions, and, surprisingly perhaps, robust support for liberal values relative to elsewhere in the region) is quite remarkable and is deserving of admiration.

Yet democracy in Indonesia will not stand or fall on how well it is doing relative to other democracies in the world. It will stand or fall in terms of how well it is doing in itself.

It is worrying when somebody tries to set up a serious counter corruption institution and then it falters, never gets off the ground, and an audit commission never develops momentum, autonomy, vigour, and real capacity, because its just too threatening to vested interests in the system. This is the canary in the coal mine of democracies.

The conclusion that democracy in Indonesia is secure, for all time, not just for these few years, will be safe only when there has been more progress toward better governance than there has been so far.

Larry Diamond is Director of the Center on Democracy, Development, and the Rule of Law at Stanford University, Senior Fellow at the Hoover Institution and the Freeman Spogli Institute at Stanford, and author of ‘The Spirit of Democracy’.

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Indonesia’s new cabinet: A boost for economic policy and reform

Author: Hal Hill and Chris Manning, ANU

President Susilo Bambang Yudhoyono (universally known as SBY) announced the cabinet for his second five-year term shortly after his inauguration on October 20. Its composition and quality provide one of the best indications of the president’s policy priorities, as well as his political strategy.

SBY’s Democrat Party emerged as the major, though minority, party at the April parliamentary polls, while he had a resounding victory in the July presidential election. He is therefore in a much stronger position than in 2004. In May, he made a surprising choice of Dr Boediono as his vice presidential running mate, a ‘non-politician’, a respected economic policy maker (and also an Australian graduate).

Despite greater success in the polls, however, he has still decided to opt for ‘rainbow cabinet’ with an eye to getting bills passed in the DPR, the lower house of parliament. The new cabinet reflects these compromises. The majority of the 37 portfolios have gone mostly to party people. Overall SBYs grand coalition of Muslim parties received twelve, Golkar three and SBY’s own party seven. The balance has gone to professionals, most notably in the field of economics.

Consistency in economic policy and a clear agenda for policy reform were two stumbling blocks for the previous administration. This time it might be different. Unlike the previous Vice President, Jusuf Kalla, Boediono can be expected to provide greater coherence in economic policy. Working with him will be three highly accomplished women, all with doctorates in economics.

Sri Mulyani Indrawati, an able, tough and outspoken Finance Minister, continues in that position, and is certain to want to continue her wide-ranging reform agenda.

Mari Pangestu, like Boediono an Australian graduate, and the most knowledgeable trade minister in the region, retains her post. One item already on the bilateral agenda is the Australia-Indonesia Free Trade Agreement which Minister Pangestu (who has written widely on the benefits of an open trade regime) is committed to completing. She is likely to strike a tough but reasonable bargain on sensitive issues such as agriculture.

They will be joined by a newcomer, Armida Alisjahbana, as planning minister, who should give that agency a much-needed boost in its main task of coordinating development policies, after several years in the doldrums.

Overall, the economics team is arguably the most highly credentialed in the Asia-Pacific region and signals a commitment to conservative macroeconomic management, an open foreign trade and investment regime and an active role in regional and international forums. Their Australian counterparts will find them to be natural allies on a range of regional and global issues, from the G20 to the East Asian Summit.

Greater consistency in economic policy is also likely to result from the appointment of a special Presidential Unit for Management of Reform (Indonesia’s ‘West Wing’) under the respected Kuntoro Mangkusubroto, former Head of the Aceh Nias Reconstruction Agency.

Two businessmen who join the cabinet as head of the Department of Industry and the Investment Coordinating Board can both be expected to promote the interests of domestic business strongly. But this is unlikely to accompany any significant increase in restrictions on foreign trade or investment.

Other professional appointments have been made to the important ministries of foreign affairs, home affairs, education, health and public works. SBY has dropped some controversial ministers, including the protectionist agriculture minister and the conspiratorial health minister. The removal of both bodes well for greater international cooperation.

The President’s desire for a more activist role for Indonesia in regional and global affairs should be furthered by the appointment of Dr. Marty Natalegawa, as Foreign Minister. Dr. Natalegawa is an eloquent and internationally respected former Head of the Indonesian Delegation to the United Nations (and also an Australian graduate).

This has been a very good year for Indonesia. A decade ago, the economy was on the ropes, there was nasty ethnic conflict, and the possibility of territorial disintegration could not be discounted. Twelve months ago there was great uncertainty, both about the effects of the global financial crisis and the conduct and outcome of the parliamentary and presidential elections. In the event, the former has had a surprisingly mild effect while the latter went off smoothly. In the economic field, at least, SBY’s new cabinet can be expected to consolidate these gains. It would be a pity if the Australian media focus on boat people and Balibo distracted our attention from these hugely important developments.

Hal Hill and Chris Manning are economists with the ANU’s Indonesia Project.

This article first appeared in the Australian Financial Review.

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Thinking about the Asia Pacific Community

December 6th, 2009

Authors: Hadi Soesastro (CSIS, Jakarta) and Peter Drysdale (ANU, Canberra)

The idea that regional architecture in Asia and the Pacific is not up to the tasks it now needs to serve has been around for some time. It has been inspired in part by worries about the untidiness in the competing structures — across the Pacific, of APEC, and within East Asia, of ASEAN +3 and the East Asia Summit (EAS). There has also been a hankering after ‘robust’ regional institutions modelled on the arrangements in Europe or North America, however unsuited they are to Asia Pacific circumstances.


What is different about the thinking that led to Prime Minister Rudd’s Asia Pacific Community proposal is that these worries are incidental to its main strategic motivation. The Rudd idea is grounded in the reality of the big shifts taking place in the structure of regional and world power. These shifts in the structure of power have two main implications.

First, Asia’s growth is changing the structure of the world economy and shifting global economic power, and ultimately, strategic weight towards Asia, in particular China and India. Economic and political changes in Asia and the Pacific challenge the primacy of some dimensions of American power. These developments underline the gap in the framework for regional political and security dialogue in Asia and the role that such dialogue could play in helping to manage the long-term change in the structure of Asian economic and political power and political security relations between Asia and America.

Second, the scale of Asia’s impact on the global economy means that there is urgency in energising regional efforts to deliver on Asia’s global responsibilities – in the financial and macro-economy, in trade policy and on climate change – and how that might be assisted through regional structures.

Until the collapse of world financial markets and world trade in the global financial crisis, the East Asian region, including Australia, was preoccupied with managing all aspects of the China boom – the pressure on energy, resource and food markets, the macroeconomic pressures, the looming foreign direct investment and commercial presence – and beginning to think about its long-term political consequences. India too was more and more caught up in the wave. All was premised on the continuing strength of North American and European markets.

East Asian economies should have been more conscious of their role on the world stage and the need to reposition quickly to manage the global system consequences of their own economic success and the dangers presented to its sustainability that the huge imbalances had created on the way. East Asia bore no responsibility for America’s squandering the beneficence of East Asia’s success – the apparently never-ending supply of cheap credit negligently guarded by the private and public custodians of the developed world’s financial system. But in this and in many other global system-making or system-destroying economic and political affairs, East Asia had significant prudential responsibility and it failed collectively at every stage to exercise it.

The reason for this failure is simple.

Despite the emergence of East Asia as a major economic force in the world – China, Japan and the rest of East Asia through to Australia and New Zealand reaching out to India – the East Asian economies collectively could not step up to the mark because regional structures were still not up to the task of effective global participation. The stage was still set for the wrong play – reactive responses to regionalism in other parts of the world, the trivia of regional FTAs and ‘mickey mouse’ financial cooperation – and there was no platform on which to perform globally.

In East Asia, like elsewhere in the world, the risks that we now face in recovery from the global financial crisis, not only economically but also politically, are a consequence of failure in the architecture of governance, including regional architecture, that frustrated a coherent East Asian and international response to the big problems of the day in their global context.

The global financial crisis and the emergence of the G20 has changed all this dramatically and propelled the G20’s Asian members to assume a new role and their proper responsibilities in managing the world economic order. ASEAN is the fulcrum of Asian cooperation arrangements, including APEC, ARF, ASEAN+3 and the East Asian Summit (EAS) but, with the rise of the bigger powers in Asia, and the G20, this is changing.

How can regional architecture be restructured to relate effectively to the new global arrangements?

The starting point is to understand that, while they may have failed to connect Asia’s regional with its growing global interests and responsibilities and they have other weaknesses, the regional arrangements we have in place are huge assets in going forward. APEC is entrenched as the primary trans-Pacific arrangement. ASEAN+3 and the East Asian Summit have assumed an important role in developing the Asian regional agenda. APEC, in its first twenty years, has provided a workable strategy in trade and economic diplomacy in East Asia and the Pacific supporting policies of liberalisation and structural reform, organised around the principle of open regionalism (a strategy well suited to the development, objectives and diversity of the Asia Pacific region). But after the Asian financial crisis and the global financial crisis, these regional arrangements (APEC, ASEAN +3, ASEAN+6) must now relate more strategically to the global arrangements (the G20 group). And there is a whole new political and security agenda to navigate within the Asia Pacific region.

Clearly, the Asia Pacific Community idea needs to relate to these established regional structures – APEC and East Asian arrangements – if it is to be both accepted and serve its underlying political-security purpose. It will only be worthwhile and practical if it limits dialogue to the major players. Hence, although it cannot encompass all APEC’s membership, or all the membership of EAS, a dialogue on political and security affairs needs to represent both as they are presently constituted. It needs to link to, be coordinated with, and draw on the base of all of the established trans-Pacific and East Asian arrangements.

While none of the existing regional institutions addresses all of the key dimensions of regional cooperation that they now need to – providing a collective forum for regional leaders to address the full range of regional and global issues; dealing effectively with the consequences of economic integration, particularly its trade and investment but also its financial and macro-economic dimensions; addressing issues of political change and security; and educating the public and opinion leaders about the region – nor should any one organisation need to perform all these roles. Each of these forums has evolved to serve some or other of these roles and they can all make an input across the range of issues that are now important.

This points to the need for a new heads of government meeting that transcends APEC and EAS (encompassing the Rudd and Hatoyama proposals) that can address the full range of regional and global issues, including issues that might arise in APEC, EAS, ARF or other regional forums and feed into the G20 and other global processes. This summit could eventually constitute an Asia Pacific Council, underpinning the continued development of the regional community. It would not need its own secretariat but draw on APEC and the ASEAN-based groups to develop issues for consideration.

There may be sensitivities in creating a new summit involving a limited number of countries, the ‘larger’ players in Asia and the Pacific. But so long as it is structured so that it is representative of all the regional arrangements, these sensitivities need not be important. The most practical proposal and most logical starting point is that this summit should begin by including the Asia Pacific members of the G20, and meet adjunct to the APEC summit. A dialogue among these countries does not entail creating an additional institution as G20 leaders will continue to meet beyond the current financial crisis, encompass the core players in APEC and EAS and meet in conjunction with the annual APEC summit . These are all important considerations in taking the next steps towards realising vision of an Asia Pacific and East Asian Community.

The clear message is that ‘no one wants more meetings’ and that there is ‘no appetite for additional institutions.’ But there is strong support for developing more effective alignment of regional strategic purpose, a sentiment that is at the core of the idea of an Asia Pacific Community.

If this is an idea that seeks to anticipate and shape our regional political and economic future, it is an idea that cannot be put on hold, take a decade to implement or wait until the United States signs on to EAS, an ASEAN-based, primarily Asian-oriented and still nascent grouping.

The next APEC meeting in Japan, provides an excellent opportunity to convene a side-dialogue of this group, including India, on these issues, likely just prior to the G20 meetings in Seoul, to lay the foundations for a representative Asia Pacific Council that can give leadership to taking the Asia Pacific Community idea forward.

Dr Hadi Soesastro is a senior economist with CSIS in Jakarta and Peter Drysdale is Emeritus Professor in the Crawford School of Economics and Government at the Australian National University. The original version of this essay was submitted as background to the Asia Pacific Community Conference held in Sydney at the instigation of Australian Prime Minister, Kevin Rudd, 3-5 December 2009.

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Backgrounder: Indonesian former president Wahid

JAKARTA, Dec. 30 (Xinhua) -- Indonesian former president Abdurrahman Wahid passed away at the age of 69 in the country's landmark hospital Cipto Mangunkusumo (RSCM) on Wednesday, due to complications of stroke, kidney and heart problems.

Wahid was born on Sept. 7, 1940 in Jombang, East Java, as the eldest child among six siblings. His grandfather is Hasyim Asy'ari, co-founder of Nahdlatul Ulama (NU), which is one of the largest independent Islamic organizations in the world. And his father Wahid Hasyim was appointed as Indonesia's first Minister of Religious Affairs.

Wahid began to receive his education in Jakarta since 1949. In 1957, he graduated from the junior high school and went to a Muslim school in Magelang for two years. After that, he went back to his hometown to continue his education while taking his first job as a teacher and later headmaster of a Muslim school. He also got a journalist job for magazines in the period.

In 1963, Wahid received a scholarship from the Ministry of Religious Affairs to study at Al Azhar University in Cairo, Egypt, while working for the Indonesian Embassy. He left for Egypt in November 1963 and received another scholarship at the University of Baghdad in 1970. after that, Wahid visited Netherlands, Germany and France before going back to Indonesia in 1971.When returned to Jakarta, Wahid joined the Institute for Economic and Social Research, Education and Information, an organization which consisted of intellectuals with progressive Muslims and social-democratic views. He continued his career as a journalist of magazine Tempo and Kompas newspaper, building up a reputation as a social commentator. thanks to his well-received articles. In 1974, Wahid became a Muslim Legal Studies teacher at a Muslim school in Jombang, and in 1977, he joined the Hasyim Asyari University as Dean of the Faculty of Islamic Beliefs and Practices.

Wahid had his first political experience in 1982, when he campaigned for the United Development Party (PPP) in Legislative Elections. PPP is an Islamist Party which was formed as a result of a merger of 4 Islamist parties including NU. In 1984, Wahid was elected as the new Chairman of NU. He was re-elected to a second term and third term as Chairman of NU at the 1989 National Congress and the 1994 National Congress.

In 1998, Wahid approved of the formation of PKB and became the Chairman of its Advisory Council with Matori Abdul Djalil as Party Chairman. He promoted PKB as a party that is non-sectarian and open to all members of society. On Feb. 7 1999, PKB officially declared Wahid as their Presidential candidate in Indonesia's 1999elections.

Wahid's PKB entered the legislative elections in 1999, winning 12 percent of the votes. In July, the Central Axis, a coalition of Muslim parties, was formed, and it officially nominated Wahid as a Presidential Candidate in October. In the same month, Indonesian People's Consultative Assembly (MPR) convened and began electing for a new President. Wahid was then elected as Indonesia's 4th President with 373 votes.

Wahid founded his first Cabinet as a coalition which consisted of members of various political parties in 1999. He went on to make two administrative reforms by abolishing the Ministry of Information and disbanding the Ministry of Welfare. He visited China in December.

In March 2000, Wahid's government began to open negotiations with the Free Aceh Movement (GAM). In May, the two sides signed a memorandum of understanding to last until the beginning of 2001, by which time both signatories would have breached the agreement.

In January 2001, Wahid made the announcement that Chinese New Year was to become an optional holiday. Wahid followed this up in February by lifting the ban on the display of Chinese characters and the importations of Chinese publication.

On July 23, 2001, the MPR unanimously voted to impeach Wahid and to replace him with Megawati as President. 2009-12-30 23:53:15

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