U.S. Gov Federal News Service
March 18, 1999

Testimony of Edward Masters, Senate Foreign Relations Committee



Thank you, Mr. Chairman. I am pleased to be here today to discuss recent developments in the world's fourth largest country - Indonesia. A year ago this week I testified before your committee describing a country at a critical point in its relatively short history, faced with an economy in paralysis undergoing massive IMF-prescribed austerity measures and supported by emergency stand-by credits; a humanitarian crisis due to the effects of El Ninio; soaring prices for food; shortages of food and medicine; and mounting unemployment. All of these factors came to a head in May 1998 when massive demonstrations and rioting led to the resignation of President Soeharto with his then vice president B.J. Habibie assuming the presidency.

Today I will share my impression of the democratization process in Indonesia. I have been following events in Indonesia for nearly thirty-five years. My first assignment, as political counselor in the American Embassy in  Jakarta, commenced on September 30, 1964, one year to the day before the attempted communist coup that was launched on September 30, 1965. That traumatic event set in motion the eventual transfer of power that took place officially on March 1, 1967.

I witnessed the first years of Suharto's New Order, when all efforts were mobilized to stabilize the massive debt incurred by the Sukarno regime and to assure a reliable food and fuel supply to the people. I returned to Indonesia in 1977 as Ambassador, and served another four years. By this time, the remarkable achievements of economic development were well underway. Although corruption and cronyism have been well known in Indonesia for a generation -- as indeed in just about all rapidly developing countries -- the  benefits of development were not limited to the few at the top. The World Bank estimates that the distribution of wealth, measured by the Gini coefficient, was slightly more equitable in Indonesia in the early 1990s than in the United States.

After four years as Ambassador I followed events in Indonesia off and on until circumstances permitted a closer look five years ago. I realized that this huge, rich, fascinating and important country -- one of the key nations in the world today -- is virtually unknown to the American people. There are perhaps understandable historic reasons for this, but nonetheless, this giant of Southeast Asia has been almost totally ignored except for the occasions when it has been sharply criticized for its shortcomings.

For this reason I, along with other Americans and Indonesians with long experience in each other's countries, founded The United States- Indonesia Society five years ago. Our purpose is to offer a variety of programs in the United States to permit a more thorough understanding than is commonly available. That understanding is essential today if we wish to determine the best approach for the U.S. toward lndonesia's problems.

From an historical perspective, the tremendous changes that took place in 1998 will be viewed by most Indonesians as painful medicine necessary for the nation to endure in order to achieve sweeping reforms. It is ironic that demonstrating students last May welcomed former President Soeharto's resignation with jubilation and euphoria at first, but it was not long thereafter that the general mood turned to one of fear and uncertainty about the future of the country.

A 15% contraction of the economy, high inflation, a much devalued rupiah, domestic social unrest and a change of government all make it difficult to chart a path toward economic recovery let alone the restoration of political stability and social harmony. Most of us see these processes as inseparable: Progress on both fronts must be made simultaneously.

The nation passed the first litmus test of its ability to reach political compromise when the Parliament adopted three laws to replace the five
political laws promulgated in 1985. The laws are about the elections, political parties and the composition of the parliament, the people's consultative assembly and the regional assemblies.

The date for elections to the national Parliament (DPR) as well as to provincial and subprovincial (district) legislatures has been set for June 7, 1999, after a three week-campaign period from May 18-June 6. The district-level results will be announced first (over June 20-26) with members installed on July 20; provincial results will be announced between June 27 and July 2 with members installed on July 25. National results will be announced over July 3-12 and members inaugurated on August 29. A new 700-member Majelis Permusyawaratan Rakyat MPR (People's Consultative Assembly) is then scheduled to convene on November 11 to elect a new president and vice president.

For many of us who have been monitoring developments in Indonesia, the period between the parliamentary election scheduled for June 7th and the November presidential election is critical and I will return to this point a bit later. Under Indonesia's political structure, eligible political parties will contest for seats in the Dewan Perwakilan Rakyat - DPR (Parliament) while members of the DPR will automatically become members of the MPR. The DPR will consist of 462  elected members and 38 appointed armed forces (ABRI) members. The size of the MPR was reduced from 1000 to 700 members. The MPR will consist of 500 DPR members plus 135 representatives appointed by provincial legislatures (5 from each province) and 65 representatives of social organizations. The MPR will elect the president and vice president and decide on the Broad Guidelines of State Policy. There will also be elections for the provincial and district assemblies.

The election will be based on a multiparty system. The election will be held under a system of proportional representation at the provincial level.
According to the law on the election, to be eligible to take part in the elections, a party must have branches in at least nine provinces, and in half the districts in each of these nine provinces. On March 4 a list of 48 parties that qualified was announced.

Political parties will compete in the 27 provinces with their own candidate lists for national seats (DPR), provincial seats (DPRD-I) and district level seats (DPRD-II). Voters will elect by piercing the symbol of their party. An Election Committee or KPU, composed of government officials and representatives of the parties which are eligible to take part, is responsible for the conduct of the election. The KPU is in charge of voter registration, the nomination of candidates, campaign arrangements, polling and tabulation of votes at the polling stations.

The government will allow independent observers and monitors. The KPU will coordinate election monitors which will play a crucial role to ensure the elections are conducted in a free, fair and transparent manner. All Indonesian citizens above 17 will have the right to vote (married people under 17 will also be allowed to vote).

According to the latest figures (based on the 1997 election) 124.7 million out of a population of more than 210 million people will be entitled to vote. In addition to conducting the June elections, the KPU will allocate the number of parliamentary seats assigned to each province; tabulate and announce results of the contest.

The Election Law stipulates that the government will provide five representatives to the KPU, and that each political party taking part in the
elections will provide one representative. If and when the KPU votes on decisions, the government and political party representatives will each have a 50% weight in the voting rights. This makes the government representatives particularly influential: together their five votes carry the same weight as the 48 votes from the political party representatives. If these five are credible figures with strong integrity, it will boost the chances for fair elections. The five individuals named to be government representatives to the KPU turned out to be responsible private (non-government) figures who have been critical of government in the past. The names of appointees were greeted with relief and surprise by skeptical observers and opposition parties.The election schedule:

-- Feb. 1-March 1: Registration and selection of political parties eligible to contest the elections.
-- March 16-April 20: Registration of voters.
-- March 15-April 15: Nomination of legislators for the House of Representatives, and for provincial and regency legislatures.
-- May 18-June 6: Election campaign season.
-- June 7: Balloting and vote counting,
-- July 3-12: Announcement of election results for House legislators. Those winning seats in provincial legislatures will be announced from June 27 until July 2 while election results for regency legislative councils will be announced between June 20 and June 26.
-- Aug. 29: Inauguration of new legislators in the lower House. Legislators in regency and provincial legislatures will be installed on July 20 and July 25 respectively.
-- Presidential Election tentatively set for late October though there is some talk of advancing the date to as early as August 29.

Under the new laws, civil servants are barred from joining political parties. Civil servants who join a political party must take leave of absence, while being entitled to draw his or her basic pay for at least one year, and this can be extended to five years. Civil servants who fail to report membership in a political party will be fired. I view this as a very positive development and a clear break from past practices - a leveling of the playing field whereby no single political power can corner the civil servant constituency. Progress is being made in Indonesia's electoral reform process in other ways that are worth noting. New election laws stipulate monetary limits on political donations (15 million rupiah for individuals, and 150 million rupiah for corporate contributions). This is a welcome development and another example of a leveling of the playing field.Problem Areas

There was great debate over whether the new election law would designate seats in the DPR for ABRI, the armed forces. As it turns out, the army retained seats and for the time being preserved the social and political role it plays -- the dwi-fungsi -- in addition to providing for the country's defense. The dual-function is one of the main obstacles to democracy in Indonesia. Under the new laws, the armed forces, whose members will not be entitled to vote in the elections, will occupy 38 DPR seats (down from 75) with full voting rights, leaving 462 seats for the political parties which contest seats. The 38 ABRI seats in the national parliament will represent the equivalent of 9 to I 0 million votes, a possible swing vote of 7.5%.

In the provincial and district-level parliaments, the armed forces will occupy 10% of the seats without contesting in the elections. At present, the armed forces occupy half of the nation's governor positions, while 40% of district heads are from ABRI. By retaining seats in the regional assemblies they will be able to influence appointments of governors and district heads. A component of the new law on the composition of parliament is the appointment of two hundred members to the MPR by the provincial legislatures and social groups. There will be 135 seats for regional appointees (five representatives per province appointed by new provincial legislatures) and 65 for community and social groups nominated by the KPU. Thus the voting outcome for the provincial elections will be critical for the selection of their representatives to the
MPR, which in turn selects the next president.

A problem area of the new political laws is the exclusion of local parties from participating in the election of national and regional parliaments. The stipulation that parties must have branches in at least one third of all provinces means that local or ethnic groups will not have their own
representative parties in parliament. For instance, Acehnese or Papuan political parties will not be able to participate in the elections simply because they do not have branches in at least nine of lndonesia's 27 provinces. Clearly, the new laws are skewed in favor of Javabased, nationwide parties. In a country of such ethnic diversity as Indonesia, this is a major drawback. The same rules will also apply to the provincial and district assemblies that will be rendered incapable of representing the local communities. On the other hand it reduces the chances of separatist political parties.

It is too soon to draw assumptions or make predictions about the upcoming parliamentary elections and whether the electoral process will be free and fair for all political parties. The government will allow independent observers to monitor the elections. As the world's largest archipelago, it will be difficult for independent monitors to cover an election estimated to cost $400 million and spread over 300,000 polling stations, especially in the more remote parts of the country where wholesale election malpractice typically occurs.

Disproportionate government control over the administration of the election process such as voter registration, nomination of candidates, voting and tabulation of votes in the polling stations from top to bottom also raises the prospect of manipulation and fraud.

Also, the gap between the June elections and the November presidential election offers a window in which violence might escalate. Flare-ups and sustained inter-ethnic clashes as we have witnessed in Ambon in the first few months of 1999 are testament to the susceptibility of Indonesia's fragile social fabric. The eruption of violent incidents as the elections draw near could derail Indonesia's first post-Suharto general election.

Indonesia's Election Law may also be deficient in terms of how it deals with the appeals process. Fair and transparent handling of complaints will be crucial for this election, but the law fails to grant the KPU control over processing appeals. Instead, the KPU must "coordinate" with the judicial system.

The.judicial committees with which the KPU must coordinate will be made up of government appointees. Indonesia's court system has been plagued by corruption. Even if the KPU and the Ministry of Home Affairs manage to conduct the elections in a fair and credible manner, one cannot rule out the possibility of a mishandling of the appeals process by the judiciary.

The upcoming elections are one in a series of steps that our friends in Indonesia must take on the long road to democracy. The elections are not a panacea for all of the social conflicts and economic problems the country is now dealing with. But if the June election is conducted in a fair, transparent, and credible manner, broader and more equitable representation of the people's political aspirations will be achieved. We have an opportunity to help make this the first truly democratic election in Indonesia since 1955, and I strongly advocate continued engagement, consultation, financial and humanitarian assistance to Indonesia at this critical time.