http://www.cipe.org/publications/ert/e35/e35_10.pdf

Home

Indonesia
Digest

Global
Digest

Editor

 

 

 

 Indonesia Digest

 

 Global Digest

 

 

 

 

 

 

 

 

 

 Indonesia Digest

Indonesia Globalization

Page 1

Page 2

Indonesia


Current

Focus

Elections 2014

Political

Corruption

 Supersemar

 ASEAN

 Asia

 New Beginning

 USA

Australia

UK

 

Malaysia

Middle East

  China

  World

 

 

 

 

 

 

 

Introduction

Profile

Diplomacy

Development

Sukarno years

Suharto years

Overview

Government

US relations

Economy

1965 Gestapu

 World Bank/IMF

History

Current Affairs

New Beginning

Business

Silent Genocide

Globalization

 

SPECIAL REPORTS

Global Rulers

  Rule By Secrecy

 US Relations 60s-98

Suharto Obit

Corruption

East Timor

 

Impact of Global Relations on
Political and Economic development

In the global context Indonesia relations have been closely interwoven with AA countries and the West (especially the US). In the 1950s, the first period of independence. Indonesia became a domino in the Cold War struggle between the US and its western allies against the Soviet Union representing communism.

The Sukarno years were dominated by Cold War intrigues.
Because of its politically strategic location and its wealth of natural resources the US considered Indonesia a vital link in its Cold War struggle. Independence, non-alignment were the principles President Sukarno stood for.
His neutralist stand made him a relentless vicious target of the West starting with covert operations in the mid-fifties.
The US needed a South East Asia stronghold.

The Cold War struggle impacted the early years of independence as western nations did not hesitate to resort to covert intrigues, manipulative and treacherous actions to make Sukarno bow to their demand that he become a Western ally, side with them, the all-powerful West. His refusal to do so and insistence on neutralism resulted in unabated treacherous western actions, led by the US and the UK, to bring him down as president, falsely proclaiming him a communist because of his stand for nationalism and neutralism.
A thorn in their eyes, they finally succeeded in
1967 with his removal as President and replacement by a staunch "Cold War Ally". The US and UK played a dominant role with support of Australia.

From then on the Western powers continued their efforts to control Indonesia both politicall and economically. A pattern of creating and sustaining a politcal elite to serve their interests resulted in their economic dominance and exploitation, providing selfserving tied "AID" and fostering deeprooted corruption.

A historic tragic example of the Western quest for global dominance.

 

 

 

The New Rulers of the World

In order to examine the true effects of globalization, Pilger turns the spotlight on Indonesia, a country described by the World Bank as a model pupil until its globalized economy collapsed in 1998. The film examines the use of sweatshop factories by famous brand names, and asks some penetrating questions.

Who are the real beneficiaries of the globalized economy?

Who really rules the world now? Is it governments or a handful of huge companies? The Ford Motor Company alone is bigger than the economy of South Africa. Enormously rich men, like Bill Gates, have a wealth greater than all of Africa. Pilger goes behind the hype of the new global economy and reveals that the divisions between the rich and poor have never been greater — two thirds of the world’s children live in poverty — and the gulf is widening like never before.

The film looks at the new rulers of the world — the great multinationals and the governments and institutions that back them — the IMF and the World Bank. Under IMF rules, millions of people throughout the world lose their jobs and livelihood. The reality behind much of modern shopping and the famous brands is a sweatshop economy, which is being duplicated in country after country.

The film travels to Indonesia and Washington, asking challenging questions seldom raised in the mainstream media and exposing the scandal of globalization, including revealing interviews with top officials of the World Bank and the IMF. (Excerpt from bullfrogfilms.com)

 

 

 

Globalisation:


The New Rulers of the World
report by John Pilger
Journalist and filmmaker John Pilger's recent documentary 'The New Rulers Of The World' was broadcast on 18 July 2001. It investigates economic globalisation and specifically its impact on one country - Indonesia.

" The facts of globalisation are revealing, a small group of powerful individuals are now richer than most of the population of Africa just 200 giant corporations dominate a quarter of the worlds economic activity: General Motors is now bigger than Denmark, Ford is bigger than South Africa ..."

Corporate Takeover Of Indonesia
".. secretly backed by the
United States and Britain and by western business leaders it brought to power General Suharto ... within a year of the blood bath Indonesia's economy was effectively redesigned in America, giving the West access to vast mineral wealth, markets and cheap labour, what President
Nixon called the greatest prize in Asia."

" The World Bank and the IMF were set up near the end of World War II to rebuild the economies of Europe, later they began offering loans to poor countries but only if they privatised their economies
and allowed western corporations free access to their raw materials and markets ..."

" the conditions of the IMF's latest loan include a reduction in subsides on certain fuel and food.
Half this mans monthly wage of less than 40 pounds goes on medical treatment for his children who suffer from a serious blood disorder, as prices go up he can not even afford the special drugs that keep them alive.."

" Globalisation creates debts, and debts create misery, creates unemployment, creates the crisis .."

 

 

THE IMPACT OF GLOBALIZATION ON INDONESIA

"THE MODEL PUPIL" OF THE WORLD BANK IN THE YEARS 1968 -1998

 

In 2001, John Pilger made 'The New Rulers of the World', a film exploring the impact of globalisation.
It took Indonesia as the prime example, a country that the World Bank described as a 'model pupil' until its 'globalised' economy collapsed in 1998.


Globalisation has not only made the world smaller. It has also made it interdependent. An investment decision made in London can spell unemployment for thousands in Indonesia, while a business decision taken in Tokyo can create thousands of new jobs for workers in north-east England.

The film looks at the new rulers of the world - the great multinationals and the governments and institutions that back them - the World Bank and the IMF.
nder IMF rules, millions of people throughout the world lose their jobs and livelihood. The reality behind much of modern shopping and the famous brands is a sweatshop economy, which is being duplicated in country after country.

 

 

 

 

THE GLOBALIZATION OF INDONESIA

 

 

Indonesia Greatest Prize of Southeast Asia

 Washintond DC

h

 

 With President Nixon in the White House

With visiting President Ford 

 

The globalization of Indonesia

Greatest prize of Southeast Asia

In November 1967, following the capture of the "greatest prize", the booty was handed out. The Time-Life Corporation sponsored an extraordinary conference in Geneva which, in the course of a week, designed the corporate takeover of Indonesia.
It was attended by the most important businessmen in the world, the likes of David Rockefeller, and all the giants of western capitalism were represented. They included the major oil companies and banks, General Motors, Imperial Chemical Industries, British Leyland, British-American Tobacco, American Express, Siemens, Goodyear, the International Paper Corporation, US Steel
Across the table were Suharto's men, whom Rockefeller called "Indonesia's top economic team". Several were economists trained at the University of California in Berkeley. All sang for their supper, offering the principal selling points of their country and their people: "Abundance of cheap labour . . . a treasure house of resources . . . a captive market." Recently, I asked one of them, Dr Emile Salim, if anyone at the conference had even mentioned that a million people had died in bringing this new business-friendly government to power. "No, that was not on the agenda," he replied. "I didn't know about it till later. Remember, we didn't have television and the telephones were not working well."

The Indonesian economy was carved up, sector by sector, at the conference. In one room, forests in another, minerals. The Freeport Company got a mountain of copper in West Papua (Henry Kissinger is currently on the board). A US/European consortium got West Papua's nickel. The giant Alcoa company got the biggest slice of Indonesia's bauxite. A group of US, Japanese and French got thetropical forests of Sumatra, West Papua and Kalimantan.

A Foreign Investment Law, hurried on to the statutes by Suharto, made this plunder tax-free for at least five years. Real, and secret, control of the Indonesian economy passed to the IMF and the World Bank through the Inter-Governmental Group on Indonesia (IGGI), whose principal members were the US, Canada, Europe and Australia. Under Sukarno, Indonesia had few debts. Now the really big loans rolled in, often straight into pockets, as the treasurehouse of resources rolled out. Shortly before the Asian financial crash in 1997, the IGGI godfathers congratulated their favourite mass murderer for having "created a miracle economy.

 

The New Rulers of the World is a 2001-2002 documentary film produced, written and presented by John Pilger on the consequences of globalisation, taking Indonesia as the primary example of the serious problems with the new globalization

Review (related to Indonesia)

The New Rulers of the World, John Pilger's new book (Verso, London, 2002), covers much ground in four major essays. The first one - 'The Model Pupil' - reveals how General Suharto's bloody seizure of power in Indonesia in the mid-1960s, which resulted in the deaths of up to a million 'Communist sympathisers' (as 'The Independent' deceptively described the victims recently), led to the imposition of an economy planned to western design. This was the true, and largely unreported, origin of economic globalisation in this part of Asia.

Documentary Film

In order to examine the true effects of globalization, Pilger turns the spotlight on Indonesia, a country described by the World Bank as a model pupil until its globalized economy collapsed in 1998. The film examines the use of sweatshop factories by famous brand names, and asks some penetrating questions. Who are the real beneficiaries of the globalized economy? Who really rules the world now? Is it governments or a handful of huge companies? The Ford Motor Company alone is bigger than the economy of South Africa. Enormously rich men, like Bill Gates, have a wealth greater than all of Africa.
Pilger goes behind the hype of the new global economy and reveals that the divisions between the rich and poor have never been greater -- two thirds of the world's children live in poverty -- and the gulf is widening like never before.

The film looks at the new rulers of the world -- the great multinationals and the governments and institutions that back them -- the IMF and the World Bank. Under IMF rules, millions of people throughout the world lose their jobs and livelihood. The reality behind much of modern shopping and the famous brands is a sweatshop economy, which is being duplicated in country after country.

The film travels to Indonesia and Washington, asking challenging questions seldom raised in the mainstream media and exposing the scandal of globalization, including revealing interviews with top officials of the World Bank and the IMF.

 

"A deeply impressive, informative, heartfelt piece of journalism." Graham McCann, Financial Times


"Pilger's analysis is sophisticated, interweaving Cold War politics and the workings of the World Bank and the IMF, and shows how corporations such as Ford now have bigger economies than South Africa, and the way many countries have been turned into giant sweatshops."
Gerard Gilbert, The (London) Independent

"A scathing portrait of the way Western commerce has taken over the economy of Indonesia and continues to maintain its grip in a way which prevents the country from ever rising above its poverty."
Doug Cummings, filmjourney.org

 

 


 GLOBALIZATION IN INDONESIA


"A deeply impressive, informative, heartfelt piece of journalism."
Graham McCann, Financial Times

 

 

 

 

 

The World Bank (WB) & The International Monetary Fund (IMF)

 

 

Globalisation: The New Rulers of the World
report by John Pilger
© copyright John Pilger.


Journalist and filmmaker John Pilger's recent documentary
'The New Rulers Of The World'

was broadcast on 18 July 2001.
It investigates economic globalisation and
specifically its impact on one country - Indonesia.

 

 

Pilger offers a detailed and well documented account of gross global injustices and their lingering implications. He explains the underlying causes of poverty and terrorism and asserts that imperialism constitutes the most dangerous threat to international peace and stability. His book further exposes gross economic inequalities between the West and the Rest. You will further learn how the World Bank impedes the progress of the developing countries through the imposition of preposterous loan conditions.

Discover why developing countries become increasingly poorer and how the wealth of the West is constantly increasing. No one seems to think that it is extremely unjust that an executive can make up to 100,000 dollar a month while a great number of people live below the poverty line and do not even have enough food to survive.

In this fully updated colection he reveals the secrets and illusions of modern imperialism.

Beginning with Indonesia, he shows how General Suharto's seizure of power in the 1960's was part of a Western design to impose a "Global Economy"on Asia. A million Indonesians died as the price for being the World Bank's "model pupil".

 

Globalisation has not only made the world smaller. It has also made it interdependent.

An investment decision made in London can spell unemployment for thousands in Indonesia, while a business decision taken in Tokyo can create thousands of new jobs for workers in north-east England.

The film looks at the new rulers of the world - the great multinationals and the governments and institutions that back them - the World Bank and the IMF. Under IMF rules, millions of people throughout the world lose their jobs and livelihood. The reality behind much of modern shopping and the famous brands is a sweatshop economy, which is being duplicated in country after country.

 

Globalisation

 

 

 

The state is more powerful than ever; the view that big business alone shapes the new world order is wrong

9 Jul 2001
There is a view fashionable in the media that the world is being taken over by huge multinational corporations, accountable to no one.

"Governments are reduced to playing the role of servile lackeys to big business," Noreena Hertz, the dissident financier, wrote in these pages recently. Even the US government has surrendered state power, she says, citing "George W Bush's shameful obsequiousness to big energy corporations".

For all the vivid examples of modern corporate power, such as the annual income of Motorola being equal to the annual income of Nigeria's 118 million people, it is folly to believe that big business on its own is shaping the new world order. This allows the argument against globalisation to be depoliticised, reducing it to single issues of "ethical trading" and "codes of conduct", and inviting its co-option. Above all, it misses the point that state power in the west is accelerating.

"Globalisation does not mean the impotence of the state," wrote the Russian economist and activist Boris Kagarlitsky, "but the rejection by the state of its social functions in favour of repressive ones, irresponsibility on the part of governments and the ending of democratic freedoms." The illusion of a weakened state is enticing: indeed, it is the smokescreen thrown up by the designers of modern, centralised power. Margaret Thatcher concentrated executive power while claiming the opposite; Tony Blair has done the same. The European project is all about extending the frontiers of the state. Totalitarian China has embraced the "free" market while consolidating its vast state apparatus. The autocracies in Singapore and Malaysia achieved the same while growing stronger. (Not surprisingly, Blair is an admirer of Singapore.)

It is the American state that surpasses them all, and it has never been more powerful. The notion that George Bush is "obsequious to big energy corporations" (and ought to be ashamed of himself) is naive. Big oil, like big weapons manufacturing and big agribusiness, has always been as one with the occupants of the White House and the US government; they are interchangeable. That is the American way. Without government patronage, some of the greatest corporations would fail. The Cargill Corporation, which dominates the world trade in food grains, would not enjoy its monopoly, were it not for years of big subsidies to American agribusiness, as well as US government policies that used "food aid" to subvert the agriculture of developing countries.

It was the triumphant American state that fashioned the present "global economy" at Bretton Woods in 1944, so that its military and corporate arms would have unlimited access to minerals, oil, markets and cheap labour. In 1948, the State Department's senior imperial planner, George Kennan, wrote: "We have 50 per cent of the world's wealth, but only 6.3 per cent of its population. In this situation, our real job in the coming period is to devise a pattern of relationships which permit us to maintain this position of disparity. To do so, we have to dispense with all sentimentality . . . we should cease thinking about human rights, the raising of living standards and democratisation."

The World Bank and the International Monetary Fund were invented to implement this strategy. Their base is Washington, where they are joined by an umbilical cord to the US Treasury, a few blocks away. This is where the globalisation of poverty and the use of debt as a weapon of control was conceived. When John Maynard Keynes, the British representative at Bretton Woods, proposed a tax on creditor nations, designed to prevent poor countries falling into perpetual debt, he was told by the Americans that if he persisted, Britain would not get its desperately needed war loans. More than half a century later, the gap between the richest 20 per cent of humanity and the poorest 20 per cent has doubled; and "structural adjustment programmes" have secured an indebted imperium greater than the British empire at its height.

The danger of the "moderate" view, which refuses to contemplate the sheer rapacity of western state power, is that it can be co-opted. The World Bank and the IMF, now under siege as never before, have devised their survival tactics in relation to this. Overnight, the IMF, the greatest of the loan sharks, has begun to sound like an institutional Mother Teresa, with a "mission to defeat poverty". Together with the World Bank, and the World Trade Organisation, it now promotes "dialogue" with "moderate" non-governmental organisations (NGOs) opposed to globalisation, anointing them as "serious opponents", in contrast to the "hooligans" on the streets.

Clare Short's Department for International Development employs this tactic, co-opting leading NGOs for "consultation", even commissioning them to contribute to government white papers. This collaboration should not be underestimated. Following the successful attack on the WTO in Seattle two years ago, more than 1,200 groups and organisations from 85 countries called for a "moratorium" on further liberalisation of trade and an "audit" of WTO policies as the first stage of reforming it.

The WTO and its creators in Washington were delighted, for its legitimacy was not in question. Yet, this secretive, entirely undemocratic body is the most rapacious predator devised by the imperial powers. The Economist calls it an "embryo world government" - which no one has voted for. Beware of moderates

 

 

 

Globalization

Indonesia Promises Growth
Joy Bolli, Online Publications

06.04.2010

In March, the Credit Suisse Global Economics & Strategy Group (GESG) convened at the Asian Investment Conference. Chairman Giles Keating gives an overview both on the current world economy and the most exquisite investor’s event in Hong Kong.
Joy Bolli: Giles, what were the main points of discussion at this month’s GESG meeting?
Giles Keating: There was a big discussion about what’s going on in the world economy and of course the markets. And I’d say the tone was fairly constructive. I think people feel that the economic expansion – although coming from a very low level – has actually been proceeding well and running at quite a fast rate over recent months. And looking forward, we see it broadening out, becoming deeper and more sustainable. For example, employment is picking up in Europe and in America, and here in Asia, the economy is still running at a very good pace. If anything, we think other people are still a little too pessimistic about the outlook.
The GESG meeting is usually held in Zurich. This month, it was held here in Hong Kong at the Asian Investment Conference. What are the striking findings from the meeting with regard to the Asian economies?
We were lucky enough to have Dong Tao, who is the Chief Economist for the region here in the Investment Bank. He was able to join the meeting along with our normal participants such as Neal Soss, Andrew Garthwaite, Jonathan Wilmot, Stefan Keitel and others. Dong Tao gave us his view of the Chinese economy. He certainly thinks that for the time being the expansion can continue. However, he does give us a warning that next year, some of the very high rates of loans may cause problems for local authority lending. Even then, he thinks that whatever problems come from that can be dealt with quite quickly. Hong Kong itself is potentially more of an issue. But not just yet, as we think that the price boom can actually run for a while longer. The problem in Hong Kong is that it imports its interest rates from America and its economic growth from China. And that is a marriage that just doesn’t work.
Some 3,000 investors, politicians and corporates have enrolled for the AIC this year. What are their expectations?
This conference has actually attracted more and more participants over the years. It is now in its 13th year. The standard was always very high, but now, I think we’ve reached the point of critical mass where the level, in terms of the political system, of some of the speakers has become so high that I think this attracts yet more people to come. It’s like a snowball that rolls downhill and grows ever bigger. That creates a big buzz here and allows us to gauge what’s going on in the economies as well as to look at the investment opportunities in a very special way.

A big topic is infrastructure. Does this mean people should invest in Asian roads and airports?
Well, I think that infrastructure is very important and certainly, we’ve seen some of the governments in the region, particularly China, use infrastructure spending as a way of helping bring their economies out of the crisis very rapidly. That infrastructure does indeed present investment opportunities – both here in Asia, and in some companies in Europe and America that supply the products that are needed to help build that infrastructure. But in addition, over the medium term, it helps boost the growth rate. For example, in China it helps some regions in the interior - parts of the country away from the coasts – by giving them better road, rail and air access, and boosting both their consumption and production. That will help to diversify China, so that it becomes not just a country that is just producing goods to sell to Americans and Europeans, but also a country with its own very vibrant consumption sector.

Another issue is the rise of the Asian middle classes and the effect of increased life expectancy. How can investors profit from that?
Well, it does mean that the companies selling to Asian consumers are really going to see their markets grow rapidly over the next few years. And that again benefits a number of companies in Europe and America, for example those supplying luxury goods as well as some suppliers of technology goods. But it will also benefit local companies here in Asia, particularly those that are gradually building up their expertise in the consumer sector. That hasn’t been such a big business in the past. We think it will become very big in the future.

We’ve often heard that China and India are driving growth in Asia. Is there an Asian economy whose growth might surprise us in 2010?
One of the countries which people outside the region don’t pay enough attention to is Indonesia. The country has a quarter of a billion people, making it one of the world’s largest countries in terms of population. Its economy has really been doing very well over the last two or three years. The political situation is much more stable than it was, and looks good from an outside perspective. And there is real dynamism. It’s one of the countries that I myself visit quite frequently. There’s real dynamism in the sense that it’s beginning to broaden out from its previous commodity focus. So there are many exciting opportunities in the Asian region, but I think Indonesia is perhaps one which investors from outside often underestimate.

If you had to summarize the latest findings of the GESG meeting and the most important results of the AIC here in Hong Kong - how would you wrap that all up for investors?
We are positive about stock markets for the time being. We think that investors are still being too cautious, underestimating economic growth. They’re perhaps worried about equity valuations, but we are not. We think equity valuations look pretty fair. So there is significant further upside for equities from here. The same is true for commodities which, although they’ve gone up a lot, can still benefit from this continued economic expansion, in our view. So, these are the two asset classes we’d be looking at. Within the equity sector, we also see very good opportunities here in Asia. In fact, China is one of our preferred markets and that’s been confirmed by much of what has been said here at the conference. The one area where we’d be more cautious is in fixed income. As countries move towards more monetary tightening over time, we don't expect to be seeing the same kind of returns that you will see in equities and commodities.

 

Globalization: Challenges for Indonesia
(pdf format)

Hadi Soesastro
The author is the Executive Direcor of the Centre for Strategic and International Studies (CSIS),
and is a member of the National Economic Council in Indonesia

Indonesia has gone a long way in liberalizing its economy, but the task is far from complete. Globalization has given the government a strong justification for undertaking market-oriented reforms that can help maintain high and sustainable rates of exports necessary for strong eco-nomic growth.
The country's policy of globalization has been based on pragmatism. It is not grounded on ideological considerations; it is based on an objective assessment of what other countries in East Asia have been able to achieve. In addition, there is a strong element of competition at work among the countries in the region to liberalize in order the make their economies more attractive to global investments. Such competitive liberalization is itself a powerful factor. The universal trend in the 1980s toward economic liberalization, deregulation and privatization may have provided an additional source of inspiration.

Indonesia's participation and efforts to promote a number of regional cooperation helps its participants to take part in global economic integration more effectively as a group of regional economies. It is not surprising, therefore, that in Southeast Asia, AFTA (ASEAN Free Trade Area) and APEC (Asia-Pacific Economic Cooperation) are widely seen as representing-indeed as manifesting-the globalization phenomenon because of the importance of trade and investment liberalization in these organizations' agendas.
In justifying its multilateral commitments, the Indonesian government has argued that the country's industries and companies will become internationally competitive only if the economy continues to open up. It argues, however, that developing countries such as Indonesia must be given a longer period to adjust than the industrialized countries. This principle is adopted by the WTO and APEC and thus fulfills an important requirement for Indonesia's participation in these groups.

It is exactly because globalization is being used as a justification for economic reform-and used successfully thus far-that the sustainability of the reform program itself will depend to a large extent on the ability of the government and the society at-large to redress the negative public perception of the impact of globalization. Today in Indonesia-and in other ASEAN countries-there is a widely shared view that the government has been quite successful in undertaking the first-order domestic adjustments in response to globalization.
These adjustments are a continuing process as the government has opted for a gradual rather than a "big bang" approach in undertaking reforms. This gradual approach was taken in order to demonstrate the positive outcomes of the reforms and thus help create ever larger constituencies for the various reform programs.

Economic backdrop
Since the mid-1980s, Indonesia's trade and investment regimes have been substantially liberalized.
These policies have been introduced in response to what the government perceives to be a trend toward globalization and the international integration of markets. Furthermore, it is believed that the country will gain significant net benefits from its participation in this process. The policy of globalization has necessitated the introduction of a series of structural ad-justments in Indonesia's economy through liberalization, marketization and deregulation, as well as privatization.
The objective of these adjustments is to enhance the economy's international competitiveness since the government believes that only then can Indonesia fully benefit from developments in the global economy. Thus, in essence, these first-order adjustments aim to increase the attractiveness of the Indonesian economy as a production base for the global market.
Until the onset of the 1997-98 economic and political crisis, the Indonesian economy grew by an average of 7% per annum. The economy experienced a slowdown in the mid-1970s and again in the mid-l980s when the world economy was in a recession. Each time, however, the Indonesian economy was able to come out stronger, as the finanacial "crises" forced the government to undertake the necessary reforms in order to sustain the country's economic growth.
Substantial reforms were undertaken in Indonesia from 1986 to about 1990. During this entire period, no less than 20 policy packages to deregulate and liberalize the economy were issued. The dramatic drop in oil prices in 1986 and the currency realignment following the agreement that increased Indonesia's external debt payments appear to have been responsible for precipitating and fueling a sense of economic crisis that resulted in the more drastic measures.
In East Asia, Indonesia is the only country that began with the liberalization of its capital account.
However, like many other neighboring countries, it instituted export policy reforms before undertaking import liberalization. In effect, this resulted in what has been accurately called a double distortion policy. Thus, Indonesia's earlier deregulation measures were not considered substantial because they failed to address the issue of nontariff barriers (NTBs) that affected a large proportion of imports. Close to 1,500 important items-which represented about 35% of the value of Indonesia's total imports-were subject to some form of NTB, usually a licensing restriction.
The system became a vehicle for rent-seeking activities that led to the emergence of what Mancur Olson has called "distributional coalitions." The system was also misused to promote the development of industries of questionable economic viability. The October 1986 package was the first serious attack on this system. It included the dismantling of the plastics and steel import monopolies, which were seen as a symbol of the then emerging cronyism.
In the early 1990s the country experienced a "reform fatigue," or a policy inertia. Efforts to further liberalize trade policy appeared to have come to a halt. The average rate of nominal tariffs remained at the same level during much of this period. Things began to change in the middle of 1994 with the issuance of liberalization measures in the investment field following a poor non-oil export performance and a marked decline in approvals of foreign direct investment.
Competition and cronyism
These events marked the beginning of a process driven by the need to compete with other countries in East Asia as they also undertook liberalization policies. The government and others in Indone-sia felt that the country was beginning to lose out in the competition for foreign direct investment to such countries as China, Vietnam and India. Indonesia also began to experience declining export competitiveness, which was another possible reason for the slowing down of foreign investments.

In addition, these liberalization measures were to be understood as the government's determination to implement its commitments under AFTA, APEC and the WTO. Further liberalization packages were introduced in mid-1996 and 1997. However, while on the whole significant progress has been achieved in reducing tariffs, a few sectors remain highly protected.
Dismantling of the protection given to these privileged sectors has become a difficult political question. It no longer involves a competition of ideas between different government ministries. Rather, it has become a struggle to dismantle the cronyism that has become so rampant and entrenched. In an increasingly integrated global economy, Indonesia cannot allow itself to maintain a system in which transaction costs are excessive because of a lack of rule-based behavior.

State-business relationships
Globalization has led the state to give a greater role to the business sector in the development process. The process of economic liberalization, deregulation and privatization since the early 1980s in Indonesia-and in other Southeast Asian countries-has provided greater space for the business sector. This serves the state and regime well as does the more active involvement of the business sector-local and international-helps sustain economic growth and in turn strengthens the legitimacy of the governing regime.
At the same time, however, there is always a strong tendency on the part of the government to maintain control over the business community. A kind of collusion evolves in which the current regime or political leadership provides privileges to groups of businesses that in turn are expected to help uphold the regime. In the course of this devel-opment, independent business entities are being squeezed out. The emergence of crony capitalism in Indonesia and other countries in the region has its origin in the interest of the state to maintain political control over the business sector and to control its financial resources.

The business community in Indonesia feels that in pursuing its policy of globalization via several deregulation and liberalization policy packages, the government has to do a great deal more to make Indonesian industries and companies internationally competitive. While some have called for a more pro-active policy, including some form of industrial targeting, the general perception is that the policy packages have tended to be reactive and incoherent as well as discriminatory, because they often exclude certain groups or sectors from the deregulation, thus creating an envi-ronment of unfair competition. The call for an antimonopoly law or some form of competition legislation is not a new development in Indonesia, but the need for more transparent and certain rules of the game is felt more urgently today. The government has responded slowly to these demands.
Freedom of economic information will promote state-business relations.

Aftermath of the Asian crisis
The region's economic crisis has shown that maintaining macroeconomic stability has become much more difficult in a globalized world. The issue is not whether or not to open up, and it involves much more than the proper sequencing of the liberalization process. The issue is how to maintain a workable and credible commitment to open economic policies.
The task will not be easy. In the economic realm alone, the Indonesian government's agenda is already overloaded. On top of this there is the equally challenging political agenda of managing the process of democratic transition and consolidation. The economy shrank by about 14% in real terms in 1998, and inflation during that year reached almost 80%. This was Indonesia's worst economic perfor-mance in the past thirty years.

 

 

 


Globalization and the Economic Crisis: The Indonesian Story

Download: PDF 128.77 KB
by Kartasasmita, Ginandjar

To what extent has globalization been a factor in Indonesia's economic turmoil? This essay addresses the question by reviewing the experience of the Indonesian economy as it evolved in the decade before the crisis and since the crisis hit. It starts by reviewing the policies adopted by the Indonesian government as it sought to integrate the economy more closely into the global market place and reviews the outcome of this earlier policy shift. The paper then turns to assess the impact of the Asian financial crisis but broadens the scope to include a review of domestic political and social stability. It traces the country's slow and halting movement towards recovery highlighting the major reasons why the economic collapse was so severe and why the recovery process has been slower than in neighboring countries. It also briefly reviews "pro" and "con" globalization arguments, and assesses the role globalization played in Indonesia's economic collapse, before concluding with lessons that can be drawn from the Indonesian experience. The author also looks at the role of the IMF in managing the crisis drawing upon his own role negotiating with the IMF during the critical period in Indonesia's economic and political history.
Publication Type: WCFIA Working Paper
Published Date: January 2001
Field of Interest: International Economics

Kartasasmita, Ginandjar. "Globalization and the Economic Crisis: The Indonesian Story." Working Paper 01–03, Weatherhead Center for International Affairs, Harvard University, 2001.

 

 



Spoils Of A Massacre
23 Jul 2001

In Indonesia 35 years ago, a military dictator took over, a million people were killed and a red carpet was rolled out for western capital. It was the start of globalisation in Asia, a model for the rest of the world, leaving a legacy of sweatshops and corruption.

Flying into Jakarta, it is not difficult to imagine the city below fitting the World Bank's description of Indonesia.

A "model pupil of globalisation" was the last of many laurels the bank bestowed. That was almost four years ago, in the summer of 1997. Within weeks, short-term global capital had fled the country, the stock market and currency had crashed, and the number of people living in absolute poverty had reached almost 70 million. The next year, General Suharto was forced to resign after 30 years as dictator, taking with him severance pay estimated at $15 billion, the equivalent of almost 13% of his country's foreign debt, much of it owed to the World Bank.

EXCERPT

Spoils of a Massacre


What is also no longer in doubt is the collaboration of western governments and the subsequent role of western big business. Indeed, globalisation in Asia was conceived in this bloodbath. For Britain, the goal at the time was to protect its post-colonial interests in Malaysia, then threatened by "confrontation" with an "unstable" Sukarno - a 1964 Foreign Office file called for the "defence" of western interests in Southeast Asia, "a major producer of essential commodities. The region produces nearly 85% of the world's natural rubber, over 45% of the tin, 65% of the copra and 23% of the chromium ore." Of Indonesia, Richard Nixon wrote, "With its 100 million people and its 300-mile arc of islands containing the region's richest hoard of natural resources, Indonesia is the greatest prize in Southeast Asia."

Sukarno was a populist as well as a nationalist, the founder of modern Indonesia and of the nonaligned movement of developing countries, which he hoped would forge a genuine "third way" between the spheres of the two superpowers. He could be a democrat and a demagogue. He encouraged mass trade unions and peasant, women's and cultural movements. Between 1959 and 1965, more than 15 million joined political parties or affiliated mass organisations that were encouragedto challenge British and US influence in the region. With three million members, the PKI was the largest communist party in the world outside the Soviet Union and China. According to the Australian historian Harold Crouch, "the PKI had won widespread support not as a revolutionary party but as an organisation defending the interests of the poor within the existing system". It was this popularity, rather than any armed insurgency, that alarmed the Americans. Indonesia, like Vietnam to the north, could "go communist".

In 1990, the American investigative journalist Kathy Kadane revealed the extent of secret US collaboration in the massacres of 1965/66 that toppled Sukarno and brought to power Suharto, who at the time was little known outside western intelligence circles. In a series of interviews with former US officials, she concluded, "They systematically compiled comprehensive lists of communist operatives. As many as 5,000 names were furnished to the Indonesian army, and the Americans later checked off the names of those who had been killed or captured."

In 1966, the US ambassador in Jakarta assured Suharto that the "US is generally sympathetic with and admiring of what the army is doing". The British ambassador, Sir Andrew Gilchrist, reported to the Foreign Office: "I have never concealed from you my belief that a little shooting in Indonesia would be an essential preliminary to effective change." Having already armed and equipped much of the army, Washington secretly supplied Suharto's troops with a field communications network. Flown in at night by US Air Force planes from the Philippines, this was state-of-the-art equipment, whose high frequencies were known to the CIA and the National Security Agency. Not only did this technology allow Suharto's generals to coordinate the killings, it also meant that the highest echelons of the US administration were listening in. Suharto was able to seal off large areas of the country. Archive film of people being herded into trucks and driven away exists but that is all. To my knowledge, the fuzzy photograph published here is the only pictorial record of the actual killings in this Asian holocaust.

It ought to be salutary for journalists these days to heed the important role that western propaganda played then, as it does now. British intelligence manipulated the press so expertly that Norman Reddaway, head of the Foreign Office's Information Research Department (IRD), boasted to Ambassador Gilchrist, in a letter marked "secret and personal", that the spin he and his colleagues had orchestrated - that Sukarno's continued rule would lead to a communist takeover - "went all over the world and back again". He describes an experienced Fleet Street journalist agreeing "to give your angle on events in his article . . . ie, that this was a kid-glove coup without butchery". Roland Challis, who was the BBC's Southeast Asia correspondent at the time, believes that the cover-up of the massacres was a triumph for western propaganda. "My British sources purported not to know what was going on," he told me, "but they knew what the American plan was. There were bodies being washed up on the lawns of the British consulate in Surabayo, and British warships escorted a ship full of Indonesian troops down the Malacca Straits, so that they could take part in this terrible holocaust. It was only much later that we learned the American embassy was supplying names and ticking them off as they were killed. There was a deal, you see. In establishing the Suharto regime, the involvement of the IMF and the World Bank was part of it. Sukarno had kicked them out now Suharto would bring them back. That was the deal."

With an ailing Sukarno powerless and Suharto about to appoint himself president, the US press reported the Washington-backed coup not as a great human catastrophe but in terms of the new economic advantages. The military takeover, notwithstanding the massacres, was described by Time magazine as "The West's Best News in Asia". A headline in US News and World Report read: "Indonesia: Hope . . . where there was once none." The renowned New York Times columnist James Reston celebrated "A gleam of light in Asia" and wrote a kid-glove version he had clearly been given. The Australian prime minister, Harold Holt, who was visiting the US, offered a striking example of his sense of humour: "With 500,000 to a million communist sympathisers knocked off," he said, "I think it's safe to assume a reorientation has taken place."I

t ought to be salutary for journalists these days to heed the important role that western propaganda played then, as it does now. British intelligence manipulated the press so expertly that Norman Reddaway, head of the Foreign Office's Information Research Department (IRD), boasted to Ambassador Gilchrist, in a letter marked "secret and personal", that the spin he and his colleagues had orchestrated - that Sukarno's continued rule would lead to a communist takeover - "went all over the world and back again". He describes an experienced Fleet Street journalist agreeing "to give your angle on events in his article . . . ie, that this was a kid-glove coup without butchery". Roland Challis, who was the BBC's Southeast Asia correspondent at the time, believes that the cover-up of the massacres was a triumph for western propaganda. "My British sources purported not to know what was going on," he told me, "but they knew what the American plan was. There were bodies being washed up on the lawns of the British consulate in Surabayo, and British warships escorted a ship full of Indonesian troops down the Malacca Straits, so that they could take part in this terrible holocaust. It was only much later that we learned the American embassy was supplying names and ticking them off as they were killed. There was a deal, you see. In establishing the Suharto regime, the involvement of the IMF and the World Bank was part of it. Sukarno had kicked them out now Suharto would bring them back. That was the deal."

 

Ralph McGehee, a senior CIA operations officer at the time, whom I first interviewed almost 20 years ago, described the ousting of Sukarno in Indonesia as a "model operation" for the US-run coup that got rid of Salvador Allende in Chile seven years later. "The CIA forged a document purporting to reveal a leftist plot to murder Chilean military leaders," he wrote, "[just like] what happened in Indonesia in 1965." He says the Indonesian massacres were also
the model for Operation Phoenix in Vietnam, where US-directed death squads assassinated up to 50,000 people.


In November 1967, following the capture of the "greatest prize", the booty was handed out. The Time-Life Corporation sponsored an extraordinary conference in Geneva which, in the course of a week, designed the corporate takeover of Indonesia. It was attended by the most important businessmen in the world, the likes of David Rockefeller, and all the giants of western capitalism were represented. They included the major oil companies and banks, General Motors, Imperial Chemical Industries, British Leyland, British-American Tobacco, American Express, Siemens, Goodyear, the International Paper Corporation, US Steel. Across the table were Suharto's men, whom Rockefeller called "Indonesia's top economic team". Several were economists trained at the University of California in Berkeley. All sang for their supper, offering the principal selling points of their country and their people: "Abundance of cheap labour . . . a treasure house of resources . . . a captive market." Recently, I asked one of them, Dr Emile Salim, if anyone at the conference had even mentioned that a million people had died in bringing this new business-friendly government to power. "No, that was not on the agenda," he replied. "I didn't know about it till later. Remember, we didn't have television and the telephones were not working well."

The Indonesian economy was carved up, sector by sector, at the conference. In one room, forests in another, minerals. The Freeport Company got a mountain of copper in West Papua (Henry Kissinger is currently on the board). A US/European consortium got West Papua's nickel. The giant Alcoa company got the biggest slice of Indonesia's bauxite. A group of US, Japanese and French got thetropical forests of Sumatra, West Papua and Kalimantan.

A Foreign Investment Law, hurried on to the statutes by Suharto, made this plunder tax-free for at least five years. Real, and secret, control of the Indonesian economy passed to the IMF and the World Bank through the Inter-Governmental Group on Indonesia (IGGI), whose principal members were the US, Canada, Europe and Australia. Under Sukarno, Indonesia had few debts. Now the really big loans rolled in, often straight into pockets, as the treasurehouse of resources rolled out. Shortly before the Asian financial crash in 1997, the IGGI godfathers congratulated their favourite mass murderer for having "created a miracle economy.

Complete Article

 

 ECONOMIC DEVELOPMENT SINCE THE 1970'S

 

 

After President Suharto took office in 1967
US-Indonesia relations improved tremendously
and US investment grew as never before.
Almost overnight the Indonesian government went
from being a fierce voice for cold war neutrality and anti-imperialism
to a quiet, compliant partner of the U.S. world orde
r.

 

The Time-Life Corporation

sponsored an extraordinary conference in Geneva which,
in the course of a week, designed the
corporate takeover of Indonesia.

 


In the Suharto period relations with US and other Western countries changed overnight, foreign investment grew,
project and development aid flew in abundantly, stimulating development and corruption. Project aid funds where
highly focused on infrastructure development to facilitate foreign corporate investment operations, not specifically
the country's needs.

 

 PROJECT AID WAS MOSTLY TIED AID. AID FUNDS HAD TO BE SPEND IN THE DONOR COUNTRY.
IGGI AID IS OFTEN CONSIDERED WELFARE MONEY FOR INDONESIA.

IT IS CONVENIENTLY FORGOTTEN THAT THE TIED AID PROVISION
HUGELY BENEFITED THE DONOR COUNTRY AS WELL.

Project aid provided through IGGI was mainly TIED, the "Aid funds" had to be spent in the donor country.
The rush to win costly infrastructure projects resulted in highlevel briberies in dealings with a select power elite, stimulating corruption, which, stretching over an extended period of years. took deep roots in society.

In short, foreign corporate greed took over the development of Indonesia, fattening corporate profits and the pockets of an
elite power group supported by financial institutions like the IMF and World Bank.

 

Jakarta 1967 Green - Nixon

1967 - Richard Nixon : "Greatest Prize"

By 1967, Richard Nixon was describing Indonesia
as
"the greatest prize in the Southeast Asian area."

Richard Nixon highlighted the major factor driving US policy
towards Indonesia when, in 1967, he noted that "
with its
100 million people and its 3,000 mile arc of islands containing
the region's richest hoard of natural resources, Indonesia
constitutes the "greatest prize in the Southeast Asia area’".

1)

His assessment came after the Indonesian military had, in 1965, suppressed the Indonesian communist party, the PKI, and carried out a massacre of alleged communists, which had left hundreds of thousands of people dead, and had removed President Sukarno from power. In November 1967, Western business leaders met the new Indonesian leadership in Geneva to divide up the spoils of victory – the economic assets Nixon spoke of – and begin the exploitation of the country's wealth, which Sukarno had resisted.

2)

Indonesia's value to the West has, though, always gone beyond its economic significance. As the world's largest Islamic country and fifth most populous nation, it was arguably the most important country in Southeast Asia.

 

 

Globalisation in Indonesia: Spoils of a Massacre
(Excerpt)
report by John Pilger,

In November 1967, following the capture of the "greatest prize", the booty was handed out.
The Time-Life Corporation sponsored an extraordinary conference in Geneva which, in the course of a week, designed the corporate takeover of Indonesia.

 

 

It was attended by the most important businessmen in the world, the likes of David Rockefeller,
and all the giants of western capitalism were represented.

They included the major oil companies and banks, General Motors, Imperial Chemical Industries,
British Leyland, British-American Tobacco, American Express, Siemens, Goodyear,
the International Paper Corporation, US Steel.

(see below)

 

Indonesia 1965: Sukarno - The Greatest Prize - Rockefeller

The Time-Life Corporation sponsored an extraordinary conference in Geneva which, in the course of three days, designed the corporate takeover of Indonesia. The participants included the most powerful capitalists in the world, the likes of David Rockefeller.

All the corporate giants of the West were represented: the major oil companies and banks, General Motors, Imperial Chemical Industries, British Leyland, British-American Tobacco, American Express, Siemens, Goodyear, the International Paper Corporation, US Steel. Across the table were Suharto's men, whom Rockefeller called 'Indonesia's top economic team'.

The Freeport Company got a mountain of copper in West Papua (Henry Kissinger is currently on the board). An American and European consortium got West Papua's nickel. The giant Alcoa company got the biggest slice of Indonesia's bauxite. A group of American, Japanese and French companies got the tropical forests of Sumatra, West Papua and Kalimantan. A Foreign Investment Law, hurried on to the statutes by Suharto, made this plunder tax-free for at least five years.

Real, and secret, control of the Indonesian economy passed to the Inter-Governmental Group on Indonesia (IGGI), whose principal members were the US, Canada, Europe and Australia and, most importantly, the International Monetary Fund and the World Bank...

Under Sukarno, Indonesia had had few debts; he had thrown out the World Bank, limited the power of the oil companies and publicly told the Americans to 'go to hell' with their loans. Now the big loans rolled in, mostly from the World Bank, which had the job of tutoring the 'model pupil' on behalf of the IGGI godfathers.
'Indonesia,' said an official of the bank, 'is the best thing that's happened to Uncle Sam since World War Two.'

 

Indonesia debts

Under Sukarno, Indonesia had few debts.
Now the really big loans rolled in, often straight into pockets, as the treasurehouse of resources rolled out.Shortly before the Asian financial crash in 1997, the
IGGI godfathers congratulated their favourite mass murderer for having "created a miracle econom
y".

Suharto's attack on the Communist and usurpation of the presidency resulted in a
reversal of U.S. fortunes in the country.
Almost overnight the Indonesian government
went from being a fierce voice for cold war neutrality and anti-imperialism to a quiet,
compliant partner of the U.S. world orde
r.

 

 

2006
from VideoGoogle and FreeDodumentaries Websites

Globalization



Spotlight on Indonesia


In order to examine the true effects of globalization, Pilger turns the spotlight on Indonesia, a country described by the World Bank as a model pupil until its globalized economy collapsed in 1998.

The film examines the use of sweatshop factories by famous brand names, and asks some penetrating questions.

* Who are the real beneficiaries of the globalized economy?
* Who really rules the world now?
* Is it governments or a handful of huge companies?

The Ford Motor Company alone is bigger than the economy of South Africa. Enormously rich men, like Bill Gates, have a wealth greater than all of Africa.

Pilger goes behind the hype of the new global economy and reveals that the divisions between the rich and poor have never been greater - two thirds of the world's children live in poverty - and the gulf is widening like never before.
The film looks at the new rulers of the world - the great multinationals and the governments and institutions that back them - the World Bank and the IMF. Under IMF rules, millions of people throughout the world lose their jobs and livelihood. The reality behind much of modern shopping and the famous brands is a sweatshop economy, which is being duplicated in country after country.

The film travels to Indonesia and Washington, asking challenging questions seldom raised in the mainstream media and exposing the scandal of globalization, including revealing interviews with top officials of the IMF and the World Bank.
John Pilger once again gains the interviews that elude all other reporters and ask the questions that others are afraid to ask.
He also poses as a buyer to infiltrate Indonesian Gap/Old Navy sweetshops to interview textile workers. When I heard the poultry wages that were paid and horrid working conditions, I couldn't help by wondering... would it really be so much to ask for Nike to raise the price of shoes 40 cents to double the salaries of workers?

Unlike many films on globalization this film directly links big business, elimination of workers rights and a murderous regime that was ignored by the international world.

 


DEMOLISHING GLOBAL MYTHS

David Cromwell talks to John Pilger about his television documentary, The New Rulers of the World, which examines the real meaning of the 'global economy', including the virtually unknown and bloody history of how globalisation took root in Indonesia


Anything less than a rigorous accounting of power is - in the eyes of John Pilger, the renowned Australian journalist and ZNet commentator - a serious failure of journalism. Interviewed last year by Professor Anthony Clare for BBC Radio 4's 'In the Psychiatrist's Chair', Pilger said: 'A journalist covering political affairs, international affairs, really should be outside - so outside - the establishment ring, that he or she makes enemies'. Pilger fits the bill. As he told Anthony Hayward - whose recent book, 'In the Name of Justice', reviews the journalist's 30 years of television broadcasting - '[I am] anti-authoritarian and forever sceptical of anything the agents of power want to tell us'. But more importantly, in his own words, Pilger is driven by his 'respect for humanity, and for telling the stories of humanity from the ground up, not from the point of view of the powerful and those who, in one way or another, want to control or exploit us'.

In his latest documentary, 'The New Rulers of the World', Pilger presents the compelling argument that economic globalisation is but the latest phase of colonial domination of the weak by the powerful. Globalisation - deceptively described by Blair and Clinton as 'irreversible', 'irresistable' and 'not a policy choice, [but] a fact' - is being deliberately moulded by powerful international forces such as the World Trade Organisation, the World Bank and the International Monetary Fund. The film reveals 'free' trade as nothing other than forced trade, with victims aplenty falling by the wayside. Some of these victims are the half-million Indonesians who were slaughtered in Suharto's Western-supported coup in 1965, leading to the Western control of that country's economy, as Pilger documents.

It's that kind of link between economic globalisation and mass abuses of human rights that sets Pilger's work apart from relative newcomers to the field, such as Naomi Klein and Noreena Hertz. How else does Pilger's take on globalisation differ from the relatively safe analysis served up by such voices? 'A lot of the people who are in the broad anti-globalisation coalition', he responds, 'subscribe to the view that the new rulers of the world are the multinational corporations. I don't agree. I think it's a combination of state power - with state power still dominant - and the multinational corporations. The two are really wedded together. It's risky to start describing the world as simply run by corporations.' Pilger points out that 'the United States government has never been more powerful' and that major US corporations have been 'the beneficiaries of massive government subsidy - a kind of socialism for the rich.' The rise of the transnational corporation has been enabled and maintained by 'centralised state power'. This power, Pilger maintains, is the 'engine room of globalisation'.

In the hour-long documentary, to be screened in Britain by ITV on July 18, the 'global economy' is stripped bare, revealing a world 'where the divisions between rich and poor have never been greater.' 1.2 billion live in severe poverty - including two-thirds of the world's children - and more than one billion do not have enough to eat. More than one billion people still have no access to clean water. Over 1.2 million Iraqis have been killed by the West's 'genocidal' regime of economic sanctions, in one of the greatest crimes against humanity in the modern era. All of these shocking facts raise barely a murmur in the free press. But then, as Noam Chomsky once observed, 'What is being reported blandly on the front pages would elicit ridicule and horror in a society with a genuinely free and democratic intellectual culture.'

The documentary highlights the impacts of globalisation on Indonesia. I asked Pilger why he decided to focus on this country. 'Indonesia's a very good example because it brings in the roles of the World Bank, the IMF, foreign investors, [as well as] the exploitation of natural resources and of labour. So all the ingredients of the globalised economy can be found in Indonesia.' Also, as Pilger reports, the country is a 'a major client of the British arms industry' and was described by the World Bank - ironically, just before the Asian crash in 1998 - as a 'model pupil'.

The film presents a virtually unknown account of how globalisation took hold in Indonesia. In the wake of Suharto's seizure of power in the mid-1960s, which was backed by the United States and Britain, some of the most powerful capitalists in the world, such as David Rockefeller, met with Suharto's ministers at a secret meeting convened by Time magazine in Geneva in 1967. 'Most of the Indonesian economy', reports Pilger, 'was redesigned in a week. This was the direct result of the bloodbath in Indonesia the year before, in which the United States and Britain had played important, supportive roles.' He goes on, 'Indonesia then fell under the control of a group called the Joint Inter-Governmental Working Group, which was all the main Western governments, Japan, the World Bank and the IMF. They effectively guided the Suharto economy for many years, determining investment, debt, central bank policy and so on.'

It's an astonishing revelation, and typical of Pilger's drive to get to the heart of significant matters for Western democracy - to expose the dirty reality of a US-led vision of 'global markets', 'freedom' and 'human rights'. His previous documentary, 'Paying the Price - Killing the Children of Iraq', broadcast here in March 2000, sent shock waves through Washington and London. Pilger gave space to former high-level UN diplomats to denounce US/British sanctions as 'genocidal', with the deaths of over 4000 children under the age of 5 every month. Since the broadcast, the US and UK have intensified their efforts to frame the debate about Iraqi sanctions as though they are wholly the responsibility of Saddam. The latest talk of 'smart sanctions' is but the latest step in the same propaganda offensive. Hans von Sponeck, one of two UN humanitarian coordinators featured by Pilger who resigned in disgust at the West's policy, said recently that the US/UK proposals are mere 'tinkering at the edges of the sanctions regime'.

'Journalism', says Pilger, 'is about lifting rocks, and not accepting the official line. As a journalist, it is my duty, surely, to tell people when they're being conned or told lies'. And the whole edifice of a global economy, understands Pilger, would not be possible without official untruths and media complicity. Politicians tell us that the poor have 'lost out' on the 'benefits of free trade'. The solution to poverty, we are told by representatives of the rich West, is for these benefits to be 'spread more evenly throughout society' by continuing the process of economic globalisation which has already caused so much harm.

Pilger notes that while the clichés of corporate propaganda may have changed - 'the American way of life' has become 'globalisation' and 'the new world order'- the objective remains the same: 'to expand the power of capital, mostly Western and American capital, into most aspects of our lives so that almost everything is a commodity and the only value is measured by cost and consumption.' Pilger concurs with Indian activist Vandana Shiva's observation that the forces of globalisation, and especially the corporate media, are generating a form of brainwashing, a 'monoculture of the mind'. 'Media language', says Pilger, 'has systematically appropriated positive concepts, emptying them of their dictionary meaning and refilling them.' 'Reform' now means regression or destruction. Selling off public enterprises - such as the railway system - is 'breaking up monopolies'. 'Deregulation' means a shift from public protection to private power. This insidious corruption of language encourages people to accept that global capitalism is as healthy and inevitable as the need to consume oxygen.

One of the myths that John Pilger wishes to demolish with this film is 'the received wisdom ... that people these days are apathetic'. Pilger expands, 'The opposite is true... the fact that several million people in the last six months have demonstrated all over the world against the imposition of various forms of the global economy has been ignored by the free press. Most people have had no idea of the extent of the opposition to globalisation'. Compassion and outrage - not apathy - typifies public reaction when the truth is told about the machinations of Western power. Pilger's documentaries have invariably generated massive response. When 'Year Zero' was broadcast in 1979, it raised $45 million, unsolicited, for the people of Cambodia. In 1994, immediately following 'Death Of A Nation' about East Timor, 4000 calls a minute were made to ITV.' Last year, in the wake of Pilger's documentary on Iraq, the Foreign Office were reportedly shocked by the extent of public questioning of the West's sanctions regime in that country. Given John Pilger's record, 'The New Rulers of the World' looks set to be a major contribution to the rapidly growing resistance to state-corporate totalitarianism.

'The New Rulers of the World - A Special Report by John Pilger', a Carlton TV production, will be broadcast in Britain by ITV on Wednesday, 18 July at 10.30pm. A special preview will take place at the National Film Theatre in London on Monday, 16 July, when John Pilger will be taking questions after the screening. The director and producer is Alan Lowery. The producer, writer and presenter is John Pilger. The website address is www.JohnPilger.com


David Cromwell's book, 'Private Planet', is published by Jon Carpenter (£12.99).
Website: www.private-planet.com

 

Globalization Hurts
Sep 20th, 2006,
in Business & Economy, IM Posts, by David

Free trade, or globalization, has caused much financial suffering in Indonesia, says a scholarly body, but the blame is laid squarely on the nation itself.

The Lembaga Ilmu Pengetahuan Indonesia (LIPI), a body of intellectuals, says that free trade and the process of globalization pains Indonesia to the tune of 18 trillion rupiah, or 1.9 billion dollars, per year, in the form of, they say, a 30% reduction of subsidies and tariffs that had previously protected Indonesian companies from the blustering winds of competition.

By way of explanation Carunia Mulya Firdausy, an analyst for the LIPI, said that Indonesia was stuck between a rock and a hard place. If globalisation were resisted the nation would be left behind, floundering, but if it were welcomed damage would be caused to hitherto coddled industries. Some countries, he said, such as China, had managed to benefit from globalization, to the tune of 37 billion dollars a year in the Chinese case, but Indonesia was not among the winners as yet.

One example he outlined was the matter of balance of trade with the east Asian region. Since 1985 the proportion of Indonesian exports going to its neighbours had risen from 9.9% to 27% by 2003, while this seemingly impressive performance was put into shadow by the comparison with imports from the same countries - these had risen from 13.8% of total in 1985 to 37.3% in 2003.

Carunia Mulya Firdausy advised that Indonesia had a tendency to place too much emphasis on increasing exports of raw materials and should focus more on manufacturing and downstream products, and that this was proof of Indonesia's failure to take up and run with the opportunities presented by the globalization dynamic, and of a failure to increase factory productivity.

Without improvement in total factory productivity, he said, high economic growth could not be achieved, and he named technological factors as key in the battle for productivity gains. The underlying problem was that the basic "development" paradigm of Indonesia, pioneered in the 1960's, focused on exploitation of the country's natural wealth, and not on utilising the potential of people and technology.

 

 Impact of Global Relations on
Political and Economic development

 

 


Spoils Of A Massacre
23 Jul 2001

In Indonesia 35 years ago, a military dictator took over, a million people were killed and a red carpet was rolled out for western capital. It was the start of globalisation in Asia, a model for the rest of the world, leaving a legacy of sweatshops and corruption.

Flying into Jakarta, it is not difficult to imagine the city below fitting the World Bank's description of Indonesia. A "model pupil of globalisation" was the last of many laurels the bank bestowed. That was almost four years ago, in the summer of 1997. Within weeks, short-term global capital had fled the country, the stock market and currency had crashed, and the number of people living in absolute poverty had reached almost 70 million. The next year, General Suharto was forced to resign after 30 years as dictator, taking with him severance pay estimated at $15 billion, the equivalent of almost 13% of his country's foreign debt, much of it owed to the World Bank.

 

EXCERPT

Spoils of a Massacre


What is also no longer in doubt is the collaboration of western governments and the subsequent role of western big business. Indeed, globalisation in Asia was conceived in this bloodbath. For Britain, the goal at the time was to protect its post-colonial interests in Malaysia, then threatened by "confrontation" with an "unstable" Sukarno - a 1964 Foreign Office file called for the "defence" of western interests in Southeast Asia, "a major producer of essential commodities. The region produces nearly 85% of the world's natural rubber, over 45% of the tin, 65% of the copra and 23% of the chromium ore." Of Indonesia, Richard Nixon wrote, "With its 100 million people and its 300-mile arc of islands containing the region's richest hoard of natural resources, Indonesia is the greatest prize in Southeast Asia."

Sukarno was a populist as well as a nationalist, the founder of modern Indonesia and of the nonaligned movement of developing countries, which he hoped would forge a genuine "third way" between the spheres of the two superpowers. He could be a democrat and a demagogue. He encouraged mass trade unions and peasant, women's and cultural movements. Between 1959 and 1965, more than 15 million joined political parties or affiliated mass organisations that were encouragedto challenge British and US influence in the region. With three million members, the PKI was the largest communist party in the world outside the Soviet Union and China. According to the Australian historian Harold Crouch, "the PKI had won widespread support not as a revolutionary party but as an organisation defending the interests of the poor within the existing system". It was this popularity, rather than any armed insurgency, that alarmed the Americans. Indonesia, like Vietnam to the north, could "go communist".

In 1990, the American investigative journalist Kathy Kadane revealed the extent of secret US collaboration in the massacres of 1965/66 that toppled Sukarno and brought to power Suharto, who at the time was little known outside western intelligence circles. In a series of interviews with former US officials, she concluded, "They systematically compiled comprehensive lists of communist operatives. As many as 5,000 names were furnished to the Indonesian army, and the Americans later checked off the names of those who had been killed or captured."

In 1966, the US ambassador in Jakarta assured Suharto that the "US is generally sympathetic with and admiring of what the army is doing". The British ambassador, Sir Andrew Gilchrist, reported to the Foreign Office: "I have never concealed from you my belief that a little shooting in Indonesia would be an essential preliminary to effective change." Having already armed and equipped much of the army, Washington secretly supplied Suharto's troops with a field communications network. Flown in at night by US Air Force planes from the Philippines, this was state-of-the-art equipment, whose high frequencies were known to the CIA and the National Security Agency. Not only did this technology allow Suharto's generals to coordinate the killings, it also meant that the highest echelons of the US administration were listening in. Suharto was able to seal off large areas of the country. Archive film of people being herded into trucks and driven away exists but that is all. To my knowledge, the fuzzy photograph published here is the only pictorial record of the actual killings in this Asian holocaust.

It ought to be salutary for journalists these days to heed the important role that western propaganda played then, as it does now. British intelligence manipulated the press so expertly that Norman Reddaway, head of the Foreign Office's Information Research Department (IRD), boasted to Ambassador Gilchrist, in a letter marked "secret and personal", that the spin he and his colleagues had orchestrated - that Sukarno's continued rule would lead to a communist takeover - "went all over the world and back again". He describes an experienced Fleet Street journalist agreeing "to give your angle on events in his article . . . ie, that this was a kid-glove coup without butchery". Roland Challis, who was the BBC's Southeast Asia correspondent at the time, believes that the cover-up of the massacres was a triumph for western propaganda. "My British sources purported not to know what was going on," he told me, "but they knew what the American plan was. There were bodies being washed up on the lawns of the British consulate in Surabayo, and British warships escorted a ship full of Indonesian troops down the Malacca Straits, so that they could take part in this terrible holocaust. It was only much later that we learned the American embassy was supplying names and ticking them off as they were killed. There was a deal, you see. In establishing the Suharto regime, the involvement of the IMF and the World Bank was part of it. Sukarno had kicked them out now Suharto would bring them back. That was the deal."

With an ailing Sukarno powerless and Suharto about to appoint himself president, the US press reported the Washington-backed coup not as a great human catastrophe but in terms of the new economic advantages. The military takeover, notwithstanding the massacres, was described by Time magazine as "The West's Best News in Asia". A headline in US News and World Report read: "Indonesia: Hope . . . where there was once none." The renowned New York Times columnist James Reston celebrated "A gleam of light in Asia" and wrote a kid-glove version he had clearly been given. The Australian prime minister, Harold Holt, who was visiting the US, offered a striking example of his sense of humour: "With 500,000 to a million communist sympathisers knocked off," he said, "I think it's safe to assume a reorientation has taken place."It ought to be salutary for journalists these days to heed the important role that western propaganda played then, as it does now. British intelligence manipulated the press so expertly that Norman Reddaway, head of the Foreign Office's Information Research Department (IRD), boasted to Ambassador Gilchrist, in a letter marked "secret and personal", that the spin he and his colleagues had orchestrated - that Sukarno's continued rule would lead to a communist takeover - "went all over the world and back again". He describes an experienced Fleet Street journalist agreeing "to give your angle on events in his article . . . ie, that this was a kid-glove coup without butchery". Roland Challis, who was the BBC's Southeast Asia correspondent at the time, believes that the cover-up of the massacres was a triumph for western propaganda. "My British sources purported not to know what was going on," he told me, "but they knew what the American plan was. There were bodies being washed up on the lawns of the British consulate in Surabayo, and British warships escorted a ship full of Indonesian troops down the Malacca Straits, so that they could take part in this terrible holocaust. It was only much later that we learned the American embassy was supplying names and ticking them off as they were killed. There was a deal, you see. In establishing the Suharto regime, the involvement of the IMF and the World Bank was part of it. Sukarno had kicked them out now Suharto would bring them back. That was the deal."

With an ailing Sukarno powerless and Suharto about to appoint himself president, the US press reported the Washington-backed coup not as a great human catastrophe but in terms of the new economic advantages. The military takeover, notwithstanding the massacres, was described by Time magazine as "The West's Best News in Asia". A headline in US News and World Report read: "Indonesia: Hope . . . where there was once none." The renowned New York Times columnist James Reston celebrated "A gleam of light in Asia" and wrote a kid-glove version he had clearly been given. The Australian prime minister, Harold Holt, who was visiting the US, offered a striking example of his sense of humour: "With 500,000 to a million communist sympathisers knocked off," he said, "I think it's safe to assume a reorientation has taken place."

 

Ralph McGehee, a senior CIA operations officer at the time, whom I first interviewed almost 20 years ago, described the ousting of Sukarno in Indonesia as a "model operation" for the US-run coup that got rid of Salvador Allende in Chile seven years later. "The CIA forged a document purporting to reveal a leftist plot to murder Chilean military leaders," he wrote, "[just like] what happened in Indonesia in 1965." He says the Indonesian massacres were also the model for Operation Phoenix in Vietnam, where US-directed death squads assassinated up to 50,000 people.

In November 1967, following the capture of the "greatest prize", the booty was handed out. The Time-Life Corporation sponsored an extraordinary conference in Geneva which, in the course of a week, designed the corporate takeover of Indonesia. It was attended by the most important businessmen in the world, the likes of David Rockefeller, and all the giants of western capitalism were represented. They included the major oil companies and banks,
General Motors, Imperial Chemical Industries, British Leyland, British-American Tobacco, American Express, Siemens, Goodyear, the International Paper Corporation, US Steel. Across the table were Suharto's men, whom Rockefeller called "Indonesia's top economic team". Several were economists trained at the University of California in Berkeley. All sang for their supper, offering the principal selling points of their country and their people: "Abundance
of cheap labour . . . a treasure house of resources . . . a captive market." Recently, I asked one of them, Dr Emile Salim, if anyone at the conference had even mentioned that a million people had died in bringing this new business-friendly government to power. "No, that was not on the agenda," he replied. "I didn't know about it till later. Remember, we didn't have television and the telephones were not working well."

The Indonesian economy was carved up, sector by sector, at the conference. In one room, forests in another, minerals. The Freeport Company got a mountain of copper in West Papua (Henry Kissinger is currently on the board). A US/European consortium got West Papua's nickel. The giant Alcoa company got the biggest slice of Indonesia's bauxite. A group of US, Japanese and French got thetropical forests of Sumatra, West Papua and Kalimantan.

A Foreign Investment Law, hurried on to the statutes by Suharto, made this plunder tax-free for at least five years. Real, and secret, control of the Indonesian economy passed to the IMF and the World Bank through the Inter-Governmental Group on Indonesia (IGGI), whose principal members were the US, Canada, Europe and Australia. Under Sukarno, Indonesia had few debts. Now the really big loans rolled in, often straight into pockets, as the treasurehouse of resources rolled out. Shortly before the Asian financial crash in 1997, the IGGI godfathers congratulated their favourite mass murderer for having "created a miracle economy.

Complete Article

Globalisation in Indonesia:

Spoils of a Massacre
report by John Pilger,
Guardian Weekend 14 July 2001

In Indonesia 35 years ago, a military dictator took over, a million people were killed and a red carpet was rolled out for western capital. It was the start of globalisation in Asia, a model for the rest of the world, leaving a legacy of sweatshops and corruption.

Flying into Jakarta, it is not difficult to imagine the city below fitting the World Bank's description of Indonesia. A "model pupil of globalisation" was the last of many laurels the bank bestowed. That was almost four years ago, in the summer of 1997. Within weeks, short-term global capital had fled the country, the stock market and currency had crashed, and the number of people living in absolute poverty had reached almost 70 million. The next year, General Suharto was forced to resign after 30 years as dictator, taking with him severance pay estimated at $15 billion, the equivalent of almost 13% of his country's foreign debt, much of it owed to the World Bank.

From the air, it is the industrial design of the model pupil that is striking. Jakarta is ringed by vast compounds, known as economic processing zones. These enclose hundreds of factories that make products for foreign companies: the clothes you buy on the high street, from the cool khakis of Gap to the Nike, Adidas and Reebok trainers that sell in the UK for up to 100 pounds a pair. In these factories are thousands of mostly young women working for the equivalent of 72 pence per day.At current exchange rates, this is the official minimum wage in Indonesia, which, says the government, is about half the living wage and here, that means subsistence. Nike workers get about 4% of the retail price of the shoes they make - not enough to buy the laces. Still, they count themselves lucky: they have jobs. The "booming, dynamic economic success" (another World Bank accolade) has left more than 36 million without work

At a factory I saw, making the famous brands, the young women work, battery-style, in temperatures that climb to 40 degrees centigrade. Most have no choice about the hours they must work, including a notorious "long shift": 36 hours without going home.
Flying into Jakarta, it is not difficult to imagine the city below fitting the World Bank's description of Indonesia. A "model pupil of globalisation" was the last of many laurels the bank bestowed. That was almost four years ago, in the summer of 1997. Within weeks, short-term global capital had fled the country, the stock market and currency had crashed, and the number of people living in absolute poverty had reached almost 70 million. The next year, General Suharto was forced to resign after 30 years as dictator, taking with him severance pay estimated at $15 billion, the equivalent of almost 13% of his country's foreign debt, much of it owed to the World Bank.
From the air, it is the industrial design of the model pupil that is striking. Jakarta is ringed by vast compounds, known as economic processing zones. These enclose hundreds of factories that make products for foreign companies: the clothes you buy on the high street, from the cool khakis of Gap to the Nike, Adidas and Reebok trainers that sell in the UK for up to 100 pounds a pair. In these factories are thousands of mostly young women working for the equivalent of 72 pence per day.At current exchange rates, this is the official minimum wage in Indonesia, which, says the government, is about half the living wage and here, that means subsistence. Nike workers get about 4% of the retail price of the shoes they make - not enough to buy the laces. Still, they count themselves lucky: they have jobs. The "booming, dynamic economic success" (another World Bank accolade) has left more than 36 million without work

At a factory I saw, making the famous brands, the young women work, battery-style, in temperatures that climb to 40 degrees centigrade. Most have no choice about the hours they must work, including a notorious "long shift": 36 hours without going home.

I could just squeeze along a passageway. It was filled with people's clothes, hanging in plastic, like the backroom of a dry cleaner's. The cleanliness and neatness of people's lives is astonishing. They live in cell-like rooms, mostly without windows or ventilation, in which eating and sleeping are tuned to the ruthless rhythm of shiftwork in the factories. During the monsoon season, the canals rise and flood, and more plastic materialises to protect possessions: a precious tape player, posters of the Spice Girls and Che Guevera. I almost tipped over a frying pan of sizzling tofu. There are open paraffin fires and children darting perilously close. I watched a family of five perched on a patch of green, gazing at the sunset through a polluted yellow haze tiny bats circled overhead in the distance were the skeletal silhouettes of unfinished skyscrapers. It was an apocalyptic glimpse of a "globalised" world that Blair and Bush say is irreversible.

A code of conduct issued by the American company Gap says: "Dormitory facilities [must] meet all applicable laws and regulations related to health and safety, including fire safety, sanitation, risk protection and electrical, mechanical and structural safety." Because these dormitories are not on the factory site, however, Gap and the companies they contract to make their products are not liable. Consumers humming into Gap's numerous stores in Britain might reflect on this non-liability as they pay for smart shirts made by people who, on the wages they are paid, cannot afford even the buttons, let alone a decent place to live. Ten miles from the camps, along the toll road owned b Suharto's daughter (he distributed the national power grid among his children banks and vast tracts of forest were tossed to generals and other cronies), lies downtown Jakarta. This is the approved face of the global "model pupil". Here you can find McDonald's with sugar-plump children on Ronald's knee, and shopping malls with Versace leather coats at £2,000 and a showroom of Jaguar cars. One of the smartest hotels is the Shangri-la. There are four wedding receptions here every Sunday night. Last December, attended one that cost $120,000. It was held in the grand ballroom, which is a version of the ballroom of the Waldorf Astoria in New York, complete with chandeliers and gold-leaf arches. The guests wore Armani, Versace and real diamonds, and dropped cheques in a large box. There was an eight-tier cake with the initials of the couple embossed in icing and the holiday snaps of them on a world tour were projected cinema-size. The guests included former cronies of the deposed Suharto and the chief representative of the World Bank in Indonesia, Mark Baird, a New Zealander, who looked troubled when I asked him if he was enjoying himself. The World Bank says its mission in Indonesia is "poverty reduction" and "reaching out to the poor". The Bank set up the $86 million loan that built the Shangri-la, which, shortly after the wedding attended by Baird, sacked most of its workers when they went on strike for decent pay.

The Gotham City skyline of downtown Jakarta is mostly banks, many of them empty, and unfinished buildings. Before 1997, there were more banks here than in any city on earth, but half of them have gone bust since the "dynamic" economy collapsed beneath the weight of its corruption. During Suharto's 30-year dictatorship, a cataract of "global" capital poured into Indonesia. The World Bank lavished more than $30 billion. Some of this went to worthwhile programmes, such as literacy, billions went elsewhere - $630 million was spent on a notorious "transmigration" programme that allowed Suharto to colonise the archipelago. Migrants from all over Indonesia were sent to occupied East Timor, where they controlled the economy. The recent blood-letting in Kalimantan (Borneo) was directed against Madura islanders who had been shipped in to "develop" the territory. In August 1997, an internal World Bank report, written in Jakarta, confirmed arguably the greatest scandal in the history of "development" - that "at least 20 to 30%" of the bank's loans "are diverted through informal payments to GOI [Government of Indonesia] staff and politicians".

Seldom a month would pass when Suharto was not being congratulated by western politicians for bringing "stability" to the world's fourth most populous nation. British politicians were especially appreciative, beginning with Harold Wilson's foreign secretary, Michael Stewart, who in 1966 lauded the dictator's "sensible economic policies". Margaret Thatcher called Suharto "one of our very best and most valuable friends". John Major's foreign secretary, Douglas Hurd, championed the Suharto regime's "Asian values" (the unctuous code for lack of democracy and abuse of human rights). In 1997, Robin Cook's first trip abroad included Indonesia, where he shook hands warmly with Suharto - so warmly that a colour photograph of the pair of them was chosen, bizarrely, to illustrate the Foreign Office's report on human rights in the world.

They all knew, of course. Amnesty filled cabinets with evidence of Suharto's grisly record. Milosevic and Saddam Hussein were wimps by comparison. Shortly before Cook flew in, an exhaustive investigation by the foreign affairs committee of the Australian parliament concluded that Suharto's troops had caused the deaths of "at least" 200,000 East Timorese, a third of the population. In New Labour's first year in office, Britain was the biggest weapons supplier to Indonesia.

This made sense - the arms trade is one of globalisation's great successes an Indonesia, the model pupil, has played a vital role. When the "global economy" (ie, unfettered capitalism) took hold in Britain in the early 80s, Margaret Thatcher set about dismantling much of Britain's manufacturing, while restoring the country's arms industry to a world leader, second only to the US. This was done with veiled subsidies, of the kind that underwrite and rig the "free market" in the west. Almost half of all research and development funds went on "defence" and the export credit guarantee department (ECGD) of the Department of Trade and Industry offered "soft loans" to third world regimes shopping for hi-tech sabres to rattle. That many had appalling human rights records and internal conflicts and/or were on the verge of war with a neighbour (India, Pakistan, Iran, Iraq, Israel) was not a barrier. Indonesia was a major recipient of these virtual giveaways. During one 12-month period, almost pounds 1 billion of ECGD money financed the sale of Hawk fighter-bombers to Indonesia. The British taxpayer paid up the arms industry reaped its profits. The Hawks were used to bomb villages in the mountains of East Timor - and the Foreign Office lied about for years, until Cook was forced to admit it. Since then, the Hawks have bombed the West Papuans as they have struggled to free themselves.

I drove into the Krawang region of Java, where I met a rice farmer calle Sarkom. It is fair to describe Sarkom as representative of the 80% of humanity whose livelihoods depend on agriculture. He is not among the poorest, he lives with his wife and three daughters in a small, bamboo-walled house and there are tiles on the floor. At the front, under the eave, is a bamboo bed, a chair and a table where his wife, Cucuk, supplements their income with sewing. Last year, the International Monetary Fund offered the post-Suharto government a "rescue package" of multi-million-dollar loans. The conditions included the elimination of tariffs on staple foods. "Trade in all qualities of rice has been opened to general importers and exporters," decreed the IMF's letter of intent. Fertilisers and pesticides also lost their 70% subsidy. This means that farmers such as Sarkom are likely to go bankrupt and their children forced to find work in the cities. Moreover, it gives the green light to the giant US foodgrains corporations to move into Indonesia

The double standard embodied in these conditions is breathtaking. Agribusiness in the west, especially in the US and Europe, has been able to produce its infamous surpluses and develop its export power only because of high tariff walls and massive domestic subsidies. The result has been the soaring power of the west over humanity's staples. The chief executive of the Cargill Corporation, which dominates the world trade in foodgrains, once boasted, "When we get up from the breakfast table each morning, much of what we have eaten - cereals, bread, coffee, sugar and so on - has passed through the hands of my company." Cargill's goal is to double in size every five to seven years. This is known as "free trade". "I went to prison for 14 years so that this would not happen," said Sarkom. "All my friends, those who were not killed, went to prison so that the power of big money would not take us over. I don't care what they call it now - global this or that. It's the same force, the same threat to our lives."

That remark refers to a chapter in Indonesia's recent past that western politicians and businessmen would prefer to forget, although they have been among the chief beneficiaries. Sarkom was one of tens of thousands imprisoned when General Suharto seized power in Indonesia in 1965-66 - the "year of living dangerously" - deposing the nationalist president Sukarno, who had led Indonesia since the end of Dutch colonial rule. Scholars now estimate that as many as a million people died in a pogrom that was directed primarily at Indonesia's communist party, the PKI. Sarkom was 19 when he was taken away. He is trying to write down in an exercise book his memories of the horrors he experienced. He was for many years on Buru island, where thousands were dumped, at first without housing, food and water. On the day I went to see him, he had gathered a group of friends for me to meet, men in their 60s and 70s, who had also been tapols - political prisoners released since the fall of Suharto in 1998. Two were teachers, one a civil servant, another a member of parliament. One man was imprisoned because he refused to vote for Suharto's front party, Golkar. Several were PKI members. Adon Sutrisna, a teacher, told me, "We are the people, the nation, that the world forgot. If you know the truth about what happened in Indonesia, you can understand clearly where the world is being led today." A few miles from Sarkom's farm is a hump of earth overgrown with mustard flowers. It is a mass grave, but it has no markings - 35 years after the murders, the families of the victims, believed to be a dozen, are still too frightened to place a headstone. However, in the post-Suharto era, many Indonesians are slowly overcoming th fear that has blighted a generation throughout the countryside, families have begun to excavate the remains of their loved ones. They are furtive figures of the night, occasionally glimpsed on the rim of a paddy or a riverbank. The older witnesses recall rivers "jammed with bodies like logs" in village after village, young men were slaughtered for no reason, their murder marked by rows of severed penises.

I have a friend in Jakarta whose name is Roy. Others call him Daniel. These are just two of many aliases that have helped keep him alive since 1965. He is one of a group of remarkable revolutionaries who went underground during the long years of Suharto's repression - the years when the World Bank was tutoring its "model pupil" - emerging at critical moments to lead spears of a clandestine opposition movement. On several occasions, this led to his arrest and torture. "I survived because they never knew it was me," he said. "Once, a torturer yelled at me, 'Tell us where Daniel is!' " In 1998, he helped bring on to the streets the students whose courageous confrontations with troops usin British-supplied anti-riot vehicles played a critical role in finally bringing down the dictator.

Roy took me back to his primary school where, for him, the nightmare of Suharto's rule began. As we sat in an empty classroom, he recalled the day in October 1965 when he watched a gang burst in, drag the headmaster into the playground, and beat him to death. "He was a wonderful man: gentle and kind," Roy said. "He would sing to the class, and read to me. He was the person that I, as a boy, looked up to . . . I can hear his screams now, but for a long time, years in fact, all I could remember was running from the classroom, and running and running through the streets, not stopping. When they found me that evening, I was dumbstruck. For a whole year I couldn't speak."

The headmaster was suspected of being a communist, and his murder that day was typical of the systematic executions of teachers, students, civil servants, peasant farmers. "In terms of the numbers killed," reported the Central Intelligence Agency, "the massacres rank as one of the worst mass murders of the 20th century." The historian Gabriel Kolko wrote that "the 'final solution' to the communist problem in Indonesia ranks as a crime of the same type as the Nazis perpetrated". According to the Asia specialist Peter Dale Scott, western politicians, diplomats, journalists and scholars, some with prominent western intelligence connections, propagated the myth that Suharto and the military had saved the nation's honour from an attempted coup by the Indonesian communist party, the PKI. Until then, Sukarno had relied on the communists as a counterweight to the army. When six army generals were murdered on September 30, 1965, Suharto blamed the PKI. Since the dictator's fall in 1998, witnesses have spoken for the first time and documents have come to light strongly suggesting that Suharto, who had military control of Jakarta, opportunistically exploited an internecine struggle within the army in order to seize power.

What is also no longer in doubt is the collaboration of western governments and the subsequent role of western big business. Indeed, globalisation in Asia was conceived in this bloodbath. For Britain, the goal at the time was to protect its post-colonial interests in Malaysia, then threatened by "confrontation" with an "unstable" Sukarno - a 1964 Foreign Office file called for the "defence" of western interests in Southeast Asia, "a major producer of essential commodities. The region produces nearly 85% of the world's natural rubber, over 45% of the tin, 65% of the copra and 23% of the chromium ore." Of Indonesia, Richard Nixon wrote, "With its 100 million people and its 300-mile arc of islands containing the region's richest hoard of natural resources, Indonesia is the greatest prize in Southeast Asia."

Sukarno was a populist as well as a nationalist, the founder of modern Indonesia and of the nonaligned movement of developing countries, which he hoped would forge a genuine "third way" between the spheres of the two superpowers. He could be a democrat and a demagogue. He encouraged mass trade unions and peasant, women's and cultural movements. Between 1959 and 1965, more than 15 million joined political parties or affiliated mass organisations that were encouragedto challenge British and US influence in the region. With three million members, the PKI was the largest communist party in the world outside the Soviet Union and China. According to the Australian historian Harold Crouch, "the PKI had won widespread support not as a revolutionary party but as an organisation defending the interests of the poor within the existing system". It was this popularity, rather than any armed insurgency, that alarmed the Americans. Indonesia, like Vietnam to the north, could "go communist".


In 1990, the American investigative journalist Kathy Kadane revealed the extent of secret US collaboration in the massacres of 1965/66 that toppled Sukarno and brought to power Suharto, who at the time was little known outside western intelligence circles. In a series of interviews with former US officials, she concluded, "They systematically compiled comprehensive lists of communist operatives. As many as 5,000 names were furnished to the Indonesian army, and the Americans later checked off the names of those who had been killed or captured."

In 1966, the US ambassador in Jakarta assured Suharto that the "US is generally sympathetic with and admiring of what the army is doing". The British ambassador, Sir Andrew Gilchrist, reported to the Foreign Office: "I have never concealed from you my belief that a little shooting in Indonesia would be an essential preliminary to effective change." Having already armed and equipped much of the army, Washington secretly supplied Suharto's troops with a field communications network. Flown in at night by US Air Force planes from the Philippines, this was state-of-the-art equipment, whose high frequencies were known to the CIA and the National Security Agency. Not only did this technology allow Suharto's generals to coordinate the killings, it also meant that the highest echelons of the US administration were listening in. Suharto was able to seal off large areas of the country. Archive film of people being herded into trucks and driven away exists but that is all. To my knowledge, the fuzzy photograph published here is the only pictorial record of the actual killings in this Asian holocaust.

It ought to be salutary for journalists these days to heed the important role that western propaganda played then, as it does now. British intelligence manipulated the press so expertly that Norman Reddaway, head of the Foreign Office's Information Research Department (IRD), boasted to Ambassador Gilchrist, in a letter marked "secret and personal", that the spin he and his colleagues had orchestrated - that Sukarno's continued rule would lead to a communist takeover - "went all over the world and back again". He describes an experienced Fleet Street journalist agreeing "to give your angle on events in his article . . . ie, that this was a kid-glove coup without butchery".

Roland Challis, who was the BBC's Southeast Asia correspondent at the time, believes that the cover-up of the massacres was a triumph for western propaganda. "My British sources purported not to know what was going on," he told me, "but they knew what the American plan was. There were bodies being washed up on the lawns of the British consulate in Surabaya, and British warships escorted a ship full of Indonesian troops down the Malacca Straits, so that they could take part in this terrible holocaust. It was only much later that we learned the American embassy was supplying names and ticking them off as they were killed. There was a deal, you see.

In establishing the Suharto regime, the involvement of the IMF and the World Bank was part of it. Sukarno had kicked them out now Suharto would bring them back. That was the deal."

With an ailing Sukarno powerless and Suharto about to appoint himself president, the US press reported the Washington-backed coup not as a great human catastrophe but in terms of the new economic advantages. The military takeover, notwithstanding the massacres, was described by Time magazine as "The West's Best News in Asia".
A headline in US News and World Report read: "Indonesia: Hope . . . where there was once none." The renowned New York Times columnist James Reston celebrated "A gleam of light in Asia" and wrote a kid-glove version he had clearly been given. The Australian prime minister, Harold Holt, who was visiting the US, offered a striking example of his sense of humour: "With 500,000 to a million communist sympathisers knocked off," he said, "I think it's safe to assume a reorientation has taken place."

Ralph McGehee, a senior CIA operations officer at the time, whom I first interviewed almost 20 years ago, described the ousting of Sukarno in Indonesia as a "model operation" for the US-run coup that got rid of Salvador Allende in Chile seven years later. "The CIA forged a document purporting to reveal a leftist plot to murder Chilean military leaders," he wrote, "[just like] what happened in Indonesia in 1965." He says the Indonesian massacres were also the model for Operation Phoenix in Vietnam, where US-directed death squads assassinated up to 50,000 people.

In November 1967, following the capture of the "greatest prize", the booty was handed out. The Time-Life Corporation sponsored an extraordinary conference in Geneva which, in the course of a week, designed the corporate takeover of Indonesia.

It was attended by the most important businessmen in the world, the likes of David Rockefeller, and all the giants of western capitalism were represented. They included the major oil companies and banks, General Motors, Imperial Chemical Industries, British Leyland, British-American Tobacco, American Express, Siemens, Goodyear, the International Paper Corporation, US Steel.

Across the table were Suharto's men, whom Rockefeller called "Indonesia's top economic team". Several were economists trained at the University of California in Berkeley. All sang for their supper, offering the principal selling points of their country and their people: "Abundance of cheap labour . . . a treasure house of resources . . . a captive market." Recently, I asked one of them, Dr Emile Salim, if anyone at the conference had even mentioned that a million people had died in bringing this new business-friendly government to power. "No, that was not on the agenda," he replied. "I didn't know about it till later. Remember, we didn't have television and the telephones were not working well."

The Indonesian economy was carved up, sector by sector, at the conference. In one room, forests in another, minerals. The Freeport Company got a mountain of copper in West Papua (Henry Kissinger is currently on the board). A US/European consortium got West Papua's nickel. The giant Alcoa company got the biggest slice of Indonesia's bauxite. A group of US, Japanese and French got thetropical forests of Sumatra, West Papua and Kalimantan.

A Foreign Investment Law, hurried on to the statutes by Suharto, made this plunder tax-free for at least five years. Real, and secret, control of the Indonesian economy passed to the IMF and the World Bank through the Inter-Governmental Group on Indonesia (IGGI), whose principal members were the US, Canada, Europe and Australia. Under Sukarno, Indonesia had few debts. Now the really big loans rolled in, often straight into pockets, as the treasurehouse of resources rolled out. Shortly before the Asian financial crash in 1997, the IGGI godfathers congratulated their favourite mass murderer for having "created a miracle economy.

© copyright John Pilger.