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Suharto Still Unbowed after Global Finance Officials' Visit

By David Lamb
Los Angeles Times
JAKARTA, Indonesia

Key finance officials from Europe, the United States, and Asia descended on this capital city Monday in an attempt to get President Suharto to accept economic reforms demanded by the International Monetary Fund.

Suharto smiled and nodded and said he would be flexible. But the Indonesian leader, who apparently still favors the much-criticized idea of creating a currency board to peg the rupiah at a fixed exchange rate to the U.S. dollar, remained noncommittal.

As Suharto's new 36-member Cabinet was sworn in Monday, university students continued their on-campus demonstrations against the president in the capitol city of Jakarta and in the city of Surabaya. The month-long protests have generally been peaceful, but Suharto was burned in effigy at one demonstration last week.

The composition of Suharto's Cabinet alarmed many economists because it is practically devoid of economists and reformists.

"Judging by their track records, most of the people in the Cabinet are incompetent," said Faisal Basri, a respected economist at the University of Jakarta. Last week, Indonesian markets reacted negatively to the possibility that Suharto would appoint the loyalists, but the rupiah strengthened slightly Monday, and the stock market was up four percent.

The officials who came to Jakarta on separate missions Monday included David Lipton, a U.S. treasury undersecretary; Klaus Regling, director-general of Germany's Finance Ministry; and Eisuke Sabakibara, Japan's vice finance minister. Hubert Weiss, the head of the IMF's Asia-Pacific operations, is due in Jakarta Tuesday.

Japanese Prime Minister Ryutaro Hashimoto, whose government has pledged $8 billion to Indonesia's bailout, traveled to Jakarta over the weekend with an entourage of 50. He left without winning any apparent concessions from Suharto in Indonesia's standoff with the IMF.

"I am deeply concerned about the economic difficulties which Indonesia now faces and expect President Suharto to make the courageous decision in overcoming the present difficulties," Hashimoto said.

The IMF has threatened to pull out of Indonesia entirely if Suharto goes ahead with his currency board idea without first undertaking major economic reforms.