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This Asian Tiger is Not Made of Paper

Author: Joshua Kurlantzick, Senior Fellow for Southeast Asia
September 4, 2009
The National


On a typically humid morning this past July, two bombings shattered the cacophony of the Indonesian capital - the normal sounds of vendors hawking clove cigarettes, calls to prayer, and honking cars crawling through the soupy, polluted tropical air. At the Jakarta JW Marriott, a group of local and expatriate business leaders had gathered for a working breakfast. Just before 8am, a powerful bomb exploded immediately outside the restaurant, destroying the interior and blasting blood onto the sidewalks outside the hotel. Five minutes later, a suicide bomber attacked the restaurant of the Ritz-Carlton, detonating a second bomb that destroyed much of that hotel's façade, spraying glass like shrapnel. Overall, the attacks killed nine people and wounded at least 50.

Police descended on the scene, and local terrorism experts quickly placed the blame on splinter elements of Jemaah Islamiah, a prominent South-east Asian Islamist group linked to al Qa'eda. Over the past decade, Jemaah Islamiah has struck multiple times in Indonesia; the suspected mastermind of the July bombings, Noordin Mohammed Top, allegedly had organised a previous attack on the JW Marriott, a bombing of the Australian embassy in Jakarta, and several other terror plots.

Following the July bombing, some foreign commentators rushed to brand Indonesia as a dangerous battleground for Islamic militancy - a Pakistan on the rim of the Indian Ocean. Those cries of alarm were predictable but wide of the mark. The broader trends in Indonesia's recent history suggest something entirely different.

A decade ago, following the fall of longtime dictator Suharto and the chaos of the Asian financial crisis, the archipelago was indeed threatened by rising Islamism, inter-ethnic violence and an economic meltdown. Seemingly overnight, as much as one-quarter of the country fell below the poverty line, and the central bank had to grovel to the International Monetary Fund for a bailout. The political vacuum resulting from Suharto's downfall, combined with the economic distress, caused a cauldron of street protest, with rioters targeting sections of Jakarta that were home to ethnic Chinese, often stigmatised for their success in business. Sitting in one office building during the riots, I could look across downtown Jakarta to see smoke rising from burnt-out Chinese areas of town. My translator, who was ethnic Chinese, hid out in her family compound as mobs attacked the security guards outside.

Ten years later, that chaos seems a distant memory. Despite the July bombings, Indonesia has made enormous strides in breaking up Jemaah Islamiah and other militant groups. "JI still exists as an organisation, although it seems to have lost a sense of direction," notes a recent analysis of the terror network by the International Crisis Group, which closely monitors Indonesia. "Tragic as these attacks are, there is no indication that they will have any impact on the political stability of the government." Once an economic basket case, Indonesia now outperforms many of its neighbours - in the second quarter of 2009, the archipelago's economy expanded by over four per cent, a near-miracle in the global financial crisis. And the military, once so powerful, has been forced to the sidelines by the elected president, Susilo Bambang Yudhoyono, a former general himself.

What is most impressive, though, is that, in a world where only Turkey has built a stable, Muslim-majority democracy, Indonesia has created one of the freest, most vibrant democracies in Asia. That is one reason why the Obama administration has made the archipelago a foreign policy priority. This past summer, Yudhoyono won 61 per cent of the vote to claim a second term as president in an election where some 100 million Indonesians, spread across over 900 islands, voted in a free and fair poll. The election was a triumph for secular democracy: Islamic parties barely registered in the election, gaining nine points less of the vote than they had five years earlier.

For decades after the coup that installed Suharto as president in the mid-1960s, Indonesia lived in a kind of political slumber. The fourth most populous nation on earth, stretching across a diverse archipelago that ranges from densely-populated Java to islands peopled by tribes that had never interacted with the modern world, it went ignored by most policymakers in the West. One of the most comprehensive studies of the country, by the journalist Adam Schwarz, was titled Indonesia: A Nation in Waiting because the country seemed yet to emerge, both politically and on the world stage.

After Suharto grabbed the presidency, he launched his "New Order" economic and political policy, which concentrated power in his hands but also liberalised the economy, welcoming foreign investment. The New Order delivered rapid economic growth - accompanied by voluminous alleged graft by Suharto's family and friends. Close associates of Suharto, like Mohamad "Bob" Hasan, found their businesses benefited enormously from ties to the president; Hasan inked enormous joint venture deals with foreign companies looking to harvest Indonesia's timber. (In 2001, Hasan was convicted on charges of corruption and served three years in jail.)

Despite Suharto's cronyism, organised protest remained relatively rare for most of his three-decade rule, in part because of strong economic growth. Jakarta grew from a city of shacks and elegant Dutch colonial homes into a high-rise metropolis. Suharto also kept a lid on Islamism. Indonesia historically had practised a moderate version of Islam: the religion had been brought to the archipelago by traders and mixed with local folk practices. Still, the dictator took no chances. His security forces monitored radical Islamist groups, harassing them and often tossing their leaders in jail.

This stability lasted until 1997. As the Asian financial crisis spiralled out of control, Indonesia was hit harder than any other country in the region. The rupiah, Indonesia's currency, plunged from a pre-crisis exchange rate of around 2,400 to the US dollar to, at its worst, around 15,000 to the dollar. Local banks collapsed.  oreign investors began pulling out of Indonesia, and many decamped to China never to return. Rich Indonesians parked their money in nearby, stable Singapore. In 1998, the economy shrank by nearly 14 per cent, and many Indonesians could no longer afford staples like rice.

With the economic downturn, Indonesia's time of waiting ended abruptly. As street protests over the financial crisis morphed into all-out riots, Suharto finally stepped down, handing power in May of 1998 to his vice president, the ineffective BJ Habibie, who was forced to open the political system. Habibie let East Timor, a former Portuguese colony annexed by Indonesia in 1975, split away, though in the period after the Timorese voted for independence, Indonesian militias linked to the army ran wild in Timor, burning towns to the ground. (When I visited Timor, seven years after the independence referendum in 1999, I could still see blocks of burnt out buildings across the landscape in Dili, Timor's capital, as if the battles had just ended.)

In Indonesia proper, the political opening culminated in a truly democratic election in June 1999. But free votes didn't exactly produce stability. Abdurrahman Wahid, the former leader of one of the country's largest religious organisations, became the first president of the democratic era. Incapacitated by strokes, Wahid relied on a small circle of advisers and appeared to make decisions with little forethought, dismissing ministers left and right while seemingly oblivious to the corruption around him.

However, Wahid did set one precedent that proved enormously important for Indonesia. Though he was himself a religious leader, Wahid scrupulously insisted that Islam and secular government must be kept separate, and that he would not let religious law dominate his policy choices for the state. Because Wahid, one of the most respected clerics in the country, made clear he would not mix Quranic advice with government decisions, it became much more difficult for future Indonesian leaders, none of whom had Wahid's religious credentials, to argue they needed to use the Quran to guide secular policymaking. "Wahid and Amein Rais [another religious leader-turned-prominent politician] - these guys were like civil society leaders, they organized people but they never suggested that religious law was more important [than secular law]", says Walter Lohman, head of the Asian Studies Center of the Heritage Foundation, a Washington think tank. "So Indonesia could see itself as a Muslim-majority country that was a democracy but not a ‘Muslim democracy.'"

Ultimately, facing health problems and policy drift, Wahid  stepped down and was succeeded by his vice president, Megawati Sukarnoputri. In office, she proved even less  competent than Wahid. The daughter of Indonesia's independence hero, Sukarno, Megawati seemed to view herself like a queen, entitled to power but not required to actually do anything. For four years as president, Megawati gave virtually no high-profile policy addresses. "You can't get her to do anything; she doesn't even seem to recognise the dangers in her own country," one Bush administration official told me at the time.

While the administrations of Wahid and Megawati melted down, the country itself seemed on the verge of falling apart. Many Indonesian policy analysts thought the country would either return to strongman rule, since people would want an authoritarian leader to restore order, or would become increasingly Islamicised since Islamic parties, which had made gains in the 1999 poll, promised clean government and a return to order. Inter-ethnic and inter- religious violence spiralled out of control. In Indonesia's fabled Spice Islands, which lie astride the equator, local Muslim and Christian communities went to war, the Muslims assisted by Islamic militias like Laskar Jihad that came from other parts of Indonesia. Like modern-day Vlad the Impalers, gangs in the Spice Islands would decapitate their victims and then display the heads in public.

Terrorist networks were gaining strength too. Many leaders of these networks had travelled to Afghanistan to train at Taliban-protected terror camps and imbibe the speeches of Osama bin Laden. "We wanted to defend the Muslim faithful who were being oppressed... by undertaking acts of terror aimed at facilities owned by Americans, British, Australians, and Israelis," one of the architects of the 2003 Marriott bombings told police, according to a transcript obtained by the International Crisis Group. Some Jemaah Islamiah leaders even decided they could build a new Islamic caliphate stretching from southern Thailand, across Malaysia and Indonesia to the southern Philippines, home to another militant Muslim insurgency. To build its network, JI recruited in pesantrens, Islamic boarding schools often funded with money from foreign charities. These pesantrens offered some poor Indonesian children their only chance at a real education, but a small handful of the schools became breeding grounds for militant groups. One infamous pesantren, Al Mukmi, became an elite prep school of terrorism studies. "Its alumni were responsible for the 2002 Bali bombings, the 2003 Jakarta Marriott Hotel bombing and the 2004 suicide bombings at the Australian Embassy in Jakarta," notes Sharif Shuja of Monash University in Australia.

In the winter of 2000, Jemaah Islamiah made its first major statement. On Christmas Eve, bombs exploded at  churches in Jakarta and eight other cities. These were only the warm-up to the 2002 Bali bombing, in which two suicide bombers killed over 200 people on the resort island, the worst terrorist strike in Indonesia's history. Yet even after Bali, Megawati did almost nothing about the threat. Her vice president, Hamzah Haz, who'd once expressed hope that the September 11, 2001 attacks would "cleanse America of its sins", confidently told reporters there were "no terrorists in Indonesia".

In the run-up to the 2004 presidential election, the country's mood was grim. The unstable security situation further scared off foreign investors, already wary after the Asian financial crisis. Corruption still marred most government activities; Indonesia ranked near the bottom of Transparency International's international Corruption Perceptions Index. Most years, Indonesia attracted less than one-tenth the foreign direct investment of China, its regional rival in producing shoes, textiles, toys and cheap electronics. Meanwhile, the armed forces continued to wield enormous influence, supporting militias across the country and snuffing out human rights activists and other critics who spoke too loudly. In 2004, Munir Said Thalib, one of the country's most famous human rights activists, boarded a flight operated by the state-run carrier Garuda Indonesia, which has links to the armed forces. In the air between Jakarta and Amsterdam, a flight attendant served him several drinks. He became violently ill, vomiting heavily, and by the time he arrived in Amsterdam he was dead. Investigators there found staggering amounts of cyanide in his system.

When I returned to Jakarta in 2006 I was shocked by how rapidly the mood had changed just since the early 2000s. Bars that had once posted burly guards for fear of being attacked by Islamist vigilante groups had relaxed again. At one club, Indonesian yuppies from the nearby banks, dressed in dark suits despite the 100 degree heat outside, tossed down bottles of Tiger beer followed by shots of vodka. At the fancy country clubs in Jakarta's suburbs, businessmen friends had shed their depression, talking instead of new deals with Chinese companies, new orders for shoes from western multinationals and new oil discoveries in Indonesian waters. In a swank office in one of Jakarta's downtown high-rises, Ali Alatas, a former foreign minister working for a law firm, captured the optimism. "It hasn't been that long" since the chaos of the 1990s, he told me, "but you can see we are in a position to lead again."

The brutal ethnic violence of just a few years ago now seemed like a closed book - some Indonesians I met appeared surprised I even asked about it. My translator, who'd hid from violent mobs in the late 1990s, now reminded friends of her Chinese heritage. When I visited the penthouse office of a prominent Indonesian Chinese business leader named AB Susanto, he boasted to me that several leading political parties had tried to recruit him to run in the national elections. "The environment is much more tolerant now," Susanto said. "People don't have to hide who they are."

In office, Yudhoyono, who'd won the 2004 presidential election, moved quickly against Jemaah Islamiah and its networks. The president, known to all as "SBY," embraced a seemingly simple idea, but one few other Muslim heads of state have communicated effectively: terrorists threaten average Indonesians, not just the West. By convincing his public of this central theme, SBY was able to turn opinion against Jemaah Islamiah while deflecting claims that he was just serving the interests of the United States. "The whole tide of the counterterrorism fight, and the Indonesian relationship [with the US] turned after SBY was elected," says Walter Lohman of the Heritage Foundation. By contrast, despite ample evidence to the contrary, Saudi leaders claimed for years that terrorism posed little threat to the Kingdom, and once the government confronted the threat, many Saudi bloggers claimed that it had reversed  course solely because of pressure from Washington. Similarly, Pakistani leaders have suggested to the public that it must crack down on extremism or risk jeopardizing its relations with the West - and the attendant flow of aid money. Little wonder, then, that poll after poll of Pakistanis shows tepid support for confronting terrorism.

Unafraid to challenge militants in public, Yudhoyono has made good use of the bully pulpit. (Again, by contrast, while bin Laden and Zawahiri have proven masterful at public speeches, leaders from countries they target, like Saudi Arabia, rarely make good use of their own public speeches to rally opinion.) In nearly every major address, SBY hit this theme hard. "The terrorist acts were aimed directly against their own country,'' he said in one high-profile, representative speech. "To the whole of the Indonesian people, let us collectively unite in the fight against the acts of terrorism. Let us protect our citizens and youth from misleading and extreme ideas that may lead them to commit acts of terrorism."

Yudhoyono has backed up his speeches with clear action, eventually winning the public to his side. (In one poll of Indonesians by the organization Terror Free Tomorrow, 74 per cent said that terrorist attacks are "never justified".) His government realised it could not defeat militants with force alone. "A counterterrorism strategy that is only focused on the use of only physical force or harsh law enforcement measures would not be effective," said Ansyyad Mbai, head of Indonesia's Counter- Terrorism Coordinating Desk, at a conference. So Jakarta created an initiative in which former terrorists would appear on national television, describe the brutality of their crimes, express remorse for killing Indonesians and emphasise to the public that terror threatens everyone, not just westerners and western companies. Indonesia's religious establishment has also helped, with moderate leaders of large Islamic organizations quickly and independently condemning the militants. At one press conference, Kiai Haj Hasyim Muzadi, president of Indonesia's largest Muslim organisation, with over 30 million members, declared, "Terrorism has nothing to do with Islam." This is an advantage not enjoyed by leaders in, say, Saudi Arabia, where hard-line clerics have proven tough to rein in.

Meanwhile, realising that only former militants could speak directly to the current crop of angry young men, Indonesia has launched a novel "deradicalisation" programme designed to convince terrorists to reject violence. In this programme, former militants approach convicted terrorists in prison, using religious arguments, compassion and other softer tactics to win them over. High-profile militants like Nasir Abbas, a former JI commander, have been turned; Abbas now works with the Indonesian police to flip other terrorists and turn them into community organisers. One study by the International Crisis Group found the deradicalisation programme had convinced at least 24 former JI militants to co-operate with the police. Other governments have taken note: Saudi Arabia had created its own version of the deradicalisation programme, as have Yemen, Egypt and the Netherlands.

The government combined this conversion strategy with highly effective elite police work, led by a counterterrorism task force called Detachment 88. Using a distinct elite counterterrorism force made sense; the average police officer in Indonesia, poorly paid and poorly trained, is an easy target for corruption, while the army has such a terrible public reputation that turning it loose against terrorists would have been a disaster. By showing itself virtually impervious to graft or leaks, Detachment 88 has built an impressive network of informants around the archipelago. Such informants, along with the former militants turned to the government side and the general public support for the terror battle, have all helped Detachment 88, allowing it to penetrate terrorist cells, probably the toughest task of any counterterrorism force. (The Central Intelligence Agency, for one, has largely failed to penetrate cells.)

Relying on these strategies, Detachment 88 has broken open huge cases. Over the past five years, it has arrested over 300 militants and captured most of the ringleaders of the Bali bombing, the 2003 Marriott bombing and nearly every other terrorist strike. In the process, according to most Indonesian terror experts, the task force has crippled Jemaah Islamiah's network, damaged its fund-raising capacity and curtailed its ability to recruit in Islamic boarding schools. In 2007, Detachment 88 captured Zarkasih, then the head of JI - the rough equivalent of the United States capturing Osama bin Laden or Ayman al Zawahiri. Detachment 88's network of informants has also allowed it to move very quickly. Almost immediately after the hotel bombings in July, the Indonesian security forces nabbed most of the major plotters behind the attack.

Yet unlike nearly every nation in the Middle East, and unlike South-east Asian neighbours like Malaysia and Singapore, Indonesia has never relied on holding suspects without trial to stop terror. In fact, SBY has stuck so diligently to the existing court system that the West has griped about it. When a court released Abu Bakar Bashir, the spiritual leader of Jemaah Islamiah, after he had served only a brief prison term, Australia and the United States complained, and their diplomats pressured Jakarta to keep Bashir locked up even though the Indonesian government had been unable to prove he deserved a longer term. Still, releasing suspects like Bashir when the government cannot prove a case has helped boost the appeal of the counterterrorism strategy to the Indonesian public, since it showed Jakarta was playing by the rule of law, and not just bowing to Western pressure.

While battling the most dangerous militants, the Indonesian government has also set out to undercut militancy's broader appeal, in part by copying some of the strategies that Islamists have ridden to popular success in other parts of the Muslim world. Rather than letting Islamic parties run on promises to improve the lives of the poor, Yudhoyono has overseen a massive national anti-poverty programme, which included an increase in direct cash transfers and rice subsidies to the poor - roughly 100 million Indonesians. Besides winning the hearts - and votes - of the poor, these direct cash handouts sparked consumer spending, critical in an era when exports to the West are lagging. Just as critical, they reduced poor families' utter dependence on Islamic boarding schools to give their sons a decent education, a point not grasped in, say, Pakistan, where politicians frequently vow to reform madrasas but spend little time investing in public education.

Under SBY, the government also has aggressively devolved power to local areas, giving cities and regions greater shares of the national budget, more control over local natural resources and more money back from direct investment in their area. Seemingly simple, this idea proved unique - in nearly every other  eveloping country in Asia, and in most of the Middle East, strong central governments dominate, with leaders fearing that any devolution of power could lead to their downfall. Through devolution, Indonesia has prevented one of the traps common in other new democracies, in which a post-authoritarian leader, like Thailand's Thaksin Shinawatra or Russia's Vladimir Putin, centralizes power around himself and becomes a kind of elected autocrat, souring people on democracy itself. With devolution, Indonesia has made it easier for average people to have some connection to politics, since government no longer resides only in far-off Jakarta. Devolution also encourages provinces and cities to become more economically competitive, since they get to keep more of the money they attract from foreign investors, rather than just funnelling it all back to the centre. "This has been the real revolution in Indonesia. It gets overlooked by everything else, but having control of your own money, this is the real change," James Castle, a longtime business consultant in Jakarta, told me. "You go out to provincial areas - that's where the real action is now."

SBY's government has also denied the Islamists another of their biggest recruiting tools. From Suharto to Megawati, previous Indonesian leaders have been notorious for corruption; even when they created commissions to investigate graft, their close circle of acquaintances would remain untouched. And so, as in the Middle East, Indonesian Islamic parties made clean government part of their platform. The appeal makes sense. In other young democracies like Bangladesh and Thailand, popular anger at the allegedly immense graft committed by elected politicians, like Bangladesh's Sheik Hasina, has sparked anti-democratic street protests calling for the military to step in again and clean up politics - which, in many cases, it did, undermining progress toward civilian rule.

Like his predecessors, SBY has backed the national counter-corruption agency. But unlike them, he has understood that, to truly tackle corruption and overcome public cynicism, he has to show that no one, no matter how well-connected, is safe. So he has stayed out of the courts' way. In the spring of 2009, just before the presidential election, Aulia Pohan, a close relative of SBY and a former governor of the Bank of Indonesia, was convicted of embezzlement and sentenced to four-anda- half years in jail. Yudhoyono did nothing to stop the verdict, shocking many Indonesians who were accustomed to seeing the powerful protect the powerful. Under Yudhoyono, the anti-corruption commission has prosecuted over 140 figures, including other powerful politicians like West Java governor Danny Setiwan.

The Obama administration clearly recognises Indonesia's progress. In a speech earlier this year, Hillary Clinton, the US Secretary of State, held out Indonesia as an example that showed "Islam, democracy, and modernity" can exist together. Following up on the rhetoric, the US government has created an internal interagency working group on Indonesia, designed to brainstorm how Washington can drastically expand its relations with the country. "When we've had meetings of this group, you can barely fit all the people in the room because there's so much interest," one administration official focused on South East Asia told me. Indeed, the official told me, the US would like to drastically increase arms sales to Indonesia (which the US Congress blocked for years because of the Indonesian army's poor human rights record) and also to lean on Jakarta for help with other recalcitrant regimes in Asia, like Burma, where Indonesia could serve as an example of how to make a successful transition to democracy without any retribution against the armed forces. Some in the administration, too, would like Indonesia to demonstrate to other predominantly Muslim nations what kinds of reforms are possible - and how Washington rewards countries that really push democratic change. "We're not sure how hard to push this idea," the US official says. "I'm not sure the Indonesians want to be held up as an example - they don't want to be defined as just a ‘Muslim nation.'"

To cap off this outreach, Obama, who lived in Indonesia as a boy, will probably visit the country in November while he is in South East Asia for the Asia Pacific Economic Cooperation summit. Once in Indonesia, the president is likely to give a high-profile speech, as in Turkey and Egypt, promoting America's new vision for relations with the Islamic world. Obama's visit is eagerly awaited. While George W Bush plumbed new lows of unpopularity in Indonesia, Obama, a kind of adopted native son, could be the most popular American president in Indonesian history. One poll, taken in July by the Pew Research Center, found that the United States is now more popular in Indonesia than in any other Muslim country in the world.

Yudhoyono clearly understands that Indonesia has crawled back from the brink. In a speech shortly after his election, he admitted, "Ten years ago, it is still fresh in our memories that our country suffered a devastating crisis... Many quarters, both at home and abroad, were concerned about the future of our country." Indonesia, he continued, easily could have split apart like the former Yugoslavia, gone back to strongman rule or turned towards Islamism.

To be sure, Indonesia still faces serious challenges. Roughly fifteen per cent of the population still lives below the poverty line. Though wounded, Jemaah Islamiah still functions, as evidenced by the July bombings. Though the government has resolved insurgencies in Aceh and East Timor (by granting Timor independence and Aceh greater autonomy), in the remote region of West Papua armed separatists still cause trouble.

But the radical changes of recent years, coupled with successful democratic elections, have given Indonesians a renewed sense of self-confidence. "You can see the Indonesians returning to their natural leadership place in Asia," one South East Asian diplomat told me. "All the countries around them are struggling. Their democracy is strong."


This article appears in full on CFR.org by permission of its original publisher. It was originally available here.

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