Indonesia’s floating elites and democratic consolidation

In the lead up to the incumbent Democratic Party’s national convention in September this year and the Indonesian presidential election next year, a number of prominent political figures are jostling to be selected as the party’s presidential candidate.

Many of these potential candidates are external figures rather than inner-party elites. Such external figures include Mahfud MD, a former Constitutional Court Chief Justice; Gita Wiryawan, a former businessman and Minister of Trade since October 2011; Dahlan Iskan, former CEO of the Jawa Pos Group and Indonesia’s State Electricity Company, and Minister of State Enterprises since October 2011; Irman Gusman, current chairman of the Regional Representatives Council; Pramono Edhie Wibowo, former Army Chief of Staff and Jusuf Kalla, former vice president during President Susilo Bambang Yudhoyono’s (SBY) first term (2004-2009) and presidential candidate for the Golkar Party in 2009. By contrast there are few internal figures among the frontrunners other than Marzuki Alie, Speaker of Indonesian House of Representatives and former Democratic Party Secretary-General. The opportunity of these external or ‘floating’ elites to run as a presidential candidate for the incumbent party carries with it some potential significant effects for Indonesian politics.

In political science the term ‘floating elite’ describes elites without a party base for attaining power in office. Nevertheless, as Robert Michels argues in Iron Law of Oligarchy, through power resources — such as finances, popularity, and mobilisation capability — these elites display the ability to mobilise grassroots level support and compete in elections. As such, the internal party elites may allow the floating elites to run in order to achieve a majority come election time. This process is particularly likely when a party’s image is suffering decline as is currently the case with Indonesia’s Democratic Party.

Many eminent Democratic Party figures, including Nazarudin, Angelina Sondakh, Andi Malarangeng, and even the former party chief Anas Urbaningrum, have been involved in corruption scandals during SBY’s second term. But, as is typical with newly established parties, there appears to be no strong plan for managing the crisis. SBY himself has been compelled to take the lead to clean up the pervasive corruption within the party. And in replacing Urbaningrum’s position, the Democratic Party chose SBY illustrating that there is no strong organisational structure within the party, beyond SBY and his inner circle, to lead the party.
The corruption scandals within the party and reliance on a single political leader are the main reasons why the party is losing public support. This view is shown the latest survey by the Centre for Security and International Studies, Jakarta, which shows that the Democratic Party’s public support rate has declined to a new low of 7.1 per cent. This is a dramatic fall compared with their 21 per cent support rate in 2009 when SBY was voted in for a second term.

Given the Democratic Party’s current situation, one potential rescue plan is to establish an open primary convention from which both internal cadres and external figures can compete to be nominated as the Democratic presidential candidate in the 2014 election.

Mahfud MD is presumed to be the most prominent figure who can help the ruling party lift its reputation due to his unblemished personal background and his record of integrity as a former minister and constitutional judge. With the split in his former party, the National Awakening Party (PKB), Mahfud’s only realistic opportunity to enter the race is through the Democratic primary convention. However, winning the primary will be a tough ask not only due to competition from other external figures but also because of the lack of support from inner-party cadres.

Among the internal candidates, Marzuki Alie is the most eminent figure based on his career in the party. But his reputation as an elite means he lacks a basic grassroots constituency. Alie’s challenge is exacerbated by a split between the cadres into two camps: those loyal to former chief Urbaningrum and those loyal to SBY. In sum, the Democratic Party faces many obstacles in elevating its popularity before the upcoming election.

Amidst the patrimonial based system under which Indonesian political parties operate, the emergence of external figures may help facilitate a transition to a more robust political landscape as Indonesia seeks to consolidate its democracy. After the ouster of President Soeharto in 1998, Indonesian politics has been controlled by a dominant closed-party system under which only established party elites can lead, maintain, and, more importantly, decide who can run in legislative and presidential elections. From 1999 until 2009, these elites have tended to maintain their roles or have created new political parties to acquire government office. Only the Golkar Party bothered to hold conventions in 2004 and 2009, and its choice of candidates was still dominated by internal elites.

The emergence of the external figures reveals the opportunity for outsiders to compete in the internal party conventions leading to the presidential election. Even though these floating elites face a lack of internal support, particularly from the cadres, they nonetheless exemplify an opportunity to fortify the quality of democracy in Indonesia, allowing external elites to express their various political visions and draw support from the grassroots. This will be crucial for the future of Indonesian politics as consolidating democracy requires not only the maintenance and strengthening of a free and fair electoral system, but also open public discussion of alternative policy visions and their impact on the public interest.

Hipolitus Yolisandry Ringgi Wangge is Visiting Scholar in the Equality Development and Globalization Studies Program at the Buffet Center for International and Comparative Studies, Northwestern University.

How will India be a part of the Asian century?

The 19th century was thought of as belonging to Britain and the 20th century to America. Many now believe that the 21st century will be Asia’s

The sheer market size and growth potential of China and India place them at the centre of the Asian century. Over the past 20 years, these two countries have almost tripled their share of the global economy. When adjusted for purchasing power parity, the Indian economy is now roughly the same size as Japan’s. One Goldman Sachs estimate suggests that India’s economy will surpass the US economy by 2043. For long the world’s second-largest country, India’s population is expected to pass China’s in less than two decades.

Despite all this, India is likely to remain a lower middle-income country well into the Asian century, lagging behind its BRICS counterparts. India has the world’s largest concentration of poor people: in 2010, more than 840 million Indians lived on less than $2 a day, and 400 million on less than $1.25 a day. By the time India becomes the most-populated country in the world, its already large challenges relating to urbanisation and the provision of adequate infrastructure, jobs, drinking water, and food for its citizens will be immense. India’s size and its rising middle-class power may have led many to rightly highlight its role in powering the Asian century, but, ironically, it is less clear how India’s own poor people will be empowered to rise out of poverty.

This raises a number of questions. Located in the right place at the right time, how can India thrive in this Asian century? What opportunities will Asia’s rise offer India? What opportunities will India’s rise offer Asia? Most importantly for the average Indian, how will the shift of economic and strategic power to Asia shape the massive economic and social transformation underway in the world’s largest democracy? Already a lower middle-income country, how can India avoid the middle-income trap? More immediately, how can India regain the growth momentum it had generated in the mid-2000s, address its rapidly growing fiscal pressures, and reduce the unprecedented fragility of its current account deficit?

These are large and complex questions. It is important to ask them now because in a very real sense the world’s expectations of India perhaps exceed India’s expectations of itself. India’s failure to address these questions will have far-reaching consequences, giving rise to a greater gulf between India’s potential and its achievements, and making it that much harder for India to catch up with the rest of a rapidly rising Asia. Much will depend on the far-sighted leadership that Indian leaders do or do not provide in designing, implementing and evaluating the right policy frameworks to achieve the goal of ‘faster, sustainable, more inclusive growth’ that the Indian government’s 12th Five Year Plan (2012–17) has set for itself.

Three scenarios are worth considering. The first, and most favourable is a win–win situation in which India gains greatly from the rise of Asia, much as India’s market size contributes to the Asian century. India successfully leverages its demographics and its trade and cultural proximity to Asia’s economic centres to transform its workforce and its manufacturing and service sectors into a highly competitive, connected and innovative force through sound public policies, and investments in education, skills and infrastructure. In the second, less-welcome, scenario India muddles through. It meets some of the expectations of India’s role in the Asian century but does not gain ground relative to other Asian countries and perhaps falls further behind. The third and least-desirable scenario sees the Asian century largely bypass India. Given the commercial, political and strategic relationships that India already has with the rest of Asia, this scenario is hopefully also the least likely. But the very fact that it is unlikely could breed domestic complacency and keep India from gaining fully from the Asian century.

What will it take for India to make the first scenario a reality? Analysts have identified seven domestic pillars that aided the early and rapid transformation of Asia’s newly industrialising economies: policies that supported free markets, science and technology, meritocracy, pragmatism, a culture of peace, rule of law and education. These pillars will require further refinement, as India will also have to address newer domestic challenges, including global warming, the provision of clean energy and water to its citizens, and the threat of corruption and public ineffectiveness, which appears to have worsened in recent years.

On the external front, India’s trade and investment relations with Asia will play a major role, not just within Asia but also in its relationships with North American, European and African markets. India has already signed nearly 20 regional trade agreements and is currently negotiating several more. As hopes dim for a successful multilateral trading regime, India must expend its energies not just in signing bilateral agreements but also in helping to bring about an FTA in groups such as the ASEAN+6 or the Regional Comprehensive Economic Partnership arrangement.

To enhance public awareness of the immense advantages and significant risks that India will face in the Asian century, India’s National Council of Applied Economic Research in New Delhi (NCAER) is exploring a multi-year research program on India in the Asian century. The research program will focus on identifying opportunities in the short, medium and long term to increase the economic and other net benefits to India from the global economic and strategic shift to Asia. 

Short-term actions are those that India could take in the next five years, and medium- and long-term actions are those that could be implemented before 2025. An important part of this project would be to foster joint work with Asian partner institutions. If India is not to miss the boat in the Asian century, there is much work to be done.

Shekhar Shah is Director-General of the National Council of Applied Economic Research (NCAER), New Delhi. He is grateful to Dr Rajesh Chadha, Senior Fellow at NCAER, for the many useful discussions on the topic.

This article appeared in the most recent edition of the East Asia Forum Quarterly, ‘Coming to terms with Asia’.

Kevin Rudd ousts Australian Prime Minister Julia Gillard

The EGO MANIAC RETURNS
 
Kevin Rudd has exacted revenge on Julia Gillard, his one-time friend and deputy who ruthlessly deposed him in 2010. Ever since he was removed from the prime minister's office, he has sought to destabilise her leadership. This has been a very personal feud.

For Gillard, it's a dramatic reversal. Three months ago, when she last called a leadership election, her rival could not muster enough support to mount a credible challenge. 

In the meantime, the Labor government has slipped even further in the polls. Labor is not only one of the most brutal political parties in the world, but also one of the most calculating and pragmatic.

Its parliamentarians might not necessarily believe they can win the forthcoming election against the conservative opposition. Many already believe that's a lost cause. But many calculate Rudd will at least prevent an electoral wipe-out, and maybe help save their own seats.

Unfortunately for the Australian Public memories are short and the damage done by Rudd to our economy and refugee policy was significant.

When Rudd assumed power from the Conservative Liberal Government former Treasurer Peter Costello had prepared Australia financially, leaving 50 Billion Dollars in surplus.

Now, after Rudd and Gillard and Wayne Swan have recklessly squandered the country’s reserves, Australians should be reminded that we CAN NOT afford another term of Rudd and his Faceless Men (Unionists)

Out Of The Haze, A Singapore Spring?

The haze sweeping Asia is a hazard to your health — and for members of Singapore’s ruling elite such as the mercurial K. Shanmugam, a threat to your tight grip on power, too.

When you are Singapore’s Lee family, and your clan has exercised absolute and uninterrupted control over its swanky specklet of Asia for 54 years, fellows like Kasiviswanathan Shanmugam are handy to have within your power court.

K. Shanmugam, as he’s less tongue-twistingly known, may have escaped the attention of those unfamiliar with the cosy connections that hold Singapore’s power elite together — a warm, clubby embrace that has kept them very wealthy.

But 54-year-old Shanmugam is a bigwig on the tiny island, which is currently being suffocated by pollution from the periodic burning of millions of hectares of palm oil plantations that have trashed the equatorial habitat of neighbouring Indonesia. That pollution from the illegal fire-clearing of these plantations has swept on eastward winds from Sumatra in massive clouds of smoke and ash to shroud and choke Singapore, southern Malaysia and large tracts of western Indonesia.
Call it blowback. Many of these plantations are owned by people with intimate connections to that same power court in Singapore, who helpfully provide them all manner of metropolitan usefulness, banking their billions and domiciling their empires while discreetly looking past, er, indiscretions that may have been perpetrated elsewhere.

Many of these plantations are owned by people with intimate connections to that same power court in Singapore, who helpfully provide them all manner of metropolitan usefulness, banking their billions and domiciling their empires. 

Singapore has 101,000 millionaires officially resident on the island, their assets tucked safely away in the nation’s banks, property and share markets. Plenty of these plutocrats are normal Singaporeans who’ve done well in business. But many are not, like corrupt Indonesians on the run, or Burmese generals seeking safe haven. Singapore’s plutocratic ranks have been swelled in recent years by Europeans and Russians seeking relief from tax and the prying regulators of home, these exiles spending just enough time and money in Singapore to qualify for residency.
This, to many, is the useful point of Singapore, where Shanmugam – born in 1959, the very year Lee family patriarch Lee Kuan Yew began his three decades as ruler – has been an MP since 1988 for the Lees’ ruling People’s Action Party (PAP).

Shanmugam’s story, and there are many like it in Singapore’s political circles, neatly illustrates how power flows in Singapore, via an apparatus ironically made more visible by the haze crisis.
There have been five parliamentary elections since then in Singapore’s almost-democracy, three of them relatively leisurely affairs for Shanmugam; he and his PAP friends were untroubled by any other candidates in their constituency, Sembawang, an area perhaps best known for its US naval facility.

But Shanmugam’s selfless devotion to public service – Singapore MPs receive a basic annual allowance of around US$200,000 – hasn’t hindered an even more lucrative career, in law and business. He’s one of Singapore’s most formidable litigators, a leader of the army of Lee-loyalist lawyers who’ve helped win their legal system a contentious reputation as a jurisdiction, most notably in defamation.

Singapore is one of the world’s libel capitals, and its litigants – many have been colleagues of Shanmugam, leaders of the ruling PAP – have won record-setting damages for defamation by their political rivals and the international media.

What would pass as the normal buffeting of election debate in most genuinely pluralist democracies has been, in Singapore, a device of oppression. Here, sensitive politicians and officials, famously led by the Lees themselves, have shown an enthusiastic inclination to sue opponents into penurious legal submission. Singaporean officials, it’s often said, can imagine libel and slander in a harsh glare.

All of which helps explain why MPs like Shanmugam don’t always encounter combatants when they run for election. Indeed, this absence of opposition has meant that there’s only been three parliamentary elections in Singapore in the five since 1988 in which the PAP wasn’t returned to office on nomination day – the actual poll being largely irrelevant as to decide who runs the country.

SURYO WIBOWO/AFP/Getty Images

K. Shanmugam meeting with Indonesian Foreign Minister Marty Natalegawa last year. Singapore’s respiratory crisis has shone a spotlight on some local companies with interests in the controversial Indonesian palm-oil sector.

Shanmugam doesn’t mind highlighting such powerful connections in his sparkling official CV, now for the Nee Soon electorate in Singapore. This biography describes a storied student who became a ‘star litigator’ for Singapore’s biggest law firm, a lawyer who has represented prime ministers past and present.

And, busy man, Shanmugam has also served on some illustrious boards while being MP and lawyer-at-large, his biography reveals. For example, he’s held a long and lucrative directorship at one of Singapore’s state-controlled blue chips, Sembcorp (a post he shared with strongman Lee Kuan Yew’s daughter-in-law Lee Suet Fern, whose husband ran Singapore Telecommunications for 12 years), and another on Singapore’s state media regulator, among other establishment posts.
Now Shanmugam has been Singapore’s Foreign Minister since 2011, and Minister for Law since 2008, his official salary now somewhere north of $US1 million. He’s the senior official entrusted by his Prime Minister, Lee Kuan Yew’s son Lee Hsien Loong, to go after the polluters they believe are responsible for the life-threatening haze, now too thick to ignore, which has engulfed their region.

“If any Singapore companies are involved,” thundered PM Lee last week, “or companies which are present in Singapore are involved, we will take it up with them."
Indeed, Jakarta has helpfully identified as many as 14 companies it believes responsible for the muck, while reminding Singapore that many more Indonesians are suffering its effects than inhabitants of the look-at-me island nation.

Two of the companies fingered by Indonesia are its Widjaja family’s Sinar Mas Agro Resources and Technology (SMART), which has long been a target of environmentalists, and Asia Pacific Resources International (APRIL), controlled by the Indonesian-born Singaporean tycoon Sukanto Tanoto. Both are based in Singapore, where SMART’s parent company is the locally listed Golden Agri-Resources.

And this is where Lee’s Foreign and Law Minister K. Shanmugam comes in again.
Two of the directorships that don’t appear in Shanmugam’s glittering CV are his former stints as a director of Golden Agri-Resources and Asia Food and Property Ltd.

APP’s debts were effectively written off and, like so many dodgy Indonesians and Singaporeans of that era, the Widjajas regrouped to do business another day – to pollute again. 

Both are Singaporean companies controlled by Indonesia’s controversial Widjaja family. In the early 2000s, while Shanmugam was on these boards, the Widjajas had the dubious honour of owning the notorious Asia Pulp and Paper, which would come to be responsible for the biggest bond default in corporate Asian history.

What transpired at APP was a US$13 billion fiasco, a scandal largely unearthed by the pesky foreign media, and which exposed Singapore as something other than the squeaky-clean financial centre its government likes to internationally promote itself as. Transferring public company funds through a murky family-controlled bank in the tax haven of the Cook Islands was a sleight of hand much favoured by the Widjajas.

No-one involved with the APP scandal was ever prosecuted or brought to legal book anywhere. Those foolish enough to have invested with the Widjajas absorbed huge hits. Most of APP’s debts were effectively written off and, like so many dodgy Indonesians and Singaporeans of that era, the Widjajas regrouped to do business another day – to pollute again. 

As for Shanmugam, after firing off a few threatening legal salvos at the time to anyone who too publicly mentioned his connection to the Widjajas, he later resigned his directorships and resumed his legal and political career.

The Global Mail isn’t suggesting that Shanmugam was in any way party to the financial scandal that then engulfed the Widjaja empire. Indeed, all reports at the time suggested he was embarrassed by his links to the Widjajas. Nor are we saying that he is involved in the haze outrage that now engulfs them. And, despite being identified by Jakarta as a polluter, Golden Agri insists “there are no hotspots or fires” at its Sumatran plantations.

Should this assertion of innocence be proved wrong, Shanmugam, now as a minister, would at least know who to call when asked to bring miscreants to book; that is, if he doesn’t first recuse himself from official involvement given his one-time close links to the controversial Widjajas.
But that doesn’t seem likely. Last weekend, Shanmugam reportedly joined his PM and other government colleagues in handing out some of the million-odd facemasks Singapore has bought to distribute to low-income Singaporeans affected by the haze.

Chris McGrath/Getty Images

Face masks sold out in Singapore’s stores, and the government handed out more — along with advice to wear them even indoors.

TGM emailed Mr Shanmugam a series of questions about his former links to the Widjaja’s Golden Agri but did not receive a response.

Singapore’s respiratory crisis has also shone a spotlight on some other local companies with interests in the controversial palm oil sector. One of them is particularly close to PM Lee, at the core Singapore’s politics-meets-business power apparatus: Temasek Holdings, Singapore’s influential state-owned investment company, which controls companies such as Singapore Telecom, Singapore Airlines and Australia’s Optus, also holds big stakes in myriad international businesses.
One of those investments is in CTP Holdings, Temasek’s Singapore-based joint venture with the US agricultural group Cargill. CTP operates oil-palm plantations in Indonesia. Last week, CTP was quick to say its holdings are well away from the current hotspots that have so polluted the Singapore environs. In any event, CTP’s backers claim their plantations operate a strict no-burn policy, and Temasek and Cargill have been keen to distance CTP and themselves from any environmental outrage.

Which is not how the US environmental lobby Rain Forest Network sees CTP’s operations in Indonesia’s Kalimantan region, to Singapore’s east; the group accuses CTP of clearing rainforest without permits, destroying watersheds and burning forests.
That Temasek was moved to publish a press release on the palm oil crisis at this time is itself instructive. It speaks to the rising opposition to Singapore’s Lee-led establishment, which revealed itself most eloquently in the last parliamentary and presidential elections, in 2011, in which the opposition not only fielded a record complement of candidates but made genuine gains against the PAP-dominated system.

Amidst the tumult from Tahrir Square and the tragedy of Syria, this ‘Singapore Spring’ hasn’t registered internationally with quite the impact of the Arab prototype that inspired it. But to the 5.3 million Singaporeans now coughing through yet another haze outrage blown in from Indonesia, their spring has arrived in the increasing accountability they demand of Singapore’s once impervious courtiers in running national affairs.

In a town where ‘normal’ political activity is deemed off limits, Temasek’s management has been a proxy political tool the opposition can fulminate about – Temasek as the symbolic vehicle of PAP patronage and performance.

Amidst the tumult from Tahrir Square and the tragedy of Syria, this ‘Singapore Spring’ hasn’t registered internationally with quite the impact of the Arab prototype that inspired it. 

Temasek and its likewise state-owned sister fund, the Singapore Government Investment Corporation, officially invest Singaporeans’ money. Like the more transparent sovereign wealth funds of democratic Norway and East Timor, and those more opaque in the Gulf monarchies, these two companies are national nest eggs owned by all Singaporeans, and in which every Singaporean notionally has a say.

Temasek, which by some measures has an interest in as much as 60 per cent of the Singaporean economy, has been run by PM Lee’s wife, Ho Ching, since 2003. And her patchy investment record would likely have seen her removed, had she performed similarly in any Western company. That record has increasingly been the subject of rational analysis, by academics and aspiring Singaporean politicians such as Kenneth Jeyaretnam, who would like to see these funds broken up and privatised.

Such transparency has been refreshing for Singaporeans, but other things don’t change. It remains out of bounds in Singapore to debate if Madame Ho got – and kept – her job because she’s a member of the Lee family. The last voice to publicly do this was a well-followed local blog, the Temasek Review Emeritus, which was swiftly threatened by one of the Lees’ notorious legal onslaughts en route to being forced into a grovelling apology. Today, it’s a rare Western media outlet – those with corporate interests or circulation in Singapore are particularly reticent – that will examine the Temasek record as they might similarly influential corporations elsewhere, such as Apple, Shell or BHP Billiton. 

For media reporting on Temasek’s activities, official Singapore has insisted that it be accurate in its facts, and that it refer to Temasek as an “Asian investment company”. For good measure, Temasek would also prefer that any reference to Madame Ho as the PM’s wife be expunged. Singapore’s pliant media does what its told but foreign press is less observant of local sensitivities.
But the media, indeed anyone with cause to analyses Temasek, such as credit rating agencies and banks, can’t fulfill the latter requirements without noting the former.

Accuracy and investment decisions demand that Temasek be properly identified as being owned by the Singapore government. And there’s no avoiding the fact that Madame Ho, who often very publicly travels with her husband on state tours abroad, is Mrs Lee, a very powerful and wealthy Mrs Lee, if not always a particularly astute investor of her compatriots’ nest egg.

For all the putridness that the clouds now defiling Singapore and beyond are depositing, they may yet come with a silver lining, of more transparency for one Asia’s most rigid societies. The Global Mail