What we need is leadership, not quarrels about the IMF

Posted by Admin on Saturday, 26 January 2008 | Opini

The Jakarta Post , Jakarta | Sat, 01/26/2008 2:39 AM

Sayidiman Suryohadiprojo, Former governor of National Resilience Institute (Lemhanas), Jakarta

State Minister of National Development Planning Kwik Kian Gie has surprised many people when he strongly suggested that Indonesia should terminate its relationship with the International Monetary Fund (IMF) at the end of 2002.

In fact, this is not the first time that Kwik has expressed his dissatisfaction with the IMF. But that he did it as a member of President Megawati Soekarnoputri’s Cabinet, is something that causes surprise. Because it is public knowledge that Dorodjatun Kuntjoro-Jakti, the current coordinating minister for economic affairs, is a staunch defender of Indonesia’s relations with the IMF.

In Indonesia Kwik is not alone in his negative opinion of the IMF. Rizal Ramli, who served as coordinating minister for economic affairs and minister of finance in former president Abdurrahman Wahid’s cabinet, shares this view. And so are other economists, many of them with important positions in Indonesian public life. But on the other side Dorodjatun also has friends who share his views. Some of them are equally strong in their belief and even dare to say that Indonesia will go bankrupt without the IMF’s support.

The debate that developed between the economists with conflicting views heated up and might be very interesting for the intellectual elite. But it does not ease the difficult life of the common people and their heavy economic burden. And a debate between ministers of the same Cabinet about such an important issue is definitely counter-productive for Megawati’s leadership of the nation.

It is a fact that many economists in the world have expressed a strong criticism of the way the IMF is playing its role in supporting developing nations. Not long ago Dr. Joseph E. Stiglitz, Nobel Prize laureate for economy in 2001, and former economic adviser to then president Bill Clinton and former chief economist of the World Bank, had stated that the IMF’s stance on market fundamentalism is principally false. Namely, that the market of itself will create a balance between supply and demand and is a key for growth and development. IMF’s prescription to the nations it is supposed to support has caused much more human suffering than solving those nations’ economic problems.

Stiglitz also stated that the IMF and the U.S. Treasury Department were more inclined to aim their efforts at defending the interests of big investment bankers than paying attention to poor and developing nations.

With the credentials of Stiglitz as an economist and his experience with the World Bank and the U.S. government, we must assume that what he stated publicly contains the truth. And Stiglitz is not the only economist of international fame that criticizes the IMF and its behavior.

Looking from this point Kwik and his partners are on the right side. However, Dorodjatun and his friends are equally convinced of Indonesia’s uncertain future when it drops the IMF.

Malaysia has shown that it could solve its economic crisis problems without IMF support. Already at the start of the crisis in 1997 Malaysia decided not to request support. And Malaysia is now in a good and safe economic position. That is proof that a developing nation facing economic crisis need not have the IMF’s support. We can therefore say that Dorodjatun’s pessimism might be an exaggeration. After Malaysia, Thailand and South Korea also opted to dropping IMF support. The conclusion is that it might not be impossible for Indonesia to do the same. That makes Kwik the man with the right intention for Indonesia.

If that is true, why was Kwik unable to steer the Indonesian economy in safe waters when he was the economic coordinating minister. The same goes for Rizal Ramli. Both of them as the boss or commanding generals of Indonesia’s economic struggle were in the position to free Indonesia from IMF support and take the country out of its present economic troubles. But they were not able to deliver any progress in the bad situation.

Without being an economic expert one can observe that nothing has fundamentally changed during their time as Indonesia’s economic czars. It is therefore questionable whether that with their track records they would be able to steer Indonesia out of the crisis without IMP support.

It is very sad for an Indonesian patriot to realize that today the other Asian nations have already left the crisis that started in 1997, but Indonesia alone is still fighting to get out. Of course, any thinking Indonesian would very much welcome Indonesia’s self reliance and not longer has to depend on the IMP, World Bank or any other international financial institute. Indonesians envy Malaysia that has been successful in its economic struggle, whereas Indonesia basically has similar capabilities. Moreover, Indonesia is gifted with a lot of valuable natural resources, in particular oil and gas.

But Malaysia was able to achieve success because it has the right leadership in the person of Prime Minister Mahathir Mohamad. It is doubtful whether without his leadership success could have been achieved.

We also see China’s economic progress because of the leadership of Deng Xiaoping, who started economic reform in a very fundamental way in 1979. Later he was replaced by Jiang Zemin and Zhu Rongji who were all very strong in leading China toward progress. Without that strong leadership China would not be in the position it is today.

Also Germany after World War II was able to demonstrate a Wirtschaftswunder or economic miracle because of the leadership of Konrad Adenauer supported and later replaced by Ludwig Erhard. It is quite interesting that among the names just mentioned only Ludwig Erhard is an economist. Mahathir is a medical doctor turned politician, Deng Xiaoping a People’s Liberation Army (PLA) general with the engineers Jiang Zemin and Zhu Rongji, and Konrad Adenauer the lawyer. It is not the basic background that is important, but the capability to demonstrate leadership in difficult times.

It is clear that the problem for Indonesia is not the question of dropping or maintaining IMF support. But the capability of our elite to demonstrate the right leadership. Do we have people who have a strong enough ambition to create a strong national economy? Are there people who strongly want to alleviate the people from poverty, provide food and homes, education and health services attainable for every one in this nation? And are they also ready to perform the leadership and management to achieve these goals by motivating the people and taking them along for a struggle to produce results.

What we need is the leadership that can set the example and get the people’s trust. In Indonesia we say Jer Basuki Mawa Bea, if you want to be successful you must be prepared to suffer first. Not leadership that only can talk without doing anything important. Let us suggest to our economists that theorizing and debating is definitely very good and important for the economic science. But realities require action that produce results and improvement.

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