Monday, April 26, 1999

Indonesia’s survival
as nation is in doubt

Bullet The issue: The collapse of the economy and widespread violence have raised doubts about the survival of Indonesia.
Bullet Our view: The United States should use its limited influence to help democratic elements.

IN a column appearing in the Opinion section Saturday, Edward Neilan suggested that the West ease up on Indonesia. Writing from Tokyo, Neilan urged that "the endless lectures by foreigners from the International Monetary Fund and World Bank demands about ending 'crony capitalism' should be junked. Western embargoes should be undone, United Nations sanctions lifted and positive measures implemented. The world should give Indonesia a sweeping amnesty for its supposed transgressions and allow Jakarta a fresh start."

There is some merit to that approach. The IMF's strictures may have made Indonesia's economic problems worse. Sanctions for human-rights abuses may be inappropriate at a time when maintaining order is a huge challenge. With President Suharto forced out of power a year ago, the time may be near to ease sanctions and give the new government more breathing room.

However, it may be advisable to hold off on any relaxation of sanctions until the June elections. The government of President B.J. Habibie, who succeeded Suharto, should be required to conduct free and orderly elections, with easing of sanctions as the reward.

As Richard Baker of the East-West Center, a specialist on Indonesia, stated in a recent lecture, the elections could be critical to Indonesia's future. The collapse of Suharto's three-decade-long authoritarian regime has led to widespread ethnic violence. The nation is in danger of disintegrating. Yugoslavia is a chilling example of what could befall the largest country in Southeast Asia.

The June elections will be Indonesia's opportunity to institute truly democratic government, but the outlook for a decisive victory by any party that could result in effective governance is poor. More probable is a scenario in which several parties negotiate for power through shifting coalitions.

Also on the horizon is a United Nations-supervised vote on self-determination for East Timor, which is scheduled for July. A week ago militant supporters of the Jakarta government attacked supposed separatists in the East Timor capital, Dili, killing more than 30 people and leaving scores injured.

After years of resistance to Indonesian rule, the government offered self-determination to the Timorese, but the military seems to be trying to terrorize advocates of independence. Ending sanctions in advance of the vote could be viewed as a green light for more terrorism.

As Baker observed, Indonesia's fate is highly uncertain. The United States is in no position to influence developments decisively. But Washington should devote what influence it has to advance the cause of democracy.


Social Security reform
is essential

Bullet The issue: House Republicans maintain they intend to enact retirement measures before the next election.
Bullet Our view: Reforming the Social Security system is too urgent a need to be deferred for political reasons.

HOUSE Republican leaders have denied reports that they had abandoned efforts to reform Social Security until the next election. That's welcome, because too much time has already been wasted by politicians fearful of voter backlash against changes in the system.

President Clinton, who has not been above demagoguery on the issue of Social Security, had chided the Republicans on the basis of the earlier reports for being "either unable or unwilling to face up to the challenge of strengthening Social Security."

House Speaker Dennis Has-tert, in his denial, said bolstering what he called "retirement security" tops the GOP's four-point legislative agenda.

The other points are improving education, fortifying national security and providing middle-class tax relief.

The Republicans are reportedly on the verge of announcing a plan to use the projected federal budget surplus to finance an income-tax cut. Individuals could then use the money that otherwise would have been paid in taxes to invest in individual retirement accounts.

Rep. E. Clay Shaw Jr., a Florida Republican who chairs the Ways and Means Social Security Subcommittee, has been drafting the GOP proposal and said it will be introduced soon.

The plan does not appear to be sufficient to rescue Social Security, although it could be part of the solution. The system's trust reserve fund is now projected to be depleted in 2034 unless reforms are made in benefits or eligibility.

One idea that should be pursued is to permit individual investment of part of Social Security taxes in stocks and bonds, which are likely to bring a much higher return.

The idea of a tax cut with the money retained invested in retirement accounts might be expanded to include part of Social Security taxes.

Putting off this issue until the next election is not acceptable.

Published by Liberty Newspapers Limited Partnership

Rupert E. Phillips, CEO

John M. Flanagan, Editor & Publisher

David Shapiro, Managing Editor

Diane Yukihiro Chang, Senior Editor & Editorial Page Editor

Frank Bridgewater & Michael Rovner, Assistant Managing Editors

A.A. Smyser, Contributing Editor

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