Introduction

On 25 December 2002, President Megawati Soekarnoputri made a one-day visit to Papua. During a ceremony with 3,000 people in Jayapura, the normally reticent Megawati announced that she would sing her favourite song as a Christmas present for the people of Papua. The song she chose was Frank Sinatra's “My Way”. Yet the year 2002 was marked by constant media commentary that Megawati had failed to show leadership on any of the major issues to confront Indonesia. Megawati's way, it turns out, is to be instinctively cautious.

Indonesia continues to deal with the twin economic and political crises that began with the Asian financial crisis in 1997. Politically, Indonesia continues to be in a transitional phase as the body politic moves towards strengthening its infant democracy. The year saw yet another set of incremental constitutional amendments, while keeping to the 1945 Constitution. Despite hopes after Megawati's selection as President in 2001, raised in particular by the announcement of a strong Cabinet, the current administration has been described as lethargic by many pundits. During 2002, there was no reshuffle of the Cabinet, although there were very public difficulties with several members of the executive. While Megawati skirted around the question of a Cabinet reshuffle in mid-2002, by the end of the year she was scotching any suggestion of Cabinet changes completely. Regional autonomy continues to devolve resources and decision-making to the outlying regions. A peace deal in December 2002 in Aceh may or may not bring about actual peace, but there was still a great deal of violence in both Aceh and Papua throughout the year.

The event that singularly grabbed global media attention, however, and has some profound implications for Indonesia, was the terrorist bomb blast in Bali on 12 October 2002 — the single largest terrorist attack since the Al-Qaeda attacked the U.S. mainland on 11 September 2001. The Megawati administration has been forced to confront the problem of international terrorism in its own backyard.

Introduction

Globalization thickens interconnectivity among peoples and between nations but also accelerates the process of change in both the domestic and international realms. For a fast globalizing Southeast Asia, turning points have quickly become new defining moments but not always for the better in terms of security and growth. The region's recovery from the destabilizing effects of the 1997/98 Asian economic/financial crisis had been patchy, and although by 2002 most gross domestic product (GDP) levels had edged back to pre-crisis levels, per capita incomes had not and unemployment was on the rise. The 3.5 per cent growth in Indonesia was achieved over a low baseline. Its path towards economic restructuring, sustained economic recovery, and political stability remained tortuous.

On the road to economic recovery two developments set back confidence and fuelled uncertainties. The Al-Qaeda terrorist attacks on the United States on 11 September 2001 (commonly referred to as “9/11”) opened a new phase of international insecurity. How the United States would pursue the war against global terrorism and with what impacts on the Muslim world fuelled uncertainty. The more open regional economies focussed on the consequences for global travel, business confidence, and the international economy. In retrospect neither the United States nor the most open regional economy, Singapore, was too seriously affected. Within a year both economies had rebounded with Singapore in the third quarter of 2002 seemingly headed for a 4 per cent growth. In 2002 the Malaysian economy grew by 4.2 per cent while the fastest regional growth rate of 7 per cent was recorded by Vietnam. However, the terrorist bombings in Bali on 12 October 2002, which killed 202 people, many of them foreign tourists including 88 Australians, dampened expectations of a rebound as Southeast Asia initially acquired an undifferentiated image in the minds of foreign investors and in travel advisories as an insecure region.

Introduction

The year 2002 started on an optimistic note as growth in the United States picked up in late 2001 and the first quarter of 2002. This gave rise to the hope that the American economy was on the way towards recovering from the turmoil of the previous year and the recovery will in turn lead to beneficial effects for Southeast Asia due to the extensive trade and investment links between the two. However, by the middle of the year, the sustainability of the recovery in the United States started to appear questionable as the seemingly strong pace of growth in the gross domestic product (GDP) in the first quarter of 2002 actually reflected an inventory rebound rather than an upturn in corporate expenditures.

This seemed to be confirmed by the slowdown in the economic growth of the United States in the second quarter of 2002 and the downward revision of the first quarter growth. The growth for 2001 was also subsequently revised downwards based on data revisions. Thus while the recovery of the American economy is projected to continue, its pace is expected to be much more subdued than earlier thought, at 2.2 per cent for the year 2002 as a whole and at 2.6 per cent for 2003.

At the same time the sluggish pace of recovery in Europe also led the International Monetary Fund to revise downwards the projected growth rate of this region for both 2002 and 2003 by 0.5 per cent lower than its April forecast. Concurrently Japan's economy continues to languish as the recession in 2001 is expected to continue into 2002 although a modest rebound is forecast for the year 2003. Amid the uncertainty of the recovery in the United States, Europe, and Japan, the Bali blast in October 2002 as well as the prospect of war between the United States and Iraq only served to heighten the fragility of the recovery in the global economy and its attendant impact on the ASEAN economies.

During a year in which Cambodia was afflicted by both a prolonged drought and subsequent costly floods, there is no question as to what was the dominant feature of the country's politics. Throughout 2002, Prime Minister Hun Sen continued to consolidate his position as the most powerful politician in the kingdom. He marginalized his opponents and not-so-subtly made clear that King Norodom Sihanouk, while welcome to play a ceremonial role, has no place in the country's political life. To a large extent, Hun Sen's primacy may be seen as the continuation of a trend that began in July 1997, when the Prime Minister used a savage coup to shatter FUNCINPEC (Front Uni National Pour Un Cambodge Indépendant, Neutre, Pacifique, et Coopératif), the major alternative political force within the country, which is led by Sihanouk's son, Prince Norodom Ranariddh. Yet more than just continuity was involved, as the year saw Hun Sen's Cambodian People's Party (CPP) achieve a remarkable sweep of commune elections and the steady decline of FUNCINPEC into factional squabbling. At the same time, the always vocal Sam Rainsy, leader of the small opposition Sam Rainsy Party, was unable to be more than an annoying gadfly on the broader body politic.

Hun Sen's dominant role has not meant that Cambodia during 2002 was free of controversies — far from it. The issue of trials for former Khmer Rouge (KR) leaders remained unresolved and problems of corruption associated with the logging industry continued to dog this vital export industry. The programme for the demobilization of Cambodia's excessively large military is not complete, with attendant links to corrupt practices on the part of the army's top brass. In terms of the application of justice, the frequently criticized culture of impunity for the rich and privileged has not disappeared. How to develop the economy remained a matter for debate that spilled over into issues associated with the management of Cambodia's major tourist attraction, the great temple complex at Angkor.

Soul of the Nation

The tension, as the cliché goes, was so thick one could almost cut it with a knife. It was the night of Wednesday, 20 May 1992. After three days of street violence, Bangkok was bracing itself for a bloody showdown between troops and demonstrators. Rumours of conflicts within the military abounded. The situation seemed hopeless. More and more people began to pray for the kind of political miracle that had taken place nearly two decades before, during the 1973 student uprising against military rule. At that time, just as the situation threatened to escalate with considerably more violence and bloodshed, King Bhumibol Adulyadej, the ninth monarch of the ruling Chakri Dynasty, made a dramatic television appearance, which restored public order and resolved the crisis.

Eventually, their prayers were answered. The main protagonists, Prime Minister General Suchinda Kraprayoon and Major Chamlong Srimuang, the de facto leader of the anti-government protest movement, were summoned to the palace. The royal audience was broadcast worldwide. With the two prostrate on the floor before him, King Bhumibol quietly gave a lecture on the public interest and the need to avoid an impending “catastrophe” and made a “request” that they “sit down and face the facts together in a conciliatory manner, and not in a confrontational manner, to find a way to solve the problem, because our country does not belong to any one or two persons, but belongs to everyone”.

Once more there was a miracle. The crisis was instantly diffused. The two powerful protagonists backed down. Battle-ready military units returned to the barracks. Demonstrators dispersed. A few days later, Suchinda resigned, and power was peacefully transferred to an interim government under the respected Anand Panyarachun, who later transferred key military leaders and called a general election.

It was extraordinary. In June 1932 royal absolutism was overthrown and replaced by a constitutional monarchy. Since then, the Thai king's royal powers and prerogatives have been clearly defined and limited in a manner similar to those of constitutional monarchs in Europe.

The year 2002 saw the government of Gloria Macapagal-Arroyo facing an almost unending list of problems and controversies. She had been installed President in January 2001 after the tumultuous “People Power 2/Edsa II”, a popular uprising that overthrew the administration of former President Joseph Estrada. From a controversial and rocky start and weak political support, Arroyo seemed to have finally found her bearings after a year and half in office. She even managed to score a relatively high popular support rating in the middle of July 2002. However, her popularity began to ebb in the later part of 2002, culminating in her unexpected year-end announcement that she would not contest the 2004 presidential elections.

The revised Philippine Constitution of 1987 had effectively set the limit of a Philippine President's term to a single six-year one. Arroyo's case was different however. She took over from Joseph Estrada after he was implicated in a series of corruption scandals that resulted in a controversial impeachment trial. The trial and the series of turbulent events that followed climaxed in the “People Power 2” uprising on 20 January 2001, ending the two years of Estrada's presidency. Hence, Arroyo's current four-year term was only to complete what would have been Estrada's six-year term as President, making her technically eligible to run again as President for a full six-year term. As the incumbent President, Arroyo's chances of getting re-elected — until the middle of 2002 — were actually quite strong. They were buoyed by her achievement of a modicum of political stability and her relatively successful management of the country's economic challenges.

Thus, President Arroyo's announcement took the country by surprise. Apparently even her closest allies were left in the dark until she delivered her year-end speech on 30 December 2002, which coincided with the country's celebration of National Heroes Day. The significance of the timing of the announcement was not lost on observers and political commentators.

The bilateral ties between Singapore and Malaysia in 2002 were marked by high-profile disputes over many issues, in particular over water. Other issues included the reaction towards land reclamation in Singapore, the management of the lighthouse on Pulau Pisang by Singapore, the banning of the use of the tudung in Singapore schools, and Singapore's bilateral Free Trade Agreements (FTAs) with other countries. These disputes demonstrate that the relations between Singapore and Malaysia continue to be driven by fundamentally competitive forces which show little sign of dissipating in the foreseeable future. Shared key interests such as economic interlinkages as well as the fight against terrorism may have mitigated the intensity of the differences to a certain extent but the overall tone remains conflictual. The outlook is not necessarily bleak. There remains a potential for bilateral ties to be brought to a modus vivendi in which both sides, while acknowledging deeply differing interests, nevertheless are cognizant of the detrimental effects of over-intense competition. Singapore and Malaysia can look for ways to work more closely according to the principle that harmonious ties are likely to lead to better economic and security conditions for both countries.

THE ISSUES AND THE DRIVING FACTORS

Water

Perhaps no issue has captured the attention more than that of water. The crux of the dispute is this: Malaysia has argued that it has a right to review the price of raw water under the current agreements while the Singapore Government has maintained that the right of review lapsed in 1986 and 1987 when Malaysia chose not to undertake the review. To understand how the discussions progressed in 2002, it is helpful to trace the key events in the negotiation process (see Table 1).

Why is Malaysia only seeking a price review now? In 1986, Malaysia did not press for a review because it was felt that the increase in the price of raw water sold to Singapore would translate into a price increase in treated water sold to Johor. It was a matter of conscious policy.

The year 2002 opened with expectations of economic rebound in Southeast Asia after a year of generally sluggish growth but by the second quarter it was becoming clear that the three traditional engines that drove regional economic growth were spluttering — the U.S. economy did not sustain the hoped-for growth; Japan continued to be mired in recession; and Europe was experiencing economic slowdown. The political and economic dynamics were further complicated by the spectre of international terrorism, which acquired strong regional resonance after the devastating Bali bombings in October. The Bali bombings refocussed attention on the connections between regional and global networks of terror. While not all regional governments necessarily shared the same domestic concern with Muslim militancy or radicalism, the challenge of resurgent political Islam and the intensified religiosity among Muslim populations in the region could not be dismissed.

Fortuitously the external security environment of Southeast Asia remained relatively stable during this time. The new global challenge posed by terrorism resulted in a positive shift in relations among the major external powers — most notably between the United States and China. The threat of international terrorism became a point of overlapping though not necessarily congruent major power security interests. It also tempered somewhat, especially after the Bali bombings, regional differences towards security co-operation with the United States. But differences in domestic political circumstances did complicate attempts at a coherent regional response. If 2002 began with regional anticipation of the political fallout of the war against international terrorism, it ended with nervous tension over the imminence of war in Iraq.

The year also saw ASEAN continuing to address the sense of drift. Persisting economic strains, the pressure of domestic politics, and a new intramural competitiveness also had their negative effects on certain bilateral relations. Malaysia–Singapore differences centred on the pricing of Malaysian water supplied to Singapore and rival claims over Pedra Branca/Pulau Batu Putih were among the irritants that resurfaced during the year.

Introduction

The year 2002 was a mixed one for Brunei. Politically, it was an uneventful year with a minor change in the Cabinet line-up. The economy was sluggish despite the government's efforts to stimulate growth. The international and military front had a busy schedule. Socially, negative symptoms of a coddled society were beginning to show up.

A Coddled Society and Its Social Problems

Without a doubt, Bruneians are well-pampered people as a result of extensive welfare services and programmes initiated in the 1950s by the monarchy and funded by the wealth derived from oil and gas. Brunei has welfare programmes from the cradle to the grave. Most Bruneians enjoy the good life without having to pay income tax. They also enjoy the guarantee of government jobs as well as free education and health care. According to the United Nations Development Programme (UNDP), Brunei was ranked thirty-sixth in its Human Development Index in 2002 and it was the highest ranked country in Southeast Asia.

Education

Education is free for Bruneians from primary up to secondary level. From 2003, it will be extended to the permanent residents of Brunei. Nonetheless, this generous provision of education has not been fully taken advantage of by Bruneians, as can be seen from the disappointing results of national public examinations at the primary and secondary levels. The Deputy Minister for Education pointed this out when he remarked that the results at these two levels “have yet to achieve satisfactory level”. About half of the candidates at the lower secondary public examination and at the “O” levels failed their examinations.

At the tertiary level, about 200 students were shocked to find their applications to study at the local university, Universiti Brunei Darussalam, rejected even after fulfilling the university's entry requirement. This was due to the introduction of a new quota system on university admissions by the Ministry of Education in order to alleviate the graduate unemployment problem in Brunei.

Among the many remarkable powers that Indonesia's central government surrendered as part of its decentralisation policy was the right to choose district heads (bupati) and mayors. With the exception of a two-year period during the late 1950s, these officials had served since colonial times as the central government's all-powerful regional representatives. In one stroke, the new law on regional government turned this historical pattern upside-down. As a result, regional chief executives are no longer civil servants accountable to the national government, but local politicians answerable to regional legislators and the electorates they represent.

By increasing the scope for public participation in government and making local officials accountable to the people they serve, the 1999 law on regional government not only enhanced the autonomy of local governments from Jakarta but democratised them too. In this way, the law reflects an emerging consensus among advocates of regional autonomy that decentralisation must be democratic if it is to be successful. But democratisation is no less likely to encounter obstacles at the local level than at the national level. Indeed, sources as diverse as the eighteenth-century Federalist Papers and contemporary public choice theory suggest that ‘the lower the level of government, the greater is the extent of capture by vested interests’ (Bardhan and Mookherjee 2000: 135).

Anecdotal evidence strongly suggests that Indonesia's decentralisation is producing local governments that are more likely to be captured by elites than held accountable by the general public. Allegations of vote buying mar the election of nearly every governor, bupati and mayor. However, systematic data about decentralisation's political impact in Indonesia are lacking, and the theoretical literature on the issue of government capture is weak. In both cases, further empirical research is needed. Towards that end, this chapter reviews key theoretical perspectives on the balance between public accountability and elite capture of local government; summarises Indonesia's experience with centralised management of local government; and reports the results of a sustained effort to document the outcome of a large number of regional chief executive elections. The data tend to show that the old political elite has reconsolidated its power despite the introduction of new political rules. The reasons are found in the weakness of newly created institutions and the strength of old social forces.

Debates about identity have multiplied across Indonesia in the wake of the implementation of regional autonomy. In the ethnically heterogeneous province of Riau, identity is prominent in the public debate and pivotal to struggles over the distribution of resources and questions of political allegiance. This chapter examines the extent to which these public discourses of identity are reflected at the grassroots level, drawing from my own experiences as an intermittent member of a non-Malay Riau household, and on data from semi-structured interviews conducted in June 2002 with community leaders and 40 other people from a range of social and ethnic backgrounds (see Table 9.1).

Half of the interviews took place in Pekanbaru (the provincial capital, located on the mainland) and half in Tanjungpinang (traditionally the major administrative centre in the islands). They focused on four issues: understandings of regional autonomy; the potential division of Riau into two provinces; who can lay claim to being an orang Riau (a person of Riau); and relationships among ethnic groups.

My informants' responses confirmed that the hopes of the people of Riau for improved access to economic resources have fuelled both general public support for autonomy and Malay claims to preferential treatment. However, they also suggested that affective factors should not be overlooked in attempts to understand the nuances of regional autonomy in Riau. On the one hand, Malay identity is emerging as a form of collective expression. On the other, Malayclaims to place have left many non-Malays with a sense that they have no place to claim. Where, then, does indigeneity end and citizenship begin? This question, which lies at the very heart of the identity conundrum in Riau, is important for Indonesia as a whole as it emerges from the New Order period.

On Saturday, 5 December 1998, at about 7 p.m., hundreds of people started to gather in the southern part of Blora around the house of Eddy Kosasih, a Chinese merchant who was the largest fertiliser retailer in the district. Attached to his house were a pharmacy and a warehouse containing tons of fertiliser. As the crowd formed, passers-by stopped to watch. News of a possible riot spread fast throughout the town, causing the curious to wonder what was about to happen in their normally peaceful town.

By the time the police arrived at just after 8 p.m. it was too late to calm down the masses. The crowd already numbered in the thousands and emotions were running high. At 8.20 p.m., shouting loudly, they approached the house, broke down the iron gate and began to ransack the compound. They looted and destroyed the warehouse, taking fertiliser, seed, pesticide and other equipment, and burned two trucks loaded with fertiliser. The action did not stop until almost 1.00 p.m. the following day when the army arrived to help the police. On the same evening, a fertiliser warehouse about 10 kilometres to the west of Blora belonging to the Banjareja Kecamatan Cooperative was also ransacked. Interestingly, not a single person was hurt in the mass action. No one was arrested.

The riots continued for three more days. Although fertiliser depots remained the main target, the rioters also attacked shops, especially those along the main roads belonging to Chinese merchants. When the mob swarmed to the police station to demand the release of three rioters detained on 7 December, the police had little choice but to release them without charge. The military, however, took firmer measures, shooting at rioters with rubber bullets when they began to threaten property. By the evening of 9 December the situation was under control, although the atmosphere remained tense. Shop owners took the precaution of removing portable merchandise such as electronic appliances and clothing from their shops. All shops and warehouses storing fertiliser were guarded by the security apparatus but were left open to make sure that what was inside was on public display.