'THE PEOPLE ARE MY BOSS'

Report Card How's he doing?

The Suhartos Living outside the limelight

Batam The place that made the man

ASEAN Don't expect Jakarta to lead

RUNNING CHARACTERISTICALLY behind schedule, an energetic President B.J. Habibie entered the reception room of the Bina Graha on Aug. 18, and launched into an animated 75-minute discussion with Asiaweek Editor Ann Morrison, Jakarta Correspondent Joel Manuel Tesoro, and Contributor Dewi Loveard. His English tinged with a German accent and his hands and face in constant motion, Habibie tried to distance himself from his predecessor by repeating that he was a democrat and that he wanted his government to be transparent and to work from the ground up, not the top down. He also expressed his ideas of what a president should be - and not be - and suggested that he would run again. The edited transcript follows:

What in your opinion have you achieved so far?

We are still healthy and everybody in Indonesia still has something to eat - even though not enough. And people are getting more and more self-confident. I think that is not my achievement but actually the achievement of all of the Indonesian people. To get $14 billion from the international community has to

[mean] that they have confidence in the Indonesian people and in the way we respond to all our current problems..

What are the disappointments and frustrations of the last 100 days?

I am too realistic: I take things as they are. And because of that I am not frustrated.

Your speech for Independence Day was well-received but there was some criticism that you were not specific and (expressed) no sense of urgency.

First of all, if I am to make a very specific detailed speech , I will need the whole day. Or I will speak for only a second so you will see the tree but not the forest. It should be considered as a political statement of the president.

What is your first priority for the economy?

To take care of the poor because they are the most innocent people in the society. You know that the [number of] people who live below the poverty level has become bigger. It is not only double, but almost triple. Because of that, I have a lot of people who are unemployed. So I give them the first priority. For example, [in meeting their] basic needs like [providing] rice, cooking oil and protein through soybeans, and medicines and also in assisting them to get scholarships for their children.

Where is the money coming from?

This is the biggest sad story. We get some $14 billion but the majority of it is for a social safety net. That's a lot of money. It would be nice if we could use it for development. But in this case we have to take care [of the people]. And that money comes partly from ourselves, because of course the $14 billion is not enough: You know we have about 200 million people. But it is a lot [of aid money] to give special attention. For that, on behalf of the people of the Republic of Indonesia, I would like to say thank you for all the attention from the old IMF members as well as the new IMF members such as China, which is supporting us, the World Bank, and the G7 members who are very proactive and who were very sympathetic to Indonesia.

You have not mentioned ASEAN.

ASEAN is included. Of course.

The level of inflation, or hyperinflation, is one of the hardest things for the poor to accept. How would you balance the need the see high interest rates and the need to put liquidity into the economy?

We still maintain a tight money policy. The tight policy we have now will of course result in a high interest rate. Before, the amount of money coming into the money market was almost dominated by the fact that the rupiah had become a commodity through speculation. Besides, it was a fact that the rupiah was being used for the survival of at least 55 banks that have problems with cash flow. We cannot afford [to let them] collapse, because if they collapse the whole economy will collapse. The former government took the banks into their care by putting them into the Indonesia Banking Restructuring Agency (IBRA) and helping them. Not subsidizing them, but giving them a credit, which they have to pay, with interest. Of course they have to meet the criteria, which means [be] creditable.

Now the difference between my government and the former government is that at that time, the influence of the government in the Central Bank was very big. Even in all systems in the bank. That is exactly what I have decoupled. That is why, after I was sworn in, I took the central bank out of the government immediately. There was no law about that, but I am preparing the law. As the president I took care so nobody from my government or myself will interfere in the policy of Bank Indonesia. So I have asked them to take care [of] the high quality of the rupiah. It means that the depreciation of the rupiah must be minimized or become zero. Because the depreciation is low, lower, or zero, then it will give impact to the inflation [level]. If the depreciation as well as inflation are low, interest rates will be low. That is the attitude. What I have done is I have decoupled IBRA from the Bank of Indonesia. Before, they were just sucking the money from the central bank. As soon as I took over, I excluded the Bank of Indonesia from the government, [and] I let them know please take care, I'm not going to ask your money. I have asked IBRA to take care of their own. For example, if they need cash flow, don't let the Bank of Indonesia print [money], ask for credit from the market because we are still creditable [enough to raise] our own money from the market. Secondly I have asked the central bank to issue Bank of Indonesia Certificates (SBI) to take money out of circulation. Before, they just sold it. Now I asked them to tender it. Also, to [take advantage] of the high interest spread. So, people say that our interest rate will be for a long time high. That is okay, but we will take care of inflation with the tight money policy.

In the meantime, I have to take care of the national economy. For example the first priority is given to the small and medium enterprises and to basic need for people's distribution. With such a policy I hope we can [make] the volume of the money in circulation constant. And while doing that, we increase the dynamism of the national economy. With money, for example the $14 billion, people will have more confidence in the Indonesian government as well as in the national economy. Then GDP [will] grow and the volume of money will be maintained, and I'm sure inflation will go down.

Some economists are very critical of your economic plan. They say that your government lacks coordination.

How do they know that? They are just sitting outside and watching. If we are as bad as [they say] we are, we will not get any penny of the foreign money. Come on.

You are giving priority to small and medium enterprises. Could you tell me what you mean by priority?

Before they had their basic distribution taken care of by Bulog [the national logistics board]. It's already done with certain commodities, but in the shortest time, Bulog will only be helping with rice and cooking oil. I'm going to give [those] to the market. Before they just ordered the rice and distributed the commodities, for example. It was a cartel. Now, I will leave it to small enterprise.

Since Chinese interests control many listed companies, some people interpret your recent attack on the monopolies as being anti-Chinese.

If you have an anti-monopoly in the United States, are you anti-Chinese? [No,] you are anti-monopoly. You are going to increase the competitors in your economy. Today maybe some companies enjoyed a monopoly. It is not their mistake because then this was legal. They have enjoyed the fact there was a beautiful economy, maybe like the robber-barons years ago in the United States. We are just 53 years old. Those guys, I told them, the past is the past. It's yours. The future is ours. We are going to learn from the market-oriented economy.

What companies will be privatized and how?

Other people have to do that. I have to act as the president and not as [someone] behind the counter. Other people have to do that. If you take care of almost 210 million people, you have to be realistic. I have the same amount of time you have, 24 hours.

You talked in your Independence Day speech of the role of the military. What role do you see it playing in the future?

Not only the military, every institution has to be transparent and professional. In the administration. I'm not going to make a revolution, because it is counter-productive.

The military has been a very professional organization since the first day of their establishment. They were and they are always loyal to the Constitution, to the president. [Military Chief] Gen. Wiranto, only five minutes after I was sworn in, made the statement that the armed forces are behind the constitutional president. And that constitutional president, his name is Habibie. The president is also the supreme commander, and any steps that have to be taken by the chief of the armed forces always [need to be] approved by the supreme commander. Any new appointment in the whole military system needs the signature of the supreme commander. Because of that there was never a conflict between the supreme commander from the start of the constitutional republic to today. There is no problem.

What if the generals were to promote Wiranto as a possible presidential candidate?

The generals cannot promote, only the People's Assembly can. If they want it, they get it. Nobody can promote. We are not in a jungle.

You have denied being dependent on the military, but you are not an elected president.

No, the elected president was Mr. Suharto. I am a president based on the Constitution. I am an elected vice president. There are only two people in this country who have been elected based on the people's power . They are the president and the vice president.

We both signed a contract. The contract is that the president gets a mandate from the People's Assembly, to implement all the decisions made by the People's Assembly. And one of the decisions, for example, is when to have the next election, then the next People's Assembly, then the guidelines for building the country for the next five year period. I signed the contract, and the president signed it. The contract of the president is that he has to perform all the decisions of the People's Assembly based on the Indonesian constitution. Then he signed that if he could not continue his work, he has to give it to the vice president. The president also has to sign that he is prepared to cooperate with the vice president. As a vice president I signed also that I accepted the election. I signed also that if something happened to the president, based on the Constitution, I will continue.

Did you think you would become president?

No. I did not even think that I would become vice president. It was not in my plan. You know from my background that I am a scientist. I was looking for 25 years of assisting the president, that it was more than enough. I wanted to write a book about my experience and on science policy, and on my experience in developing sustainable national development.

You have proven your skill as a politician, in taking control of [ruling party] Golkar.

No, I don't control Golkar. It is the people who elect the [delegates]. In Golkar we are a democracy. I was a young man in Europe and I learned the values of justice, democracy, human rights, all of those, from the Europeans, the Americans, the Australians. For me it is standing procedure. I am not going to manipulate. If you are a democrat, [government] must be bottom up, transparent.

There have been suggestions of a cabinet reshuffle.

There's always the possibility, because you are free and have to optimize. [But] if you ask any president, he will say there will not be changes.

Will you be naming a vice-president?

I will not be doing that because he must be elected by the People's Assembly. And the People's Assembly will be held next year in December.

Will you be running for president?

It depends on three things. I must be healthy. I am sitting here to fulfill the expectations of the people. I am sitting here to give and not to take. I am giving everything I have. Time. Even time that is owed to my wife and my family. I have to optimize my experience. I am not a young man; I have been in cabinet for a quarter of a century. I thought that as a student I worked very hard. But I have [never] worked as hard in the last 25 years [as I do now]. I try to give what I have to the people, because they honored me to become their president.

The second, I am a democrat. Not only today, my whole life, my blood. I want to be president again only if the people want me. If they don't want me, I cannot force them. I am not going to engineer it. It is not my style.

The third thing is that if it happens it will be my last term, this will be considered the first term even though it is only 18 months. I refuse to be called a transition president, that is the only way [I would run again].

There is a lack of faith in institutions, a sense of lawlessness. Does this erosion of faith worry you?

It is matter of fact that I am the president of the republic. It is a matter of fact that it is on the shoulders of the president to take care for security and prosperity. It is a matter of fact that I have had to take over a lot of things that I was not involved in. I was involved in science and technology and the strategic industries. We did not contribute to this big debt. The only debt we had was rupiah debt for operating capital. Being a president, I am very aware of my responsibilities and the expectations of the people.

What is the criteria for the national medals of honor you awarded recently? The recipients included your wife and a brother, Gus Dur and Amien Rais.

There is a panel who evaluate the people. They submitted [recommendations] to [me]. It was not top down, it was bottom up. I couldn't even review it. [The panel] is made up of the four co-ordinating ministers, and maybe some other ministers, eight people I think.

Including the military sector?

Of course. The secretary is a lieutenant general. The members include the co-ordinating minister for security and defence (along with the other co-ordinating ministers). There are others, I don't know the whole list. I just check it and it was okay, so I signed. I asked about my wife's name. The answer was that my wife is the first lady and she has to accompany the president, and she has to get [a medal]. It's just a uniform for, say yesterday, National Day. My wife is a medical doctor, and she said, "Why should I get it." And I said, "You are the first lady." My younger brother is now retired. He has served as a government official since he was maybe 25 and now he is 60. He was two times director for sea communications. He said, "You're not going to make a mistake [in naming me]. I am the last one who wants you to make a mistake." And I said "No, I'm not." If I said no [and refused him the medal], it [would be] insulting and arrogant.

And Gus Dur and Amien Rais?

I see Gus Dur and Amien Rais have given a big contribution to Indonesian reformation. You should honor people like this. As a democrat I have to consider the opinions of all people. Not everything I am doing is correct, and I have to listen. I see that they have contributed a lot.

Were you surprised that they were not present?

They were asked if they wanted to receive [the medal], and they said okay. Amien Rais signed his acceptance to be invited. There were two others who were going to be elected who said not this year, because this year I am doing a lot of things which are going to be counter-productive to you. I told them, "You are not getting this because of what you are doing now but because of what you did in the past 30 years."

Some people would say you are trying to co-opt your opponents.

Oh no, I am not politicking. Come on. That is wrong, because then I would do top down. Gus Dur didn't come because of his health and we pray to God that he will able to contribute for as long as possible.

Since 90% of the people in Indonesia are Muslims, isn't it clear that they will have the biggest say in future elections?

No, not Muslims. People will have the say. Don't take the religion. It is people's power, not religion. We are not making a religious war. We have declared war on poverty and ignorance. Come on.

Indonesian Chinese are still saying that they do not feel secure, they fear there will be more planned riots, they worry about their future.

I can understand their concern. My political statement [in the Independence Day speech Habibie called the violence against Indonesians of Chinese descent "barbaric acts" ] was loud and clear. The whole world was watching. If that is not enough, I don't know what to do.

You've seen federalism work in Germany. Is this a possible model for Indonesia?

No, we are going to give more autonomy to the provinces, in fact, to the districts in the provinces. This is in the pipeline. They are preparing the law for sharing the benefits of natural resources. In some cases, only 20% will go to the central government and the rest will go to local districts. How much will depend on the industry, for example mining, though districts involved in, say, transporting the minerals will also share.

You have apologized for violations of human rights. Could your predecessor have had any involvement in those violations?

I don't know. It's enough for me that a lot of the information I got embarrassed and insulted me as a human being, and based on that I had to apologize. I hope that will be accepted and that the wounds of the past will be healed. I promised that this will never, never happen again. I have limited time and I am not a detective. I want the people of the Republic of Indonesia to concentrate on their future. I cannot bring those [human rights victims] back to life. We will build a future for Indonesia based on the values of human rights, values which have no difference between Europe and Asia.

Has this changed your opinion of your predecessor?

I am not a scientist who makes research on the values of the opinions of my predecessor.

What is your position on the assets of the former president and his family?

I leave it to the attorney general's office. The first day I told them. We have the presumption of innocence, and everyone has to act according to the law. My full concentration is on coming out of the crisis and to help the poor who are really innocent. They are my heroes. My responsibility is to the people I love. The people, even those who hate me, are my boss.