Over the last ten years, we the NGOs have witnessed the shift within the World Bank from a totally closed and government- oriented organisation into a more transparent one. However, the Bank still persists with its paradigm of economic development based on economic growth, supported by a stable political structure, and heavily financed by foreign money through loans and direct investment.
The World Bank has championed Indonesia as a show case of this paradigm. It has used Indonesian 'miracle economic growth' as an example to other developing countries. Now all the 'achievements', which we gained through the hardships and sacrifices of our most vulnerable people, have evaporated in just a few months. This followed the failures of the same paradigm in Latin America, Central America and Mexico in the early 80s.
Non Government Organisations - in Indonesia we participate in the International NGO Forum for Indonesian Development (Infid) - have long advocated the Bank to change this paradigm. The Bank has ignored the political and institutional dimensions of development. These include the development of the rule of law, recognition of human rights, effective democratic mechanisms, a structure to produce accountable government, and effective social control which can actually enhance the economic development process.
On the contrary, the Bank has used the soft approach to the problems of corruption, collusion and oppressive practices of its clients, as long as they can show strong economic growth.
We have advocated human rights and democratisation as the basis for economic development, but the Bank has responded that its business is development and not democratisation. On the contrary, the Bank has continuously increased its support to our government, even though quietly the Bank knew the government was losing its own people's confidence due to corruption and collusion. The Bank knew that the government got its legitimation through an oppressive political system and tight security control, but it chose to ignore them.
Now this problem has culminated in the continuous downfall of Indonesia's rupiah, despite economic and structural reforms imposed by the IMF and the World Bank. Clearly, we need more than just economic and structural reform. We need political and institutional reform to guarantee sustainable development. We need a national leadership which honours the people's sovereignty, which respects human rights and the rule of law, and which respects the principle of the separation of powers within a democratic system.
We recommend that economic reform can only be successful if the following reforms take place simultaneously:
- Reform the judiciary system to free it from government intervention;
- Reform the political system by abolishing laws that inhibit the freedom to organise, to assemble and express opinions; abolish laws that paralyse political parties and prevent free and just elections;
- Develop laws that guarantee social justice within the market economy by acting against corruption and monopolies, and in favour of consumers;
- Base all economic reform on poverty alleviation and an environmentally sustainable development principles;
- Remove state authority from 'quasi public interest' foundations, and replace them with a state policy that allocates more resources to small and medium enterprises;
- Include the Indonesian public in the economic reform. This means disclosing any agreement between the government and the World Bank on the bailout package.
We understand that the World Bank has a limited mandate and perhaps cannot address the whole reform agenda above. Nevertheless, we expect the World Bank to demonstrate an attitude that its support to the Indonesian government is conditional on reform achievements in these political, institutional and social justice areas. We expect the Bank to declare that position publicly as well as to the government of Indonesia.
Jakarta, February 4, 1998
International NGO Forum on Indonesia Development (Infid) Indonesia Steering Committee:
Zoemrotin K Soesilo, Chairwoman
Asmara Nababan, Secretary
Infid has 40 NGO participants, ranging from small organisations to Indonesia's most prominent independent NGOs. This statement is extracted from the original memo.