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1 1 INDONESIA’S NEW PROMINENCE IN THE WORLD Anthony Reid ‘GOODBYE CHINA, HELLO INDONESIA’? Surprising as it sounds to cynical Indonesians and disillusioned Indonesianists , there are reasons for thinking that this is at last Indonesia’s moment on the world stage. The world’s fourth-biggest country by population has an unenviable reputation for not living up to expectations, epitomized by the subtitle of Anne Booth’s economic history of Indonesia : ‘A history of missed opportunities’ (Booth 1998). She traced over almost two centuries a sequence of hopeful new beginnings followed by disappointments, leaving Indonesia one of the world’s poorest and most conflicted countries in the 1960s. As other Asian tiger economies leapt ahead in the latter part of the twentieth century, Indo­ nesia also grew, but failed to close the gap with its neighbours. In 1998 the Asian financial crisis caused a 13 per cent drop in GDP, and an IMF bullying of the Suharto government into taking the kind of stern medicine that helped precipitate its fall. Yet now we have international pundits declaring that Indonesia is the future. The influential US journal Foreign Policy used the heading ‘The Indonesian tiger’ for a story proclaiming the country the quiet achiever of the moment (Keating 2010). Much quoted NYU Stern School economist Nouriel Roubini, known as ‘Dr Doom’ for his forecasting of global financial crisis and especially a coming crash in China, went further. In a speech reported under the heading ‘Roubini: goodbye China, hello Indonesia ’, he noted that China’s growth rate was falling while Indonesia’s was rising (6.1 per cent in 2010, 6.3 per cent in 2011, 6.5 per cent expected in 2012). He argued moreover that Indonesia had the right model to sustain growth, with its low inflation, low debt (about 26 per cent of GDP), 2  Indonesia Rising: The Repositioning of Asia’s Third Giant young demographics, and the insulation provided by two-thirds of its GDP being derived from domestic consumption. It therefore stood a better chance than China, let alone the developed world, of long-term growth even in the hard times he expected the world to face (Deutsch 2011). Indonesia’s admission to the G20 club of influential states seems no more than its due in light of such predictions. Inside Indonesia all this is hard to believe. The headlines are all about corruption scandals, political stalemate, extremist Islamic rhetoric and natural disaster. Even when a reformist policy survives the vested interests and outrageous corruption of a multi-party legislature, the difficulties of making it effective on the ground appear as remote as ever. The transition from Suharto’s hierarchical and centrally driven political economy to a democratic environment of fragmented power appears to have demoralized more than it has galvanized the young reformers who gave birth to the change. This book is intended to weigh the arguments about Indonesia’s present and future standing in the world. It includes the good news and the bad, and avoids the type of glib optimism expressed in the Roubini headline , but on the whole it offers some concrete reasons why the present opportunity is Indonesia’s best yet. STRATEGIC ARCHIPELAGO TO THIRD WORLD EXPERIMENT The archipelago that constitutes Indonesia today was destined by its geography to be a passageway between oceans and continents, but also in the longer term a major source of threats to our planet. This section of the Pacific ‘Ring of Fire’, where the India–Australia plate pushes under that of Eurasia, has been the source of the most devastating volcanic eruptions to threaten humanity. The eruption of the volcano that created Lake Toba in Sumatra 74,000 years ago is now thought to have caused six years of global winter and reduced the human species to a small remnant. More recently, the eruptions of Tambora (in Sumbawa) in 1815 and Krakatau (between Sumatra and Java) in 1883 also had global as well as regional effects in changing the world’s climate. The layer of ash thrown into the atmosphere by a similar eruption in the twenty-first century would have catastrophic effects on global air traffic. Research since the shock of the world’s worst known tsunami in 2004 reveals that Indo­ nesia is also exceptionally exposed to major tectonic earthquakes that can cause terrifying tsunamis around the heavily populated Indian Ocean littoral. In historical times that archipelago’s moments of global prominence owed more to its environment, its tropical produce (Java and Makas...


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