Indonesia: The New Order

At long last, after months of delays and confusion, Indonesia’s Sukarno was removed as his country’s chief of state. The People’s Consultative Congress, Indonesia’s highest legislative body, stripped him of his presidential powers and turned them over to General Suhar to, the strongman who already exercised them in fact.

Indonesia reacted with unexpected calm to the fall of Sukarno, who declared Indonesia’s independence from The Netherlands in 1945 and has reigned as sole ruler for 22 years. The golden presidential flag no longer flew from his Bogor Palace outside Djakarta, to which Sukarno retired last week to await the return of his Japanese wife Ratna Sari Dewi, 27, from Tokyo, where she recently gave birth to a daughter. Almost overnight, his picture disappeared from government offices. Sukarno will henceforth be referred to only as “Doctor Engineer” Sukarno, in deference to his academic training, will not be allowed to travel inside or outside the country without Suharto’s permission.

Foreign Minister Adam Malik explained why Sukarno must move out of the ornate, white Merdeka (Freedom) Palace in Djakarta: “It is like a former government servant staying in a government house.” But General Suharto, who does not want to give Sukarno’s backers reason to rebel, is in no rush to go too far in punishing him, himself prefers to continue living in his modest one-story house. “Let him keep his ornaments,” says Suharto. “What harm does it do?” As he was sworn in as Indonesia’s new chief executive last week, Suharto continued that note of reasonableness and compromise: “Winners are we all. Neither group has been defeated in this Congress, nor has one been victorious. It is the people’s interest that has won. The winner is the New Order.”

Severe Damage. The first task of the New Order is to clean up the incredible economic mess that Sukarno has made of Indonesia. As a Dutch colony before World War II, Indonesia supplied one-fifth of the world’s tea, one-third of its rubber and palm oil, two-fifths of its kapok and four-fifths of its pepper. Scattered throughout Indonesia’s 3,000 verdant islands are rich mineral deposits —gold, tin, bauxite, tungsten—and oil reserves. “Indonesia is rich in natural resources,” says Suharto, “but the damage done to our country’s economy has been severe.”

After the Dutch departure, the riches were left largely untouched while Sukarno pursued what he called “mental investments”—big prestige projects that he built by borrowing or just by having his central bank crank out billions of new rupiahs. Djakarta is a monstrous monument to Sukarno’s excesses. The opulent Hotel Indonesia, where a full-sized orchestra sometimes plays to a handful of guests, stands like an ocean liner moored in a cesspool. Thousands of gawking Indonesians stream through the Sarinah department store (named for Sukarno’s childhood nurse) to view goods that they cannot afford, including chewing gum at 700 a pack and Ronson lighters at $20. Amid the shacks and open kali-kali (canals), in which the impoverished populace both bathes and relieves itself, stand the rusty skeletons of unfinished skyscrapers and the crumbling concrete shells of uncompleted conference halls—symbols of Sukarno’s megalomaniacal dream of turning the city into the capital of the underdeveloped world.

All Sukarno actually accomplished was to bring his once rich land to the edge of ruin and total bankruptcy. His print-now, pay-never policies caused the postwar world’s worst inflation, which has sent the Indonesian cost of living up an incredible 80,000% in the past six years. More than 40% of the national airline’s planes are unflyable for lack of spare parts. The country owes $2.3 billion in foreign debts, has no financial reserves and next to no credit. Its exports have plummeted, its industries are operSiting far below capacity, and unemployment is massive among its 107 million people.

Bright & Young. Can Indonesia be saved? Suharto believes that, with Sukarno gone, it can. His economic advisers—mostly bright, young, Western-educated men—have already taken such emergency steps as halting all “show building” construction, balancing the 1967 budget to try to rein in inflation, tightening credit and arranging for a stretched-out schedule for the repayment of foreign debts. But Indonesia badly needs outside technical aid and foreign investments to turn its potential riches into reality. Many foreign firms, including several American ones, are already negotiating with Suharto to come in (TIME, Jan. 27). Many more can now be expected to follow. To encourage them, Suharto’s men have introduced a new tax-exemption law for foreign enterprises, and are beginning to return companies seized during Sukarno’s days to their rightful owners.