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  • Indonesia Report
  •   Suharto Says He Will Seek Seventh Term

    By Paul Blustein
    Washington Post Staff Writer
    Wednesday, January 21, 1998; Page A15

    JAKARTA, Indonesia, Jan. 20—Indonesian President Suharto let it be known today that he intends to run for a seventh five-year term in office, and in a move that stirred unease among international investors, he hinted that his choice for vice president is a strong-willed technology minister whose views are anathema to the International Monetary Fund.

    The chairman of the ruling Golkar party, Harmoko, told reporters after meeting with Suharto that the president "is ready to be nominated at the People's Consultative Assembly meeting" in March, which will be dominated by supporters of the 76-year-old leader. Like many Indonesians, Harmoko uses only one name.

    Suharto, who took control of the world's fourth-most-populous country in a 1966 military coup, recently has faced an unprecedented number of public calls for resignation or retirement as Indonesia grapples with a financial crisis that has staggered the country's currency and stock markets. But Harmoko said that a poll showed "the majority of the people still want Suharto to be nominated as president" and that Suharto "will accept" their trust in him.

    That much was widely expected. But what is feeding the Jakarta rumor mills is speculation that Suharto has settled on B.J. Habibie, the minister for research and technology, as his next vice president and presumed successor.

    Today's announcement fueled those rumors because Harmoko released a list of more than a dozen criteria that Suharto said he wanted in a vice president. Fourth on the list was "an understanding of technological knowledge for the benefit of the national interest."

    That would appear to point to Habibie, 61, whose most controversial moves have involved putting government money into projects that he contended would enable Indonesia to leapfrog other countries in technological advancement. The best known is a venture to create an Indonesian aerospace industry by building passenger planes.

    His penchant for industrial policy has exasperated free-market economists at institutions such as the IMF and the World Bank, which have criticized Indonesia for pouring resources into ambitious industrial projects instead of goals such as education. Only last week, the IMF demanded -- and got -- Suharto's reluctant agreement to terminate government subsidies for Habibie's airplane project as part of a package of economic reforms. The IMF is leading a $43 billion international bailout of Indonesia.

    Accordingly, foreign analysts and diplomats expressed dismay that Suharto, right after seeking the IMF's blessing, would take a step that appears to amount to a thumb in the eye of the IMF and the financial markets.

    "I don't know what planet he's on," said Eugene Galbraith, group head of research in Hong Kong at ABN Amro Hoare Govett Asia, who spent many years in Indonesia. "If the IMF is good at anything . . . it would be getting countries to scale back on government involvement in the economy. And yet the person he seems poised to choose to run the country is the most statist person in the government. If true, we're set for a real disaster."

    Although the Jakarta stock market's benchmark index rose 2 percent today, the Indonesian currency, the rupiah, continued to hover at record lows against the U.S. dollar. Its plunge has left many Indonesian companies unable to pay their foreign debts because they must marshal many more rupiahs to make principal or interest payments in dollars.

    Early today, the rupiah dropped 10 percent to an all-time low of 10,600 per dollar, although later this afternoon, it strengthened to about 9,600.

    © Copyright 1998 The Washington Post Company

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