Resentment against Megawati flares

Since the government of Megawati Sukarnoputri instituted price increases at the beginning of the year, ragtag student groups have been protesting.

Last week, in the Central Java city of Yogyakarta, shots were fired during a rally of about 250 students, and two protesters were jailed for burning a photograph of President Megawati. In the capital, Jakarta, about 500 students set tires on fire outside of Megawati's lavish home and called for her to step down for "betraying the poor."

The protests - modest by Indonesian standards - proved effective. Some subsidies on fuel and electricity were restored last week, and the usually taciturn Megawati responded with a rare speech laced with attacks on her political enemies and complaints about press bias.

Observers say it's a clear warning that the campaign for president has unofficially opened, 17 months before the next election, and that the challenge to Megawati's rule will be intense. For Megawati herself, the protests were evidence that the saintly aura she brought to office has been tattered by economic malaise and a growing public perception that she won't fight corruption.

"She is accustomed to having attacks come from the political elite, not from the grass roots, where she is convinced she is widely adored,'' says Jeffrey Winters, an Indonesia expert at Northwestern University in Chicago. "That bubble of adoration ... has burst now, and she has to entertain for the first time the idea that she might not win so handily in 2004."

While Indonesian politicians and pressure groups tend to hire "rent-a-crowds" to create the impression of support, most analysts say these protests appeared genuine. They had broad backing since the price increases on government-controlled commodities, particularly diesel fuel used to transport food, translated immediately into higher food prices.

Murtiwi, a trader at Yogyakarta's sprawling central market, says the fuel increase drove up prices for rice she peddles by about 8 percent. "I don't have much trust in Megawati anymore - she's just like every other politician."

In the early days of the democracy movement that began with the fall of the dictator Suharto in 1998, Megawati was revered by students as dedicated to fighting for the poor. But since taking the reins she has cut power-sharing deals with many politicians who were close to Suharto and backed off on prosecutions for former officials and high-profile businessmen who stole tens of billions in the Suharto years. In particular, Megawati called a halt to prosecutions of private bankers alleged to have stolen billions from state-supported banks when the dictatorship fell.

At the time, the government pumped more than $15 billion in emergency support to keep the banks from collapsing. But Central Bank officials allege the bank owners transferred that money into offshore private accounts. The banks eventually collapsed, and the state was left to foot the bill.

In large part, Megawati's effort to reduce subsidies is an attempt to plug that hole. Indonesia needs to come up with $6 billion this year alone to cover interest and principal on its debts.

To many Indonesians, Megawati is asking the poor to pay for the sins of the rich. Indonesia was hoping to save $2 billion with subsidy reductions this year that would have affected more than 200 million people while the 10 largest private debtors still owe $9.4 billion. Failure to punish the worst offenders is a big reason Megawati had little popular support for her move.

"Why don't they stop the big crooks before they take something away from the people?'' asks Ari Arianto, a Yogyakarta official for the National League of Students for Democracy. At least 10 protesters have been jailed for the crime of insulting the president since early January.

Megawati's government acknowledges it has done little to stop corruption. At the annual donors conference, chaired by the World Bank, the state development planning minister estimated that 20 percent of Indonesia's foreign aid loans is siphoned off the top each year. Still, the World Bank and other donors approved $2.7 billion in loans for 2003 - which has also made it difficult for Megawati to defend subsidy reductions.

"Many of the unpopular policy moves Megawati made are needed. But her packaging and execution were dismal,'' says Winters. "Effective political communication could even persuade the population that a blanket amnesty for the great majority of the country's corrupt businessmen makes economic sense. But you cannot do this without the political side of the bargain, which is to arrest and convict the very worst offenders."

Megawati's declining popularity doesn't seem to be matched by a rise in the public standing of her rivals. Instead, political apathy is on the rise less than four years after Indonesia's first democratic election in a generation. As a result, political analysts say, Megawati could win the next election, but with a much smaller public mandate, and an increasingly restless population that could turn to violence.