Problems for SBY at home in Indonesia

President Susilo Bambang Yudhoyono’s recent visit to Australia has been widely regarded as a success and the Indonesian leader would have been delighted with the standing ovation he received at the end of his address to a joint sitting of Parliament.

It was in stark contrast to the recriminations, political manoeuvring and disillusionment that have set in at home since he was sworn in for a second term last October.

This is the view of a panel of Indonesia watchers at a seminar on the prospects for reform in the country, organised by the ACT Branch of the Australian Institute of International Affairs.

Marcus Mietzner, a lecturer in Indonesian Studies at the ANU, said local media were describing the first 100 days of President Yudhoyono’s new term as a “political disaster” and his appointment of Boediono, the former Governor of Indonesia’s Central Bank as his vice president “a major strategic blunder”.

The Boediono problem has it roots in the $700 million bailout of Bank Century, once Indonesia’s 13th largest bank, after it had defaulted on several major loans during the height of the Global Financial Crisis in late 2008. Parliament questioned not only the scale of the rescue package, but also whether some of the money might have been diverted or embezzled.

Although no serious commentator suggests Boediono, who was Bank Indonesia Governor at the time, was implicit in the affair, he has been widely criticised for not exercising a close enough watch over the way the bailout was conducted and just where the funds were going.

Dr Mietzner also claims that the fact Boediono is a non-party figure robbed Yudhoyono of the opportunity of nailing one of the major groupings in the often tumultuous Indonesian Parliament to his banner.

“He believed his previous vice president, Jusuf Kallar, who was also chairman of the Golkar Party, had brought political loyalties into the issue of governance, and by selecting a vice president without these political ties he could separate policy-making from politicking,” Dr Mietzner said.

“But by giving away the vice-presidency to a non-party figure he squandered the opportunity to bind Golkar to his administration. Between them his Democrat Party and Golkar would have controlled 40 per cent of the seats in Parliament, making it much easier for him to build a stable coalition.”

Instead the ruling coalition was in disarray, with distrust and disharmony reaching into the Cabinet itself. While attempting to keep a calm public persona, Yudhoyono is reportedly outraged at the turn of events, but undecided about how to deal with it.

One possibility would be the removal of his vice-president - a huge embarrassment for Yudhoyono so soon after endorsing him - but possibly preferable to allowing the Bank Central scandal to continue to distract his administration.

However, a consultant on governance and political change in Indonesia, Stephen Sherlock, points out that Boediono was elected to office on a dual ticket with Yudhoyono and has a direct mandate from the people. That mandate can only be removed by a series of impeachment-style procedures involving hard evidence of illegal activity that must convince Parliament, the Constitutional Court and a third body made up of parliamentarians and members of the House of Regional Representatives or DPD.