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----- Original Message -----
From: <[EMAIL PROTECTED]>
To: <[EMAIL PROTECTED]>
Sent: Thursday, September 09, 1999 5:13 AM
Subject: [synchronistic] Re: Weekly Analysis September 7, 1999
> From: <[EMAIL PROTECTED]>
>
> Indonesia is certainly coming apart, and this can be traced directly to
the imf, currency speculators and foreign interference...
>
> the process by which it has happened certainly bears relevance to most of
the free world in underlining how unelected foreign
> parties with no mandate can cause the elected representatives of a
sovereign nation to be removed...
>
> i think the writer is mistaken as to the effects of foreign
interference...most governments in this part of the world are well aware
> of what has happened, just as the people are...and the same method cannot
be employed twice...
>
> the foreign interference has had 2 backlash effects....
>
> 1 is a growing cohesiveness and nationalism in most countries to defend
and preserve the people's choice of government and way of
> life in general...the people in most countries view the right to be
represented by their elected representatives and government as a
> basic human right...any interference with this simply unites the people
behind their respective governments...and against the
> foreign elements...so, for instance, in Indonesia, the anti imf feeling is
very strong...as they are seen to be the main culprits
> behind the economic problems...in fact, the imf itself has openly admitted
that they have applied the wrong policies and in the
> process caused the change of government...
>
> but while this may be seen to be an accidental error due to ignorance in
the west...the feeling in the east is that it was a
> deliberate policy act...just as much as the Chinese embassy bombing is
seen to be deliberate act....simply too obvious and thinly
> disguised to be anything but...
>
> in any event trust is not the strong suit of western leaders...the feeling
here is that western leaders are simply incapable of
> being trusted, and are willing to look you in the eye and lie...
>
> the second fairly direct effect of foreign interference, has been calls
for reforms of the UN, imf, and greater transparency in
> their process....this has also been coupled with alternative bodies being
set up, or in the process of being set up, such as the
> amf, the Islamic grouping of nations, eaec and so on...
>
> individual countries have also boosted their defences, both military and
economic and have sought to work together to cure the
> problem...
>
> examples of this would be the imposition of a Chilean style exit levy,
increased submarine and plane purchases from Russia, and the
> development of long range missile capability, exchange pegs, local bond
markets, to soak up excess domestic liquidity and boosting
> of foreign reserves...
>
> this all serves as defensive barriers against further interference by
foreign elements...
>
> in china's case, instability caused by economics is not an obvious viable
route...firstly china still remains a transition
> developing economy...it has still not moved all its systems to
capitalism...so, it is quite possible for china to revert to a
> command style socialist regime, with minor dislocations in its well
being...if such a move should become necessary...
>
> secondly, china's economy is too big to be easily destabilised...it
already generates greater trade flow than Japan's, and like
> Japan's is financed by healthy current account surpluses...it also large
foreign reserves and has the capacity to sell these
> holdings to short cover any problem positions....the effect of this may be
to destabilise various key world currencies pushing them
> out of their narrow trading range at the cross rates...
>
> china also has significant sympathetic support from this region...Taiwan
does not deny that it is part of china, only that it wishes
> to negotiate the terms of its integration...and Hong Kong also can lend
significant support with its deep pockets and foreign
> holdings...
>
> the military in china is still reaping the benefits of business growth,
and it's loyalty behind Beijing will is stronger since the
> Chinese embassy bombing and remarks made by Taiwanese president...
>
> the other significant difference between china and Indonesia is that as
yet, it's economy continues to grow at the rate of 8%, and
> this shows no sign of slowing...if anything, with the shifting focus of
Europe and the rest of Asia towards china and its potential
> markets, there is very little reason why the Chinese economy cannot
continue at its current growth rate, if not accelerate...
>
> talks of a meltdown are greatly exaggerated and short sighted as Asia has
now started to withdraw its capital investments out of
> riskier markets and continues to reinvest in itself...ideas of Asia
reconfiguring itself is true, in that it has become far stronger
> and more stable than ever before in economic terms...
>
> Korea is now showing signs of 10% growth, a rate which appears sustainable
with the current reinvention of its chaebols...
>
> but Asia's growth at this rate suggests that it will be forced to
reconfigure current global systems to cope with realites of Asian
> trade and security issues...
>
> the Pakistan and India nuclear stand off is an indication that the UN, in
its current form is no longer capable of dealing with
> Asian style conflict....
>
> neither party turned to the UN as a serious avenue of discussion, but
preferred instead to engage in hostilities...
>
> if world organisations is to remain relevant to this region, it must
reform itself to understand and deal with Asian problems...
>
> as far as china is concerned, there is little reason why if anything has
changed...the economy has not slowed...nor has the way of
> doing business...and the military are still major stake holders in the
economy...china in fact seems set to overtake USA as the
> principle supplier of military technology over the next decade...it would
be unrealistic to expect the Chinese army not to know of
> the benefits that this will translate to them...i see little reason to
expect anybody other than the military to become the
> principle defence contractors as china sells technology cheaply to the
rest of the world...
>
> with so much at stake in china, and the increasing economic abundance,
there is very little evidence to suggest that there is
> unhappiness in the military or in the general population...
>
> if anything there is an increased sense of destiny for china and its army,
as it marches forward to become the world's greatest
> super power of the new millennium...
>
> ----- Original Message -----
> From: <[EMAIL PROTECTED]>
> To: <[EMAIL PROTECTED]>
> Sent: Tuesday, September 07, 1999 11:06 AM
> Subject: Weekly Analysis September 7, 1999
>
>
> > ___________________________________________
> >
> > What's going on in your world? Find Out.
> > Visit Stratfor's Global Intelligence Center
> > http://www.stratfor.com/world/default.htm
> > ___________________________________________
> >
> > OTHER FEATURES ON STRATFOR.COM
> >
> > Why East Timor Matters
> > http://www.stratfor.com/asia/specialreports/special68.htm
> >
> > East Timor: In the Face of Violence, Who Will Act?
> > http://www.stratfor.com/asia/specialreports/special67.htm
> > __________________________________
> >
> >
> > STRATFOR.COM
> > Global Intelligence Update
> > Weekly Analysis September 7, 1999
> >
> > Indonesia's Crisis: The Lesson for China
> >
> > Summary:
> >
> > Indonesia, as we have long predicted, is coming apart. This
> > process has a great deal of relevance to China, whose army, like
> > Indonesia's, was accustomed to making lots of money and now resents
> > the fact that the good times are over. In both countries, making
> > money became the basis for military loyalty to the regime, which in
> > turn needed the army as guarantor. But in China, as in Indonesia,
> > the military is no longer making money, and China has banned its
> > officers from business. Now Beijing is creating international
> > tension to soak up the military's energy and resentment. But in
> > the end, the guarantor of the regime can bring its death, leaving
> > warlords poised to take power.
> >
> >
> > Analysis:
> >
> > We have long argued that the Asian economic meltdown, as its
> > ultimate legacy, would politically reconfigure Asia. We meant this
> > in both the international and domestic sense: Nations would behave
> > differently after the meltdown than they did during the past
> > generation of extraordinary prosperity. The reconfiguration of
> > Sino-American relations is an obvious manifestation of this. But it
> > is the domestic political changes that are the most profound and
> > will have the most impact on international relations. It should be
> > obvious that an economic transformation of the magnitude we have
> > seen cannot help but have equally dramatic political consequences.
> >
> > Asia is obviously a diverse region. It goes without saying that
> > the economic meltdown will affect Japan's politics dramatically
> > differently than Malaysia's. However, events during the last week
> > have drawn our attention to one area of commonality: the effect of
> > the economic crisis on the military in China and in Indonesia.
> >
> > These two countries are not usually lumped together; they differ in
> > profound ways. But they share this: they have both used their
> > military forces for three missions - protection against foreign
> > enemies, enforcement of internal security and development of the
> > economy. During the previous generation, the latter role became
> > more and more important for both the Chinese and Indonesian
> > militaries.
> >
> > But Asia's recent economic crisis, the states and circumstance have
> > forced both militaries to de-emphasize their economic roles. Not
> > only are the militaries not happy about this, but their unhappiness
> > could destabilize their respective regimes. Quite apart from the
> > truly disturbing prospect of an Asia dealing simultaneously with
> > both Chinese and Indonesian instability, there are important
> > lessons to be learned from the way in which each country used the
> > military and the consequences of that use.
> >
> > The fundamental roles of both the Chinese People's Liberation Army
> > (PLA) and the Indonesian armed forces (TNI) was originally the
> > same, to serve as the foundation of a regime governing a restive,
> > multi-ethnic populace engaged in building a cohesive nation-state.
> > Although circumstances were different in China and Indonesia, there
> > was great commonality of purpose.
> >
> > On the one hand, the armies in both countries were designed to
> > guarantee internal security so that the state could construct its
> > control mechanisms in safety. On the other hand, the army -- as
> > one of the few genuinely national institutions -- was an instrument
> > of nation-building. By recruiting members throughout society, these
> > armies served as a means for upward mobility and as a tool for
> > integrating diverse elements into a cohesive whole. As was the
> > case in many new societies, the military served not only as a means
> > for stability, but also as a tool of modernity.
> >
> > The Chinese and Indonesian armies played similar roles in
> > controlling the social instability created by their charismatic
> > leaders. Beginning with the October, 1965, backlash against the
> > communists, the Indonesian military steadily asserted itself, and
> > under the leadership of then-Gen. Suharto, the legacy of
> > Indonesia's founder Sukarno steadily diminished. The PLA intervened
> > to crush the Mao-inspired Great Proletarian Cultural Revolution.
> > The PLA's intervention not only stabilized a China that was
> > oscillating out of control and moving toward chaos, but it created
> > the framework that led to the victory of Deng Xiaoping over Maoist
> > forces and set the stage for the implementation of Deng^s economic
> > reforms.
> >
> > Both China and Indonesia moved cautiously toward engagement with
> > the outside world's economic system. Both Deng and Suharto held
> > the reins tightly on the process of development. But as economic
> > development began to accelerate and involvement with international
> > finance developed, both Deng and Suharto had to involve their
> > militaries, not only to control the process but also to facilitate
> > it.
> >
> > In developing countries, the military is frequently the most modern
> > institution in society. Preparing for war requires two things.
> > The first is some degree of familiarity with technology and the
> > principle of technological development. In societies in which the
> > understanding of better and worse technology is fairly abstract,
> > the military -- which lives and dies by better and worse technology
> > -- is frequently the most capable of evaluating and adapting it.
> > Second, as the largest integrated organization in the country, the
> > army has to some degree mastered the management and coordination of
> > large numbers of personnel in dispersed locations, cooperating to
> > achieve the same end.
> >
> > Thus, the Indonesian and Chinese armies had a more intimate
> > understanding of technology and a more efficient means of
> > organizing production than other institutions. In a China, where
> > the Cultural Revolution had torn out the heart of the nation's
> > managerial class, and an Indonesia in which the managerial class
> > had either been Dutch or had emigrated, turning to the military to
> > facilitate economic development was a natural choice. Moreover, in
> > two xenophobic countries where economic development necessarily
> > meant dealing with suspect foreigners, a commitment to national
> > security was another reason to rely on the military.
> >
> > There was another issue: Both the Chinese and Indonesian regimes
> > depended on the loyalty of their military to survive. If economic
> > development was to take place, the officer corps had to be
> > permitted to participate in it. If, having saved the regime, the
> > officers were to see other segments of society prospering while
> > they were excluded, the inevitable dissatisfaction would threaten
> > the regime's survival. It was simply good politics to allow the
> > military to participate in the economic development process.
> >
> > Thus, social reality and politics combined to turn both the Chinese
> > and Indonesian militaries into economic entities. As time went on,
> > the senior officers in both countries became businessmen, both as
> > individuals and as organizational leaders. From the village level
> > to the largest deals, the military participated. Military
> > officers became the linchpins not only of small-scale business but
> > of multi-billion dollar projects involving huge foreign investment.
> > In both countries, the armies became intimately bound to the ruling
> > families, the banking system and the system of facilitation and
> > corruption that distributed wealth.
> >
> > Indeed, their most important function was the collection and
> > distribution of wealth. While great wealth concentrated at the
> > top, during the boom times it frequently trickled down through the
> > army, through enlisted personnel on projects, hiring local labor,
> > money transferred to local officials, and supporting family and
> > friends linked to the military. All of this made the military
> > indispensable in the use of wealth as a means of stabilizing and
> > building loyalty to the regime.
> >
> > Economic growth in the early 1990s pushed ideology out the window.
> > Both the weaker ideology of Indonesian nationalism and the much
> > more robust Maoist socialist ideologies lost relevance during the
> > boom times. The army's security function declined, as increased
> > wealth was seen as the permanent path to the regime's survival.
> > And, given the ideology of global finance, reasonable military men
> > found doing deals with foreign banks far more relevant than
> > preparing to fight foreign armies. The economic development mission
> > supplanted the security mission in both China and Indonesia. What
> > was left was the military officer as businessman.
> >
> > All of this worked perfectly until the bottom fell out of the
> > economy. Having abandoned ideology as a driver and national
> > security as a mission, what was left was private economic
> > calculation. Officers in both countries had become used to asking,
> > over the past decade, "What's in it for me?" For most of the
> > decade, the answer was "quite a lot." The regime could no longer
> > give this answer. Indeed, rather than distribute growing wealth,
> > the regime now had to allocate growing misery.
> >
> > More important, the regime had to rely on the military for
> > protection in the face of tremendous resentment from the masses,
> > who had never received anything but crumbs during the boom. Having
> > now realized that those crumbs were all they would get, the
> > bitterness was intense. The regime, which had broken the social
> > contract they had entered into with the military, now called on the
> > military for protection. Times were now tough, and the military was
> > asking, "What's in it for me?"
> >
> > The Chinese responded by ordering the military out of businesses.
> > This was both politically and structurally absurd. The PLA was so
> > deeply into business that disengagement would inevitably increase
> > the pressure on the economy, not to mention destabilize the
> > political situation. Nevertheless, the regime clearly understood
> > where the economy was headed, and therefore knew that it had to
> > pre-empt the military to minimize resentment and mobilize the
> > military to defend the regime. China has renewed ideological
> > campaigns, resurrecting the notion of socialism long after the
> > military had ceased to resonate to it. Much more important, the
> > regime generated a national security threat both domestically and
> > from foreign sources. It is no accident that the regime happily
> > went into confrontation with the United States. It understood that
> > the military, even if it was left cold by neo-Maoist rhetoric,
> > would resonate to patriotism and to foreign threats.
> >
> > The Indonesians, with less room to maneuver, confronted a much more
> > serious problem. Their military had neither ideology nor a
> > credible foreign threat to supplant the sense of betrayed economic
> > entitlement. The regime has used East Timor as a reminder of how
> > much worse things could get. The expulsion of the military command
> > from East Timor would leave them with no means of livelihood. East
> > Timor is an opportunity for the regime to demonstrate to the army
> > what can happen in the rest of Indonesia if the military fails to
> > hold the country together. Having few other cards to play, Jakarta
> > wants to convince the army that saving the regime is a savvy
> > economic move.
> >
> > In both China and Indonesia, the burning question is the same.
> > Having suffered massive economic reversal, having been barred by
> > reality and edict from economic life, will the military simply
> > return to the primary mission of national security against enemies
> > foreign and domestic? To be more precise, will they return to
> > those missions effectively, or will they return to those missions
> > while they bide their time as an institution and as individuals.
> >
> > Business has a corrosive effect on any military organization. The
> > principles of self-interest and the principles of self-sacrifice
> > are not compatible. A generation of military officers has had
> > self-enrichment as its primary mission. The economic collapse has
> > closed off opportunities that these military men saw as their
> > entitlement. Now the regime, having failed the military, is
> > mobilizing them to save the regime. It is a tough sell.
> >
> > There is a path, well known in Asia, which combines the military
> > mission with the doctrine of self-enrichment. It is called the
> > warlord. The warlord is a businessman who uses military force as a
> > means of enterprise. Warlords arise when the central regime loses
> > credibility and power devolves to regional forces. Since the
> > military is the most organized social force, it naturally picks up
> > power when it is lying in the streets. This is particularly true
> > when military commanders have had the experience of making vast
> > amounts of money in business.
> >
> > Warlords are not alien to Asia. The Indonesian and Chinese cases
> > are natural incubators for this phenomenon. In China, it would be
> > merely a reversion to a fairly common social form. In Indonesia,
> > where relatively benign warlords have ruled the countryside for a
> > generation, it is what would remain if you lopped off the top of
> > the regime.
> >
> > No one knows what direction things will go, particularly in China,
> > where power struggles are becoming as opaque as they were before
> > the opening to the West. Nevertheless, signing an order banning
> > the PLA from doing business and enforcing it are very different
> > things. As difficult as it is to believe, it appears to us that
> > China is flirting with the same disintegration we predicted for
> > Indonesia two years ago. The very force that held China together,
> > the PLA, may now be in the process of pulling it apart.
> >
> >
> > __________________________________________________
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