Suharto Is Given A 7th Mandate Amid Growing Domestic Crisis

By Seth Mydans New York Times Service
JAKARTA - With shouts of ''Agree! Agree!'' electoral delegates leaped from their seats on Tuesday to acclaim President Suharto as their leader for a seventh term, after 32 years of nearly absolute power in the world's fourth-largest nation.

His carefully scripted re-election was unanimous, without even a murmur of dissent in the 1,000-member People's Consultative Assembly. But it comes at Mr. Suharto's moment of greatest crisis as the dramatic economic accomplishments of his presidency slip away under the pressure of Asia's economic slump.

Since the crisis hit in January, Mr. Suharto, 76, has produced an impressive display of his political control, cowing his critics into silence, choking off demonstrations and cementing the backing of the powerful military and all three officially sanctioned parties.

But he has failed to come to grips with the economic crisis and is now locked in a confrontation with the International Monetary Fund, which is demanding that he dismantle Indonesia's system of monopolies and favoritism in return for a $40 billion rescue package.

Though Thailand and South Korea have embraced the IMF plan in return for billions of dollars in aid, the fund's director-general, Michel Camdessus, said Monday, ''We are not there yet by far in Indonesia.''

Instead, Mr. Suharto is continuing to float the idea of creating what is known as a currency board, which would artificially raise the value of the Indonesian rupiah, a move that the IMF has strongly opposed.

This possibility has slowed the deterioration in the value of the rupiah against the dollar, which closed Tuesday at 10,950 rupiah, down from 10,900 Monday.

Last week, the IMF announced that it was delaying its second $3 billion disbursement of funds because of the slow pace of reforms, and Indonesian officials reacted with pugnacious nationalism.

One of the President's sons, Bambang Trihatmodjo, said Tuesday that Indonesia would go it alone rather than submit to foreign dictate. ''If necessary, we can rebuild this country starting from ground zero,'' he said.

The statement captured the country's grim mood on what should have been a day of triumph for Asia's longest-serving leader.

Mr. Suharto enters his new term facing a bleak economy not unlike the one he inherited in 1965 from his predecessor, Sukarno, with both inflation and unemployment soaring amid growing fears of food shortages and social unrest.

Mr. Suharto, then a little-known general, came to power after suppressing an apparent Communist coup attempt, which was followed by massacres that took as many as 500,000 lives.

The son of poor farmers, he focused on bringing his nation up from poverty, providing schools, health care, roads and electricity to even the most remote areas of this sprawling archipelago. In addition, he secured decades of stability through a system of top-down military control, tight limits on press freedom and the banning of most political activity.

But the steady growth rate of 7 percent a year that he brought his 200 million countrymen as the price of their political acquiescence has collapsed into expectations of a deep recession this year. The economy is hobbled by a huge foreign debt, a wounded banking system and a severely weakened currency.

As if these problems were not enough, Indonesia has been hit by its worst drought in 50 years, ruining harvests of foodstuffs and important exports.

Mr. Suharto's associates say he is determined to conquer this final, greatest challenge of his presidency. ''He told us that he was already older than the Prophet Mohamad,'' said Lieutenant General Yunus Yosfiah, a member of the electoral assembly, ''but that with a fighting spirit and adherence to the Indonesian soldiers' oath he was prepared to devote his soul, not to mention his possessions, to the country.''

Mr. Suharto's possessions are an issue for his critics, who say the fortune amassed by the president and his six powerful children amounts to at least $30 billion. One analysis of his reluctance to fulfill the terms of his agreement with the IMF is that he is seeking to protect this wealth.

Mr. Suharto's political dominance has endured in part because there is no real alternative. He has systematically eliminated potential rivals, changing his vice presidents every five years and regularly shuffling military leaders to insure their loyalty to him.

Part of the persistent insecurity among investors comes from Mr. Suharto's refusal to put in place a reliable scenario for succession. Even with a vice president in place, there are fears of a power struggle and possible instability if he dies or is incapacitated.

Despite Mr. Suharto's uncontested re-election, there is a spreading sense within the country's middle class that the time has come for a change. A younger generation of better-educated and more-affluent Indonesians is hungry for a more democratic system.

''In our hearts, we know Suharto has to be replaced,'' said Abdurrahman Wahid, the country's most influential Muslim leader, in January. ''But the problem is, there is a difference between our idealism and the reality of the situation.''

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