DAS Supports Suharto Regime in Indonesia

A series of confidential memoranda circulated within Harvard by officials of the Development Advisory Service (DAS) indicates that an important purpose of the DAS' economic work in Indonesia has been to provide political support for the military, Western-oriented regime of General Suharto.

The memoranda-made available by a west coast journalist to whom the DAS leaked them last March-suggested ways in which Suharto and his retinue of economists, civil servants, industrialists, and military personnel might make use of basic economic policy to broaden their domestic political base.

The DAS-the largest wing of the Center for International Affairs-sends economic advisors to counsel underdeveloped countries on economic policy. These advisors work as employees of the host governments.

One of the memos-written by Gustav F. Papanek, then director of the DAS, in October 1968-specifically links a massive infusion of American "Food for Peace" to the possibility of "political benefits in the countryside."

In addition, advice provided by the DAS to the Suharto government on regulating or curtailing foreign investment has been prompted in part by considerations of potential political difficulties, Papanek and Lester E. Gordon, the present director of the DAS, said yesterday.

"The government is going to have to move fast to provide employment in the cities and increased assistance to agriculture," Papanek wrote in October 1968. "It seems to be serious about holding an election within the next two years and will have to do better than just avoiding chaos if Suharto is going to be popularly elected, which seems to be his present intention."

"A really widespread public works program, financed by increased imports of PL 480 ['Food for Peace'] commodities sold at lower prices, could provide quick economic and political benefits in the countryside," Papanek's report added. "More protection and credit for industry, and particularly textiles, would help to stabilize prices and increase employment. Wage and salary increases for a selected group of government employees could greatly increase the efficiency and reduce the venality of the public service."

Speaking more directly of the political situation, Papanek added that during the past year, "Suharto also moved more decisively to gain control of the government and the military. His personal military staff was downgraded and somewhat changed in composition and some other shifts in military commands took place."

'Suspected Communists'

"A number of suspected Communists and pro-Sukarno officers were arrested or dismissed. This was generally interpreted as reflecting Suharto's increasing strength, which enabled him to take action on opposition elements he had been aware of, rather than the discovery of a new conspiracy."

The reports also indicated that, in the case of Indonesia, the DAS conceived of its present work as contributing to the stability or the consolidation of the present regime.

Papanek and others in the DAS have often responded to criticism of the agency's work by claiming that, while necessarily limited to the official sanctions of its host governments, it may ultimately lead through growing wealth and technology to a situation in which an increasingly sophisticated and modernized populace could bring about basic political change.

The present government in Indonesia came to power in 1966 by means of a bloody anti-Communist coup which overthrew Sukarno's rule. An estimated 500,000 Communists and suspected Communist sympathizers were executed in the aftermath of the takeover.

Although the role of the central government in much of the slaughter is still in dispute, Suharto has since imprisoned 100,000 suspected political enemies.

The most crucial economic contribution of the Suharto government was a halting of inflation, which had amounted to between 600 and 800 per cent per year.

The turnabout-accomplished with the aid of the DAS team in less than one year's time-was termed "unprecedented" for an underdeveloped country in another confidential DAS report.

At the suggestion of a corps of economic advisors-most of whom received academic training in the United States-the government also reversed Sukarno's anti-foreign economic stand and re-opened the country to investment from abroad.

The major foreign investors-who have concentrated on oil and minerals-are from the U.S., Japan, West Germany, Holland, and Britain, in that order. Their investments total nearly $2 billion in actual or planned ventures.

The DAS team-which began working for Suharto in mid-1968-has helped the Indonesian government in its negotiations with foreign investors. "They badly needed jobs, they badly needed revenues, so they made some deals that were highly favorable to the foreign investors," Papanek said last month. He added that the DAS has also counseled the government against lopsided bargains with foreign firms.

The source of the confidential memos on Indonesia said in releasing them, "What they are essentially arguing for is an 'open-door' policy for Indonesia-and in a world economic system dominated by American capital, such an open door is a conveniently liberal way for American capital to extend its power and control."

Papanek said in defense of present Indonesian policy that reversal of Sukarno's extravagant monument-building program-in combination with a resumption of large-scale American aid-has brought about significant economic improvement.

Adding that the government is reported to be releasing some of the political prisoners, he said, "By any standards that measure the well-being of the Indonesian people, this government is clearly doing more than the Sukarno government was doing. I don't think one has to be too apologetic for working with them."