THE three thousand islands which make up the Indonesian archipelago stretch for 2800 miles in a crescent around the southeast corner of Asia. In known natural resources the country is the third richest in the world, ranking after the United States and the Soviet Union. In population, with approximately 90 million people (most of whom are Muslims), it ranks sixth. It is liberally supplied with petroleum, tin, and bauxite and has extensive but unexploited deposits of coal, manganese, iron, asphalt, phosphate, copper, nickel, tungsten, sulphur, iodine, gold, silver, platinum, and diamonds. It has a huge hydroelectric potential and an abundant, if unskilled, labor force.

Before World War II, under Dutch colonial rule, it supplied about a third of the world’s rubber, palm oil, and coconut products, two fifths of the world’s kapok, four fifths of the world’s pepper, and a fifth of the world’s tea, in addition to large quantities of sugar and coffee. The climate is tropical but benign, the soil volcanic and rich. Yet Indonesia, after a decade of independence, is perilously close to both anarchy and bankruptcy.

Many factors have contributed to the decline. With a population that was only 7 per cent literate and an economy which had suffered grievously from the Japanese invasion and the bitter struggle for independence, Indonesia was singularly illprepared to run its own affairs when, on December 27, 1949, the Dutch reluctantly signed over all the former territories of the Netherlands East Indies, except West New Guinea. There were almost no trained administrators. Fewer than a thousand Indonesians were attending universities at the start of the Pacific War, and hostilities put an end for nearly a decade to higher education.

By the end of the war, railways, roads, and canal systems had all fallen into disrepair. Many estates had been taken over by squatters who cut down the trees for firewood. Sugar and coffee plantations were in ruins. Even the basic rice crop had fallen off to such an extent that two years after independence Indonesia imported 600,000 tons at a cost of $140 million.

Boom prices for raw materials gave a deceptively encouraging start. But the handsome surplus in 1951 led merely to a government spending spree and the corruption, graft, and heavy deficits that have plagued Indonesian administrations ever since. Despite a warning in 1953 by Dr. Sjafruddin Prawiranegara, then governor of the Bank of Indonesia, that the state was living on a standard beyond the financial strength of the people to sustain, the reckless expenditure continued.

A munitions factory, imported from Italy, rusted and rotted at Bandung in West Java because there were no technicians to put it together or to run it. Imported prefabricated houses failed to get beyond Tandjung-priok, the port for Djakarta. Grand ideas for social and industrial change collapsed under the weight of governmental inefficiency and inexperience.

The strain on resources

Regional and religious differences showed up in the first weeks of independence. One fanatical Muslim group, the Darul Islam, which had been fighting the Dutch, refused to lay down its arms and continued the fight for the creation of a theocratic state. Large areas of West Java are still terrorized by its forces, which operate in gangs of up to four hundred men; other Darul Islam insurgents are active in the southern Celebes and in the province of Atjeh in northern Sumatra.

The remnants of another early revolt designed to set up a republic of the South Moluccas still exist in East Indonesia on the island of Ceram. In Sumatra and the northern Celebes, Dr. Sjafruddin, with two former prime ministers, a former acting president, and half a dozen of the country’s foremost soldiers, leads a force of some 30,000 armed men in a struggle that appears to be much more dangerous now than it was two years ago, when the army all but crushed the seemingly ill-timed revolt.

Though the rebels have no hope of winning by force of arms, their economic squeeze and the cost to the government of maintaining military forces to contain them are combining to bring the country closer to ruin. By widespread and large-scale smuggling, they are depriving the government of urgently needed finances. Indonesian officials admit that smuggling from dissident areas cost the government $84 million in 1958.

One bright spot on the economic scene was an increase ol $50 million in foreign exchange reserves, increased rubber and petroleum sales offset a decline of up to 20 per cent in estate production, and the government, in an effort to repair the damage caused by the excesses of earlier years, enforced a rigid and austere control over imports. But this in turn had inflationary effects. Although industrial raw materials and spare parts received high priority, supply fell far short of requirements, and by the end of the year local industries were working at less than half capacity.

Shortage of goods and money

To the problems caused by acute shortages of essential consumer goods, including rice, dried fish, and textiles, was then added a crisis in distribution as the Indonesian government began to expel Chinese merchants from the rural areas of Java. In theory, the merchants were to be replaced by cooperative village committees. But again, theory and practice did not coincide, since there was no one with the capital, the skills, or the inclination to take over the abandoned stores. By the time government leaders stopped to reckon the consequences, the damage was done.

The panic flight of rupias to Singapore gave the black market its biggest boost ever. Despite the death sentence for such trafficking, the dollar fetched more than ten times the official rate in Djakarta curbside markets. And Peiping, rallying to the defense of its overseas subjects, denounced and threatened the Indonesian government in terms that caused shock and dismay, especially to President Sukarno, whose friendliness with Communist China was implicit in his “active and independent” — that is, neutral-foreign policy.

Sukarno’s guided democracy

Out of the crisis, three major and significant forces have emerged: the Communist Party, under the leadership of its stocky, able, twenty-fiveyear-old secretary-general D. N. Aidit; the decidedly non-Communist army led by General Nasution, who is forty-two; and President Sukarno, fifty-nine, who describes himself as the “champion talker and interpreter of the Indonesian people.” The Communist Party, with one and a ball million members and candidate members, has the mass organization; the army, with 110 battalions, has the guns; and the President, with his demagogy and charm, has a following that so far has enabled him to weather repeated threats to his authority.

Since he dissolved the Constituent Assembly and reintroduced the 1945 Constitution with himself as Prime Minister in August, 1959, the President has identified himself with the day-to-day work of the government and also with its failures. His palaces and villas and his immensely expensive round-the-world excursions by chartered Pan American planes no longer come within the exclusive realm of national prestige. And in this there are dangers to his own position. For though he has made himself a dictator, he is by nature a dilettante. He revels in high theory but cares little for hard work.

The President got the idea for “guided democracy” when he visited Communist China in 1956. In vague and generalized terms he announced his konsepsi on February 21, 1957. Three weeks later, when Dr. Ali Sastraomidjojo’s government collapsed, Sukarno made the first move toward the introduction of the new system by placing the country under martial law, with supreme legal authority in his own hands as commander in chief of the armed forces.

Progress was slow, however. The President’s plan to include Communists in the Cabinet; growing political and economic discontent in the outlying islands, where army officers had seized the opportunity presented by martial law to set up semiautonomous administrations; the failure of the General Assembly to recommend negotiations with the Netherlands over the disputed territory of West New Guinea; and the chaos caused by the campaign to nationalize Dutch holdings all helped to precipitate the Sjafruddin revolt early in 1958. Guided democracy went into cold storage while the government fought to survive.

Communist strength

However shaky the President’s hold may have been at the beginning ol the revolt, his position was soon restored. For this he could thank firm Communist support for his policies and the loyally and efficiency of the bulk of the army under General Nasution. Both have been rewarded. In his Supreme Advisory Council, which the President personally chose and which he has established as the principal policymaking body in the country, the Communists and their followers are well represented.

In the Cabinet, which the President heads as Prime Minister and which is intended primarily to execute the Supreme Advisory Council’s policies, the Communists are not directly represented and the ariny is well entrenched. In the 261member, new, partly political, partly functional Parliament, now appointed by the President, the Communists are the strongest single force, with thirty political representatives and forty other members and fellow travelers among the functional groups. The army, on the other hand, has only fifteen members.

Conspicuous by their absence from these and other governmental bodies are official representatives of the Masjumi (moderate Muslim) and Socialist parties, some of whose leaders are identified with the Sjafruddin rebellion. Inevitably this slight has become a new cause for revived regional and ideological tensions, since both the Masjumi Party and the Socialists are strongest in the outer islands, where resentment against populous Java, which contributes so little to the country’s exports (17 per cent) while consuming so much of its imports (71 per cent), remains intense.

Despite a brief period of unpopularity when they espoused the Chinese cause at the beginning of the year, the Communists remain the strongest and best organized oi all parties. If the elections the President has promised for Parliament and the yet-to-be-created People’s Consultative Congress are held in 1962, the Communists may emerge as the major political force.

How good is the army?

The question that vexes Indonesia today is whether the army, purged of its Communist elements by General Nasution, would permit such a development. Already the army has forestalled Communist plans to create armed “people’s forces.”ostensibly to fight against Sjafruddin’s rebels and the Darul Islam; and its ban, imposed under martial law, on political demonstrations has affected the Communists more than any other party.

But neither Nasution’s disposition nor his personal following in the army suggests that he is the likely leader of a successful coup d’état. Moreover, the army, in the civil aspects of its martial law administration, has failed to prove itself more capable or even noticeably less corrupt than the politicians. It gives the impression of having neither the inclination nor the capacity to govern, while the Communists, with the inclination and perhaps the capacity, still lack the means.

Meanwhile, the economic, social, and political decline continues. Though the situation may well seem disastrous to Western observers, it is well to remember that it strikes many Indonesians as only moderately serious. Most government offices have sacks of rice stacked readily at hand, and workers in the civil services and others in the cities who might be expected to suffer most from inflation and the general economic chaos get food handouts and other free supplies. Elsewhere in the largely peasant community, nature’s generous hand provides a cushion against total disaster. However bad things may be, most Indonesians know they will not starve or lack for shelter. And in that they are better off than many other Asians.