Joko Widodo’s election in 2014, after a long and harshly contested presidential race, raised great expectations: not beholden to the military and political elites of the Suharto era, Indonesian people considered him a representative of new democratic forces vis-a-vis the deep-seated «New Order» legacy. Accordingly, 2015 was important to see the extent to which these great expectations would be fulfilled. Unfortunately, the new President’s record was a mixed one, as the hoped-for change, although not completely absent, was greatly constrained by Joko Widodo’s inability to overcome the resistance of the conservative forces, still well entrenched both in the opposition and inside the ruling coalition who exerted their sway against Widodo’s advanced pro-poor and reformist programme. In fact, the new President had to come to terms with these conservative forces, allying himself with at least some of the most influential politicians of the «New Order» Suharto era. Of course, this could not but adversely reflect on Joko Widodo’s credibility.

To make things more difficult, Indonesia in 2015 continued to be characterised by strong internal tensions. These were caused by the persistent discrimination against religious and ethnic minorities, by the militarisation of the outermost region of West Papua, and by a comparatively new political development in Indonesia, namely the rise of radical forms of Islam, represented by domestic organisations which claimed to be linked to the murderous Middle Eastern Islamic State (IS). Given this background, in 2015 Joko Widodo was unable to clearly take a firm stance on these issues, in spite of their potential danger of destabilisation.  

Finally, the global economic crisis represented a further considerable challenge for the new President who, in 2015, was unable to fulfil his electoral promise to free the largest economy in South East Asia from the slowdown which had begun during his predecessor’s (President Yudhoyono) last term.

1. Introduction

2015 was an important year for Indonesia, because it coincided with Joko «Jokowi» Widodo’s first full year in office as President. Jokowi’s election was saluted as a remarkable event, a radical turning-point in the history of the country, since the new President was the first to not come from the Suharto-related military or political elite.[1] For this reason, Joko Widodo embodied a «new hope» for Indonesia, the only man who thanks to his humble origins could bring effective change to improve the situation of the wong cilik, the «ordinary man».

Nonetheless, as will be seen, the longed-for change was more taxing than it was optimistically expected, made difficult not only by the country’s systemic problems, but also by Jokowi’s questionable alliances with suspicious politicians and by his lack of a well-structured ideological vision. In spite of some positive developments, after more than one year from his election the so-called «man of the people» was still struggling to assert his independence vis-à-vis the conservative forces which have traditionally dominated Indonesian politics.

This chapter will first focus on Indonesia’s domestic policy. In order to consolidate his power basis, Jokowi wooed the military and made a series of political moves at odds with his original programme. The issues analysed include: the political discourse about the 1965 anti-communist massacres, Jokowi’s stance on the Papuan question, the alarming revival of radical Islamist groups, some of which are linked to the Islamic State (IS), and, finally, the regional elections. Then, Indonesia’s new foreign policy will be discussed, which aimed at transforming the archipelagic country into a major maritime power, willing and capable of taking a more independent stance vis-à-vis the ASEAN group and in relation to the tense situation in the South China Sea. Finally, the last section will analyse Jokowi’s response to the economic slowdown affecting Indonesia in the year under review, including the pro-poor measures taken to fulfil electoral promises.

2. Domestic policy: «Jokowi is us»?[2]

2.1. Jokowi’s «original sin»

Jokowi’s victory was generally welcomed with relief. Many feared that if his opponent Prabowo Subianto, a general of the Suharto-era and an oil-magnate,[3] had become president of Indonesia, the country might have backtracked on the difficult path to democratisation. Therefore the fact that Jokowi,[4] a man of no privilege or wealth, could win the election was considered a step forward in the consolidation of Indonesian democracy.

Undoubtedly, Jokowi, often compared with Obama, owes his popularity to his image of a clean new face in the Indonesian political scene. For this reason, the people, unhappy with the extant nepotistic and corrupted political system, saw the new President as a valid alternative, if not the antithesis, to his immediate predecessor: Susilo Bambang Yudhoyono (2004-14). Nevertheless, since his presidential candidacy, Jokowi had to rely, paradoxically, on the financial and political backing of those same oligarchs who have traditionally dominated the Indonesian political system and economy. Joko Widodo’s victory, therefore, was the result of both grassroots consensus and negotiations with at least some of the old oligarchs. In fact, popular support coming from grassroots organisations and new forms of campaigning, involving the use of social networks such as YouTube and Twitter came together with support from vested interests. Hence, it is very likely that Jokowi’s success in the presidential race would not have been possible if the chairman of the Indonesian Democratic Party of Struggle (PDI-P) Megawati Sukarnoputri had not decided to support him, a fact that gave Jokowi national prominence.[5] Also media tycoon Surya Paloh, chairman of NasDem Party and close associate of Megawati, gave his support as well.[6] Finally Jokowi’s choice of Muhammad Jusuf Kalla – Golkar’s unsuccessful presidential candidate in 2009[7] – as his running mate, proved equally decisive.

Indeed, Jokowi’s necessity to fall back on the support of a section of the old oligarchic forces which he was supposed to fight can be considered the «original sin» of his presidency. Hence the wavering conduct which, during the year under review, came to characterise the new presidency betrayed Jokowi’s conviction that his outsider status was a source of vulnerability, rather than strength.[8] Therefore, soon after Jokowi’s victory, it became clear that the new President would struggle to keep his credibility amidst an intricate political scenario characterised by the continuing hegemony of a few powerful and wealthy elites.

When Joko Widodo took the oath of office in October 2014, his weakness was very apparent. As a matter of fact, the majority of seats in the newly inaugurated Parliament were controlled by the conservative Red-and-White coalition. Taking its name from the colours of the Indonesian flag and led by Prabowo, this coalition comprised Prabowo’s own party Gerindra, Golkar, Yudhoyono’s Democratic Party (PD), the Islamic PAN (Partai Amanat Nasional), PKS (Partai Keadilan Sejahtera), and PPP (Partai Persatuan Pembangunan). Together they held 63% of the seats. This fact enabled the opposition to pass measures aimed at strengthening its position, while obstructing Jokowi from realising his programme.[9]

To make matters worse, Widodo had to combat the pro-status-quo forces within his own coalition. In fact, on the one hand, the ex-President Megawati Sukarnoputri and her daughter Puan Maharani were wary about Jokowi’s agenda. In particular, Puan perceived the new President as a threat to her power within the PDI-P, which she considered a family property, although the party was also Jokowi’s strongest political support. On the other hand, the other forces in the alliance had strong links with the political elites of the New Order and did not look favourably upon the reforms promised by Widodo. It should not be forgotten, indeed, that there were two parties in Jokowi’s coalition that were created after a split in the conservative Golkar, that is Hanura, led by the former commander of the armed forces Wiranto, and NasDem founded by the above-mentioned media tsar Paloh, both linked to the Suharto’s regime. Moreover, Widodo strategically allied with the Partai Kebangkitan Bangsa (PKB) or National Awakening Party, namely a traditionalist Muslim party, in order to win the vote of the rural Muslim constituency in Java.[10]

All this considered, since the beginning of his mandate, Jokowi appeared to vacillate between presenting himself as the man of the people and surrendering to pressures from those among his political allies who belonged to the traditional power elites. Indeed, during Jokowi’s first year in power, on several occasions the public expressed disappointment, because of the impression that the new President was acting as the establishment’s front man or, at least, that he could not gain autonomy from the key establishment figures in his coalition. Many started wondering whether Jokowi had leadership capability and if his integrity was such to withstand the pressure of the old hefty politicians and military-businessmen.[11] The point is that, if the new President needs the support of the traditional political forces, he also needs the backing of those civil society groups which are a growing reality in Indonesia. These groups – which cannot be ignored, especially given their pivotal role in Jokowi’s rise – continue to be perceived as a threat by the establishment. In this situation, as noted by Philip Vermonte, the President must prove his credibility and accordingly will be judged in terms of legal enforcement and corruption eradication, both important elements in his campaign.[12]

In light of this, as maintained by Klaas Stutje, historian at the University of Amsterdam, there are three main roadblocks in Jokowi’s path towards change for Indonesia. First, the President is alarmingly dependent on dark, authoritarian forces which influence his choices in the conservative sense. Secondly, Jokowi’s coalition is not stable, because, as often happens in Indonesian politics, parties have no ideological basis and jump easily from one side to the other of the political spectrum. Third, Jokowi himself has never developed a clearly defined ideology: this makes it unclear which social classes he is focused on and which social structures he relies on to realise the bottom-up approach to politics he proclaims to support.[13]

2.2. Jokowi’s new government

Once elected head of the Indonesian Republic, the new President had to pay his political debt to those members of the traditional oligarchic order who had supported his political ascent. This explains why Paloh and Muhammad Yusuf Kalla were soon appointed to top positions in State-owned enterprises (SOE) and given seats in the Working Cabinet.[14] Likewise, Megawati’s PDI-P obtained eight ministerial seats,[15] while Paloh’s NasDem got three seats and the post of Attorney General, despite his party only winning 6.2% of seats in the House.[16] Furthermore, controversial figures closely linked to Suharto’s New Order were chosen to be part of the government: for example Ryamizard Ryacudu, retired army general involved in the genocidal military operations in Timor-Leste, was appointed Minister of Defence.

Nevertheless, the newly elected President tried to balance these questionable choices by appointing 19 non-partisan professionals to his 34 member cabinet.[17] Moreover, some members were chosen for their pro-democratic and inclusive credentials: for example, the rector of Paramadina University in Jakarta, Anies Baswedan, a reputed intellectual who, among other things, campaigned against corruption,[18] was appointed Minister of Education, while a moderate Muslim figure, Lukman Hakim Saifuddin was appointed Minister of Religious Affairs. The latter engaged in talks with religious minorities, mainly Ahmadiyya, Shias and Christians, and stated that cases of violence and discrimination affecting them would not be tolerated. This and similar announcements notwithstanding, many cases remain unresolved and in October in Aceh, a province were sharia has been established, three Churches were burnt.[19]

2.3. The Gunawan and Hendropriyono controversies

Unfortunately for the new President, 2015 started with a huge controversy around the appointment of Budi Gunawan as National Police Chief in January.[20] Gunawan, a personal friend and former aide of Jokowi’s political patron, Megawati, was suspected of money laundering and bribery by the Corruption Eradication Commission (KPK), the formidable anti-corruption organisation established in 2003. This not only created a conflict between the police and the KPK – with Gunawan starting investigations against some key members of the anti-graft agency – but it also ignited a feud between Jokowi and Megawati. In fact, the general uproar against the criminalisation of the KPK pushed Jokowi to defy his own party, since he realised that his overall reputation was in danger. Finally, in mid-February Jokowi made up his mind and dropped Gunawan from his post, a move that was gladly welcomed by the Indonesian public opinion, although considered belated by several activists.[21]

Again, in February, another fact reminded the public of dynamics typical of the Suharto era and cast a shadow on Jokowi’s reputation of anti-graft advocate. During the President’s official visit to Malaysia, a Memorandum of Understanding (MoU) was signed between Proton, the Malaysian national carmaker, and ACL, a rather unknown Indonesian car company. However the CEO of ACL and, as such the one who signed the MoU, was the controversial A. M. Hendropriyono. Hendropriyono, a retired four-star General and former head of the National Intelligence Agency, [22] who had close ties with Megawati and had been one of the greatest backers of Jokowi during his ascent to the presidency, was suspected of human rights violations.[23] Apart from that, the Indonesian public was stunned to find out that the beneficiary of the Malaysian-Indonesian joint-venture was the lesser company of a political affiliate of Jokowi, instead of Esemka, Indonesia’s national car brand. Resentment was raised against Widodo’s inability to detach himself from cronyism,[24] which the President had promised to uproot.

2.4. The August reshuffle of the presidential cabinet

In August, the President reshuffled the cabinet, a decision aimed at strengthening his position, which, as seen above, was precarious because of the opposition within and outside his own party. The reshuffle occurred in the background of an economic slowdown and the fall of Indonesian rupiah at a 17-year low. Six ministers were replaced in order to make the public feel confident that the economic situation would improve.[25] In the first place, Jokowi replaced three out of four Coordinating Ministers[26] to attain better coordination and communication: this move was appreciated by analysts as more convenient stability-wise than the replacement of the main technical ministers themselves.[27] What appeared evident was Joko Widodo’s willingness to choose figures known to international markets[28] and to «counter rising negative perceptions of Indonesia’s protectionist trade policies»,[29] before his official visit to Washington. So, the previous Trade Minister, Rahman Gobel, was replaced by Thomas Lembong, a Harvard-educated economist, specialised in investment banking,[30] whereas Darmin Nasution, former Central Bank of Indonesia director and official in the Finance Ministry, was appointed Coordinating Minister of Economics. Compared to the former Minister, Sofyan Djalil, it seems that Nasution is less dependent on the Vice-President Jusuf Kalla, with whom Jokowi had disagreements in terms of economic policies.[31] Moreover, the former military, now rich businessman, Luhut Binsar Pandjaitan, head of the special forces under Suharto and already Chief of Staff in the President’s office (the latter position he left one month after the reshuffle), was appointed Coordinating Minister for Security and Political Affairs with six ministers, including those of Foreign Affairs, Home Affairs and Defence, reporting to him.[32] Luhut, a forceful supporter of Jokowi and part of the latter campaign team since the beginning,[33] was still very influential in the military; therefore his choice can be perceived as a way to gain favour from the army while countering Megawati’s heft. Nevertheless, Mrs. Sukarnoputri’s daughter, Puan Maharani, was the only Coordinating Minister (of Human Development and Culture) to remain in her place, despite the general discontent with her performance. Moreover, Sukarnoputri’s closest aide and PDI-P former general secretary, Pramono Anung, obtained the position of cabinet secretary. Also Dr. Rizal Ramli, appointed the new Coordinating Minister for Maritime Affairs, was considered to be close to Megawati. All these appointments signalled the sway of Sukarno’s daughter and granddaughter over the President, which makes it difficult for him to find a compromise between his avowed objective to appoint his ministers on the basis of meritocracy and his need to appease his political sponsors. In terms of power consolidation, a further step on Jokowi’s part was the political deal completed at the beginning of September, which brought the moderate Islamist National Mandate Party (PAN) into the ruling coalition, giving the government a majority.[34]

2.5. The limitations of Jokowi’s pro-workers stance

With this background, the President’s ambivalence towards social movements, such as human rights activists and trade unions, came to the fore.[35] Accordingly, despite Jokowi’s supposed pro-workers stance, a new regulation was introduced in October, which tied annual wage increases to the current fiscal year inflation and to GDP growth rates. The new regulation replaced a formula which was more favourable to the workers based on the basic cost of living (KHL),[36] and did away with the past practice of talks between unions, companies and local officials. Moreover, the labour strikes against the government’s decision were violently repressed by the police, especially in Jakarta, where thousands of workers had gathered.[37] The government even vowed to protect businesses by providing security measures in order to guarantee the safety of foreign companies against potential future strikes.[38]

Another of Jokowi’s stances which seems at odds with his proclaimed pro-labour inclination is his resolve to join the controversial international treaty Trans Pacific Partnership (TPP), announced during the official visit to the US in late October.[39] Without dwelling on the TTP characteristics – which, given the secrecy enveloping the pact, are mainly known thanks to documents leaked by WikiLeaks – here it suffices to remember – in Michela Cerimele’s words – that «the TPP seem[s] to be the bearer of a possible suspension of national, economic and political sovereignty, and as well as limitative of human rights and of important elements of democracy, all goals which are to be reached through the adoption of extraterritorial regulatory and judicial norms.»[40] All in all, there are reasons to believe that the TPP is completely at odds with a «people-centred economy».[41]

2.6. Jokowi’s «muscular» policy

During 2015, Joko Widodo, in order to address his sagging popularity – something certainly exacerbated by the unfavourable economic situation – reacted by taking actions that caused dismay both within and outside the country. In the first place, after brushing aside last-minute appeals by foreign leaders, in January a total of six people convicted of drug trafficking, including five foreign nationals,[42] were executed. Besides rejecting clemency requests, President Widodo forcefully defended the executions, stating that Indonesia was facing an «emergency» regarding drug use.[43] In order to rally support for his adamant stance against drug smugglers, Joko Widodo wooed Islamic organisations visiting the headquarters of Indonesia’s two largest Muslim organisations: Nahdlatul Ulama (NU) and Muhammadiyah.[44]

Also the decision to sink foreign illegal fishing boats has been a source of bewilderment and diplomatic tension, especially with Malaysia. The President has justified this as a necessary move to safeguard the self-sufficiency of small islands in terms of fish, namely the main food resource in the largest archipelagic state in the world. But, at the same time, curbing illegal fishing is being considered a test, although a minor one, for the new maritime security agency, called Bakamla. Bakamla is viewed as a critical institution for the realisation of the country’s maritime ambitions; in turn, maritime security, as a matter of fact, is one of the pillars of Jokowi’s ideology.[45] The highly public sinking of boats has served a double function: on the one hand, the government was flexing its muscles to intimidate the neighbouring countries;[46] on the other hand, it was tapping into nationalistic sentiments in a period of plummeting public approval, as also suggested by the fact that the sinking of 41 illegal fishing vessels took place on National Awakening Day.[47]

2.7. Jokowi’s inability to come to terms with Indonesia’s past

Jokowi’s tough actions and stance, however, were not enough to cover up his continuous political wavering, as shown by his inability to come to terms with his country’s genocidal past. Widodo had promised a national reconciliation process and an official apology for the 1965-66 anti-communist killings.[48] The year 2015, marking the 50th anniversary of the massacres, would have been the perfect occasion to show that Indonesia was ready to admit its past wrongs. Actually, with bitter disappointment for the families of the victims, for human rights activists and for intellectuals, it was Jokowi himself who silenced any rumours that he would offer a public apology on the 30th of September, the date in which the killings started in 1965. The President stated in front of the leaders of the most important national Muslim organisation, Muhammadiya, that he had no intention of doing so, a statement reaffirmed afterwards in high-sounding military tones by Luhut Pandjaitan.[49] In fact, it was the pressure exerted by the Islamic organisations – Muhammadiya, Nathdlatul Ulama, and also the radical Islamic Defender Front (FDI) – and by the military, both more or less involved in the massacres that prompted the President to abandon any thought of apologising officially.[50] In particular, the FDI stated that it absolutely forbade Joko Widodo to apologise, because an apology would have meant a justificatory posture towards the Communist Party of Indonesia and would have implied that the communists had done nothing wrong.[51] It is important to note that the relationship between Jokowi and Islam is particularly delicate. During his presidential campaign, Jokowi reiterated his tie with the majoritarian Sunni Islam, so much so that, as already noted, he allied with the PKB, a traditionalist Islamic party which had previously joined conservative coalitions. The PKB shift gave Jokowi an «Islamic edge», which in fact the would-be President needed in order to refute Prabowo’s allegations that he was Christian and from a Singaporean family. Joko Widodo, then, played the religious card and has been keeping an eye on Muslim forces in an attempt to not displease them. This constant wooing of Sunni Islam, whose support Jokowi needs, can prove dangerous, especially when it comes from traditionalist groups, since they are mainly responsible for discriminating against religious minorities, in particular Shias, Ahmadiyya and Christians. Jokowi might feel that his hands are tied and might turn a blind eye to anti-minority religious violence and intolerance.[52] Yet, by failing to address these persistent social issues, Joko Widodo risks paying a high political price, as people expect his government to perform better than the previous one towards the creation of a peaceful society and the consolidation of the country’s democracy.

Therefore, while deciding to please certain forces, Jokowi disappointed the elements of civil society that had hoped that the new President could provide a resolution for the past violations. Unfortunately, as further confirmation that this was not going to happen, the Ubud Writers and Readers Festival in Bali, the largest of this type in Indonesia, was forced to cancel the events dealing with the anti-communist massacres, something unprecedented in the twelve-year history of the popular festival.[53] In addition to this, other incidents revealed that the government was not willing to start a serious debate on the heinous crimes of the New Order: on the contrary, in the name of silencing the 1965 purges, censorship is being used to enforce general limitations on freedom of expression.[54]

By and large, it is difficult to say whether, by promising to offer an apology, Jokowi simply wanted to gain favour from human rights activists or if he was sincerely committed to alleviating the suffering of the 1965 victims. Yet, since in the meanwhile he has benefited from the political and financial backing of personalities of the Jakarta establishment, who were more or less directly linked to the Suharto’s junta (and who do not easily accept seeing their power challenged by a potential revisitation of history), Jokowi was aware of the fact that he was running with the hare and hunting with the hounds and that he would have to displease one side or the other.

2.8. Jokowi’s ambivalent attitude on the rise of radical Islam and the IS threat

A major social development of the past years that cannot be ignored is the alarming influence of radical Islamist organisations in several areas on the archipelago. In a sprawling and diverse country such as Indonesia, still characterised in many places by tensions between the local population and the central government, an already tense situation has been overlapping with IS-promoted terrorism, generating a synergy between these two phenomena which can be destructive.

The rise of radical Islam is not a new phenomenon in the Southeast Asian nation, the world’s most populous Muslim-majority country. Indonesia’s Islam has historically been moderate, accommodating and diverse,[55] and, significantly, did not spread in the archipelago following outside conquest but thanks to the preaching of the Sufis. However, starting with the 1980s, namely from the last decade of Suharto’s regime onwards, Indonesia was subjected to the influence of Saudi Arabia. This brought about the creation of Saudi-funded schools and the invasion of the Indonesian cheap book market with pamphlets and booklets that condemned pluralism, while promoting Wahhabism.[56] Thus, after the Suharto era, powerfully sponsored by Saudi money and influence, new radical versions of Islam started competing for dominance with the quiet and traditionally tolerant Indonesian Islam. The Majelis Ulama Indonesia (MUI, Council of Indonesian Ulama), established in 1975, shifted from a modernist stance to a conservative and «purer» one. Moreover, Indonesia’s national ideology was increasingly influenced by arguments according to which the nation should take the form of an Islamic state. This new ideology has become so influential that some provinces have introduced the Islamic law.[57]

What is important to underline here is that MUI has great influence both at the social and political levels as it defines the parameters of religious orthodoxy. These parameters, although not legally binding, are kept in consideration by the government, which does not want to alienate Muslim support. Over the last decade, MUI has become a detractor of pluralism, even issuing fatwas justifying violence against those who do not comply with the interpretation of Islam that the organisation promotes.[58] Indeed, during the Congress of the Indonesian Muslims held in February 2015 in Jakarta, MUI, while forgetting to mention the discrimination of non-Islamic minorities in Indonesia, denounced the oppression of Muslims all over the world and advocated distrusting cultures not in line with the sharia.[59] Furthermore, MUI had previously issued a fatwa against pluralism, secularism, and liberalism, while refusing to do the same against IS.[60]

This is not to suggest that the version of Islam promoted by MUI is representative of the majority of Muslims in Indonesia: Indonesian Islam remains mainly tolerant and moderate and several Muslim organisations are trying to spread a counter narrative to denounce the IS’s interpretation of Islam.[61] Yet, it cannot be denied that, not surprisingly, MUI advocacy of a stricter Islam has had negative repercussions over the social fabric, since it favoured the emergence of hardliner Muslim groups like Laskar Jihad and the FDI, responsible for the victimisations of religious minorities, or even organisations like Jemaah Islamyah (JI), linked with al-Qa‘ida and responsible for the bombing attacks of 2000s. Moreover, in the past years, at least three IS-linked groups have become active in Indonesia: Katibah Nusantara, Ansharut Daulah Islamiyah, and Mujahidin Indonesia Timur. Katibah Nusantara, guided by Bahrun Naim, is, according to the New York Times, «a ‘dedicated Southeast Asian military unit’ under the Islamic State that represents a direct security threat to the region».[62] But it is active even outside Indonesia, having been credited with the capture of part of the territory formerly held by Kurds in Syria.[63] Ansharut Daulah Islamiyah claims to be the main IS structure in Indonesia. Mujahidin Indonesia Timur (MIT), also known as East Indonesia Mujahideen, has been linked to lethal attacks on policemen and organises training camps in Sulawesi Island.[64] The MIT is led by Santoso, one of the most feared Indonesian terrorists, involved in the Bali bombings of 2002 and 2005, whom the Indonesian security forces, in spite of a sustained campaign, have hitherto been unsuccessful in hunting down.[65]

Therefore, radicalised Islam and the formation of terrorist groups are tightly linked and should be equally confronted promptly and effectively. As a matter of fact, just after becoming President, Jokowi declared that terrorism and extremism must be dealt with by combining military resolve with a «soft approach», which includes the reduction of economic inequality, education, law-enforcement, and cooperation with moderate Muslim organisations.[66] Nevertheless, while taking forceful action against global terrorism-linked groups, the new President has preferred to maintain a cautious and ambivalent attitude towards the ideological threat of radical Islam. No doubt, on the one hand, President Widodo has not shied away from using the army to curb Islamist armed groups. In fact, the military operations launched in March and at the end of the year under review, although unsuccessful in apprehending the masterminds of the IS-inspired terror strategy, nevertheless led to the arrest of several militants.[67] On the other hand, however, during the same period Widodo did not take a strong stand at the ideological and cultural level against FDI and MUI. This could be explained by the fact that, accused of being a Christian by his rival Prabowo during the presidential campaign, Jokowi feared that taking a clear stance against Islamic radical ideology could cast doubts on his religious affiliation and be detrimental to his quest for consensus. Thus, during his first year in power, the President’s condemnation of intolerance was not matched with concrete steps to stop the discrimination against religious minorities or to limit the circulation of extremist messages.[68] By and large, then, notwithstanding the alarming situation, Jokowi’s reaction to the threat of radical Islam has been strategically weak. In line with the conduct of the previous Indonesian governments over the past fifteen years,[69] Joko Widodo has insisted on showing Indonesia’s military might, but has so far been wavering in condemning and fighting those elements of ideological extremism which could facilitate the penetration of Indonesian society by IS-linked terrorist organisations. Although effective only in the short-term, from the point of view of power consolidation and consensus gathering, the new President has deemed fighting an enemy which claims to have links with global terrorism to be more rewarding and legitimising while presenting it as a threat to national security rather than trying to uproot radical Islam by ideologically defying it.

2.9. Jokowi’s ambivalent attitude on the Papuan question

Jokowi’s ambivalent attitude can also be seen in the case of the thorny Papuan question.[70] During his electoral campaign the would-be President paid considerable attention to the outermost region of West Papua. He presented Papuan grievances as worth lending an ear to and seemed genuinely willing to find a solution to end the longstanding conflict. That Jokowi has addressed the problem is undoubtedly a positive aspect per se, since, for the Indonesian state, West Papua represents a national security issue and any change in the status quo is considered political taboo. Therefore, the President introduced an element «that could be a determining factor: dialogue».[71] In fact, previous governments simply addressed economic issues, but they did not take into consideration Papuans’ claims or their complex cultural identity and historical specificity, something that understandably did not ease the process of pacification. Thus, apart from promoting regional development through infrastructure building, the rehabilitation of traditional markets, a more equitable sharing of resources between centre and periphery, the continuation and implementation of former President Yudhoyono’s welfare policy,[72] and the enforcement of a revision of the 2001 special autonomy law, Jokowi is trying to find a comprehensive and durable solution.[73] For example, Jokowi proposed building a presidential palace in Papua,[74] a measure also supported by Komnas HAM (the human rights national commission) in order to give local people more visibility; he announced the suspension of the discussed transmigration scheme that relocated mainly Javanese farmers to Papua and contributed to reducing locals to a minority in certain areas,[75] perpetuating the imposition of the Javanese ethnocentrism.[76] Moreover, Jokowi declared the end of the restrictions for foreign journalists[77] in Papua and West Papua and, in May, decided to release five political prisoners,[78] while promising to free many more activists.[79] In fact, in November he also released Filep Karma, symbol of the independence movement.[80] These steps are undeniably important signals for a region that has for too long been victimised by a painful internal colonisation and a fierce military repression. Yet, there are some major problems. Papua is in fact a theatre of multiple conflicting interests and agendas and it is difficult to take a stance that pleases all parties. A very strong hand is needed if things are to change. In the first place, the presence of the army in the region has not been reduced; on the contrary, despite Jokowi’s efforts to involve the military and the local police in the dialogue with the local inhabitants, the expansion of territorial military structures in the region does not contribute to helping the local population regain trust in the good will of the central government. In fact, security policies remain in place and counterbalance the beneficial effect of welfare policies. Such security policies are part of a programme, unfortunately named Serbuan teritorial («territorial invasion»), promoted by Defence Minister Ryamizard Ryacudu, who is in favour of greater involvement of the military in civilian life.[81] The purpose of the programme is to increase the social functions of the military in the outermost, conflict-prone areas – and thus also in Papua – and improve the soldiers’ image among the locals. But, according to many analysts, it is exactly the opposite of what is needed to stop abuses of power.[82] Therefore, Jokowi’s agenda is at odds with the agenda of the generals, some of whom, like Ryamizard, are also members of his Cabinet. Moreover, both the Minister of Defence and the Commander of the Indonesian Armed Forces (TNI) publicly denied that the veto on foreign journalists in Papua had been lifted. On the contrary, they declared that permission would still be needed and «good reports» (that is to say nothing which questions the official narrative) must be produced.[83] Also Jokowi’s plan to grant amnesty to around ninety Papuan political prisoners was rejected by the House of Representatives.[84] Another contradictory fact was that the President, albeit professing to be determined to combat the discrimination against Papuans, denied the latter’s claims to Melanesian cultural identity and refused to acknowledge any special relationship to Melanesia. In fact, Jokowi successfully exerted his pressure over the Melanesian Spearhead Group (MSG)[85] in order to prevent the United Liberation Movement of West Papua (ULMWP), namely an umbrella group formed in 2014 that gathers different organisations fighting for Papuan independence from Indonesia,[86] from becoming full members. At the same time, Indonesia obtained the status of associate member in the MSG.[87] This was a political victory for Joko Widodo: indeed, by granting ULMWP only the status of observer, the MSG made clear that it recognised Indonesia’s sovereignty over Papua. In other words, Jakarta was acknowledged as the legitimate representative of the five Melanesian provinces in the archipelago, while the ULMWP was denied its prerogative to speak on behalf of all the West Papuan Melanesians.[88] In addition to this, the Indonesian President was trying to tighten the economic ties with Papua New Guinea to undermine this nation’s support of Indonesian Papuans.[89] This ambiguity and the lack of a shared vision within the government was not encouraging for those who had set high expectations on Jokowi.

Also the presence of powerful international companies is a factor with serious complications in the area. West Papua has always kindled much interest for its enormous mineral wealth[90] and since the 1960s, under Suharto, the region experienced an influx of American, European, and Japanese companies,[91] but hardly ever did the locals benefit from their own resources. For example, in the case of Freeport Indonesia, a unit of the gigantic American mining company Freeport McRohan, Papuans complained that, in terms of employment, they are discriminated against in favour of immigrant workers; they also reported that local government is rarely involved in negotiations related to companies working in the region.[92] Moreover, the implementation of expansion schemes for palm oil production have brought the swift penetration of multination industrial producers. This, not surprisingly, has been damaging to local smallholders, constrained by the insufficient expertise, fertilisers and other fundamental inputs. If the needs of local communities are not taken into consideration, these economic policies are likely to alienate Papuans’ trust in the central government’s development policies. In addition to this, lack of transparency in land acquisitions by companies to the detriment of land rights of smallholders have spurred conflicts that can destabilise the areas.[93]

2.10. Jokowi’s ambivalent attitude on the «haze crisis»

Both the questions of land ownership and production of palm oil are crucially linked to the disastrous «haze crisis» which was caused by forest fires which burned from June to December 2015. [94] These fires blanketed a great part of Southeast Asia, stirring diplomatic tensions with the neighbouring countries[95] and placing the Indonesian President under global spotlights. On the one hand, fires are set in cases of disputed ownership to claim one’s right over a certain land; on the other hand, the fires clear the land for the plantation of trees for pulp and paper, but above all, for oil-producing palms.[96] Both smallholders and plantation companies – the former having less resources at their disposal, for survival,[97] the latter driven by the logic of profit – turn to burning instead of cutting, because it is extremely cheaper and faster.[98] Investigations have shown that plantation companies, by paying families to set fires to land, have fed a mafia of farmer group organisers, village heads, land claimants, businessmen, and government officers who benefit enormously from the fires.[99] Despite the dreadful extent of the ecological disaster – whose gravity, it is worth mentioning, pushed the President to shorten his official visit to Washington at the end of October – Jokowi did not declare a state of emergency, lest companies could default from contracts;[100] this caused dismay, especially in West Papua, which was badly damaged by the fires.

In this situation, the President took action to try to solve the crisis and defeat the haze problems within three years. In the first place, he acknowledged that unclear land tenure and concessions were at the root of the problem, announcing the mapping of land ownership, which should be carried out by 2020;[101] secondly, the government froze permits to four of the companies suspected to be errant and criminal cases were filed against their executives;[102] moreover, the Forestry Minister issued new technical guidelines that should contribute to reducing fire risks in the forthcoming years.[103] Yet, analysts have expressed concern about Jokowi’s ability to implement central government policies at the local level, something made difficult by the decentralisation, which Indonesia underwent after the Suharto era.[104] Moreover, the decision jointly made by Malaysia and Indonesia to create a Council of palm oil producer countries[105] was received with generally disappointment: in fact, this seemed to go against important agreements aimed at reducing deforestation[106] and to contradict Jokowi’s declarations at Cop21 in Paris that local communities must be involved in order to pursue a more sustainable economy.[107] Once again, it was not clear where Jokowi was heading. The risk is that welfare policies would be of no use if not backed by a durable and inclusive development scheme that, especially in critical West Papua, values and protects the environment as the fundamental resource of local communities.

3. The regional elections

Late in 2015, millions of Indonesians voted in regional elections, which were held in about half the local administrations of the country. This was just the first of three rounds: the two remaining ones are scheduled to take place in February 2017 and June 2018.[108] What is important to note is that, contrary to the attempt by the Prabowo Subianto’s coalition to eliminate local elections during the transition period, these were maintained. In fact, owing to an enormous public outcry, Yudhoyono soon had to overturn the unpopular move and restore the pilkada system (local elections system).[109] Since 2005, this allows electors to choose local administrators directly and is a fundamental safeguard of bottom-up democracy. The fact that local elections were retained was a personal victory for Jokowi, who had loudly decried the anti-democratic measure.[110] These elections cannot be considered a referendum over Jokowi’s first year for two main reasons.[111] The first one is that single candidates are more important than parties.[112] The second one is that just half the country will be involved during this round. Yet, results matter because the winners could implement or stall Jokowi’s proposals at the local level, therefore being either a consolidation or a destabilising factor for the President.[113]

4. Foreign policy: «In the Ocean we triumph»[114]

If we look at Indonesian foreign policy, we can see that Joko Widodo seeks to present himself as a promoter of considerable change. Nevertheless, there are many elements of continuity with Yudhoyono’s foreign policy. This is evident both in the new President’s maritime vision and in the emphasis on the need for varying and expanding bilateral relationships with partner countries. Three main points will be analysed in the following section. First, it will be seen how Jokowi has been trying to sensitise the general public on issues concerning maritime vision and security and to depict Indonesia as a country that can serve as a bridge between the Pacific and Indian Oceans. Second, Indonesia’s bilateral relations will be taken into account. Greater prominence will be given to the relations with China and US. It will be shown that, in a period of growing geopolitical tensions at the international level, Indonesia is not willing to choose between the US and China. As a matter of fact, Jakarta prefers not to take a clear-cut stance and nor be drawn into a rivalry that might cost a great deal in terms of sovereignty and independence. Not unlike the other ASEAN countries’ leaders, Widodo does not ignore the complexities of the interwoven conflicts of interests in the regional scenario and is trying to take advantage of the proposal advanced by both US and China, avoiding upsetting either. Ultimately, Jokowi’s attitude towards the ASEAN group will be considered. Certain declarations by the new President and his entourage suggest that Indonesia might abandon its traditional role of mediator in the region and focus on its national interests, while strengthening its position in the regional area.

4.1. Jokowi’s maritime vision

At this point, it is important to briefly focus our attention on Joko Widodo’s maritime vision. Jokowi wants to transform Indonesia into a «global maritime axis», namely a powerful and dynamic maritime hub, equipped with a developed modern infrastructure.[115] His political manifesto gave momentum to ideas which were not new but had been discussed only at the high-politics level. As a matter of fact, during his presidential campaign, the issues of maritime strategy and maritime security were encompassed in the broader political discourse for the first time.

The President’s vision is predicated on three main principles: 1) improvement of infrastructure to enhance inter-island connectivity in order to integrate the outermost areas of Indonesia, improving trade and commerce, thanks to a better use of choke points and maritime corridors;[116] 2) expansion of regional diplomacy in the area of the Indian and Pacific Oceans, making Indonesia a fulcrum between India and China and between China and the US;[117] 3) projecting Indonesia as a maritime power whose naval capability will be increased in the forthcoming years.

As analysts maintain, the new emphasis placed on maritime vision is a by-product of the growing awareness of the maritime vulnerability of Indonesia given the alarming tension in the South China Sea and the rise of China and India: a stronger awareness of the archipelago being exposed to external threats is constitutive of the country’s deep-seated sense of vulnerability towards its maritime domain.[118] Moreover, while underlining the need to overcome what has been an anomaly for the world’s biggest archipelagic state, namely a strategy predicated on a continental army,[119] Jokowi reinvigorates Mohammad Hatta’s «between the two continents and two Oceans worldview», according to which Indonesia’s geographical cross-road location shapes its «independent and active foreign policy». [120]

The implementation of this maritime vision would hardly be possible without the modernisation of the Indonesian navy, which – it is worth remembering – is weaker than those of Singapore, Vietnam or Thailand. Former President Yodhoyono had already started a twenty-year programme (2005-2024) focused mainly on the improvement of the naval and air forces. Thank to this plan, called «Minimum Essential Force» (MEF), some progress has been made and a few warships and submarines have been acquired.[121] This notwithstanding, because of the limited resources allocated and the lack of coordination, the programme has left much to be desired. Therefore, Jokowi’s intention was to push it forward.[122] The President’s elaboration of an ideological framework in which maritime security is depicted as a national interest priority is functional to gain political support and to sensitise people through a mainstream public debate. The above-mentioned sinking of illegal fishing vessels, for instance, could be interpreted as part of this strategy.

In order to improve maritime coordination, soon after being elected, Jokowi created a new maritime security agency, called Bakamla, to replace the previous agencies, whose tasks were not clear and often overlapped. Bakamla’s priorities were securing Indonesian resources against illegal fishing, building up maritime defence and preserving territorial integrity, conducting patrols and exercises and cooperating with Customs and with the Ministers of Transportation and Maritime Affairs.[123] Secondly, Jokowi announced his will to double the defence budget from 0.9% to 1.5% of the GDP in five years.[124] In 2014, Indonesia met 38% of its MEF objective, with the aim of reaching 100% by 2019.[125] All this considered, Joko Widodo’s five years in office will be pivotal for the realisation of his vision. Yet, it will be a tough test for the President, since, as noticed by many, there are several roadblocks ahead.

In the first place, doubts have been raised about the possibility of doubling the financial resources allocated to the armed forces. Moreover, it is not to be forgotten that Ryamizard will try to redirect most of these additional resources to the TNI rather than to the Navy. Also, the idea is widespread that the country might not be able to develop the necessary technological know-how to reach the goal of entirely relying on the indigenous shipbuilding industry. Finally, the common sense is that Joko Widodo’s lack of the necessary experience in foreign affairs will prevent him from acquiring national and international credibility.[126]

4.2. The Indonesia-China relations

The clash with the Defence Minister should not be underestimated, since it has influenced many domestic policy-related issues.[127] Also as far as the South China Sea dispute is concerned, the positions of Ryamizard and Jokowi have been at odds. It is well-known that according to the so-called «Nine-Dash Line», the vague boundary used on official Chinese maps, about 90% of the South China Sea belongs to the People’s Republic of China.[128] Within the area on which China lays claim, lie the Indonesian Natuna Islands, where Jakarta has established an Exclusive Economic Zone. Therefore, while the Minister of Defence announced that the deployment of a fleet of jet fighters and three corvettes to the islands is planned, as well as the upgrading of the small military force based there,[129] the President was more careful. During his official visit to Beijing in March, Jokowi apparently did not discuss with Xi Jinping the issue of the disputed sea area and a number of MoUs were signed on questions of finance, industry, infrastructure, natural disaster management and aerospace. Later on, in an interview with a Japanese newspaper, the Indonesian President was reported as saying that China’s claim over the South China Sea does not have any legal foundation in international law. However, Jokowi soon clarified that his statement, rather than being against the Chinese posture, was meant to emphasise the fact that a Code of Conduct was needed for tackling the South China Sea dispute.[130] Joko Widodo, thus, is aware of the complexities of the relationship with China, whose foreign investments he wants to attract, and that is maybe the reason why he is reluctant to play a leadership role within the ASEAN group and to act as spokesperson of the other member countries who have grievances against the Asian superpower.[131]

All in all, however, the relationship with Beijing is strengthening, as shown by the fact that Jokowi visited China twice during 2015 and that, in October, the latter offered up to US$ 100 billion in total investments in several projects, including joint-venture infrastructure development projects, such as the bullet train connecting Jakarta and Bandung.[132] Moreover, in November, during the G20 meeting in Antalya, Jokowi and Xi discussed the possibility of liquidity support with an additional contribution of US$ 20 million as part of an attempt to reduce Indonesia’s dependence on the US dollar.[133] Considering that Jokowi has rightly declared that infrastructure is at the top of his priorities, Indonesia seeks to take advantage of the will to invest in the Asian colossus, which is one of Indonesia’s biggest investors.[134]

4.3. The Indonesia-US relations

It is too early, though, to tell whether Jokowi will abandon the traditional role of regional mediator played by Indonesia or if he will move towards either the US or China, becoming part of the spheres of influence of either power.[135] For the time being, despite great expectations, Washington has been disappointed by the hesitating attitude of the archipelagic country. During Joko Widodo’s visit to the US in October 2015, Washington and Jakarta signed a MoU on maritime cooperation which covered broad priority areas such as maritime security, law enforcement institutions, and technical skills. Nevertheless, a new work plan which was supposed to provide the recently-created Bakamla with institutionalised assistance from the US did not come up for discussion because, for reasons which are not very clear, it had been cancelled by Indonesia.[136] While it has been said that this is explainable by a struggle for authority within the Bakamla, it is likely that Jakarta does not want to depend upon Washington too much to avoid being too closely integrated inside the US sphere of influence. Likewise, Jokowi’s announcement on being keen on joining the TPP has not been followed by concrete steps, at least so far. Apparently, then, like other countries in South-East Asia, Indonesia is also struggling to find a balance between strengthening defence cooperation with Washington, while establishing economic ties with China.[137]

4.4. The Indonesia-ASEAN relations

Furthermore, it has been observed that the Indo-Pacific vision implies a broader landscape for strategic action and allows Indonesia to project itself as a maritime power outside ASEAN, which, according to some sections of the strategic circles, is too constraining.[138] As declared by Rizal Sukma, one of Indonesia’s leading strategic experts, ASEAN is an important focal point, but only one.[139] What has been seen so far is that certain statements released by Jokowi as soon as he took office gave the impression that Indonesia might change its attitude towards the ASEAN and cease to have a unifying function. During the ASEAN summit in Myanmar in November 2014, Jokowi said that Indonesia is not willing to become merely a market and that the country must ensure that no harm comes to its national interests.[140] Is this sheer rhetoric to impress Indonesian public opinion and neighbouring countries or is it a concrete sign that Jakarta is embracing a broader vision and that its focus on the so-called PACINDO (the Pacific and Indian Ocean region) will entail turning away from the South East Asian regional cooperation?[141] In any case, such declarations are not very promising in view of the full implementation of the ASEAN Economic Community (AEC). Other declarations released by the Minister of Culture demanding that, since Indonesia will be the centre for economic development among the group, Bahasa Indonesia should become AEC’s main language were not fostering unity and trust, and suggested that Indonesia was acquiring a self-centred posture and abandoning regionalism.[142] This big-brother behaviour might exacerbate fissures that are already present within the ASEAN group. In fact, although such statements might remain confined to the rhetorical level, in the current tense climate it might stall regional cooperation and harden postures related to the several territorial disputes already dividing the member states. All in all, this can make the regional countries more vulnerable to the powerful sway exerted by the US and China.

4.5. Indonesia’s other bilateral ties

By and large, Joko Widodo has not neglected other bilateral ties, apart from those with the US and China. Those with Iran, Australia, Russia, and India are examined in the present section. The visit of the Iranian President and the Foreign Minister to Indonesia in April indicated the mutual will to strengthen relationships in terms of regional security, infrastructural and technical projects and in anti-terrorism cooperation.[143] The political shift with Jokowi was also perceived as timely by Australian new Prime Minister Malcolm Turnbull in order to reset relationships which had been marred during Abbott’s government.[144] Another very important step occurred in June, when Jakarta signed a MoU with Moscow in the field of nuclear energy.[145] Russia is also considering helping Indonesia with military equipment and contributing to the development of her infrastructures.[146]

Moreover, India has also been an object of greater attention, especially as far as defence partnership is concerned. In August 2015, Indonesian Defence Minister Ryamizard and India’s ambassador to Indonesia, Gurjit Singh, held a meeting during which they signed a MoU focusing on maritime security and on the will to promote future cooperation in defence procurement.[147] This could bring mutual advantages, since Narendra Modi, the Indian Prime Minister, wants to increase naval cooperation with Southeast Asia as per his «Act East» policy, whereas Jakarta, as mentioned above, is willing to enhance its naval capabilities.[148]

Note must be taken of the fact that during Jokowi’s first year in office, an improvement has been noticed in the diplomatic relationships between Indonesia and Malaysia. Although the situation remains tense due to territorial disputes that involve tiny, but rich in oil, islands in the Sulawesi sea and because of mistreatments of migrant Indonesian workers,[149] increasing bilateral trade, investment growth and deepening cooperation in defence and security are contributing to a detente.[150] Thus, in February, during a bilateral meeting, the Defence Ministers of the two neighbour countries signed a letter of intent expressing their will to cooperate in the fight against both IS and piracy: this has been interpreted as a mutual effort to temporarily overcome territorial disputes in order to fight common enemies.[151]

All in all, Indonesia is trying to diversify its bilateral relationships in an effort to balance the influence of the US and China in the Indo-Pacific region and to strengthen its position. This notwithstanding, it cannot be denied that Indonesia has not completely neglected its traditional role of mediator within the south eastern region. It is worth mentioning that during the Shangri-La Dialogue held in April 2015, Indonesia had proposed a peaceful settlement of several border disputes by supporting regional dialogue, the introduction of a Code of Conduct (CoC), and the introduction of joint patrolling operations in the area.[152] Moreover, despite the tougher approach taken by the Indonesian military towards China, also seen above, and the deployment of at least 14 naval ships to conduct routine surveillance in the southernmost South China Sea area, Jokowi and Coordinating Minister for Security and Political Affairs Luhut Binsar Pandjaitan made blunt statements after the provocative action of the American destroyer USS Lassen[153] asking all sides to «exercise restraint» and tone down the inflammation of the dispute.*[154]

5. The economy

5.1. The general economic trend

In 2015, the Indonesian economy was under pressure from both internal and external factors. Although the new President’s election brought a gust of optimism to a country which had been bitterly disappointed by the slowdown of the economy in 2014,[155] the problems inherited from the previous government – that is endemic corruption, rising inequality, sluggish economic growth and poor infrastructure – were deep-seated and not easy to solve. These unfavourable conditions were exacerbated by a new global economic slump and by the huge cost of the haze crisis which amounted to 1.9% of the GDP in only five months.[156]

Initially, Joko Widodo had set expectations too high: he had projected a growth rate of 7%, then revised to 5.7%, for 2015.[157] The World Bank considered it ambitious and unrealistic, and, already in the second quarter of the year, forecast the growth of Indonesia’s GDP at around 4.7%, a figure that was confirmed by further forecasts at the end of the year.[158] In fact, Southeast Asia’s largest economy was affected by the financial crisis in China and in other parts of the world: the rupiah fell precipitously against the US dollar in the first nine months of 2015, trading at the lowest level since 1998, while performing slightly better in the remaining part of the year.[159] This had burdensome repercussions for the country: internal consumption, which comprises half of the economy, decreased since domestic purchase power was curtailed by the high inflation and the high benchmark interest rate at 7.50%.[160] Moreover, the rupiah’s depreciation did not even benefit Indonesia’s main exports, namely natural gas, coal, and palm oil, due to a downward trend in their prices.[161] Also manufacturing exports were not favoured by the weak currency, as several industries need to import basic or intermediate materials in order to produce exportable commodities. Another reason for the loss of competitiveness was the surge of labour wages, spurred by inflation.[162]

Consumers’ confidence fell also as a consequence of President Widodo’s decision to stop gasoline subsidies and cap assistance for diesel from January.[163] The removal of fuel subsidies, which had been in place since the first petrol crisis in 1973, was favoured by falling global oil prices. According to forecasts, the budget cost of fuel subsidies was reduced from US$ 8 billion in 2015 to US$ 4 billion in 2016.[164] This move was part of Jokowi’s broad aims to make funds available in order to boost spending on education, health, infrastructure and abate the budget deficit from under 3% to under 2% of the GDP. However, the beneficial effects of the state budget savings, if any, were to be seen in the following years. For the time being, the measure was not popular, because of fear that the cost of transportation and food could increase, even though the government took steps to moderate the negative impact of higher prices on vulnerable households. These steps included a monthly allowance for 15.5 million economically unprivileged families, plus health assistance and funds for education. The relative expenses would be financed by making use of the financial resources made available in the medium-term by the removal of fuel subsidies.[165]

5.2. Public spending in support of the disadvantaged social strata

It should not be forgotten, in fact, that according to the World Bank more than 11% of Indonesians live below the national poverty line (for 2015 this was fixed at 331.000 rupiahs per month, about US$ 23),[166] while many more are just slightly above it. On the whole, people below and slightly above the poverty line form a conspicuous disadvantaged stratum.[167]

The President launched a health care programme and a public education programme, which were modelled on programmes which he successfully implemented during his mayoral career in Solo. It will be seen whether the conditions to implement such schemes at the national level will be created. A major problem, in fact, is the lack of coordination between centre and periphery. Until October 2015, the level of fiscal deficit was still 2.5% of GDP, instead of the proposed target of 1.9%; the government’s commitment to accelerate public spending and a revenue collection lower than expected contributed to that result.[168] As planned, the expenditure for infrastructure, health and social assistance has increased and should further increase as per the 2015-2016 budget. As far as infrastructure is concerned, the allocation of more funds will go to local governments and through capital injections to SOE.[169] A higher public spending in infrastructure is positive because it can help reduce the negative effect of higher unemployment caused by moderate growth.[170] In 2015, in fact, both construction and trade benefitted from the expansion and/or betterment of infrastructure, which created the largest number of jobs.[171] On the other hand, universal access to subsidised healthcare was supposed to be achieved by 2019 and will require increasing spending to cover more and more of the population.[172]

Jokowi’s social programmes, in line with social security schemes introduced in 2013 by Yudhoyono, address both the formal and informal sectors, even though it is much more difficult to implement such schemes in the informal sector. A positive development was that, from August 2010 to February 2015, the number of workers employed in the informal economy went down from 59% to less than 52%. Moreover, most of the new jobs created from 2001 are in the formal economy.[173] Poverty reduction, however, has been less successful, recording no decline in 2014, while the divide between poor and rich has been widening: according to a World Bank report published in November 2015 the income of the top 10% of the population rose three times faster than that of the lowest 40%.[174]

Certainly, it takes time to fix inequality, but providing targeted social assistance and a good tax administration can contribute to realise Joko Widodo’s aim to cut the country’s Gini coefficient,[175] stable at 0.41 since 2011, to 0.39% by 2019.[176]

5.3. The 2015-2016 budget

The 2015-2016 state budget was approved in October 2015. The macroeconomic targets remained those of enhancing investment in infrastructure development (raised by 8% compared to the 2014-2015 state budget), increasing, exports and boosting people’s purchasing power through subsidies to diesel, electricity, and gas, along with programmes of food security.[177] Economic growth was projected at 5.3%, lower than the government’s initial assumption, with an inflation rate of 4.7% and an exchange rate of 13,900 rupiahs per US$. In relation to welfare, targets include the reduction of the poverty level between 9 and 10% as well as the decrease of unemployment rate to 5.2% from 5.5%.[178]

The only party which disagreed with the budget draft was Gerindra. In particular, Gerindra, the major opposition party in the «Red-and-White» coalition,[179] carried out such a determined opposition against the injection of state capital in SOE that the government had to postpone that measure sine die.[180] The plan was to inject around US$ 3 billion in state firms, in particular construction and electricity companies, to boost infrastructure development. This would have been a significant economic step in relation to the size of Indonesia’s economy. State enterprises, with an asset superior to US$ 300 billion, are pivotal for building infrastructure and connect the archipelago through communication and a more even development; moreover, they employ more than 850,000 people.[181] It is understandable, then, that Jokowi and the Minister of SoE, Rini Soemarno, considered this step to be very important for growth. Even though Rini Soermano was not excluding privatisation as a future option, her priority was, for the time being, the expansion of state enterprises.[182]

Apart from finding a way to implement such expansionary policy, it remains to be seen how Jokowi’s administration is going to face the problems that hinder infrastructure development: one is corruption, which has involved several state enterprises in recent times; the other is difficulty in spending, as shown by the fact that, in the first six months of the year under review, only 11% of the US$ 22 billion allocated for infrastructure programmes were spent.[183]

Another much-discussed measure was tax amnesty, which was supposed to be implemented in 2015 but had to be included in the 2015-2016 budget.[184] Through this, the President aimed to decrease the budget deficit. Nevertheless, the proposal caused concern among anti-corruption activists and the Organisation for Economic Cooperation and Development (OECD): as a matter of fact, according to them, Indonesia does not have enough monitoring mechanisms to make sure that people who do not comply with amnesty or just partially submit their assets get punished.[185] Moreover, analysts fear that it is too risky to rely on such uncertain resources and that future tax compliance might be negatively affected by amnesties, favouring the promotion of tax evasion and a culture of impunity.[186]

5.4. Moving towards neoliberalism?

The economic policy adopted by Joko Widodo appeared predicated on a good dose of state intervention, evidently seen by the new President as conducive to steady growth and inclusive development. Nevertheless, the appointment of Thomas Lembong as Trade Minister following the August Cabinet reshuffle and a package of deregulation policies, according to which the minimum wage is also determined,[187] have raised concerns about the new President possibly sliding towards a neoliberal agenda. Also the decision to let fuel prices be fixed by market mechanisms has been interpreted as evidence of a growing neoliberal influence.[188] As a more telling signal that the biggest economy of ASEAN might move in the direction of the hegemonic paradigm of neoliberalism, Jokowi and Trade Minister Thomas Lembong declared their intention to join the TPP.[189] Several economists have warned about the dangers that joining the TPP could cause to the country. In fact, while Jokowi apparently wants to be involved in the free trade agreement in order to attract foreign direct investment more easily,[190] the benefits for the common person are questionable. Former President Yudhoyono himself advised Joko Widodo against signing the TPP and cautioned him about the geopolitical repercussions that such a decision could cause, especially as far as China is concerned.[191] Lana Soelistianingsih, an economist at the University of Indonesia held that signatory neighbouring countries like Singapore, Malaysia and Vietnam, being manufacturing export-based economies, will be able to perform better in the US-promoted partnership than Indonesia, whose exports are mainly raw materials like oil and gas. According to Soelistianingsih, boosting the competitiveness of the Indonesian manufacturing sector would require, among other things, significant upgrades to the existing poor electricity infrastructure.[192] Likewise Firmanzah, a former dean of the faculty of Economics of the University of Indonesia, has argued that Indonesia should focus on existing regional agreements such as the Regional Cooperation Economic Partnership (RCEP) and the Comprehensive Economic Partnership Agreement (CEPA). Different from these regional agreements, the TPP is at odds with Jokowi’s development agenda «Nawa Cita», whose purpose is to achieve economic independence by developing strategic sectors in the domestic economy.[193]

Generally, many observers have been afraid that the positive results attainable through social schemes and economic policies could be neutralised by joining the TPP. Among other problems, they pointed out the risk of the massive damages that the penetration of food multinational companies into the food sector could cause to small farmers. Likewise, they highlighted the danger that some TPP regulations could cause the removal of the extant provisions of flexibility related to the implementation of the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). This is a scheme which allows many developing countries to produce generics of drugs patented by US pharmaceutical companies at lower prices in the public’s interest. Such removal could result in a significant increase in prices due to cartels and monopolies on drugs organised by powerful foreign corporations.[194] It is a remarkable fact that even a financial institution like the World Bank, which has consistently shown its commitment to the promotion of neoliberal policies, has expressed its reservation over the potential effects of «the [TPP] agreement [since it] affords countries little flexibility to make laws and regulations more restrictive towards other member countries […]». Accordingly, as acknowledged by the World Bank, «the cost of this TPP-imposed limitation would be the loss of some economic policy space».[195]