INDONESIAN UNREST WORRIES LAWMAKERS, BUSINESSES

INDONESIAN UNREST WORRIES LAWMAKERS, BUSINESSES

As Congress debates the merits of the International Monetary Fund's economic stabilization program in Asia, lawmakers, businesses and human rights advocates are turning their attention to the political situation in Indonesia.

After South Korea, Indonesia is the largest recipient of the IMF's $100 billion program to rescue the troubled economies of East Asia.It has received $38 billion in loans from the IMF and other institutions to clean up its banking system and restructure an economy dominated by large business groups with close ties to the ruling Suharto family.

But recent unrest, fueled by rising unemployment and widespread disillusionment with the authoritarian Suharto government, has many observers worried that the country is on the brink of a political explosion that could threaten U.S. business and security interests.

'REALLY VERY DISTURBING'

''I think the situation there is really very disturbing,'' said Richard W. Baker, a senior fellow with the East-West Center in Honolulu.

''The real danger is social instability in the urban areas'' that could spark a violent response from the Indonesian military.

''There is growing concern about possible human rights abuses if the army cracks down on social unrest,'' added Mike Jendrzejezyk, who follows Indonesia for Human Rights Watch/Asia.

At the end of 1996, U.S. corporations had more than $7.5 billion invested in Indonesia, according to the U.S.-Asean Business Council, which represents U.S. companies in the Association of Southeast Asian Nations.

By the end of November 1997, U.S. exports to Indonesia were $4 billion, while imports reached $8.9 billion.

While those figures show an increase from 1996, they don't tell the real story, said a business executive and lobbyist who spent five years in Indonesia in the early 1990s.

A PUBLIC OPTIMISM

''For direct investors from the U.S. and elsewhere, the situation is tentative, it's wait-and-see,'' said the executive, who asked not to be identified. ''Key players in the market are re-evaluating their game plan.''

In public, however, business groups are expressing optimism.

''I think U.S. companies are looking at the long term,'' said Walter Lohman, director of Indonesia and Singapore affairs for the U.S.-Asean council. ''It's going to be a bright market in the future, and we want to be there.''

Still, some analysts point to the troubles in Indonesia as a reason to slow the pace of trade and integration with Asia.

''I think this crisis raises very fundamental questions about U.S. strategy in East Asia,'' said Alan Tonelson, a research fellow with the U.S. Business and Industrial Council and a self-described economic nationalist.

''The U.S. is pushing and pushing a policy of economic integration with a turbulent region with economic and political structures very different from our own.''

Increasingly, calls for change in Indonesia are coming from political moderates. This week, Indonesia's National Human Rights Commission, which was appointed by Mr. Suharto, sharply criticized the government for blocking political reform.

'DANGEROUS POINT'

The lack of commitment to democracy, the commission said, was aggravating Indonesia's economic problems and driving the country to a ''dangerous point.

''The U.S. clearly has in interest in seeing the IMF reforms implemented, but that's not enough when many Indonesians are calling for a more accountable political system,'' Mr. Jendrzejezyk of Human Rights Watch said.

The prospect of increased repression by the Suharto government also has raised concerns in Congress, where lawmakers in both parties have been critical of the Indonesian government for its human rights abuses and its brutal invasion and annexation of East Timor.

''Indonesia is one of the world's worst-governed countries,'' said Rep. Barney Frank, D-Mass., at a House Banking Committee hearing last week.

Rep. Frank and others have sought assurances that the Clinton administration will demand improvements in the Indonesia human rights situation as a condition of IMF funding.

LABOR SPOKESMAN OPINES

A key issue for many lawmakers is the Suharto government's refusal to allow independent labor unions to organize despite its 1993 pledge to President Clinton to amend laws that allow only pro-government unions.

The AFL-CIO, a key player in trade debates, has also criticized the imprisonment of Muchtar Pakpahan, the leader of Indonesia's independent labor movement.

''If it is possible for the IMF to recommend dismantling Korean labor law as a condition of emergency loans, then surely it is possible for the IMF to use its extraordinary leverage to force the Indonesian government to free'' Mr. Pakpahan, said George Becker of the United Steel Workers of America, in House testimony this week.