The 1980s: Maturing Relations

By the early 1980s, the relationship between the Indonesian Government and the international community had matured in important ways. Indonesia was seen by much of the international community as a country which still faced great challenges but which was making good economic progress and was playing an increasingly significant role in Southeast Asia (Severino: 2003).

During this period, Indonesia's official relations with the international community, including in economic and commercial relations, were generally effective. President Soeharto himself concentrated mainly on domestic policy issues, travelled overseas relatively infrequently, and showed little inclination to strengthen Indonesia's international profile. Indeed, few leaders of large nations can have been so little known overseas. The Indonesian bureaucracy followed the President's lead and adopted a policy of maintaining a relatively low profile overseas. The result was that for a large nation, Indonesia's role in international affairs was relatively modest. This, it might be noted, was no bad thing. The emphasis on domestic policy was seen by the international community as appropriate and, indeed, served to bolster international confidence in the Indonesian Government's approach.

However it is important to note that one factor that helped Indonesia adopt this low-key approach was the special degree of support that multilateral financial institutions such as the World Bank, the IMF and the Asian Development Bank provided to Indonesia. During the 1970s, the major international financial institutions had developed highly effective working relations with senior Indonesian leaders. Several features of the relationship are worth noting. One is that the close working relationship between Indonesia's senior economic policy makers and the international institutions received strong support from the bilateral donor community working through the IGGI, and from large donors such as Japan. Another feature of the relationship was that the major multilateral institutions played a key role in bolstering Indonesia's economic diplomacy. The major financial institutions provided, first, valuable assistance in helping formulate economic policy and then, second, provided much assistance to Indonesia in explaining these policies to the international community.

Nevertheless, despite the undoubted success of national economic policies, a daunting agenda of other problems was slowly attracting increasing attention (Elson: 2001). At home, issues such as corruption, poor government services, arbitrary bureaucracy, and the "lack of the rule of law" were matters of frequent comment. At the international level, the agenda of the donor community was widening away from the traditional focus on economic growth and a limited range of sectoral issues (agriculture, irrigation, transport and communications, power, manufacturing) into education, health, and environmental and gender issues.

Nevertheless throughout the 1980s economic growth in Indonesia remained high and, importantly, poverty levels declined markedly. The result was that the growing concerns about these and other issues were pushed into the background. It was hard to argue with such evident economic success. (Thee: 2003)