chapter  9
6 Pages


The B. J. Habibie and Abdurrahman Wahid governments have introduced a range of liberal political and economic reforms that have transformed the nature of the country's political economy. If the government strays too far from what the International Monetary Fund considers to be an appropriate economic strategy, it can quickly pull it back into line by threatening to withdraw or delay its aid disbursements, something it has shown a willingness to do on a number of occasions. Another reason why there is nothing certain about a shift to liberal markets in Indonesia is that the crisis has led to a dramatic increase in calls for the government to adopt more populist economic policies. If history really is a process of rationalization and has as its end point liberal markets and democracy, the idea that Indonesia is heading inevitably towards liberal markets would be unproblematic. In effect, it has a power of veto over the Indonesian government's decisions.