GRAPHIC: GLOBALIZATION: The role of International Financial Institutions The power of globalization helped destabilize economies across the Pacific Rim, but Asia's financial crisis hit hardest in Indonesia, the world's fourth most populous nation. For many years, the country had been praised as one of the Asian Tigers whose economy could do no wrong. Global corporations flocked here because of its stable political environment, low wages and high profitability. ALLAN NAIRN: The Indonesian economic miracle was largely a myth. Journalist Allan Nairn has written extensively on Indonesia. ALLAN NAIRN: The currency crises started with the collapse of some banks in Thailand, it spread to Indonesia. There was a run on the ruppiah the currency. In one day it lost 26 percent of its value. And suddenly the Suharto regime was in crises. The Indonesian government tried to stem the crisis but found itself up against the volatility of the international financial markets. Indonesia’s Ambassador to the United States Dorodjatun Kuntjoro-Jakti, blames globalization. AMB. KUNTJORO-JAKTI: The most intense part of globalization is actually currency flow between countries. We are, I think, suffering in the region the first wave of this globalization, which is probably going to be the experience of many more emerging markets, in particular. As outside capital poured in searching for high returns, currency speculation increased, and corrupt local economic institutions crumbled under the pressure. ALLAN NAIRN: The Indonesian system is based on personal control by the Suharto family, business partnerships between Suharto and multinationals, and, most of all, repression of labor artificially holding down wages by crushing the unions. AMB. KUNTJORO-JAKTI: You cannot help that you have problem of cronyism, of nepotism. That is the stage of development that we are in--not trying to be apologetic about it. But it is happening. It is true. ALLAN NAIRN: The IMF and Suharto clashed over the subsidies-- the public subsidies that Suharto gives his children. His children are billionaires. He shuffles them billions from the public trough. The IMF was against that. The IMF has been pushing to move Indonesia from crony capitalism-- dominated by the Suharto family, to global market capitalism-- dominated by multi-national investors. Although a downturn was expected in the Asian economy, even an experienced investor like George Soros found the severity of the crisis alarming. SOROS: The magnitude of the crisis and the extent of the crisis I think surprised practically everyone. Financial markets are supposed to work like a pendulum-- you know, sort of swings one way then it sort of eventually settles and reaches equilibrium. And instead of that it worked like a wrecking ball knocking over one economy after another. And that was very scary. To stabilize the situation, the international financial community promised a massive 40 billion-dollar bailout--but only if Indonesia restructured its economy. The International Monetary Fund insisted on a plan to cut back spending and eliminate subsidies to the poor, although it backed away somewhat as protests mounted. NADER: The Asian crisis is among other things, too much dictatorships, too many oligarchies ripping off the masses of the people. SOROS: The system is currently stacked in favor of the lenders to the detriment of the debtors. Indonesian Sociologist Mely Tan describes the impact of the crisis on ordinary people. TAN: The increase of the prices of basic necessities are such that it’s very legitimate of housewives and mothers if they are quite concerned about how to get rice, and cooking oil, sugar-- basic necessities that you need for everyday sustenance. As the cost of living in Indonesia skyrocketed, riots broke-out to protest out of control food prices. Factory worker and organizer Cicih Sukaesih Cicih Sukaesih: Our salaries need to be made more appropriate to prices we have now. If this isn’t the case, then we are going to starve. SOROS: The crisis has really hurt the workers. They are not responsible for the catastrophe that has befallen them, the social dislocations in Asia are tremendous because these countries don't have social safety nets. So, if people lose their jobs they have nothing to fall back on. As unrest increased inside Indonesia, international pressure grew to link human rights protections to any financial rescue plan. PROTESTERS: People yes! Bankers no! The IMF has got to go! This view was echoed in Jakarta when we slipped into a military-run hospital to interview the country’s then imprisoned labor leader, Muchtar Pakpahan. MUCHTAR PAKPAHAN: I seriously insist the USA government stop the aid if (there is) no political reformation. The freedom to associate for workers, and the freedom to bargain for workers, are economic matters, not political matters. U.S. Treasury Secretary Robert Rubin rejects such calls for linking human rights to economic aid. sot RUBIN: The problem that you have in Southeast Asia, where you have this enormous financial instability, if it isn’t turned around, it seems to me inimical to human rights, to environmental protection, to other matters of that sort. There, I think what we need is to do everything practical and sensible to reestablish financial stability and economic growth. World Bank economist Michael Goulding also favors keeping human rights and economic strategy separate. GOULDING: Globalization is by its nature a carrot and stick process in economics and politics and human rights. You engage, you encourage countries to participate in the global economy and thatforces them to change internal behavior and standards. ALLAN NAIRN: Human rights cuts against the IMF program. The IMF program involves holding down wages. If you have human rights you have free labor organization that drives up wages. AMB. KUNTJORO-JAKTI: Globalization still demands the division of labor. Some countries will actually use the cheap labor base. You have exploitation of labor as a matter of fact. You cannot help it as I see it. Human rights in Asia is often synonymous with worker’s rights in factories like these which produce garments and athletic shoes for export. One key issue is the right to organize unions to press for higher wages from global corporations. Pharis Harvey from the International Labor Rights Fund helps Indonesians form independent labor unions. HARVEY: What we are working at here is an effort to find handles to enhance workers' ability to negotiate their own terms within a global economy as it relates to their basic rights - their right to organize, their rights to negotiate and bargain collectively. Those are all issues that are increasingly under threat. MAX WHITE: We are in a country here which has a long history of being able to use the military to suppress most kinds of labor organizing and labor activity. Max White monitors labor conditions in Indonesia for Justice. Do It! a U.S. based workers rights group. MAX WHITE: It is much to the advantage of the government to prevent just such organizing. In the United States, at least so far, if I go in and ask my boss for a raise, or if a hundred of us in and ask my boss for a raise, he could fire us, but he couldn't call the police and have me arrested. They can here. Cicih Sukaesih was fired from this Nike contract factory after organizing for better working conditions. CICIH SUKAESIH: From my point of view, I'm hoping workers can get organized and that workers can unite. It's very difficult to unite workers here. We don't have freedom of organization. We're seen as opponents when, in fact, all we want to do is improve the situation of workers. PROTESTERS: Shame! Shame on Nike! Shame! Nike’s practices have become the focus of many protests--like this one outside the Niketown store In New York City--just weeks before we visited Indonesia. PROTESTER: We're fired up! We'll buy no more! Nike is paying their workers 11 cents an hour to make those shoes that cost $150-dollars here. We want them to pay a decent wage to workers overseas and we want them to open up some factories here. We could use the jobs right here. We made you! We'll break you!
Nike spokesman Vada Manager: VADA MANAGER: Nike’s been unfairly targeted by a number of both other companies as well as by individuals with regard to our practices. We’ve actually been quite a world leader in the past 25 years at making investments in developing economies throughout Asia, throughout South--Latin America and have actually provided economic opportunities for quite some time to workers who seek better opportunities.
Nike asked Andrew Young, former US Ambassador to the United Nations, to examine conditions in the company’s Asian factories. Young’s report concluded that "Nike is doing a good job in the application of its code of conduct," but the workers we met in Indonesia had a different assessment. CICIH SUKAESIH: Up until now the code of conduct is still often violated and the report that was put out by Mr. Andrew Young isn't correct. It's just fine words. Young told us that "Nike made a special effort to enforce its Code of Conduct," but Nike workers in Indonesia want the company to go further. KUSNADI: What makes us want to ask things of Nike is that the code of conduct promises things and we think that it shouldn't just be something posted on the wall. PRESS CLUB MC: Chairman and chief executive officer of Nike As criticisms of Nike mounted, the company’s Chairman, Phil Knight, appeared before the National Press Club to announce reforms in its work practices. PHIL KNIGHT: When Nike has gone into a country with its manufacturing operations, wages have increased and poverty has decreased. Nike of course is not solely responsible for that, but we have been a part of that process. And we are proud of it, and not ashamed of it. We accompanied Pharis Harvey on inspections to several manufacturers to monitor working conditions. At this factory making Nike shoes we were met by armed guards, escorted inside for questioning, and denied access. Pharis Harvey at gates of factory Harvey found a more positive situation when he visited a Reebok plant. Like many multinational manufacturers, Reebok doesn’t own factories here but works with subcontractors. HARVEY: For the most part I have found the company to be responsive when people have pointed out problems. But they would be the first to admit they are not catching all the problems themselves. Worker and student unrest had been building for years. In the spring of l998, the unrest exploded into riots. Although the protests were widely reported, their underlying causes were not. ALLAN NAIRN: The real impact of the IMF plan is the mass lay-offs ending the food and the fuel subsidies for the poor of Indonesia even though 45 percent of one-year-olds are mal-nourished according to UNICEF. When they upped the fuel prices by 70 percent under pressure from the IMF, that touched off the popular explosion - ironically - that brought down Suharto. RIOTING Suharto speech On May 20. l998 after 32 years of a dictatorship known for corruption, and widespread brutality, Suharto stepped down. He transferred power to his hand picked Vice-President, B.J. Habibie. Indonesian jubilation MUCHTAR PAKPAHAN: Globalization will continue. If a country (is) without democracy, without the principle of justice and without human rights, I think the country will fail to face the globalization. Human rights problems remain pervasive--not only in Indonesia but in the neighboring territory of East Timor. Indonesia invaded the former Portuguese colony in 1975, and fighting there, along with disease and starvation has left an estimated two-hundred thousand people dead. Montage of Invasion JOSE´ RAMOS-HORTA: It is one of the worst cases of human rights violations in the world. Jose´ Ramos-Horta won a Nobel Peace Prize for his work to free East Timor: JOSE´ RAMOS-HORTA: For the past 21 years, you know, this regime, the Suharto regime has perpetrated extraordinary violence on the people in a manner that is totally unnecessary.
Human rights leaders say that if there is to be more change in Indonesia, outside pressure will be needed--a view shared by Indonesia's ambassador. AMB. KUNTJORO-JAKTI: Democracy in our country to some extent will come up from pressure from the outside-- not just from inner side. More and more as foreign actors are involved. Our society will then realize that, 'Hey this is something we miss ourselves. We should have it.’ GEORGE SOROS: The Asian crisis has created tremendous human suffering. And as it happened it didn't affect the advanced countries. In fact, in a funny way it actually was to their benefit. So with our Spartan upbringing we can take other people's pain without flinching and that is what is happening now in Asia. C. HUNTER-GAULT: Countries like Indonesia face pressure from both ends of the globalization equation--from the top, to be less restrictive--and from bottom to be more just. We move now to consider responses from the international human rights movement. The next stop on our journey: Thailand. MARCHERS: Global march! Go Go Global march!
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