China-US Showdown and Indonesian Foreign Policy

TWO TO TANGO. President Susilo Bambang Yudhoyono is reportedly not at the same wavelength with his Foreign Minister Marty Natalegawa on the US plan to build military base at Darwin, Australia. In contrast to the cucumber-cool Yudhoyono, the Australia-educated Marty insisted that the US Darwin plan would increase tension in Asia-Pacific region and create a "vicious cycle of mistrust" among neighborhood countries. 

(Photo by Ikhwan Yanuar)

Has Indonesian foreign policy transgressed from the initiative of the country’s founding fathers?

As the recent string of events in Asia-Pacific shows, the relevancy of Indonesian foreign policy of Free and Active (bebas aktif), which was once a landmark on how Indonesia dealt with its foreign policy matters in its post-independence era, is currently in question.

Strategically located in the heart of Asia-Pacific, a region where countries are currently busy stockpiling their economic wealth and bracing against each other to strengthen regional influence, early signs showed that Indonesia is currently in the brink of being insubstantial.

To lead is easier said to be done, especially when Indonesia is living in an embattled region whose influence is being fought by two powerful forces such as China and United States. Yet there is no doubt that Indonesia could do much, much better rather than “sit down and watch the battle between two giants unfolds” as its present stance suggests.

As the United States proceeds with its plan to establish a military base in Darwin, Australia, deploying roughly 2,500 US marines in the area, the standpoint of President Susilo Bambang Yudhoyono somewhat shows that Indonesia responds lightly to the issue.   

Foreign Minister Marty Natalegawa, who previously denounced the Darwin plan as “creating a vicious cycle of tensions and mistrust”, was reportedly at odds with his boss Yudhoyono. Apparently, Yudhoyono sided with US President Barack Obama, the Darwin plan’s initiator who was reportedly irked with Marty’s statements and directly assured Yudhoyono during the ASEAN forum in Bali that the Darwin military base, which was only 850-kilometer away from Indonesia, was “nothing special”.

Imagine having Soekarno instead of Yudhoyono as president; then the US would think more than twice to establish a military base in Darwin.

Economics affairs might not be the best expertise of Soekarno, who proclaimed Indonesian independence and became the country’s first president yet ended up being toppled from power because of his clumsy economic management. In terms of foreign affairs, however, Soekarno’s track record is historical: He successfully put Indonesia, a young country that only gained independence a few years back at that time, in the world map.

Despite his political ideology that was more frequently associated with communism and Soviet Union, Soekarno, impressively, still managed to earn reverence from the US as well. During his presidency, Soekarno was even deemed as a daunting figure to the US. At that time under the leadership of John F. Kennedy, the US tried to “win over” Soekarno from the Soviet Union’s hands by inviting the president to Washington and providing Indonesia with billions of dollars in civilian and military aid in the early 1960s.

Soekarno, however, impressively managed to remain impartial on the Cold War that pits the US and the Soviet Union, even leading the plan to intercede the hostilities between the two countries by establishing the Non-Aligned Movement (Gerakan Non-Blok) whose members comprised of third-world countries’ leaders.

Reflecting Indonesia’s scrawny stance on the US Darwin military base issue: does Yudhoyono lean to the United States? Or is he merely being insubstantial due to his weak leadership, especially when he was benchmarked to Soekarno? If both questions are answered with a “yes”, then it’s fair to say that Indonesia is not independent and not active –thus going astray from the nation’s highly acclaimed Free and Active foreign policy.

As the last troops of US military step out from their exhausting wars in Afghanistan and Iraq, the 2012 and after will be the years when the US will focus its foreign policies –as well as its multi-trillion dollar military budget– from Middle East to Asia-Pacific.  

Bolstering influence in the Asia-Pacific and ASEAN region is especially necessary for the US considering Obama is currently eyeing to execute the ambitious Trans-Pacific Partnership (TPP Free Trade Agreement); an economic deal that will include the US in the free trade agreement with ASEAN.

So far, six countries in the Asia Pacific region –China, India, Japan, Korea, Australia, and New Zealand– have implemented free trade agreements with the ASEAN. Considering ASEAN’s massive population and market potential, it is thus a rational strategy for the US to follow their footsteps in the mission to restore their tattering economy.

The world may usher the era of power transition with growing economies in the Asia-Pacific region, at the same time when the economies in the Europe and the US are declining. The boisterous economy of China’s especially leads Asia-Pacific region to become the world’s new centre of gravity, while ASEAN’s strong domestic market was also perceived as crucial to save the recession-plagued economies of Western countries.

For Indonesia, a nation that is frequently referred as the central figure in the ASEAN region, the year of 2012 would be pivotal. For Indonesian President Yudhoyono, this should be the year to revive the Free and Active foreign policy in the upcoming China-US encounter whose battleground will take place at the coruscating region of Asia-Pacific. 

China-US Relations: Why China Can't Bluff

BIG PLAYER. With US$ 1.6 trillion dollar of US treasury bonds in possession, China's Hu Jintao is betting big in United States and is being held hostage by Barack Obama and his economic policies.

The game of Poker expects the player with the strongest hand to raise the bet, control the opponents’ moves, and dictate the flow of the game.

So why could not China –as the biggest United States’ creditor with 1.5 trillion of US treasury bonds in hand– just dictate United States and tell Washington what to do? The riddle here is why China succumbed to the pressure from the United States in some of its economic policies –like appreciating its currency– whereas they supposedly have the power to direct Washington to conduct economic policies for Beijing’s benefit.

Onviously, China is anticipated to be acting something more like this: “You do what I say,” said Hu Jintao to Barack Obama, “or I’ll stop lending you money, I’ll stop buying your assets, and I’ll sell all these 1.6 trillion treasury bonds in instant.”

In fact, such conversation is not happening –because the situation is more complicated and some things are definitely easier to be said than done.

Holding 1.6 trillion of the US treasury bonds does not mean China is holding United States hostage –it could be, in some ways, the other way around. Instead of having a strong hand that allows its player to bluff and dictate the game, it turns out that the 1.6 trillion dollar US assets that China is holding right now is a devilish bug that limits Chinese policymakers from doing what they deem necessary for their economy.

In its effort to boost export and increase trade competitiveness, it is well known that People’s Bank of China –China’s central bank– has been continuously interfering the market by purchasing US dollars every time they deem the situation as necessary.

This policy ultimately leads to two outcomes. The first is the world’s economy is overwhelmed with Chinese currency, the renminbi, whose rate is excessively undervalued since there is way too much supply of the currency in the market.

The second is China hold too many foreign exchange reserves in their possession. Because China continuously purchase US dollars –and other currencies as well– and fill the market with renminbi, at the end of March 2011 China’s foreign reserves has accumulated to a astounding level of US$ 3.05 trillion; 60% of which (about US$ 1.6 trillion) composed of US dollar that comes mostly in the form of US treasury bonds.

The latter outcome is a condition that prompts a big-scale headache for Chinese policymakers at present.

If something happens to United States and their economy, China could not simply sell their US treasury bonds. Holding US$ 1.6 trillion of US dollar-denominated assets makes China the big player, hence if China sell its assets, other countries are more likely to follow suit. Eventually, this will drive down the value of China’s own assets and put their multi-billion investment at stake.

With an investment worth of more than a trillion dollar in United States treasury and institutional bonds –and some in the form of stocks–, it makes a lot of sense if the officials from Beijing are watching United States’ economic policies in vigilant state.

For example, a few months ago Chinese policymakers were infuriated to see their US dollar-denominated assets to decline in value because of the quantitative easing policy implemented by the officials of The Federal Reserve, United States central bank, who craftily depreciated US dollar to boost the United States export sector.

Just recently, the Republicans are losing their marbles as they are putting the world’s economy at bay by trying to push the United States economy into default in the protracted debt-ceiling negotiation against Barack Obama. The situation is serious: If a new bar of debt-ceiling is not set and United States goes into default, the US dollar will surely freefall and the Chinese, with its US$ 1.6 trillion of dollar-denominated assets in their stash, would be among the party that suffers the biggest economic losses.

The situation could go from bad to worse due to the fact that rating agencies like Moody's and Standard & Poor's have considered the possibility of downgrading the United States credit rating from its current rating (AAA) this year.

But, where to invest besides in US treasury bonds? No matter how worse the situation that engulfs US economy at present, the US treasury bonds remains the largest and the most liquid investment in the world. Moreover, amidst the deteriorating euro and the volatile yen, the fact that the US dollar is still considered as the world’s reserve currency should not be ignored.

At the moment, China does not really have better solution and alternative in this game. Eventually this makes any bluff from China to the United States meaningless –because the opponent, apparently, knows that China is betting loads of money in the pot with a very, very weak hand.

The Renminbi Blame-Game

I BOW TO YOU. As United States is running massive deficit on its trade balance at the moment, Barack Obama seeks help from his new foe Hu Jintao while crossing his fingers that China would be willing to help United States by letting the renminbi to appreciate.

It’s interesting to see that for the last few years the centre of gravity of the world’s economy has shifted radically from the west to the east.

In United States, the 2008 financial crisis that was caused by irresponsible bankers in Wall Street has led many countries to stop worshipping United States’ economy as their deity. In Europe, the failure of euro and the collapse of its adopters such as Greece, Ireland, and Portugal make the Europe’s economy no longer relevant to be seen as benchmark.

Countries such as China, India, Vietnam, and Indonesia look more powerful than ever. China, particularly, managed to reach a double-digit economic growth in 2010 and overtook Japan as the second-largest economy in the world. If China’s trend continues, it is even predicted that in 20 or 30 years time United States’s position as the world’s largest economy could be in peril.

And such stellar achievement does not go unnoticed: China’s growing force in its economy has left many western leaders –who have always had histories of looking down to their Asian counterparts– to put more strict attention on the country.

United States now deemed China as an important player in global stage. Hu Jintao’s diplomatic visit to United States in January 2011, for example, was met with more coverage from the United States media than ever.

What exactly is the major factor behind China’s rise today? Of all the far-sighted tactics and strategies of Chinese leaders, economists, and policymakers that have bolstered China’s economy until present; how Chinese central bankers peg the renminbi and keep the currency low has always been considered as China’s most brilliant –and controversial– economic gambit.

Currency devaluation leads to what some economic analysts call as unfair advantage for China. They claim that China is allegedly controlling its renminbi in its own favor at the expense of other countries’ economies, as the downpour of Chinese goods today is increasing their import numbers as well as hurting their domestic industries.

Of course, China’s strategy in keeping its currency low does not matter in the past when Chinese goods only held a small fraction of the world’s economy.

But in a situation like today when Chinese goods could be found in almost every corners in the world, it prompts massive headache for many policymakers in many countries: Citizens are becoming more dependent to Chinese goods, and thus many countries see a massive surge in import in that leads to trade deficit in their balance book.

Is China really the evil here? Criticisms regarding China’s international economics policy could be heard mostly from Americans: Both US President Barack Obama and his Treasury Secretary Tim Geithner has repeatedly launched searing attacks against China’s undervalued currency, while Nobel prize-winning economist Paul Krugman even described China as ‘bad guy in currency war who is to blame for the currency tensions as the cheap renminbi is contributing to global trade inbalances’.

This renders complicated problems for economic policymakers in many countries that import goods from China, especially United States, simply because their domestic industries could not compete with cheaper Chinese goods that are more preferable among the customers.

What deteriorates the problem is today many Chinese goods come in the same quality as American, therefore pushing some western goods in the sidelines, with almost no competitive advantage against exported goods from China.

In addition to hurting many countries’ domestic industries, the maelstrom of imported Chinese goods causes many countries to run deficits in their trade balances, as their import exceed exports number. It is reasonable if many world leaders massively denounce China’s act of depreciating the renminbi far beyond its real value, as this is simply not the right time for China to become so inconsiderate.

The world is still recuperating from the United States financial crisis in 2008; arguably one of the worst economic crises the world has ever seen. In fact, today not all countries have returned to their pre-crisis economic growth, yet China seemingly acts as the real villain whose undervalued currency and massive export numbers are causing global trade imbalances and rendering trade deficits among its trade partners.

But apparently, the argument of deeming China as the real evil here is a little bit too unfair.

The first question we ought to ask is: Why does China, after all the sweltering attacks from various countries, keep insisting in maintaining the renminbi undervalued? While many countries blast China’s acts as immoral during these tough times, it’s difficult to judge their actions as wrong or against the law however.

Keeping an eye on currency’s valuation is necessary if a country’s economy depends very much on its export industry; which is precisely the situation that China is currently in. China’s economy depends much on its export industry –so much that it was reported that in 2007 export in China accounts at a staggering level of US$ 1.22 trillion, or close to 40% of its total GDP.

China’s exports also shows a striking development, as China’s export alone have grown at 25% annual rate in the last decade, over the twice of growth of China’s GDP.

An economy that depends on export sector like China means its citizens also depend on the export industry –or mostly employed in factories or companies that focus on exporting items abroad. For China, it means that adjusting policies regarding its export industry –such as letting the renminbi afloat– is the same as playing with the fates of the Chinese citizens.

It is clear that by devaluating the renminbi, China is trying to make jobs and save its own citizens. For example, a research shows that total employment in China significantly increased by 7.5 million per year over 1997-2005, with export growth contributed at most 2.5 million jobs per year. The researchers also concluded that exports have become ‘increasingly important’ in stimulating employment in China.

Chinese policymakers, after all, are just doing what they have to do: Implement the best policy for their own citizens.

Of course, it is not to say that what China has done is morally justified in this post-crisis period; but it is also unfair to put a verdict that what Chinese policymakers have been doing is completely wrong. Today, the soaring economic growth of China has successfully dragged millions of Chinese out of poverty, and policymakers in China are merely implementing a policy to support its export sector, which provides jobs for million of Chinese and makes them better off.

Yet an economic superpower like United States is acting like a street beggar these days, pleading Chinese policymakers to pity them and help the country to overcome its massive trade deficit.

Why United States is acting so shameful like that goes beyond my comprehension. Well, China’s response regarding this US-China currency fallout is predictable, and it is represented at its best by the words from Yu Jianhua, a Director at China’s Ministry of Commerce, who said:

“Don’t make other people take the medicine for your disease.”

It's the Global Economy, Stupid

PUBLIC ENEMY. Barack Obama might not be popular during the G-20 summit following the decision of The Federal Reserve to pump US$ 600 billion to the US economy; a policy which will weaken the US dollar and propel more hot money inflows, inflation, and asset bubbles to the developing world.

As the United States President, Mr. Barack Obama surely has too many thoughts in his mind, doesn’t he?

The major overhaul in US healthcare system reflected Obama’s responsiveness in domestic policies and fulfilled his campaign promise, while the way he handled the British Petroleum fiasco in Gulf of Mexico indeed had satisfied the environmentalists.

In foreign policy matters there’s an urgent need to embrace the Muslim world after George W. Bush responded the 9/11 attack with waging wars here and there. The relationship has never been bitter: In Iraq, the US enraged many Muslim communities by demolishing the country because of the Weapon of Mass Destruction that never exists. In Afghanistan people still cry for more American troops to be deployed, arguing it is the US’s responsibility to fix the chaos that Bush once initiated.

But it seems Obama’s mind is being crammed with too many foreign issues that the US has to deal with –and the economy is not being put as his major precedence. Perhaps we could recall one of the most famous remarks in the history of United States politics, which was coined by Bill Clinton during the 1992 presidential campaign against George H. W. Bush.

That phase of Clinton’s emphasized the need to put economic issues as the most important priority among others. As Bush at that time gained fame among his voters because of his foreign policy developments, Bill Clinton, impressively, become the eventual winner the election thanks to his audacious –and effectual– campaign slogan: It’s the economy, stupid.

That’s what Obama should know, because the dreadful economy at present is definitely the reason why his Democratic party conceded a defeat against the Republican recently. Obama’s report card in the economy is a complete mess: In US currently unemployment rate soars higher than ever, and the multi-trillion dollar bailout is not actually effective to fix the situation or jumpstart the domestic economy either.

Also, Americans are not too interested with the revamp on regulations of Wall Street, as they urge Obama to put more attention to the jobless people who desperately look for dollars to feed their family on Main Street.

While Obama is not popular home, The Federal Reserve’s decision to boost the US economy by purchasing treasury bonds worth of US$ 600 billion and keep the interest rates at a historically low level may make him a more unpopular figure overseas.

Yes, Obama may be welcomed with ecstasy by Indonesians as he gave his speech in fully-packed hall of University of Indonesia’s. But surely unhappy leaders of G20 economies would not be that kind to shake his hand with such warmth as the Indonesians did –and they surely greeted him with sinister smiles on their faces knowing what the US had done to the global economy.

The US is the major perpetrator behind the recent currency wars, depreciating its dollar in order to make its exported goods more competitive abroad, as well as continually keeping its interest rates low to boost its economy. As if the historically low interest rates are not enough to cultivate hot money inflow and prompt headache among developing countries, now The Fed is looking to print US$ 600 billion more to the economy –a move that will surely increase the US dollar supply in the market, press the US dollar to depreciate further, and ultimately bring the new chapter of currency wars.

The United States is playing dangerous game here in implementing such self-centered policies like those because the consequences of the policy are likely to put the stability of global economy at bay. Depreciation in US dollar currently leads to a considerable corrosion in many countries trade balances, while a near-zero interest rate already stimulates a significant surge in capital inflow among developing countries.

And regarding the US$ 600 billion injection to the US economy: Is this a trade protectionism in disguise? Weaker dollar will eventually make US goods more competitive abroad; stabbing many US trade partners in the process. Countries around the world would not be so happy with this. “You blame me as the global economy’s hitman and now look what you’ve done,” says China.

Does Obama really need to come to G20 meeting anyway? While the global economy is still recovering from an economic mess which the US started, the G20 economy members are supposed to implement integrated and joint efforts to fix the global economy together, not the other way around.

Yes, the G20 group should work in cooperation; and that’s why it was formed at the first place. But now such commitment is in question because currently the group’s de-facto leader seems to be more interested in pursuing egotistic policies to save the his economy alone, not the world.

In Australia, It Takes Only One to Tango

STALEMATE. Australians may have just witnessed one of the most exciting federal elections in the country’s history, but the power divide between Julia Gillard and Tony Abbott in parliament would not be the outcome they were keen to have.

A well-known idiom it takes two to tango definitely does not refer to politics.

At least that’s what we could conclude from Australia’s parliament composition as a result of a nail-biting federal election drama, in which Julia Gillard from Labor Party and Tony Abbot from National Coalition acted as the main protagonists.

In the election, there were weeks when a hung parliament was imminent as both Gillard and Abbot shared the same number of seats. In a country with a de-facto two-party parliamentary system like Australia, a brittle situation from hung parliament –a condition where parliament is divided and neither political party has an absolute majority against each other– is the last thing that any prime minister would want to have.

Fortunately, after weeks of vagueness, Australians could breathe a sigh of relief when Labor’s Gillard finally secured 76 seats (the number required for outright victory from the 150 seats in the parliament) with last-gasp support from Australian Greens Party and three independent members. This ends Australia’s political limbo, even though the predicament is far from over as Gillard’s road ahead is still paved by wobbly rocks.

The major reason why some are skeptics about the stability of Australia’s future government is a parliament with ruling party has no supreme power against the opposition could prevent the government to perform at full throttle.

This could be nasty: during times when government policies urgently require approval from the parliament, politics intervention from the strong opposing party may be the hinderer that stands in the way of the implementation of such important policies.

As a country that reels through both the era of autocracy and democracy (and also experiences the thorny transition between), several examples could be drawn from Indonesia, Australia’s closest neighbor to the north, in terms of parliamentary matter.

In our not-so-distant past, former Indonesian president Suharto can run a top-down politics and an extremely stable government because he had almost no one who can oppose him in the parliament. In addition to the autocratic culture that was stemmed from his leadership style, the fact that Golkar party always came out victorious with overwhelming support in every elections led the party to earn most of the seats in the parliament, which allowed Suharto to implement government policies as he pleases.

Soeharto provides excellent example that the bigger power that a ruling party has in the parliament, then the bigger chance of government policies could be implemented smoothly. In this situation, political interference from opposing parties is unlikely to happen because of the overwhelming power that the ruling party boasts in the parliament.

Today, Susilo Bambang Yudhoyono did try to do just that by embracing other parties to form a giant coalition which hold 75 percent of total seats from the parliament, with expectation that such powerful coalition would weaken the bargaining power of the opposition and ensure the stability of his second-tenure government.

So what would happen in a situation like Australia’s, where a parliament is divided into two fractions, with the ruling party only has wafer-thin majority against the opposition? If you were the leader of ruling party in Australia like Julia Gillard with current parliament’s composition, then in the future you can expect your powerful opposition in parliament to confront and grill you every time you come out with new government policies.

And with her experience as former minister and policymaker, Gillard surely knows that politics could potentially turn very filthy. Several lecturers in my university had experience of being a policymaker in the government, and some of them once uttered of how a crucial economic policy could lose its timing and credibility, and eventually become ineffectual, since it usually has to undergo an arduous and protracted process of Indonesian politics first before it can be approved by the lawmakers.

In United States, very often Barack Obama had to endure torrid times first from the Republican lawmakers before his policies could be put into actions. Indeed, providing check and balance to the government by confronting the ruling party is precisely the job of opposing party, like the Republican. But in academics perspective –particularly in economics field where timing does matter and economic policies needs to be implemented just in time– there are times when a too strong opposition party leads to lengthy political process, which ultimately reduce the efficiency of the government itself.

Yet in 2010 Gillard is not the only world’s newly-elected leader facing difficult challenges. Some of the peers with same fate as hers including Philippines’ Noynoy Aquino, who was just elected this year, but already he has to deal with the problem of the national security and recovering Philippines image to the world following the Hongkong tourists carnage incident.

Or Colombia’s new president Juan Manuel Santos, who presided over as president amidst the growing domestic tension between the country and guerillas and drug kingpins, as well as the problem with the war threat from Hugo Chavez because of the infamous 2010 Colombia-Venezuela diplomatic crisis.

New Briton Prime Minister David Cameron is also unfortunate to occupy 10 Downing Street this year in the middle of anti-British sentiment among environmentalists around the world following British Petroleum fiasco at Gulf of Mexico.

Having only a slim power difference against her opposition in the parliament, with even a single lawmaker defecting could turn her plans upside down, the government during Gillard’s tenure is highly fragile indeed. In the world where encountering an uphill battle is becoming a trend for every newly-elected leader this year, how to tame her stronger-than-ever opposition in the parliament is the test for our beloved neighbor’s first female prime minister to overcome.

This article was published in The Jakarta Post on Saturday, September 25 2010

380 Billion Dollar vs. 13000 Billion Dollar

If 380 billion dollar debt burden could smash Greece's economy into pieces, then will the United States -with 13 trillion dollar debt under its belt- share the same fate in the future?

Barack Obama could not sleep tight these days. The words of one of his economic advisers echo in his mind as he puts his head on his spongy pillow at night, “Alarming news, Mr. President: unemployment rate still relatively high, the threat of deflation still persists, and our economic recovery in overall is limping slowly in the path where China is running riot.”

That economic adviser pauses a while and finish his round of words with a massive blow, “I know that you have spent lots of money these days –but we really need to spend more.”

Spend more? Add more debts? Deep inside Obama’s heart he is surely yearning for the end of massive spending. He knows it, the Americans know it: it’s too much budget deficit already these days and the US debt has gone to a lethal number.

What a doom that Obama inherits. Bill Clinton may have long-sufferingly amassed the money in the mid 1990s, but two Texas cowboys with 'Bush' pedigree splurged it wildly –so wild that if there is anything left for Obama, the massive debt from Bush’s previous fondness of wars is all he’s got.

In Greece, the consequence of piling up debt proved to be fatal. And if even mercurial Gods in Olympus were unable to thwart the crisis; then should anyone remind the mortal Obama that this could be the right moment to stop spending and cut the budget deficit?

No, he should not and will not stop spending. During these hard times, flatlined economy like US need government spending more than anything else to galvanize the economy until it is completely back on the right track –even if that means lots of money poured in to the market with 13 trillion debt daunting behind as the consequences.

Hence if you are embroiled in a financial crisis where the threat of recession or depression is imminent, spending money or running a budget deficit policy is absolute necessity.

After all, maybe one should stop calling US as a liberal and lassez-faire nation from now on, as it is walking the path where the principles of free market and invisible hand are forgotten, and government intervention –such as government spending– matters more than ever.

Here are several lessons we can draw from Greece’s case-in-study and its discrepancy to US. First and foremost, comparing the 380 billion dollar Greece’s debt and 13 trillion dollar debt of the US is somewhat misleading. The United States may possess 40 times bigger debt than Greece, but you simply cannot compare the economy of superpower like US and what they have in Greece. The economy of US is big, and so big that you can have ten countries like Greece combined and in you will still have a smaller economy than the US.

Second, during the last few years Greece is like a zombie waiting his name to be called by angel of death; in 2010 its debt stood at the highest level of 113% of its own GDP and thus it was no surprise when it eventually went bankrupt. But United States is not a dead man walking –at least not yet. Even though its current debt is tenfold compared to Greece’s, that 13-trillion-debt is actually ‘still’ around 90% of its GDP and at least Barack Obama can still breathe for several years before its GDP-to-debt ratio indicator flashes red.

And the third party to blame for Greece’s crisis is Euro. Because of the single currency policy, which Greece shared with other 15 European countries, the country did not have the independency of its economic policies and could not implement essential monetary actions to jolt its economy during the turmoil. The US dollar, by contrast, is a widely accepted currency around the world and becomes an enormous advantage for US who prints it.

Yet no matter how different the US to Greece at the moment; debt is still debt. The bigger your debt is, the higher the interest you will have to pay in the future; which literally means more and more burden your child and grandchild will share. It very much resembles nurturing a time bomb whose blast is just in the offing.

Obama’s spending spree is likely to continue as major solution to salvage the economy. But the question is: how long can he pour the money before the pump eventually runs dry?

It’s 93% of GDP-to-debt ratio which United States has at the moment. The future looks bleak for the Chicago kid.

Time for the Young to Take Over

THE YEAR OF THE PRODIGY. Last year of 2009 saw prolific young men rising to the next level and taking over the lead from the older generations. (From top left, clockwise) Anies Baswedan, Gumilar Somantri, Firmanzah, Barack Obama, Jonathan Favreau, and Josep Guardiola.

Persons who are in charge of top-level management positions are usually on the age of 50s or 60s. But few months ago my university friends and I were covered in disbelief as we found out that our newly-elected dean, impressively, did not follow suit. Still at the age of only 33, Pak Firmanzah rose against the seemingly impossible odds to beat other more experienced candidates to become the youngest-ever dean in the history of University of Indonesia’s Faculty of Economics (FEUI).

Because of his young age, at first many consider him as green and lacking on experience to lead the faculty –but so far he has proven the critics wrong. It has only been eight months since Pak Fiz –that’s how we usually call him– took charge as our new dean, but his hard-working attitude and attentive leadership style have made him a popular figure among us FEUI students.

My respected dean is not alone in this case. Recently such occurrence can no longer be considered as unlikely; up to this day we have seen a significant increase in number of younger people who have been given huge responsibility to hold an important role in high level –and so far they have proven to us that they can perform the given task as well as the older and more experienced generation does.

Before Firmanzah, In Indonesia the predecessor includes the person to whom he has to report now, Gumilar Rusliwa Soemantri, who became University of Indonesia’s rector at the age of only 44. UI sees a significant increase of its THES QS universities rank from 287^th to 201^st this year among 4000 universities which were evaluated, thanks to various internal reforms in UI that were encouraged by Gumilar himself.

Even more impressive is the achievement of Anies Baswedan, the rector of Paramadina University whose intellect earned him a place as one of the members of the so-called “Team 8”. Anies Baswedan was merely 38 years old when he was appointed as the head of the University and despite his relatively young age today he is highly regarded as one of the brightest political analysts in Indonesia.

Young people are rising and we can see that this phenomenon does happen in almost every sector in the world. In sports, this year many football pundits heaped praises on Josep Guardiola’s managerial ability as he rose to become the youngest UEFA Champions League winning manager ever. Only in his first season at the club, Guardiola, the former Spanish international who just turned 38 this year, successfully lead his star-studded FC Barcelona team to win the competition, having beaten the veteran 67-year old Sir Alex Ferguson and his Manchester United team in the final.

In world politics, perhaps this year will be best remembered because of the historic victory of Barack Obama, who, despite the robust challenge by far older and more experienced persons like John McCain and Hillary Clinton during the election, has been able to win the US presidential election and become the fifth-youngest man in the US history to occupy the oval office.

Barack Obama seems to read the wind as he also trusted several of his key posts to be given to the younger colleague of his. More experienced economist like the 66-year-old Joseph Stiglitz was left out in the cold and Obama decided to choose younger faces like 48-year-old Timothy Geithner as his Treasury Secretary or 40-year-old Peter Orzag as his Director of the Office of Management and Budget instead. Obama also appointed a young writing-prodigy named Jonathan Favreau, 28, as his Director of Speechwriting –and a brilliant speech deliverer and best-seller book author like Barack Obama definitely doesn’t trust ordinary man in doing that task, which allows the person to have a massive authority in controlling his words.

But unfortunately we did not have much choice during the last presidential election. Susilo Bambang Yudhoyono certainly represented the older generation when he took oath as our president in the age of 60, and the same can also be said to his vice-president Boediono who was 67. Other candidates are very much the same and the youngest among them all is vice-president candidate Prabowo Subianto who, despite all of his youthful spirit and stirring speeches which he brought to us, was actually 57 and surely he will be a bit long in the tooth if he is to represent younger generation in the 2014 election.

Indonesia is lagging behind on the regeneration and this becomes a millstone around our neck today; you can just look to the last presidential election’s candidates or SBY’s ministerial cabinet formation and you will realize that both are still dominated by stale and old-timer politicians. We may have just finished our presidential election this year, but as we usher to the year of 2010 and are gearing up to the next 2014 election we might well start considering about rejuvenation.

Yes, the bitter fact is that Indonesia still highly depends to the older generation up to present –public are fed up staring at the same old faces and are ravenous for having younger generations to replace them.

In this year of 2009, people like Firmanzah, Gumilar Rusliwa Soemantri, Anies Baswedan, Barack Obama, and Josep Guardiola have proven to us that young people are up against the challenge. In the next year of 2010, will there be more number of young people who emerge at various top levels just like last year? Or will this be the year of revelation for someone waiting in the wings to bring about the rejuvenation in Indonesia’s 2014 election?

This article was part of the limited edition copy of The Jakarta Post special report; Review 2009 and Outlook 2010

Hillary the Humble

STILL A FRIEND OF MINE. Although she suffered a defeat during the Democrat’s primary, Hillary Clinton shows her humbleness by pledging a loyalty to her former foe Barack Obama and working as his Secretary of the State.

Many writings have been dedicated to Barack Obama –his ability to inspire, his historic victory, or what will be his forthcoming policy during his terms of presidency–, but few have been written to Hillary Clinton, the US Secretary of the State, who was in Indonesia last week to improve the US relation to the world's most populous Muslim country.

Out of scraps of Obama’s highlight, Hillary is humbly working in the background, delineating patriotism in her own depiction. Her modesty was especially shown in an exclusive interview, where she was asked what post she was up to after Obama trounced her in her way of becoming the first woman president of the United States.

The answer that she uttered was really inspiring

“I am going to be focused on what we’re going to get done. I’m not interested in just enhancing my visibility. I’m interested in standing on the South Lawn of the White House and seeing President Obama signing into law quality, affordable health care for everybody, and voting in a big majority for clean, renewable energy and smarter economic policies. That’s what I’m all about, and I’m going to use every tool at my disposal to bring about.” (TIME magazine, November 17 2008)

Read again. I am going to be focused on what we’re going to get done. The meaning of her words is actually straightforward; what matters is actually focusing herself to accomplish the country’s objective – and for her it doesn’t matter what place of duty she is in.

And yes, she carries out her words. She does serve her nation, but neither as a president –as she was running at the first place during this year election–, nor as a vice-president –the role that most of the people think that Hillary will perfectly fit for–, but just as the country’s secretary of the state.

Imagine someone as gifted as Hillary Clinton, who possesses nearly all the capabilities needed to lead the world’s most powerful nation, unpretentiously accepted her new role, a supporting role. Something we hardly see in Indonesia, where every person wants to be a president and politicians are caught in the fuss among themselves about who should be the frontrunner and who should be the patron.

Furthermore, it is worth noting that accepting her new post as the secretary of the state means she has to work under Barack Obama, who is actually her ex rival during the nail-biting campaign for Democrat’s presidential nominee.

Here’s one example we can learn from US politicians. As we recall the competition between Obama and Hillary in the past, it is true that they indefatigably criticized each other throughout the Democrat’s primary.

But soon after Obama had been endorsed officially as the democrat’s presidential nominee frontrunner, they amalgamated with no animosities towards each other. Hillary supported Obama wholeheartedly, persuading her supporters to give their votes to her former foe and even lending him a hand during the campaign by frequently attending his campaign alongside her husband.

Well, such notion may look difficult for Indonesian leaders to comprehend, instead, they prefer to heave their fierce rivalry into sight by criticizing each other rather than working in cooperation, do they?

And yet there’s still another lesson we can learn from her. Take a look once more on Hillary’s words above and these words may cause Indonesian politicians to shiver: I am not interested in just enhancing my visibility.

Today, many Indonesian politicians’ motive of becoming president is just a personal fame or fulfillment of self-ambition. As she pointed out, recognition and fulfilling your self-ambition as the nation’s number one man should be the last things you have in mind when you stride yourself ahead as a presidential candidate; lifting your country and its citizens to prosperity must be placed as your main agenda.

An election is never about the president; it is about the people. If you get elected as a president, people won’t pay heed whether you win by a landslide or a petite. Your recognition, of course, will be based on how you administer your country and its people during your terms of presidency.

And the victory itself comes not when you finally succeed of winning the election and stamping a history of yourself by becoming the nation’s number one man; victory comes when you have completed the tasks that are assigned to you the time you get elected as the commander-in-chief.

Dealing with different countries means dealing with different responsibilities. For the new US president Barack Obama, it means fixing its economic framework and restoring the citizen of the world’s faith in America’s foreign policy. For the forthcoming president of Indonesia, it means eliminating Indonesia’s poverty and keeping pace with Asia’s economic tigers like China, Taiwan, India, Malaysia, and Singapore –a realistic target considering a wealth of natural resources and an established democracy that Indonesia has.

Hillary Clinton suffered defeat in the election, but surely she won’t be feeling too downhearted at the moment. It is neither a self-ambition’s accomplishment nor a reputation that she sought when she was running for the president of the United States; it is her ambition of fulfilling the country’s objective that she set in the first place.

We hope you had a good time while you were in Indonesia, Mrs. Secretary. As we prepare to usher our own presidential election this year, your humility from the previous US election should really be an inspiration for every politicians here in Indonesia.

The Lesson from Obama's Win

Yes, Barack Obama won the election. No, he has not elected as the president yet; and people are criticizing him already for not making any actions regarding the conflict in Gaza. Thus let’s momentary ignore Israel-Palestine war issue when we talk about Obama as today he is officially inaugurated as the 44^th president of the United States. As a matter of fact, the Israel-Palestine war has eclipsed what actually we can learn from his triumph and what it really means to all the people in the world.

Today, as we say goodbye to the out-of-favor president George W. Bush, Americans and the world welcome an unlikely new president who is supposed to be the one to fix the battered image of the country abroad and change United States to a nation that the world can depend once more.

Obama’s win is an unlikely case; simply because he is black. As it happens in most of the countries in the world, the minority usually hasn’t got the same opportunity as the majority has. Now we can see that the world’s most powerful nation is led by a black man, and that’s really something.

Change we can believe in, says Barack Obama, the man who successfully convinces Americans to believe that he, regardless the color of his skin, can make change for country’s future image to the world. The man who teaches us that being minority doesn’t mean you can’t fulfill your dream; even his once impossible reverie to be a black president in his country can come into reality. And this is the man who, most importantly, unites the Americans and razes racial barriers which have overwhelmed the people for years.

“No he will not make it because, you know, he is a black. And racial discrimination in that country is way bigger than you think”, said my Indonesian colleague friend from United States when he came back to Jakarta a year ago. Obama was still trailing behind Hillary Clinton in the race for Democrat’s presidential nominee back then, and skepticism still arose whether Americans were ready yet to have an African-American to be their president.

But the United States people have proved themselves that they can brush skin color judgment aside and unite for the country’s purpose. Obama’s win as the first black president of the United States shows that now each citizen in that country, black or white, minority or majority, can share the same opportunity and freedom; the mere delusion that was dreamed by Martin Luther King 45 years ago.

And bear in mind that it happens in United States –where there was time when black students were not allowed to be in the same class with white students, when black people are obliged to sit at the back of the bus, and when a black politician is condemned for having dinner in the White House.

Today, many countries are still struggling to surmount their own underlying racial and ethnic problems. And the one who suffers is always the minority, who has yet to experience commonly unfair treatments and conducts and can not share the equal opportunity as the majority has.

As an Indonesian, it is true that I am not considered as minority. Yet speaking about being part of the minority, I am an obedient Muslim who spent 6 years in Catholic school that is dominated by the Chinese, the race that hold only less than 4 percent of Indonesia’s total population and for long has been struggling to find their way out of frequent unfair treatments from the bureaucracy or other Indonesians. Trust me, I do know what it feels like to be a minority.

Think the way Americans were thinking when they cast their vote in the election. It’s not Obama’s race that matters; it’s his ability to bring the country back on the right pathway. As the new president-elect officially stepped in to the oval office this January, the Americans have shown us that the earth we are currently living is no longer a place where people are judged by the color of their skin, or other differences that matter.

If American people can do it, then why can’t we? Oh obviously, yes we can.