Indonesia remains the family business for President Suharto

At his drink stand tucked at the edge of shantytown, Papajana (47) does his small part to contribute to the fortunes of Indonesia…

At his drink stand tucked at the edge of shantytown, Papajana (47) does his small part to contribute to the fortunes of Indonesia's first family, one of the world's wealthiest.

Every time Papajana sells a pack of clove cigarettes or a bottle of water, flicks on the light or the television or makes a telephone call, one of the children of Indonesia's President gets a little richer.

President Suharto and his six children have an estimated net worth of $40 billion, equal to roughly half the country's gross domestic product. Their influence flows to nearly every capillary of Indonesian life: they control assets from oil and electricity to planes, cars, toll roads and media.

Their monopolistic grip on the economy is one of the biggest obstacles to the country's recovery, the International Monetary Fund says. And amid Indonesia's economic crisis, as long as Mr Suharto refuses to embrace reforms that would endanger his clan's interests, the country's currency, the rupiah, continues to drop, prices rise and people like Papajana get poorer daily.

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"He is the head of the country," Papajana says, pointing to a fading picture of Mr Suharto pasted on his shack's plywood wall, in a place of honour next to a poster of the Marlboro Man. "We are just the very tip of the tail."

But in a move that could shake all Indonesia, the IMF is demanding an end to some of the pet projects of Mr Suharto's children. In emergency talks to stop the economic nose-dive this week, Mr Suharto has agreed to severe changes to retain a $47 billion bailout package.

Several of the IMF prescriptions slash to the heart of his family's most closely protected interests. The President agreed to end fuel subsidies and price controls on staple goods that benefit several of his offspring; drop his son's controversial national car programme; and shelve a quixotically expensive aircraft-manufacturing project run by a close friend, the technology minister.

For Mr Suharto (76), who is known across the nation simply as Father, the moves are meant to signal that he is, at last, ready to act the part of a national patriarch and put the interests of the country ahead of those of his children.

In a week of daring criticism by opposition figures and intense pressure from international leaders - often focusing on the nepotism, cartels and grasping expansion of his children's interests - many see it as a sign of surrender by Mr Suharto after 32 years of tough rule.

"This is an extremely significant change," said Sofjan Wanandi, a prominent businessman and leader of a group that helps redistribute a new tax on the largest corporations to help small businesses. "It is a direct hit on the ones he didn't want to touch. It shows he knows that the only way to survive is to reform."

Papajana, the drink vendor, confesses he identifies a bit with the ageing leader, who started life as a poor boy in a village. He thinks they share the common bond of fathers trying to look out for their children who are a little out of control.

The similarity ends there.

If they ever met, in the minute it would take to shake hands, Mr Suharto would make more off the interest on his family fortune than Papajana has earned in his life. "If I were president," the poor Indonesian mused, looking at his brown, calloused hands, "I might do the same thing."

Critics say they will believe Mr Suharto's reform pledge is sincere only when they see action, since the President has quietly backtracked on plans limiting his clan's projects before.

In September a power plant owned by Tutut, his eldest daughter, was placed on a list of 156 projects to be postponed. The plant slid off the list two months later, only to be shoved back on, under the IMF's eye, earlier this week.

The IMF also wanted 16 banks closed. Two escaped liquidation, saved by their links to the presidential family, analysts say. Mr Suharto's cousin bailed out one bank from his own pocket. The other - son Bambang's Bank Andromeda - was reborn under another name.

The children's widespread wealth and the lengths they were willing to go to get it have long fascinated and soured Indonesians and foreign investors.

Having a family member or one of Suharto's close circle of tycoon friends as a business partner was once one sure way to win a contract, critics say; often the children would take an equity stake in a venture in exchange for their prestige, and an implied promise of presidential favour.

International companies confronting competition, like General Motors, AT&T, Lucent Technologies, NEC, Hughes and Siemens, all forged ties with a Suharto family member.

Sometimes there was sibling rivalry. When Indonesia opened telecommunications up to foreign providers in 1989, one Suharto son, Tommy, signed on as an agent for NEC and Sumitomo; his sister, Tutut, represented AT&T. Officials in the crossfire, afraid to offend Washington or Tokyo or to favour one sibling over another, decided to double the size of the contract and award half to each.

Last year brothers Bambang and Tommy went head-to-head in car manufacturing ventures until Tommy won the contract to make a national car, meant to be affordable and suitable for Indonesia's streets. Although his vehicle was almost completely built in South Korea by Kia Motors, Tommy received special duty-free status and other tariff exemptions, allowing him to sell the car, the Timor, for half the price of his rivals.

Ms Megawati Sukarnoputri, Indonesia's best-known opposition leader, has used the public's longsimmering indignation over the first family's privileges to pressure Mr Suharto to stop the cronyism or step down.

She knows something about family relationships; she is the daughter of Indonesia's founding president, Sukarno.