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Jakarta Post

Editorial: Fuel politics

In Indonesia, fuel is pure politics, and therefore, it's not surprising when political parties, even those with representatives in the government, voice objections to the government's plan to raise fuel prices

The Jakarta Post
Wed, May 14, 2008

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Editorial: Fuel politics

In Indonesia, fuel is pure politics, and therefore, it's not surprising when political parties, even those with representatives in the government, voice objections to the government's plan to raise fuel prices.

We understand when the Indonesian Democratic Party of Struggle (PDIP) voices their opposition to the plan that the party has thus placed itself with the opposition.

But when the opposition comes from the Prosperous Justice Party (PKS) and the National Mandate Party (PAN), which have representatives in the Cabinet, it's kind of odd. But, that's politics.

In politics, friends and foes are defined by interests. One day, they are friends, but the next day, on another issue, they are political enemies. In the end, interests play the biggest role in politics.

And now the main interest of all politicians and political parties is how to win votes in next year's general elections. This interest dictates the behavior of all politicians, including their response to the government's planned fuel price increase.

Any price increase is unpopular, no matter how reasonable it is, and therefore, the government's plan to raise fuel prices becomes an easy target for vote-hungry politicians.

That explains why PKS and PAN leaders have attacked the government's fuel plan. It's really about preparation for next year's elections, and not about defending people's interests now.

Not only PKS and PAN, even the Golkar Party, which is led by Vice President Jusuf Kalla, is struggling to keep its members united in supporting the government's fuel plan.

Some Golkar politicians admit they face the dilemma, whether to side with the government or with the popular voice that wants lower fuel prices.

But actually, it's unethical for legislators and factions at the House of Representatives to challenge the government's fuel price increase plan as it is simply a consequence of the amended 2008 budget, which was approved by the House in the first place.

The amended budget sets the fuel subsidy at Rp 126 trillion (US$13.7 billion) and electricity subsidy at Rp 61 trillion, based on the assumption that crude oil prices would average US$95 per barrel. Crude oil prices are now above $120 per barrel.

Thus, keeping our fuel prices at the current level -- which are the lowest in the region, even lower than those in Laos and Cambodia -- would mean an even higher subsidy, which goes against the agreed budget.

If they use their intelligence and reasoning properly, these politicians who claim to defend the interest of the people should have supported the proposed direct subsidy to the poor rather than the existing and rising commodity subsidy.

Commodity subsidies often do not reach intended recipients. Fuel subsidies, for example, benefit the rich more than the poor.

Official data show that 82 percent of the Rp 126 trillion fuel subsidy, or Rp 103 trillion, goes to people with motor vehicles, who are not poor at all.

Worse still, the richest 40 percent in this country, who have big-engine cars or more than one car at home, consume 70 percent of this Rp 103 trillion.

For like-minded people, it's crystal clear that the fuel subsidy in Indonesia benefits the rich rather than the poor, and it's wrong to allow the rich to consume most of the subsidy. Yet what appears on the surface is apparently the contrary, that it is the poor who suffer if the price of fuel goes up. This is very provocative to those who do not really understand, including the protesting students.

Politicians make it worse by fanning the flames of controversy through populist opposition to the price increase plan and even more unethically when plotting political moves to question the government over the plan.

Again, this is politics, where the loudest voices often win support, and the silent majority is often sidelined. And in this country it is always the rich who have the stronger voice.

In this muddy situation, we need strong leadership from the President as a statesman to defend the interest of the poor. He has to make the decision to raise fuel prices sooner rather than later, as every day, more and more people suffer from fuel scarcity as a result of increasing fuel hoarding and smuggling by a minority of irresponsible rich people.

If the President continues to be hesitant, or worse if he backs off as a result of political pressure and then decides not to do it, he will be remembered as a political coward, and that will leave a bad impression in the minds of the people.

Thus, the choice for the President is clear, whether he will back off to please the rich or steadfastly move forward and free this country from the moral crime of supplying the rich with heavily subsidized fuel.

If he does the courageous thing, then he will possibly win his second term with the support of the poor.

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