A conversation with Suharto
Indonesia's Suharto regime (1967 to 1998) was fabulously corrupt. James Wolfensohn, the President of the World Bank, got a chance to talk to Suharto about it during a 1996 visit. Sebastian Mallaby tells the story,
- "...The two leaders each addressed a trade summit, along with a posse of regional big shots, including China's vice premier, Zhu Rongji, and in a gap in the proceedings the VIPs went off to have tea together. Suharto was talking to Zhu, and he summoned Wolfensohn over; and then he broached the subject of corruption. The latest corruption rankings produced by a watchdog group called Transparency International were most upsetting, Suharto declared, for they rated Indonesia as less corrupt than China; he had been happier with the previous year's results, which had recognized his own country as the more energetic embezzler. Zhu looked visibly annoyed, but Suharto carried on, "Don't you think we should tell the president of the World Bank about corruption in this part of the world?" he asked Zhu, who maintained a stony reticence. Then Suharto looked at Wolfensohn. "You know, what you regard as corruption in your part of the world, we regard as family values."
The relationship between corruption and growth is not simple. Suharto's regime may have been corrupt, but it's economy also grew very rapidly and poverty dropped. Mancur Olson may have had the answer in his book Power and Prosperity.
This month the Economist surveyed Indonesia's progress since the economic crisis, and Suharto's fall, in 1998. They've created a vibrant democratic state; growth is lagging behind historical rates. The Washington Post reports that 80,000 Indonesians have died in the tidal wave.
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