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5 March 2010

Indonesia: President Yudhoyono calls for calm over bank bailout

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Indonesia's president on Thursday called for calm as he battled to save his fragile coalition following parliament's call for a criminal probe into a controversial bank bailout, reported AFP.

In an address televised from the state palace, President Susilo Bambang Yudhoyono said he respected the political process after the parliamentary clash over a 724-million-dollar rescue package for Bank Century in 2008.

"We know clearly there are differences in views and positions by political groups in parliament on the decision to rescue Bank Century... I am of the opinion that this shouldn't cause excessive worries," Yudhoyono said.

"My main priority is to make pro-people programmes a success and not issues like the coalition of political parties supporting the government," he added.

He also defended Vice President Boediono and Finance Minister Sri Mulyani Indrawati for authorising the bailout, saying their decision was an "accurate choice" to save the country's economy during the global financial crisis.

"The people responsible and decision makers did that without any conflict of interest or ill intentions," he said, adding that the two had untarnished track records with regard to their competency, credibility and personal integrity.

More than half the country's lawmakers voted Wednesday for an investigation into Boediono and Sri Mulyani for their approval of the 2008 bailout. The two most respected economic figures in Yudhoyono's cabinet, Boediono and Sri Mulyani came under intense pressure after the country's top auditor last year found strong indications of "violations" in the bailout.

Bank Century's rescue has triggered the worst crisis for Yudhoyono since he was re-elected in 2009 on a pledge to crack down on graft in one of the most corrupt nations in the world.

The total funds disbursed to save the relatively minor bank were 10 times the amount initially deemed necessary to prevent the lender's collapse. Sri Mulyani said she respected the parliamentary move but defended her actions, saying the bailout was essential to prevent a banking crisis.

"The truth is my main priority... In this case, I've had to carry out the state mandate to protect the people, manage problems and handle various crises which could occur," she added. Boediono declared that all state officials "must bow to the laws and honour the people's mandate".

"In every era, God is always on the side of the truth," he told reporters. In all, 325 lawmakers in the 560-seat parliament voted for a probe, accusing the pair of an "abuse of power" in the bailout, which they say caused huge losses for the state.

The vote, which was backed by the government's coalition partners Golkar and the Muslim-based Prosperous Justice Party (PKS), puts Yudhoyono in a difficult position, forcing him to decide between retaining his two colleagues or preventing his coalition from disintegrating. "It's urgent that Yudhoyono starts an intense political communication with his partners, especially with Golkar and the PKS," political analyst Andi Widjajanto from the University of Indonesia told AFP.

"He needs to achieve some political bargaining with opponent groups or he will face problems in the next four years in government," he said. Another analyst, referring to the president by his initials, said "SBY's coalition is like a man having too many wives.

"Some wives are prettier, some uglier. He'll divorce the less useful ones," said Pande Raja Silalahi. "There's proof the big parties have lost faith in the government. If SBY doesn't expel them, they may choose to walk out," said analyst Bantarto Bantoro. Yudhoyono's Democratic Party was now "evaluating" its relationship with its coalition partners, said its secretary-general, Amir Syamsuddin.

"It's good that we know in the early stages (the partners') attitudes towards the coalition. We still have a long way to go," he told AFP. Yudhoyono, a liberal ex-general who first came to power in 2004, was re-elected in 2009 on promises to root out corruption, which riddles every aspect of Indonesian public life, from the courts to the customs office.

Indonesians have staged demonstrations over the bailout, and on Tuesday stick-wielding protesters hurled stones and bottled water at police, who responded with tear gas and water cannon.


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