20.1.08

Party Financing in Post-Soeharto Indonesia: Between State Subsidies and Political Corruption

Journal article by Marcus Mietzner; Contemporary Southeast Asia, Vol. 29, 2007

by Marcus Mietzner

Ever since the reintroduction of democratic rule in 1998, Indonesia's political parties have been the target of harsh criticism by the media, academic observers and the electorate. In opinion surveys, voters have invariably ranked parties among the most corrupt institutions in the country, and a large number of corruption cases brought against party politicians both confirm and reinforce this trend. "Money politics" has become a household phrase in Indonesia to depict the moral decadence of party politicians, describing their dual practice of accepting bribes from patrons and distributing money to gain or maintain office. Echoing these popular sentiments, domestic and foreign observers have described the parties as rent-seeking entities, driven by oligarchic interests and personal greed. With their legitimacy in decline, parties are generally seen as the weak link in Indonesia's consolidating democracy. This perception, in turn, has fuelled demands for non-party figures to play a greater role in political life.

There have been few attempts, however, to critically explore the motivations behind the political corruption of political parties. In general, two different approaches have been used to analyse the
problem. To begin with, proponents of the neo-Marxist paradigm have argued that political parties and their leaders are agents of global and local capitalist interests, with the "predatory" behaviour of Indonesia's parties reflecting developments in other parts of the world (Robison and Hadiz 2004). In this model, parties are corrupt because they are by definition part of the struggle of oligarchic elites to hijack democratic institutions and perpetuate the capitalist
system. The other interpretation uses a more anthropological approach,
and is based on what Jonathan Hopkin (2004, p. 629) has called the
"assumption of self-interested utility": politicians are, like all
other human beings, largely interested in maximizing their own
benefit, with political parties only constituting vehicles for
increasing their wealth, influence and social status. The latter
interpretation has been the most popular one in Indonesia, where a
certain measure of corruption is often viewed as an integral feature
of human nature.

This focus on either neo-Marxist or anthropological imperatives has
distracted observers from looking at the problem of party corruption
in Indonesia as an analytical issue with highly complex implications
for the country's political system. Most significantly, there have
been very few detailed analyses of the critical roles that state
subsidies and illicit fund-raising play in Indonesia's party financing
mechanism. In particular, the causal relationship between the low
level of state funding for parties and the increase in their corrupt
practices has not been sufficiently researched. Similarly, while there
are numerous reports of corrupt politicians and their rent-seeking
activities (Johnson Tan 2006; Choi 2004), very little has been said
about the high costs of holding and maintaining political office in
Indonesia. As a result, other reasons for political corruption beyond
oligarchic agency or individual greed have not found their way into
the literature on Indonesian political parties and their crisis of
legitimacy.

Addressing this gap in the existing literature, the following study
discusses financing and expenditure patterns of political parties in
Indonesia. It begins with an overview of the various income sources of
parties, showing that legal and direct state subsidies were reduced
dramatically in recent years--and that parties compensated for this
decline in revenue by corrupting even more public monies than was
already the case before the cut. The article will then analyse the
expenditures made by political parties and their functionaries in
gaining and defending public office, demonstrating that the decline in
state subsidies was accompanied by exponentially growing costs. In
concluding, the discussion weighs the benefits and disadvantages of
public party financing. While the most recent literature has argued
that such subsidies increase the dependence of parties on the state
and isolate them from civil society (Biezen and Kopecky 2007), the
case of Indonesia suggests that the reduction of public funds for
political parties has led not only to an increase in illicit financing
activities and other forms of corruption, but has also aggravated
already existing institutional defects in the democratic system. Thus
the benefits of providing stronger public funding for political
parties seem to outweigh the drawbacks.

Party Financing: State Subsidies and External Contributions

In the scholarly discussion of party financing, the funding mechanism
used by mass parties is typically considered the ideal form of
financial party management (Katz 1997). Mass parties are mostly funded
through membership fees and small contributions made by their
supporters, who work voluntarily in party offices and are actively
engaged in running electoral campaigns. The supply of funds by a
motivated and ideologically cohesive support base reduces the
dependence of the party on state subsidies on the one hand and
donations by politically interested sponsors on the other. The problem
with this concept is that mass parties have become an extremely rare
phenomenon. Mass parties dominated the political landscape of Western
Europe until the 1970s, when their rapid decline began. Ultimately,
they were transformed into electoral elite parties--the party type
already predominant in much of the developing world after 1945. Today,
the vast majority of parties cover only small parts of their expenses
through membership fees and internal donations, with most of their
income provided by state subsidies and contributions from business
corporations.

The decline of the mass parties was accompanied by the introduction of
public party financing around the globe. In 75 per cent of all liberal
democracies in the world, the state provides financial assistance to
political parties, with no significant differences between old and new
democracies (Biezen and Kopecky 2007, p. 244). India, Switzerland, New
Zealand and the United States are the only liberal democracies which
do not allocate public funds for political parties, but even in some
of these countries, state support is available for individual
candidates. The region with the lowest level of state financing for
parties is Africa, where only 44 per cent of all democracies offer
public funds for parties. Thus it appears that the more consolidated a
multiparty democracy' the more likely it is to view public party
funding as the best available option to maintain the independence and
professionalism of its parties.

In Indonesia, however, the trend has moved in the opposite direction.
While the Indonesian state provided quite generous public funding to
political parties between 2001 and 2005, it has recently cut this
support by as much as 90 per cent. Although corruption in Indonesian
political parties has certainly been a chronic and multilayered
phenomenon since the founding days of the Republic, the reduction in
subsidies after 2005 aggravated the problem. Parties are now
increasingly encouraged to seek their own funding, which they do by
intensifying their internal and external fund-raising activities.
These efforts include asking their legislators for increased
contributions, exploiting alternative state funds, selling nominations
for public office to affluent non-party figures and, most recently,
establishing party-owned companies. This development, in turn, has
reinforced the public's view of Indonesian political parties as
inherently corrupt; yet only a few observers make the connection
between this corruption and the small amount of state subsidies
provided to political parties.

Direct State Subsidies

After the fall of the authoritarian New Order regime in May 1998, the
problem of party financing became an issue of immediate urgency for
all parties, including those that had operated under Soeharto's rule.
Even Golkar, the cashed-up electoral machine of the New Order, was
confronted with severe financial difficulties after Soeharto stopped
funding the party in July 1998. The former president, who still
controlled a party fund of Rp 900 billion (around US$100 million) at
the time of his resignation, had demanded continued influence over
Golkar in exchange for further financial assistance. The new party
leadership under Akbar Tandjung declined that request, however, and
Soeharto suspended all payments as a result. (1) While benefiting from
a government decision that all New Order parties were allowed to keep
their assets and party offices, Golkar found itself in the unusual
situation of having to raise funds from external sources. Another
party that enjoyed the advantage of an existing party infrastructure
was the Islamic PPP (Partai Persatuan Pembangunan, United Development
Party), but since it had been barred from political activity below the
district level throughout the New Order period, it now needed money
for its post-1998 expansion to the sub-districts and villages.
Finally, the secular-nationalist party of Megawati Soekarnoputri,
PDI-P (Partai Demokrasi Indonesia Perjuangan, Indonesian Democratic
Party of Struggle), lost its claim on the party assets owned by the
Soeharto-endorsed PDI after a long and protracted court battle.
Accordingly, it had to rely on former PDI cadres and their resources
in order to build up an effective party network.

The financial challenges for newly established parties were of course
significantly greater than for those groomed by the New Order. The law
on general elections passed in 1999 set high thresholds for parties
that intended to participate in elections, requiring them to open
offices in half of the country's provinces and in half of the
districts in those provinces. While this regulation was designed to
prevent the emergence of localist parties and limit the number of
contenders in the 1999 general elections, it put a heavy financial
burden on the new parties. Consequently, out of the 200 new parties
formed after 1998, "only" 48 qualified for the 1999 elections. This
included a number of parties that managed to recruit personnel and
assets from large religious organizations. For example, the newly
founded PKB (Partai Kebangkitan Bangsa, National Awakening Party)
profited from its close relationship with the traditionalist Muslim
group NU (Nahdlatul Ulama, Revival of the Islamic Scholars).
Similarly, the modernist Muslim organization Muhammadiyah encouraged
some of its functionaries to help with the establishment of PAN
(Partai Amanat Nasional, National Mandate Party).

In this early phase of the post-Soeharto transition, the state paid
subsidies to the parties only on an ad hoc basis. While the 1999 law
on political parties stipulated that parties were entitled to state
funding, there was no system of public party financing in place. Thus
the parties tried to find other ways to gain access to state
resources, particularly through their membership of the Electoral
Commission (KPU, Komisi Pemilihan Umum). Based on the 1999 laws, the
KPU was run by representatives of all parties participating in the
elections, opening access for them to its huge operational budget of
more than Rp 1.6 trillion (around US$177.8 million). In addition, the
United Nations Development Programme (UNDP) allocated another US$60
million for the 1999 polls. (2) In its post-election auditing report,
the Financial Auditing Agency (BPK, Badan Pemeriksaan Keuangan) found
that at least Rp 117 billion (US$13 million) allocated for the
administration of the polls had gone missing, with some of those funds
divided between the parties sitting on the commission. (3) There were
also widespread reports of misuse of the UNDP assistance. The parties,
for their part, were unapologetic as far as their use of the
operational funds were concerned. In fact, they openly proposed that
Rp 74 billion (US$8.2 million) of "left-over funds" from the KPU
budget be distributed among the parties. (4) While it is not clear how
much each of the parties received, there is no doubt that the KPU was
one of the major cash cows for political parties before the 1999
elections. Partly because of this blatant diversion of funds allocated
for electoral logistics, the 2003 revision of the election laws
stipulated that political parties could no longer be represented in
the KPU, with independent figures put in charge of managing the next
ballot.

After the 1999 elections, the majority of political parties demanded
that the government formalize the state subsidies for them in a
regular system of payments. However, then President Abdurrahman Wahid
refused to fulfill this request as his relations with the political
parties in parliament were in notoriously bad shape, with many
factions seeking his impeachment. Only in his last days in office,
when he already faced dismissal by the MPR (Majelis Permusyawaratan
Rakyat, People's Consultative Assembly), did Wahid issue a "Government
Regulation on Financial Assistance to Political Parties" (PP 51/2001).
(5) Clearly designed to appease the parties that were about to impeach
him, Wahid decreed that the central board of each political party
would annually receive Rp 1,000 (around 10 US cents) per vote obtained
in the 1999 elections. In addition, local governments were also
ordered to pay subsidies to political parties, albeit in line with
their financial capability. In practice, most local governments also
paid the parties Rp 1,000 for every vote they had won in the region
concerned. In fact, many governors and district heads seeking
re-election by local parliaments in 2002 and 2003 had a personal
interest in maximizing the subsidies, and thus often found additional
ways of providing support for party offices or covering travel
expenses of senior party leaders.

Even without these extra benefits granted by local bureaucrats, the
official state subsidies were significant sources of income for the
parties. Based on the Rp 1,000 per vote formula, PDI-P, for example,
received Rp 35.7 billion (around US$3.9 million) each year for its
central office. In addition, given that most local administrations
followed the payment scheme used by the central government, PDI-P's 32
provincial and 440-plus district boards presumably obtained another Rp
70 billion (US$ 7.7 million). Accordingly, PDI-P is likely to have
collected a total of around Rp 422.8 billion (US$47 million) between
2001 and 2004 in official state funding alone. (6)

This relatively generous system of public party financing drew some
fierce criticism from bureaucrats in the government of Wahid's
successor, Megawati Soekarnoputri (2001-04). Hari Sabarno, then
Minister of Home Affairs, was especially critical, condemning the fact
that even tiny parties without parliamentary representation received
financial aid. (7) Consequently, the Megawati government after 2001
began to revise Wahid's decree and the law that underpinned it. In
2002, parliament passed revisions to the political party law, with one
of its key articles changing the basis for the calculation of party
funding from a vote-based to a seat-based formula. However, the law
did not specify concrete monetary figures for remuneration per seat,
and it was not until July 2005, under Megawati's successor Susilo
Bambang Yudhoyono, that the government issued a new decree on this
matter. Government Regulation 29 of 2005 stated that political parties
were to receive each year Rp 21 million (US$2,300) per seat won in the
2004 elections, with local governments mandated to issue their own
decrees. (8) As in the past, local governments typically followed the
figure set by the central government, and also paid Rp 21 million per
seat. (9) For much of 2005 and 2006, there was great confusion in the
regions about whether to apply the old or the new government
regulation. For instance, the local government decree on party
financing in North Sumatra was passed in October 2006, meaning that
the new guidelines only came into effect there more than one year
after Jakarta had issued them. (10)

The implementation of the new seat-based funding formula led to a
drastic decline in income for the major parties. PDI-P, for instance,
witnessed a decrease of its central state funding from the annual Rp
35.7 billion it received until 2004 to only Rp 2.3 billion in January
2006, when the first payment according to the new decree was made.
Altogether, the subsidies provided by the central government to
political parties declined from more than Rp 105 billion annually
before 2005 to just Rp 11.5 billion in early 2006, a drop of 89 per
cent. (11) This sharp decline shocked many politicians, who had
endorsed the seat-based system during deliberations in parliament but
were unaware that the government planned to set such low levels of
funding per seat. Thus when the decree was issued, party treasurers
were in disarray. They hastily inquired of their leaders, many of whom
sat in cabinet, about the rationale behind this decision. (12)
However, even party chairs close to President Yudhoyono had apparently
not been informed in advance about the decree, causing a deep sense of
dissatisfaction among party cadres both in the centre and at the
grassroots. The anger was particularly strong in Golkar, whose
functionaries had hoped that party chairman Jusuf Kalla, the sitting
vice-president, would find ways to mobilize additional state resources
for the party's coffers. Instead, the flow of official subsidies from
the state to Golkar had all but dried up, despite Kalla's key position
in the government.

The Yudhoyono government never publicly explained its reasons for
significantly reducing the state subsidies to political parties. In
his presentation of the 2005 decree, then State Secretary Yusril Ihza
Mahendra did not even acknowledge that it would lead to such a
decline, and only stated that the regulation was in line with the 2002
law on political parties. (13) Thus it is unclear if any strategic
discussion took place within the government before the decision was
made, and if there were compelling considerations behind it. Clearly,
budgetary concerns could not have played a major role in the debate,
with the government saving a mere US$9.8 million dollars, or 0.01 per
cent, out of a central budget of US$72 billion in 2006. (14) It is
thus more likely that matters of political principle motivated the
decree. Andi Mallarangeng, Yudhoyono's influential spokesperson and a
political scientist who had helped to draft the 1999 election laws,
has been a prominent opponent of public financing of political
parties. He believed that state subsidies tend to encourage
disreputable entrepreneurs to enter party politics in order to make
money rather than to produce policies for the public good. (15)
Therefore, abolishing such subsidies appeared to Mallarangeng as a way
to cleanse the parties of rent-seeking elements. It seems, however,
that the almost complete collapse of the system of public party
financing had quite the opposite effect, with parties trying to
compensate for their loss of subsidies by tapping into alternative
state resources and increasing their engagement with the very
rent-seekers that Mallarangeng wanted to shut out.

Indirect State Subsidies

The decline in direct state funding had an immediate impact on party
representatives in the national and local legislatures. Determined to
make up for lost revenue, central party leaderships instructed their
members who held parliamentary seats to increase their contributions
to the party. Before the cut in subsidies, party boards had asked for
10 to 20 per cent of parliamentarians' salaries; after 2005, however,
this figure could reach up to 40 per cent. One parliamentarian from
PAN reported that his party doubled the requirement for donations from
Rp 5 million to Rp 10 million in November 2006. (16) In addition,
members of parliament were increasingly asked to help pay for party
functions and other activities, reducing their take-home salary even
further. For most legislators, the demand from their central boards
for higher contributions was equivalent to an encouragement to raise
more money through corrupt practices. To be sure, political corruption
in Indonesia's parliaments had been rampant even during the period of
generous public party financing between 2001 and 2005, but the
subsequent reduction in legal subsidies provided an additional impetus
(and, in the eyes of the parties, justification) for illicit fund-raising.

Against this background, it was hardly surprising that
parliamentarians endeavoured to gain access to additional state
resources by engineering excessive increases in existing allowances or
inventing new ones. Thus in late 2005, shortly after the government
had issued its decree that cut state subsidies to political parties,
parliament passed an unprecedented increase in the allowances of its
members. The new allowance package included payments for electricity,
telephone, spouses, children, housing, rice, representation,
"intensive communication"

, an unnamed lump sum and "honorary money".
(17) Overall, the allowances combined with the base salary to a total
pay of up to Rp 50 million per month, an increase of around 82 per
cent. This policy sparked widespread public protests, with many
journalists, political activists and society leaders accusing the
politicians of greed and insensitivity towards the plight of ordinary
Indonesians. One commentator called the raise an "insult to the
public" and remarked that "if these sort of increases had been
proposed for our atrociously paid public school teachers, the people
would have been jubilant". (18) By contrast, when the government had
cut the payments to parties by almost 90 per cent, the news had not
made it to the front pages of Indonesia's main dailies and had
attracted very little interest from civil society organizations.

The situation at the local level was similar. In October 2005, the
government had issued a regulation that limited the allowances which
local parliaments were able to pay to their members and leaders. (19)
Many parties depended on these allowances, particularly the larger
amounts received by faction heads and speakers of local legislatures,
to cover routine expenses ranging from office maintenance to cadre
training events. Consequently, party functionaries were outraged at
the government's decision, accusing Minister of Home Affairs Mohammed
Mar'uf of trying to "kill" the parties. (20) Golkar politicians felt
particularly targeted, because they viewed the move as evidence of the
growing tensions between their party and Yudhoyono's government. Eager
to avoid further confrontation with Golkar, Yudhoyono issued
Government Regulation 37 in November 2006, which annulled the previous
decree and instead provided for a 150 to 300 per cent increase in the
allowances for local parliamentarians, especially those in leadership
positions. (21) However, once again the public response was damning.
Sharp critiques of the planned raise featured prominently in the media
for weeks, reinforcing the already strong public image that
politicians were merely self-interested rent-seekers. Faced with such
condemnation, most parties slowly began to distance themselves from
the decree, and some asked for its cancellation. Even Golkar, the
party that had been most vocal in demanding higher allowances for its
local parliamentarians, called on its members not to accept the
additional money or return it if they already had. Eventually, the
government revoked the regulation in January 2007 and replaced it with
one that granted significantly lower benefits to legislators than the
previous decree. (22)

In addition to tapping into budgets of legislatures, political parties
have also tried to profit from their participation in government.
Ministers who represent a particular political party in cabinet are
expected to make regular and significant contributions to that party,
as are governors and district heads. (23) They are also under pressure
to divert state funds into party coffers, mostly by offering projects
to businesses or individuals closely associated with the party.
Shortly after the 1998 regime change, there were some barely disguised
attempts by politicians to siphon off money for their parties from
state agencies and banks. In 1999, Golkar functionaries managed to
extort some US$78 million from the owner of Bank Bali for questionable
consultancy services, and party chairman Akbar Tandjung was sentenced
to several years in prison in 2002 for diverting funds from the
national logistic agency Bulog to a fictitious foundation, which was
not more than a front for Golkar's fund-raising activities. (24) In
the same vein, then President Wahid was accused of having misused
Bulog funds for his own benefit and of diverting substantial amounts
of state money to foundations close to PKB.

These transgressions were committed so openly, however, that
politicians from rival parties were typically able to leak them to the
press, the police and prosecutors. Thus after the initial series of
scandals, parties and their leaders had to be much more careful, and
the methods developed to access state funds for party purposes became
less obvious as a result. While such new schemes have not been well
documented, one member of the central board of President Yudhoyono's
Partai Demokrat (PD) has described in some detail how they operate. In
a case that the functionary had intimate knowledge of, the party set
up an enterprise to develop business "proposals", which subsequently
were sent to governors and district chiefs close to the party. These
heads of local administrations would then force companies who had
already been awarded government contracts to take on the PD-affiliated
firm as a sub-contractor. According to the PD politician, this
approach helped to avoid public scrutiny and circumvent tight tender
regulations. Operating successfully in several provinces and
districts, the projects generated profits that were used both to
provide jobs to party cadres and to cover routine costs of the central
board. (25)

Besides engaging in such schemes, politicians in the executive branch
have also utilized public facilities to support party activities. For
instance, they typically use vehicles and meeting venues owned by the
state for party events, or hire their party members to fill
bureaucratic vacancies. While the total value of state resources used
indirectly for party purposes is difficult to quantify, and some
senior executives have tried to disengage from such practices, (26)
there is no doubt that participation in government remains an
important means for parties to access public monies.

The increasing attempts by parties to obtain state funds indirectly
rather than through open subsidies point to the poor organization of
public party financing in Indonesia, particularly after 2005. While
corruption in political parties had been rampant even before the 2005
changes were introduced, the cut in subsidies further entrenched and
complicated the already existing problems. Through its various decrees
and regulations, the government shifted the pattern of state financing
of parties from the relatively transparent and direct mechanism that
was applied before 2005 to the much murkier and indirect methods of
party fund-raising in parliaments and the executive. In this regard,
it is difficult not to view the Government Regulation 37 of 2006,
which exponentially increased the salaries of local parliamentarians,
as a rather clumsy attempt to provide compensation for the dramatic
decline in direct state subsidies in the preceding year. However, the
damage to political parties as a result of this planned compensation
has been considerable, with widespread allegations of self-enrichment
and corruption sending their reputation to new lows. Given the loss of
most official state subsidies, the exploitation of parliament and
government resources has now become one of the major funding sources
for political parties, attracting significantly more negative
publicity than the annual payments made under the pre-2005 financing
system. In addition to their legislative and executive fund-raising,
however, the parties have also increased their efforts to collect
money from external sources.

External Contributions

Internationally, the dependence of parties on external contributions
from companies and individuals is viewed as the least desirable form
of party financing. Most donors have clearly defined political and
economic interests, and they expect the party and its politicians to
take those interests into consideration if elected to public office.
In the most extreme cases, sponsors provide donations in exchange for
support of a particular policy or piece of legislation that benefits
them. In the United States, such "checkbook democracy" (West 2000) has
been practiced openly for some time, with lobbyists forming a huge
clientele in and around legislative and executive institutions. But
even in Europe, there has been an increasing number of party financing
scandals, in which politicians are typically accused of receiving
donations in order to influence procurement or policy decisions in the
interest of their sponsors. Public confidence in the political system
in general and its parties in particular has gradually eroded as a
result of such practices (Fisher and Eisenstadt 2004, p. 621).

In Indonesia, wealthy entrepreneurs played a significant role in
bankrolling the New Order's political machine, with mostly ethnic
Chinese conglomerates providing the funds for Soeharto to secure the
loyalty of the military, the bureaucracy and the political parties
(Robison 1986). In exchange, they were granted trade monopolies,
preferred access to credits from state banks, large mining and oil
projects, and profitable joint ventures with foreign investors. After
1998, the role of large corporate financiers in funding the national
political elite declined somewhat, with many of the key donors of the
previous regime now suffering under huge debts incurred during the
economic crisis. In addition, the decentralization of power in
post-Soeharto Indonesia meant that businesses now spent less money on
parties and politicians in the capital Jakarta, but spread their
donations more evenly among office holders at all administrative levels.

However, entrepreneurs remained important sources of income for
political parties, which received most of their electoral campaign
funds from external donors (Badoh 2005). (27) Businesses also gave
contributions to fund major party congresses or provided office space
if requested by senior politicians. In addition to institutional
funding to the parties, companies also sponsored selected party
officials and parliamentarians if they thought that these individuals
could influence policy decisions in economically important areas. For
example, large businesses targeted legislators sitting on particular
commissions that were in charge of drafting laws or policy regulations
on areas of their interest, ranging from mining, fishery and forestry
to telecommunications and hadj pilgrimages. By the same token,
state-owned enterprises distributed money to parliamentarians tasked
with their supervision, mostly in order to receive sympathetic
performance reviews but also to influence pieces of legislation that
regulated them. (28)

The problem with these donations from businesses was not only that
they were tied to very narrow economic interests, but also that they
rarely benefited the parties as institutions. Only during election
time, when most party funds were pooled in a number of central
accounts in order to coordinate the financing of the national
campaign, did tycoons use the party treasury as their main entry point
for donations. Between elections, however, businesspeople often handed
private contributions not to treasurers, but to senior party leaders,
who kept the money for themselves rather than paying it into their
party's official account. Noviantika Nasution, who was PDI-P's
treasurer between 2000 and 2005, stated that "when I made my rounds to
ask entrepreneurs for donations, they often told me that I was already
the seventh or eighth person from PDI-P that month who had requested a
contribution". (29) None of those funds ever made it to the treasury,
of course, with top leaders instead using the money to establish
personal patronage networks within the party. Subur Budhisantoso, the
chairman of Partai Demokrat until 2005, recalled that a senior banker
once asked him how the party had used his donation. Hearing about this
alleged payment for the first time, Budhisantoso subsequently
confronted the PD politician who had received the donation, and
demanded an explanation for why it had not been handed over to the
party. Unapologetic, the party official replied that he had used the
funds to cover his personal expenses. (30) This trend, while seriously
affecting the income of parties, was particularly unfortunate for the
treasuries, which found it difficult to grow into independent and
professional party institutions.

The growing importance of businesses for political party financing is
a worldwide phenomenon, occurring in both developing and consolidated
democracies. In Indonesia, however, the role of external donations is
no longer limited to the usual lobbyism and influence-seeking by
interested donors. More importantly, Indonesian parties have
effectively begun to surrender some of their core political functions
in exchange for vital financial assistance. This tendency has even
turned the basic political rule on its head that parties typically
seek public office in order to pursue their ideological and political
convictions, and that external funding is necessary to enable party
leaders to win the elections that lead to such public office.
Political parties in Indonesia, by contrast, have in an increasing
number of cases sold the nominations for legislative and executive
office to wealthy individuals who had no particular connection with
the party or its beliefs, but who could afford to pay large sums of
money to the party (Buehler and Tan 2007). In parliamentary elections,
potential candidates often had to hand over substantial contributions
to parties in order to be considered for nomination. The prices of
nominations were staggered according to the ranking of the party list,
with high rankings that virtually secure election significantly more
expensive than lower positions that included no guarantee of success.
(31) Many candidates, both in the centre and in the regions, took up
bank credits or sold their properties in order to win nomination,
which in turn increased the pressure on them to regain this investment
once elected.

While money was important to secure a legislative nomination, most
candidates for parliament were still somehow affiliated with the party
that nominated them. Party boards had to satisfy the demands from
their local chapters that they be represented adequately, making it
difficult for the central leadership to pick nominees without any
organizational experience in the party (Haris 2005, p. 16). By
contrast, in the direct local elections for governors, district heads
and mayors that began in June 2005, party affiliation has played only
a very marginal role in the nomination process. Although parties had
the exclusive right to nominate candidates, with independents barred
from running, only 22 per cent of all nominees were party officials
(Mietzner 2006a). The large majority were bureaucrats and
entrepreneurs, with 36 and 28 per cent representation respectively,
followed by smaller groups of former security officers, civil society
leaders and media figures.

Instead of party affiliation, two other factors became the dominant
criteria in the selection process: personal affluence and popularity
in the polls. Candidates were not only expected to finance their own
campaigns, but also to pay considerable contributions to the party
board in exchange for the nomination. In one of the most prominent
cases, the former deputy chief of the national police, Gen. Adang
Daradjatun, was widely believed to have pledged a large sum of money
to the puritanical Muslim party PKS (Partai Keadilan Sejahtera, Party
of Justice and Prosperity) for his nomination as governor of Jakarta.
Public speculation put the figure at somewhere between Rp 14 billion
and Rp 150 billion, and even PKS did not deny that financial
compensation was involved. The second criteria for nomination,
popularity in the opinion surveys, further weakened the bond between
parties and candidates as party boards began to compete for the
nominee most likely to win an election, regardless of his or her
political and ideological profile (Mietzner 2006b).

The financial weakness of parties and their consequent inability to
nominate their own cadres for public office in the regions has trapped
party elites in a vicious cycle. Political investors and lobbyists
typically seek to hand their contributions to groups or individuals
who are powerful enough to take care of the interests of their
sponsors. In the same vein, the donations increase or decrease
proportionally to the power of the sponsored party or politician.
Accordingly, with Indonesian parties openly demonstrating their
failure to gain public office for themselves, they have become less
attractive as recipients of politically-interested donations. Thus the
financial difficulties of parties have not only led to an increase in
their corrupt practices, but have also undermined their structural
capacity to develop into professional electoral machines that could
attract legal and regular contributions from businesses and society.

This circular dilemma has destroyed the initial hope of parties that
the "sale" of candidacies would strengthen their finances; instead,
their loss of political significance led to a further decline in their
long-term income prospects. Airlangga Hartarto, Deputy Treasurer of
Golkar, has confirmed this development, noting "a clear shift in
investor donations from political parties to nominees for public
office, many of whom are not party members". (32) According to
Hartarto, the majority of entrepreneurs has come to believe that
donating money to parties in Indonesia's new multi-party system was
like "throwing money into the sea--it just floats away without hitting
the target". In the calculations of companies, providing contributions
to powerful non-party bureaucrats who run for public office appeared
to be a much more direct and effective way of ensuring that their
interests were served.

The discussion so far has shown that the decline in state subsidies
for political parties has contributed to the increase in their
attempts to exploit alternative state resources and external
donations. This trend has not only reinforced the public image of
parties as rent-seeking and self-serving institutions, but has also
eroded their ability to carry out the basic tasks of political parties
in democratic societies. Mostly unable to fund the campaigns of their
cadres for public office in the regions, parties have resorted to
offering the nominations to wealthy non-party figures. These affluent
nominees temporarily provide the necessary cash for electoral
activities and routine party events, but often feel no obligation to
protect the interests of the party once elected to office. In the long
run, this erosion in political influence is likely to discourage
investors from continuing their support for parties, especially
between legislative elections. Declining contributions, in turn,
weaken the parties further. Meanwhile, the costs of obtaining and
maintaining political office in Indonesia continue to rise.

The Rising Cost of Political Office

The end of the "golden age" of mass parties has significantly
increased the costs of political party activity, both in the West and
in developing democracies in Latin America, Asia and Africa. Parties
can no longer rely on their members to perform unpaid secretarial
work, electoral campaigning or constituency mobilization. Instead,
party boards have to hire office staff, consultants and media
specialists, who charge professional fees and have only loose
emotional ties to their employers (Farrell and Webb 2000). In
addition, the increasing role of the media has changed the nature of
election campaigns, with voters receiving information less through
party activists at the grassroots, but via expensive media
advertisements and strategic news placement. This technological
transformation of electoral campaigning has put strains on party
budgets, leading most governments in developed democracies to
gradually increase the amount of public party financing.

In Indonesia, the liberalization of the political system has led to a
particularly steep increase in the operational expenses of parties.
Before 2004, political parties had to finance only one parliamentary
campaign every five years, with executive officials elected afterwards
by their respective legislatures. After the post-2004 reforms,
however, which introduced direct elections for the presidency,
governorships and district head positions, the number of popular
ballots in any one district in a five-year cycle rose to a minimum of
four and a maximum of seven. (33) Obviously, this increase in
electoral activity resulted in exploding costs for the parties. For
example, while PDI-P officially spent Rp 69.1 billion (US$7.7 million)
in the 1999 general elections, (34) it reported a total expenditure of
Rp 211.9 billion (US$23.5 million) for its three national campaigns in
2004 (IFES 2004). These were the figures in its legally required
auditing report, however, with the real costs presumably much higher. (35)

Given this increase in the frequency of ballots and the corresponding
costs, party officials not only had to intensify their search for
contributions, but they also had to set personal priorities as far as
the use of these hard-won finances was concerned. Functionaries who
ran for legislative seats at the national or local level, for
instance, began to concentrate their funds in their own campaigns
rather than making them available for those organized by the central
party board. Megawati Soekarnoputri, for example, has openly
attributed her defeat in the 2004 presidential ballot to the
self-serving attitude of her party cadres, observing "clearly how some
of them gave everything when it concerned their own affairs, but were
not interested when it was about winning the presidency". (36) This
development is part of a global trend described by Jonathan Hopkin
(2004, p. 631), in which "office-seeking, rather than policy-seeking,
[is] becoming the dominant rationale of party activity". Apparently,
party officials are prepared to invest considerable portions of their
private wealth into their own bid for office, but are less inclined to
spend money on activities related to more general interests of the
party, such as a presidential campaign. These dynamics also reflect
the new realities of Indonesia's decentralized political system after
1998: especially for provincial or district-level parliamentary
candidates, it often does not really matter if their party wins the
presidency in Jakarta. Instead, securing a seat for themselves is
generally sufficient to satisfy their short-term political ambitions.

Partly in order to compensate for the declining support of party
cadres at the grassroots level, central boards have felt the need to
significantly increase their expenditure for national media campaigns.
Not only must parties set aside a constantly increasing budget for
television, radio and print media advertisements, which in the 2004
elections made up at least 30 per cent of the total campaign costs,
(37) but they also have to spend more and more money for media
consultants, campaign strategists and opinion pollsters, most of whom
are professionals without political links to the parties that employ
them. In fact, many of these consultants advise different parties and
candidates at the same time. While political consulting played some
role in the 1999 elections, its importance grew exponentially after
the 2004 presidential ballots and the direct local polls that began in
2005. In 2004, many traditional party politicians, particularly in the
larger parties, were still skeptical about the accuracy of opinion
polls that predicted a landslide victory for Susilo Bambang Yudhoyono,
who had little party support. In Golkar and PDI-P, senior leaders
believed that their party machines could easily defeat Yudhoyono, and
that the opinion polls could not be trusted. (38) However, Yudhoyono's
triumph changed these perceptions completely, with PDI-P and Golkar
now investing considerable amounts of money into polling and political
consulting. Since then, companies that offer such services have
mushroomed, making billions of Rupiah from central party boards and
individual candidates in the regions. (39)

As the costs for central party offices grew, so did the expenditure of
individual party functionaries in the regions. Party leaders who had
gained parliamentary seats found themselves confronted with an
unrelenting stream of financial demands from their constituencies,
ordinary party members as well as other opportunistic rent-seekers.
While one of the conventional wisdoms of contemporary Indonesian
politics has been that legislators are typically isolated from, and
unresponsive to, their constituencies, a closer look reveals a much
more complex picture. Parliamentarians are in fact under extreme
pressure from their electoral districts, where local party offices
often have the authority to endorse or reject the re-nomination of
incumbents, and where a wide variety of social groups are electorally
too important to be ignored or alienated. Maruarar Sirait, a PDI-P
legislator whose electoral district is located in Subang in West Java,
explained that "whenever I visit my constituency, everybody wants
attention and, of course, money: the local party cadres, Islamic
clerics, sports clubs, schools, youth groups and even the thugs". (40)
Thus Sirait spends most of his income as a legislator on satisfying
the material expectations of his electorate, while using the profits
from his businesses to cover his personal expenses. Engaging in what
Fisher and Eisenstadt (2004, p. 622) have called the "politics of the
belly", Sirait certainly hopes that this will make his re-nomination
and re-election in 2009 an easy affair. Like Sirait, many other
parliamentarians have regularly transferred a large portion of their
allowances to influential groups or individuals in their electoral
areas. This trend was highlighted by the fact that when the Ministry
of Home Affairs revoked Government Regulation 37 of 2006 and asked the
legislators to return the allowances, several politicians submitted
evidence that their constituents had already consumed the funds.

The parallel developments of the increasing cost of gaining and
maintaining political office on the one hand, and declining state
subsidies for parties on the other, have had serious consequences for
the socio-economic fabric of party politics in Indonesia. To begin
with, many politicians have resorted to corruption to recover the
investments they made in securing nominations for parliament or
executive office, and to meet the financial demands of their electoral
constituencies. This should not come as a surprise. If parties are
unable to pay for the campaigns of their legislative and executive
candidates, and instead feel the need to ask them for "contributions"
that exceed their official income, then corruption becomes an almost
built-in element of political activity. In the same vein, the
desperately needed contributions from external donors are mostly tied
to their expectation that office-holders would shift state projects to
companies owned by the sponsors or issue policies that benefit their
interests. Needless to say, politicians also siphon off considerable
amounts of money to sustain their own extravagant lifestyles, but
equally significant portions of the corrupted monies flow back into
party activities that in other states would be covered by public
subsidies for political parties and their officials.

The other important impact of this trend has been a wide-ranging
transformation of the socio-political profiles of party politicians.
While some politicians engage in corruption to become rich in office,
an increasing number of already wealthy entrepreneurs have entered
politics precisely because their money has provided them with the
necessary means to seek public office. Vice-President Kalla and
Coordinating Minister for Social Welfare Abdurizal Bakrie, both Golkar
politicians, are prominent examples in this regard. Both men have of
course gained additional financial benefits from being in government,
(41) but they also have spent large parts of their personal wealth on
political activities. Bakrie in particular not only bankrolled much of
Yudhoyono's 2004 campaign, but has continued to fund Golkar and other
parties that support the Yudhoyono administration. Often referred to
as the government's "paymaster", Bakrie has stayed in office despite
increasing public calls for his resignation over the East Java mud
volcano, which erupted in May 2006 when one of Bakrie's subsidiaries
drilled for oil in a densely populated area. Bakrie's continued
presence in cabinet suggests that his financial resources constitute
an indispensable asset for Yudhoyono's government, outweighing even
the public relations damage done by the images of angry refugees and
demonstrators demanding compensation for the ongoing disaster.

The increasing role of entrepreneurs in party politics is also
reflected in their rising numbers in parliament. Bima Arya Sugiarto
(2006, p. 34) has shown that 39.8 per cent of all members of the 2004
national parliament are businesspeople, a remarkable increase compared
to 1999. In the PAN faction, for example, the percentage of
entrepreneurs almost doubled to more than 60 per cent. One of its
members, Alvin Lie, claimed that "only owners of companies can survive
in parliament; if I think about how much of my private wealth I've
spent in politics, I get sick". (42) In the same vein, Maruarar Sirait
asserted that he "deliberately built up my business before entering
politics, because you really need to have your house in order before
taking up the risk of political life". (43) Thus it appears that
post-Soeharto e1ite politics are increasingly limited to those
commanding sufficient financial resources, with corruption and
lobbyism as automatic side effects. When similar trends began to
develop worrying dimensions in Western democracies in the 1970s and
1980s, public party financing was introduced as a result. The
concluding section will weigh the benefits and disadvantages of
increasing state subsidies for political parties in Indonesia, with
the material presented so far guiding the analysis.

Public Party Financing in Indonesia: Benefits and Disadvantages

This article has demonstrated that the financial weakness of
Indonesian parties has had damaging effects on both their functional
capacity and their legitimacy with the electorate. While this has been
a chronic problem even under previous Indonesian regimes (under
parliamentary democracy in the 1950s, for example), the reduction of
state subsidies for parties in 2005 has made matters worse. The cut in
public funding motivated politicians to intensify their efforts to
engineer exorbitant increases to their legislative allowances, drawing
sharp public criticism and reinforcing their image as corrupt and
self-serving. In addition, parties have increasingly sought donations
from external contributors, who expect politicians to give them state
contracts and other policy-related benefits in return. But the
financial deficiencies of parties have not only catalyzed political
corruption. They have also had a deep impact on the internal coherence
of parties and their ability to carry out key democratic functions.
With party politicians asked to pay for their own bids for public
office, they tend to prioritize their personal candidacies over the
campaigns driven by central party leaderships. In the same vein, the
sale of nominations for top positions in local government to non-party
individuals has undermined the critical link between political parties
and their representation in the executive--making it impossible for
voters to assess the politico-ideological consistency of parties by
their performance in government. Ultimately, this erosion in political
significance has led investors to redirect their funds away from
central party boards to individual candidates, aggravating the very
financial problems of parties that had been the trigger for their
difficulties in the first place.

Providing more state subsidies to parties appears like a convenient
solution to this dilemma, but the critics of such an approach are
numerous. In the neo-classical literature on party financing, scholars
have warned that public subsidies make the parties dependent on the
state, discourage them from deepening their roots in society, and
create "cartelistic" tendencies, in which the parties no longer
compete for power, but are occupied with distributing state resources
among themselves (Slater 2004). Furthermore, state subsidies are no
guarantee against party corruption, with public funding having "a
supplementary rather than substitutory effect on clientelistic forms
of financing" (Biezen 2000, p. 336).

Opponents of state subsidies for parties in Indonesia echo this
general skepticism. They point to the fact that parties already do not
respect existing party financing regulations, with only 13 out of 24
parties that competed in the 2004 elections submitting their auditing
reports to the KPU. Out of these, four parties handed in their reports
on time, and only one was in line with the required standards (IFES
2004, p. 11). Furthermore, Transparency International Indonesia (2004)
has provided evidence that parties regularly under-report their
contributions and expenses, making it unlikely that they would submit
to the tight control regime typically required for effective public
party financing. The authorities, for their part, have not imposed
significant sanctions for reporting violations, adding to the doubts
that any further state subsidies would be spent for organizational
needs of the party rather than personal interests of individual
politicians. Finally, there is also a general belief that state
subsidies will not be able to satisfy the greed of party leaders, who
would only add the money to their already substantial bank accounts.

These are valid and serious concerns, but they do not address the
institutional defects that the financial difficulties of parties have
created for the political system. This complex of defects, which has
undermined the functionality of parties in Indonesia's consolidating
democracy, includes the parties' exploitation of parliaments and
bureaucracies as alternative sources of income, their dependence on
external donors with narrow business interests, the growing gap
between central party boards and their self-financing regional
chapters, and the inability of parties to field candidates for local
government posts. Increasing state subsidies would not remove these
deficiencies, but would almost certainly lessen their impact.

There is a broad-based agreement among scholars that public party
financing "seems to perform rather better, on some understandings of
democracy, than the most feasible alternative in present
conditions--the externally (or perhaps even internally) financed elite
party" (Hopkin 2004, p. 646). In Indonesia, it would not be realistic
to hope for the development of mass parties that can fund themselves
through membership fees and contributions by their committed cadres.
In all parts of the world, even in those with highly developed
economies, this party model has almost vanished, and it is unlikely to
re-emerge in Indonesia, where few ordinary citizens have surplus money
to pay for party memberships. The dominant party type in contemporary
Indonesia is the externally funded elite party described by Hopkin,
which has created the negative effects outlined in this article.
Accordingly, with 75 per cent of all consolidated democracies
concluding that state subsidies to parties are not the ideal, but the
most practical solution to the problem of party financing, Indonesia
should have little reason to swim against the current.

[FIGURE 1 OMITTED}

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NOTES

* The author would like to thank Dr Edward Aspinall of the Department
of Political and Social Change, Research School of Pacific and Asian
Studies, Australian National University, for his very useful comments
on an earlier draft of this article.

(1) Interviews with Akbar Tandjung, Jakarta, 17 November 2006; and
Slamet Effendi Yusuf, senior Golkar politician, Jakarta, 27 September
2006.

(2) According to UNDP, "foreign financial and technical assistance [in
1999] amounted to US$90 million, of which US$60 million was channelled
directly through UNDP, representing the largest ever support programme
to a nationally run election [...] in any [...] country". See
http://www.undp.or.id/elections2004/index.asp, accessed on 22 May 2007.

(3) "Mantan Sekretaris Umum KPU: 'Anggota KPU Harus Kembalikan Rp 5,3
Milyar Uang Bendera"', Kompas, 22 March 2000.

(4) "Aye, Rebut Dana Partai Rp 1,5 Miliar", Tempo, 12 April 1999.

(5) "Peraturan Pemerintah Republik Indonesia Nomor 51 Tahun 2001
Tentang Bantuan Keuangan Kepada Partai Politik", Jakarta, 14 June 2001.

(6) These calculations are based on PDI-P's election result in 1999
and the assumption of 1,000 Rp paid per vote.

(7) "Bantuan Untuk Parpol Ditinjan Ulang", Media Indonesia, 26 March 2002.

(8) "Peraturan Pemerintah Republik Indonesia Nomor 29 Tahun 2005
Tentang Bantuan Keuangan Kepada Partai Politik", Jakarta, 19 July 2005.

(9) Some local governments paid considerably more. The city
administration of Surabaya, for example, granted each party Rp 100
million plus Rp 20 million per seat, which favoured particularly the
smaller parties. The government in Surabaya also continued to make
payments to parties without representation in parliament. "Bantuan
Parpol Naik", Kompas, 21 February 2006.

(10) "Parpol Sumut Dapat Bantuan 21 Jura Pertahun", Berita Sore, 10
October 2006.

(11) "14 Parpol Terima Bantuan Dana Dari Pemerintah", Media Indonesia,
3 January 2006.

(12) Interview with Airlangga Hartarto, Deputy Treasurer of Golkar,
Jakarta, 30 October 2006.

(13) "Pemerintah Bagikan Duit Parpol", Kompas, 19 July 2005.

(14) Then Minister of Home Affairs Hari Sabarno had mentioned
budgetary concerns when announcing the upcoming revision of government
regulation 51 of 2001. "Bantuan Untuk Parpol Ditinjau Ulang", Media
Indonesia, 26 March 2002.

(15) Interview with Andi Mallarangeng, Jakarta, 27 September 2006.

(16) Interview with Alvin Lie, Jakarta, 8 December 2006.

(17) "Gaji DPR Naik 15 Persen", Kompas, 14 December 2005. The new
allowances were proposed in July 2005, in the week of the government's
announcement that party subsidies would be cut. The salary increase
was eventually passed by the DPR in December.

(18) B. Herry-Priyono, "House of Reps: Just Who Are They
Representing?", Jakarta Post, 23 July 2005.

(19) The decree was issued in response to the legal uncertainty
surrounding such allowances. Before 2005, local legislatures had often
set the standards for their own allowances, triggering numerous
investigations by prosecutors who viewed such self-servicing as
illegal. Thus between 2004 and 2006, no less than 1,062 local
parliamentarians were under Investigation for corruption.

(20) Syamsul Komar, Golkar official from North Sumatra, at a party
meeting in Jakarta, 4 November 2006; notes by the author.

(21) "Peraturan Pemerintah Republik Indonesia Nomor 37 Tahun 2006
Tentang Kedudukan Protekuler dan Keuangan Pimpinan dan Anggota Dewan
Perwakilan Rakyat Daerah", Jakarta, 14 November 2006.

(22) "Anggota DPRD Tetap Dapat Rapelan Tunjangan", Suara Merdeka, 29
March 2007.

(23) Even ministers who do not represent certain political parties
often try to improve their political standing by handing out donations
to all parties. At the time of writing, former Minister for Maritime
Affairs and Fishery Rokhmin Dahuri stood trial for collecting more
than Rp 31 billion in off-budget funds from his officials and the
ministry's clients between 2002 and 2004. The money was subsequently
used for donations to presidential candidates and their parties in the
2004 elections, including Amien Rais, Wiranto and Yudhoyono. Most
recipients have denied receiving money from Rokhmin, with the notable
exception of Amien, who admitted to getting Rp 200 million personally
and another Rp 200 million for his party. "Amien 'Ready' for
Corruption Prosecution", Jakarta Post, 16 May 2007.

(24) Akbar was eventually acquitted by the Supreme Court.

(25) Confidential interview with a member of Partai Demokrat's central
board, Jakarta, 20 September 2006.

(26) Due to Indonesia's presidential system, many ministers feel that
they can afford to distance themselves from the parties that had
nominated them when the cabinet was formed. Such ministers often use
their posts to increase their own political status and wealth rather
than that of their parties. For example, the then Deputy Chairman of
PPP, Alimarwan Hanan, openly complained in December 2006 that Minister
for Social Affairs Bachtiar Chamsyah and Minister for State
Enterprises Sugiharto had not made any contribution to the party's
treasury, despite them being PPP cadres. As a result, Sugiharto lost
PPP's backing, and was replaced in a cabinet reshuffle in May 2007.
Bachtiar, however, stayed on. Interview with Alimarwan Hanan, Jakarta,
11 December 2006.

(27) For example, 64 per cent of Megawati's campaign contributions in
2004 came from large corporations. While companies could only donate
Rp 750 million each to a legislative or presidential campaign, many
entrepreneurs had their sub-companies making multiple contributions.
For example, the tycoon Prayogo Pangestu had 15 of his firms donating
sums between Rp 125 and 750 million each to Megawati's campaign in
2004, totaling Rp 6.95 billion. His colleague Djoko Tjandra made a
contribution of Rp 12.725 billion through 17 of his companies. "Jurus
Merapat Lewat Kocek Kandidat", Gatra 30 July 2004.

(28) "ICW: Pecat Wakil Rakyat 'Amplopan'", Bernas, 21 September 2001.

(29) Interview with Noviantika Nasution, 18 December 2006.

(30) Interview with Subur Bhudisantoso, Jakarta, 28 September 2006.

(31) The Golkar party chapter in Surabaya, for example, charged Rp 52
million for the first position on the list, Rp 24 million for the
second, Rp 14 million for the third, and Rp 7 million for the fourth
ranking. In the centre, the prices reached hundreds of millions. "A
Referee Without a Whistle", Tempo, English Edition, 6 January 2004.

(32) Interview with Airlangga Hartarto, Deputy Treasurer of Golkar,
Jakarta, 30 October 2006.

(33) Since the introduction of the new direct electoral mechanism,
voters go to the polls for parliamentary elections, presidential
elections and ballots for governors and district heads. Each of the
direct votes includes the possibility of a second round. Indonesians
also vote for their village heads, but these are by law barred from
becoming members of political parties.

(34) "Money Politics Could Play Role in 2004 Elections, Says Cetro",
Jakarta Post, 10 April 2003.

(35) "Transparency International Indonesia claimed that PDIP had spent
Rp 241 billion (US$26.8 million) for its parliamentary campaign alone.
"Parties Not Transparent about Legislative Poll Funding: NGO", Jakarta
Post, 29 May 2004.

(36) Speech by Megawati Soekarnoputri at the 70th birthday of Sabam
Sirait, Jakarta, 29 November 2006; notes by the author.

(37) "Iklan Parpol atau Iklan Orang Parpol?", Kompas, 28 June 2004.

(38) Interview with Akbar Tandjung, Jakarta, 20 December 2006.

(39) One of the major players in this field has been LSI (Lingkaran
Survei Indonesia, Indonesian Survey Circle) under the coordination of
Denny J.A., which had split off a more academically oriented polling
institution also named LSI (Lembaga Survei Indonesia, Indonesian
Survey Institution). In regular newspaper advertisements, Danny's LSI
proudly announced which parties or individuals it had helped to win
campaigns by providing advise on key policy messages, popular
image-building and the weaknesses of their opponents.

(40) Interview with Maruarar Sirait, Subang, 22 October 2006.

(41) Kalla's family businesses have earned a reputation for trying to
gain government contracts by offering cheaper prices than their
competitors. One minister reported that Kalla's siblings would
typically offer a "Kalla price" (harga Kalla) for a wide variety of
planned government procurement projects. (Interview with a minister in
the Yudhoyono cabinet, Jakarta, 1 May 2007.) Kalla, whose companies
won contracts for Jakarta's monorail and a number of power plants
while he was in office, has openly defended this practice, saying that
there was nothing wrong with it as long as the state saved money.
"Jusuf Kalla: Saya Pencet Supaya Semua Jalan", Tempo, 7 May 2007.

(42) Interview with Alvin Lie, Jakarta, 8 December 2006.

(43) Interview with Maruarar Sirait, Jakarta, 21 October 2006.

MARCUS MIETZNER is currently Senior Visiting Fellow at the Indonesian Institute, Center for Public Policy Research, Jakarta, Indonesia.

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