The U.S. Friday gave Indonesia $1 billion in loan guarantees, free of any conditions concerning human rights ab-uses surrounding the protests against President Suharto's rule. Almost simultaneously, the Pentagon, citing the unrest, canceled a joint training exercise with the Indonesian military.
The two actions underlined how the Clinton administration has been sending seemingly conflicting signals to Suharto's government all week. While the State Department has warned Indonesia several times about the dangers of further repression and the kidnapping of dissidents, it has declined to link those warnings to the aid being sent to ease the country's economic cri-sis.Both the new loan program and the Pentagon decision were discussed at the White House Friday morning, in a meeting to review the rising opposition to
Suharto and the price increases in fuel and other necessities mandated by the International Monetary Fund.
Friday the students burned an effigy of Suharto in the streets of Jakarta. But in Medan, where military troops were sent in to back up police in putting down protests that turned violent earlier this week, demonstrations were peaceful.
The billion-dollar loan package put together by the Export-Import Bank of the United States, an independent government agency charged with promoting U.S. exports, was signed here Friday with Indonesia's finance minister, Fuad Bawazier. The president of the Ex-Im Bank, James Harmon, said that by helping Indonesia obtain the raw materials it needs to get its factories running again, "we hope to contribute to stability to calm the social situation."
Major investors have been unwilling to put money back into Indonesia until it is clear that a peaceful transfer of power will take place after the 76-year old Suharto, who took over after a coup in 1965, dies or leaves office.