Military Businesses in Post-Suharto Indonesia: Decline, Reform and Persistence

One of the most crucial challenges for transitional or consolidating democracies is establishing effective government control over the armed forces (Diamond & Plattner, 1996). Without such control, the armed forces (or factional elements within them) retain the capacity to sabotage democratic reforms – most notably elections, the creation of independent legislatures and judiciaries, as well as the expansion of civil liberties. Many states undergoing democratic transitions try to impose control over their militaries by removing them from political decision-making, placing pro-reform officers in key positions and strengthen civilian institutions (Cottey, Edmunds, & Forster, 2002b). If militaries played a particularly strong role in the authoritarian regime that ruled prior to the democratic transition, new government leaders may also opt to make concessions to the officer corps, such as amnesty for past human rights abuses or some form of continued role in security affairs (Mainwaring, 1989). But one field that is often overlooked by civilian officials in democratizing states is the importance of gaining control over the military’s finances. More often than not, institutional reforms are being carried out that fail to curtail the military’s access to or even direct possession of vast monetary resources. With these resources, militaries become independent of the official defense budget allocations provided by the state, and can thus finance operations that run counter to the interests of the government (Brömmelhörster & Paes, 2003). Hence, even states that have successfully introduced electoral reforms and made other important institutional changes can still see their democratization processes undermined by militaries with sufficient financial autonomy to pursue their own agendas.