Event

Mr Joko Widodo’s first months of presidential mandate are proving difficult and tricky. Indeed, against the  will of his party’s (PDI-P) heavyweights, notably party leader and former president Megawati Sukarnoputri, he finally decided not to appoint General Budi Gunawan as the new police chief because of corruption charges – later reversed by a court due to an alleged faulty procedure - from the Corruption Eradication Commission (KPK). Instead he nominated Deputy Police Chief Mr Badrodin, a choice that was also  criticised by his supporters as Badrodin had been suspected of corruption as well. The subsequent arrest by the police of two KPK commissioners, a seemingly retaliatory move, highlighted the usual competition between both institutions.

Impact on country risk

Joko Widodo’s honeymoon has been short-lived. Today’s political crisis has weakened him and could affect his reform agenda. Faced with internal rift from a large party faction which was already apparent in the past months, he could need to find punctual support in the opposition, not only from small parties but also from the main opposition party. This highlights potential instability within the parliamentary majority. In return, he should give in to some of the opposition’s requests, probably from Mr Subianto, his top opponent at the latest elections, who also has to cope with intra-party tensions - which should translate into a more nationalistic stance in economic policy. Mr Widodo’s unstable position in this nomination case between his party and supporters was particularly delicate as he had been elected on a strong anti-graft reputation in a country where corruption is deep. As a result, expected protests and a tumbled popularity rate could lead to more populist measures in the short term. Although it is too early to judge whether initial hopes following Widodo’s elections will inevitably be disappointed as evidenced by the current crisis, for sure vested interests and corruption will remain huge challenges for him or any future president wishing to improve deeply-entrenched political and police practices.

Analyst: Raphaël Cecchi, r.cecchi@credendogroup.com