Electric Review

Culture & Criticism From the Far Distant Realms

Bali & the Big Picture

The second wave of Bali bombings reflects an ongoing dispute about the organizational umbrella of the Asian region. The international flow of trade and capital has undermined traditional power structures and has pushed Asian leaders towards free trade and the consideration of monetary unions. Some of those whose power is threatened have unleashed a tsunami of vengeance in the hope that a regional caliphate will emerge from the rubble.

Strange though it may sound, the terrorists and their masters are engaging in rational optimizing behavior. Underdogs of war must focus on provoking and overstretching their enemies and waiting for their crucial mistake.

Casualties have been much higher in other areas of internal conflict (Aceh, Maluku, Papua, Sulawesi etc) but killing tourists in the ‘flesh pots’ of Bali has a potent symbolic significance.

The tourist industry has been fed by a growing sense of a unique identity: the island has recently experienced a strong Balinese revivalist movement. (Since 2001 authority over most social and economic affairs has been devolved to the district level and control of tourism is largely decentralized). Yet, tourist income represents only about 3% of total economic activity in Indonesia (although about 40% derives from Bali) so the terrorists must be hoping that capital flows will be disrupted by fear of future dislocations. Our rational response is to minimize the dislocation to the Indonesian economy and to persevere with existing collaborative arrangements.

Indonesia is coming under intense international pressure to crack down on local terrorists. But there are a number of domestic factors that both help and hinder the government in this regard. Indonesia has traditionally been very resistant to outside pressure. But since 2002 it has taken the unprecedented step of allowing foreign (Australian) police and forensic scientists unlimited access to local records and day-to-day activities. Australian police are effectively running several local operations.

Reportedly, over 250 members of Jemaah Islamiyah have been successfully prosecuted in the courts. It would only strengthen our enemies if the concessions that the Indonesians have made are not recognized, and their government is still criticized for having not done enough.

Islam has enjoyed a resurgence in Indonesia since 1990. The public culture is becoming increasingly Muslim, although the dominant form of Islam is overwhelmingly moderate. There was (and still is) widespread revulsion against terrorists using Islam as a justification for wanton murder. On the other hand, if the government is seen to be acceding to foreign pressure, it may become a recruiting ground for radical elements. Perceived foreign pressure could work against our interests, by legitimizing radical opponents, and de-legitimizing government efforts to restrict terrorists.

In the short term, the impact these bombings may be as severe as the equivalent atrocities in 2002 as foreigners (and the increasingly important domestic tourists) stay away from Bali. The long-term impact will depend on how the government responds. If it is seen to be successfully managing the crisis, then those attacking the government for being either too weak or too strong will have less legitimacy.

The key for success will be the Indonesian government’s success in maintaining domestic political support for its efforts. If they can continue to gain community support for the efforts to isolate terrorists, then it is likely to succeed. A hard-line ‘security approach’ will not alone be successful – any such measures must be accompanied by an intense ‘social approach’.

Suicide bombers believe they are maximizing their perpetual happiness by committing their horrendous acts. Such sentiments are not unique to Islam. In 1918, Anthony Eden (later a British Prime Minister) wrote to his mother from the Western front: “we must all die some day, why not now by the most honorable way possible, the way that opens the gates to paradise – the soldier’s death”. By lessening the perceived certainty of such associations, we also lessen the probability that terrorists will make a ‘rational’ calculation that ‘heavenly’ capital and paradise awaits them.

As Nobel laureate Gary Becker and Yona Rubinstein pointed out, when we respond to terrorism we should recognize that overcoming fear is a fixed, not a variable, cost. Probabilities don’t change much – but perceptions do. Thus, Indonesia’s trading partners must distinguish between fearful perceptions and rational self-interest.

by Ian Chalmers & Robert Lesson

© 2005. Ian Chalmers & Robert Lesson. Reproduction without written permission of the authors expressly prohibited. All rights reserved.


Ian Chalmers is Senior Lecturer, Indonesian Studies, Curtin University of Technology, Australia. Robert Leeson is Associate Professor of Economics, Murdoch University, Australia, and currently ranked 17th on the list of the world’s top 500 economists.

This story was first published October 4, 2005 in the Australian Financial Review.
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This entry was posted on April 26, 2013 by in 2013, April 2013, Rat's Notebook and tagged , .
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