Sri Mulyani Indrawati Interview: From political protest to top of the World Bank

Daily Mail, by ALEX BRUMMER, CITY EDITOR, 27th April 2011

When Sri Mulyani Indrawati was drafted into one of the top jobs at the World Bank in June 2010, she could never have guessed how useful her experience as a reformer in the post-Suharto era of klepto-capitalism in Indonesia would prove to be.

In her current job as the Washington based Bank’s managing director, she finds herself responsible – among other things – for the Middle East and North Africa region, which has seen unprecedented upheaval, violence and change since revolution erupted in Tunisia late last year.

Since then no less than 15 of the 17 countries across the region – many of them clients of the Bank – have been in turmoil. In two countries, Libya and Yemen, there is all out civil war.

Unlikely revolutionary: Mulyani's experience as a
reformer in Indonesia has proven invaluable

When the disturbances began, Mulyani, a native of the world’s fourth most populous nation, immediately identified them with events in her own country where the population rose up against the rule of President Suharto in 1998 in the wake of the devastating Asian financial crisis.

‘The changes have a similarity with Indonesia. You have an economy supported by a relatively crude economic performance, or in this case (the Middle East), the oil sector,’ Mulyani argues.

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'People feel they are not participating in the decision-making process. Decisions are exclusive to those at the very top. You have grown up with crony capitalism and it creates ever more resentment.’

Our conversation takes place at the conference table in her office on the spacious president’s floor of the World Bank headquarters, just a short distance from the White House.

Mulyani, who is a near permanent presence on the Forbes list of the world’s most powerful women, speaks in fluent – but sometimes difficult to understand – English, and is accompanied by a coterie of advisers.

The World Bank managing director’s own experience in part resembles that of the well-educated revolutionaries in Egypt’s Tahrir Square and across the region. As the protests against the Suharto regime grew amid soaring inflation, which climbed to 80 per cent, and a collapsed economy, Mulyani, an academic at the University of Indonesia, found herself acting as ‘a resources person for the media’.

She became a big voice in the protest movement and as change came about was swept into government as an adviser sitting on the council of economic affairs. After a short sabbatical she was called back to power as finance minister.

The World Bank, with its 10,000 employees and thousands of consultants, looks a doddle in comparison. ‘At the Ministry of Finance we had 64,000 people,’ she recalls.

A slight woman, dressed demurely in a grey silk suit, Mulyani looks an unlikely revolutionary. She says that ‘toppling the small elites in charge and identifying the issues is much easier than correcting it’.

She adds: ‘You have to build new institutions that create an open, fair transparent institution and regulatory framework.

‘Indonesia’s response was dictated by the financial shock of crisis. So there was a phenomenal policy change required at the time.

‘We now have an anti-corruption law, we have a competition law and an anti-monopoly law and a bankruptcy law.

‘It took a year and a half from ending the president’s (Suharto) rule.’ In her view it was possible to speedily drive reform in Indonesia because it was ‘a collapsed economy’.

It may be harder in Tunisia, Egypt and across North Africa and the Middle East because the damage, so far, has not been so cataclysmic.

‘The momentum for change cannot be that radical in a way that it was in Indonesia. Tunisia and Egypt need to design the transition which strike the right balance between the continuity of economic growth and the need to protect poor people.’

As someone coming from the country with the world’s largest Muslim population, does Mulyani believe that Islamism and modern reformed economies are incompatible?

‘I don’t believe it has anything to do with religious belief,’ she snaps back. ‘People now, especially with the internet, are connected. They have an expectation of behaviour, of accountability, avoiding conflict and fair and just competition.

‘In Indonesia we don’t see this as against our values or religious beliefs. In fact I think Islam is actually seeking a just society in a way.’

Part of the clean-up process in Mulyani’s view is returning looted assets to the people through a ‘proper process’. But she warns it takes a long time and people ‘can be easily disappointed’.

Now that she is on the other side of the fence, Mulyani recognises that the World Bank and other development groups have much to learn from the way in which unscrupulous leaders loot the national wealth through crony capitalism and nepotism.

‘We are watching and learning from the experience. Corruption is really an enemy of the people, it is the enemy of the poor and that is why governance has become one of the Bank’s essential principles.

‘Engaging with a country that will not provide support for governance will definitely be a limitation on the Bank’s ability to operate there,’ she insists.

Mulyani is keen to bring a new dynamic to the Middle East economies which avoids a model of ‘high growth which fails to create jobs’. In her view it needs a blueprint that is inclusive and recognises the harm done by discrimination on ‘gender, on minority and location’.

She bemoans the fact that much of the education in nations like Tunisia ‘is not connecting with the jobs market’. Many of the manufacturing jobs are being replaced by automation so it is the services sector which will need to pick up the slack.

As for food prices, one of the other underlying causes of upheaval across the region, Mulyani thinks that governments need to be ‘aggressive in designing a social safety net’.

‘The problem of the food price is structural. The growth of demand cannot be checked in that it is coming from middle income countries demanding more quality and more quantity of food. High demand is here to stay,’ she says.

Mulyani has made an extraordinary journey from academia, to protest leader, to the highest level of government in one of the world’s most complicated countries, and now a portfolio at the World Bank which stretches from Latin America to East Asia and North Africa.

Mulyani says: ‘Many emerging countries are facing the same issue of overheating and inflation because they have been vigorously expanding fiscal and monetary policy to counter the 2008 shock.’

But she is hopeful that they have learned from the past and the economic framework is now much more sound.

Having risen to such dizzy heights does she have further ambition? Could she, for instance, be the first emerging market president of the World Bank.

Mulyani won’t be drawn. She simply notes that the ‘process has to be credible’ which means ‘open and not following any nationality’.

Despite the disadvantages of being a women from Asia – at an institution which since its foundation at Bretton Woods in 1944 has been headed by alpha male Americans – it would be hard to argue against her credentials.