Sjafruddin Prawiranegara

Shortly after the proclamation of Indonesian independence, he joined the Central Indonesian National Committee on 24 August 1945, becoming one of the members of its Working Committee. In a later interview, he noted that some considered him a follower of Sjahrir within the group, but he did not consider himself as such.[7][11] In 1946, he joined Masjumi, the Islamic political party. He was close to Sjahrir, which led to his appointment as deputy minister of finance in Sjahrir's second cabinet from 12 March 1946 to 2 October 1946, Minister of Finance for Sjahrir's third cabinet from 2 October 1946 to 27 June 1947, as well as being Minister of Prosperity under Hatta's non-party cabinet starting from 29 January 1948.[7][12] Sjahrir had offered Sjafruddin a post as Minister of Finance in his first cabinet, but Sjafruddin rejected citing his perceived inexperience. In a later interview, Sjafruddin remarked that once he became Junior Minister and saw how Minister of Finance Soerachman Tjokroadisurjo worked, he thought he "can do [the Finance Minister's duties] better than that".[13]

Early in the revolution, Sjafruddin emphasized the need for revolutionaries to maintain a pragmatic stance. In a newspaper article, he criticized the Pemuda groups for pressuring the government with excessive demands, supported Sjahrir's realpolitik approach and praised Vladimir Lenin and Joseph Stalin as "realists", despite himself being a Muslim. The article came as a response to Sudirman's speech which espoused militancy and downplayed the lack of equipment of the Indonesian military. Sjafruddin also denounced a number of leaders which called for pemuda to fight Allied forces with bambu runcing as "criminal".[14] Sjafruddin also persuaded Hatta to issue the Oeang Republik Indonesia (ORI), the predecessor to the modern Indonesian Rupiah, both to finance the Indonesian government during the revolution and to generate a degree of legitimacy to the international community.[15] When Hatta hesitated, Sjafruddin remarked to him that "if [Hatta] was caught by the Dutch he would be hanged not as a forger but as a rebel". In late 1946, he was the first Indonesian finance minister to distribute the ORI – although the signatures were that of A. A. Maramis who had organized its printing the previous year.[13][16] In 1947, he participated in Economic Council for Asia and the Far East at Manila, where he learned of the international impression that the Indonesian revolutionaries were communists. Once he returned, he published a booklet in mid-1948 which attempted to clarify the unusual coalition between Masyumi and the Indonesian Communist Party.[17]

Sjafruddin's base during his time at Bidar Alam.[18]

Sjafruddin (second from right) with Sukarno (center) in Yogyakarta after his return, 1949.

By November 1948, the prospects of a potential second Dutch offensive following Operation Product against the Republicans had caused the Indonesian government to prepare a contingency plan. Mohammad Hatta brought Sjafruddin to Bukittinggi, and returned to Yogyakarta, leaving Sjafruddin to form an emergency government should Yogyakarta and other Republican leaders fall into Dutch hands. This happened on 19 December 1948, and after being informed of Yogyakarta's fall by Colonel Hidayat Martaatmadja, Sjafruddin was initially unable to believe that the Indonesian government would fall so quickly and that both Sukarno and Hatta had been captured. He was also initially uncertain of the authenticity of the news, and of his legal authority to form a government.[19][20] He convened a meeting with local Republican officials such as Teuku Muhammad Hasan and Mohammad Nasroen, but their meeting was cut short by Dutch aircraft flying low over the city.[21]

In order to evade the Dutch attacking Bukittinggi, he retreated further inland, towards the town of Halaban, where he was joined by a number of Republican officials and military leaders. There he eventually announced the formation of the Emergency Government of the Republic of Indonesia (PDRI) on 22 December, with himself as head. The PDRI further announced the formation of a commissariat in Java, which were to be headed by Republican leaders which evaded capture such as Soekiman Wirjosandjojo and I.J. Kasimo.[19][22] He adopted the title "Head" instead of "President" which Sukarno had given him mandate for as the mandate had not reached him by 22 December.[23] In addition to Head of Government, the emergency cabinet also had Sjafruddin as ministers of defense, foreign affairs,[lower-alpha 5] and information.[25] Still on 22 December, Dutch forces captured Bukittinggi and Payakumbuh, threatening the PDRI at Halaban and convincing them to withdraw further.[26] Shortly after the pronouncement, Sjafruddin's group left Halaban, with the military leadership heading north towards Aceh.[27]

Sjafruddin and the civilian leadership had initially planned to move to Pekanbaru, but Dutch air attacks, difficult roads, and Dutch capture of a number of towns in the route compelled the group to briefly split up at Sungai Dareh, then regroup at the village of Bidar Alam, near Jambi. Sjafruddin arrived there on 9 January 1949, and the split groups followed up in the following weeks.[28] Sjafruddin used a generator-powered radio transmitter of the Indonesian Air Force to maintain contact with both the international world (for example, congratulating Jawaharlal Nehru for his inauguration as Indian Prime Minister) and the scattered members of PDRI.[27][28] In order to ensure continued supplies of food and military supplies for the guerilla units still operating in Sumatra, Sjafruddin established a supply section, which controlled the Republican trade of agricultural products and opium to the Malay peninsula.[29] On one occasion on 14 January 1949, Sjafruddin and a large number of PDRI's civilian and military leaders attended a meeting at the village of Situjuh Batur. Sjafruddin left after the meeting, but a number of leaders (such as Chatib Sulaiman) stayed the night there and were killed in a Dutch ambush at the dawn of 15 January.[30][31]

As the Republican forces conducting guerrilla warfare in Java and Sumatra, led by Sudirman, recognized Sjafruddin's PDRI as the legitimate Republican government, the PDRI critically allowed the Indonesian fighters to continue having a unifying authority.[24] Eventually, frustrated with continued Indonesian resistance, the Dutch approached Sukarno and Hatta in order to negotiate, bypassing Sjafruddin's emergency government. This angered him, as he believed that Sukarno and Hatta had no legal authority at that time and that the PDRI should be considered the legal representation. Many leaders, including Sudirman, were also displeased as neither Sukarno nor Hatta consulted the PDRI leaders while negotiating the Roem–Van Roijen Agreement, and pressed Sjafruddin to reject it.[32][33][34] Sjafruddin was eventually convinced to agree to the outcome of the agreement after some convincing by Mohammad Natsir, Johannes Leimena and Abdul Halim – Hatta had also went to meet Sjafruddin, but he went to Aceh as the captured Republican leaders thought that the PDRI was based there.[32][33] Eventually, escorted by troops from the United Nations, he left his hideout, and returned to Java with Natsir. In a speech before his departure, Sjafruddin indicated his misgivings with the agreement, but recognizing the need of presenting a united Indonesian front, he returned his mandate to Sukarno in Yogyakarta on 13 July 1949.[35]

A caricature describing the Sjafruddin Cut policy

A 2.5-rupiah banknote from 1951, bearing Sjafruddin's signature

Following Sjafruddin's return to Yogyakarta, he was appointed as Deputy Prime Minister for Sumatra in the Second Hatta Cabinet, and was stationed at Kutaraja.[1] He was given extensive powers in this position, due to tenuous control and communication that the Republican government had on Sumatra.[36] During the PDRI period, Sjafruddin had been approached by Acehnese leaders, who requested that the region be split off into its own province.[37] By May 1949, he had officially appointed Daud Beureu'eh as military governor of Aceh.[38][36] In a visit to Aceh on August 1949, he faced significant pressure in order to form a province, to a point where a government statement later described that "the autonomous province of Aceh was created through force majeure".[36] In December 1949, he released a decree which separated Aceh from North Sumatra to form its own province, but this decree was revoked by the central government under Mohammad Natsir's premiership. This caused significant anger amongst Acehnese leaders such as Daud Beureu'eh, and only successive visits by Sjafruddin, Assaat, Hatta, and finally Natsir himself calmed down the situation.[37][39] Additionally, Sjafruddin also assured officials who had worked for the Dutch that the Republican government would not permit reprisals.[40]

Within the Republic of the United States of Indonesia Cabinet, Sjafruddin returned to his previous office as Minister of Finance, a post which he would later retain in the succeeding Natsir Cabinet.[41] In the Masyumi-heavy cabinets between December 1949 and June 1953 (at the end of the Wilopo Cabinet), Sjafruddin's economic views and outlook enjoyed significant influence in the government, with Sjafruddin being Masyumi's primary outlet of economic policy.[42] One policy of Sjarifuddin was a foreign exchange certificate policy, which granted such certificates at half of the nominal value of exports. This could in turn be sold to importers, who would have to present the certificate with a face value equivalent to the nominal value of their imports.[43]

Additionally, as a result of the Dutch–Indonesian Round Table Conference, the Indonesian government was saddled with heavy debts and obligations, and the economy was plagued with heavy inflation due to a shortage of goods and an oversupply of currency. By 1950, there were three currencies circulating – one issued by the Republican government, one issued by the Netherlands Indies Civil Administration (NICA), and the other issued by De Javasche Bank before the Japanese occupation. In order to reduce the money supply, Sjafruddin announced on 10 March 1950 that all NICA and De Javasche Bank notes with a face value above 5 guilders were to be physically cut in half – a policy known as the "Sjafruddin Cut" (Gunting Sjafruddin).[43][44][45] The left halves of the notes remained legal tender until 9 April 1950, with a nominal value of half its face value and to be exchanged with new notes, while the right halves were exchanged with 30-year government bonds yielding 3 percent.[43][46] Outside of paper money, the same "cut" also applied to bank accounts, with half of all bank account values (excepting an amount of 200 guilders for accounts with less than 1,000 guilders) being transferred into a government loan account.[44][47] According to Sjafruddin in a later interview, beyond reining inflation, this also served to create a uniform currency system for the whole country and remove unwanted Dutch currency from circulation.[13][45] Claims from De Javasche Bank stated that the policy reduced the money supply by 41 percent, and that the prices of food and textiles still rose in 1950 after the execution of the Sjafruddin Cut.[41]

Both policies resulted in significant criticism from the political opposition. This was especially the case with the Sjafruddin Cut, which was constantly attacked by the Indonesian Communist Party.[43] It also caused controversy due to the dating of the order – which happened at the end of the month, when most salaried workers still held cash.[46] While government income increased during his early tenure, expenses also rose, and hence he failed to close the government deficit.[48] Indonesian government finances later improved during the Natsir era due to a boom caused by the Korean War, resulting in a budget surplus. In this period, the "Economic Urgency Plan" was devised by minister of trade and industry Sumitro Djojohadikusumo, to Sjafruddin's opposition, to develop import substitution industries and restrict some industries to native Indonesian entrepreneurs.[41][49] Despite the better financial situation, Sjafruddin maintained the government budget strictly, maintaining an unpopular colonial-era tax, refusing to raise salaries of civil servants, and rejecting calls to provide funding to political parties. This was compounded by a number of Dutch officials he maintained within the finance ministry who held significant powers.[50][51]

Generally, Sjafruddin's policies and views were considered more accommodating than his contemporaries.[52] With regards to his religious views and upbringing, Sjafruddin disagreed with the interpretation of bank interest as riba.[53] In a 1948 pamphlet, he espoused "Religious Socialism", which promoted a liberal free market economy and reserved nationalization for a later-stage, more developed economy.[52] This resulted in a number of disagreements and public debates between him and the more nationalistic Sumitro.[41] Unlike Sumitro, who endorsed state intervention to develop an industrial base, Sjafruddin doubted that state-owned enterprises would be efficient or productive.[54] Sjafruddin also argued for a more gradual process of nationalization,[49] arguing that foreign capital was advantageous for the country's economy and that rejecting it would be counterproductive.[55] After his replacement by Jusuf Wibisono, Sjafruddin began to criticize the Sukiman Cabinet's economic policies, writing in a June 1951 pamphlet that economic decline from the government's policies was "only temporarily hidden by the pseudo-welfare of high export prices".[56] During 1952, a split occurred in Masyumi, the party remaining under modernist politicians such as Sjafruddin and Natsir, while more traditional Islamist members merged into Nahdlatul Ulama (NU).[57]

By 1951, the Indonesian government had nationalized De Javasche Bank, and converted it from a joint-stock company into a public body.[58] Sjafruddin opposed the nationalization on the grounds that the bank's Indonesian personnel were too unexperienced to manage it.[59] Despite this, he was appointed as the inaugural governor of the central bank, later renamed Bank Indonesia (BI), on 30 April 1951 to replace the previous resigning governor A. Houwink.[59] Sjafruddin held relatively similar economic and monetary policy views with the previous Dutch administrators – such as his belief in the lack of necessity to nationalize the bank – and according to Sjafruddin's claim, Houwink agreed with his selection. In the first annual report of BI, Sjafruddin argued for the bank to continue commercial banking activities, citing a shortage of access to banking systems and a lack of a capital market in Indonesia at that time.[58] In designing BI's statutes, Sjafruddin placed a clause which would manage the bank's reserves of gold and foreign currency at 20 percent of currency issued. This was criticized by contemporary economists, most prominently Sumitro who had been appointed as the new Finance Minister, and the reserve requirement failed to fulfill its intended purpose.[60]

While in his tenure, Sjafruddin criticized the Indonesian government's lack of clarity on the distinction between "domestic" and "foreign" capital. Sjafruddin was of the opinion that the distinction between the two laid in whether profits were remitted abroad or not – in other words, that Chinese Indonesian entrepreneurs would be "domestic". This was in contrast to positive discrimination policies for indigenous Indonesians favored by Sumitro.[61] During the Ali Sastroamidjojo premiership between 1953 and 1955, Sjafruddin was also a prominent critic of the government economic and monetary policies.[62] In 1956, approaching the end of Sjafruddin's first term as governor, the Indonesian National Party (PNI) proposed to replace him with PNI member, BI deputy governor and former PDRI minister Lukman Hakim, who Sjafruddin had a close relationship with. Sjafruddin maintained his post after NU opted to back his second term, aided by favours given to NU-related businesses by fellow Masyumi member and sitting finance minister Jusuf Wibisono.[63][64]

By late 1957, the Indonesian economic and political situation had deteriorated, and Dutch firms were often blamed for the malaise.[65][66] The general public opinion was firmly against Sjafruddin's position which still accommodated foreign capital.[67] Sentiments against the Netherlands rose significantly following Dutch success in blocking the West New Guinea dispute from being discussed at the United Nations General Assembly on 29 November 1957, and immediately afterwards Sukarno ordered labor unions and army units to take over Dutch businesses.[65][66] Sjafruddin himself alongside other Masyumi leaders were investigated for possible links with an assassination attempt on Sukarno on 30 November 1957 in Cikini as some of the assassins were members of Masyumi's youth wing.[66] Despite of this, Sjafruddin remained critical of the takeovers, and the lack of a clear plan on how they would be executed.[65] Throughout December 1957, Masyumi leaders Sjafruddin, Natsir, and Burhanuddin Harahap were subjected to accusations by the media of being complicit in the assassination, and they were harassed by phone calls and by paramilitary groups. They all opted to depart Jakarta for their own and their families' safety, and by January 1958 Sjafruddin was in Padang.[66]

While on the way there, he and other Masyumi leaders (and Sumitro, who had left Jakarta after being accused of corruption) attended a meeting with a number of dissident officers such as Maludin Simbolon. Following debates (the military commanders allegedly wanted to declare Sumatra's independence, which the civilian leaders opposed), the group released a statement which called the Djuanda Cabinet unconstitutional, and called for a cabinet led by Hatta and Hamengkubuwono IX to be formed.[68] Sjafruddin also stopped over at Palembang and held discussions with the potential dissident Colonel Barlian, who was the regional commander of the armed forces in South Sumatra. Barlian refused to commit his forces to support a potential rebellion.[69] Sjafruddin also wrote an open letter to Sukarno, which voiced his opposition to the "fascist" Guided Democracy and called for a return to the 1945 Constitution.[69] While Natsir and Harahap claimed to have specific reasons to be in Sumatra, Sjafruddin openly admitted to having fled Jakarta, writing another open letter to Sukarno on 23 January 1958, saying that "he was not ready to die stupidly".[70]

A PRRI banknote from September 1958, bearing Sjafruddin's signature.

On 15 February 1958, the Revolutionary Government of the Republic of Indonesia (PRRI) was declared in Padang by Lt. Col Ahmad Husein, with Sjafruddin being named as its prime minister.[71][72] He also doubled as the minister of finance in the PRRI government.[72] However, Sjafruddin refused to sign the declaration.[73] The Indonesian government under prime minister Djuanda Kartawidjaja issued an order to arrest Sjafruddin and the other civilian leaders the following day, and within a week aerial attacks were launched against cities in West Sumatra.[72] By April, government forces had landed in Padang and secured it with little to no resistance. Once he learned of the PRRI military collapse, Sjafruddin vowed in anger to "stay here in the jungle" and adding that "it won't be the first time". By 5 May, the PRRI capital at Bukittinggi had been captured by the Indonesian government.[74]

Within four months, the government's military actions had completely defeated the PRRI militarily, the leaders had failed to gain significant popular support for the movement, and while it initially received some backing from the United States, the military aid was soon withdrawn.[lower-alpha 6] By the middle of 1958, the group had been forced into a low-intensity guerrila warfare based in the jungles of Sumatra.[75] Despite continued defeats, Sjafruddin then still refused to attempt a compromise with the Jakarta government. On the first anniversary of the PRRI, he gave a speech still attacking Sukarno for working with Communists, and urged for a federal state.[76] In a last-ditch political attempt, the Masyumi leadership and the dissident military leaders announced the "United Republic of Indonesia" at Bonjol on 8 February 1960.[76][77] In the proclaimed state, Sjafruddin was named president, but little other details beyond the state's constitution was prepared.[76] The declaration did not amount to much, and the Indonesian government continued to pressure the PRRI, capturing rebel held towns in Sumatra's highlands. By July 1960, the rebel stronghold at Koto Tinggi where Sjafruddin and the other Masyumi/PRRI leaders resided had been captured, forcing them to flee and disabling their capacity to lead the rebellion.[78]

Army Chief of Staff Abdul Haris Nasution, in order to further split the government of the PRRI, announced an amnesty program for rebelling troops in late 1960. In April and May 1961, PRRI's troops began surrendering to the government, although the PRRI still controlled much of the rural regions of West Sumatra.[77][78] Sjafruddin and Natsir appointed Maludin Simbolon to represent the PRRI in negotiating with the central government, but the military leaders opted to surrender separately. Between June and 17 August 1961, nearly all of the PRRI's troops and military commanders surrendered, leaving the civilian leaders little options.[78] Sjafruddin himself had been negotiating with Nasution since July, and alongside Assaat and Burhanuddin Harahap he submitted to military authorities near Padangsidempuan on 25 August 1961.[78][79] He did so after advising his own remaining followers to "cease hostilities" in a radio broadcast on 17 August.[78][80] Sjafruddin also surrendered the PRRI's assets in form of 29 kg of gold bullion. This left only Natsir and Colonel Dahlan Djambek as PRRI's remaining leadership, and after Djambek's death on 13 September, Natsir too surrendered on 25 September, ending the PRRI rebellion.[81]

Sjafruddin was initially not imprisoned, due to a 1961 declaration of amnesty for PRRI members by Sukarno, and for a time he stayed around Medan. However, in March 1962, he was brought to Jakarta, and then held as a prisoner in Kedu for two years before being transferred to a military prison in Jakarta in 1964.[82] He was eventually released on 26 July 1966.[79]