Source: The Oregonian, Oct. 21, 1998

[Indonesia, in the Wake of the East Asian Financial Crisis]

The French Fry Connection
Strands in a broken web
The Asian financial collapse tore an intricate trade network to tatters, but the global economy endures
Wednesday, October 21 1998
By Richard Read of The Oregonian staff

The day Jakarta burned, Angus Karoll struggled to keep 550 tons of french fries out of the fire.

Karoll, 27, a lean, wry Australian who heads potato processor J.R. Simplot Co.'s Indonesian distribution, had no time to ponder the irony of the situation. As the world's fourth most-populous country lurched toward revolution May 14, Karoll worked to save a stash of frozen potatoes.

Karoll needed someone courageous, foolhardy or greedy enough to drive 800 gallons of gasoline through riots and fire to the french fry warehouse. The fuel would power an emergency generator to keep the spuds at 8 degrees below zero until power was restored.

Karoll found his improbable hero. He met the wide-eyed driver at the storage building and paid him generously in cash.

The potatoes were saved. But the riots took a toll far more serious than a warehouse full of french fries. More than 500 people died in Jakarta that day.

While Jakarta burned, tourists in Singapore, 550 miles away, strolled calmly along Orchard Road. There, schoolchildren munched happily on McDonald's french fries produced in the Pacific Northwest by members of the Hutterite sect and diverted from riot-torn Indonesia.

Singapore's serenity so close to Indonesia's chaos highlighted the differing fortunes of nations caught in the "Asian crisis," which is actually several converging crises. The differences between countries, which persist as the turmoil goes global, suggest that any recovery of the world economy will also come not all at once, but in stages. Japan's advanced economy, for example, might recover sooner than Indonesia's, where terrorized ethnic Chinese businesspeople could take years to return.

Sixteen months after the economic blaze ignited in Thailand, Asia's fires still smolder, flaring unexpectedly as far away as Russia and Latin America, still threatening to cause a world conflagration.

But the global economy is so new, so unchecked and so crudely understood that the world's leading economists can't agree on how to douse the flames. Jittery investors dash for the exits with each new sign of smoke, upsetting stock markets and compounding uncertainty.

The example of the Northwest french fry illustrates one sure truth: The global economy is ubiquitous to the point that there's no going back. Countries and regions can no more shut it out than rebuild the Berlin Wall or resurrect the Soviet Union.

When something as prosaic as a french fry can reach far-flung Indonesian islands, consider how far dollars, yen and euros can go. When merchants risk their lives to save a stash of potatoes, consider how readily global economic forces can topple governments and build or destroy nations and regions.

Singapore and other nations could still succumb to the global crisis. Protesters are taking to the streets in neighboring Malaysia. They probably will turn out again when President Clinton and other Pacific Rim leaders meet in the recession-bound Southeast Asian nation next month.

The leaders could agree on economic checks and balances that would help guide the world toward recovery. But the wide sweep of the humble french fry suggests that no one can claim immunity to swings of the global economy.

After saving Simplot's french fries May 14, Karoll retreated to his 10th-floor office in central Jakarta. He gazed in awe as the city lit up in flames.

Directly below, rioters threw rocks at the front of a Hero supermarket, smashing windows. They entered and began looting.

Karoll was safe, his office building protected by an electric fence hastily erected at the entryway. He watched as the three-story supermarket below him burned to the ground. So did one-third of the restaurants that bought fries from Simplot, including about 10 McDonald's.

Suharto, Indonesia's president, resigned May 21. After decades of ordering soldiers to hunt down guerrillas and leftists, the dictator was toppled by markets and globalization. 


The carnage in Indonesia took its toll on a key segment of the nation's population. The middle class, which flowered in Indonesia and across Asia during the region's economic rise, faces extinction.

Jakarta's middle class included Indonesians such as Jimmy Lubis, whose house in a pleasant suburb has many of the trappings of a middle-class home in the West. His family of four has a television, a stereo and a desktop computer.

But by May, Lubis, 35, a former futures commodities broker trained as a lawyer, could no longer afford to take his daughter, Savina, then 5, to McDonald's.

"She loved those french fries," said his wife, Emma, 32. "Now we don't go out at all."

Indonesia's middle class was never large. An estimated 18 percent of households earned more than $400 a month in late 1996.

Members of the middle class looked forward to buying new homes, founding businesses and sending their children to college. They were the people who ate french fries and consumed other Western products.

Westerners awed by Asia's rise saw the emerging middle class as the new hope of the world economy.

"They are increasingly regarded as the economic dynamisers of the 21st Century," wrote Richard Robison and David Goodman in a 1996 study, "The New Rich in Asia: Mobile Phones, McDonald's and Middle-Class Revolution."

After the economic crash, half of Indonesia's 200 million people are expected to descend this year below the poverty line of $5 a month.

Children are among the main victims.

Authorities estimate that more than 6 million Indonesian elementary school students are in danger of dropping out. More than 250,000 Thai students have already left school for lack of money. The exodus could stunt future economic growth, limiting the supply of productive, skilled workers.

The demise of much of Asia's middle class fuels nationalism, as unemployed workers lash out at foreigners or local ethnic groups. Mobs in Indonesia target ethnic Chinese, who control the nations economy, for rapes, muggings and murder.

Lubis worked briefly for a Western firm and for a home remodeler after his brokerage went bankrupt. He sold the family car to start his own remodeling business. By May, he scrounged occasional work repairing air conditioners or installing wiring.

The Lubis family, with a baby and no health insurance, was exhausting its savings as prices rose.

In its heyday in the 1980s and early 1990s, Asia's new middle class drove the economic growth of nations. The middle class in places such as South Korea and Taiwan reached the critical mass necessary to fuel political reforms, converting authoritarian regimes into democratic governments.

The question now is how Asia and its once and future middle class will reinvent themselves. 



See also the following article:

Lisa J. Studdert, Edward A. Frongillo, Jr. and Pascale Valois*: "Household Food Insecurity Was Prevalent in Java during Indonesia’s Economic Crisis", in: Journal of Nutrition,  2001, 131, pp. 2685-2691.
(The Journal is published by The American Society for Nutritional Sciences) 

Correspondence may be addressed to Edward A. Frongillo, Jr.: E-mail: