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Thesis & Antithesis

A critical perspective on energy, international politics & current affairs

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Location: Washington, D.C.

greekdefaultwatch@gmail.com Natural gas consultant by day, blogger on the Greek economy by night. Trained as an economist and political scientist. I believe in common sense and in data, and my aim is to offer insight written in language that is clear and convincing.

28 September 2005

Indonesia fuel subsidies

Yesterday, the Indonesian parliament approved a plan to limit fuel subsidies to $8.7bn (the current estimate is that Indonesia spends about $14bn a year subsidizing fuel). The resulting price hikes are to come into effect this Saturday (Oct. 1), triggering fears about the impact on Indonesia’s politics; after all, fuel price hikes were part of the spark that helped topple former dictator Suharto. If anything, this decision shows political courage (it includes help to 15 million poorer families); but it also underscores the limitation of subsidies, as they create a sense of entitlement among the people which makes their abolition all the more difficult.

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