Introduction
Indonesia president Prabowo Subianto declared in a speech that the Dutch have siphoned off US$ 27 trillion from Indonesia. In 2014 I published an economic model to calculate the amount of reparations that a colonial power should pay for the damage that colonialism has caused to the colonized people.[1]
A first run of the model shows that the estimate of Subianto is way to low. It is at least x time higher. In this article I will explain the model and how to apply it to calculate the damage done by Dutch colonialism to Indonesia.
The principles of the economic model
The economic model is based on principles that are accepted by European economic theory of liberalism.
The European economic theory of liberalism is based on five assumptions:
- If you build an enterprise on land that is not yours, you should pay rent. This principle is accepted in the west, then and now. You do not set up a business on a property in London, Paris or Amsterdam without asking permission from the person owning the land and without negotiating about the rent you should pay. Colonization was the conquest of land that did not belong to the Europeans. So in our model we calculate the outstanding rent that the colonizers have to pay for exploiting land that was not theirs during all the years of colonization.
- If you take goods that are not yours, you should pay for them. You don’t steal, you buy. This principle is vested in religion, morality and law of the west. One of the ten commandments of the Bible is: “Thou shalt not steal”. In our model we take account of the value of the minerals, agricultural goods and other material goods that Europeans have stolen and taken away without payment.
- If somebody performs labor on your behalf, you should pay a proper wage for his or her services. If a painter comes to paint your house, you give him of her a decent payment. What is decent is negotiable but the principle that labor is not free was generally accepted in the west during colonialism. Underpaid labor is labor that did not get the wage that was considered proper in Europe for the services that were provided by the laborers. The fact that labor has been extracted from the colonized without their consent and by force is included in this part of the calculation.
- If you intentionally (or even unintentionally) cause injury to an individual or a community you should pay compensation for the injury. In the case of an individual the injury can vary from emotional injury (stress from forced labor or kidnapping) to injury in property and body. In the case of a community, the injury consists in the annihilation of social institutions, the destruction of human dignity and the suppression of basic human rights. A basis principle in these cases is that the victim should be compensated and not the perpetrator. The Europeans have reversed this principle. When they abolished slavery in the Americas, the criminals were compensated. They got a sum of money per enslaved person as compensation for their crime. In our model we compensate the victim, not the criminal.
- If you have a debt, you should pay interest. This is an accepted principle in economics and morality in the west. If you were a Muslim, you might argue that interest is forbidden in Islam, so no interest can be charged. But the west was Christian, not Muslim, so we adhere to the principles of the west. In our model I use the interest rate that a European power (France) has imposed on a colonized people (the people of Haiti) when they demanded and got reparations for enslavement, which was 6%. In 1791, the enslaved Africans in Haiti started a revolution that ended in a victory on January 1, 1804 when they formally declared the first free black republic in the Americas. It took the defeated French twenty years to reorganize for a decisive battle to reinstate slavery. In 1825, the French came with 14 warships and 528 cannons and presented Haiti with the choice: pay 150 million gold francs as reparations and get recognition of Haiti as a free nation by France and other European nations or face economic blockade, starvation, war and the reinstatement of slavery. The amount was equivalent to a whole year of Haiti´s revenues. Haiti accepted unwillingly. They were forced to borrow the amount from French banks who charged a 6% interest rate for their loans. Haiti finished paying reparations to France in 1947.
The calculation
1. Unpaid rent
Indonesia has a land area of 1,892,555 square km, which is 1,892,555,000,000 square meters. Dutch colonialism started in 1602. The Dutch East India Company first seized Ambon in 1605, then conquered Jayakarta (modern Jakarta) in 1619, renaming it Batavia and making it the colonial capital. By the mid-17th century, the VOC controlled key spice-producing regions like the Banda Islands and Maluku, displacing Portuguese and British rivals.
The Dutch never paid rent, as they should have according to their own liberal economic theory.
How do we calculate the unpaid rent? We use a price per square meter per month. Let us say US$ 10 cent per month, which is US$ 1,20 per year. The rent per year would be 1,892,555,000,000 * US$ 1,20 = US$ US$ 2,271,066,000,000 per year. The Dutch colonized Indonesia for 344 years (from 1605 till the final liberation of Indonesia in 1949). For all these years the Dutch should have paid US$ 781 trillion (344 * US$ 2,2 trillion). That is way more than the Indonesian president talked about. And this is just for unpaid rent.
We have to make some modifications in the calculation.
First, the Dutch did not colonize all of Indonesia in one year in 1605. So we can set up an model based on annual expansion of unpaid rent. That would decrease the total amount for rent.
Second, we should calculate the unpaid rent as a loan that the Indonesian people were forced to grant to the Dutch colonizer. Indonesia should receive interest for this loan. That would dramatically increase the unpaid rent.
2. Unpaid goods
The Dutch stole goods from Indonesia. Historians should be able to produce statistics about the stolen goods such as agricultural product in quantity and price. Then you have a value per year of what was stolen en not paid for. You can calculate the amount per year.
3. Unpaid or underpaid labour
When the Dutch first occupied Indonesia, the population was about 10-12 million. When the Dutch finally left in 1949 after a bloody war of independence the population was around 75 million. Historians can make estimates per year of the share of the population that was subjected to forced labour or underpaid labour per year in labour hours. They can put a proper wage per hour that should have been paid. You can calculate the amount per year.
4. Compensation for human suffering
Dutch colonialism brought immense suffering for the Indonesian people in the course of 344 years of colonial domination. They committed genocide in the island of Banda (1621), Java (1740) and Aceh (1873–1914) with state-sanctioned mass killings. The racist humiliation, oppression, brutal violation of human rights imposed immense suffering during colonialism. Historians can make estimates per year of the share of the population that was subjected to this treatment. In 2011, 2013 and 2016 the Dutch state was brought to court for human rights violations during the war of liberation in Rawagede (Java), South Sulawesi and Java/Sumatra. The court ordered the state to pay a compensation to the widows of the victims varying from € 20.000 – € 25.000. Based on these data you can make an estimate for the compensation for human suffering.
5. Interest for forced loans
The Dutch never paid for the above mentioned items. As they should have pay for them, it is reasonable to regard the non-payment as a loan that the Indonesian people were forced to give to the Dutch. In all the calculation we will use 6% interest for the forced loans.
6. Restitution of forced reparations
After the war of liberation, Indonesia was forced under American pressure to pay 4.5 billion guilders to the Netherlands as compensation for lost goods during the war. That amounts to €25 billion today. The Dutch should return the money to Indonesia.
Conclusion
The amount that president Prabowo Subianto mentioned of US$ 27 trillion is really a very small part of the total amount that the Dutch should pay to the Indonesian people for the damage that colonialism has done. Historians and economists should work together to build more solid estimates of the total amount, so that people can be educated about the nature of colonialism as a crime against humanity.
Sandew Hira
June 13, 2025
[1] Hira, S (2014): 20 Questions and Answers on Reparations for Colonialism. Amrit Publishers The Hague.