by Peter Church
Successful agricultural policies were the base on which resource development and industrial policies were constructed. With the gradual opening of huge coal mines in eastern Kalimantan in the 1990s, Indonesia became a major coal exporter. In the 1970s and early 1980s, economic development depended on revenue derived from the export of oil, which was boosted by the price hikes imposed by OPEC. As the price of oil fell in the 1980s, Indonesia was forced to review its economic policies. The result was a steady liberalisation and internationalisation of the economy, with the emphasis on securing international investment and developing export‐oriented manufacturing industries. By the late 1980s, Indonesia became a major textile, footwear, and clothing exporter and a growing exporter of consumer products.
THE END OF SUHARTO'S RULE
Authoritarianism, corruption, and nepotism were increasingly the hallmarks of the Suharto era. Despite this, Suharto's government brought stability to Indonesia after the chaos of the late 1950s and early 1960s and for 30 years delivered steady economic growth. Many of those who benefited most owed their new wealth more to political connections and privileges than to entrepreneurial skills or sheer hard work. And the gap between the political, military, and economic elites and the mass of urban and rural people had become obscenely wide by the mid‐1990s. Nonetheless, ordinary Indonesians enjoyed basic amenities they had never had before: enough to eat and a steadily improving diet; better clothing and housing; subsidised neighbourhood clinics that provided basic health care; and educational opportunities for their children. Development funds were spread to the rural areas, resulting in strong growth in agricultural production. There was a rapid growth in the urban middle class which developed modern consumer demands and, through vastly improved communications, was linked into the global network of ideas. As long as the national economic cake was increasing in size and the fruits of economic development trickled down from the favoured few to the newly emerging middle classes and to ordinary urban and rural workers, the majority of the population, while resenting the growing corruption and nepotism of the government, was not prepared to challenge the strong military and institutional control emanating from Jakarta.
In the 1990s, speculation about a replacement for the aging Suharto grew, particularly among the urban middle classes. Suharto might have responded to this disquiet—and the increasingly open critiques of his rule—by slowly loosening state controls and encouraging the emergence of a new political consensus. Instead, he turned even more to his family and cronies, played one group off against another, and used force to punish dissidents and dissuade others from questioning the state. The closed political system prevented open debate, let alone the emergence of experienced politicians as potential presidential successors. It also obscured the disastrous direction in which Suharto's family and associates—using their political connections to amass personal fortunes—were taking the economy by the early 1990s.
The succession problem turned into a crisis of legitimacy in late 1997, when it became obvious that there was a speculative bubble, and capital flight occurred. The currency quickly crashed from around 4,000 rupiah to more than 12,000 rupiah to the US dollar. Suharto's claim to legitimacy collapsed with it. In May 1998, just weeks after another carefully controlled election had again appointed him president, Suharto was forced to resign by the pressure of street demonstrations led by university students. The genie of popular protest was out of the bottle and with it the ethnic, religious, and class divisions which for 30 years had been papered over by authoritarian means.
Since independence, successive Indonesian governments have been involved in a process of nation building—both literally and symbolically. National identity could never be taken for granted. Indonesia is a very diverse country. It is also a fragile country. One of the tragedies of recent Indonesian history is that the lack of open political debate for most of the decades since independence has prevented the emergence of a consensus on what Indonesia should be. Suharto tried to impose his vision, but received only grudging and formal assent. This formal assent collapsed with the social and economic catastrophe of Indonesia's financial collapse in late 1997.
With the dramatic resignation of Suharto after months of street protests, urban riots, and army violence, the demand for greater openness and a return to a democratic society has dominated Indonesian public discourse. However, few countries that have had longstanding authoritarian regimes have found the transition to democracy easy, and Indonesia is no exception. Suharto may have gone, but others who held power under him were reluctant to give it up. Much of the rioting and violence that wracked Indonesia through 1998 and 1999 was alleged to have been organised by shadowy groups aligned to factions within the military and to old civilian elites who saw more advantage in instigating an atmosphere of chaos than in assisting a transition to a more open society.
The Indonesian Constitution stipulates that in the event of death or resignation of the president, the vice president assumes the position for the remainder of the term. The Sulawesi‐born vice president, Dr BJ Habibie, duly took over as president, though continued popular protest and urban violence quickly forced him to concede the need for new elections as soon as possible. He had, after all, been installed as vice president by Suharto, despite widespread opposition and rumblings from Indonesia's normally silent neighbours that it was not a good idea.
In December 1998, the Indonesian parliament, under pressure from street demonstrations and sensing the mood for greater openness, passed new electoral laws that opened the way for elections in June 1999. The June elections passed remarkably peacefully. For most Indonesians, this was their first experience of a real election. As expected, no one political party obtained a majority of the votes. The Indonesian Democratic Struggle Party, led by Megawati Sukarnoputri—the daughter of former President Sukarno—gained the largest block of seats in the parliament, followed by the Party of National Awakening, a modernist Muslim party led by Abdurrahman Wahid, with Golkar a distant third. Megawati's popularity among ordinary Indonesians, particularly in the cities and towns of Java, was clear. She was the symbol of opposition to Suharto and the corruption, nepotism, and repression of the New Order government.
The election of June 1999 created a new House of Representatives which, together with government and military appointees and representatives of the regional parliaments, formed the People's Consultative Assembly (MPR), which met in October 1999 to hear a report from the outgoing president, Dr Habibie, and to elect a new president and vice president. Leading up to the votes, the contest was seen as between Habibie (Golkar's nominee) and Megawati (nominee of the Indonesian Democratic Struggle Party). However, the MPR rejected Habibie's Accountability Speech of his period in office, effectively delivering a vote of no‐confidence, which caused him to withdraw from the presidential race. To the surprise of most observers, Abdurrahman Wahid was elected as president by a clear majority, with Megawati later elected as vice president. Though Megawati lost the race because of her poor political skills in the jockeying for power between the general elections of June and the presidential election of October, her defeat was also partly attributable to the fact that she was not supported by the Muslim‐based parties. As the longtime leader of the largest Islamic organisation, Nahdlatul Ulama, Abdurrahman Wahid's Islamic credentials were the deciding factor.
One of President Habibie's most profound decisions during his short term was to announce that a UN‐supervised referendum on greater autonomy for East Timor would be held on August 30, 1999. He also gave assurances that if the East Timorese people rejected it, he would allow East Timor to cut itself loose from Indonesia; 78 percent of voters rejected Habibie's proposal and the way was clear for full independence.
However, in the months following the vote, a wave of violence in which more than 2,000 people died was perpetuated by pro‐Jakarta East Timorese militias with the covert backing of the Indonesian military, whose generals had been humiliated by the sudden volte‐face shown by the politicia
ns. During this chaotic period, thousands of refugees fled into West Timor and much of East Timor's infrastructure was razed by rampaging militiamen. When it became clear to Habibie that his army was unwilling to reign in the militias, he reluctantly allowed a UN multinational peacekeeping force to restore order in late 1999 and prepare the territory for full independence, which was formally granted at midnight on May 20, 2002.
Hopes were great among Indonesians that Wahid would prove to be the unifying force capable of reconciling the disparate interests and the guiding hand able to stabilise and develop the moribund economy. Reformasi—the slogan heard repeatedly on the streets, on public platforms, and in the press during this period—was a clarion call for change rather than a detailed programme. But clearly, large numbers of students and the urban middle class, as well as ordinary Indonesians throughout the vast archipelago, wanted greater social and economic justice and a real say in the decisions affecting their lives. People wanted jobs, lower inflation, and a return to the economic growth that prevailed before the financial collapse of 1997, but they would no longer tolerate the corruption, the nepotism, and the ostentatious display of wealth by a small economic and political elite that were so much in evidence during the New Order.
The road to a permanently more open society was strewn with difficulties. To continue the process of greater openness and in order to develop a strong civil society, the government needed to achieve a number of delicate balances. It needed to reduce ethnic and religious tensions while encouraging open debate on Indonesia's future. It needed to find ways to balance the economic interests of indigenous Indonesians and Indonesians of Chinese ethnic backgrounds. It also needed to satisfy the demands of people outside Java for greater local autonomy while holding the diverse nation together and continuing social, economic, and political reforms.
Unfortunately, Wahid proved to be a president incapable of addressing these issues. While it is partly true that such lofty expectations could never have been satisfied by any leader given the extent of the problems at hand, it is also a fact that Wahid was undermined by his own failures of leadership. He antagonised the MPR and Vice President Megawati, and seemed unwilling to tackle a troubled economy, communal and separatist unrest, and a political climate that had moved on since the twilight years of Suharto.
Wahid had once been almost revered by many Indonesians, spanning the entire gamut of the ethnic, social, and religious divide as a man of proven wisdom, pragmatism, and moderation. Yet after 20 months of his weak, ineffectual, and sometimes erratic rule, many of his erstwhile supporters became disillusioned and he seemed oblivious to new political power blocs congealing around him and determined to see him ousted.
He was removed from office by the People's Consultative Assembly following a censure motion stemming from allegations of his involvement in graft. Defiant to the last, he threatened to impose a military‐enforced state of emergency and dissolve parliament, a move rejected as unconstitutional by the chief of army. Vice President Megawati Sukarnoputri became president on July 23, 2001.
Megawati set about trying to dispel popular perceptions of her as indecisive and blinkered by the strident nationalism that had so dominated her father, Sukarno, but which had less of a place in the Indonesia of the 21st century. Perhaps the weight of popular expectations would have been too great for any one person seeking to navigate a course between stability and change, but by 2003 she had lost the confidence of many of her supporters, both within the MPR and out on the streets. One of her key cabinet appointments was a popular retired general named Susilo Bambang Yudhoyono, who held the position of Coordinating Minister for Political Affairs, Security and Social Welfare. In 2002, the MPR approved legislation allowing for the direct election of the president and, in March 2004, Yudhoyono resigned from his cabinet post, claiming Megawati had failed to include him in her decision making. This paved the way for him to stand as a presidential candidate against her.
In October 2004, Yudhoyono was declared the winner of the country's first direct presidential election, having defeated Megawati and securing 61 percent of votes cast. His initial promise to enact sweeping reform was undermined by the massive social upheaval and loss of life resulting from the 2004 Boxing Day tsunami, which claimed the lives of at least 164,000 Indonesians, mainly in the northern Sumatran province of Aceh. The international community responded with promises of multibillion‐dollar aid packages but the trauma and economic consequences affected many Indonesians beyond the provinces immediately hit. Nonetheless, Yudhoyono projected an image of confidence and competence which reassured the investment community after the indecisive leadership of Wahid and Megawati.
In December 2009, Yudhoyono was reelected as president and his Democratic Party won by tripling its votes from the last polls in 2004. While he managed to grow the economy at an average of 6 percent annually and reduce unemployment during his ten‐year tenure, his promises to tackle corruption and improve infrastructure were largely unmet.
Terrorist bombings carried out by al‐Qaeda (AQ)‐backed operatives of the Jemaah Islamiah (JI) group in Kuta, Bali, on October 12, 2002, killed 202 people—including 88 Australian and 26 British tourists—and provided a major test of the government's commitment to respond vigorously by cooperating with the West in a sustained campaign against regional terrorists while still pursuing a reformist agenda. The short‐term economic consequences of the attacks were evident in figures which estimated financial losses as a result of foreign tourist cancellations on Bali alone to be in excess of US$2 billion, with flow‐on effects to all other parts of the national economy. Australian government travel warnings advising against non‐essential travel to Indonesia by its citizens remain a source of contention between the two countries, since they restrict tourism and business investment. On the other hand, ongoing law enforcement cooperation, capacity building, and intelligence sharing between Indonesian and foreign security services (especially Australia and the United States) in tracking down those responsible for terrorist acts indicated a renewed effort to address the issue of foreign‐backed hardline Islamic groups operating within the country. Three of four of those found guilty of the attacks in Bali were sentenced to death in 2003 and executed in 2008, with a fourth receiving a life sentence. JI's spiritual leader, Abu Bakar Bashir, was not charged in relation to the bombings due to a lack of admissible evidence but was found guilty of subversion in 2003 and served two years in prison. Bashir's sentence was later overturned following an appeal to the Supreme Court, but he had already served his term. JI and loosely aligned splinter groups are believed to have been behind a number of anti‐Western bombings in Indonesia between 2003 and 2005, including attacks targeting Jakarta's Marriott Hotel (2003), the Australian Embassy (2004), and a second attack in Bali (2005). Initially, many Indonesians remained unconvinced of the existence of Islamic terrorist organisations in the country but testimony from several convicted terrorists during their trials dispelled most doubts. A string of successes by Indonesian police has left terrorist groups such as JI splintered and operationally incapable of launching large‐scale attacks on the scale of the first Bali bombing. Links between JI and AQ have also been severed.
Nonetheless, Yudhoyono needed to tread carefully to ensure the crackdown on Islamic fundamentalism was not perceived to be an attack on Islam itself. Sometimes this meant pandering to the wishes of Islamist parliamentarians to ensure their continued political support. In 2008 he endorsed a law preventing members of the breakaway Islamic sect Ahmadiyah from proselytising following a violent campaign by hardline Islamic groups to have the sect completely banned. Ahmadiyah had enjoyed a peaceful presence in Indonesia for nearly a century and restrictions on its activities were criticised by many commentators at home and abroad for being opportunistic and contrary to the pluralist state ideology of pancasila. In the same vein, his support in the same year for an anti‐pornography bill proposed by some Islamic political parties infuriated many liberals and non‐Muslims from places such as Bal
i and the eastern provinces, where celebration of the naked form is seen as an intrinsic part of local culture.
The threat of a new terrorist group, ISIS (Islamic State of Iraq and Syria) emerged in 2013. Growing out of al‐Qaeda and led by Abu Bakr al‐Baghdadi, the group has struck the lives of many in the region and throughout the world. It carried a deadly attack in the heart of Jakarta in January 2016, killing four in broad daylight. Among the 12 suspects arrested, one was the alleged mastermind, Bahrun Naim, who reportedly led a South‐East Asian branch of ISIS called Katibah Nusantara. Almost every month the Indonesian antiterrorist force has to deal with actual or threatened terrorist attacks. Most are small lone‐wolf attacks. But more worrying was the arrest in August of six men on the Indonesian island of Batam who were in the final stages of planning a rocket attack on the business district of nearby Singapore. Though Indonesia has long battled extremist violence like that mentioned above, the ISIS ideology is even more dangerous as it aims to recruit and radicalise young Indonesians to carry out acts of terrorism. Today, the presence of ISIS is the key security threat facing Indonesia. The number of Indonesian fighters estimated to have joined ISIS in Syria is between 500 and 700.
Indonesia's new president, Joko Widodo, who swept into power in July 2014, has called for more resources to monitor returning Indonesian fighters and also passed regulation for passports to be revoked.
Some of the issues facing Indonesia today are disturbingly similar to those faced in the 1950s, when the first attempt at democracy was derailed by Sukarno's declaration of Guided Democracy in 1959. However, Indonesia in the new millennium is very different from Indonesia in 1959. It has a much stronger institutional and physical infrastructure and a larger, better‐educated, and more assertive middle class linked to the ideas and institutions of the outside world in ways unimaginable in the 1950s. Indonesians are far more internationally oriented—the communications revolution has had a massive impact—and the economy is much more tightly enmeshed with the global economy. There are considerable domestic and international pressures for this second attempt to create a more democratic and open society to be successful.
