The New Order and Post New Order Era - Indonesian history

Suharto instituted a “New Order” (Orde Baru) regime, which espoused a largely pro-Western policy. Indonesia ended confrontation with Malaysia and became a major promoter and participant in the Association of Southeast Asian Nations (ASEAN), which was founded in 1967. Suharto was officially inaugurated president in 1968. Elections were held in 1971, but they were tightly controlled by the government. The government-backed Golkar party secured most of the seats in the House of Representatives, as it would in each of the elections held at five-year intervals thereafter. Similarly, the People’s Consultative Assembly routinely returned Suharto to the presidency, unopposed, at five-year intervals.

In 1975 the state-owned oil enterprise, Pertamina, was unable to meet debt repayments amounting to $10.5 billion, and the crisis threatened Indonesia’s financial structure. Only by canceling projects, renegotiating loans, and receiving help from the United States and other Western governments did Indonesia salvage the situation. The rise in world oil prices helped Indonesia’s economic recovery. When oil prices stagnated in the early 1980s, Suharto shifted economic policy away from a reliance on oil exports. As part of the changes, he introduced greater openness (keterbukaan), promoting foreign investment in Indonesia and greater integration of Indonesia into the world economy. He also introduced reforms across a wide range of sectors to cut production costs and improve the competitiveness of Indonesia’s commodity exports. Although this policy brought about solid economic growth, the reforms did not reverse the nation’s growing economic and social inequalities, particularly among the rural Javanese. A large slice of Indonesia’s wealth came to be concentrated in the hands of the president’s family and their associates. The economic inequalities were exacerbated by the growth of the population, despite a relatively successful family-planning program in Java.

Opposition to Suharto’s rule grew steadily in the late 1980s and early 1990s, although many Indonesians were afraid to express their views openly. Suharto’s most vocal opponents were Islamic radicals and university students alienated by the government’s corruption and human rights violations. In early 1978 widespread student demonstrations prompted the government to restrict activity on college campuses and freedom of the press. In the early 1990s many dissidents gave their support to Megawati Sukarnoputri, the daughter of former president Sukarno. When she was deposed as chair of the Indonesian Democratic Party by political rivals in mid-1996, protesters rioted in Jakarta. Although Megawati did not have the support of a large part of the Indonesian population, she was the first figure in many years to pose a challenge to the incumbent president.

Ultimately, it was the economy that posed the greatest threat to Suharto’s rule. In mid-1997 an economic crisis developed when the value of Indonesia’s currency plummeted. The economic crisis was particularly acute for Indonesia’s urban middle class and the poor, as the cost of basic goods and services skyrocketed. In early 1998 riots broke out in several Indonesian cities, and in March, after Suharto was reelected unopposed for a seventh term, students staged protests on university campuses across the country. In May peaceful protests as well as violent riots escalated, and government troops killed hundreds in an attempt to contain the chaos. The growing unrest prompted Suharto to resign on May 21, and his handpicked vice president, Bucharuddin Jusuf Habibie, assumed the presidency.

In his brief term in office, President Habibie introduced processes of reform (reformasi) and tentatively set about dismantling some of the most repressive measures put in place by Suharto. Provinces were given greater control over their finances. Some of the economic privileges given to the former president’s family were revoked, but Habibie avoided any direct confrontation with Suharto, his mentor since his youth. Habibie’s popular support, which was never very strong, eroded rapidly during his term as president as a result of his failure to deal rigorously with Suharto’s legacy, as well as his involvement in a bank fund misappropriation scandal.

Indonesia held elections for the 500-seat House of Representatives in June 1999. The large number of small parties, many of which disputed the vote-counting process, delayed the declaration of results. Megawati’s new Indonesian Democratic Party of Struggle received the largest number of votes (33.7 percent), but it did not gain a majority, winning only 153 seats. Golkar, which had dominated previous elections under Suharto, followed with 22.4 percent, followed by the National Awakening Party (12.6 percent), the PPP (10.7 percent), and the National Mandate Party (7.1 percent). When the People’s Consultative Assembly convened in October to choose the next president, it unexpectedly elected Abdurrahman Wahid of the National Awakening Party. For vice president it elected Megawati Sukarnoputri. A Muslim cleric, Wahid enjoyed a large and devoted following as head the Nahdlatul Ulama, Indonesia’s largest Islamic organization with about 40 million members. Although neither leader had any previous experience in government, the pairing satisfied the widespread need felt in Indonesia for political change. The new administration faced many problems, including a need to reform governance and administration, remove the Suharto legacy of inefficiency and corruption, and address the continuing economic problems of the country.

In mid-2000, however, Wahid became implicated in two multimillion-dollar corruption scandals. Although an investigative inquiry did not prove Wahid was directly or indirectly involved in the high-level graft, the scandals intensified criticisms of the president’s inattention to the country’s severe social and economic problems. In February 2001 and again in April, the House of Representatives delivered censures against Wahid alleging corruption and incompetence. Wahid rejected the allegations as baseless and ignored calls for his resignation. The legislature then voted to begin impeachment proceedings against Wahid in August. The political crisis came to a head in late July, when Wahid issued an emergency decree to suspend the legislature in an attempt to hold onto power. Police and military officials refused to obey his decree, however, and on July 23 the People’s Consultative Assembly convened in an emergency session and voted to remove Wahid from office. Vice President Megawati was chosen to replace him as president.

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