Post-Suharto Indonesia - Democratization Against the Odds?

After 300 years under Dutch Colonial rule and 32 years of military rule, Indonesia is – against all odds – now trying its hand at democratic rule. Fragile at best, this nascent democracy will need to pull together groups from varying religions, ethnicity, and political ideologies. Some pundits believe that democracy can survive in an economy still reeling from the Asian economic crisis of 1997. Others believe that the divisions plaguing Indonesia make democracy all but impossible. Professor Douglas Webber takes up the debate in this recent case, providing a succinct overview of Indonesia’s history and offering a basis for understanding the current political and economic climate.

by Douglas Webber
Last Updated: 23 Jul 2013

“If we don’t change direction soon, we’ll end up where we’re going.” This funny twist of words, attributed to Irwin Corey, could well sum up the political and economic situation facing Indonesia today. The question remains, “Can Indonesia become a stable democracy?” If not, where is it going?

In this recent case, Douglas Webber, Professor of Political Sciences, provides a succinct overview of the political, religious, and social history of the nation, outlining the forces that created current-day Indonesia and by extension, its current economic situation.

He starts the case with the July 2001 ousting of the country’s president, Abdurrahman Wahid, in favour of Megawati Sukarnoputri, daughter of Sukarno, Indonesia’s first president and co-founder of the independent state. Megawati, who had had only limited political experience, inherits a country that is still reeling from the 1997 Asian economic crisis, which sparked a period of extreme economic and political turbulence, leading to the collapse of the 32-year authoritarian regime of former army general, Suharto.

Suharto’s hold over the country appeared so intractable that few had imagined what a post-Suharto Indonesia would look like. In a nod to his incredible hold over the country, one newspaper observed, “When Suharto goes, everything will have to be reinvented.” Indeed, little in the country worked except for the “institution” of Suharto. Now pundits ask whether Megawati, or anyone else for that matter, can establish a working democracy that would help the country dig out from social, political and economic crisis.

Standing in her way is a country with so many divisions, some wonder why it ever became a single nation in the first place. Managing a country made up of diverse languages, religions, ethnicity, education levels, and even location (Indonesia is made up of 17,508 islands covering 5,000 km and three time zones) is difficult under ordinary circumstances. Under an increasingly desperate economic outlook, these differences have sparked growing separatist activity in some regions, especially in Aceh, as well as intercommunal violence in others, such as the Moluccan islands and parts of Sulawesi.

To understand the complex forces at work in modern-day Indonesia, says Professor Webber, we need to go back to the country’s history, which includes more than 300 years (1603 -1942) of Dutch Colonial rule, where apartheid-style structures differentiated between Europeans, natives, and “foreign Orientals” (mainly ethnic Chinese).

The case continues with Indonesia’s post-World War II independence and a subsequent effort at democracy, which failed at the hands of an ongoing power struggle between Sukarno (a key player in the country’s independence), the Communist party, and the army. A 1965 coup attempt marked the beginning of 35 years of “New Order” under General Suharto, who went to work on stabilising the economy. His efforts had varying degrees of success, but as the years went by he slowly centralised his power by selecting friends and family members to direct the country’s largest businesses.

Professor Webber concludes with a look at the post-Suharto years, which have been characterised by political infighting, corruption, and growing debt, and asks us to consider whether this environment is stable enough to support a democracy.

This case is particularly appropriate for MBA or PhD students studying Southeast Asian politics and economics, as well as Executive Education programs focused on the region.

INSEAD 2002

Find this article useful?

Get more great articles like this in your inbox every lunchtime