This article is about the Indonesian government of the 1960s through 1990s. For other uses of the term, see
New Order (disambiguation).
The
New Order (
Indonesian:
Orde Baru) is the term coined by the second Indonesian President
Suharto to characterize his regime as he came to power in
1966. Suharto used this term to contrast his rule with that of his predecessor,
Sukarno (dubbed the "Old Order," or
Orde Lama). The term "New Order" in more recent times has become synonymous with the Suharto years (1965–1998).
Immediately following the
attempted coup
in 1965, the political situation was uncertain, but the Suharto's New
Order found much popular support from groups wanting a separation from
Indonesia's problems since its independence. The 'generation of 66' (
Angkatan 66)
epitomised talk of a new group of young leaders and new intellectual
thought. Following Indonesia's communal and political conflicts, and its
economic collapse and social breakdown of the late 1950s through to the
mid-1960s, the "New Order" was committed to achieving and maintaining
political order, economic development, and the removal of mass
participation in the political process. The features of the "New Order"
established from the late 1960s were thus a strong political role for
the military, the bureaucratization and corporatization of political and
societal organizations, and selective but effective repression of
opponents. Strident
anti-communism remained a hallmark of the regime for its subsequent 32 years.
Within a few years, however, many of its original allies had become
indifferent or averse to the New Order, which comprised a military
faction supported by a narrow civilian group. Among much of the
pro-democracy movement which forced Suharto to resign in the
1998 Indonesian Revolution
and then gained power, the term "New Order" has come to be used
pejoratively. It is frequently employed to describe figures who were
either tied to the Suharto period, or who upheld the practises of his
authoritarian regime, such as corruption,
collusion and
nepotism (widely known by the acronym KKN:
korupsi,
kolusi,
nepotisme).
[1]
Background
Sukarno
was Indonesia's founding president, a position he had held since the
Republic's formation in 1945. In 1955, the first general parliamentary
elections delivered an unstable parliament and from the late 1950s,
Sukarno's rule became increasingly autocratic under his "
Guided Democracy". Described as the great ‘’Dalang’’, or puppet master, Sukarno’s position depended on his concept of
NASAKOM
(Religion, Nationalism, Communism) whereby he sought to balance the
competing Indonesian Military, Islamic groups, and the increasingly
powerful
Indonesian Communist Party
(PKI). To the resentment of the Military and Muslim groups, this
arrangement became increasingly reliant on the PKI which had become the
country’s strongest political party.
Sukarno’s anti-imperial ideology saw Indonesia increasingly dependent
on the Soviet Union and China which was met with indignation from
Western countries. The cash-strapped government had to scrap public
sector subsidies, annual inflation rose to as high as 1,000%, export
revenues were shrinking, infrastructure crumbling, and factories were
operating at minimal capacity with negligible investment. Sukarno’s
administration became increasingly ineffective in providing a viable
economic system to lift its citizens out of poverty and hunger.
Meanwhile, Sukarno led Indonesia into
Konfrontasi, a military confrontation with Malaysia, removed Indonesia from the
United Nations, and stepped up revolutionary and anti-Western rhetoric.
[2]
By 1965 at the height of the
Cold War,
the PKI penetrated all levels of government. With the support of
Sukarno and the Air Force, the party gained increasing influence at the
expense of the army, thus ensuring the army's enmity.
[3]
Muslim clerics, many of whom were landowners, felt threatened by the
PKI's rural land confiscation actions. The army was alarmed at Sukarno’s
support for the PKI’s wish to quickly establish a "fifth force" of
armed peasants and labourers.
[4]
Adding to this desperate and fractious nature of Indonesia in the
1960s, a split within the military was fostered by Western countries
backing a right-wing faction against a left-wing faction backed by the
PKI.
[5]
Overthrow of Sukarno
On 30 September 1965, six generals were killed by a group calling themselves the
30 September Movement
who alleged a right-wing plot to kill the President. General Suharto
led the army in suppressing the abortive coup attempt. The
Communist Party of Indonesia (PKI) were quickly blamed and the army led
an anti-communist purge
which killed an estimated 500,000 people. Public opinion shifted
against Sukarno in part due to his apparent knowledge of, and sympathy
for, the events of 30 September, and for his tolerance of leftist and
communist elements whom the army blamed for the coup attempt. Student
groups, such as
KAMI,
were encouraged by, and sided with, the Army against Sukarno. In March
1966, Suharto secured a presidential decree (known as the
Supersemar), which gave him authority to take any action necessary to maintain security.
[6] Using the decree, the PKI was banned in March 1966 and the parliament (
MPRS),
government and military were purged of pro-Sukarno elements many of
whom were accused of being communist sympathisers, and who were replaced
with Suharto supporters.
[7]
A June session of the now-purged parliament banned
Marxism-Leninism,
ratified the Supersemar, and stripped Sukarno of his title of president
for life. In August–September 1966, and against the wishes of Sukarno,
the New Order ended Indonesia's confrontation with Malaysia and rejoined
the
United Nations.
Parliament re-convened in March 1967 to impeach the President for his
apparent toleration of 30 September Movement and violation of
constitution by promoting PKI's international communist agenda,
negligence of the economy, and promotion of national "moral degradation"
via his womanising behaviour. In March 1967, the MPRS stripped Sukarno
of his remaining power, and Suharto was named
Acting President.
[8] Sukarno was placed under house arrest in
Bogor Palace; little more was heard from him, and he died in June 1970.
[9] In March 1968, the MPRS appointed Suharto to the first of his five-year terms as President.
[10]
Consolidation of power
Suharto is appointed President of Indonesia at a ceremony, March 1968.
The "New Order" was so called to distinguish itself from Sukarno's "Old Order".
Pancasila was promoted as the national ideology, one that pre-dated introduced religions such as
Hinduism or
Islam.
[11] Suharto secured a parliamentary resolution in 1983 (
Tap MPR No 11/1983)
which obliged all organisations in Indonesia to adhere to Pancasila as a
basic principle. He instituted a Pancasila indoctrination program that
must be attended by all Indonesians, from primary school students to
office workers.
[11]
Pancasila, a rather vague and generalist set of principles originally
formulated by Sukarno in 1945, was vigorously promoted as a sacrosanct
national ideology which represents the ancient wisdom of Indonesian
people even before the entry of foreign-based religions such as
Hinduism or
Islam. In a July 1982 speech which reflected his deep infatuation with
Javanese beliefs, Suharto glorified Pancasila as a key to reach the perfect life (
ilmu kasampurnaning hurip) of harmony with God and fellow mankind.
[11]
In practice, however, the vagueness of Pancasila was exploited by
Suharto's government to justify their actions and to condemn their
opponents as "anti-Pancasila".
[11]
The
Dwifungsi
("Dual Function") policy allowed the military to have an active role in
all levels of Indonesian government, economy, and society.
Neutralization of internal dissent
Having been appointed president, Suharto still needed to share power
with various elements including Indonesian generals who considered
Suharto as mere
primus inter pares
as well as Islamic and student groups who participated in the
anti-communist purge. Suharto, aided by his "Office of Personal
Assistants" (
Aspri) clique of military officers from his days as commander of Diponegoro Division, particularly
Ali Murtopo,
began to systematically cement his hold on power by subtly sidelining
potential rivals while rewarding loyalists with political position and
monetary incentives.
Having successfully stood-down MPRS chairman General
Nasution's
1968 attempt to introduce bill which will severely curtail presidential
authority, Suharto had him removed from his position as MPRS chairman
in 1969 and forced his early retirement from the military in 1972. In
1967, generals HR Dharsono,
Kemal Idris, and
Sarwo Edhie Wibowo
(dubbed "New Order Radicals") opposed Suharto's decision to allow
participation of existing political parties in elections in favour of a
non-ideological two-party system similar to those found in many Western
countries. Suharto then proceeded to send Dharsono overseas as
ambassador, while
Kemal Idris and
Sarwo Edhie Wibowo were sent to distant
North Sumatera and
South Sulawesi as regional commanders.
[12]
While many original leaders of the 1966 student movement (
Angkatan 66)
were successfully co-opted into the regime, it faced large student
demonstrations challenging the legitimacy of 1971 elections (
Golput Movement), the costly construction of
Taman Mini Indonesia Indah theme park (1972), the domination of foreign capitalists (
Malari Incident
of 1974), and the lack of term limits of Suharto's presidency (1978).
The New Order responded by imprisoning student activists and sending
army units to occupy the campus of the
Bandung Institute of Technology
in 1978. In April 1978, Suharto ended the campus unrest by issuing a
decree on the "Normalization of Campus Life" (NKK) which prohibited
political activities on-campus not related to academic pursuits.
[13][14]
In 1980, fifty prominent figures political figures signed the
Petition of Fifty which criticised Suharto's use of
Pancasila
to silence his critics. Suharto refused to address the petitioners'
concerns, and some of them were imprisoned with others having
restrictions imposed on their movements.
[15]
Domestic politics and security
To placate demands from civilian politicians for the holding of
elections, as manifested in MPRS resolutions of 1966 and 1967, Suharto
government formulated a series of laws regarding elections as well as
the structure and duties of parliament which were passed by MPRS on
November 1969 after protracted negotiations. The law provided for a
parliament (Madjelis Permusjawaratan Rakjat/MPR) with the power to elect presidents, consisting of a lower house (
Dewan Perwakilan Rakjat/DPR)
and regional representatives. 100 of the 460 members of DPR will be
directly appointed by the government, while the remaining seats were
allocated to political parties based on results of general election.
This mechanism ensures significant government control over legislative
affairs, particularly the appointment of presidents.
[16][17]
To participate in the elections, Suharto realized the need to align
himself with a political party. After initially considering alignment
with Sukarno's old party the
PNI, in 1969 Suharto decided to take-over control of an obscure military-run federation of NGOs called
Golkar ("Functional Group") and transform it into his electoral vehicle under the coordination of his right-hand man
Ali Murtopo. The
first general election was held on 3 July 1971 with ten participants; consisting of
Golkar,
four Islamic parties, as well as five nationalist and Christian
parties. Campaigning on a non-ideological platform of "development", and
aided by official government support and subtle intimidation tactics,
Golkar
managed to secure 62.8% of the popular vote. The March 1973 general
session of newly elected MPR promptly appointed Suharto to second-term
in office with Sultan
Hamengkubuwono IX as vice-president.
[18]
On 5 January 1973, to allow better control, the government forced the four Islamic parties to merge into
PPP (
Partai Persatuan Pembangunan/United Development Party) while the five non-Islamic parties were fused into
PDI (
Partai Demokrasi Indonesia/Indonesian
Democratic Party). The government ensured that these parties never
developed effective opposition by controlling their leadership, while
establishing the "re-call" system to remove any outspoken legislators
from their positions. Using this system dubbed the "
Pancasila Democracy", Golkar won the MPR general elections of
1977,
1982,
1987,
1992, and
1997
with massive landslides. The elected MPR then proceeded to unanimously
re-elect Suharto as president in 1978, 1983, 1988, 1993, and 1998.
[19]
Suharto proceeded with various social engineering projects designed
to transform Indonesian society into a de-politicized "floating mass"
supportive of the national mission of "development", a concept similar
to
corporatism.
The government formed various civil society groups to unite the
populace in support of government programs. For instance, the government
created Korpri (
Korps Pegawai Republik Indonesia) on November 1971 as union of civil servants to ensure their loyalty, organized the FBSI (
Federasi Buruh Seluruh Indonesia) as the only legal labour union on February 1973 (later renamed as SPSI /
Serikat Pekerja Seluruh Indonesia in 1985), and established the
MUI (
Majelis Ulama Indonesia) in 1975 to control Islamic clerics. In 1966 to 1967, to promote assimiliation of the influential
Chinese-Indonesians, the Suharto government passed
several laws
as part of so-called "Basic Policy for the Solution of Chinese
Problem", whereby only one Chinese-language publication (controlled by
the army) was allowed to continue, all Chinese cultural and religious
expressions (including display of Chinese characters) were prohibited
from public space, Chinese schools were phased-out, and the
ethnic-Chinese were encouraged to take-up
Indonesian-sounding names. In 1968, Suharto commenced the very successful family-planning program (
Keluarga Berentjana / KB)
to stem the huge population growth rate and hence increasing per-capita
income. A lasting legacy from this period is the spelling reform of
Indonesian language decreed by Suharto on 17 August 1972.
[20]
Suharto relied on the military to ruthlessly maintain domestic security, organized by the
Kopkamtib
(Operation Command for the Restoration of Security and Order) and BAKIN
(State Intelligence Coordination Agency). To maintain strict control
over the country, Suharto expanded the army's territorial system down to
village-level, while military officers were appointed as regional heads
under the rubric of the
Dwifungsi
("Dual Function") of the military. By 1969, 70% of Indonesia's
provincial governors and more than half of its district chiefs were
active military officers. Suharto authorized
Operasi Trisula which destroyed PKI-remnants trying to organize a guerilla base in
Blitar area in 1968, and ordered several military operations which ended the communist PGRS-Paraku insurgency in
West Kalimantan (1967-1972). Attacks on oil workers by the first incarnation of
Free Aceh Movement separatists under
Hasan di Tiro
in 1977 led to dispatch of small special forces detachments who quickly
either killed or forced the movement's members to flee abroad.
[21] Notably, on March 1981, Suharto authorised a successful special forces mission to end
hijacking of a Garuda Indonesia flight by Islamic extremists at
Don Muang Airport in
Bangkok.
[22]
To comply with
New York Agreement of 1962 which required a plebiscite on integration of
West Irian into Indonesia before end of 1969, the Suharto government begin organizing for a so-called "
Act of Free Choice" scheduled on July–August 1969. The government sent RPKAD special forces under
Sarwo Edhie Wibowo which secured the surrender of several bands of former Dutch-organized militia (
Papoea Vrijwilligers Korps / PVK) at large in the jungles since the Indonesian takeover in 1963, while sending Catholic volunteers under
Jusuf Wanandi
to distribute consumer goods to promote pro-Indonesian sentiments. On
March 1969, it was agreed that the plebiscite will be channeled via
1,025 tribal chiefs, citing the logistical challenge and political
ignorance of the population. Using the above strategy, the plebiscite
produced a unanimous decision for integration with Indonesia, which was
duly noted by
United Nations General Assembly on November 1969.
[23]
Economy
The new president enlisted a group of mostly American-educated Indonesian economists, dubbed the "
Berkeley Mafia",
to formulate government economic policy. By cutting subsidies and
government debt, and reforming the exchange rate mechanism, inflation
dripped from 660% in 1966 to 19% in 1969. The threat of famine was
alleviated by influx of
USAID rice aid shipments in 1967 to 1968.
[24]
Realizing the dearth of domestic capital capable of re-juvenating
growth, Suharto reversed Sukarno's economic autarky policies by opening
selected economic sectors of the country to much-needed foreign
investment under the new Foreign Investment Law of January 1967
(containing generous tax holidays and free movement of money). Suharto
himself travelled to Western Europe and
Japan
in a series of trips to promote investment into Indonesia, starting in
the natural resources sector. Among the first foreign investors to
re-enter Indonesia were mining companies
Freeport Sulphur Company and
International Nickel Company,
later followed by significant investment from Japanese, South Korean,
and Taiwanese companies. From 1967, the government managed to secure
low-interest foreign aid from ten countries grouped under the
Inter-Governmental Group on Indonesia (IGGI) to cover its budget deficit.
[25]
Suharto government issued Domestic Investment Law of June 1968 to
allow development of domestic capitalist class capable of motoring
economic growth to supplement existing state-owned enterprises. The late
1960s and early 1970s saw emergence of domestic enterpreneurs (mostly
Chinese-Indonesians) in the import-substitution light-manufacturing
sector such as
Astra Group and
Salim Group.
[26]
Flush with IGGI foreign aid and later the jump in oil exports during the
1973 oil crisis, the government began a series of large-scale intensive investment in infrastructure under a series of five-year plans (
Rentjana Pembangunan Lima Tahun / REPELITA):
- REPELITA I (1969-1974) focusing on agricultural improvements (Green Revolution) to ensure food security
- REPELITA II (1974-1979) focusing on infrastructure on islands outside Java and growth in primary industries
- REPELITA III (1979-1984) focusing on achieving food self-sufficiency and growth in export-oriented labour-intensive industry
- REPELITA IV (1984-1989) focusing on growth in capital-good manufacturing
- REPELITA V (1989-1994) focusing on growth in telecommunications, education, and transportation infrastructure
- REPELITA VI (1994-1998, unfinished) focusing on infrastructure to support foreign investment and free trade[26][27][28]
While establishing a formal economy based on rational and sound macroeconomic policies, Suharto continued his past
modus operandi of creating vast network of charitable organizations ("
yayasan")
run by the military and his family members, which extracts "donations"
from domestic and foreign enterprises in exchange for necessary
government support and permits. While some proceeds of these
organizations were used for charitable purposes (such as building a
heart-disease hospital by
Yayasan Harapan Kita run by the first
lady), most of the money was re-cycled as slush fund to reward political
allies to maintain support for Suharto's regime.
[27] [29]
In February 1975, the state-oil company
Pertamina was forced to default its US$ 15 billion loans to American and Canadian creditors. The company's director, General
Ibnu Sutowo
(a close ally of Suharto), has invested the windfall income from rising
oil prices into a myriad of other business activities such as shipping,
steel, construction, real estate, and hospitals. These businesses were
mismanaged and riddled with corruption. The government was forced to
bail-out the company, in the process nearly doubling the national debt,
while
Ibnu Sutowo was removed from his position.
[30]
Foreign policy
Upon assuming power, Suharto government adopted policy of neutrality in the
Cold War with quiet alignment with the Western bloc (including
Japan and
South Korea)
with the objective of securing support for Indonesia's economic
recovery. Western countries, impressed by Suharto's strong
anti-communist credentials, were quick to offer their support.
Diplomatic relations with
China was suspended on October 1967 due to suspicion of Chinese involvement in
30 September Movement (diplomatic relations was only restored in 1990). Due to Suharto's destruction of PKI,
Soviet Union embargoed military sales to Indonesia. However, from 1967 to 1970 foreign minister
Adam Malik
managed to secure several agreements to restructure massive debts
incurred by Sukarno from Soviet Union and other Eastern European
communist states. Regionally, having ended confrontation with
Malaysia on August 1966, Indonesia became a founding member of
Association of Southeast Asian Nations
(ASEAN) on August 1967. This organization is designed to establish
peaceful relationship between Southeast Asian countries free from
conflicts such as ongoing
Vietnam War.
[27]
In 1974, the neighbouring colony of
Portuguese Timor descended into civil war after the withdrawal of Portuguese authority following the
Carnation Revolution, whereby the leftist-leaning
Fretilin (
Frente Revolucionária de Timor-Leste Independente) emerged triumphant. After persuasion from Western countries (including from US president
Gerald Ford and Australian prime minister
Gough Whitlam
during their visits to Indonesia), Suharto decided to intervene to
prevent establishment of a communist state. After an unsuccessful
attempt of covert support to Timorese anti-communist groups
UDT and
APODETI, Suharto authorized full-scale
invasion of the colony on 7 December 1975 followed with its official annexation as Indonesia's 27th province of
East Timor
in July 1976. The "encirclement and annihilation" campaigns of
1977-1979 broke the back of Fretilin control over the hinterlands,
although continuing guerilla resistance forced the government to
maintain strong military presence in the half-island until 1999. An
estimated minimum of 90,800 and maximum of 213,600 conflict-related
deaths occurred in East Timor during
Indonesian rule (1974–1999);
namely, 17,600–19,600 killings and 73,200 to 194,000 'excess' deaths
from hunger and illness, although Indonesian forces were responsible for
only about 70% of the violent killings.
[31]
Apex of power
Socio-economic progress and growing corruption
By 1996, Indonesia's poverty rate had dropped to around 11% compared
with 45% in 1970 according to some studies, though this claim of poverty
reduction is debatable and many studies indicate poverty is much higher
than claimed,
[32][33] possibly as high as 50% living on a dollar a day or less.
[34]
From 1966 to 1997, Indonesia recorded real GDP growth of 5.03% pa,
pushing real GDP per capita upwards from US$ 806 to US$ 4,114. In 1966,
manufacturing sector made-up less than 10% of GDP (mostly industries
related to oil and agriculture). By 1997, manufacturing had risen to 25%
of GDP whereby 53% of exports consisted of manufactured products. The
government invested into massive infrastructure development (notably the
launching of series of
Palapa
telecommunication satellites), consequently Indonesian infrastructure
in mid-1990s was considered at par with China. Suharto was keen to
capitalize on such achievements to justify his regime, and an
MPR resolution in 1983 granted him the title of "Father of Development".
[35]
Suharto government's health-care programs (such as the
Puskesmas
program) increased life expectancy from 47 years (1966) to 67 years
(1997) while cutting infant mortality rate by more than 60%. The
government's
Inpres program launched in 1973 resulted in primary
school enrollment ratio reaching 90% by 1983 while almost eliminating
education gap between boys and girls. Sustained support for agriculture
resulted in Indonesia reaching rice self-sufficiency by 1984, an
unprecedented achievement which earned Suharto a gold medal from
FAO on November 1985.
[36]
In early 1980s, Suharto government responded to fall in oil exports due to the
1980s oil glut
by successfully shifting pillar of the economy into export-oriented
labour intensive manufacturing, made globally competitive by Indonesia's
low wages and a series of currency devaluation. Industrialization was
mostly undertaken by ethnic-Chinese companies which evolved into immense
conglomerates dominating the nation's economy. The largest
conglomeracies are the
Salim Group led by
Liem Sioe Liong (Sudono Salim),
Sinar Mas Group led by
Oei Ek Tjong (Eka Tjipta Widjaja),
Astra Group led by
Tjia Han Poen (William Soeryadjaya),
Lippo Group led by
Lie Mo Tie (Mochtar Riady), Barito Pacific Group led by
Pang Djun Phen (Prajogo Pangestu), and Nusamba Group led by
Bob Hasan. Suharto decided to support the growth of small number of
Chinese-Indonesian
conglomerates since they cannot pose political challenge due to their
ethnic-minority status, but from his past experience he deemed them to
possess the skills and capital needed to create real growth for the
country. In exchange for Suharto's patronage, the conglomerates provided
vital financing for his "regime maintenance" activities.
[37]
In late 1980s, Suharto government decided to de-regulate the banking
sector to encourage savings and providing domestic source of financing
required for growth. Suharto decreed the "October Package of 1988" (
PAKTO 88)
which eased requirements for establishing banks and extending credit;
resulting in a 50% increase in number of banks from 1989-1991. To
promote savings, the government introduced the
TABANAS program to the populace.
Jakarta Stock Exchange, re-opened in 1977, recorded bull-run due to spree of domestic
IPOs
and influx of foreign funds after deregulation in 1990. The sudden
availability of credit fueled strong economic growth in the early 1990s,
but the weak regulatory environment of the financial sector sowed the
seeds of the catastrophic crisis in 1997 which eventually destroyed
Suharto's regime.
[38]
The growth of the economy is coincided by rapid expansion in corruption, collusion, and nepotism (
Korupsi, Kolusi, dan Nepotisme / KKN). In the early 1980s, Suharto's children, particularly
Siti Hardiyanti Rukmana ("Tutut"),
Hutomo Mandala Putra ("Tommy"),
and Bambang Trihatmodjo, has grown into greedy adults. Their companies
were given lucrative government contracts and protected from market
competition by monopolies. Examples include the
toll-expressway
market which was monopolized by Tutut, national car project monopolized
by Bambang and Tommy, and even the cinema market monopolized by
21 Cineplex
owned by Suharto's cousin Sudwikatmono. The family is said to control
about 36,000 km² of real estate in Indonesia, including 100,000 m² of
prime office space in Jakarta and nearly 40% of the land in East Timor.
Additionally, Suharto's family members received free shares in 1,251 of
Indonesia's most lucrative domestic companies (mostly run by Suharto's
ethnic-Chinese cronies), while foreign-owned companies were encouraged
to establish "strategic partnerships" with Suharto family's companies.
Meanwhile, the myriad of
yayasans run by Suharto family grew even
larger, levying millions of dollars in "donations" from the public and
private sectors each year.
[39][40]
Grip on power
By the 1980s, Suharto's grip on power was very strong, maintained by
emasculation of civil society, engineered elections, and liberal use of
military's coercive powers. Upon his retirement from the military in
June 1976, Suharto undertook re-organization of the armed forces that
concentrates power away from commanders to the president. On March 1983,
he appointed General
Leonardus Benjamin Moerdani
as head of the armed forces. A tough and capable soldier, Moerdani is
also a Roman Catholic, which precluded him from posing a political
threat to Suharto.
[41]
Suharto ruthlessly suppressed elements who disturbed the tranquility
of the New Order society. From 1983 to 1985, army death squads murdered
up to 10,000 suspected criminals in response to a spike in crime rate
(dubbed "
Petrus Killings"). Suharto's imposition of
Pancasila as sole ideology caused protests from conservative Islamic groups who considers the Islamic law (
sharia) to be above any human conceptions. On September 1984, a violent demonstration in
Tanjung Priok area of Jakarta by conservative Muslims led to soldiers
opening fire, massacring up to 100 protestors. A retaliatory series of small bombings (notably the bombing of
Borobudur
Temple on January 1985) led to arrests of hundreds of conservative
Islamic activists, ranging from future parliamentary leader AM Fatwa to
radical cleric
Abu Bakar Bashir (future initiator of terrorist group
Jemaah Islamiyah). Attacks on police by resurgent
Libyan-aided
Free Aceh Movement in 1989 led to a brutal military operation ("
Operasi Jaring Merah")
which ended the insurgency by 1992 by killing of 2,000 people. More
subtly, Suharto government seek to better control the press by issuing
1984 law requiring all media to possess a press operating licence (
SIUPP) which can be revoked at any time by Ministry of Information.
[42]
In the international arena, Western concern over communism waned with end of
Cold War, and Suharto's human rights record came under greater international scrutiny. The November 1991
Santa Cruz Massacre in
Dili, East Timor, resulted in the
Congress of the United States passing limitations on
IMET assistance to the Indonesian Military. Suharto retaliated by cancelling purchase orders for American
F-16 fighter jets in 1997.
[43][44] When
Netherlands
condemned the Santa Cruz Massacre, Suharto retaliated by expelling the
Dutch from IGGI on March 1992 and renaming this aid organization into
Consultative Group on Indonesia (CGI) which continued increasing aid to Indonesia.
[45] Realizing this trend, Suharto seek wider alliances under the rubric of economic development, away from over-reliance to
United States support. Suharto was elected as head of the
Non-Aligned Movement in 1992, while Indonesia is a founding member of
APEC in 1989 and host to the
Bogor APEC Summit in 1994.
[46]
Domestically, the growing raparaciousness of Suharto's family created
discontent amongst the military who lost access to power and lucrative
rent-seeking opportunities. On March 1988
MPR session, military legislators attempted to pressure Suharto by unsuccessfully seeking to block nomination of
Sudharmono, a Suharto-loyalist, as vice-president. After General
Moerdani
voiced his objections on Suharto family's corruption, the president
dismissed him from the position of military chief. Suharto proceeded to
slowly "de-militarize" his regime; he dissolved the powerful
Kopkamtib on September 1988 and ensured key military positions were held by loyalists.
[47]
In an attempt to diversify his power base away from the military,
Suharto begin courting support from Islamic elements. He undertook a
much-publicized
hajj pilgrimage in 1991, took up name of
Haji Mohammad Suharto,
started promoting Islamic values into society, and promoted the careers
of Islamic-oriented generals (dubbed the "green generals"). To win
support from the nascent Muslim business community who resented
dominance of Chinese-Indonesian conglomerates, Suharto formed the ICMI
(Indonesian Islamic Intellectuals' Association) on November 1990, which
was led by his protege
BJ Habibie,
the Minister for Research and Technology since 1978. During this period
of Suharto's cozying with Islamists, race riots against ethnic-Chinese
begin to occur quite regularly, beginning with April 1994 riot in
Medan.
[48]
By the 1990s, Suharto's government came to be dominated by sycophantic civilian politicians such as
Habibie,
Harmoko,
Ginandjar Kartasasmita, and
Akbar Tanjung,
who owed their position solely to Suharto. As sign of Habibie's growing
clout, when several prominent Indonesian magazines criticized Habibie's
purchase of almost the entire fleet of the disbanded
East German Navy
in 1993 (most of the vessels were of scrap-value), Suharto ordered the
offending publications to be closed down on 21 June 1994.
[48]
By the 1990s, elements the growing Indonesian
middle class
created by Suharto's economic development, was becoming restless with
his autocracy and corruption of his children, fueling demands for "
Reformasi" (reform) of the 30-year-old New Order system. By 1996,
Megawati Sukarnoputri, the daughter of
Sukarno and chairwoman of the normally compliant
PDI,
was becoming a rallying point for this growing discontent. In response,
Suharto backed a co-opted faction of PDI led by Suryadi, which removed
Megawati from the chair. On 27 July 1996, an attack by soldiers and
hired thugs led by Lieutenant-General
Sutiyoso
on demonstrating Megawati supporters in Jakarta resulted in fatal riots
and looting. This incident was followed by waves of arrests on 200
democracy activists, 23 of whom were kidnapped (some were murdered) by
army squads called
Tim Mawar ("Rose Team") led by Suharto's son-in-law, Major-General
Prabowo Subianto.
[49]
Regardless of these incidents, as late as mid-1997, Suharto's grip on
power seemed as secure as ever with the military led by his loyalists,
all opposition groups suppressed, and the economy in good shape.
Downfall
Suharto reads his address of resignation at Merdeka Palace on 21 May 1998. Suharto's successor, B. J. Habibie, is to his right.
The
1997 Asian financial crisis beginning on July 1997 in
Thailand
spread into Indonesia as foreign speculative investors pulled-out their
investments, sucking US dollar liquidity in Indonesia and causing
severe depreciation of the
Indonesian rupiah.
In the private sector, many Indonesian corporations had been borrowing
heavily in lower-interest US dollar denomination while their revenues
were mostly in rupiah; their debt rapidly increased as the US dollar
appreciated, leaving many companies virtually bankrupt. These companies
desperately sold rupiah and bought US dollars, causing the rupiah's
value to drop from Rp 2,600 per dollar in August 1997 to over Rp 14,800
per dollar by January 1998. Efforts by the
central bank
to defend its managed float regime by selling dollar had little impact
and instead drained Indonesia's foreign exchange reserves, forcing the
government to free-float the currency and seek liquidity aid from
IMF (International Monetary Fund).
[50]
In exchange for US$ 43 billion in liquidity aid, Suharto was forced
to sign three letters of intent from October 1997 to April 1998 with the
IMF. The LoI promised reforms which includes closing banks owned by
Suharto's family and cronies starting on November 1997. Plan to close
unhealthy banks resulted in a
bank run
that drained liquidity; depositors knew of the poor regulations and
risky related-party credit extensions of Indonesian banks. On January
1998, the government was forced to provide emergency liquidity
assistance (BLBI), issue blanket guarantee for bank deposits, and set-up
Indonesian Bank Restructuring Agency
to take-over management of troubled banks to prevent collapse of the
financial system. Based on IMF recommendation, the government increased
interest rates to 70% pa on February 1998 to control spiralling
inflation caused by higher price of imports, but this action killed
availability of credit to the corporate sector. Suharto's foot-dragging
in undertaking reforms demanded by IMF in relation to his children's
business further weakened public confidence.
[27][51] According to American economist
Steve Hanke, invited by Suharto on February 1998 to plan
currency board system, President
Bill Clinton and IMF managing director
Michel Camdessus deliberately worsened the Indonesian crisis to force Suharto to resign.
[52]
Economic meltdown was accompanied by increasing political tension. Anti-Chinese riots occurred in
Situbondo (1996),
Tasikmalaya (1996),
Banjarmasin (1997), and
Makassar (1997); while bloody ethnic clashes broke-out between the
Dayak and
Madurese settlers in
Central Kalimantan in 1997. After violent campaign season,
Golkar won the heavily-rigged
May 1997 MPR elections.
The new MPR voted unanimously to re-elect Suharto to another five-year
term in office on March 1998, upon which he proceeded to appoint his
protege
BJ Habibie as vice-president while stacking the cabinet with his own family and business associates (his daughter
Tutut became Minister of Social Affairs). Government's increase of fuel prices by 70% of 4 May triggered anti-Chinese rioting in
Medan.
With Suharto increasingly seen as the source of the country's mounting
economic and political crises, prominent political figures spoke out
against his presidency (notably Muslim politician
Amien Rais), and on January 1998 university students began organizing nation-wide demonstrations.
[53]
The crisis climaxed when Suharto was on state visit to
Egypt on May 1998. Security forces
killed four student demonstrators from Jakarta's
Trisakti University on 12 May 1998, which was followed by
anti-Chinese rioting and looting across Jakarta and some other cities
on 13–15 May that destroyed thousands of buildings and killed over
1,000 people. Various theories exist on the origins of the racial pogrom
against the
ethnic-Chinese. One theory suggested rivalry between military chief General
Wiranto and
Prabowo,
while another theory suggested deliberate provocation by Suharto to
divert blame for the crisis to the ethnic-Chinese and discredit the
student movement.
[54]
