ACADEMIC

project on environmental scarcities, state capacity, & civil violence

The Case Study of Indonesia – Section 1 and 2

by Charles Victor Barber
World Resources Institute
Cambridge: American Academy of Arts and Sciences and the University of Toronto
1997

I. INTRODUCTION

Recent studies across a number of countries show that growing scarcities of renewable natural resources can contribute to social instability and civil strife.¹ These studies also indicate that the multiple effects of environmental scarcity, including economic decline and large population movements, may sharply weaken the administrative ability, internal coherence, and legitimacy of the state in some poor countries. Weakened state legitimacy further raises the likelihood of civil violence. This case study of Indonesia (others focus on China and India) is part of a follow-up project to the work noted above, which explores the links among resource scarcity, state capacity, and civil conflict.

Three factors can produce renewable resource scarcities. First, environmental degradation can reduce the aggregate pool of available resources; for example, forest loss, cropland degradation, or destruction of fish habitat reduces the absolute supply of those resources (supply-induced scarcity). Second, the demand for a resource can increase due to growth in population or per capita resource consumption. Population growth divides a resource among more and more people, which reduces its per capita availability, while rising incomes can increase the per capita demand for a resource (demand-induced scarcity). Third, unequal resource distribution concentrates a resource in the hands of a few people and subjects the rest to greater scarcity (structural scarcity).²

The studies previously cited suggest several ways in which resource scarcity may erode state capacity and increase the probability of civil conflict. First, scarcity may increase financial and political demands on the government. Absolute resource losses necessitate expensive rehabilitation measures, deprive resource-dependent elites of sources of income, and impoverish resource-dependent populations. These impoverished populations may then either migrate to urban slums or move onto ever-more fragile habitats, accelerating the process of resource loss.

Second, resource scarcity may adversely affect the economy’s general productivity, via sedimentation of dams and irrigation works, salinization of croplands, decline in raw material supply for forest industries, and collapse of fisheries. When state legitimacy is based on sustained economic development, the impacts of general resource decline may affect this legitimacy. State revenues may decline and thereby undercut the delivery of development benefits. The inability of the state to respond to societal needs leads to social dissatisfaction with the state and conflicts among various social sectors.

Third, resource scarcity may, under certain circumstances, impede the ability of the state to adapt to new conditions and pressures.³ As the conditions and challenges facing the state change — because of resource scarcity, structural alterations in the economy, or other factors — the ability of the state to adapt is constrained by political, economic, and institutional policies implemented in the past. In other words, the state does not operate with a clean slate when addressing new challenges: the most logical and effective policies and actions may be precluded by the resistance of special interests, weakness of the bureaucracy, political and intellectual rigidities in the leadership, and other traits inherited by the present-day state.

The state’s ability to adapt may be further impeded by increasing resource scarcities for several reasons. First, scarcity often leads to rising demands from various social actors (farmers, urban workers, resource-dependent industries, environmentalists) for state action (examples include subsidies, resource rehabilitation investments, or the creation of national parks). This growing cacophony of demands constricts the state’s ability to maneuver and to innovate. Second, scarcity frequently increases the level of social friction and conflict among these groups, which reduces the state’s ability to get different actors (for example, forest-based local communities and logging concessionaires) to work together in innovative ways. Finally, as resources become scarce, the state finds it more difficult to provide “win-win” solutions to resource conflicts. When the resource pie shrinks, one actor’s gain will likely be another actor’s loss.

This study explores these dynamics of environmental scarcity, resource conflict, and state capacity in Indonesia, the world’s fourth most populous nation. Specifically, the study’s objectives are to:

Briefly review the historical roots of President Soeharto’s “New Order” regime, the circumstances under which it came to power in 1965 to 1966, and how history shaped its present outlook and orientation (Section II);
Analyze the evolution, strengths, and weaknesses of state capacity under the New Order, with particular reference to the role of natural resources (Section III);
Examine the forestry sector, especially the scarcity of forest resources, the kinds of conflicts that arise from forest resource scarcities, and New Order responses to these scarcities (Section IV); and
Assess the future capacity of the New Order state to adapt to intensifying economic, social, political, and environmental pressures, and the extent to which resource scarcities directly and indirectly diminish that capacity (Section V).

Indonesia is not presently a country in which resource scarcities cause widespread conflicts that appreciably erode the legitimacy or capacity of the state. Rather, over the past three decades the New Order state has systematically exploited Indonesia’s abundant renewable resources to support rapid economic growth, social services expansion, and state capacity. Enhanced capacities have enabled the state to extend its political, territorial, and ideological control. At the same time, the state has used its heightened political capacities — and the benefits of development — to muffle long-standing cleavages within Indonesian society and quell recent local conflicts arising from rapid socioeconomic and environmental change.

Circa 1997, optimistic conclusions on the adaptation ability of the Indonesian state are defensible. The capacity of the New Order state is as strong as it has ever been; economic development continues at a good pace and provides the regime with broad-based popular legitimacy; renewable natural resources are still relatively plentiful (compared to many other countries in the region); and although the level of conflict over resources is rising, the state is capable of containing this conflict. And while it began as an army-led regime, the New Order installed a relatively effective bureaucracy that has adapted to new political, economic, and environmental circumstances.

However, an examination of emerging economic and environmental trends, recent political developments, and the adaptive limitations imposed on the New Order state by its past political and economic choices, leads to more pessimistic, but equally defensible conclusions. The renewable resource base of Indonesia, while still considerable, is under severe strain and eroding steadily. Oil, the cornerstone of New Order growth in the past, will run out within two decades. Unequal distribution of natural resource access and benefits has caused ubiquitous (albeit usually politically invisible) conflicts with local communities, and fostered the creation of powerful business conglomerates that play a heightened role in setting — or stonewalling — government policies. And historical cleavages (such as those between Javanese and non-Javanese, Muslim and non-Muslim, Malay and Chinese) held in check by authoritarian rule and an expanding economic pie, have not disappeared. Meanwhile, three decades of economic development transformed Indonesia’s economy and society, and created new actors, interests, and demands on both natural resources and the state. Despite the New Order state’s proven ability to adapt to macroeconomic changes, due to its historical roots, basic ideology and structural characteristics, the state has little capacity for sociopolitical adaptation. With Soeharto’s long reign coming to an end and no clear successor in sight, all of these factors may create heightened social instability and conflict in the coming decade.

The set of optimistic conclusions corresponds to many aspects of observable reality in the late 1990s. This study contends, however, that the second set of pessimistic conclusions more accurately describe the probable future relationships among resource scarcity, social conflict, and state capacity over the next ten years.

“The State” and “State Capacity”: Working Definitions

As a starting point, this study adopts Joel Migdal’s definition of the state:
An organization composed of numerous agencies coordinated by the state’s leadership (executive authority) that has the ability or authority to make and implement the binding rules for all the people as well as the parameters of rule making for other social organizations in a given territory, using force if necessary to have its way.⁴
As Homer-Dixon⁵ points out, this definition gives little guidance on the boundaries of the state. For example, nongovernmental organizations (NGOs) influence and sometimes implement government programs,⁶ and timber concession-holders carry out significant resource management and control functions. The International Monetary Fund and the World Bank play key roles in setting many governments’ economic policies.⁷ While not formally part of the state apparatus, such institutions certainly shape and implement state policies and actions.

Through its ability to set the rules for social organizations, exercise coercion, and provide economic and other incentives (such as the opportunity to sit closer to power) the state manipulates, coerces, and coopts a range of extra-governmental organizations into serving its objectives. These organizations exhibit varying degrees of autonomy from the state. The same NGO that implements one government program may protest another and timber concessionaires may fight increased taxation. At some point organizational autonomy reaches a stage where an organization is unambiguously within the societal rather than the state ambit. (The state is rarely monolithic — these organizations may also become weapons in intrastate conflicts between different ministries or branches of government.) In short, the boundaries of the modern state are inherently fuzzy, and no one general definition can encompass all contexts.

Turning to the question of “state capacity,” this study utilizes a framework of nine indicators of state capacity, four measuring the intrinsic characteristics of the state, the remainder analyzing the characteristics of state-society relationships.⁸

Indicators Measuring Intrinsic Characteristics of the State

Human capital measures the technical and managerial skill level of individuals within the state and its component parts.
Instrumental rationality concerns the ability of a state’s components to gather and evaluate information relevant to their interests and to make reasoned decisions maximizing their utility.
Coherence is the degree to which the organs and agents of the state agree and act on shared ideological bases, objectives, and methods which flow from the executive authority.
Resilience is the state’s capacity to absorb sudden shocks (political, economic, and otherwise); to adapt to longer-term changes in socioeconomic conditions, interests, and political demands; and to sustainably resolve disputes and conflicts within society, and between the state and societal actors.

Indicators Measuring State-Society Relational Characteristics

Autonomy is the extent to which the state can act independently of external forces, both domestic and international, and coopt those that would alter or constrain its actions.
Legitimacy is the strength of the state’s moral authority — the extent to which the populace obeys its commands out of a sense of allegiance and duty, rather than as a result of coercion or economic incentive.
Reach measures a state’s ability to actually get things done in the society and the economy. Reach includes the state’s capacity to extend its ideology, sociopolitical structures, and administrative apparatus throughout society; and the state’s capacity to design and effectively implement programs and projects on the ground (or ensure that others do so).
Responsiveness measures the extent to which state policies and actions meet the needs, interests, and grievances of various social actors and, therefore, the extent to which the state fosters or allows the development of mechanisms (political processes, NGO activities, a free press) through which all stakeholders can articulate their views and aspirations.
Fiscal strength refers to the state’s ability to finance its programs, policies, and politics. To convince, cajole, or coerce recalcitrant groups within society, the state only has three choices: moral suasion (for which legitimacy is important), bribery and cooptation, and outright coercion. Fiscal strength is the key to the latter two. Access to considerable and continuous financial resources is necessary to fund development programs, pork-barrel projects, and subsidies (to name only a few forms of financially based state persuasion), and to keep army and police loyal, trained, and equipped. Fiscal strength contributes to human capital, autonomy, coherence, legitimacy, and reach, and is also, in part, a consequence of these factors.

Two additional points are important. First, the major components of the state — such as the executive, bureaucracy, Parliament, judiciary, and military — may rank very differently for any of these dimensions. Second, there is no direct link between a high level of state capacity and the goodness, justness, or humaneness of that state. A strong state may, in the short term at least, be one which breeds or tolerates great economic inequalities, carries out arbitrary and brutal police actions, and is not politically accountable to the citizenry for its actions. Nazi Germany is one prominent example.

Thesis of the Case Study

The New Order state exploited the archipelago’s rich natural resources to jump-start and sustain a process of economic development that the World Bank praised as “one of the best in the developing world.”⁹ However, the regime used its natural resources as more than fuel for economic growth. Revenues from resource extraction provided tangible development benefits — increased food production, roads, schools, and health care — to a large segment of the populace. These development benefits ameliorated long-standing social cleavages within the Indonesian economy and society, increased state legitimacy, and cemented allegiances to the regime.

Natural resources — and resource policies — have also strengthened various dimensions of the New Order state’s capacity. Natural resource revenues increased the state’s fiscal strength which bolstered most other dimensions of state capacity discussed in the previous section. And natural resource policies provided an important vehicle for projecting New Order values and priorities throughout society.

State autonomy has been strengthened through the use of natural resource exploitation licenses and other privileges. The state uses these privileges to coopt potential opponents and dissenters within the elite, and to strengthen the ministries issuing these rights. Similarly, resource revenues have deepened state coherence. The president disperses funds to ministries and local governments and therefore can command obedience from diverse sectors within the state. As already noted, the provision of development benefits to much of the populace has bolstered state legitimacy. The reach of the state has been extended by resource-derived funds but also by policies which claim three-fourths of the country as “forests lands” under state control. This control has allowed the state (or its agents) to open up isolated areas to state-led development, sociopolitical organization, and cultural penetration.

Inevitably, the rapid economic development under the New Order gave rise to conflicts between state-led resource extraction activities and local communities deprived of their long-standing access to forests and other resources. Until recently, the regime has successfully localized, suppressed, or resolved these conflicts so these disputes pose no threat to the regime’s capacity or stability.

The state’s ability to contain conflict over natural resources, resource exploitation rents, and resource policies depended on a particular set of circumstances. These circumstances included: abundant natural resources; continued economic growth and poverty reduction; an efficient and heavy-handed military intelligence and domestic security apparatus which largely accepted and served the objectives of state policy; the transformation of the electoral process into a state-controlled mechanism for reinforcing its legitimacy; a quiescent and depoliticized peasantry and urban workforce; a small (until very recently) middle class willing to accept authoritarian politics in exchange for growing wealth; and the continuity of President Soeharto’s thirty-year rule.

Many of these conditions are changing rapidly in the late 1990s, and new circumstances arise that challenge the ability of the state to control and direct events as effectively as it has in the past.

Conflicts over natural resources are not as “local” as they once were.

The increasingly bold Indonesian print media (at least until the media crackdown of 1994, discussed below), the advocacy efforts of local and national NGOs, and the growth of global electronic communications publicize local resource conflicts. NGO advocacy on local conflicts has been most visible and effective with projects funded by multilateral development banks and other donors. In such cases, the ousting of local forest dwellers or farmers to make way for logging or dam-building will now likely result in hearings in the US Congress, protest demonstrations in front of the Indonesian Embassy in London, and coverage in the International Herald Tribune and the Far Eastern Economic Review.

The international development Zeitgeist has changed in thirty years from a single-minded focus on “economic growth” to “sustainable development,” with growing attention to environmental, social, and human rights concerns.¹⁰

It is no longer as acceptable to “break a few eggs” locally in order to make an “omelette” of national economic growth. International development agencies have less influence in Indonesia than in many smaller, poorer developing countries (and the depth of their commitment to a new sustainable development path is questionable).¹¹ But with aggregate Official Development Assistance (ODA) running at about $5 billion annually, these agencies still exercise considerable influence. And as Indonesia takes a higher profile on the international stage (for example, by chairing the Non-Aligned Movement in 1993 to 1994, hosting the Asia-Pacific Economic Cooperation Summit in 1994, and sitting on the United Nations [UN] Security Council), the government is more sensitive to international opinion.

The natural resource base of the country is increasingly degraded, leaving fewer resources for the regime to exploit, and less to sustain the growing rural population.

Deforestation runs between 600,000 to 1.3 million hectares per year,12 heightened energy demand may make the country a net oil importer by 2000, and millions of hectares of land are now extremely degraded. At the same time, while the relative share of primary commodities in total GDP has declined from 60 percent in 1970 to 39 percent today, and will likely reach 17 percent by 2010, the absolute value added from primary commodities has more than doubled over the past twenty years. The absolute value of nonrenewables (oil, liquid natural gas [LNG], minerals) increased by 128 percent and “renewables” (agriculture, fishing, and forestry) increased by 91 percent. In 2010, the total value of these sectors is expected to rise by 50 percent.¹³ Thus, while the regime continues to rely on natural resources, it will do so in the face of growing absolute scarcities, pressures to conserve, and heightened demands from the growing rural population.

Indonesia’s economy and society have changed dramatically since the 1960s. The pace of change is accelerating, leaving a transformed sociopolitical landscape in its wake.

The economy grew by nearly 8 percent annually in the 1970s, and despite external shocks growth averaged 5.3 percent in the 1980s. For the past five years, growth in the manufactured goods sector averaged 27 percent annually, and overall private investment grew by an annual average of 11 percent since 1986. Per capita income has risen from $50 in 1967 to $650 today, and poverty has been reduced from 60 percent to an estimated 15 percent of the population.¹⁴ Adult illiteracy rates fell by two-thirds,¹⁵ and life expectancy at birth increased by twenty years (almost 50 percent). In 1970, 15 percent of the population lived in urban areas; the country’s population is already 30 percent urban today, and urbanization may reach 50 percent by 2020.¹⁶ These impressive development achievements have created a small but rapidly growing class of educated, increasingly mobile, urban, and informed people. This new class has greater expectations for political participation and less tolerance for — or more willingness and ability to complain about — autocratic and corrupt behavior on the part of government officials and agencies.

The concentration of natural resource-based wealth in the hands of a small political-economic elite is under growing attack from many parts of society.

The power and conspicuous consumption of these elites — often ethnic-Chinese in league with members of the president’s family and other regime figures — is increasingly unacceptable. Critics include a general public long suspicious of the country’s wealthy Chinese minority,¹⁷ the rising middle class which sees its own business prospects constrained by cronyism, and elements within the military and civilian state elite. Some members of the state elite see the growing power and profile of the Chinese conglomerates and “the kids” as an obstacle to a smooth presidential succession, and as a potential source of general social unrest and political opposition.¹⁸

President Soeharto has been in power since 1966 and cannot last forever.

Questions arose in mid-1996 about whether Soeharto, 75, would stand for another five-year term in 1998, especially after the death of his wife in May 1996 and a well-publicized July 1996 trip to Germany for medical treatment. However, most political observers bet that he will remain in office. The state of his health is unclear, no successor is in view, and there is no reliable — or even tested — mechanism in place for managing this crucial political transition. His relatives’ business empires complicate the picture, as Soeharto is less likely to step down if their interests would be at risk under his successor. Soeharto is the linchpin and symbol who holds the New Order regime — and hence the current stability and prosperity of Indonesia — together. It remains unclear what the “Indonesian state” is without the New Order regime and equally unclear what the New Order regime without Soeharto will look like.

Political conflict in mid-1996 — which turned violent in July — reflects growing weaknesses in the regime’s ability to continue dominating and manipulating the political process.

The run-up to the 1997 election in mid-1996 provoked the greatest political turmoil and the most significant riots in decades. Megawati Sukarno, daughter of the former president, was elected Chair of the Indonesian Democratic Party (PDI) in 1993. Fearful that the Sukarno name would coalesce opposition forces into a credible electoral alternative, the government and military engineered a PDI “Party Congress” in June 1996. At this Congress, Megawati was ousted and replaced by Suryadi, who chaired the party from 1986 to 1993 and is not a political threat to the regime. Megawati and her supporters rejected the results of the Congress, and her forces refused to leave the PDI’s Jakarta headquarters. The PDI building, according to Newsweek, rapidly became “a hotbed of free speech and debate. Labor leaders and environmentalists entertained big crowds with tirades against the government.” But on 27 July, a band of police and military-backed thugs violently evicted Megawati’s supporters from the PDI building — according to one eyewitness, some of the injured carried out were “so smashed up they didn’t look like people anymore.”¹⁹ The assault set off the worst riots in Jakarta since 1984. Dozens of buildings were burned, at least 5 people were killed (the number is disputed), and many others were injured or went missing, while at least 250 people were arrested in the aftermath.²⁰

The government quickly blamed the PRD, a small group of young democracy and labor activists formed in 1994, arrested its leader in August, and charged him with subversion (punishable by death). Soeharto and other New Order leaders branded the whole affair as evidence of the continued threat of communism.²¹ Megawati and her supporters filed a lawsuit against the PDI and the government, while the government began calling in numerous prominent opposition figures for “questioning,” including Megawati. Troops patrolled the streets and the state imposed a curfew in major cities for one month.²² By September, the protests subsided. However, the 1997 election will probably be far more volatile than past elections. Doubts about Soeharto’s ability to retain control of events are growing, even among members of the military.²³

If current trends and events continue over the next decade, the regime may be unable to contain growing conflicts over natural resources (and other issues) as effectively as in the past. The state’s ability to appropriate the resource rents needed to maintain the support of clients and the bureaucracy, or sustain the coherence of elite interests and actors who constitute the power centers of the regime, may be weakened.

Moreover, the New Order state is weak along the three dimensions of state capacity that are critical to confront these new challenges. While within the central organs of the state, human capital is quite strong, it is extremely weak within most of the provincial and subprovincial governance structures — the legacy of three decades of centralization. This lack of human capital outside the central state weakens the state’s instrumental rationality: Due to the centralized, top-down nature of the state apparatus, the state is unable to effectively gather and evaluate information from the provinces and from those elements of society not connected to the political apparatus. Finally, perhaps the weakest component of the state is its lack of responsiveness to local needs and interests and its inability to satisfactorily resolve local conflicts when those interests collide.

Thus, the regime’s weak capacity to adapt to the social and political dimensions of ongoing changes stands in stark contrast to its nimble macroeconomic policy-making in recent years. A successful shift in the 1980s away from dependence on oil revenues and the concurrent deregulation of many industries and service sectors, for example, paved the way for the feverish levels of foreign investment and strong GDP growth over the past six years.²⁴

In short, despite its strengths in other areas, the New Order state’s capacity for ingenuity — ideas applied to solve practical social and technical problems²⁵ — is extremely low. During the violent transition from Old Order to New and the first twenty years of Indonesia’s independence, the perceptions and experiences of the regime’s leaders, Soeharto in particular, shaped the choices and policies of the New Order. Those perceptions, choices, and policies have beneficially served the internal interests of the state over the past three decades. And although these policies have caused a great deal of oppression and suffering for some, they have delivered sustained and broad-based economic and social development to the majority of Indonesians. However, the regime now seems bereft of the ideas, mechanisms, and skills to adapt to the rapid changes engulfing the archipelago in the late 1990s.

First, political development towards a more responsive, democratic polity has been stunted. The institutions of civil society (such as political parties, NGOs, media, and student organizations) which could form the seeds of democratic development have been systematically harassed, coopted, or transformed into state puppets, and in some cases, dismantled. Conflicts in mid-1996 over the leadership of the PDI — resulting in the above-mentioned riot in July — have been used by the government as a pretext for a general crackdown on all democratic activists. This crackdown was characterized by the Far Eastern Economic Review as a “hunting season.”²⁶ Despite the broad consensus that the riots and related events (discussed in Section III) were the result of thwarted demands for greater democracy and more accountable government, Soeharto firmly maintained in his annual Independence Day address in August that “these riots had no correlation whatsoever with democracy.”

Second, the policies of the New Order state have grievously wounded the capacity of local communities to take an active and effective role in development initiatives and projects. In its efforts to depoliticize the masses and introduce a uniform set of state-dominated development institutions at local levels, the New Order dismantled or seriously crippled most of the rich and diverse local systems of governance, socioeconomic cooperation, and natural resource management. At the same time, the institutions it has put in their place are for the most part either pure symbols, or vehicles for the top-down transmission of state priorities and programs to local communities. Communities are thus increasingly bereft of the organizational resources and the local leaders needed to effectively participate in development and adapt to change, while the state is deprived of the collective ingenuity of the nation’s myriad villages.

Both of these factors combine to reduce the state’s capacity to develop innovative policy and institutional solutions to new challenges and to resolve disputes and conflicts. Under such conditions, even relatively low levels of resource competition could lead to high levels of social conflict and violence. And as resources become more scarce and the incidence of resource conflicts increases over the coming years, weak dispute resolution capacity — an absence of accessible forums, the refusal to admit the existence of valid disputes, and popular perceptions that the system is incurably biased towards elite interests — will certainly prolong, sharpen, and exacerbate such conflicts.

II. LEGACIES OF THE PAST AND THE BIRTH OF THE NEW ORDER

The New Order’s agenda and style of government is largely a consequence of its rejection of most aspects of pre-1966 history. Nevertheless, important features of the New Order took shape in the 1950s and early 1960s, during the tumultuous rule of Sukarno, Indonesia’s first president.

Sukarno and the Old Order

The nationalist leaders Sukarno and Hatta declared Indonesia’s independence on 17 August 1945, following three years of Japanese occupation. The nationalists promptly drew up a provisional constitution and formed a cabinet, but the Dutch surrendered their colonial claims on the archipelago only after four years of armed resistance. After the nationalists won their independence, they could not agree on how the country should be governed. The 1945 Constitution was short and vague, but clearly provided for a strong presidency. A provisional constitution, enacted in 1950, established a parliamentary system, mirrored many guarantees in the 1948 UN’s Universal Declaration of Human Rights, restricted the presidency, and called for a permanent constitution to be drawn up by an elected assembly known as the Konstituante. Elections to the Konstituante were held in 1955. Inconclusive debates continued in the Konstituante until 1959 when President Sukarno dissolved it and reinstated the 1945 Constitution.

Throughout this period, three political visions competed for supremacy — the integralists, Islamists, and constitutionalists.²⁷ The integralists rejected Western-inspired individualism. They saw this individualism as the foundation of capitalism, colonialism, and imperialism. Integralists denied the notion of a separation between the state and its citizens; they preferred the metaphor of a family with no need for specific guarantees of human rights or checks and balances among different functions of government. In the economic sphere, integralists supported a heavy state hand in the economy, a major role for cooperatives, and the assertion of total state ownership and control over land and natural resources. They were opposed to the establishment of an Islamic state. The Islamists, however, believed that Indonesia — 85 percent Muslim — must become an Islamic state. The constitutionalist group focused on the processes of government. This group aspired for a state characterized by “procedures for the effective participation of the people in government, limitation of government power, and accountability of the government to the people,” and based on “an ethic of means rather than of ends, however noble and just these may be.”²⁸

To reconcile these camps, in June 1945 Sukarno enunciated a national philosophy based on Pancasila, or Five Principles: belief in one supreme God; justice and civility among peoples; the unity of Indonesia; democracy through deliberation and consensus among representatives; and social justice for all. Sukarno’s rationale for Pancasila lay in the need for “broadly inclusive principles to bind together the diverse groups of an extremely pluralistic society.”²⁹ More specifically, the first principle undercut demands for an Islamic state.

The 1950s were a period of intensive political ferment characterized by “a kind of permanent round-the-clock politics in which mass organizations competed with each other at every conceivable kind of level without there being any real resolution. . . . Politics in universities, in factories, in schools, in plantations and so forth, never could come to real resolution precisely because the electoral mechanism was not in place.”³⁰ Resentment of Javanese political domination in the Outer Islands led to a series of regional rebellions. The dashing of Islamist hopes gave rise to a violent movement, centered in West Java, for an Islamic state. In 1958, a group of disillusioned regional military officers — backed by the CIA and suspicious of Sukarno’s communist sympathies — set up a short-lived rebel government based in West Sumatra. Meanwhile, the government’s devotion to socialist economic strategy, combined with general economic mismanagement, caused economic deterioration.

At that time, the Communist Party of Indonesia (PKI) was expanding its influence through its systematic organization of urban and plantation workers and the peasantry. The PKI soon became one of the biggest political parties, particularly in East and Central Java. Hated and distrusted by both the military and the Islamic parties, the PKI developed an alliance with the PNI, Sukarno’s Indonesian Nationalist Party.³¹

The Parliament was unable to stem these rising tensions. General elections in 1955, although widely viewed as freer and fairer than any since, essentially produced a stalemate. “Rather than resolving political issues, the elections merely helped to draw the battle-lines more precisely.”³²

In 1959 Sukarno took matters in his own hands. He dissolved the Konstituante, reinstated the 1945 Constitution, and established “Guided Democracy,” essentially “a return to a system of personal rule more reminiscent of Javanese feudalism than the chaotic democratic experiment of the 1950s.”³³ Juggling the same conflicting forces that had paralyzed the parliamentary system, Sukarno fashioned a volatile coalition called nasakom — an acronym for nationalism, religion, and communism. Conflicts among the military, Islamic groups, and the PKI intensified. By 1963 to 1964, in many parts of Java, PKI-led peasant groups violently clashed with large landowners — many from the more devout Islamic faction known as santri³⁴ — in “unilateral actions” to seize land. Killings, burning of crops and buildings, and even confrontations among groups numbering in the thousands were not uncommon, and continued into mid-1965.³⁵

Meanwhile, the military became dissatisfied with being only a piece on Sukarno’s chessboard. Established during the revolutionary struggle, the Indonesian Armed Forces (ABRI) always viewed its role as “the institution which first forged the nation and then saved it from itself time and again.”³⁶ The ABRI viewed civilian politicians as incompetent and vehemently opposed both Islamic nationalism and communism. They therefore formulated the “Middle Way” doctrine, which was later transformed by the New Order into “Dual Function” (Dwifungsi) the assertion of a strong, formal, and permanent political role for ABRI. This doctrine is a key legacy of the Old Order which continues to be a central feature of political life in the 1990s.³⁷

Sukarno’s mercurial foreign policy intensified economic chaos and political turmoil. Sukarno upped demands for Dutch cession of West Irian (now Irian Jaya), launched Konfrontasi — a military campaign against Malaysia in protest over the establishment of the states of Sabah and Sarawak on Borneo, drew closer to Beijing and Moscow, nationalized foreign businesses, told the United States in 1964 to “go to hell with your aid,” pulled out of the UN in January 1965 to protest its admission of Malaysia, and withdrew from the World Bank and the International Monetary Fund (IMF) in August of that year.³⁸

The Coup Attempt of 1965 and the Beginnings of the New Order

A coup attempt on 30 September 1965 set in motion the bloody and tumultuous events that led to Sukarno’s downfall and the establishment of the New Order regime. Although this coup stands as the most profound watershed in Indonesia’s history since 1945, much about the events of that date and their aftermath remain a mystery. On that evening, a group of leftist military officers who called themselves “The September 30 Movement” kidnapped six generals and a lieutenant. By the next morning, the seven were killed, and their bodies dumped in a well at the airbase where the rebels established their base of operations. In a radio broadcast, the group claimed that they had acted to protect Sukarno from an imminent coup by a “Council of Generals.” That evening, army units under the command of Soeharto — then a Major General — took the airbase and ended the coup. The bodies of the generals were found several days later, infuriating the army leadership.

The respective roles in these events of Sukarno, the PKI leadership, Soeharto, Beijing, and Washington have been the subject of extensive — but inconclusive — speculation and debate.³⁹
Whether the events [of the coup attempt] were mounted by dissident soldiers against President Sukarno, or with the President’s connivance against the army leadership remains unknown. The official explanation has always been that it was a Communist-inspired coup which failed. The message is simple: Communists are barbarous and bad, the army is virtuous and good. However, objective assessments of the affair have not dislodged the primacy of the government’s explanation that it was “an attempted communist coup.”⁴⁰
The events that followed the attempted coup decisively shaped Indonesia’s history. In late October, paratroopers from Jakarta arrived in Central Java to suppress local army units that expressed support for the coup plotters. Soon, clashes between pro- and anti-PKI groups escalated, the paratroopers began arming local youths from religious and nationalist organizations, and the conflict became a one-sided slaughter of real and alleged PKI members and sympathizers. Similar violence broke out in East Java, and soon spread to Bali. To a lesser extent, other regions experienced upheaval, such as fiercely Islamic Aceh in North Sumatra. In each region, after several weeks of mass slaughter, the army took belated steps to bring the killings under control, but violence continued well into 1966.

Estimates of those killed range from 78,500 to 500,000, but the real figure will never be known. According to a CIA analysis:
In terms of numbers killed, the anti-PKI massacres in Indonesia rank as one of the worst mass murders of the twentieth century, along with the Soviet purges of the 1930s, the Nazi mass murders during the Second World War, and the Maoist bloodbath of the early 1950s. In this regard, the Indonesian coup is certainly one of the most significant events of the 20th century, far more significant than many other events that have received much greater publicity.⁴¹
The army’s role in the killings is debated. ABRI claims that it was not in control of rural areas and that it was the army which put an end to the slaughter. However, few objective observers believe this view, and it has been contradicted by key army participants in the killings.⁴² As Bresnan points out, neither General Nasution, General Soeharto, nor any other army leaders publicly condemned the killing or called for an end to the violence. He concludes that the army leadership knew the killings were occurring and sanctioned or at least tolerated it, but notes that civilians carried out much of the killing, some of it without army involvement.⁴³ Robert Cribb’s view is that the army took part directly in some cases, but more often they simply supplied weapons, rudimentary training, and strong encouragement to civilian gangs who carried out the bulk of the killings. In most cases, he notes, “the killings did not begin until elite military units had arrived in a locality, and had sanctioned violence by instruction or example.”⁴⁴

By early 1966, the rural strongholds of the PKI were essentially crushed, the PKI leader was executed, and the army began to remove suspected PKI sympathizers from civilian and military power. While Soeharto consolidated his support within the armed forces, Sukarno was increasingly isolated and his days as president were numbered.
When the bodies of the generals were found in the Halim well, the die was cast. The army sought greater control of the political system and the bungled coup provided an opening for the army to reassert its control. Guided Democracy provided a sufficiently serviceable political vehicle for Soeharto, all he lacked was to replace its civilian leadership with one drawn from the military ranks.⁴⁵
Soeharto moved very cautiously, however. At that time, he was relatively unknown, while Sukarno, despite his troubles, was still widely revered as the founder of the nation and a prominent international leader. And “having forestalled an unconstitutional military putsch, most of whose leaders had previously served under his own command, Soeharto had to avoid even the appearance of unconstitutional action on his part.”⁴⁶

The formal transfer of power to Soeharto began with Sukarno issuing the “Letter of March 11” — later known by the acronym Supersemar — which granted Soeharto the authority to “take all measures considered necessary to guarantee security, calm, and stability of the government and the revolution, and to guarantee the personal safety and authority [of Sukarno].” While he did not become the acting president until the next year, Supersemar was in reality the beginning of Soeharto’s de facto rule.⁴⁷

While Crouch described Supersemar as “the disguised coup of 11 March,”⁴⁸ Soeharto has said “I have never thought of Supersemar as a means to gain power. Neither was [it] an instrument to stage a disguised coup. Supersemar was the beginning of the struggle of the New Order.”⁴⁹ Nevertheless, the following day Soeharto used his new power to formally ban the PKI, dissolve all of its affiliated organizations, and arrest cabinet members distrusted by the army. In the following months, he arrested thousands in a bid to remove all leftist sympathizers from the civilian and military bureaucracies. In March 1967, Soeharto was named acting president and, one year later, president.

Legacies of the Past: Summary

The dramatic and often tragic history of Indonesia’s first twenty years of independence deeply marked Soeharto and his subordinates. Many elements of the New Order show considerable continuity with the political processes and institutions put in place during those years. Others are best understood as visceral reactions against certain features and events of the Old Order, and the chaotic transition to the New.

The vision of an integralistic state, first elaborated in the 1940s, dominates New Order ideology and drives the regime’s approach to the political process, labor relations, student and NGO activism, human rights, the media, development initiatives, and the forms and limits of socioeconomic organization at the local level.
The 1945 Constitution, which Sukarno reinstated in 1959, with its strong presidency, the lack of checks and balances between branches of government, and an impotent Parliament, remains the basic political structure of the nation.
The dual security and sociopolitical roles of the armed forces, first enunciated in the late 1950s, endure. The doctrine of dwifungsi greatly strengthens the political and economic power of the army.
Fear of Islamic nationalism continues. The state must delicately balance the suppression of extremist Islamic tendencies with a general support for Islam in a country that is 85 percent Muslim.
Concern for national unity and the suppression of separatist tendencies has intensified, with particular emphasis on the newly integrated provinces of Irian Jaya (1969) and East Timor (1975), and systematic efforts to impose a uniform set of cultural and political values throughout the far-flung archipelago.
Fear of a communist resurgence — or at least political use of that fear — remains a perennial preoccupation of the regime. This fear continues, long after any sort of communist movement in the country has evaporated. “Not even the end of the Cold War has cooled the enthusiasm of New Order leaders for stamping the communist label on unwanted political activity.”⁵⁰
Distrust and suspicion of parliamentary-style democracy remains strong. This distrust was borne out of the chaotic experiences of the 1950s, but is maintained to concentrate power and suppress dissent rather than to keep order.
The regime pays meticulous attention to reinforcing the legal legitimacy of its rise to power and its policies and actions. This attention to legalities is rooted in the regime’s distaste for the perceived abuses of the legal process under “Guided Democracy” and its insecurity over the murky legitimacy of its own political birth.
Memories of bungled economic policies, ensuing hardships and economic decline under Sukarno — and, some would say, Soeharto’s own memories of a poor rural childhood⁵¹ — have imbued the New Order with a strong commitment to economic development, especially in rural areas.
Echoes of the mass killings in 1965 and 1966 color both the regime’s political views, and the attitude of the populace toward its rulers. “No one knows exactly why the beast emerged and the possibility of its return has inculcated in the New Order regime a deep streak of political caution.”⁵² For their part, the populace does not need a daily show of police or military power on the streets (and one sees little of this in Indonesia) to convince it that the price of crossing the New Order’s rulers can be very high indeed.