Indonesia: Economic, Social and Political Dimensions of the Current Crisis

  • Author: John T. Sidel
  • Document source:
  • Date:
    1 April 1998


In January and February of this year, against a backdrop of rapidly worsening economic conditions, a series of riots took place in various parts of Java and elsewhere in the Indonesian archipelago. Such incidents received broad and sustained coverage in the international media and gave rise to somewhat exaggerated fears that the predicted deepening of the economic crisis in Indonesia in the upcoming months could generate widespread social "unrest" or even a total breakdown of social order in the country.[1]

By late April, by contrast, the prospects for rapid and dramatic social "disorder" or political change appeared neither as apocalyptic nor as promising as some of the reporting had suggested. The rioting ceased, Suharto won yet another five-year presidential term from the tightly controlled People's Consultative Assembly (Majelis Permusyawaratan Rakyat - MPR), a new cabinet was appointed, a more flexible agreement with the International Monetary Fund (IMF) was signed, and the military remained firm in its repression of student demonstrations and other popular protests. Even as local and foreign commentators have begun speculating openly about the prospects for a "People Power Revolution" if student rallies spill into the streets, it is now possible to step back and evaluate the course of the crisis in Indonesia over the early months of 1998. Thanks both to short-term hindsight and to the considerable breadth, depth, and sophistication of available research on Indonesian history and society, today's ever-shifting news can be situated within a broader context of historical legacies and social trends.

This report provides an examination of the current crisis in Indonesia with a focus on the pattern of social mobilization and the prospects for further political change, including the possibilities for violence and the displacement of large numbers of people. It is argued that the riots which have occurred over the past few months reflect not only the effects of the ongoing economic crisis, but also the consequences of underlying social trends and a national‑level political transition already well under way in 1997. 

There is ample support for expectations that anti‑Chinese, anti-Christian, and other inter‑ethnic violence may well occur in the months ahead, but a refugee crisis or a full-blown breakdown of the existing social order in Indonesia still appears  highly unlikely. Although the ongoing economic crisis and political transition in Indonesia may well be characterized by a climate of rising social tensions and sporadic, if not escalating, anti‑Chinese and anti-Christian mobilization, nonetheless, there are considerable limits on possibilities for the mass rioting, dislocations, and disorder predicted by some commentators over the past few months. Certain prominent features of the Suharto regime, most notably the deep entrenchment of the Armed Forces and the system of heavily restricted regional and national parliamentary institutions, are likely to play a decisive ‑ albeit conservative ‑ role in shaping any political transition as it unfolds in the months and years to come. The societal grievances and aspirations unleashed by the economic crisis are thus likely to be channelled in the direction of popular anti-regime protest rather than the more apocalyptic options of inter-ethnic violence, revolution, or breakdown. 


In the course of 1997, a financial crisis hit several East Asian nations, most notably Thailand, South Korea, Malaysia, the  Philippines, and Indonesia. Yet, it is only in Indonesia that this crisis led to riots and to an atmosphere of considerable uncertainty and fear with regard to the future the world's fourth most populous nation. The current situation in Indonesia, unique in the region, can only be understood in a broader political and social context. 

2.1       Political Background: Regime Tensions and Transformation 

First of all, the economic crisis in Indonesia has unfolded against a background of rising tensions within the regime of President Suharto, in power since the mid-1960s. These tensions, it is argued, stem not only from the overriding question of succession to the presidency, but also from the particular mix of personal networks and institutional bases through which Suharto has entrenched himself in power and exerted authority over the years. In this regard, the underlying structural tensions within the regime consist of those between the institutional interests of the Indonesian Armed Forces and the personal interests of the President, between the essentially military pillars of his regime and the decidely more civilian networks established by him for his electoral and ideological legitimation and his family's economic enrichment.

General Suharto came to power in late 1965 in the wake of a coup d'état. It was his position as commander of the army's Strategic Reserve Command in Jakarta ‑ and as one of the Army's most senior generals ‑ that allowed him to consolidate power, both within the Armed Forces and later within Indonesian society at large. Under Suharto, the Army assumed a dominant role within the Armed Forces, the state, and society. Army officers (both active and retired) came to occupy numerous key positions as cabinet ministers, local government officials, heads of state enterprises, and members of the regime's parliamentary bodies. Institutionally, the Armed Forces' preeminent position within the state was guaranteed through its representation in the pseudo-representative bodies of the regime, most notably the parliament and the body that meets every five years to elect the President and Vice-President. Ideologically, the Armed Forces' political role has been promoted through claims to its heroic role in the revolution that led to independence, its role in the violent defeat of the Communist Party (Partai Komunis Indonesia - PKI) in the 1960s, and its alleged indispensability in maintaining peace and order in an ethnically and religiously diverse Indonesia.[2]

Over the years, even as General Suharto abandoned his Army uniform for civilian attire and relinquished his long-held role as Defence Minister to successive (retired) generals, the President retained considerable control over military promotions and assignments. In the late 1960s and 1970s, Suharto filled the uppermost ranks of the military with trusted lieutenants from the days of his command of the Army's Central Java Command in the 1950s and with officers from minority ethnic and religious backgrounds. In the 1980s, by contrast, he concentrated enormous power in the hands of a single former subordinate, General Benny Murdani, who dominated the Army hierarchy and built up the regime's intelligence apparatus over much of the decade.[3]

Following Murdani's political demise in the 1990s, Suharto has tended to favour officers with previous service as his personal adjutants, or with close personal (e.g. marital) relations with members of his own family, for key military posts. The most controversial and important officer in this mold is Lieutenant-General Prabowo Subianto, Suharto's son-in-law, who rose up extremely rapidly in the ranks to command Kopassus, the Special Forces of the Indonesian Army, and in March 1998 was promoted to head the powerful Kostrad, or Strategic Army Reserve Command ‑ the same position from which Suharto seized power after the coup in 1965.[4]

Yet, Suharto's relations with the military are declining with two underlying structural problems. With every year, even as another annual batch of military officers goes into retirement at the age of fifty-five, Suharto grows older and his links to the officer corps ‑ through shared personal, generational, and institutional experiences ‑ are becoming more tenuous.[5] Moreover, the past three decades have witnessed growing tensions between the institutional interests of the Army and the personal interests of the President. Now in his late 70s, Suharto's health and scenarios for succession are issues of considerable interest and speculation in Jakarta.

Suharto has appeared intent upon promoting the personal fortunes and political futures of his children and close friends, through a system of nepotism and cronyism that has allowed them to build up enormous business empires and to wield influence in government (including military) affairs over the past decade. Suharto's efforts to create a dynasty carry great potential for alienating Army officers with weaker links and allegiances to the Palace, whose careers and interests are stymied by the presidential family and its representatives in the Armed Forces, most notably Lieutenant-General Prabowo.

The past ten years have also seen a significant shift of real power from military to civilian hands, whereby the Army has lost considerable state power to the Palace and its non-military networks of patronage and prestige. This trend is especially visible in Golkar (Golongan Karya - Functional Groups), the government party that holds the lion's share of the elected seats in the regime's pseudo-parliamentary bodies, where the President's children and other Palace favourites have been installed in key leadership positions at the expense of retired Army officers. President Suharto has also devoted ample resources to civilian-led programmes that underscore his role both as the "father of development" and, since the beginning of the decade, as a patron of Islam, the faith of more than 85 per cent of the population.

In this vein, Suharto has promoted the establishment of a military-industrial complex under the aegis of his long-time associate and Minister of Research and Technology, B.J. Habibie. Habibie's sprawling empire of ten state-owned enterprises grouped under the Coordinating Agency for Strategic Industries, including Krakatau Steel, shipbuilder PT PAL, and controversial aircraft producer IPTN, has grown (as have the conglomerates of the Suharto children), even as the economic realm controlled by the Armed Forces has shrunk. In the name of high-tech economic nationalism and state-led rapid industrialization, Habibie has built up an enormous state-based patronage empire outside military control. Through control over "strategic industries" and responsibility for infrastructure projects and industrial development schemes, Habibie has wielded considerable discretion over government contracts and enjoys close links with leading businessmen, including members of the presidential family.

Meanwhile, President Suharto has also promoted Habibie's forays into the political realm, which he has undertaken under a distinctly Islamic banner. Several years ago, Habibie received considerable encouragement from the President in founding the Association of Indonesian Moslem Intellectuals (Ikatan Cendekiawan Muslim Indonesia - ICMI), a group with a sizeable media empire and patronage network for Islamic institutions and activities. Since its founding in 1990, ICMI has used these impressive resources to attract activists from a variety of Islamic associations and to broaden its influence in state and society alike. More importantly perhaps, Suharto engineered the rise of Habibie to the governing body of Golkar, and is believed to have considered him for the vice-presidency in 1993. In 1993-1997, Habibie succeeded in installing several protégés in Cabinet positions and was known to enjoy close ties (partly through ICMI) with high-ranking military officers. Thanks to his warm personal and business relations with the President as well as an evolving political base through Golkar and ICMI, Habibie won the vice-presidency in March 1998. He has positioned himself as a leading civilian contender in the succession struggle ahead.[6]

Thus, a complex mix of institutional and personalistic interests and military and civilian networks has sustained Suharto's rule over the past three decades. However, with increasing evidence of Suharto's mortality. the ever more imminent issue of his succession is intensifying inherent tensions within the Army and between rival clusters of civilian interests ‑ familial and personal ‑ backed by the Palace.

2.2       Social Background: The Past in the Present Crisis

The pattern of regime consolidation and transformation under President Suharto has crystallized against a backdrop of a set of important social trends set in motion as early as the 1970s. These trends must be understood as reflecting both the enduring legacies of Dutch colonial rule in the archipelago and the dramatic societal changes which economic growth and state policy under Suharto have engendered over the past decades.

Aside from its tremendous ethnic and religious diversity, Indonesian society has been distinctively marked by three crucial historical legacies. Firstly, the colonial authorities of the Netherlands East Indies implemented a set of policies that ensured the segregation -- and stigmatization as foreign -- of immigrants from China, even as they were encouraged to serve as middlemen in the exploitation of native labour. Thus, unlike in Siam or the Philippines, for example, the emergence of ethnic Chinese petty traders, moneylenders, revenue farmers, and capitalists, such as occurred throughout Southeast Asia in the colonial era, resulted in the Dutch East Indies in a minority of "pariah entrepreneurs" rather than an assimilated, "domestic" business class.[7]


Secondly, the low legitimacy of the minority "Chinese"[8] business class was coupled with the strength of local community-level bonds and experiences of popular mobilization, especially on the island of Java, where the majority of the Indonesian population resides. Instead of undermining Javanese society, for example, the Dutch in fact strengthened village institutions as key mechanisms for the extraction of labour and produce, and they valorized the native aristocracy for its role in defending (or even inventing) "Javanese tradition". During the Japanese occupation during World War II, these institutions served as bases for the mobilization of thousands of Indonesian youth, especially on Java, in political and para-military organizations around the island in anticipation of an Allied invasion. The subsequent struggle for independence (1945-1949) was led not by a nationally organized Leninist party as in Vietnam, but by a broad array of local guerrilla forces, with diverse ethnic, religious, and political orientations and hopes for a free "Indonesia".[9]

Thirdly, Dutch and Japanese policies laid the foundations for the political mobilization of religious identities and institutions. Unlike the British in Malaya, for example, the Dutch by and large allowed Islamic schools, places of worship, scholars, and preachers to remain outside the control of the indigenous aristocracy and the emerging bureaucratic state. In this context, a broad variety of autonomous Islamic associations emerged in the course of the early twentieth century, most notably the modernist Muhammadiyah (founded in 1912) and the avowedly traditionalist Nahdlatul Ulama (NU ‑ established in 1926). These two associations, first drawn actively into political activities by the Japanese authorities during the occupation, then served as the bases for many local anti-Dutch forces during the Revolution and later for political parties during the Soekarno era (1950-1965).[10]

Meanwhile, the broader patterns of Dutch colonization and uneven economic development in Indonesia worked to problematize the position of the small but important non-Moslem minority in the archipelago. Portuguese influence in eastern Indonesia and missionary activities throughout the archipelago created sizeable pockets of Catholic and Protestant Christians. Together with the largely non-Moslem ethnic Chinese minority, these Christians were, by the early twentieth century, clearly overrepresented in the ranks of the small but growing urban middle class of merchants, professionals, and civil servants. Thanks to early exposure to the urban cash economy (especially the ethnic Chinese), privileged access to Western-style education (i.e. missionary schools), and discriminatory state policies (e.g. in recruitment to the colonial army), by the time of Indonesian independence in 1950, Christians, while a small minority (less than 10 per cent of the archipelago's total population), enjoyed a privileged position in business, the state bureaucracy, and the urban social élite.

Against the background of this historical legacy of politically salient and potentially problematic ethnic and religious diversity, a number of developments since the 1970s have worked to exacerbate "communal" tensions in Indonesia. Thus, the process of rapid capitalist industrialization and urbanization, fuelled by the oil boom and import substitution in the 1970s and later by export-oriented manufacturing in the 1980s, gave rise to new social forces and problems in the country.[11]

Thanks to the virtual absence of a suitably "indigenous" business class at independence, economic nationalism and étatisme have enjoyed considerable legitimacy in Indonesia, and the state has played a very crucial role in capitalist development in the country. Dutch and other foreign-owned plantations and industries were nationalized by Soekarno in the late 1950s and early 1960s, and the oil boom of the 1970s filled government coffers with revenues for a decisively state-led industrialization drive. While the Suharto regime has invited foreign aid, trade, and investment (especially since the fall of oil prices in the early 1980s), sustained and rapid economic growth ‑ averaging seven per cent per annum since the 1970s ‑ has proceeded with only limited economic liberalization and privatization.[12]

The enormous economic resources and regulatory powers vested in the hands of Indonesia's highly centralized and authoritarian state have given rise to cronyism, nepotism, and a broad pattern of markedly uneven development in the archipelago. While state enterprises have provided profitable sinecures for retired Army officers and other members of the political élite, the vast panoply of bank loans, monopoly concessions, and discretionary tax, tariff, and other regulatory arrangements offered by the state to favoured private firms has spawned a business world dominated by cronies, cartels, and konglomerat.[13] At the national level, a group of ethnic Chinese cronies of President Suharto, known derisively as cukong, have since the 1970s established vast, diversified empires, stretching from agro-business to banking, construction, food processing, and logging, all heavily dependent on state finance and/or special state concessions and regulatory breaks.[14] Since the 1980s, moreover, these nation-wide konglomerat have been joined ‑ if not superseded ‑ by the businesses of President Suharto's children and other members of the extended presidential family, whose companies are now involved in virtually all major contracts in the country.[15] At the local level, small-time konglomerat, invariably owned by ethnic Chinese businessmen, have enjoyed somewhat analogous arrangements with regional military and civilian authorities. 

Given this highly skewed pattern of economic growth in the archipelago, as well as the historical legacies sketched above, capitalist development in Indonesia has, far more than anywhere else in industrializing Asia, confronted (or rather, engendered) a broad array of local grievances, resentments, and protests. In many parts of the archipelago, farmers have fought vigorously against the conversion of their rice fields into golf courses and factory belts, as have fishermen against the reclamation of shorelands, and urban slum residents against evictions and construction projects.[16] Petty traders and street vendors have likewise mobilized against their marginalization by department stores and shopping malls.[17] Despite considerable restrictions on trade unions and strikes, factory workers have organized work stoppages and other actions to raise wages and improve labour conditions.[18]

Since at least the early 1980s, such local protests have proved to be a persistent feature of Indonesian society, as is evident in the pages of virtually any local or national newspaper published over the past twenty years. This pattern stands in stark contrast to the relative quiescence observed in industrial zones in Thailand and Malaysia, or even in the Philippines. Urban middle-class grievances against kolusi and korupsi, have also been increasingly in evidence.

Meanwhile, a set of concomitant social trends and state policies have worked to deepen the distinctive configuration of ethnic and religious identities and cleavages already reinforced by the pattern of economic development noted above. Over the past several decades, the system of Islamic education in Indonesia has evolved from the traditional, rural boarding schools (pesantren) towards the model of the modernist, more Western-style madrasah, with Islamic universities established since the 1960s and growing rapidly in tandem with industrialization and urbanization. Thus by the early 1990s, the rising number of Indonesians schooled under a distinctly, self-consciously "Islamic" rubric had become a visible feature of urban life in many parts of the archipelago. The public sphere of modern, urban middle class life, perhaps for the first time in Indonesian history, could be plausibly claimed by those who defined themselves as devout Moslems.

State policies since the 1960s, moreover, have also worked to enhance and elaborate the social and political dimensions of religious identity in Indonesia. The anti-communist massacres and persecution campaign that inaugurated the Suharto regime, for example, drove millions of Indonesians to seek refuge in religious identity, institutions, and faith in the mid-late 1960s. Subsequent government regulations requiring all citizens to declare their faith, strengthening religious education in state schools, and outlawing inter-faith marriages created new official boundaries between Moslems and Christians. Policies discriminating against ethnic Chinese in the realms of culture, education, and state employment combined with the close linkages between "Chinese" businessmen and state officials to harden existing prejudices against this "pariah entrepreneur" class.[19]

By the early 1990s, the Suharto regime had also shifted its religious policies in a more self-consciously Islamic direction. Previously, the regime had practised exclusionary and in many ways repressive policies towards Islamic organizations and activists, and was widely seen as favouring Christian and Chinese interests at the expense of the Moslem majority.[20] Yet by the late 1980s, as the long-time Armed Forces and intelligence chief Benny Murdani, a Catholic, lost his influence, the President and countless other government officials made the pilgrimage to Mecca and otherwise began to signal in myriad ways that the Islamic faith enjoyed a privileged position in the eyes of the Indonesian state. In 1990, moreover, with the founding of ICMI by B.J. Habibie, a key cabinet minister and close Suharto associate, the regime also created a new rubric for the patronage (and cooptation) of Islamic institutions, from mosques and schools to publishing houses and dakwah (preaching) groups. In combination with the rising numbers of urban, educated, middle-class Indonesians professing devotion to Islam, these state policies created numerous new opportunities for Islamic intellectuals and activists.[21]

In short, by the early 1990s, a series of social trends had begun to crystallize in a society which, since the Dutch colonial era, featured overlapping ‑ and deepening ‑ ethnic, religious, and class cleavages and resentments. With rapid industrialization and urbanization in Java and elsewhere in the archipelago since the 1970s, new social forces and new social problems exacerbated these divisions, as seen in the increasing numbers and forms of local struggles against a business class perceived to be predatory and foreign. Meanwhile, the evolution of religious identities and institutions over the past few decades gave rise not only to a new class of "Moslem professionals", but to a newly enfranchised breed of what might be called "professional Moslems" as well. These long-term developments, in tandem with a set of dynamics and tensions within the Suharto regime, decisively shaped the years leading up to this year's crisis in Indonesia.

3.       PRELUDE TO CRISIS: 1990‑1997

3.1       Challenges and Containment

The years leading up to the current crisis saw the emergence and subsequent containment of a set of serious challenges to the Suharto regime. Beginning in the late 1980s, for example, the dismissal of long-time Armed Forces intelligence chief Benny Murdani inspired military elements reportedly loyal to Murdani to promote opposition forces arrayed against the regime. These oppositional forces emerged largely out of the urban middle and working classes that had grown considerably in tandem with more than two decades of sustained industrial growth. Organized in trade unions, human rights bodies, university student groups, non-governmental organizations, and religious associations, they drew on both the impressive history of social mobilization in Indonesia noted above and a broad array of popular grievances against the regime. These grievances stemmed from the regime's authoritarian nature, intolerance of dissent, and human rights abuses, the social injustices seen in rampant corruption, cronyism, and nepotism in business, and the vast inequalities in income distribution in the country.

The late 1980s and early 1990s also saw clear evidence of quiet support from dissatisfied military officers for these oppositional forces in Indonesian society.[22] Journalists and members of parliament received encouragement and assistance in exposés of government corruption and criticisms of government policies. Student groups, non-governmental organizations, human rights groups, and even labour unions enjoyed a measure of tolerance ‑ and in some cases, even backing ‑ previously withheld. Public figures known for their political independence and popularity were allowed new room for manoeuvre, most notablyAbdurrahman Wahid (popularly known as Gus Dur) of the 30-million strong Islamic association Nahdlatul Ulama (NU), and Megawati Soekarnoputri (daughter of the former president), who assumed the leadership of the Partai Demokrasi Indonesia (PDI - Indonesian Democratic Party).[23]

Meanwhile, these same military elements also began to make their presence felt in the innermost corridors of power in Jakarta. In 1988, Armed Forces' representatives in the pseudo-parliamentary body convened to re-elect Suharto had made known their opposition to the selection of former Golkar chief Sudharmono as Vice-President, an unprecedented display of internal dissent. Five years later, in 1993, military delegates forced Suharto's hand, by announcing the Armed Forces' choice for the vice-presidency: retiring General Try Sutrisno, former Army and Armed Forces Commander.

Against the background of these developments, by 1994 President Suharto began to undertake a dramatic crackdown on oppositional forces inside and outside the regime and to engineer a major consolidation of his personal authority. Newspapers were closed down, errant journalists banned, and strict censorship reimposed. Outspoken regime critics in the press, the parliament, and the universities were bought off or bullied into silence. Trade union leaders, human rights lawyers, and student activists faced harassment and imprisonment for activities deemed subversive and reminiscent of the defunct Communist Party (PKI). Public figures like Abdurrahman Wahid (Gus Dur) found themselves under siege, as government-backed intriguers and interlopers worked to undermine their leadership of hitherto independent organizations.[24]

Meanwhile, a purge of the Army ranks and a series of promotions removed suspected Murdani loyalists and other officers deemed "unreliable" from key posts and installed Palace favourites in their stead. General Hartono, an officer known for his deep involvement in the crackdown and his close relations with the President's favourite daughter, was installed as the Army Chief of Staff, while General Feisal Tanjung, an ICMI supporter and associate of B.J. Habibie, was elevated to Armed Forces Commander. Several other presidential favourites, most notably son-in-law Major-General Prabowo Subianto, also received promotions and assignments to key garrisons and commands in Jakarta.

The dramatic culmination of this crackdown and consolidation campaign came in July 1996, as government forces stormed the Jakarta headquarters of the PDI to enforce the removal of its popular leader, Megawati Soekarnoputri, from the party leadership. When crowds rioted in protest, hundreds were detained and arrested, including prominent labour leader Mochtar Pakpahan, and the event was (implausibly) blamed on a small and hitherto obscure "leftist" party and its 27‑year‑old leader. This government crackdown left oppositional forces divided and demoralized. Activist groups favouring strategies of popular mobilization faced harsh repression and tight surveillance, and ousted PDI leader Megawati found her various legal attempts to achieve reinstatement effectively thwarted.[25] Finally, key Megawati ally Gus Dur, the head of the 30‑million strong Islamic organization Nahdlatul Ulama (NU), distanced himself from her and showed himself more conciliatory towards the Suharto regime. This defensive posture was adopted in the face of renewed government efforts to eliminate Gus Dur from the NU leadership as well a broader campaign to discredit him and his organization.[26]

3.2       The Consequences of Crackdown and Consolidation

With oppositional forces cowed and Suharto's authority within the regime consolidated, Golkar, the Government's electoral machine, won yet another manufactured victory in the heavily restricted May 1997 parliamentary elections, paving the way for Suharto's reanointment to the presidency in March 1998. Yet, as suggested by the vigour of the Islamic United Development Party's (Partai Persatuan Pembangunan - PPP) anti-Golkar campaign and the violence which proved necessary to ensure a Golkar victory, the regime's internal consolidation and crackdown on the emerging opposition did not come without a price.

In this regard, Suharto's efforts to contain and silence dissenting voices within the military and the political élite had the effect of increasing his reliance on a narrow circle of close family members and friends. The President's favourite daughter, Mbak Tutut, played a prominent role in the election campaign and assumed a position of considerable power both as a member of the Golkar governing body and, especially in recent years, as one of her widowed father's closest advisors. Suharto's long-time close associate B.J. Habibie also won greater prominence, along with a top Golkar post and rising speculation that he would be named to the vice-presidency. Meanwhile, post-election rotations left Suharto's son-in-law Major- General Prabowo Subianto in command of Kopassus, the Army's Special Forces, and former presidential adjutant General Wiranto as Army Chief of Staff. Never in the history of the Suharto regime was its tendency towards cronyism and nepotism more prominently on display.[27]

More ominously, perhaps, the onset of the crackdown in 1994 coincided with a precipitous increase in the frequency and intensity of anti-Chinese, anti-Christian, and other inter-ethnic violence. Crowds burned and looted Chinese shops and places of worship in towns and cities scattered across Indonesia, including Medan in 1994, Situbondo and Tasikmalaya in 1996, and Banjarmasin and Ujungpandang in 1997. In early 1997, clashes between Madurese and Dayaks in West Kalimantan led to the deaths of hundreds and the displacement of thousands in the area.[28] Periodic church burnings, most notably in East Java, left more than three hundred Catholic and Protestant houses of worship in ashes.[29]

Anti-Chinese riots and church burnings had occurred sporadically in various parts of Indonesia in the 1970s and 1980s, but never so often or so widely. While the proximate causes of the riots varied from case to case, in virtually every instance a common set of circumstances provided a backdrop to the attacks on Chinese shops and places of worship. Firstly, in all cases, local residents clearly nursed resentment against the wealth, economic power, and social prominence enjoyed by ethnic Chinese businessmen, with long-held accusations of kolusi with local authorities and simmering disputes over land, church construction permits, and residential arrangements heavy in the air. Moreover, in many cases, such sentiments were coupled with widely held grievances against the local authorities for various misdeeds, ranging from land evictions to support for imposing an unpopular Golkar victory on a strongly pro-PPP community. In addition, well entrenched Islamic schools, such as the pesantren in towns like Situbondo and the State Islamic Religious Institutes (Institut Agama Islam Negara - IAIN) in cities like Ujungpandang, seemed to socialize young men in a self-consciously Moslem atmosphere but not to guarantee upward mobility in the form of well-paying jobs. In many cases, students from Islamic schools provided the "shock troops" of the riots.[30]

Finally, in all cases, the stance of the local and national authorities tended to encourage anti-Chinese violence. In some instances, it was in reaction to local government decisions, like a court decision or a police beating, that crowds took to the streets, burning government buildings as well as Chinese shops. In many instances, suspicions were also voiced that the riots had been instigated by elements within the regime, either to discredit rivals in local political squabbles or, as hypothesized by some with regard to the events in Situbondo and Tasikmalaya, to discredit and undermine Gus Dur by staging riots in well-known NU bailiwicks.[31] In any event, police and military authorities tended to exercise considerable restraint in their reactions to anti-Chinese riots, whether out of fear of causing further violence, sympathy for the rioters, or other reasons.[32]

Thus, the years leading up to the current crisis in Indonesia saw a confluence of discernible trends in the Suharto regime and in Indonesian society at large. On the one hand, the President succeeded in squashing oppositional forces by purging his regime of potentially disloyal elements, cracking down on dissent, and relying heavily on close family members and friends. This trend left the nepotistic and dictatorial tendencies of his government all the more visible to the population at large while rendering state policies and policy-makers all the more susceptible to the ebb and flow of personal influences, rivalries, and intrigues. On the other hand, the longer-term social trends noted above combined with these internal regime dynamics to provoke sporadic outbursts of popular protest. It was in this inauspicious context that President Suharto suffered a stroke in December 1997 and Indonesians in large numbers began to experience first-hand the effects of the Asian financial crisis as the year drew to a close.


4.1       The Crisis Unfolds

As the crisis began to unfold in Indonesia, the close connections between the "political" and the "financial" became all the more apparent, with fluctuations in the health of President Suharto and that of the nation's currency, the rupiah, working in tandem. As a host of international investors and lenders suddenly fled long-popular East Asian markets in the latter half of 1997, the Indonesian economy suffered most, with the rupiah depreciating 70 per cent and the Jakarta stock exchange index falling 50 per cent from mid-July 1997 to early January 1998. The particular vulnerability of the Indonesian economy to such rapid fluctuations in world currency markets reflected both extremely high levels of overseas borrowing, especially private, unhedged, short-term debt, as well as perceptions ‑ or self-fulfilling prophecies ‑ held in many corners of the globe that enduring patterns of cronyism and nepotism made the Indonesian economy especially weak in the face of crisis and political change.[33]

Indeed, the downward spiral of crisis began to accelerate quite precipitously at the end of the year, as uncertainties regarding the stability of the Suharto regime multiplied. In November 1997, the Government announced an austerity programme worked out with the IMF and began to shut down several ailing local banks, but the rupiah continued to plummet. With the People's Consultative Assembly (MPR) - largely appointed by Suharto himself - due to meet in March 1998 to name the President and Vice-President for the next five-year term, rumours were rife in Jakarta about Suharto's choice as his running-mate and the implications for subsequent succession scenarios.

Then, in December 1997, President Suharto, apparently suffering after a minor stroke, took ten days' rest from his official duties, heightening speculation about his health and his possible succession. By the first week of January 1998, rumours spun out of control with devastating effect, sending the rupiah to a previously unimaginable level of 10,000 to the U.S. dollar and setting off runaway inflation.[34] A wave of panic-buying ensued in markets, stores and supermarkets in various parts of the archipelago.[35] 

4.2       Economic "Nationalism"

The Government response to this much-publicized course of events was swift but multifarious. On the one hand, by 15 January, President Suharto signed a new agreement with the IMF, committing Indonesia both to new austerity measures and a set of deregulation, tax reform, bank restructuring, privatization, and liberalization programmes in exchange for US$ 33 billion in new loans. On the other hand, top officials in the Government, including Suharto, engaged in a series of political manoeuvres which served not only to undermine the supposedly "confidence-inspiring" effects of the IMF deal on global currency and equity markets, but also to exacerbate inter-ethnic and inter-religious tensions in Indonesian society at large.

A number of government actions and statements served to heighten many observers' skepticism about the Suharto government's commitment to the arrangement with the IMF. As photos of President Suharto signing the agreement under the stern gaze of IMF Director Michel Camdessus circulated in the domestic and international media, Suharto began to play the "nationalist" card. His close associate and long-time Minister of Research and Technology B.J. Habibie was floated as his likely choice for the vice-presidency, despite well-known skepticism in international business and financial circles with regard to Habibie's expensive and as yet largely unproductive high-tech projects. Although the markets reacted violently to this news, with the rupiah slipping as low as 17,000 to the U.S. dollar, Habibie was soon endorsed officially as the candidate of Golkar and subsequently "elected" in mid-March by the tightly controlled People's Consultative Assembly as Vice-President, along with Suharto as President, for the five-year term of 1998-2003.

Meanwhile, in more specific policy terms, Suharto and other Cabinet officials began to issue statements suggesting moves that contradicted the agreement with the IMF. Expensive "nationalistic" projects would be continued despite pledges of an end to government subsidies, and monopolies officially due for termination would survive in new form, it was implied.[36] More generally, the President and several Cabinet ministers began to raise the question of whether the terms of the agreement with the IMF were consistent with the Indonesian Constitution and the state ideology of Pancasila.[37] Finally, Suharto and his advisors floated a plan to adopt a "Currency Board System", which would peg the rupiah at 5,500 to the U.S. dollar and require the Government to commit its dwindling foreign reserves to the defence of an extremely weak and apparently unreliable local currency.[38]

4.3       The Sofyan Wanandi Case

In tandem with these apparently "nationalist" moves in the realm of economic policy, the Suharto regime also launched an unprecedented attack on the ethnic-Chinese business community. Part of this attack focused on Sofyan Wanandi, a businessman of Chinese ancestry and Catholic faith who was known not only for his control over a diversified group of companies, the Gemala Group, but also his close ties to the Center for Strategic and International Studies (CSIS), a conservative think-tank that represented Chinese/Catholic business interests as well as retired military officers such as Benny Murdani.[39]

Wanandi had openly voiced skepticism about the Government's willingness to implement the terms of the IMF agreement, patently refused to join the government-led "Love the Rupiah" campaign, and reportedly expressed hopes that the Vice-President chosen for the 1998-2003 would be drawn from the Armed Forces.[40] Thus, Wanandi represented a cluster of interests ‑ Christian, business and military ‑ seen as opposed to the Suharto regime's policies and to the vice-presidential candidacy of Habibie.

Against this backdrop, Sofyan Wanandi and his brother, CSIS board member Jusuf Wanandi, found themselves vulnerable to attack. On 18 January 1998, just three days after the signing of the IMF agreement, a bomb exploded in an apartment in Jakarta, leading to an investigation by the Greater Jakarta Regional Military Command, headed by Major-General Sjafrie Sjamsoeddin, a close ally of Major-General Prabowo, the President's son-in-law. The authorities subsequently blamed remnants of the People's Democratic Party (Partai Rakyat Demokrasi - PRD), the small left-ish party scapegoated after the riots in July 1996, for the explosion. But they also claimed to have discovered documents linking PRD activists to the Wanandi brothers and CSIS. Through much of the month of February, front-page articles about the case were published in newspapers and magazines, demonstrations for the closure of CSIS were held by Islamic activists, and Sofyan Wanandi was brought in for repeated, lengthy interrogations by the authorities.[41]

News of the case faded and then disappeared entirely in early March as the People's Consultative Assembly convened and Suharto and Habibie were "elected" unanimously as President and Vice-President, respectively. If, as many analysts suspected, the campaign against Sofyan Wanandi and CSIS was at least partly intended to cow opponents to Habibie within business and military circles, then in these terms it can be deemed a success. Yet the attack on Sofyan Wanandi must also be seen against a broader pattern of government actions in January and February 1998, and with an eye to a wider set of consequences.

4.4       The Anti-Chinese Campaign and the Riots

Indeed, in January and February of this year, ranking Indonesian government officials, including President Suharto, began actively stoking popular resentments against ethnic Chinese businessmen. Spokesmen for the Armed Forces, for example, issued statements revealing that the then Armed Forces Chief General Feisal Tanjung had contacted thirteen of the nation's wealthiest ethnic-Chinese businessmen to demand that they join the "Love the Rupiah" campaign and exchange their U.S. dollars for Indonesian rupiah.[42] Subsequent weeks saw mounting official attacks against unnamed currency speculators, described by the military's chief delegate to the national assembly as "traitors" and by President Suharto himself as part of a "conspiracy" to reduce the value of the rupiah to 20,000 to the U.S. dollar.[43] From the language used, it was clear that the President and his supporters were referring to ethnic Chinese businesspersons.

In addition, top government officials, both civilian and military, actively encouraged Islamic groups to amplify and act upon these anti-Chinese sentiments. On the evening of 23 January 1998, for example, an estimated 4,000 activists from several key Islamic groups joined 3,000 Kopassus (Special Forces) troops for an unprecedented and much-publicized breaking of the Ramadan fast at the Kopassus headquarters in Jakarta. This occasion brought together the then Kopassus Commander Major-General Prabowo Subianto, the President's son-in-law, with prominent leaders of Islamic groups such as the Indonesian Islamic Preaching Council (Dewan Dakwah Islamiyah Indonesia - DDII), and the Indonesian Committee for World Moslem Solidarity (Komite Indonesia untuk Solidaritas Dunia Islam - KISDI), both well known for their strident attacks on Christian and Chinese predominance in many spheres of Indonesian business and society.[44] 

These groups, already inclined and mobilized to support ICMI chairman Habibie's vice-presidential candidacy and to attack CSIS and Sofyan Wanandi, undoubtedly felt further emboldened by Major-General Prabowo's generous display of support for their activities. In a variety of publications and public fora ‑ including a mid-February KISDI rally before thousands at Jakarta's Al-Azhar Mosque[45] ‑ calls were voiced for a struggle against "traitors" and "liars" such as Wanandi and his followers.[46] Activists like Hussein Umar, Secretary-General of Dewan Dakwah Islamiyah Indonesia, fanned out across the country to spread the message beyond Jakarta.

Meanwhile, both national and local government officials made clear that the definition of "treason" to the Indonesian nation would be understood in much broader, if religiously and ethnically coloured, terms. From its inception, the regime had spoken of a krisis moneter rather than a krisis ekonomi, refusing to acknowledge structural problems in the Indonesian economy and suggesting instead (as noted above) that both the source of, and the solution to, the country's crisis lay in the mastery and manipulation of currency markets. In early February 1998, moreover, following a meeting with Suharto, the government-created Indonesian Religious Scholars' Council (Majelis Ulama Indonesia - MUI) called for a jihad (holy war) against "speculators and hoarders", defined broadly enough to cover the thousands of ‑ mostly ethnic Chinese ‑ shopkeepers, merchants, and businesspersons scattered across the archipelago.[47]

In cities and towns in Java and various other parts of the country, newspapers were soon awash with reports of local police and military officials investigating and punishing suspected "hoarders".[48] However this new crime was defined, it was clear, shopkeepers and merchants were now burdened with new "protection expenses" on top of previous exactions and the rapidly rising cost of goods. In addition, as the falling rupiah and resultant inflation sent prices of essential commodities rocketing skywards, local authorities, from bupatis (regents) to regional military commanders, began to requisition the so-called "nine basic goods" for sale at specially organized distribution centres called pasar murah (literally, "cheap markets").[49] Local Islamic groups soon launched parallel efforts, encouraging hopes about the possible role of pesantren (traditional Islamic schools) as distribution centres to replace Chinese-owned shops.[50]


Thus, a wide variety of government statements and more concrete actions in the course of January and early February worked to create an atmosphere of public, officially-sanctioned suspicion and resentment not only towards national konglomerat such as led by Sofyan Wanandi but also the thousands of ethnic Chinese shopkeepers, merchants and businesspersons scattered throughout the Indonesian archipelago. These steps could only fall on fertile ground in a country where the Government and the majority population had long stigmatized the ethnic Chinese minority as foreign and predatory, and shown considerable sympathy for heavy restraints on the unfettered operation of the free market. Moreover, such steps were taken at a time when the most dramatic and broadly felt effects of the crisis ‑ rapidly rising prices ‑ were first experienced directly via Chinese-owned shops and stores throughout the country. Many Indonesians thus simply saw local ethnic-Chinese shopkeepers as profiting, rather than suffering, from the crisis, as perpetrators rather than victims of the conspiracies and crimes referred to by Suharto and his followers.

Indeed, against this inauspicious backdrop, the months of January and February 1998 saw a series of riots take place in a number of towns and cities around Indonesia, including Java, Sumatra, Sulawesi, Lombok, Sumbawa, and Flores. In virtually all cases, the riots took the form of attacks on Chinese-owned shops or department stores, with looting and destruction of goods.[51] In many cases, Catholic or Protestant churches were also targeted by the rioting crowds, leaving dozens of Christian houses of worship burned down, damaged, or entirely destroyed by mid-February according to one estimate at the time.[52]

While the riots did not lead to any mass killings or spread much beyond ephemeral, local episodes, they helped to create (or at least exacerbate) a climate of growing fear and uncertainty. Small-town ethnic-Chinese shopkeepers closed their shops and maintained an especially low profile (even during the traditionally boisterous Chinese New Year), while many of their wealthier counterparts in the big cities reportedly purchased open airplane tickets for Singapore or Hong Kong. Meanwhile, the dramatic and in some cases exaggerated reporting that the riots received in foreign media led to growing international worries regarding "social unrest" in Indonesia.[53] Foreign governments issued statements of concern, despatched special envoys to Jakarta, and ordered their embassies to prepare emergency evacuation measures for their citizens. The IMF, facing a wave of criticism of its alleged mishandling of the crisis and prospects of a deteriorating situation in Indonesia, began to signal its recognition of the need to reevaluate and perhaps renegotiate the agreement signed in mid-January 1998.

4.5       Paying the Price

Then, as the March 1998 session of the People's Consultative Assembly opened in Jakarta, the appearance of order was rapidly restored and the riots halted abruptly. Suharto and Habibie were unanimously "elected" President and Vice-President, respectively, by the tightly controlled, mostly appointed assembly, without a single interruption in the proceedings such as had occurred in 1988 and 1993. A wave of military reassignments promoted Prabowo to the command of Kostrad, the Strategic Reserve Command, and to the rank of Lieutenant-General. Other military rotations left the key positions of Army Chief of Staff and Greater Jakarta Military Commander in the hands of close Prabowo associates but carefully balanced against the new Armed Forces Commander-in-Chief and Defence Minister, General Wiranto, and his allies in senior staff positions and other regional command posts.

In the realm of economic policy, Suharto likewise appeared to have won decisive victories. Despite much-trumpeted opposition from many quarters and the inauspicious timing of the crisis, he had succeeded in installing his close associate, ICMI head, and national high-tech tsar Habibie as Vice-President. His choices for the new Cabinet, moreover, tended to replace technocrats with close family friends and allies, like presidential golfing and business partner Mohammad "Bob" Hasan as Minister for Trade and Industry and Suharto's daughter as Minister for Social Affairs. Such choices, especially that of Hasan, a major tycoon and timber baron (and Suharto's first and only ethnic-Chinese Cabinet minister), seemed to guarantee that the interests of Suharto and his family would not be unduly compromised by the implementation of IMF-prescribed reforms. Finally, by mid-April, Suharto negotiated a new agreement with the IMF, one viewed by some analysts as considerably more "flexible" than that signed almost three months earlier.[54]

Yet the Suharto regime's tactics in achieving these short-term victories did not come without a high price. The attacks on Sofyan Wanandi and CSIS, and on "hoarders and speculators" more broadly, for example, led local and foreign businessmen alike to delay new investments and other long-overdue decisions. The dynamics set in motion by these government measures, including the riots, moreover, further weakened the stability and value of the rupiah in January and February, increasing the already enormous and unsustainable levels of foreign debt owed by local companies and the Indonesian Government itself. Thus the new agreement signed with the IMF in mid-April 1998, albeit more "flexible" than its predecessor of mid-January, was based on much more pessimistic forecasts: higher debt levels, higher inflation, and negative economic growth (minus four per cent) for the year rather than stagnation, as was the case previously. The impact of these dramatically downward trends is now all too evident in rising unemployment, costs of living, scarcities, and hardships for millions of Indonesians.

Meanwhile, both socially and politically, the first four months of 1998 have taken a heavy toll on the Suharto regime and Indonesian society at large. The combination of adventurist anti-Chinese scapegoating in January-February and increasingly nepotistic personnel and policy decisions in March-April has severely diminished the credibility and legitimacy of the Suharto regime in the eyes of many Indonesians and considerably narrowed the base of support it has enjoyed internationally and among the domestic middle class. Thus, throughout March and April of this year, anti-government student protests at university campuses endured and spread in many parts of the archipelago. There is growing evidence that their demands for demokrasi and reformasi enjoy solid legitimacy and support from a broad range of social forces, including the nation's two most popular Islamic associations, NU and Muhammadiyah (collectively said to represent well over 50 million Indonesians), and a growing number of figures from within the political establishment. By end April 1998, it appears that this new element of the equation ‑ student protest ‑ carries the greatest potential for shifting the dynamics of economic crisis and political transition in Indonesia in new, uncharted directions.


Against the background of the long-term developments and recent trends sketched above, it is thus possible to reassess the concerns raised in the introduction to this report with regard to the possibilities for widespread mass rioting, violence and dislocations in the weeks and months ahead. While the situation is obviously highly complex and potentially fluid, both the broad contours of Indonesian government and social institutions and the pattern of recent events tend to suggest sombre but not alarmist predictions in the short and medium term.

First of all, the projected four to five per cent contraction of the economy in the course of 1998 should lead to continuing, and in many instances deepening, hardships for millions of Indonesians. Reporting on a wide variety of regions and sectors suggests that the crisis is and will remain broadly felt throughout the entire archipelago, by members of all ethnic groups, religions, and social classes. Prospects for a retreat into subsistence farming in remote areas, or for migrant labour opportunities in neighbouring countries, appear bleak after the past months of El Niño-induced drought, raging forest fires in Sumatra and Kalimantan, and tightening anti-immigration measures implemented by crisis-struck Malaysia.[55] Insofar as economic hardships and struggles for control over scarce resources cause or contribute to social conflict, 1998 will remain a difficult year for Indonesia.

Secondly, the historical pattern of ethnic and religious diversity in Indonesia and recent experiences of rioting in the country suggest that economic hardship will be filtered through deeply held resentments and buoyed by strengthening identities. The predominance of ethnic-Chinese capital in an economy known for vast disparities of wealth and persistent corruption and cronyism has left this small, stigmatized minority the target of grievances often expressed in populist ethnic and religious idioms. The evolution of religious identities and institutions in Indonesia over the years, especially since the shift in state policies in the early 1990s, has also heightened these tensions. Social trends and state policies have expanded many Moslems' aspirations and sense of entitlement as members of the majority religion without delivering commensurate economic benefits. The first months of 1998 revealed how easily anti-Chinese and anti-Christian sentiments could be mobilized by government officials and Islamic activists, and how easily an atmosphere conducive to anti-Chinese rioting and church burning could be created.

Finally, prospects for popular mobilization and internal regime discord to allow for political transition have long carried commensurate perils of a descent into "chaos". Such dangers reflect not only the conservative impulses and self-preserving instincts of the Suharto regime and its foreign and domestic supporters, but also the all-too-evident capacity of the state to create and exploit "disorder" for its own purposes. As argued above, the rising frequency and intensity of anti-Chinese riots in the 1994-1997 period, as well as the riots that occurred in early 1998, must be understood at least in part as reflecting such tendencies within a highly factionalized political élite. Recalling the internal regime intrigues that facilitated the student protests and subsequent riots of late 1973 and 1974, and the crackdown that followed[56],  today's student activists are understandably wary of infiltration and provocation even as they yearn for a Philippine-style "People Power Revolution" such as the one that swept Ferdinand Marcos from power in Manila some twelve years ago.

In the light of these highly inauspicious economic, social, and political considerations, it is all to easy to conclude that the remaining months of 1998 may well see the recurrence of anti-Chinese riots and church burnings. Indeed, the trends visible in 1994-1997 would suggest that new riots would be likely to occur this year even without the current crisis. Nonetheless, a number of more salutary circumstances are likely to limit the scope and severity of whatever riots do take place, and to stand in the way of a full-blown social breakdown or conflagration.

First of all, a causal linkage between the current economic downturn and a likely upsurge in anti-Chinese and anti-Christian rioting is highly problematic. The most frequent and largest anti-Chinese riots in recent Indonesian history took place during the years of rapid economic growth and partly in response to rising grievances fuelled by new business activities and acquisitions perceived as intrusions upon local communities and their interests. Perhaps by slowing (and reversing) the pace at which ‑ predominantly ethnic-Chinese ‑ business ventures are transforming many localities throughout Indonesia, the economic crisis might even mitigate the frequency and intensity of such conflicts, albeit temporarily.

Secondly, the history of anti-Chinese riots and church burnings in Indonesia to date, while unsurpassed in Southeast Asia, does not in any way support the occasionally apocalyptic fears voiced in the international media that full-blown ethnic conflict of epidemic or genocidal proportions might be in the offing. Contrary to sometimes highly inaccurate media reports, the vast majority of the hundreds of thousands killed in the anti-communist massacres that accompanied Suharto's rise to power in 1965-1966 were non-Chinese Indonesians murdered in well-organized campaigns rather than a frenzy of primordial sentiments run amok. Probably less than 2,000 ethnic Chinese lost their lives in this unprecedented period of political violence.[57] Moreover, all the anti-Chinese riots of the past few months and years have focused anger and violence against Chinese property and houses of worship; with few exceptions the sole fatalities have been victims caught inside burning buildings. At their most spontaneous, anti-Chinese riots in recent years have not entailed mob killings, and have not led large numbers of ethnic-Chinese Indonesians to flee from their localities or from the country.

Thirdly, the current political configuration also suggests a set of constraints on the spread of riots into more sustained societal conflict of a violent nature. Even the considerable encouragement offered by government officials in January and February produced only brief, scattered episodes of looting and destruction over the course of a few weeks, and police and military troops proved capable of containing ‑ if not halting ‑ the rioting. Moreover, even as certain elements, both in the military and in some Islamic organizations, might now feel emboldened after their initial testing of the waters, they still must contend with rival forces in the Army, the Government, and civil society at large. The rising influence of Lieutenant-General Prabowo, for example, is fully matched by the authority of Armed Forces Commander-in-Chief and Defence Minister General Wiranto, who at the height of the anti-Chinese campaign described the issue as "garbage".[58] The rise of B.J. Habibie to the vice-presidency has not as yet led to a dramatic expansion of his control over policy or patronage, while the clout of Suharto's daughter within the Cabinet and her impending assumption of the Golkar leadership have reportedly caused great disappointment within ICMI and other Islamic groups aligned with Habibie.

Finally, the refusal of prominent figures in Indonesian civil society to take part in the anti-Chinese campaign of last January and February bodes well for months and years ahead. Gus Dur, leader of the 30-million-strong NU, has long worked as an adamant foe of sectarianism. As he recovers from a stroke he suffered in January 1998, he may well resume his role as spokesman for multi-faith and multi-ethnic tolerance in Indonesia. Amien Rais, head of the similarly popular Muhammadiyah, consistently refused to join in the attacks on ethnic Chinese businessmen in January-February 1998 and was among the first to call on Suharto to name an Indonesian of Chinese ancestry to a Cabinet post.[59] As of April 1998, both NU and Muhammadiyah showed support for the growing student protest movement and voiced hopes that the Armed Forces would prove receptive to rising popular demands for demokrasi and reformasi. For the first time in many years, Indonesians are openly focusing ‑ and sustaining ‑ popular protests against the Suharto regime, rather than the ethnic Chinese.

Against this backdrop, it is perhaps prudent to conclude that the weeks and months ahead may well see the occurrence of sporadic anti-Chinese riots and church burnings, but a more sustained pattern of mass violence, disorder, and dislocations appears highly unlikely. Economic hardships will continue to compel thousands of Indonesians to seek work in nearby Malaysia and the Philippines (as they have for many years), and understandable fears and insecurities may well encourage some ethnic-Chinese Indonesians to seek shelter from difficulties and dangers in safe quarters both within Indonesia and (for those who can afford it) abroad. A "boat people scenario" or mass refugee crisis is not in the offing. Nonetheless, the remainder of 1998 is certain to see great suffering among the millions of Indonesians affected by rapid economic contraction and rising inflation, as well as continuing uncertainties about Indonesia's political future.


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DDII                Dewan Dakwah Islamiyah Indonesia (Indonesian Islamic Preaching Council)

DPR                 Dewan Perwakilan Rakyat (People's Representative Assembly)

Golkar  Golongan Karya (Functional Groups)

IAIN                Institut Agama Islam Negara (State Islamic Religion Institutes)

ICMI               Ikatan Cendekiawan Muslim Indonesia (Association of Indonesian        Muslim Intellectuals)

KISDI              Komite Indonesia untuk Solidaritas Dunia Islam (Indonesian Committee for Solidarity with World Islam)

MPR                Majelis Permusyawaratan Rakyat (People's Consultative Assembly)

PDI                  Partai Demokrasi Indonesia (Indonesian Democratic Party)

PKI                  Partai Komunis Indonesia (Indonesian Communist Party)

PPP                 Partai Persatuan Pembangunan (United Development Party)

PRD                 Partai Rakyat Demokrasi (People's Democratic Party)

[1] See, for example, Asian Wall Street Journal [Hong Kong], Richard Borsuk, "Indonesia's Second-Largest City Is Fearing a Tidal Wave of Unrest", 16 February 1998

[2] On the political role of the Armed Forces in the Suharto regime, see Harold Crouch, The Army and Politics in Indonesia (Ithaca NY : Cornell University Press, 1988); Robert Lowry, The Armed Forces of Indonesia (Sydney: Allen & Unwin, 1996).

[3] See David Jenkins, Soeharto and His Generals: Indonesian Military Politics 1975-1983 (Ithaca NY : Cornell Modern Indonesia Project, 1984)

[4] See e.g. Adam Schwarz, A Nation in Waiting: Indonesia in the 1990s (Sydney: Allen & Unwin, 1994), pp. 133-61

[5] The pattern of top military promotions and reassignments over the years has been meticulously chronicled and carefully scrutinized by the editors of the journal Indonesia [Ithaca NY] in their annual "Current Data on the Indonesian Military Elite".

[6] On Habibie, see Takashi Shiraishi, "Rewiring the Indonesian State" in Daniel Lev and Ruth McVey (eds.), Making Indonesia: Essays on Modern Indonesia in Honor of George McT. Kahin (Ithaca NY : Cornell University Southeast Asia Program, 1996), pp. 164-79

[7] See James R. Rush, Opium to Java: Revenue Farming and Chinese Enterprise in Colonial Indonesia, 1860-1910 (Ithaca NY : Cornell University Press, 1990), especially pp. 83-135; G. William Skinner, "The Chinese Minority" in Ruth T. McVey (ed.), Indonesia (New Haven: Human Relations Area Files, 1963), pp. 97-117

[8] The ethnic Chinese minority in Indonesia is currently estimated at three to four per cent of the total population of the archipelago.

[9] See Benedict Anderson, Java in the Time of Revolution: Occupation and Resistance, 1944‑1946 (Ithaca NY : Cornell University Press, 1972)

[10] See Harry J. Benda, The Crescent and the Rising Sun: Indonesian Islam under the Japanese Occupation 1942-1945 (The Hague: W. van Hoeve, 1958)

[11] See Anne Booth (ed.), The Oil Boom and After: Indonesian Economic Policy and Performance in the Soeharto Era (Singapore: Oxford University Press, 1992)

[12] For three very different acounts of the state's role in Indonesia's industrialization, see Hal Hill, Indonesia's Industrial Transformation (Singapore: Institute of Southeast Asian Studies, 1997); Richard Robison, "Industrialization and the Economic and Political Development of Capital: The Case of Indonesia" in Ruth McVey (ed.), Southeast Asian Capitalists (Ithaca NY : Cornell University Southeast Asia Program, 1992), pp. 65-88; Jeffrey A. Winters, Power in Motion: Capital Mobility and the Indonesian State (Ithaca NY : Cornell University Press, 1996)

[13] Richard Robison, Indonesia: The Rise of Capital (Sydney: Allen & Unwin, 1986)

[14] See [J.A.C.] Jamie Mackie, "Changing Patterns of Chinese Big Business in Southeast Asia" in Ruth McVey (ed.), Southeast Asian Capitalists (Ithaca NY : Cornell University Southeast Asia Program, 1992), pp. 161-90

[15] Schwarz, pp. 133-61

[16] See, for example, the study of the fiercely contested Kedungombo dam project in Central Java by Stanley, Seputar Kedung Ombo (Jakarta: Lembaga Studi dan Advokasi Masyarakat, 1994)

[17] Ir. Herlianto, Urbanisasi, Pembangunan, dan Kerusuhan Kota (Bandung: Penerbit Alumni, 1997)

[18] See Vedi R. Hadiz, Workers and the State in New Order Indonesia (London: Routledge, 1997); Douglas Kammen, "A Time to Strike: Industrial Strikes and Changing Class Relations in New Order Indonesia" (Ph.D. dissertation, Cornell University), 1997

[19] See Charles A. Coppel, Indonesian Chinese in Crisis (Kuala Lumpur: Oxford University Press, 1983)

[20] On the repression of Islamic activists and organizations in the 1980s, see Human Rights Watch, Human Rights in Indonesia and East Timor (New York, 1989), pp. 76-85

[21] For two contrasting views of these trends, see Robert Hefner, "Islam, State, and Civil Society: ICMI and the Struggle for the Indonesian Middle Class", Indonesia, No. 56 (October 1993), pp. 1-37; R. William Liddle, "The Islamic Turn in Indonesia: A Political Explanation", Journal of Asian Studies, Vol. 55, No. 3 (August 1996), pp. 613-34

[22] On this pattern, see Edward Aspinall, "Students and the  Military: Regime Friction and Civilian Dissent in the Late Suharto Period", Indonesia [Ithaca NY], No. 59 (April 1995), pp. 21‑44

[23] See, inter alia, Schwarz, pp. 230-63

[24] An early, but excellent, account of these developments is provided in Human Rights Watch/Asia, The Limits to Openness: Human Rights in Indonesia and East Timor (New York, 1994)

[25] On the July 1996 attack on the PDI headquarters and its aftermath, see Institut Studi Arus Informasi and Aliansi Jurnalis Independen, Peristiwa 27 Juli (Jakarta, 1997)

[26] On these efforts, identified by various sources as "Operasi Naga Hijau" (Operation Green Dragon), see, for example, the series of related articles in the 10 February 1997 issue of Forum Keadilan [Jakarta], pp. 12-21

[27] See, for example, the account of the 1997 election campaign in Banjarmasin in Yayasan Lembaga Bantuan Hukum Indonesia, Amuk Banjarmasin, especially pp. 21‑6, 47‑56.

[28] Human Rights Watch/Asia, Indonesia: Communal Violence in West Kalimantan (New York, 1997)

[29] See Paul Tahalele and Thomas Santoso (eds.), Beginikah Kemerdekaan Kita? (Surabaya: Forum Komunikasi Kristiani Surabaya/Indonesia, 1997)

[30] Several Indonesian non-governmental organizations have conducted in-depth investigations of these riots and written up their findings in various forms, such as the following important studies: Institut DIAN and Interfidei, Draft Laporan Survai Peristiwa Situbondo 10 Oktober 1996 (Yogyakarta, 1997); Yayasan Lembaga Bantuan Hukum Indonesia, Amuk Banjarmasin (Jakarta, 1997); Institut Studi Arus Informasi, Huru-Hara Rengasdengklok (Jakarta, 1997) and Amuk Makassar (Jakarta, 1998)

[31] In some cases, most notably the riots that occurred in Situbondo and Tasikmalaya in late 1996, such accusations were reported ‑ if not fully substantiated ‑ in the Indonesian media. The most carefully researched and compelling account of official involvement in instigating a riot is the unpublished, but highly controversial "Buku Putih Situbondo". Copies of two different versions of this "white paper" are in the possession of the author.

[32] Indonesia [Ithaca NY], "The Indonesian Military in the Mid-1990s: Political Maneuvering or Structural Change?", No. 63 (April 1997), p. 104

[33] This assessment draws heavily on an unpublished International Monetary Fund (IMF) document, titled "Indonesia: Memorandum of Economic and Financial Policies", dated 15 January 1998, in the possession of the author, but the analysis and information therein is fully consistent with that reported in the international media.

[34] Local reports suggested more than 20 per cent inflation in major cities in January-February alone, as well as far higher price rises on basic commodities such as rice, cooking oil, chicken, and eggs. See, for example, Surya [Surabaya], "Inflasi Surabaya 21,21 persen", 5 March 1998, p. 10; International Herald Tribune [Paris], "Soaring Inflation Hits Indonesia and South Korea", 3 March 1998, pp. 1, 14.

[35] See, for example, Surya [Surabaya], "Isu Kudeta, Pasar Diserbu", 9 January 1998; Far Eastern Economic Review [Hong Kong], John McBeth, "Ground Zero", 22 January 1998

[36] Asian Wall Street Journal [Hong Kong], Richard Borsuk, "Indonesia Hints at New Clove-Trade Plan", 24 February 1998, p. 3

[37] Pancasila refers to five basic principles, namely belief in God, humanitarianism, national unity, democracy, and social justice. These five principles were first laid down by the nationalist leader Soekarno in 1945.

[38] On these developments, see, for example, Far Eastern Economic Review [Hong Kong], John McBeth, "Double or Nothing", 26 February 1998, pp. 14-17

[39] On the background of CSIS and the Wanandi brothers, see Human Rights Watch/Asia, Indonesia Alert: Economic Crisis Leads to Scapegoating of Ethnic Chinese (New York, 1998), especially pp. 4-5. This report also provides an excellent contextualization and account of anti-Chinese mobilization efforts in January-February 1998 in general.

[40] See, for example, Wanandi's comments as quoted in Surya [Surabaya], "CSIS: Konglomerat bisa kabur", 18 January 1998, p. 1

[41] On this case, see, for example, the following magazine cover stories: D&R [Jakarta], "Bom untuk Konglomerat", 7 February 1998;  Gatra [Jakarta], "Sofjan Wanandi dan CSIS", 14 February 1998;  D&R [Jakarta], "Dituduh Apa Lagi Sofyan Wanandi?", 14 February 1998; Forum Keadilan [Jakarta], "Kontroversi Sofyan Wanandi Setelah Ledakan", 23 February 1998.

[42] See Kompas [Jakarta], "Panglima ABRI Telepon 13 Konglomerat", 15 January 1998; Surya [Surabaya], "ABRI imbau nonpri jual dolar", 15 January 1998

[43] For such statements, see, for example, Republika [Jakarta], "Syarwan: Mereka Penghkianat", 24 January 1998; Jawa Pos [Surabaya], "'Ada Yang Sengaja Goyang Indonesia'", 12 February 1998

[44] Far Eastern Economic Review [Hong Kong], Margot Cohen, "'Us' and 'Them': Muslim Activists Say It's Time to Seize Economic Power", 12 February 1998

[45] Memorandum [Surabaya], "Ketua Kisdi: Sofyan Wanandi Pengkhianat", 9 February 1998

[46] See, for example, the various articles in Media Dakwah [Jakarta], February 1998

[47] On the importance of the MUI call for a jihad, see, for example, Jakarta Post, Masdar F. Mas'udi, "Call for jihad 'may have caused riots'", 20 February 1998; Surya [Surabaya], Rosdiansyah, "Seruan jihad MUI penyebab kerusuhan?", 5 March 1998

[48] See, for example, Jawa Pos [Surabaya], "Operasi Sembako, Dua Spekulan Diperiksa", 16 January 1998 and "Diperiksa, Tiga Gudang Penyimpanan Sembako", 18 January 1998; Republika [Jakarta], "'Cari dan Temukan Para Penimbun'", 15 February 1998 and "Penimbun Sembako di Padang Resmi Jadi Tersangka", 18 February 1998; Kompas [Jakarta], "Pengusaha Giling Padi Trauma, Dituduh Menimbun", 21 February 1998; Republika [Jakarta], "13 Penimbun Sembako Jadi Tersangka", 24 February 1998

[49] See, for example, Surabaya Post, "Walikota Bangga, Warganya Gelar Pasar Murah Sembako", 27 February 1998 and "Bagi-bagi Sembako", 28 February 1998

[50] Republika [Jakarta], "Ponpes Jatim Jadi Distributor Sembako", 19 February 1998; Jawa Pos [Surabaya], "Pesantren, Distributor Sembako?", 25 February 1998

[51] Literally hundreds of articles about these riots appeared in Indonesian newspapers and magazines in January and February of this year. For an English-language summary, see Human Rights Watch/Asia, 1998, especially pp. 8-15.

[52] Indonesia Christian Communication Forum (ICCF) [Forum Komunikasi Kristiani Indonesia (FKKI)], The Number of Churches Closed, Destroyed, or Burnt Down Every Month in Period 1998 (Surabaya, 1998)

[53] See, for example, International Herald Tribune [Paris], Michael Richardson, "U.S. Commander Sounds Alert on Indonesia Unrest", 7-8 February 1998

[54] See, for example, Far Eastern Economic Review [Hong Kong], John McBeth, "The Twilight Zone", 16 April 1998

[55] Far Eastern Economic Review [Hong Kong], Margot Cohen, "Deport and Deter: Indonesian Illegal Workers Get a Harsh Send‑Off from Malaysia", 23 April 1998      

[56] On this episode, see the highly partisan but nonetheless revealing account published on behalf of retired General Soemitro earlier this year, Heru Cahyono, Pangkopkamtib Jenderal Soemitro Dan Peristiwa 15 Januari 1974 (Jakarta: Sinar Harapan, 1998)

[57] J.A.C. Mackie, "Anti-Chinese Outbreaks in Indonesia, 1959-68", in J.A.C. Mackie (ed.), The Chinese in Indonesia (Melbourne: Nelson, 1976), pp. 77-138

[58] Kompas [Jakarta], "Jangan Sebarkan Sentimen SARA", 10 February 1998; Republika [Jakarta], "KSAD Jenderal TNI Wiranto: Hasutan Pihak Tertentu Jadi Pemicu Kerusuhan", 16 February 1998

[59] Jawa Pos [Surabaya], "Amien: MUI Tak Berhak Atas Namakan Umat Islam", 13 February 1998; Jawa Pos [Surabaya], "Kelemahan Kabinet Kita Tak Ada Warga Keturunan", 15 February 1998

This issue paper was prepared by WRITENET on the basis of publicly available information, analysis and comment. All sources are cited. This paper is not, and does not purport to be, either exhaustive with regard to conditions in the country surveyed, or conclusive as to the merits of any particular claim to refugee status or asylum. The views expressed in this paper are those of the author and are not necessarily those of UNHCR. WRITENET is a network of researchers and writers on human rights, forced migration, ethnic and political conflict. WRITENET is a subsidiary of Practical Management (UK)

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