Indonesia's New President: Continuity, Change and the Problems Ahead

Current Issues Brief 10 1999-2000

Dr Stephen Sherlock
Foreign Affairs, Defence and Trade Group
11 November 1999


Major Issues

Information and Research Services Papers on Indonesia and East Timor


The Presidential Selection: High Drama and Intrigue

National Unity or the Same Old Crowd?

An 'Islamic' Government?

Tasks for a New Government

The Gus Dur Government and Australia



Appendix A: Indonesia's Government-October 1999

Indonesia Map

Source: United States Central Intelligence Agency, Map no. (R02495)5-98

Major Issues

The surprising election of Abdurrahman Wahid (Gus Dur) and Megawati Soekarnoputri as President and Vice-President of Indonesia reflected the complex indirect nature of the selection process and the inability of any party to win a majority. Megawati's party was the largest in parliament (DPR), but she was unable to win over the majority of parliamentary and other representatives in the People's Consultative Assembly (MPR) which selects the President.

After former President Habibie's bid for the presidency collapsed, his party, Golkar, was too factionalised to put forward an alternative candidate and most of Golkar's vote went to Gus Dur. This vote, combined with the vote of Muslim parties in the 'central axis' formed by Amien Rais (and probably the vote of the military) elected Gus Dur. Gus Dur then persuaded Megawati to stand for Vice-President. Gus Dur wanted to form a 'national unity' Government of all parties and wanted to forestall a popular backlash if Megawati was not in Government. He possibly also wanted to balance the influence of the doctrinal Islamic parties who refused to support Megawati for Vice-President because of her secular politics and her gender.

The inclusiveness of the Gus Dur Government has been presented as an exercise in national unity. The Cabinet has been both praised and criticised as a compromise between parties in parliament, political and technocratic figures and between commitment to reform and keeping powerful interests onside. Some student groups have attacked the arrangement for preventing the formation of an opposition. They fear a return to oligarchy and question how much the new Government actually represents a real change. Neither Gus Dur nor Megawati were consistent critics of the Soeharto regime and none of the new Cabinet members could be considered as having been outsiders during the New Order.

The new Government should allay fears that Indonesia might be overtaken by Islamic 'fundamentalist' politics. Gus Dur and Megawati represent the tolerant Islamic and secular nationalist streams of Indonesian politics. While most Indonesians are Muslims, their Islam is mixed with Hindu, Buddhist and animist traditions. Parties espousing a prominent political role for Islam performed poorly in the election.

The new Government will have to move urgently to assist economic recovery which is lagging behind other countries in the region. The first task will be to get International Monetary Fund (IMF) agreement to restart the flow of financial assistance and regain domestic and international investor confidence. Gus Dur says he is committed to market-oriented reform and to policies facilitating an increase in the incomes of ordinary Indonesians.

A precondition for economic confidence-building will be to resolve the Bank Bali affair, a scandal involving millions of dollars in a poorly regulated banking industry riddled with 'KKN'-corruption, collusion and nepotism. Banking reform must be part of wide-ranging administrative and legal reforms to create a transparent and non-discriminatory environment. The new Government has restarted an inquiry into the wealth of former President Soeharto, but Gus Dur has suggested that he might make a special case for Soeharto because of his 'service to the nation'.

East Timor will be a critical test for Gus Dur's Government. It will need to develop a working relationship with the new UN administration and with the East Timorese leadership, as well as normalise relations with Australia. Longer term issues include renegotiation of the Timor Gap Treaty and an economic relationship with East Timor.

Separatism is strong in other parts of Indonesia. The new Government has indicated that it wants to move away from the security approach to these issues which dominated policy during the Soeharto regime. It wants to start negotiations with the Aceh separatist movement and allow regional devolution of power from Jakarta and to move in the direction of some kind of federalism.

Changing policy on regionalism will require the agreement of the military, which sees itself as the guarantor of national unity. This issue may strain the close relations between both Gus Dur and Megawati and the armed forces.

The Gus Dur-Megawati team may come to be seen as a transitional Government. The relationship between the two has not been tested by practical politics. The inclusive Cabinet may be become divided within itself or come into conflict with the DPR and/or the MPR. The Government is dominated by figures from the New Order who see politics in elite and paternalistic terms. Their political style may come to be challenged by an increasingly sophisticated electorate and the spread of political participation brought on by economic and social change.


Information and Research Services Papers on Indonesia and East Timor


Indonesia's New President: Continuity, Change and the Problems Ahead

Current Issues Brief No. 10 1999-2000, 11 November 1999

Dr Stephen Sherlock, Foreign Affairs, Defence and Trade Group

A War Crimes Tribunal for East Timor

Research Note No. 10 1999-2000, 19 October 1999

Nathan Hancock, Law and Bills Digest Group

After the Elections, After East Timor: What's Next for Indonesia

Current Issues Brief No. 5 1999-2000, 28 September 1999

Dr Stephen Sherlock, Foreign Affairs, Defence and Trade Group

East Timor and Australia's Security Role: Issues and Scenarios

Current Issues Brief No. 3 1999-2000, 21 September 1999

Dr Adam Cobb, Foreign Affairs, Defence and Trade Group

Australia's Trade with Indonesia

Research Note No. 5 1999-2000, 21 September 1999

Gerard Newman and Andrew Kopras, Statistics Group

Military Threats Versus Security Problems: Australia's Emerging Strategic Environment

Research Paper No. 1 1999-2000, 24 August 1999

Gary Brown, Foreign Affairs, Defence and Trade Group

Indonesian Armed Forces (Tentara Nasional Indonesia-TNI)

Research Paper No. 23 1998-99, 29 June 1999

Bob Lowry, Consultant, Foreign Affairs, Defence and Trade Group

The Future of East Timor: Major Current Issues

Research Paper No. 21 1998-99, 24 May 1999

Dr Frank Frost and Dr Adam Cobb, Foreign Affairs, Defence and Trade Group

Indonesia's Dangerous Transition: The Politics of Recovery and Democratisation

Research Paper No. 18 1998-1999, 28 April 1999

Dr Stephen Sherlock, Foreign Affairs, Defence and Trade Group


B. J. Habibie: Indonesia's Interim President

Research Note No. 45 1997-1998, 26 May 1998

Dr Stephen Sherlock, Foreign Affairs, Defence and Trade Group

Indonesia in Crisis: Economy, Society and Politics

Current Issues Brief No. 13 1997-1998, 6 April 1998

Dr Stephen Sherlock, Foreign Affairs, Defence and Trade Group


ASEAN at 30: Enlargement, Consolidation and the Problems of Cambodia

Current Issues Brief No. 2 1997-1998, 25 August 1997

Dr Frank Frost, Foreign Affairs, Defence and Trade Group

Elections in Indonesia: Stability, Conflict and Change

Research Note No. 52, June 1997

Dr Stephen Sherlock, Foreign Affairs, Defence and Trade Group


The Politics of Change in Indonesia: Challenges for Australia

Current Issues Brief No. 3 1996-1997, 19 August 1996

Dr Stephen Sherlock, Foreign Affairs, Defence and Trade Group

The Australia-Indonesia Security Agreement: Issues and Implications

Research Paper No. 25 1995-1996, 8 May 1996

Gary Brown, Dr Frank Frost, and Dr Stephen Sherlock, Foreign Affairs, Defence and Trade Group


'A Pebble in Indonesia's Shoe': Recent Developments in East Timor

Research Paper No. 8 1995-1996, 26 September 1995

Dr Stephen Sherlock, Foreign Affairs, Defence and Trade Group


Indonesia's protracted process of presidential selection has finally produced a result. Abdurrahman Wahid (popularly known as Gus Dur), the 59 year old leader of Indonesia's largest Islamic organisation, Nahdlatul Ulama (NU), surprised most commentators and was elected President of Indonesia by the People's Consultative Assembly (MPR) on 20 October 1999. The only other candidate before the MPR was Megawati Soekarnoputri, daughter of Indonesia's first President, Soekarno. Megawati's party, the Indonesian Democratic Party of Struggle (PDIP), received the largest number of votes in the parliamentary election of June 1999 and Megawati was the candidate considered most likely to be elected.

Megawati's defeat, while surprising, was not totally unexpected and reflected the complex indirect nature of the selection process and the inability of any of Indonesia's parties to win majority support in the country's electorate. Her subsequent election as Vice-President can be seen as recognition by most of the MPR that the country's most popular leader had to be included in the front ranks of Government, if only to forestall further political instability and an uprising amongst her supporters.

This paper examines the politics and personalities behind the selection of Gus Dur as President and the subsequent inclusion of Megawati Soekarnopurti as Vice-President. It discusses the issue of the extent to which the new Government represents a real change of leadership in Indonesian politics and the degree to which it can be seen as a continuation of the past. It also deals with the question of the likely role of Islam in Indonesian politics in the near future. The paper outlines the main problems facing the new Government and what is known about the policy approach likely to be adopted by the new President. It concludes by discussing the pressures that will affect the viability of such a broadly-based Government and considers a longer term view of the possible place of the Gus Dur-Megawati Government in Indonesia's political development.

This paper, which was completed on 6 November 1999, can be read alone or as a supplement to two previous IRS publications by the author on recent developments in Indonesia: Indonesia's Dangerous Transition: The Politics of Recovery and Democratisation, Research Paper No. 18. 1998-99 and After the Elections, After East Timor: What's Next for Indonesia?, Current Issues Brief No. 5 1999-2000.

The Presidential Selection: High Drama and Intrigue

The final selection of the President by the MPR was the culmination of over four months of speculation and manoeuvring amongst the major parties from the time of the June parliamentary election. The Assembly session was brought forward one month in order to end the uncertainty.

After the results of the June election were announced, it appeared that the most likely candidates for President were Megawati or President Habibie, with Gus Dur an outside chance and likely kingmaker. As the months passed, however, events such as the revelation of the Bank Bali scandal and the East Timor referendum steadily eroded Habibie's chances of re-election, despite speculation that he might be able to use Golkar's financial and organisational resources to sway many members of the MPR. This left Megawati alone against a range of other mooted candidates, including Gus Dur, Amien Rais, Golkar leaders such as Akbar Tanjung or leaders of the various Islamic parties.

In the meantime, Amien Rais was busy building what he said was a 'central axis' of parties with an Islamic character to balance Megawati and Habibie. Rais said the bloc included his own People's Mandate Party (PAN), the United Development Party (PPP) and smaller Islamic parties. Gus Dur announced he was willing to accept the offer from Rais to be the Presidential candidate for the 'central axis', but many leaders of Gus Dur's own party, the National Awakening Party (PKB), opposed the idea and continued to support Megawati. Rais also attempted to win over Golkar leaders critical of Habibie and the sceptics in the PKB. The seriousness with which the press, the public and key leaders took the 'central axis' varied over the intervening months.

The first indication that things might not go Megawati's way came when her candidate for the position of Speaker of the MPR was defeated. Amien Rais was comfortably elected to the position over Matori Abdul Jalil, a PKB leader from the pro-Megawati camp. Rais appears to have been supported by the 'central axis' parties, most of Golkar and part of the PKB, an alliance which foreshadowed the final presidential vote. In what is now generally seen to have been a quid pro quo, Akbar Tanjung, a Golkar leader and critic of Habibie, was elected Speaker of the parliament (DPR) by a similar alliance.

When President Habibie's accountability speech to the MPR was resoundingly rejected by the Assembly, the factionalism within Golkar became openly inflamed. Habibie supporters denounced the Tanjung faction for betraying Habibie. When Habibie decided to withdraw from the presidential contest, Tanjung first declared his candidacy for President but later decided to withdraw in the face of bitter division within Golkar. This raised the prospect that Megawati might be the only candidate, a possibility which dismayed some Islamic leaders and induced Yusril Ihza Mahendra, leader of a small Islamic party, to stand. With the announcement of Gus Dur's candidacy, however, Mahendra withdrew his nomination so as not to split the Islamic vote.

Thus on the day of the vote, an alliance of the PKB, the 'central axis', the majority of Golkar (and possibly the military) defeated a combination of Megawati's PDIP, a Golkar minority and some smaller secular nationalist parties by 373 votes to 313.(1) Megawati's announcement that she would not stand in the Vice-Presidential election the next day meant that the person widely seen as the winner of the June election would not be in the new Government. Despite Megawati's conciliatory remarks, there was widespread anger amongst her followers, especially in her stronghold of Bali, where major rioting occurred.

During the night of 20-21 October Gus Dur attempted to persuade Megawati to stand for the Vice-Presidency. He also approached the other individuals who had put their names forward for the position-military chief General Wiranto, Akbar Tanjung, Hartoto, a minister in the Habibie administration, and Hamzah Haz, leader of the Islamic PPP-and tried to persuade them to withdraw in favour of Megawati as the lone nominee. By the time the MPR had convened on the morning of 21 October, Megawati had agreed to stand and all other candidates except Hamzah Haz had withdrawn their nomination. The refusal by Hamzah Haz to leave the field to Megawati indicated the antipathy to her from the more doctrinal Islamic parties which had opposed her on the grounds of her secular politics as well as her gender. On this occasion, however, it was the Islamic parties which were isolated and Megawati was easily elected by 396 votes to 284.

National Unity or the Same Old Crowd?

Gus Dur's persistence in persuading Megawati to stand for the vice-presidency, even to the extent of trying to have her elected unopposed, reflected his desire to draw all the major parties behind his Government and to forestall a popular backlash. Gus Dur and Megawati were together supported by the entire spectrum of the MPR. He probably also felt more secure with Megawati as an old ally who could balance the influence of the more doctrinal Islamic parties who had supported his candidacy. This approach was followed in the formation of the Cabinet, which not only included members of Gus Dur's PKB and Megawati's PDIP, but leaders from all major parties in the MPR and, more controversially, even some former ministers from the Soeharto regime.

The inclusiveness of the Gus Dur Government has been publicly presented as an exercise in national unity. Such an idea had been raised in the lead-up to the June election and was foreshadowed by the joint declarations of cooperation in the early days of the election campaign by the three main opposition leaders, Megawati, Gus Dur and Amien Rais. Gus Dur had even had talks with ex-President Soeharto and suggested bringing Golkar leaders into the united front of opposition figures. Many commentators have praised this approach as a way of easing tensions and uniting the country behind all its leaders.(2)

The Cabinet has been both praised and criticised as a compromise between the various parties in parliament, between political and technocratic figures and between commitment to reform and keeping powerful interests onside (for a full list see Appendix A).(3) The appointment of a civilian, Yuwono Sudarsono, as Defence Minister has been seen as sending a signal about the Government's intention to reform civil-military relations. In regional and religious terms, the Cabinet has a number of members from the outer islands and Aceh and contains Christians, a Hindu and a Buddhist. The crucial economic team is clearly a compromise between academic expertise, business experience and political background.

Critics have pointed out, however, that a crucial element of any democratic polity is the presence of a strong opposition. A prominent student leader denounced the effective absence of any opposition parties as 'disturbing'. He argued:

There should be opposition camps which can critically apply pressure on the new Government so that it will never become like the regime we had in the past, the New Order.(4)

Another student activist compared the current situation with the early days of the Soeharto regime in 1966, expressing fears of a return to oligarchic Government:

The Angakatan 1966 students [key supporters of Soeharto's rise to power] failed to control Soeharto during the critical 1966-1970 period. It was too late for them to put pressure on him ... after 1971 and he turned out to be a dictator.(5)

While a return to the dictatorial rule of the Soeharto years seems unlikely, some commentators inside and outside Indonesia have questioned how much the new Government represents a real change after two years of economic crisis and political turmoil.

Neither the new President or Vice-President were major critics of Government during most of the rule of former President Soeharto. Gus Dur withdrew himself and NU from formal politics in 1984. During the mass uprising which brought down Soeharto in May 1998, Gus Dur called for an end to the student demonstrations.(6) He has maintained communication with the former President since that time and has close relations with his daughter Tutut. Megawati was largely silent during her years as a member of Soeharto's rubber-stamp parliament from 1992. She only became prominent during the final years of the New Order when drafted into her party's leadership because of her family name. Her reputation as an opposition figure was largely created by Soeharto himself when he over-reacted to Megawati's becoming leader of the PDI and used the military to forcibly take over the party headquarters in July 1996.(7)

The continuing influence of the military is clear from the fact that 6 of the 35 members of the new Cabinet are serving or retired Tentara Nasional Indonesia (TNI) officers, the same number as in the Habibie ministry. The former Chief of the armed forces, General Wiranto, is no longer Defence Minister, but he still holds the lesser position of Coordinating Minister for Political Affairs and Security.(8) The new Chief of TNI, A. S. Widodo, retains the status of a State Minister, although the fact that he is from the Navy rather the Army may limit his influence in Cabinet. The position of Minister of Defence has gone to a civilian for the first time, but Juwono Sudarsono has close links with the military, being Deputy Governor of the National Resilience Council, a TNI think-tank. The powerful Home Affairs position is held by retired army officer and former Governor of Jakarta, Lt. Gen. Soedirdja. Serving TNI officers have also been assigned the positions of Minister of Mines and Energy, Minister of Transportation and State Minister for State Administrative Reforms.

The continuity between the old regime and the new is reinforced by the presence of 3 people who were members of either Habibie or Soeharto Cabinets. General Wiranto, Defence Minister under Habibie, has already been mentioned. The new powerful Coordinating Minister for People's Welfare, Hamzah Haz, was a member of the Habibie Cabinet and a member of the DPR under the New Order for 27 years. The new Defence Minister, Sudarsono, held ministerial office on two occasions under President Soeharto and was a minister in the Habibie administration.

For some Indonesians, the compromise and continuity represented by the Gus Dur-Megawati Cabinet is necessary both to maintain administrative and Governmental expertise and to ensure that there is no backlash against the new Government by still-powerful conservative forces. Others are deeply disappointed, however, that for all the talk of reform, it is difficult to find a figure in the new Cabinet who could be described as having been an outsider during the years of the New Order. It has already been mentioned that another key position, Speaker of the DPR, has gone to Golkar leader, Akbar Tanjung, who was powerful in Soeharto's time. Some of these individuals may have differed over individual policy questions, but most were able to maintain positions of power and influence in politics, business or religious and social affairs within the strictures of the repressive Soeharto regime.

For example, the new Minister for Religious Affairs, Tholhah Hasan, was a leading member of the Association of Islamic Intellectuals (ICMI), established by Habibie to shore up Soeharto's influence amongst Muslim scholars. The new Minister of Manpower, Bomer Pasaribu, is chairman of the New Order-era trade union federation, the Indonesian Workers' Association (SPSI), whose activities under the Soeharto regime were designed to prevent the formation of independent workers' organisations. News of the appointment of Bomer was met with protest demonstrations by Indonesia's main independent trade union, the Indonesian Prosperous Labour Union, (banned for many years under Soeharto) which attacked the new minister for his 'opposition to the establishment of a free labour union' and alleged embezzlement of the workers' fund of an insurance company.(9)

The possible exception to the dominance of individuals from the New Order is in the key area of human rights. The new Attorney General, Marzuki Darusman, though a Golkar leader during the Soeharto's time, impressed many observers by his determination to make the National Commission on Human Rights an effective body. Despite being poorly resourced and under-funded from the time of its establishment after the Dili massacre of 1991, the Commission was frequently critical of the actions of the security forces and other Government agencies. The new State Minister of Human Rights, Hasballah M. Saad, was a human rights activist in Aceh for many years.

An 'Islamic' Government?

The conventional description of Gus Dur in the Western media as a 'Muslim cleric', could give the misleading impression that Indonesia's new Government will lead the country in the direction of Islamic politics. In fact, the result was a clear affirmation of the secular, non-sectarian nature of politics in the country with the world's largest Muslim population. Megawati and Gus Dur represent the secular nationalist and tolerant non-doctrinal Islamic streams of Indonesian politics and their formation of a Government should help quash the rather unfounded fears that Indonesia might become dominated by 'fundamentalist' Islam.

On the Sunday following his election as President, Gus Dur made a point of addressing a Hindu mass prayer attended by representatives of all five of Indonesia's officially-recognised religions. In a statement typical of Indonesian religious syncretism, Gus Dur declared:

In my opinion, all religions are the same. ... Let everyone live and praise God in peace in their own way.(10)

While 86 per cent of the population call themselves Muslims, for many Indonesians Islam is merely one influence on their worldview and cultural practices. Particularly in rural areas, adherence to Islam is mixed with traditions inherited from the centuries of Hindu, Buddhist and animist influence in the various islands that today comprise Indonesia.

During the DPR election, parties with an explicitly Islamic focus, those calling for an increased Islamisation of Government and public life, received only a very small percentage of votes. Amien Rais, a leader who had previously been identified with Islamic modernist politics, specifically rejected the idea of religiously-based politics when he formed the National Mandate Party in 1998. He made strong efforts to build support amongst the mainly Buddhist and Christian Chinese-Indonesian community. On the other hand, in Aceh, where Islamic sentiment is strong, the new provincial Government has made gestures towards Islamisation such as the compulsory wearing of Islamic dress for women working in Government offices. Whether this heightens Islamic feeling in the province or merely provides it with an outlet is an open question, but it can be seen as a inevitable cost or benefit of increased provincial autonomy.

Tasks for a New Government

Economic Recovery and Poverty Reduction

Amongst the first and most pressing of the tasks for the new Government will be to take Indonesia back onto the path of economic recovery. Indonesia was by far the worst hit country in the Asian economic crisis and the long months of uncertainty between the election and selecting the new Government have been largely wasted. While the Indonesian economy has stabilised and has probably just returned to positive growth, it is well behind its regional neighbours who are showing clear signs of recovery.

Both Indonesia's currency, the rupiah, and the Jakarta stockmarket rallied after news of the formation of a new Government, but in the following week lost much of that ground. At the time of writing the rupiah had strengthened considerably from its rapid falls during the East Timor crisis and was trading at around 7000 to the $US. But such improvements came on the basis of very thin trading, a fact which reflected the low demand for the rupiah because of Indonesia's continuing weak international trade and lack of foreign investor confidence.

Neither Gus Dur nor any of the new economic ministers have provided detailed plans for economic recovery. One of the key elements of Gus Dur's first public statements, however, has been to reassure the international financial community that the new Government is committed to market-oriented policies, to meeting the previous Government's agreements with the IMF and to encouraging foreign investment.(11) The immediate priority for the Gus Dur Government will be to begin talks with the IMF and World Bank to restart the flow of loans and other assistance which had been suspended because of the Bank Bali scandal, discussed below. This will be an essential precondition to the re-establishment of investor confidence and to a sustainable strengthening of the rupiah. The new Coordinating Minister for Economy, Finance and Industry, Kwik Kian Gie, indicated that relations with the IMF and World Bank would be his first priority.(12)

Longer term assistance plans with the IMF will also have to be mapped out because the majority of the package of assistance negotiated in 1997 and 1998 has already been disbursed. Another key task will be the formulation of a budget with realistic estimates of revenue and credible assumptions about exchange rates and economic growth and which can take account of the huge potential cost of restructuring the banking sector and other reforms.

A particular strand of Gus Dur's thinking which has already emerged is his focus on improving 'people's incomes' as a way of bridging the widening gap between the rich and poor which was one of the legacies of the Soeharto era. Gus Dur sees this as an essential precondition for undermining the culture of corruption, restoring respect for law and order and overcoming regional disparities in wealth.(13)

Bank Bali, KKN and Bank Reform

In order to be able to re-establish a flow of international financial assistance to the Indonesian economy, it will be essential for the new Government to move quickly on the Bank Bali affair. The scandal, involving the illegal transfer of around $A100 million from Bank Bali to accounts of Golkar members and associates of former President Habibie, is at the centre of the web of issues linked to economic reform and the elimination of what has become known as 'KKN'-corruption, collusion and nepotism. The affair has become a popular symbol of the 'KKN' which dominated life under the Soeharto regime and which could only have occurred because of the lack of proper Government regulation of the banking industry. And since the state of the banking sector was one of the major reasons why Indonesia sank into such massive and lasting recession, bank restructuring is essential for a sustained economic recovery.

The continued attempts by the Habibie Government to cover up the Bank Bali affair, including its refusal to make public the full results of an independent audit into the transactions, was one of the final straws which broke the back of Habibie's bid for re-election. The refusal also caused the suspension of IMF and World Bank assistance. Following a Supreme Court decision that release of the report would not contravene banking laws, Gus Dur called for its immediate publication.(14) The Gus Dur Government will not, however, be able to establish its credentials as a reforming Government or one committed to eliminating corruption until those responsible for the scandal are revealed.

Resolution of the Bank Bali affair will be only part of what is necessary to restart the restructuring of the banking sector. The Indonesian Bank Restructuring Agency (IBRA), set up by the Habibie administration to implement restructuring, has been able to make very little progress in closing or merging bankrupt banks, partly due to technical difficulties and partly because of the spiralling cost of what is effectively a state takeover of the banking industry.

Banking reform is itself only part of wide-ranging legal and administrative reforms needed to create a framework in which international and domestic business investment can be carried out in a transparent and non-discriminatory environment. Gus Dur has promised to give priority to reform of the judicial system to eliminate the preferential treatment which individuals with powerful connections were able to obtain under Soeharto. The new President also sees this as part of restoring a sense of security within the economically important Indonesian-Chinese community which has periodically been made a scapegoat during times of economic and political stress, including during the events leading to Soeharto's resignation in May 1998. He gave special emphasis to reasssuring Indonesia-Chinese business people (many of whom have moved themselves or their capital to Singapore), during his visit to Singapore on 6 November.(15)

The other high profile issue in attacking the culture and institutions of 'KKN' is the case of the inquiry into the wealth of former President Soeharto. Allegations of corrupt acquisition of wealth by Soeharto and his family were one of the principal issues raised by the student movement in the months before and since the former President's resignation. The previous Government cancelled an inquiry into Soeharto's wealth on the grounds of lack of evidence. The new Government has announced that it will restart the inquiry, but it remains to be seen how it will handle the conflicting demands of popular anger and the efforts of Soeharto's still-powerful supporters to prevent any effective action. The new Foreign Minister and confidante of Gus Dur, Alwi Shihab, suggested that Soeharto might be treated as a exceptional case because of his 'service to the nation'.(16)

East Timor

The issue of East Timor will be a major and early test for the foreign policy of the Gus Dur Government. Both Gus Dur and Megawati bitterly criticised Habibie for his East Timor policy and maintained that allowing International Force for East Timor (Interfet) into the territory was a humiliating blow to Indonesia's national sovereignty and pride. Gus Dur was particularly critical of Australia's role in the East Timor events, charging Australia with being overly eager to lead the Interfet forces and acting in a way which was unhelpful and unfriendly to Indonesia and servile to the United States. Both leaders, however, never suggested that they would not abide by the results of the 30 August referendum or oppose the MPR decree formally relinquishing Indonesia's claim to East Timor.

Gus Dur's statements on the future conduct of Indonesian policy on East Timor have, as with most issues, been off the cuff and very general. Early signs are that the new Government is prepared to cooperate with efforts to establish a UN administration in the territory. It appears to be continuing with the old Government's efforts to disengage TNI involvement with the militias. The continuing problem of militia domination of refugee camps in West Timor has, however, yet to be tackled.

Gus Dur has also sent out positive signals about developing relations with the East Timorese leadership and, by inference at least, with a future Timorese Government. He declared that he and Megawati would be at the airport to welcome Xanana Gusmao to Jakarta should he decide to visit. Concrete tests of these general expressions of goodwill will come over issues such as the East Timor's continued use of Indonesian ports, such as Surabaya, for the transhipment of exports. Larger issues such as the renegotiation of the Timor Gap Treaty will demonstrate the resolve of the Gus Dur Government to foster normal state-to-state ties with East Timor. Geographical realities dictate that the future economic development of independent East Timor will depend on a close working relationship with Indonesia.

National Unity and Regional Devolution

East Timor can be regarded as a special case because the territory was never part of the Netherlands East Indies which formed the basis of the state of Indonesia. Nevertheless, the precedent of East Timor will give encouragement to those people in various other parts of Indonesia clamouring for independence. The East Timor referendum has given rise to demands for a similar referendum in Aceh and the independence movement in Irian Jaya will undoubtedly take heart from East Timor's parting from Indonesia. Separatist sentiment has been expressed in many parts of eastern Indonesia over the last 50 years. In recent months there has been an upsurge in student agitation for independence in the island of Sulawesi.

Under the New Order, any expression of separatist ideas was treated purely as a security problem to be dealt with by military force, a policy which was usually counterproductive. TNI continued this approach in East Timor by using the violence and destruction perpetrated by the militias as a warning to any separatist movement which might gain inspiration from the East Timor example.

The new Government, however, has given indications that it wants to move away from the security approach which dominated thinking in the New Order. Gus Dur has said that he is willing to contemplate a limited form of federalism which would allow the outer islands greater autonomy in local affairs and an increased share of export revenues. In the case of Aceh, Gus Dur has offered to begin negotiations with the Acehnese separatist forces, hoping to use his position as an Islamic scholar as an opening with the Islamic rebels in the region. Vice-President Megawati has been given responsibility for relations with Irian Jaya, Riau and Ambon, regions with pockets of separatist feeling and, in the case of Ambon, the site of continuing violence between different religious and cultural communities. Gus Dur sees the issue of separatism as rooted in the lack of economic security amongst ordinary people in the regions created by the unbalanced allocation of resources during the Soeharto regime.(17)

Role of the Military

The issue of the place of the military and its traditional dwifungsi (dual function) role in Indonesian society has already been discussed in relation to the continuing presence of TNI officers in Cabinet. But it will be on the question of how to deal with the regions that the new Government will face its greatest challenge. While many TNI officers may be willing to accept a gradual military withdrawal from formal politics, few would accept relinquishing the military's role as the ultimate guarantor of Indonesia's territorial integrity. Both Gus Dur and Megawati have put considerable effort into maintaining good relations with the TNI leadership, but serious strains could well emerge if the military perceives that the new Government's policy is appeasing separatist movements at the risk of national unity.

The Gus Dur Government and Australia

It is well known that the East Timor crisis plunged relations between Australia and Indonesia to a level not seen since the early 1960s when Indonesia's policy of 'confrontation' with Malaysia threatened to send the two countries to war. When the Australian Government criticised Indonesia for its failure to control the militias in East Timor and was the leading power arguing for UN-sanctioned intervention, the Habibie Government attacked Australia for what it saw as a policy about-face which smacked of Western arrogance.(18) There was widespread mis-reporting about Australia and Interfet in the Indonesian media which reflected and intensified wounded national pride about foreign intervention and combined with the deep uneasiness many Indonesians felt about the actions of TNI in the territory.(19) In early September the Habibie Government cancelled the Indonesia-Australia Agreement on Security negotiated by Prime Minister Keating with President Soeharto and unveiled in December 1995 to register its protest against Australian actions. Almost daily demonstrations were held outside the Australian Embassy in Jakarta.

It has already been noted that Gus Dur was a leading member of the chorus of criticism of Australia's stance on East Timor. Despite this, however, it is unlikely that the new Government considers there is anything to be gained from maintaining a hostile attitude towards Australia. There is a strong feeling that the Gus Dur administration is intent on turning the country's back on the conflicts and humiliations of the last two years, of which East Timor was just one. It wants to give attention to the urgent problems which were largely ignored during the Governmental vacuum between the June election and the MPR session in October. Normalising relations with Australia can be seen as part of the project of repairing Indonesia's damaged image in the West and in much of the developing world. An atmosphere of calm and normalcy is critical to a restoration of international investor confidence in the country. It is interesting to note that demonstrations at the Australian Embassy ceased completely the day after the presidential selection.

Because of residual domestic feeling and wider foreign policy considerations, the new Government will probably not make any major moves on relations with Australia for some time. Gus Dur's first foreign visit as President was to Singapore and Malaysia on 6 November 1999 (part of a five-day Southeast Asian tour), an indication of the special emphasis the Government is giving to regional affairs and to establishing a new network of relations with major Asian countries such as China and India. Gus Dur has yet to make any public statement about Australia-Indonesia relations, but both he and Megawati have met with the Australian Ambassador, John McCarthy. The new Foreign Minister, Alwi Shihab, met with McCarthy soon after the presidential selection and reported to the press that he told the Ambassador he wanted to 'see amiable bilateral ties restored as soon as possible'.(20)

On Australia's part, Prime Minister Howard said on 31 October that bilateral relations had been particularly sensitive during the East Timor crisis, but 'the repair process' had already begun. While he had not yet made any personal contact with Indonesia's new President, Mr Howard said he had written 'a very warm letter of congratulations.' Mr Howard stated that:

...bearing in mind that Australia led the international push to have a peace enforcement operation, you can't expect the Indonesians overnight to achieve a complete thaw in the relationship. But the important thing is I think the difficulties are not as intense now and I think its upside rather than downside in the future.(21)

It is likely that the Indonesian Government will for its part move to re-establish the relationship in gradual steps over the coming months.


The Future of the Gus Dur-Megawati Government

For the first time since the 1950s, Indonesia has a Government which is not dominated by the personality of one individual. Gus Dur is a major and charismatic figure, but Megawati's incumbency as Vice-President will ensure that the office will not be the token position it was during previous administrations. This is partly because Megawati is a major figure in her own right with, at least in electoral terms, a stronger basis of support than the President. But, of course, it is also well known that Gus Dur suffers from poor health and it is quite possible that he might have to retire before completing his time in office, in which case Megawati would become President. Gus Dur has made clear gestures to indicate that he sees Megawati as his partner in Government, and has assigned her a number of policy responsibilities.

Despite best intentions, however, differences may well develop between the two figures as the many urgent policy questions bear down on the new Government. Neither figure has experience in Government and Gus Dur has a reputation for a somewhat erratic, even deliberately mischievous, political style, which may be a cause of friction between him and Megawati or with other Cabinet members. The unique features of Indonesia's presidential system of Government may also be a source of conflict or even deadlock. The DPR and the MPR, now democratically elected bodies with enhanced legitimacy, are very likely to play a vastly more prominent role than they have in the past. And since both assemblies are to be presided over by a powerful Speaker, Akbar Tanjung in the DPR and Amien Rais in the MPR, the potential for conflict between the executive and legislative arms of Government should not be underestimated.(22)

The workability of the broad, inclusive Cabinet chosen by Gus Dur has also yet to be tested. Although Gus Dur is regarded as an Islamic leader, his political philosophy has as much, or more, affinity with the secular nationalist tradition represented by Megawati. He may come into conflict with the more doctrinal modernist Muslims in the Cabinet, particularly over religious and social issues. As has already been suggested, this may have been part of Gus Dur's motivation in asking Megawati to become Vice-President. Gus Dur is a political leader in the Javanese tradition of decision by consensus. This may yet provide a formula for guaranteeing the viability of a compromise administration. On the other hand, the realities of modern Government in a time of crisis and change may spell the end of ideas of a uniquely Javanese consensus-based approach to politics.

In retrospect, the Gus Dur-Megawati Government may well be seen as an interim Government overseeing a transition from the authoritarian, paternalistic politics of the Soekarno and New Order eras to a more genuinely democratic polity. Both Gus Dur and Megawati, as well as most of the new Cabinet, are creations of politics formed in a predominantly rural society where family background and personal charisma are the key to legitimacy and where consensus is a means to enforce conformity. Whatever their own proclivities, however, Gus Dur and Megawati will be subjected to pressures from a maturing electorate and a civil society where political participation is moving beyond the bounds of a traditional elite and an activist student movement. Despite its current setbacks, Indonesia is a rapidly industrialising, urbanising society which is likely to begin generating a system of politics based on legitimacy through performance and on debate over policy as well as personality. The future of Indonesian politics could prove just as fascinating as the turbulent period through which it has just passed.


  1. Voting amongst the regional and social group representatives in the MPR appears to have followed the lead of the party groupings, but the exact patterns of support amongst these members remains unclear.

  2. New York Times, 27 October 1999.

  3. Jakarta Post, 27 October 1999, pp. 1-2.

  4. Jakarta Post, 25 October 1999, p. 3.

  5. ibid.

  6. Far Eastern Economic Review, 28 October 1999, pp. 12-13.

  7. During the days of Megawati's rise to international prominence after Soeharto's crackdown on the PDI in 1996, some foreign media commentators drew parallels between Megawati and female opposition leaders such as Aung Sang Su Kyii of Burma and Cori Aquino of the Philippines. Like Su Kyii and Aquino, Megawati's prominence owed much to family connections, but her position in her country's politics is more akin to figures such as Benazir Bhutto, or even Sonia Gandhi, who have made no real challenge to the status quo.

  8. It is interesting to note that an official photograph of the new Cabinet featured Wiranto standing in the front row next to the President and the new TNI chief in the back row. Jakarta Post, 30 October 1999, p. 1.

  9. Jakarta Post, 30 October 1999, p. 2, Jakarta Post, 1 November 1999, p. 2.

  10. Jakarta Post, 25 October 1999, p. 2.

  11. Jakarta Post, 25 October 1999, p. 1.

  12. Jakarta Post, 27 October 1999, p. 8.

  13. Jakarta Post, 25 October 1999, p. 1.

  14. Jakarta Post, 29 October 1999, p. 1.

  15. Jakarta Post, 7 November 1999, p. 1.

  16. Business Times (Singapore), 26 October 1999.

  17. Oxford Analytica Brief, 25 October 1999.

  18. 'Arrogance' was the most common word used about Australia and Australians during official and popular discourse on the East Timor issue.

  19. For example, the discovery of bodies in a burnt-out vehicle in East Timor, widely blamed on the militias, was reported in the tabloid Indonesian press to have been the work of Australian troops. One business affairs magazine described Australia as having a 'two-pronged approach' to 'protest against the Indonesian Government's management of the East Timor crisis'-an economic 'boycott' of Indonesia and 'the presence of Australian peacekeeping troops'. Kapital, 25 September-2 October 1999, p. 9.

  20. Jakarta Post, 26 October 1999, p. 1.

  21. The Canberra Times, 1 November 1999.
  22. The importance of constitutional issues for the new Government has been discussed in more detail in Stephen Sherlock, 'After the Elections, After East Timor: What's Next for Indonesia?', Information and Research Services Current Issues Brief No. 5 1999-2000, Department of the Parliamentary Library, Canberra, 1999.

Appendix A: Indonesia's Government-October 1999


Abdurrahman WAHID


MEGAWATI Sukarnoputri



Coordinating Ministers:


Economics, Finance & Industry

KWIK Kian Gie

Politics & Security


Social Welfare & Poverty Eradication

Hamzah HAZ







Foreign Affairs


Forestry & Plantations

Nur Mahmudi ISMA'IL



Housing & Regional Development


Internal Affairs

Lt-Gen Surjadi SOEDIRJA


Yusril Ihza MAHENDRA



Mines & Energy

Lt-Gen Susilo Bambang YUDHOYONO

National Education



M. Tolchah HASAN

Sea Exploration




State Ministers:


Armed Forces Chief

Admiral Widodo Adi SUTJIPTO

Attorney General


Capital Investment & State Enterprises

Laksamana SUKARDI

Cooperatives, Small & Medium Enterprises

Zarkasih NOER



Human Rights

Hasballah M. SAAD

Public Affairs

Anak Agung Gde AGUNG

Public Works

Rafik Boediro SOETJIPTO

Regional Autonomy


Research & Technology


State Administrative Reform

Laksamana Muda Freddy NUMBERI

State Secretary


Tourism & Arts


Transmigration & Population

Al Hilal HAMDI

Women's Affairs

Khofifah Indar PARAWANSA

Youth & Sport


Central Bank Governor


Source: Reuters News Service, 29 October 1999.