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The Fall Of Suharto Refers To

The fall of Suharto refers to the end of Indonesia’s second President, Suharto’s, three decade long rule, when he resigned on 21 May 1998. While many historians observing Indonesia’s politics “struggle to come to grips with that moment of epochal change”, they tend to agree that the fall was a culmination of the severe economic and political crises in the previous two years.

As such, this exploration will deal with the various perspectives focusing on the impact of Suharto’s rule, the opposition and the student movement in inadvertently causing the fall of Suharto. It will also critically examine the role of the 1997 Asian Financial Crisis (AFC) and its impact on the Indonesian economy and society, and thus, its significance in the fall of Suharto. Therefore, this research seeks to answer the following question,

To what extent was the 1997 Asian Financial Crisis responsible for the downfall of Suharto in 1998?

This topic is worthy of investigation as being a Singaporean and a member of the Association of Southeast Asian Nations (ASEAN), it is pertinent that we understand the history of the region so as to get better connected. Indonesia is a key member of ASEAN and an important trading partner of Singapore; therefore we need to understand how the Indonesian economy developed over the years. The collapse of the Suharto’s New Order had a momentous impact on its foreign policy with ASEAN members. While Singapore was previously Indonesia’s closest collaborator within ASEAN, the economic and political crisis from 1998-1999 damaged the relationship between the two countries. With Suharto no longer in power, Singapore was no longer able to rely on the rapport between him and Singapore’s first Prime Minister Lee Kwan Yew to maintain the close ties. In addition, I am also curious as to why an authoritarian leader would resign abruptly despite achieving high economic growth in the years before. Thus, this investigation will allow me to be more aware of regional affairs, which has present day implications on the economy and political scene of Southeast Asia (SEA).

The investigation utilises facts and historiography from a plethora of both primary and secondary sources, ranging from newspaper articles, personal accounts by personnel involved, academic documents with extensive research on SEA and Indonesia, as well as credible websites. The array of sources enables my research to assess and pinpoint possible limitations and bias through different lenses to ensure that a reliable and convincing argument is expounded, and ultimately offer a more objective and holistic investigation.

Contextualising the fall of Suharto (165)

Suharto rose to power in 1965 after directing a purge of communists and leftist, bringing down Indonesia’s founding President, Sukarno, and establishing himself as the second President of Indonesia. Ruling from 1968 to 1998, Suharto brought about much needed political stability, sustained economic growth, industrialisation, and improvement in many aspects of people’s lives. The New Order regime was successful for most of more than three decades in power, and few serious threats to the regime emerged. However, the world was taken by shock when Suharto resigned on 21 May 1998.

For a factor to be considered the most important factor in leading to the fall of Suharto, several criteria have to be fulfilled. It must have stirred up economic, political and social instability, as well as reduced the support for Suharto from the public. Upon examination of the factors, it is clear that the 1997 Asian Financial Crisis had a significant impact on the fall of Suharto, while the student movement was the trigger factor.

Investigation

1. Role played by the 1997 Asian Financial Crisis (762)

In retrospect, the detrimental effect of the 1997 Asian Financial Crisis on Indonesia was a pivotal moment in shifting the public’s support away from Suharto, and ultimately leading up to his fall in power.

1.1 Impact of the Crisis

The crisis developed in Thailand, after the Bank of Thailand (BOT) decided to float the Thai baht (THB) to the U.S. dollar (USD), due to the depletion of its foreign exchange reserve. The depreciation of the THB then set off a domino effect across Southeast Asia, causing the currency, stock market and asset prices of many countries to decline. Amongst those, Indonesia was considered the worst hit, with Gross Domestic Product (GDP) expected to drop by 15% in 1998.

On 14 August, the Central Bank allowed the Indonesian rupiah (IDR) to float, resulting in a devaluation of the currency from around 2,600 to 3,000 IDR against USD. Domestic capital flight and high demand for USD amongst domestic companies soon followed, which deteriorated the crisis in Indonesia. The exchange rate between the IDR and the USD weakened from 2,600 IDR to 1 USD in January 1997, to over 14,000 during the months of May and June in 1998. As a result, Indonesia plunged into deep recessions with a drop of 13.3% in GDP in 1998.

The plunge in rupiah coupled with soaring inflation engendered mass disruption to the Indonesian economy, affecting all levels of society. The collapse of the rupiah meant that imported goods became more expensive, causing a strain on consumers and producers who used imported parts or raw materials in their production. Indonesians were demoralised and firms no longer had confidence in the crippled economy. Many companies chose to either lay off large numbers of their employees, or closed down business altogether. On 30 December the Indonesian Chamber of Commerce and Industry, Kadin (Kamar Dagang dan Industri), estimated that 2.4 million jobs had been lost in the Jakarta region. While displaced workers sought for alternative in the informal sector, only half of the workers managed to be re-absorbed. On the other hand, workers who were not displaced saw a drastic decline in their income between 1996 and 1997, as seen from figure 1.

The rising domestic inflation accompanied by the increase in unemployment from crisis-affected firms prompted a surge in poverty rates. As seen from figure 2, poverty rates increased from 17.5% in 1996 to 24.2% in 1998.

The El Niño drought in 1997 aggravated the crisis, causing a cereal shortfall of 3.5 million metric tons. Similarly, total production of rice decreased from 51.1 million tons in 1996 to 49.1 million tons in 1997. Price for basic commodities sky rocketed and became prohibitively expensive to majority of the population. While 1 kilogram of rice cost 970 IDR in February 1997, it increased to 1,600 IDR in 1998. Indonesians who could not afford food and basic goods resorted to rioting, looting and burning of shops. One of the most affected province was Irian Jaya (New Guinea). By the end of 1997, more than a thousand people had died from starvation, malaria and other diseases.

1.2 Analysis

Once known as the “Father of Development” for his various development projects that led Indonesia in an unsurpassed economic story, Suharto’s failure to handle the effects of the 1997 Asian Financial Crisis stirred up ubiquitous discontent among the citizens.

One aspect which illustrates the importance of the AFC is the salient role economic stability played in ensuring the continual support for Suharto when he was in power. To quote from historian Edward Aspinall, “a kind of unspoken social contract came into being, whereby the middle classes ceded their political rights in exchange for social peace and the chance to pursue their dreams of enrichment and upward mobility”. In other words, Indonesians were willing to trade their freedom for economic growth in the country that would benefit them.

It was not until the AFC that inflamed the public’s negative perception of Suharto and inadvertently unravelling the political crisis that would spread over Indonesia. To quote from Professor Ayako Masuhara, “when the financial crisis hit Indonesia in July 1997, Suharto’s rock-solid dictatorial rule began to crumble”. Public alienation slowly transformed into active opposition and even the highly-censored press published articles that chided the government’s inability to resolve the crisis. Not only was the AFC a catalyst to the economic, political and social instability in Indonesia, but it also led to the disintegration of Suharto’s support base. As such, one would agree that the AFC was a critical factor in the fall of Suharto.

2. Role played by the Suharto (732)

In hindsight, the long-term regressive nature of Suharto’s rule accompanied by egregious abuse of power had culminated into a political crisis that was building towards the fall of Suharto, and any attempts at buying more time only served to strengthen the public’s desire for a reform of the Government.

2.1 Repression

Commonly seen as a despot, Suharto ruled Indonesia with an iron-fist. Any form of dissidence was met with imprisonment, torture and death. Despite coming into power with the death of 500, 000 to 1 million people, Suharto managed to manipulate the incident to seem as if it was a patriotic campaign that only resulted in less than 80, 000 deaths. He did so by banning all but two newspapers, both of which are expected to depict the Communist Party in a negative light.

Suharto outlawed any opposition and limited the freedom of speech of the people. In a span of 4 days in March 1998, a total of 10 activists disappeared. The increasing amount of disappearances became a focus of public attention, leading to criticism by domestic and international human rights organisations. Towards the last few months of Suharto’s rule, the government and the army’s credibility was severely undermined.

2.2 Corruption, Collusion and Nepotism

Suharto’s regime could simply be defined by the term Korupsi, Kolusi, dan Nepotisme (KKN) – a “social disease that greatly jeopardises the nation’s survival and pursuit of social justice, prosperity and independence”.

On hindsight, a German anti-corruption NGO Transparency International reveals that Suharto is the most corrupt leader in the past two decades, in which he and his family have embezzled an alleged $15-35 billion during his rule. While this was not made known during the his time in power, Indonesians were aware of flagrant corruption and nepotism. The most prominent example that aroused public animosity was the decision to have a national car. In 1996, Suharto issued a presidential decree that gave Tommy Suharto’s company, P.T. Timor Putra Nasional, the task of developing a national car, despite the company not having any experience with car production. The “National Car” policy drew criticism both domestically and internationally. Not only did the car not sell well, Japan, the US and the European Union all complained to the World Trade Union that Indonesia had violated WTO rules on equal treatment by exempting Tommy’s company from tax and tariffs. The issue worsened following the AFC when the national car project was not one of the halted fifteen financial project, heightening the cynicism and scepticism of the government’s ability and willingness to deal effectively with the crisis.

2.3 Analysis

The authoritarian nature of Suharto’s rule led to deep-seated tension within the Indonesian society that provoked a series of demonstrations calling for political and economic reforms from as far back as 1970. Supporters of this argument reasons that it was the long-term discontent that erupted into the political crisis with Suharto’s growing blatant suppression.

However, an alternative perspective illustrates that the political crisis was triggered by the AFC. Though the unrestrained corruption and favouritism of Suharto’s regime alienated the middle and business circles from supporting him, the continuing high rates of economic growth and the government’s tight political controls insulated Suharto from any genuine opposition. Many were worried that a change in President will result in a difficulty to maintain the financial stability Suharto brought about. As such, many continued to support Suharto, with the government party, Golkar, winning a landslide victory in the 1997 elections. In addition, riots occurring before the AFC were limited to only Jakarta, and was much smaller in scale than those after. Therefore, the political nature of Suharto’s rule did not disintegrate his support base and was only able to evolve into a full crisis after Suharto was no longer able to leverage economic patronage over the people.

Despite not being the most significant factor, Suharto’s reputation by the international community exacerbated the effects of the AFC. While the economies of other countries in SEA were slowly recovering, the same was not to be said about Indonesia. As a result of the growing political crisis, the market lost confidence in the government’s policies and economy, worsening the economic crisis faced domestically. In historian Jim Schiller’s words, “there was already existing tension in Indonesia … the political crisis merely added fuel to the flame”. Hence, one would consider the role of Suharto as an indirect long-term factor that intensified the already existing unrest caused by the AFC.

3. Role played by the opposition (642)

As Indonesians became increasingly restless with autocracy, opposition parties were given the opportunity to rise up as alternatives to Suharto and shift the public’s support away from him. The most prominent opposition during Suharto’s rule was the Indonesian Democratic Party (PDI), led by Megawati Sukarnoputri, and Amien Rais.

3.1 Megawati Soekarnoputri and Amien Rais

Born to Indonesia’s first President, Sukarno, many of Megawati’s supporters identified the PDI with the virtues associated with Sukarno. The positive image of the PDI would then stand in stark contrast to Suharto’s regime, where Megawati had come to represent the plight of the poor. As a strong proponent of anti-corruption, Megawati was able to garner the support of the masses.

In response to the growing threat, Suharto backed a co-opted faction of PDI led by Suryadi, a rival opponent of Megawati, to remove her from the position as chairman. On what is now known as the 27 July incident (1996), an attack by government forces and hired thugs on Megawati supporters outside of the PDI headquarters resulted in a riot that continued for two days. The incident concluded with the arrest of 200 democracy activists and was quickly dismissed by the government to have been instigated by the communists.

On the other hand, Rais gained the public’s attention for his brazen criticism of Suharto’s administration. Rais was never afraid to take a controversial stand, going as far as to decry the military’s influence in politics. After declaring his willingness to stand as a presidential candidate in the upcoming presidential election, Rais received support from many modernist Muslims in the Indonesian Association of Muslim Intellectuals (ICMI). The turn of events worried Suharto greatly, as it indicated to him that he had lost the support of the urban middle-class Muslims, of which he had been trying to assure throughout the 1990s. Suharto proceeded to remove Rais from the ICMI.

Though Suharto was successful in ousting Megawati and Rais from their respective party or organisation, the involvement of the government and military officials being made known tainted the image and democratic credentials of the regime. Suharto’s response to opposition highlighted the regime’s unaccommodating attitude towards the increasingly vocal calls for political reforms and democracy, which fuelled the political cynicism among Indonesia’s political public.

3.2 Analysis

While both Megawati and Rais’ defiance encouraged the growth of the opposition, another angle of this debate suggests that they had little impact on Suharto directly, especially in the months leading up to his resignation. Historian Stefan Eklöf reasons that both individual were “uncoordinated and lacked a coherent strategy for achieving the desired change in national leadership”. In addition, both of them were not actively campaigning for the presidency, which greatly restrained the power of the opposition to bring about any political change. The 1997 elections exemplified the opposition parties inability to pose any significant challenge to Suharto, allowing him to be re-elected for a seventh five-year term.

Even when it was made clear that the Government was actively attempting to stop the growth of the opposition, the damage made to Suharto’s personal legitimacy was minimal. In the case of the 27 July incident, Indonesia and Suharto remained unaffected as the international community largely treated the affair as an internal problem and Indonesia was soon seen as a stable nation once again. Suharto was also able to deviate from the backlash by not involving himself personally.

Furthermore, one might argue that it was the AFC that precipitated the growth of the opposition. The AFC instigated Indonesians to seek for an alternative party that would return Indonesia to the glory it once was. Evidently, the link between the growth of the opposition and the fall of Suharto was at best tenuous. This, compounded with the fact that it was the AFC that triggered the rise in opposition, indicates that the fragmented anti-Suharto opposition played a marginal role in leading to the fall of Suharto.

4. Role played by the student movement (923)

On hindsight, it was the May crisis of 1998 that heightened tension and acted as the final trigger to the fall of Suharto. As noted by Professor Leo Suryadinata, who specialises in ASEAN relations, the student movement that given rise to Suharto was also behind his downfall.

4.1 May Riots of 1998

While the student movement and Suharto worked together to bring down Sukarno, the relationship between Suharto and the students soured after the tightening control that soon became apparent. Students started protesting and demanding for ‘total reform’ (reformasi total), showing no signs of stopping. While Suharto’s most vocal critic, Rais, was despondent over the possibility of getting a change in political leadership after Suharto’s re-election in May, the student movement did not abate, but rather gained strength from it.

The collapse of the IDR was met with demands for an end to Suharto’s 32 year rule. The ubiquitous discontent was further aggravated when it was announced that Indonesia was to build the world’s largest bridge between Sumatra and Malaysia, merely days after floating the rupiah. Unlike the failure of the opposition to pose any significant threat to Suharto, the student movement spreader like wildfire across campuses and became the “nationwide focus of opposition to Suharto”. Though demonstrations occurred daily across the whole country from February 1998, it was not until the Trisakti Incident that prompted the protests to reach a climax.

What started out as a student movement soon turned into a riot that included all the people of the nation. A shooting occurred at a peaceful rally held at Trisakti University on 12 May 1998, resulting in the death of four students. The event gave the momentum for change, exacerbating the growing tensions and sparked the turmoil that would overwhelm the nation for the next three days. The crisis saw a growing resistance to authority and cases of looting and arson were broadcasted extensively all over the nation. Meanwhile, massive peaceful demonstrations were occurring in universities, where students participated in the open forum, giving speeches that criticises the actions of the security authorities that shot the students and Suharto. What was left after three days of overwhelming riots was an extensive number of casualties and destruction. According to Tim Gabungan Pencari Fakta (TGFP), a joint fact-finding team, the total number of death amounted to 1217, with 91 injured and 31 missing. It was also reported that Indonesia suffered 2.5 trillion IDR in terms of material losses.

4.2 International Response

While the international community usually remain silent regarding the ongoing issues in Indonesia, the Trisakti incident was met with negative international response. US secretary of defence, William Cohen, suspended training exercises with the ABRI, and stated that the Pentagon would resume cooperative programmes with the ABRI when there is a credible Indonesian government. As the riots targeted Chinese Indonesians, the international ethnic Chinese community expressed much unhappiness with the violence. Taiwan demanded the trial of those involved in the violence by threatening to withdraw investments from Indonesia, which was estimated at US$13 billion in 1998. The international response to the incident fuelled the political instability in Indonesia and signalled to the government the severity of the issue and the need to appease the international community by demanding for Suharto’s resignation.

4.3 Government’s response and Suharto’s resignation

Despite the increasing demands to replace Suharto, he remained adamant that he is not stepping down, and stated that a new election would be arranged. Though he claimed he will not run for the election, his plans for the future still assured him a substantial amount of power. However, Indonesians could no longer accede to his demands. On the same day – May 18 – thousands of students took part in a demonstration and occupied the parliament building in Jarkata. Two days later, half a million Indonesians marched into Yogyakarta and held large demonstrations. House Speaker and Golkar party head Harmoko and Lieutenant-General Syarwan Hamid responded by declaring that if Suharto had not resigned within two days, he would be impeached. The declaration came at a surprise as Harmoko was widely seen as one of Suharto’s most loyal associate. In addition, fourteen of Suharto’s ministers also asked him to resign, with General Wiranto reporting to him that he no longer had the support of the army. With all of his former associates turning against him, Suharto was left with no choice but to resign. On the morning of 21 May 1998, Suharto announced his resignation, with vice-president Habibie assuming the presidency, and finally bringing an end to the New Order society in Indonesia.

4.4 Analysis

While the anti-Suharto opposition parties lacked the clout to challenge the regime, the student movement was successful in uniting the nation together to bring about Suharto’s resignation. What differentiated the May riots of 1998 to other demonstrations was the scale, which spurred Suharto’s loyal allies and supporters to distance themselves away from him. In a complex web of cause and effect, the student movement acted as the contributing spark needed to push the already fragile society over the edge and eventually prompted the resignation of Suharto. However, one would agree that the May riots of 1998 cannot be considered the most crucial factor in leading to the unravelling of the issue at hand, as it required another underlying factor to trigger the students to take action. As mentioned earlier, it was the AFC and Suharto’s inability to solve the situation instigated the students to take to the streets and demand for a change. Hence, one would consider the May riots of 1998 as the trigger factor to the fall of Suharto, with AFC being the main factor.

Conclusion (354)

Principally, this investigation has endeavoured to answer the research question: To what extent was the 1998 Asian Financial Crisis responsible for the fall of for the downfall of Indonesia’s second President Suharto in 1998? In the words of Stefan Eklöf, “Suharto’s fall was precipitated by the economic crisis and the dynamics of international market mechanisms.”, and the results of this investigation could be firmly aligned with with the arguments made.

After extensive research on the variegated arguments, it can be concluded that the Asian Financial Crisis was the cardinal factor that resulted in the downfall of Suharto, as it fulfilled all the criteria stated earlier. Due to the economic crisis, Indonesia faced long periods of economic instability. Perhaps allowed the Asian Financial Crisis to have that much of an impact of Suharto was how the collapse of the economy propelled a range of political and social forces into action. It was the economic crisis that provided the impetus for the political legitimacy crisis to evolve in full. It has also been agreed by many historians, such as Edward Aspinall and Stefan Eklöf, that it was the raise in price of oil by 71 percent as well as the price of electricity on May 4 1998 that formented the socio-political instability in Indonesia during May of 1998 that ultimately gained momentum in uniting Indonesians, resulting in the resignation of Suharto.

When analysing the different factors independently, it appears that all factors have influenced the outcome in their own special ways. Although it was concluded that the fall of Suharto was largely due to the 1998 Asian Financial Crisis, one should not disregard the significance of the other factors. Though they did not directly lead to the fall of Suharto, the role of Suharto and the opposition were significant factors in decreasing the support for Suharto’s regime. The student movement was also pertinent to the issue at hand as it directly led to Suharto’s resignation, though it should be worth noting that it was the failure at handling the economic crisis that led to the growth of the student movement to trigger the fall of Suharto.The fall of Suharto refers to the end of Indonesia’s second President, Suharto’s, three decade long rule, when he resigned on 21 May 1998. While many historians observing Indonesia’s politics “struggle to come to grips with that moment of epochal change”, they tend to agree that the fall was a culmination of the severe economic and political crises in the previous two years.

As such, this exploration will deal with the various perspectives focusing on the impact of Suharto’s rule, the opposition and the student movement in inadvertently causing the fall of Suharto. It will also critically examine the role of the 1997 Asian Financial Crisis (AFC) and its impact on the Indonesian economy and society, and thus, its significance in the fall of Suharto. Therefore, this research seeks to answer the following question,

To what extent was the 1997 Asian Financial Crisis responsible for the downfall of Suharto in 1998?

This topic is worthy of investigation as being a Singaporean and a member of the Association of Southeast Asian Nations (ASEAN), it is pertinent that we understand the history of the region so as to get better connected. Indonesia is a key member of ASEAN and an important trading partner of Singapore; therefore we need to understand how the Indonesian economy developed over the years. The collapse of the Suharto’s New Order had a momentous impact on its foreign policy with ASEAN members. While Singapore was previously Indonesia’s closest collaborator within ASEAN, the economic and political crisis from 1998-1999 damaged the relationship between the two countries. With Suharto no longer in power, Singapore was no longer able to rely on the rapport between him and Singapore’s first Prime Minister Lee Kwan Yew to maintain the close ties. In addition, I am also curious as to why an authoritarian leader would resign abruptly despite achieving high economic growth in the years before. Thus, this investigation will allow me to be more aware of regional affairs, which has present day implications on the economy and political scene of Southeast Asia (SEA).

The investigation utilises facts and historiography from a plethora of both primary and secondary sources, ranging from newspaper articles, personal accounts by personnel involved, academic documents with extensive research on SEA and Indonesia, as well as credible websites. The array of sources enables my research to assess and pinpoint possible limitations and bias through different lenses to ensure that a reliable and convincing argument is expounded, and ultimately offer a more objective and holistic investigation.

Contextualising the fall of Suharto (165)

Suharto rose to power in 1965 after directing a purge of communists and leftist, bringing down Indonesia’s founding President, Sukarno, and establishing himself as the second President of Indonesia. Ruling from 1968 to 1998, Suharto brought about much needed political stability, sustained economic growth, industrialisation, and improvement in many aspects of people’s lives. The New Order regime was successful for most of more than three decades in power, and few serious threats to the regime emerged. However, the world was taken by shock when Suharto resigned on 21 May 1998.

For a factor to be considered the most important factor in leading to the fall of Suharto, several criteria have to be fulfilled. It must have stirred up economic, political and social instability, as well as reduced the support for Suharto from the public. Upon examination of the factors, it is clear that the 1997 Asian Financial Crisis had a significant impact on the fall of Suharto, while the student movement was the trigger factor.

Investigation

1. Role played by the 1997 Asian Financial Crisis (762)

In retrospect, the detrimental effect of the 1997 Asian Financial Crisis on Indonesia was a pivotal moment in shifting the public’s support away from Suharto, and ultimately leading up to his fall in power.

1.1 Impact of the Crisis

The crisis developed in Thailand, after the Bank of Thailand (BOT) decided to float the Thai baht (THB) to the U.S. dollar (USD), due to the depletion of its foreign exchange reserve. The depreciation of the THB then set off a domino effect across Southeast Asia, causing the currency, stock market and asset prices of many countries to decline. Amongst those, Indonesia was considered the worst hit, with Gross Domestic Product (GDP) expected to drop by 15% in 1998.

On 14 August, the Central Bank allowed the Indonesian rupiah (IDR) to float, resulting in a devaluation of the currency from around 2,600 to 3,000 IDR against USD. Domestic capital flight and high demand for USD amongst domestic companies soon followed, which deteriorated the crisis in Indonesia. The exchange rate between the IDR and the USD weakened from 2,600 IDR to 1 USD in January 1997, to over 14,000 during the months of May and June in 1998. As a result, Indonesia plunged into deep recessions with a drop of 13.3% in GDP in 1998.

The plunge in rupiah coupled with soaring inflation engendered mass disruption to the Indonesian economy, affecting all levels of society. The collapse of the rupiah meant that imported goods became more expensive, causing a strain on consumers and producers who used imported parts or raw materials in their production. Indonesians were demoralised and firms no longer had confidence in the crippled economy. Many companies chose to either lay off large numbers of their employees, or closed down business altogether. On 30 December the Indonesian Chamber of Commerce and Industry, Kadin (Kamar Dagang dan Industri), estimated that 2.4 million jobs had been lost in the Jakarta region. While displaced workers sought for alternative in the informal sector, only half of the workers managed to be re-absorbed. On the other hand, workers who were not displaced saw a drastic decline in their income between 1996 and 1997, as seen from figure 1.

The rising domestic inflation accompanied by the increase in unemployment from crisis-affected firms prompted a surge in poverty rates. As seen from figure 2, poverty rates increased from 17.5% in 1996 to 24.2% in 1998.

The El Niño drought in 1997 aggravated the crisis, causing a cereal shortfall of 3.5 million metric tons. Similarly, total production of rice decreased from 51.1 million tons in 1996 to 49.1 million tons in 1997. Price for basic commodities sky rocketed and became prohibitively expensive to majority of the population. While 1 kilogram of rice cost 970 IDR in February 1997, it increased to 1,600 IDR in 1998. Indonesians who could not afford food and basic goods resorted to rioting, looting and burning of shops. One of the most affected province was Irian Jaya (New Guinea). By the end of 1997, more than a thousand people had died from starvation, malaria and other diseases.

1.2 Analysis

Once known as the “Father of Development” for his various development projects that led Indonesia in an unsurpassed economic story, Suharto’s failure to handle the effects of the 1997 Asian Financial Crisis stirred up ubiquitous discontent among the citizens.

One aspect which illustrates the importance of the AFC is the salient role economic stability played in ensuring the continual support for Suharto when he was in power. To quote from historian Edward Aspinall, “a kind of unspoken social contract came into being, whereby the middle classes ceded their political rights in exchange for social peace and the chance to pursue their dreams of enrichment and upward mobility”. In other words, Indonesians were willing to trade their freedom for economic growth in the country that would benefit them.

It was not until the AFC that inflamed the public’s negative perception of Suharto and inadvertently unravelling the political crisis that would spread over Indonesia. To quote from Professor Ayako Masuhara, “when the financial crisis hit Indonesia in July 1997, Suharto’s rock-solid dictatorial rule began to crumble”. Public alienation slowly transformed into active opposition and even the highly-censored press published articles that chided the government’s inability to resolve the crisis. Not only was the AFC a catalyst to the economic, political and social instability in Indonesia, but it also led to the disintegration of Suharto’s support base. As such, one would agree that the AFC was a critical factor in the fall of Suharto.

2. Role played by the Suharto (732)

In hindsight, the long-term regressive nature of Suharto’s rule accompanied by egregious abuse of power had culminated into a political crisis that was building towards the fall of Suharto, and any attempts at buying more time only served to strengthen the public’s desire for a reform of the Government.

2.1 Repression

Commonly seen as a despot, Suharto ruled Indonesia with an iron-fist. Any form of dissidence was met with imprisonment, torture and death. Despite coming into power with the death of 500, 000 to 1 million people, Suharto managed to manipulate the incident to seem as if it was a patriotic campaign that only resulted in less than 80, 000 deaths. He did so by banning all but two newspapers, both of which are expected to depict the Communist Party in a negative light.

Suharto outlawed any opposition and limited the freedom of speech of the people. In a span of 4 days in March 1998, a total of 10 activists disappeared. The increasing amount of disappearances became a focus of public attention, leading to criticism by domestic and international human rights organisations. Towards the last few months of Suharto’s rule, the government and the army’s credibility was severely undermined.

2.2 Corruption, Collusion and Nepotism

Suharto’s regime could simply be defined by the term Korupsi, Kolusi, dan Nepotisme (KKN) – a “social disease that greatly jeopardises the nation’s survival and pursuit of social justice, prosperity and independence”.

On hindsight, a German anti-corruption NGO Transparency International reveals that Suharto is the most corrupt leader in the past two decades, in which he and his family have embezzled an alleged $15-35 billion during his rule. While this was not made known during the his time in power, Indonesians were aware of flagrant corruption and nepotism. The most prominent example that aroused public animosity was the decision to have a national car. In 1996, Suharto issued a presidential decree that gave Tommy Suharto’s company, P.T. Timor Putra Nasional, the task of developing a national car, despite the company not having any experience with car production. The “National Car” policy drew criticism both domestically and internationally. Not only did the car not sell well, Japan, the US and the European Union all complained to the World Trade Union that Indonesia had violated WTO rules on equal treatment by exempting Tommy’s company from tax and tariffs. The issue worsened following the AFC when the national car project was not one of the halted fifteen financial project, heightening the cynicism and scepticism of the government’s ability and willingness to deal effectively with the crisis.

2.3 Analysis

The authoritarian nature of Suharto’s rule led to deep-seated tension within the Indonesian society that provoked a series of demonstrations calling for political and economic reforms from as far back as 1970. Supporters of this argument reasons that it was the long-term discontent that erupted into the political crisis with Suharto’s growing blatant suppression.

However, an alternative perspective illustrates that the political crisis was triggered by the AFC. Though the unrestrained corruption and favouritism of Suharto’s regime alienated the middle and business circles from supporting him, the continuing high rates of economic growth and the government’s tight political controls insulated Suharto from any genuine opposition. Many were worried that a change in President will result in a difficulty to maintain the financial stability Suharto brought about. As such, many continued to support Suharto, with the government party, Golkar, winning a landslide victory in the 1997 elections. In addition, riots occurring before the AFC were limited to only Jakarta, and was much smaller in scale than those after. Therefore, the political nature of Suharto’s rule did not disintegrate his support base and was only able to evolve into a full crisis after Suharto was no longer able to leverage economic patronage over the people.

Despite not being the most significant factor, Suharto’s reputation by the international community exacerbated the effects of the AFC. While the economies of other countries in SEA were slowly recovering, the same was not to be said about Indonesia. As a result of the growing political crisis, the market lost confidence in the government’s policies and economy, worsening the economic crisis faced domestically. In historian Jim Schiller’s words, “there was already existing tension in Indonesia … the political crisis merely added fuel to the flame”. Hence, one would consider the role of Suharto as an indirect long-term factor that intensified the already existing unrest caused by the AFC.

3. Role played by the opposition (642)

As Indonesians became increasingly restless with autocracy, opposition parties were given the opportunity to rise up as alternatives to Suharto and shift the public’s support away from him. The most prominent opposition during Suharto’s rule was the Indonesian Democratic Party (PDI), led by Megawati Sukarnoputri, and Amien Rais.

3.1 Megawati Soekarnoputri and Amien Rais

Born to Indonesia’s first President, Sukarno, many of Megawati’s supporters identified the PDI with the virtues associated with Sukarno. The positive image of the PDI would then stand in stark contrast to Suharto’s regime, where Megawati had come to represent the plight of the poor. As a strong proponent of anti-corruption, Megawati was able to garner the support of the masses.

In response to the growing threat, Suharto backed a co-opted faction of PDI led by Suryadi, a rival opponent of Megawati, to remove her from the position as chairman. On what is now known as the 27 July incident (1996), an attack by government forces and hired thugs on Megawati supporters outside of the PDI headquarters resulted in a riot that continued for two days. The incident concluded with the arrest of 200 democracy activists and was quickly dismissed by the government to have been instigated by the communists.

On the other hand, Rais gained the public’s attention for his brazen criticism of Suharto’s administration. Rais was never afraid to take a controversial stand, going as far as to decry the military’s influence in politics. After declaring his willingness to stand as a presidential candidate in the upcoming presidential election, Rais received support from many modernist Muslims in the Indonesian Association of Muslim Intellectuals (ICMI). The turn of events worried Suharto greatly, as it indicated to him that he had lost the support of the urban middle-class Muslims, of which he had been trying to assure throughout the 1990s. Suharto proceeded to remove Rais from the ICMI.

Though Suharto was successful in ousting Megawati and Rais from their respective party or organisation, the involvement of the government and military officials being made known tainted the image and democratic credentials of the regime. Suharto’s response to opposition highlighted the regime’s unaccommodating attitude towards the increasingly vocal calls for political reforms and democracy, which fuelled the political cynicism among Indonesia’s political public.

3.2 Analysis

While both Megawati and Rais’ defiance encouraged the growth of the opposition, another angle of this debate suggests that they had little impact on Suharto directly, especially in the months leading up to his resignation. Historian Stefan Eklöf reasons that both individual were “uncoordinated and lacked a coherent strategy for achieving the desired change in national leadership”. In addition, both of them were not actively campaigning for the presidency, which greatly restrained the power of the opposition to bring about any political change. The 1997 elections exemplified the opposition parties inability to pose any significant challenge to Suharto, allowing him to be re-elected for a seventh five-year term.

Even when it was made clear that the Government was actively attempting to stop the growth of the opposition, the damage made to Suharto’s personal legitimacy was minimal. In the case of the 27 July incident, Indonesia and Suharto remained unaffected as the international community largely treated the affair as an internal problem and Indonesia was soon seen as a stable nation once again. Suharto was also able to deviate from the backlash by not involving himself personally.

Furthermore, one might argue that it was the AFC that precipitated the growth of the opposition. The AFC instigated Indonesians to seek for an alternative party that would return Indonesia to the glory it once was. Evidently, the link between the growth of the opposition and the fall of Suharto was at best tenuous. This, compounded with the fact that it was the AFC that triggered the rise in opposition, indicates that the fragmented anti-Suharto opposition played a marginal role in leading to the fall of Suharto.

4. Role played by the student movement (923)

On hindsight, it was the May crisis of 1998 that heightened tension and acted as the final trigger to the fall of Suharto. As noted by Professor Leo Suryadinata, who specialises in ASEAN relations, the student movement that given rise to Suharto was also behind his downfall.

4.1 May Riots of 1998

While the student movement and Suharto worked together to bring down Sukarno, the relationship between Suharto and the students soured after the tightening control that soon became apparent. Students started protesting and demanding for ‘total reform’ (reformasi total), showing no signs of stopping. While Suharto’s most vocal critic, Rais, was despondent over the possibility of getting a change in political leadership after Suharto’s re-election in May, the student movement did not abate, but rather gained strength from it.

The collapse of the IDR was met with demands for an end to Suharto’s 32 year rule. The ubiquitous discontent was further aggravated when it was announced that Indonesia was to build the world’s largest bridge between Sumatra and Malaysia, merely days after floating the rupiah. Unlike the failure of the opposition to pose any significant threat to Suharto, the student movement spreader like wildfire across campuses and became the “nationwide focus of opposition to Suharto”. Though demonstrations occurred daily across the whole country from February 1998, it was not until the Trisakti Incident that prompted the protests to reach a climax.

What started out as a student movement soon turned into a riot that included all the people of the nation. A shooting occurred at a peaceful rally held at Trisakti University on 12 May 1998, resulting in the death of four students. The event gave the momentum for change, exacerbating the growing tensions and sparked the turmoil that would overwhelm the nation for the next three days. The crisis saw a growing resistance to authority and cases of looting and arson were broadcasted extensively all over the nation. Meanwhile, massive peaceful demonstrations were occurring in universities, where students participated in the open forum, giving speeches that criticises the actions of the security authorities that shot the students and Suharto. What was left after three days of overwhelming riots was an extensive number of casualties and destruction. According to Tim Gabungan Pencari Fakta (TGFP), a joint fact-finding team, the total number of death amounted to 1217, with 91 injured and 31 missing. It was also reported that Indonesia suffered 2.5 trillion IDR in terms of material losses.

4.2 International Response

While the international community usually remain silent regarding the ongoing issues in Indonesia, the Trisakti incident was met with negative international response. US secretary of defence, William Cohen, suspended training exercises with the ABRI, and stated that the Pentagon would resume cooperative programmes with the ABRI when there is a credible Indonesian government. As the riots targeted Chinese Indonesians, the international ethnic Chinese community expressed much unhappiness with the violence. Taiwan demanded the trial of those involved in the violence by threatening to withdraw investments from Indonesia, which was estimated at US$13 billion in 1998. The international response to the incident fuelled the political instability in Indonesia and signalled to the government the severity of the issue and the need to appease the international community by demanding for Suharto’s resignation.

4.3 Government’s response and Suharto’s resignation

Despite the increasing demands to replace Suharto, he remained adamant that he is not stepping down, and stated that a new election would be arranged. Though he claimed he will not run for the election, his plans for the future still assured him a substantial amount of power. However, Indonesians could no longer accede to his demands. On the same day – May 18 – thousands of students took part in a demonstration and occupied the parliament building in Jarkata. Two days later, half a million Indonesians marched into Yogyakarta and held large demonstrations. House Speaker and Golkar party head Harmoko and Lieutenant-General Syarwan Hamid responded by declaring that if Suharto had not resigned within two days, he would be impeached. The declaration came at a surprise as Harmoko was widely seen as one of Suharto’s most loyal associate. In addition, fourteen of Suharto’s ministers also asked him to resign, with General Wiranto reporting to him that he no longer had the support of the army. With all of his former associates turning against him, Suharto was left with no choice but to resign. On the morning of 21 May 1998, Suharto announced his resignation, with vice-president Habibie assuming the presidency, and finally bringing an end to the New Order society in Indonesia.

4.4 Analysis

While the anti-Suharto opposition parties lacked the clout to challenge the regime, the student movement was successful in uniting the nation together to bring about Suharto’s resignation. What differentiated the May riots of 1998 to other demonstrations was the scale, which spurred Suharto’s loyal allies and supporters to distance themselves away from him. In a complex web of cause and effect, the student movement acted as the contributing spark needed to push the already fragile society over the edge and eventually prompted the resignation of Suharto. However, one would agree that the May riots of 1998 cannot be considered the most crucial factor in leading to the unravelling of the issue at hand, as it required another underlying factor to trigger the students to take action. As mentioned earlier, it was the AFC and Suharto’s inability to solve the situation instigated the students to take to the streets and demand for a change. Hence, one would consider the May riots of 1998 as the trigger factor to the fall of Suharto, with AFC being the main factor.

Conclusion (354)

Principally, this investigation has endeavoured to answer the research question: To what extent was the 1998 Asian Financial Crisis responsible for the fall of for the downfall of Indonesia’s second President Suharto in 1998? In the words of Stefan Eklöf, “Suharto’s fall was precipitated by the economic crisis and the dynamics of international market mechanisms.”, and the results of this investigation could be firmly aligned with with the arguments made.

After extensive research on the variegated arguments, it can be concluded that the Asian Financial Crisis was the cardinal factor that resulted in the downfall of Suharto, as it fulfilled all the criteria stated earlier. Due to the economic crisis, Indonesia faced long periods of economic instability. Perhaps allowed the Asian Financial Crisis to have that much of an impact of Suharto was how the collapse of the economy propelled a range of political and social forces into action. It was the economic crisis that provided the impetus for the political legitimacy crisis to evolve in full. It has also been agreed by many historians, such as Edward Aspinall and Stefan Eklöf, that it was the raise in price of oil by 71 percent as well as the price of electricity on May 4 1998 that formented the socio-political instability in Indonesia during May of 1998 that ultimately gained momentum in uniting Indonesians, resulting in the resignation of Suharto.

When analysing the different factors independently, it appears that all factors have influenced the outcome in their own special ways. Although it was concluded that the fall of Suharto was largely due to the 1998 Asian Financial Crisis, one should not disregard the significance of the other factors. Though they did not directly lead to the fall of Suharto, the role of Suharto and the opposition were significant factors in decreasing the support for Suharto’s regime. The student movement was also pertinent to the issue at hand as it directly led to Suharto’s resignation, though it should be worth noting that it was the failure at handling the economic crisis that led to the growth of the student movement to trigger the fall of Suharto.