Indonesia’s Unlikely Transitions: The World’s Largest Muslim Country Transforms

• In Event: Democracy and Autocracy in Southeast Asia: Challenges and Innovations

Abstract

After more than a decade of record price increases and a major crisis in the rich world stemming from them, the global price of oil crashed in the mid-1980s, falling by more than 75%. Indonesia’s New Order regime—an uncommon hybrid autocracy composed of military, single-party, and personalist elements under President Suharto—steered the country to a smooth transition away from oil-funded state-led development toward export-oriented light manufacturing. Just twelve years later, with the Asian Financial Crisis as a devastating backdrop, the world’s largest Muslim-majority country navigated a transition to democracy.
In comparative perspective, neither of these transitions were likely in Indonesia—a combination of oil wealth, Muslim majority population, multi-ethnicity and a history of single-party autocracy. This project offers a unique explanation that puts the New Order coalition of army and party at the center of both transitions. Moving beyond arguments to explain Indonesian democratization via elite unity (Slater and Wong 2014, 2022; Horowitz 2013), I suggest that what explains both the market transition of the 1980s and the democratic one a decade later is a) changes in the economic foundations of army and party loyalty to Suharto and b) their subsequent ability and incentives to challenge his leadership during the regime crisis of 1998. I then show how this sequential model of economic, followed by democratic, transition helps us to understand a broad range of similar transitions across the Global South.

Author

• Benjamin Smith, University of Florida