No one believed that the accession of Megawati Sukarnoputri to the presidency on 23 July 2001 would mark the beginning of a new era of dynamic reform. Rather, the Megawati presidency was welcomed with relief because the drama and chaos of 21 months under President Abdurrahman Wahid had at last come to an end. It was hoped at least that Megawati would preside over a period of stability that would enable her ministers to tackle the massive challenges that had largely been neglected by Gus Dur, as Abdurrahman is popularly known. The new president succeeded in meeting the first expectation. Government has indeed been stable under Megawati, who has avoided provoking the anger of her enemies and the despair of her friends in the manner of her predecessor. But she has failed to provide effective leadership and seems to have little mastery of the complex issues facing the government. Her public statements have usually been banal in the extreme, while policies were often handed over to her ministers to decide and left floating when they were unable to reach agreement among themselves. The reform agenda was effectively abandoned and government has become something of a holding operation.

Like Gus Dur, Megawati included all major political groups in her 33-member cabinet. Conscious of her party's lack of a parliamentary majority, she appointed only three senior leaders from her own party, the Indonesian Democratic Party of Struggle (PDI-P), the same number as from the second largest party, Golkar. Special attention was given to the loose Muslim grouping, the Central Axis (Poros Tengah), which had played a decisive role both in having Gus Dur elected in 1999 and in bringing him down in 2001. In addition to awarding four cabinet posts to Muslim parties, Megawati supported the election of Hamzah Haz, chair of the Muslim United Development Party (PPP), as vice-president in 2001, despite his campaign against her – as a woman – in 1999. Of the main political factions, only Gus Dur's wing of the National Awakening Party (PKB), which was still fretting over the dismissal of its leader, was excluded (although two prominent members of Nahdlatul Ulama (NU), on which the PKB is based, were included). The military was represented by four retired officers.