Reformasi in the Democratic Euphoria

The failure of the New Order regime to fully comprehend the consequences of being an inseparable part of the global economy might well be one of the major factors for the downfall of Soeharto. At the time, the Western powers as well as the World Bank, the IMF, and other international financial bodies saw the strategic geographical and political positions of Indonesia and they eagerly supported Indonesia's economic development efforts. With their support, the newly established New Order government not only could feel secure with the rather pro-West posture of its “independent and active” foreign policy, but it also made the decisive choice of joining the global market economy. In the controversy between “growth” and “equity” or, to put it in more ideologically tinted terms, “prosperity” and “social justice”, in the basic development strategy that took place in the early period of its era, the New Order had definitively chosen the first alternative. The choice was made in the hope that the “trickle down effects” of the strategy would gradually expand the sphere of prosperity to the general populace. The regime found out too late the probable negative consequences of the chosen alternative. The financial and monetary crises that took place in other countries could have its direct impact on the economic fundamentals of Indonesia.

The destruction of the Berlin wall and the successive dramatic events that finally led to the breakup of the Soviet Union and the termination of the Cold War definitely changed the political constellation of the world. The success of the People's Power to topple President Marcos of the Philippines suddenly showed to the people that the entrenched political and economic oligarchy had its limit. These dramatic events might not lead to “the end of history”, as a famous book emphasizes, but to Indonesia, they revealed the awkward relationship between economic liberalization and the authoritarian political system in Indonesia's New Order.