As the economic crisis hit Indonesia in 1997–98 and the New Order faltered, NU's stance towards the regime was characteristically divided between accommodation by the leadership and vocal criticism by younger members, with a range of opinions and attitudes in between. During the early post-New Order period of reform (reformasi), these structural and ideological conflicts continued to stand in the way of the development of a coherent stance towards the changes that were transforming Indonesia's political landscape. After the fall of Soeharto, the old Masyumi–NU tensions resurfaced in a new form with the strong resurgence of political Islam. Partly to counter this development, Abdurrahman Wahid (Gus Dur) was persuaded to form the National Awakening Party (PKB), despite 15 years of campaigning to keep NU out of formal politics. Deepening the irony, he then entered the race for the country's presidency, not as his own party's candidate, but as the nominee of a coalition of primarily modernist Islamic parties.

Wahid's path to the presidency was marked by further incoherence within NU, with some kiai and the cultural Islam wing of NU opposing his nomination but NU politicians supporting it. After being elected president, Wahid proceeded with the same style of leadership he had displayed while leading NU — making appointments based on personal relationships, acting without consulting allies and issuing controversial statements. His alienation of parliament and of his popular vice president led to his downfall in July 2001. One byproduct of his presidency was a further exacerbation of the ‘Masyumi–NU’ conflict — to the point of violence — and a further consolidation of the political power of the modernist Muslim parties.

THE FALL OF SOEHARTO AND THE INTERIM HABIBIE PRESIDENCY

The economic crisis that hit Asia in 1997 brought much more than financial turmoil to Indonesia — it triggered a period of social and political upheaval that toppled one of Asia's longest-lasting authoritarian rulers, President Soeharto. For NU as well, it was a period of internal confusion and conflict, with some parts of the organization remaining loyal to the president and others taking an active part in the efforts to topple him. The disparate views among the bodies representing the generational, gender and educational differences in NU were perhaps more pronounced than ever in the months leading up to Soeharto's resignation.