Indonesia in crisis

Publication Date: January 1998

Publisher: East-West Center

Author(s): Richard W. Baker

Research Area: Economics; Politics

Type: Report

Coverage: Indonesia

Abstract:

Indonesia has emerged as the most serious casualty of Asia's financial turmoil. Until recently hailed as a model of successful economic growth, Indonesia is facing a grave crisis which is, in the most fundamental sense, political. A loss of confidence in the Soeharto government and a wave of violence sparked by deteriorating economic conditions have raised the specter of a general collapse. As the world's fourth-largest nation by population, possessing vast natural resources, and located at a key crossroads between the Pacific and Indian Oceans, Indonesia is strategically critical to the future of the Asia-Pacific region. Since 1965 it has played a responsible and active international role, and was a leader in establishing the Association of Southeast Asian Nations (ASEAN), the Asia-Pacific Economic Cooperation forum (APEC), and the ASEAN Regional Forum (ARF) for security consultations. Despite differences over human rights and some other issues, Indonesia is also an important regional partner of the United States. Disintegration in Indonesia would have serious consequences for the region and for U.S. interests.