ABSTRACT
The Asian economic crisis which began in Thailand in May 1997 spread quickly to Indonesia in the same year, sending the rupiah into a steep dive, and causing capital flight and deep financial crisis by December 1997 (Hill 1999). The IMF’s overly eager policy of bank closures, and President Soeharto’s intervention in favour of family and friends hit hard by the crisis, quickly precipitated a parallel crisis of confidence in the political sphere and finally forced Soeharto’s resignation in May 1998. Vice President B.J. Habibie was sworn in as president and led the country until he lost office in June 1999 in the first democratic elections since the 1950s (Liddle and Mujani 2000). In those elections, the Indonesian Democratic Party of Struggle (PDI-P) led by Megawati Sukarnoputri won 34 per cent of the national vote and formed a coalition with the National Awakening Party (PKB) to lead the country with Abdurrachman Wahid, leader of PKB, as President.
