Indonesia's political and socio-economic developments in 2008 were marked by two contradictory trends. On the one hand, the process of democratic consolidation continued, with Indonesia further strengthening its political institutions, making progress in its anti-corruption drive and generally maintaining healthy economic growth. Indeed, with very low levels of political and communal violence, Indonesia in 2008 appeared like a bulwark of stability in the Southeast Asian region, as Thailand was crippled by incessant mass demonstrations and the Philippines saw the Mindanao insurgency escalating once again. However, Indonesia's democratic consolidation was also challenged by a very divergent phenomenon: that is, the increasing proliferation of some form of nostalgia for the effectiveness of Soeharto's New Order, which had ruled the country with an iron fist between 1966 and 1998. Significantly, the year 2008 not only witnessed Soeharto's death after a long struggle with illness and the post-authoritarian judiciary, but also the tenth anniversary of the democratic regime change. Using both occasions to reflect on Soeharto's achievements, many Indonesians concluded that his regime had been superior to the existing polity in several important aspects, particularly health services, prices of basic goods and security. This sentiment was also reflected in the names that emerged as contenders for the 2009 presidential elections: several of Soeharto's former generals threw their hat into the ring, trying to profit from the growing sympathy for New Order policies.
This chapter aims to take account of both developments: the remarkable stabilization of Indonesian democracy and the latent support in society for Soeharto's authoritative and tough leadership. Accordingly, it will discuss events, trends and patterns that dominated Indonesia in 2008 by looking at five different areas: first, the progress that Indonesia has made in advancing key democratic institutions and procedures, including elections and the fight against corruption. Second, the public reaction to Soeharto's death in January 2008, which highlighted the attitudes of Indonesians toward the New Order and the current polity. Third, the field of candidates for the parliamentary and presidential elections in 2009, and the way many of them have attempted to tap into the prevalent Soeharto nostalgia. Fourth, the state of the economy, with healthy growth in the first half of 2008 overshadowed by the emerging global financial crisis and the uncertainty associated with it. And fifth, the area of foreign policy, in which Indonesia continued its long-lasting struggle to become a relevant player on the world stage. In the conclusion, I will argue that despite the threat of an economic crisis and continuous criticisms of the incumbent multi-party system, Indonesia's democracy in 2008 was more stable than at any other point in its history.
The effectiveness and competitiveness of Indonesia's electoral democracy continued to increase in 2008, with minor revisions to existing laws and regulations leading to a further opening of the political system. Most importantly, non-party candidates were allowed from mid-2008 onwards to participate in the direct elections for governors, district heads and mayors. Previously, only nominees supported by political parties had the right to compete, but a decision by the Constitutional Court in July 2007 forced the government to annul this stipulation.1 While nonparty figures had to clear high administrative hurdles to register their candidacy, the new rules resulted in a more diverse field of nominees. In October 2008, Arya Zulkarnaen became the first independent candidate to win a direct local election in Indonesia outside of Aceh (which had allowed for non-party candidates since 2006, based on its special autonomy law). Winning the elections in the district of Batubara in North Sumatra, Zulkarnaen beat the second-placed GOLKAR candidate by a large margin. …