US Rapprochement with Indonesia: From Problem State to Partner (Report‪)‬

US relations with Indonesia have undergone a dramatic rapprochement such that today officials in both countries claim relations are the best they have ever been. Only a decade ago, Washington viewed Indonesia as a problem state. At that time Indonesia was in the midst of wrenching political and economic crises following the downfall of President Soeharto in 1998, a year in which its economy contracted by 13.8 per cent. As Indonesia began its reformasi or democratic reforms, sectarian and separatist violence erupted in parts of the country. Following East Timor's vote for independence in 1999, the Indonesian military (Tentara Nasional Indonesia or TNI) and its militia allies unleashed an orgy of violence. The 2002 Bali bombings, perpetrated by the Southeast Asian militant group and Al Qaeda affiliate Jemaah Islamiyah (JI), raised concerns that Indonesia might become a sanctuary for terrorists. At the dawn of the millennium, many in Washington feared that Indonesia would become another Yugoslavia: a country long held together by authoritarian rule that would fracture along ethnic and religious lines to become a failed state and threat to regional stability. (1) Instead, Indonesia overcame its challenges. Post-New Order governments restored macroeconomic stability and the Indonesian economy is forecast to expand by 6 per cent in 2010 despite the global economic slowdown. (2) An historic agreement in 2005 following the devastating Indian Ocean Tsunami on 26 December 2004 brought peace to Aceh; sectarian violence has declined dramatically; and Indonesia has adopted a strong counter-terrorism policy. Indonesia embarked on a messy but ultimately successful transition to democracy that refutes the proposition that Islam and democracy are incompatible. Today, Indonesia is viewed as a success story in Washington and as a linchpin of regional stability.