Strong but fragile: Horizontal inequalities in Indonesia

Today, most of the international community sees Indonesia as a 'fragile' state, with a recent history of violent conflict and a poor record of access to government services.

In the early 1990s, commentators on Indonesia oftenexpressed a grudging admiration for the New Order regime of President Suharto. In power since 1965, he kept tight politicalcontrol while achieving significant economic growth. The July 1997 currencycrisis, however, undermined the entire regime.

The outbreak of violence after 1998 was largely linked to policieswhich contributed to social exclusion and created 'horizontal' inequalitiesbetween various ethnic communities. Under the transmigration programme, forexample, thousands of families were relocated from Java and Bali to the 'Outer Islands', wherepolitical resistance and sporadic rebellion had existed since the early yearsof Indonesia'sindependence.

Although the transmigration programme was meant to relievepopulation pressures in Java, it was also a means of providing 'loyal' Javanesesupport for the territorial units of the armed forces. These migrants wereoften allocated prime agricultural land, sometimes displacing local people. Thegraph below shows the relative proportion of local people and migrants in theagricultural sector according to land-holding size (calculated from a sample ofthe 1990 census). It shows that Java/Bali born agriculturalists were heavilyconcentrated in the larger land holdings.

When the regime collapsed in 1998, the country experienced manyforms of fragility: access to government services declined sharply and statelegitimacy suffered. But key to the ethno-communal violence were tensionsbetween migrant and local communities, often made worse by religiousdifferences. Econometric analysis shows that the communal violence was moreintense in areas with higher horizontal inequalities. In this case, thetransmigration process led to state fragility by contributing to the conditionsfor ethno-communal conflict.

Indonesia'sexperience under Suharto is similar to the 'strong'state in pre-revolutionary France, which wasable to withstand social pressures for an extended period. When it eventuallygave way, the built up tensions resulted in revolution.

In a similar way, with its military strength, Suharto'sregime was able to suppress social and communal discontent over exclusion andinequalities. When the regime finally collapsed, all the destructive socialforces built up during this period were unleashed: the New Order was a fragileregime.

An important lesson from Indonesia'sexperience is the inter-connectedness of the various dimensions of statefragility. In Aceh and East Timor, forexample, a vicious cycle developed:

• poor andexclusionary service delivery, creating horizontal inequalities alongregional and ethnic lines
• declining / absentstate legitimacy
• challenges to stateauthority
• military responses,which reinforced local perceptions of the illegitimacy of the regime
• further undermining ofaccess to government services.

A final conclusion from the Indonesian case emphasises theimportance of horizontal inequalities as a driver of state fragility. Even whenoverall service delivery is good, sub-national inequalities and exclusionarypractices across communal or regional groups can ultimately undermine thelegitimacy and authority of the state.