A republic occupying most of the Malay Archipelago in southeastern Asia; formerly the Netherlands East Indies. Portugal dominated this region during the 16th century but was supplanted by the Dutch after 1595. Except for a period of British occupation during the Napoleonic wars (1811-16), the area remained under Dutch control until its occupation by Japan in 1942. After the surrender of Japan in August 1945, Indonesian nationalists under Achmed Sukarno proclaimed the independent Republic of Indonesia in central Java and throughout most of Sumatra. The ensuing civil war was finally ended by the withdrawal of the Dutch in December 1949.
In 1950, Indonesia was unified as a republic. In 1963, Western New Guinea (West Irian), which had remained under Dutch control, was seized by Indonesia. During the early 1960s, Indonesia was aligned with the Soviet Union, but an abortive communist uprising in 1965 brought massive retaliation by the military. President Sukarno, who had ruled as a dictator since 1960, was deposed, and some 300,000 communists were executed. The new regime, under Gen. Suharto, restored peaceful relations with Indonesia's neighbors, restored popular elections and has actively promoted economic development. Oil exports drove the country's economic growth during the 1970s and '80s, and Indonesia became one of the most dynamic Pacific Rim economies. The corruption centering around President Suharto's family and friends, and the regime's authoritarian rule, brought increasing opposition.
Matters came to a head with the Asian
financial crisis of 1997-98. Violent domestic unrest forced Suharto's
resignation in 1998, after the collapse of the rupiah in January. The
Indonesian economy, always vulnerable because of a weak banking system
and widespread corruption, remains battered, while ethnic and religious
unrest further divides the country. In 1975, Indonesia invaded the
Portuguese colony of Timor and in 1976 annexed the territory. Since that
time, Timorese nationalist resistance has been brutally suppressed. The
current economic and political turmoil in Indonesia has brought the
issue of Timorese independence back into the headlines.