After Suharto

Pankaj Mishra reports from Indonesia

I first visited Indonesia in 1995. For someone from India, as I was, to arrive in a country that was once part of the Hindu-Buddhist ecumene was to drift into a pleasurable dream where minor figures familiar from childhood readings of the Ramayana and the Mahabharata loomed over city squares. The Dutch, unlike the British in India, had inflicted few obviously self-aggrandising monuments on the country they exploited. Squatters now lived in the decaying colonial district of Kota in Jakarta where the Dutch had once created a replica of home, complete with mansions, canals and cobbled squares. By the time I visited, the language of the colonial power had been discarded and a new national language, Bahasa Indonesia, had helped pull together an extensive archipelago comprising more than 17,500 islands and including hundreds of ethnic groups. Indonesia, which has the world's largest Muslim-majority population (87 per cent), but also large Hindu, Christian and Buddhist minorities, came close to matching India's diversity. The Nehruvian discourse of non-alignment, secularism and socialism had been eagerly abandoned in India, but Indonesian newspapers still spoke reverently of Pancasila, the national ideology of social harmony vigorously promoted by Suharto, still at this point in power.

Yet Indonesia seemed far ahead of India in its embrace of a form of capitalism honed in the once despised West. Jakarta's new business district of glass and steel was the envy of Asia's elites (how could they have known that it had been built by thugs who used murder and rape to evict tens of thousands of people from the areas now covered by skyscrapers?). I was used to the austerity of goods made in India, the shabbiness of our counterfeit modernity, and I remember being struck by the shops abundantly stocked with international brand names and the material possessions that even factory workers seemed to have, with their scooters, televisions and fridges (but no unions to represent them).

I was unaware of the tensions building up, though there had been signs: in 1984, at the time of the Tanjung Priok riots in northern Jakarta's port area, anti-government posters showed a prominent Chinese crony of Suharto's pouring dollars into his gaping mouth. The riots were brutally repressed but the rage of the underclass would finally explode in the aftermath of the Asian financial crisis of 1997. Indonesia became synonymous with riots, terrorist plots, car bombs, widespread ethnic violence, earthquakes and fires. Suharto was ousted the following year.

A decade and a half later, Indonesia has burnished its international image. There is talk once more of a 'rising' Asian economy (the Boston Consulting Group predicts that more than half the country's 242 million people will qualify as middle class by 2020), though recent economic setbacks suggest, as with similar predictions about India, that this may prove to be fantasy. Wealth has brought disconcerting changes: large parts of Sumatra, ravaged by slash-and-burn investors, resemble a lunar landscape, and smoke from land-clearing fires started by palm-oil prospectors extends as far as the cities of Malaysia and Thailand, where doctors warn people with respiratory diseases to wear masks. The city of Bandung, once famous for hosting the Afro-Asian solidarity conference of 1955, is now known for another sort of interconnectedness: low-cost Air Asia flights from Singapore and Malaysia that bring in hordes of shoppers heading for designer fashion outlets.

While outsiders focus on the new plenty, well-established business groups, many still family-owned, have used their proximity to politicians to acquire an even more disproportionate share of national resources and income. Nearly half the country's population, employed, if at all, in the informal sector, continue to live on less than $2 a day. In a recent survey, a majority of interviewees said they preferred life under Suharto, who had at least provided affordable basic goods, security and a measure of public health provision.

Under Suharto, Indonesia's economy grew on average 6.5 per cent per annum for thirty years before contracting by 13.6 per cent in 1998. A culture of bribes and extortion flourished, but it wasn't incompatible with high growth. Development subsidies from the West and Japan ensured a rise in living standards even before Indonesia turned into an export-oriented country. An oil boom starting in the 1970s helped; rural incomes were boosted by the introduction of high-yield rice varieties; literacy rates, which had been abysmal, rose. Monopolies in cement, oil, timber, telecommunications, media and food were enjoyed by an indigenous business class that included Chinese-Indonesians as well as members of Suharto's family (he didn't trust other Indonesian business families). Local companies were allowed to make deals with multinationals; ExxonMobil moved into Aceh to operate its gas fields; Freeport and Rio Tinto acquired mining rights in Papua. Military rule opened the floodgates for the corporate class, and small windows to the middle class. Many salary-earners and members of the urban petite bourgeoisie supported Suharto (they're the ones mourning the demise of his 'stable' regime), whose Golkar party ensured that some of the loot trickled down to low-level officials. Even conservative Islam was eventually brought into his patronage networks.

Suharto's careful sharing of the spoils eradicated any lingering elements of Sukarno's national project, supposedly dedicated to the welfare of the people (rakyat). In 1988, the playwright and publisher Goenawan Mohamad braved censors to write nostalgically of Sukarno, who had died in disgrace in 1970: 'When Bung Karno was alive, Indonesia still had the ideals of a Kshatriya' – a member of the spartan elite in Hinduism's old social order – 'who owns no credit card, no BMW and no Black Drakkar aftershave. In Bung Karno's time, Indonesia was still felt as an aim, a reason to fight, a cause. Now we don't seem to be like that – and we feel that we have lost something.' Indonesia, Mohamad wrote, was now merely a name for a territory populated by 'stomachs, ambition and anxiety'.

That was what Suharto wanted: a population divided by individual pursuit of food, wealth and status was the basis of his regime's stability. It was also what finally tripped him up. Having entered the age of financial capitalism early, debt-laden Indonesia was also among the first to be exposed to its hazards. The currency lost nearly 80 per cent of its value in the wake of the crisis of 1997; per capita income collapsed; banks imploded; millions lost their jobs. The foreign investors who had been underwriting Suharto's economic 'miracle' made themselves scarce. The IMF stepped in with its usual 'rescue package' of subsidy cuts, which led to food riots. A widely circulated photograph of the IMF director Michel Camdessus, arms crossed, looming over a seated and clearly supplicant Suharto recalled the humiliations of the colonial era.

Radical students formed ad hoc alliances with factory workers, and were at the forefront of many demonstrations. On 12 May 1998, soldiers fired at protesters at Trisakti University in Jakarta, killing four students and injuring dozens, and mass violence erupted across the archipelago. The military tried to redirect public anger away from the regime by organising mob assaults on the relatively affluent Chinese, but Suharto couldn't hold on. He resigned after a five-day occupation of the parliament by students and workers.

His successor, an engineer called Bacharuddin Jusuf Habibie, began reformasi promisingly by removing press censorship, which released a torrent of public hatred for Suharto. He freed political prisoners, ended Indonesia's disastrous 24-year occupation of East Timor, and began an ambitious experiment in decentralisation, delegating power to 470 districts and cities. The appointment of Habibie's successor, Abdurrahman Wahid, the blind leader of the Nahdlatul Ulama, an Islamic charitable organisation with nearly thirty million members which runs pesantren (boarding schools) and hospitals, signalled a real break with the New Order proclaimed by Suharto in 1966. Gus Dur, as he was popularly known, boldly apologised for the killings of communists by members of his organisation during the 1965 purge towards the end of Sukarno's reign. He proposed to lift Suharto's ban on Marxist groups and publications (he was thwarted by military pressure and angry Muslim groups), and helped build better relations between Muslims and Christians, and between the NU and Muhammadiyah, which advocates a non-syncretic Islam and is, with 29 million members, the next largest Muslim organisation in Indonesia. For all his erratic ways, which finally led to his impeachment for incompetence in 2001, Gus Dur recognised that a society fragmented by violence and greed needed to do a lot more than just hold elections that visiting Western statesmen, UN observers and journalists could hail as a sign of democracy.

Sukarno's daughter, Megawati Sukarnoputri, became president after Gus Dur. She assumed an aloof posture – probably to mask her lack of political skills – while the military reverted to using brute force against separatists on outlying islands, Aceh especially. Abandoning her working-class and urban poor constituency, Megawati stood by while her husband openly cut deals with retired generals and businessmen from the Suharto era. Reformasi had turned into restorasi by the time one of Suharto's generals, Susilo Bambang Yudhoyono, popularly known as SBY, was elected president in 2004.

'I would give a C to democracy in Indonesia,' a young legislator told me one evening in Jakarta. He had been presented to me as a 'rising' politician but, once assured of anonymity, spoke with surprising frankness. His own party, Golkar, formerly the party of Suharto and now led by Aburizal Bakrie, one of the country's richest businessmen, was proof, he said, that the oligarchs and bureaucrats who had formerly used the centralised state apparatus to secure their privilege had adapted to the current more open political system. Popular consent, too, could be used to protect their political and economic power. Members of the military have made effective use of democracy and decentralisation to further their business interests, often working with local politicians and preman (hoodlums); the police now compete with the army in the business of selling protection to clients ranging from real-estate speculators and illegal loggers to human traffickers and drug traders, and the two forces have fought a number of pitched battles around the archipelago. Many retired generals and former cronies of Suharto have set up political parties which, bereft of principles and ideas, aim only at the capture of state power.

One clear manifestation of this continuity with the past is the prominence in politics of figures like Prabowo Subianto. A candidate for the vice-presidency in 2009 and a likely contender in next year's presidential election, Subianto was one of Suharto's American-trained army henchmen as well as his son-in-law (intermarriage was one way the elite tried to retain power). The old elite has sought to extend its privileges to a few more people – just enough of them to stave off mass discontent. The spoils are now trickling down to provincial and district level, as local politics become more important than national politics. People are more interested in becoming a bupati (head of a regency, one of Indonesia's administrative divisions) than an MP because bupatis control access to local resources. 'I tell my cadres how to write, how to tweet,' the young Golkar politician said, 'but they are only in it for the money.' Under Suharto, corruption was centralised. Now it's everywhere.

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The bupati I met one afternoon at the Hyatt Regency in Yogyakarta, on Java, couldn't stop boasting of his friends among Korean, Thai, Japanese and Australian investors. Like many of his peers, he was a grateful child of the New Order; he had joined the state-owned life insurance company and then worked his way to the top. He smiled ambiguously when I asked if he supported Suharto's resignation in 1998. 'It was a gentlemanly act,' he said. 'It stopped the country from descending into further conflict.' He was plainly shrewd and single-minded. Post-Suharto Indonesia, they say, is a country with many mini-Suhartos, and it was Suharto I thought of when he entered the hotel to meet me. Armed security officers heralded his appearance, striking a minatory note with their uniforms and guns in the Hyatt's marble lobby, which was otherwise full of cheerful tour groups bound for the ninth-century Buddhist temple of Borobudur. And then the man himself – in his late sixties, grimly accessorised in the contemporary style of Asian plutocrats with a Mont Blanc pen and designer glasses – leading an entourage of khaki-uniformed personal assistants.

He had invested most of his energies trying to build up the steel industry in Java through a joint venture with an Australian firm: one mining operation and 35 iron-ore processing plants. He complained that his plan was not getting approval from the environment ministry. But why, I asked, did he want to industrialise Java? He had his answer ready: agriculture was unprofitable on an island with too many small farmers. Java had to rely more on manufacturing and services. I asked him about the likelihood of educating the young population for jobs in the industrial sector and he stared at me blankly. Did he intend to set up colleges or vocational training institutes? He consulted briefly with his assistants, then told me that the foreign companies investing in Java would train them.

The various projects the bupati told me about, my interpreter said later, were all pretexts to siphon off public and private funds. But in this he was no different from other bupatis. The system doesn't encourage honesty. If you want to be a bupati, you have to pay party bosses vast sums to secure their support, then spend more to advertise your candidacy and bribe voters on polling day. The money for all this comes from businessmen who want you to do their bidding after you're elected. So the axis of business, government and the military that once operated solely in Jakarta is now reproduced at the local level, creating a multitude of fiefdoms in the vacuum of 'substantive' democracy.

Many people believe that the much feared balkanisation of Indonesia – during and after the last days of Suharto there was a recurrence of old separatist insurgencies in the provinces of Aceh, West Papua and East Timor – has been staved off by this regional autonomy. Local elections are now held even at village level; indeed, there have been three free and fair general elections since the downfall of Suharto. The media, which grew rapidly after he'd gone, are relatively free, if not particularly critical. Even the long silence over the mass killings of 1965 is now slowly and fitfully being broken. Last year, a special issue of Tempo magazine, produced to coincide with the release of the documentary film The Act of Killing, disinterred the grisly logistics and motivations of the slaughter. Corruption remains a big problem but a new agency, the Corruption Eradication Commission, has sent a few powerful politicians and businessmen to jail.

Among the elite the big news out of Indonesia, obscuring all its ailments, is economic. 'I am bullish, bullish, bullish,' Fauzi Ichsan, the chief economist at Standard Chartered in Indonesia, told me. In his elegant house there were sepia-tinted pictures of Sutan Sjahrir, the country's first prime minister, a socialist and a revered figure in modern Indonesian history. It turned out that Sjahrir was Fauzi's grandfather: 'He was an aristocrat from Sumatra who gave away all his lands, and so I had to become a banker.' Fauzi's commitment to his country is recent. He was a bond trader in Singapore when Suharto fell. Visiting Jakarta during the big demonstrations of 1998, he narrowly escaped being fired on by the police, and for some years stayed away. 'This place was hell,' Fauzi said. 'Indonesia looked like it would fall apart. There was no one to pull it together.' But now it is pulling ahead. 'Democracy was trial and error and decentralisation was chaotic. People were fighting among themselves, and Islamism was on the rise. But, strangely, everything worked, and is still working. The infrastructure had to be built from scratch, but if you are a European or American investor you have no alternative but to come to Indonesia.'

The British financier Nathaniel Rothschild seemed to have understood this when in 2011 he set up a mining company called Bumi in association with the Bakrie Group, one of the biggest family-owned conglomerates in Indonesia. Rothschild wanted to lure foreign investors to an emerging market while ensuring that the unreliable locals played by rules and regulations drafted in the City of London. The deal unravelled amid allegations of financial irregularity that tainted both European financiers and the Bakrie brothers (Aburizal Bakrie, the eldest brother, is Golkar's candidate in next year's presidential election). I heard other stories of collaborations turning sour, of increasingly opaque regulations and rising economic nationalism. But Jakarta's five-star hotels and restaurants, often found next door to kampongs with tiny shacks, open sewers and alleys just wide enough for a motorbike, still echo with talk of hedge-fund managers and diplomats.

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It was quite a contrast to meet Antonius Benny Susetyo one afternoon at the food court of a downmarket shopping mall in Jakarta. Susetyo is a Catholic priest, popularly known as Romo Benny, who became famous when he publicly confronted Aburizal Bakrie in 2006. One of Bakrie's family companies was involved with the oil and gas drilling in East Java which that year inadvertently created the world's biggest mud volcano. Susetyo demanded that the government seize Bakrie's assets to compensate the thousands who lost their homes and jobs. That may be the reason for the near fatal assault on the priest in 2008, which hasn't done anything to soften his criticisms of the country's ruling class.

Indonesia's economic growth has been built on 'hot money' from abroad, Susetyo told me, and only benefits 10 per cent of the population. But there are those who dismiss him as a carper, running down a country that (I heard this often in Jakarta) is set to replace India as the 'I' in Brics. Yudhoyono, boosted by his recent stewardship of the Association of Southeast Asian Nations, has been trying to project Indonesia as a global power. An expensive rebranding campaign aired on CNN hails the 'golden moment' for 'Remarkable Indonesia'. In 2010 Barack Obama triumphantly 'returned' to Jakarta, where he lived as a child, and made a rousing speech at the national university. The US agreed to sell air-to-surface missiles to the country's military (after years of condemning its human rights record). Paul Wolfowitz, a former ambassador to Indonesia, urged Obama to 'cement a closer relationship with an ally in the fight against Islamist extremism'. And days after Obama's visit, senior Chinese officials showed up, bearing $6 billion in new aid.

In the race for geopolitical advantage, the Americans can count on many long-standing local allies. SBY, like many of Suharto's generals, spent time at Fort Benning. The technocrats who managed the economy under Suharto were known as the Berkeley Mafia. University and think-tank fellowships, Ford Foundation grants and year-abroad programmes immunised the country's elite against the reflexive post-9/11 wariness of America in many Muslim and non-Western countries. The Chinese, on the other hand, have had to overcome a long legacy of mistrust; their own local soft power – which comes largely in the form of the Chinese business community – has to be wielded cautiously, if it can be wielded at all.

Suharto's regime blamed China for arming the masterminds of the so-called communist coup against Sukarno in 1965. The embassy was sacked and diplomatic relations suspended until 1990. Suharto also banned Chinese schools and calligraphy, and forced members of the ethnic Chinese minority to change their names to make them more Indonesian-sounding. Many Chinese left for a homeland that centuries of settlement in the archipelago had rendered utterly alien. But China had stopped exporting communist revolution in the late 1970s. Instead it sought markets and commodities; and it had on its side the great economic power of the 'bamboo network' of overseas Chinese. Suharto was shrewd enough to recognise early on that local Chinese were able to attract foreign capital and use their overseas networks to expand their operations to such high growth areas as Singapore, Hong Kong, China and even the US. One of his early cronies was Liem Sioe Liong, the man shown in the poster in 1984 pouring dollars into Suharto's mouth. The ethnic Chinese had financial clout, but posed no political threat to Suharto; and in the late 1980s, seeking to check the power of the military, he moved closer to them.

One monument to that intimacy lies a few miles west of Jakarta: an American-style suburb called Lippo Village. It has a hospital, university, cyberpark, golf course, museum and basketball court, and was built by another of Suharto's cronies, Mochtar Riady, on what was once a rice paddy. Riady started out as a bicycle trader after the Second World War, then bought a bank, before founding the Lippo Group, one of the first Indonesian-Chinese businesses to go global: it branched out from banking to telecommunications, assisted by Suharto's loan, export and import policies, and set up operations in Hong Kong, Singapore and finally China itself.

After the resumption of normal diplomatic ties with China in 1990, Riady toured the country by car for eight months. 'China at the moment is terrible,' he reportedly said, 'but in another ten years it will be incredible.' He invested in second-tier Chinese cities that Western corporations were reluctant to touch. There was a setback when, in the riots preceding Suharto's resignation, a mob of ten thousand, apparently egged on by Prabowo, torched and looted the Lippo Village super-mall, then the largest shopping centre in the country, killing 86 people. But the Riadys soon recovered and Lippo is now one of the biggest family-owned business empires in Asia.

You wouldn't know this from the sober demeanour of John Riady, Mochtar's grandson. Still in his twenties, he was prepared for membership of the global business elite at Georgetown, Wharton and Columbia, but returned to teach law at his family's university in Lippo Village. I met him in his office, which was spare and dark in contrast to the cheery American-style campus, where frisbees whirled below billboards exhorting passers-by to embrace Jesus. He spoke earnestly of empowering the poor and bringing skills to the underprivileged through a wider network of schools, colleges and hospitals. It wasn't just a matter of corporate social responsibility: the rich have a duty to help the poor. He was, I'd been told, trying to atone for his father and grandfather's long years of unabashed cronyism; the third generation of Asian tycoons are moving away from the bamboo networks and opaque practices of their fathers and grandfathers. But Riady's philanthropy is also aimed at defusing the fact that he and his family are identifiably Christian and rich in an increasingly Islamic and poor country.

A casual proposal by his father to open more Christian schools in villages was greeted with angry demonstrations by Muslim groups, which accused the family of secretly converting Indonesians to Christianity. The growing appeal of a largely non-militant yet deeply conservative Islam has been overshadowed in the Western media by the terrorist attacks in Bali and in Jakarta in 2002 and 2009. The millions of young people flocking to Jakarta from the countryside missed out on the traditional pesantren education many of their parents had known and have found new sources of moral authority and solidarity in small groups run by charismatic preachers. Even many old leftists have embraced Islam. Among the stories I heard was that of a communist poet who had returned to Indonesia after a long exile in Holland, and then left again: all his old friends were going on Haj, and he feared that if he stayed longer he might end up with them.

It's not just Islam: Christianity, especially its evangelical strain, is part of this religious revival. Romo Benny doesn't really approve. 'The challenge for religion,' he said, 'is to take sides with the downtrodden, the poor and the migrant workers and advocate on their behalf.' The new kind of religious preacher thrives on militant disaffection, and often turns it into nihilistic violence against vulnerable groups. It has become easy, as it is in Pakistan, for extremist Muslim groups to use jobless youths to mount violent assaults on infidels and blasphemers while politicians look the other way.

Muslim militants have shut down brothels, small-time gambling operations, nightclubs and bars. They have also attacked Christian churches, and prevented new ones being built. In the central Java town of Temanggung a mob burned down a Pentecostal church after a local court sentenced a Christian man to five years in jail for distributing leaflets insulting Islam; the sentence, the maximum allowed, was evidently thought too lenient. When I visited the church two weeks after the attack, the façade was still blackened, and the beheaded figures at the Last Supper hadn't been replaced. The pastor and his family, who lived in a tiny house behind the church, seemed to fear, rather than be reassured by, the token policemen at their gate, who hadn't bothered to ask me for ID. They weren't sure who had burned down the church, but they were sure they weren't locals, and that they were highly organised. The family was anxious for me to leave. Earlier that month nearly a thousand people, wielding knives and stones, had attacked members of Ahmadiyya, a Muslim minority sect, in West Java's Banten province. A bleak YouTube video showed a mob with sticks and rocks pummelling what looked like corpses under the eyes of the police.

Such incidents have become more frequent, and in the absence of any proper investigation much speculation centres on the nefariousness of the 'deep state': the enforcers of the ancien régime who are trying, as in Turkey, to increase their power by discrediting civilian leaders. It's an explanation that sounds plausible. But the deep state theory leaves out the growing role of political Islam, and the attitude to sectarian violence among civilian politicians that extends, according to a new Human Rights Watch report, from 'deadly indifference' to complicity.

The state's expedient tolerance, even encouragement, of Islamic groups dates to the last half of Suharto's reign. After he came to power Islamic groups were required to pledge allegiance to Pancasila, and to abandon Islamic symbols and language. But then, in the 1980s, sensing a decline in his popularity, Suharto turned to Islam to legitimate himself, even making a much publicised pilgrimage to Mecca. Pious Muslims were given important positions in the government and the army, Islamic learning was reinstated in schools and the ban on headscarves in schools was lifted. Muslim intellectuals were courted, and Islamic banking encouraged. During his last days, he even made a desperate attempt to rally Islamists against reformasi.

Political Islam re-emerged properly only after Suharto was gone. The new conservative Islam is part of a global phenomenon, stemming from the revolution in Iran and the subsequent effort by Saudi Arabia to match the appeal of Shiite millenarianism by funding Wahhabi-friendly organisations, schools and pilgrimages. Islam in Indonesia has also been helped by a political process that has grown ever more diffuse and unpredictable with urbanisation and the growth of new power centres in cities and small towns. The many political parties have come to be backed by even more numerous and shifting power-brokers, including Islamic groups and organisations. The result has been an unseemly scramble for votes, in which it isn't just explicitly Islamic groups that advocate rule by sharia law. All parties claim to be fulfilling an Islamic agenda. The old demand that Indonesia should be an Islamic state, regarded as outlandish in the 1940s and 1950s, has gone mainstream. Local administrations have enacted laws that require women to be indoors after dark, and men applying for government jobs have to know their Quran. Banda Aceh considered a proposal to ban women from straddling motorbikes since it 'accentuates' their 'curves'.

Democracy and free expression turn out to be no defence against creeping Islamisation. Among Indonesian writers and journalists, who had eagerly embraced the freedoms of the post-Suharto era, the rise of an overtly Islamist politics and culture provokes a conservative anxiety of the kind also found among the secular Turkish elite. Complaining that his five-year-old daughter had been made to wear a headscarf at school, a newspaper editor I met didn't take long to plunge into nostalgic longing for a secular strongman who would sort out the fundamentalists. The novelist Ayu Utami spoke more sensibly of Islamism as an unavoidable consequence of globalisation: a long process in which Arabic has become as much a language of power as English, and austere and urban visions of Islam have overwhelmed the syncretic varieties that grew up in the Indonesian countryside.

One beneficiary of Islamisation has been the Partai Keadilan Sejahtera (the Prosperity and Justice Party, or PKS). It has grown with the help of Saudi money and pedagogic cells on university campuses. Self-consciously combining the revivalist and social welfarist concerns of the Egyptian Muslim Brothers with Wahhabist theology, it received 8 per cent of the vote in the 2009 elections and joined SBY's cabinet. Its support base is the consumerist middle class: people uprooted from traditional forms of Islam.

At the 2011 national convention of the PKS at the Sheraton Hotel in Yogyakarta there were as many baseball caps as pamphlets by Hassan al-Banna, the founder of the Muslim Brothers. The choice of Yogyakarta was provocative (as was holding the conference in a five-star hotel with white women in bikinis around the pool): the city is the centre of Javanese mysticism and, with its Hindu-Buddhist and Sufi traditions, anathema to the Wahhabis. It is also the seat of an unelected sultan, whose hereditary privileges, secured by a special clause in the Indonesian constitution, are increasingly being challenged by Islamic democrats. I met the chain-smoking son of the sultan's deputy, who told me how much he despised what he called the Wahhabi 'rabble' who want to end the privileges of the ruling family, and even used the revered Wali saints of Java to entice Hindus away from Hinduism. The cosmopolitan world of Javanese culture, he felt, was falling apart.

The PKS, however, was aiming at its own kind of internationalism. Delegates to the convention were treated to a wayang (shadow puppet) performance based on the life of Bhima, the sturdiest of the five brothers in the Mahabharata. There were also items for sale branded with the coat of arms of the Yogyakarta sultanate. This reflected some confusion within the party's leadership. One young PKS member I spoke to, perspiration staining his white turban, denounced the Sultan Hamengkubuwano for using the title kalipatullah (God's caliph). The man was a kufr (infidel), he told me; the true caliphate had yet to be established. The PKS itself has some way to go in establishing the sovereignty of true Islam, even within the party. Arifinto, a PKS MP, an especially vociferous campaigner for the anti-pornography legislation, was caught watching a porn video in the legislative chamber. The leader of a pesantren near the city of Magelang smiled wryly when I told him I'd visited the PKS convention. 'They are trying hard to fit in,' he said.

His pesantren was on a narrow lane at the edge of a roadside settlement; rice paddies glimmered beyond. He sat under a huge 3D portrait of Mecca, gently scolding his daughter, who wore a T-shirt emblazoned with Disney Rapunzel, when she broke into the conversation. His own Islam, he said, came from Arabia, but had 'softened' in Hindu-Buddhist Java. The pesantren he led had always staged wayang; he had sent his pupils to help clean up the damaged Pentecostal church in Temanggung. Outside, in the pesantren's courtyard, boys sat smoking clove-scented Indonesian cigarettes in their pre-dinner break time. They seemed eager to talk. The courtesies of old Java lingered among these sons of farmers and fishermen, and it was hard to imagine the young Muslims of the region who in 1965 had gone from house to house with lists of communists to kill. The students themselves know nothing about that past, though books about famous communists such as Tan Malaka (killed by the army in 1949) are now available. They know much more about conditions in Gaza.

Despite the growth in these Islamic groups the older elites remain adept at top-down governance. Suharto's most successful creation was this transnational oligarchy. Increasingly fractious but still powerful, it keeps Indonesia at a political impasse: there is no social force strong enough to overcome it. Disenchantment with Suharto-style politics has made Joko Widodo, the governor of Jakarta, known as Jokowi, the most popular politician in Indonesia today, widely tipped to win next year's presidential election. He was a furniture importer in the Central Javanese city of Surakarta before entering politics, and has no known links to corporate groups or established political parties. During his seven years as mayor, Jokowi turned Surakarta into an example of what he calls 'bottom-up' governance.

First, he chose a Chinese as his running mate (and then fended off a smear campaign about his closeness to infidels). Surakarta is a city of small merchants and traders: he made it easier to get business permits and licences, and favoured small food-cart owners over convenience store chains and shopping malls. He peaceably relocated unregulated street vendors to a new marketplace, made it easier to access public health services, and championed small and medium-size industries against local and foreign corporations. He also supported traditional crafts and industries such as batik. These, he told me, should be helped to compete with mass-produced goods from China and were important too in the maintenance of regional identity. Localism can, as in this case, represent a way for a diverse and largely agrarian society to find its own way of being modern. First elected in 2005, Jokowi was re-elected in 2010 with the kind of majority – 90.9 per cent – often claimed by dictators. It was a remarkable feat: Surakarta is known in Indonesia as a city with a short fuse. Jemaah Islamiyah, an extremist group with ties to al-Qaida, originated there; it also provided a base for the militants linked to the bombings in Bali and was the site of vicious attacks on the ethnic Chinese community in 1998.

In the elections in Jakarta in 2012 (where he again chose a Chinese Christian running mate), the votes of the city's poor helped Jokowi upset the candidates of establishment parties. But Jakarta presents a different order of difficulty. The city's low-lying slums, populated by rural migrants, are exposed to periodic floods. Consumer capitalism has bequeathed to Jakarta's ten million residents polluted air, gridlock traffic and venality on a fantastic scale. The city's previous governor, Fauzi Bowo, a moustachioed holdover from the Suharto era of plunder, owned a Van Gogh as well as a Hummer and a Harley-Davidson.

A populist figure like Jokowi is an appealing throwback to the moment of postcolonial idealism, speaking, as he does, of an economy configured to serve the rakyat rather than aimed at increasing profits and growth rates. Defying the political trend of soft bigotry, he has upheld the rights of Christians and other minorities. His invocation of a rakyat-centred economy and repudiation of top-down governance seems something more than rhetoric; it's as if he's asking the poor – rather than their usual patrons, the centralised state, the free market and NGOs – to help get rid of poverty themselves. In Jakarta, he visited slums to discuss health and education; he planned a big drainage system to deal with the monsoon floods that were particularly severe earlier this year; he began building new toll roads and a monorail system to ease the traffic as well as constructing subsidised apartment blocks in South Jakarta for slum-dwellers who lived on the flood plain. Perhaps in acknowledgment of Jokowi's populist appeal, SBY has proposed new legislation forcing foreign investors to reduce their stake in mining companies, and stipulating that companies must process their yields within the country. Fewer foodstuffs will be imported in order to protect local farmers; small traders have lobbied for restrictions on foreign chain stores. Certainly, Jokowi has been well ahead of the country's other politicians. But even he may be too late to rebuild faith in a democracy fundamentally designed to give ever more power to the rich.