Meanwhile the Dutch shamelessly exploited the Indonesians. In 1830 the Dutch introduced the Kultuurstelsel (cultural system). Indonesian farmers were forced to put aside 20% of their land to grow crops for export. They were paid only a nominal sum by the Dutch government for them. Indonesians were forced to grow coffee, indigo, tea, pepper, cinnamon and sugar. As a result of this measure rice production was reduced.
However in 1870 the Dutch switched to a free market system. The Dutch governments monopoly on sugar and other commodities was ended. Private plantations were created. However the Indonesians were not necessarily better off. Now they were employed as coolies on the great plantations.
In the early 20th century the Dutch decided to treat the Indonesians more fairly. They introduced what they called the ethical policy. This meant building schools and spending money on health care, sanitation and irrigation. However the new policy had little effect on the lives of most Indonesians.
It did however mean that a least some Indonesians became highly educated and familiar with western ideas such as liberalism and socialism. As a result in the early 20th century nationalist movements were formed in Indonesia. They began clamouring for independence.
Then in 1940 the Germans occupied Holland. In 1942 the Japanese invaded Indonesia. The last Dutch troops surrendered on 8 March 1942. At first the Indonesians welcomed the Japanese as liberators. However they soon grew disillusioned. The Japanese were brutal and they ruthlessly exploited Indonesia's resources.
Yet when the Japanese were losing the war they started to favour Indonesian independence, hoping to make the Indonesians their allies.
Japan surrendered on 15 August 1945. Young Indonesian nationalists were determined to assert the countries independence before the Dutch could return. A group of them kidnapped two nationalist leaders Sukarno and Hatta. On 17 August Sukarno declared Indonesian independence. He became the first president and Hatta became vice-president.
However the Dutch were not willing to let Indonesia go so easily. At first British troops landed in Indonesia. They tried to remain neutral although there were armed clashes between the British and Indonesians in places.
However by November 1946 the British were gone and the Dutch had landed many men in Indonesia. In November the Indonesians and Dutch signed the Linggajati agreement. The Dutch recognized the new republic, but only in Java and Sumatra. They still claimed the rest of Indonesia. Furthermore the agreement stated that the republic would join a federal union with Holland in 1949.
Not surprisingly neither side were happy with the agreement. The Dutch built up their strength in an attempt to retake all of Indonesia. In the summer of 1947 they invaded the independent areas. However they were forced to withdraw, partly because of Indonesian resistance and partly because of strong international condemnation (especially by the USA).
In December 1948 the Dutch tried to retake Indonesia. This time the Indonesians turned to guerrilla warfare and they were successful. The Dutch faced strong condemnation from powers like the USA and they realized they could not win the war. Finally on 2 November 1949 the Dutch agreed to recognize Indonesian independence. Their troops withdrew in December 1949.
MODERN INDONESIA
At first independent Indonesia was a parliamentary democracy. However in February 1957 President Sukarno introduced a new political system, which he called 'Guided Democracy'. The power of parliament was reduced and his own power was greatly increased. His opponents formed a separate 'parliament' called the PRRC (the Revolutionary Government of the Republic of Indonesia). However the army remained loyal to Sukarno and he stayed in power.
Meanwhile in October 1957 the army took over the remaining Dutch companies in Indonesia. As a result the army grew wealthy.
Then in the early 1960s the economy faltered. There was very rapid inflation.
In September 1965 the Communists attempted a coup in Indonesia. They murdered a number of generals. They also seized strategic points in Jakarta. However General Suharto quickly took action. The coup was crushed. Suharto was granted powers by President Sukarno to restore order. After the coup Suharto arrested and executed a large number of communists.
However Sukarno lost support and on 11 March 1966 he signed over his presidential powers to Suharto. From 1966 Suharto ruled as a dictator (although there were elections held every five years democracy was a facade). However Suharto brought stability and under him the economy of Indonesia recovered.
From the 1960s reserves of oil in Indonesia were exploited. After 1973 Indonesians benefited from the high price of oil. Agriculture also became far more productive.
However most Indonesians remained poor and in 1997 Indonesia was hit by a financial crisis. As a result the economy contracted. Ind