The collapse of the New Order government of President Suharto in 1998 marked Indonesia's transition from authoritarian rule into a more democratic system of government. As will be seen below, both the rise and the fall of the New Order regime can be attributed to the complex interplay between domestic forces and international dynamics. The New Order regime emerged at the height of the Cold War period, when Western countries, led by the United States, pursued a policy of containing communism. To that end, the Western bloc gave support to developing countries that demonstrated an equally anti-communist stance, in the form of economic aid, military package and even overt political support. Although the West regarded itself as the champion of democracy, Western policy in fact helped to prop up authoritarian regimes in different parts of the world, including in Indonesia, as long as these regimes were anti-communist. The military-dominated New Order government, which restricted civil and political liberties and promoted crony capitalism, was generally applauded by the major Western countries for bringing political stability and economic development to Indonesia, thereby saving Indonesia from the communist virus.

The demise of the New Order political structure can also be attributed to a considerable degree to the fundamental changes taking place in the international political and economic systems. With the ending of the Cold War in the late 1980s, international relations agenda as promoted by the West shifted away from bipolar ideological conflict to such issues as the promotion of democracy, human rights, environmental protection and market liberalization. Combined with the forces of globalization, in particular the revolution in information and communication technology, these changes in the international environment helped to strengthen and embolden pro-democracy forces in Indonesia, which in an earlier era could easily be silenced by the government. As the New Order government faced both international and domestic pressures to reform, it was ill prepared to face the onslaught of the financial crisis that swept through Southeast Asia and Northeast Asia in mid-1997.