Since the fall of the Suharto regime in 1998, Indonesia has embarked on a phase of political and social transformation and democratisation. Despite an economy marked by the 1997 Asian crisis and a high level of unemployment and poverty, notable progress towards the consolidation of democracy and the rule of law has been achieved. However, corruption and a culture of impunity continue to create legal vacuums for violent actors, conflict economies and the exploitation of natural resources in this multi-ethnic state. A lack of structures for dialogue and cooperation across lines of conflict is also a factor in the increase and intensification of conflicts over resources and land-use rights. In light of the ongoing power struggles and distributional conflicts, security sector reform remains a key challenge now and for the future as well.

Ultra-nationalism, separatist movements and conservative Islamic groups are obstructing democratic and peace processes. Internal armed conflicts over what is now Timor-Leste and over the status of Aceh province have claimed thousands of civilian lives. The conflicts in Papua continue to erupt into violence. Deficits in the rule of law are impeding efforts to deal with and punish human rights violations as well as reconciliation processes aimed at sustainable peacebuilding and the provision of compensation for victims.