If the lessons of the past year's turmoil are rightly learned, Indonesia could emerge with sounder economic practices, greater political freedoms, and, not least, an improving human rights record.
Crucial to the last item is a just resolution of the long-simmering rebellion in East Timor. The 800,000 citizens of that small land have lived in a state of siege since 1975, when Indonesia invaded and annexed the former Portuguese colony.
The Indonesian government saw East Timor, which occupies half of the island of Timor, as a logical extension of its archipelago nation. The East Timorese, however, had a culture and religion (Roman Catholic) distinct from their neighbors'. Many of them wanted independence, and that yearning has not faded.
Despite Indonesian efforts to brutally stamp it out, resistance continues in East Timor. Effective East Timorese leaders have emerged, such as Bishop Carlos Belo and Jos Ramos-Horta, co-winners of the Nobel Peace Prize in 1996.
With a new government in Jakarta - after 30 years of President Suharto, who originally seized East Timor - hopes for a negotiated settlement are somewhat brighter. President B.J. Habibie has offered East Timor special status within Indonesia. In exchange, he wants international recognition of Indonesian sovereignty over the territory.
That won't be forthcoming. The United Nations and numerous national governments have steadfastly refused to recognize Jakarta's annexation of East Timor. The UN has long been trying to mediate talks between Indonesia and East Timor's independence movement. An UN envoy is heading for Jakarta this month in an effort to revive that process.
What should be forthcoming, now, are more productive negotiations. Independence activists initially rejected Mr. Habibie's overture. But some, notably Mr. Ramos-Horta (exiled in the United States), have moderated their tone. While independence through a free vote of the East Timorese people remains the goal, they're willing to put off for a few years the referendum - so long as it's guaranteed down the line.
Meanwhile, there could be a negotiated easing of tensions, including a phased withdrawal of Indonesian troops and phased-in autonomy for the East Timorese. The process would benefit from the UN's active involvement, as well as the support of interested neighbors like Australia.
Indonesia faces major rebuilding in the wake of its economic collapse. Disintegrative forces are a major concern. Independence movements are also stirring in Irian Jaya, on the western half of New Guinea, and in Aceh, on northern Sumatra.
But East Timor is the critical test. Indonesian politics are opening. It's time to drop repressive habits and move toward self-determination for the East Timorese.