In 1997, the finanial crisis of Asia gave a heavy blow to Indonesian economy. Then Indonesian internal politics witnessed a power transition from Suharto, Habibi to Wahid. The new Wahid government is encountering many crisis, among which are the military interfering in politics, economic depression, and the disturbances caused by the separatists, especially is Aceh. But first, there is little possibility that Aceh will depart, and federalism can be the best choice for Indonesia. Second, the issue of military interfering in politics, which is a problem of history, will last. The balance of power between military and civilian government can help enhance internal stability. But in the long run, the military will fade away from political stage under the pressure both at home and abroad. Third, to realize economic revival and development, the new government is adopting various measures, such as striving for the foreign investments and loans, and getting the ethnic Chinese capital flow back. In all, Indonesian internal politics will become stable gradually and Indonesia will be again on the way of fast economic growth.