Among the many remarkable powers that Indonesia's central government surrendered as part of its decentralisation policy was the right to choose district heads (bupati) and mayors. With the exception of a two-year period during the late 1950s, these officials had served since colonial times as the central government's all-powerful regional representatives. In one stroke, the new law on regional government turned this historical pattern upside-down. As a result, regional chief executives are no longer civil servants accountable to the national government, but local politicians answerable to regional legislators and the electorates they represent.

By increasing the scope for public participation in government and making local officials accountable to the people they serve, the 1999 law on regional government not only enhanced the autonomy of local governments from Jakarta but democratised them too. In this way, the law reflects an emerging consensus among advocates of regional autonomy that decentralisation must be democratic if it is to be successful. But democratisation is no less likely to encounter obstacles at the local level than at the national level. Indeed, sources as diverse as the eighteenth-century Federalist Papers and contemporary public choice theory suggest that ‘the lower the level of government, the greater is the extent of capture by vested interests’ (Bardhan and Mookherjee 2000: 135).

Anecdotal evidence strongly suggests that Indonesia's decentralisation is producing local governments that are more likely to be captured by elites than held accountable by the general public. Allegations of vote buying mar the election of nearly every governor, bupati and mayor. However, systematic data about decentralisation's political impact in Indonesia are lacking, and the theoretical literature on the issue of government capture is weak. In both cases, further empirical research is needed. Towards that end, this chapter reviews key theoretical perspectives on the balance between public accountability and elite capture of local government; summarises Indonesia's experience with centralised management of local government; and reports the results of a sustained effort to document the outcome of a large number of regional chief executive elections. The data tend to show that the old political elite has reconsolidated its power despite the introduction of new political rules. The reasons are found in the weakness of newly created institutions and the strength of old social forces.