It is generally believed that the earliest inhabitants of the Indonesian archipelago originated in India or Burma. In 1890, fossils of Java Man (homo erectus), some 500,000 years old, were found in east Java. Later migrants ('Malays') came from southern China and Indochina, and began populating the archipelago around 3000 BC. Powerful groups such as the Buddhist Srivijaya empire and the Hindu Mataram kingdom appeared in Java and Sumatra towards the end of the 7th century. The last important kingdom to remain Hindu was the Majapahit, which was founded in the 13th century. The subsequent spread of Islam into the archipelago in the 14th century forced the Majapahits to retreat to Bali in the 15th century.

By this time, a strong Muslim empire had developed with its centre at Melaka (Malacca) on the Malay Peninsula. Its influence was shortlived and it fell to the Portuguese in 1511. The Dutch displaced the Portuguese and began making inroads into Indonesia. The Dutch East India Company based in Batavia (Jakarta) dominated the spice trade and took control of Java by the mid 18th century, when its power was already in decline. The Dutch took control in the early 19th century and by the early 20th century, the entire archipelago - including Aceh and Bali - was under their control.

Burgeoning nationalism combined with Japanese occupation of the archipelago during WWII served to weaken Dutch resolve, and it finally transferred sovereignty to the new Indonesian republic in 1949. Achmed Soekarno, the foremost proponent of self-rule since the early 1920s, became President. In 1957, after a rudderless period of parliamentary democracy, Soekarno overthrew the parliament, declared martial law, and initiated a more authoritarian style of government, which he euphemistically dubbed 'Guided Democracy'. Once in the driving seat, Soekarno, like many like-minded military strongmen, set about consolidating his power through monument-building and socialising the economy, a move that paradoxically opened up a huge divide between the haves and have-nots and left much of the population teetering on the edge of starvation. Rebellions broke out in Sumatra and Sulewesi, Malaysia and Indonesia came perilously close to an all-out confrontation and instability was the general order of the day. Things came to a head in 1965, the eponymous Year Of Living Dangerously, when an attempted coup (purportedly by a Communist group) threatened Soekarno's hold on power.

Soekarno won that particular battle but lost the war when the man responsible for putting the coup down, General Soeharto, wrested presidential power from him in 1966. Soeharto started off with a nice line in political reconstruction, but the promises of economic reform and greater government transparency quickly degenerated into much of the same-old same-old. Nepotism, cronyism and grandiose spending, coupled with the brutal massacre of East Timorese nationalists in Dilli in 1975, proved that much of the talk was mere rhetoric. By March 1998 Soeharto was out of touch with the people and, perhaps seeing the writing on the wall, awarded himself only five more years in office. He never made it - by the end of May that year, with the economy freefalling and street violence flaring, he was out of office and the vice-president, BJ Habibie, was installed.

Habibie, never popular to begin with, mouthed the same promises of reform and even appeared willing to consider independence for East Timor, but it was all too little too late. The uncompromising stance by East Timor set off a chain reaction and sectarian violence, student protests and increased demands for independence spread like wild fire through Ambon, Kalimantan and Papua. Rogue militia groups, widely thought to be controlled and equipped by the Indonesian miltiary, rampaged through East Timor after it overwhelmingly voted for independence in 1999; local police forces and parts of the army were sent in to quash other rebellions; protesting students were killed in the streets and the whole country went to hell in a handbasket.

A UN peacekeeping force brought stability to East Timor but prompted Indonesian outrage at the 'meddling in internal affairs'. When the dust finally settled the East Timorese had been granted independence over the smoking ruins of their country. Soon afterwards Abdurrahman Wahid became Indonesia's first democratically elected president. By 23 July 2001, he'd lost the confidence of parliament and was replaced by the inscrutable Megawati Sukarnoputri.

Indonesia faces numerous crises - rising Islamic extremism, military insubordination, official corruption, a fledgling and fragile democratic process, and the many separatist movements threatening to tear the country apart. On 12 October, 2002, bombs targeting Western tourists claimed around 200 lives in Bali. An extremist group with links to Al-Qaeda was responsible.

Religious violence also plagued the Maluku islands, where Christians and Muslims reached a short-lived peace deal in February 2002. In April 2002, masked gunmen massacred 14 Christian villagers. Fighting between Christians and Muslims has claimed more than 6000 lives since 1999. In Papua and Aceh, guerrillas have been fighting for independence from Jakarta for decades.

Megawati Sukarnoputri’s presidency deserves credit for restoring social stability and economic growth but was widely condemned as ineffectual in combating rampant institutional corruption. In September 2004, 80% of Indonesian voters turned up to vote in the country’s first direct presidential ballot. Charismatic retired general – and sometime crooner - Susilo Bambang Yudhoyono (who holds an American management degree) won handsomely.