The Netherlands begin to invest in developing Netherlands New Guinea a few years earlier than OTL, with the region's colonial authorities having slightly more foresight. After Indonesia becomes independent, West Papua refused to join as in OTL, and instead forms the Papuan Democratic Republic in 1955, with its capital in Hollandia (Jayapura). Indonesia, controlled by Sukarno and his alliance of nationalists and Communists, rejects this and threatens to mount an invasion to unite the region. However, European powers, supported by the United States, cause a stalemate and force the Indonesians to back down. This loss of face for Sukarno, and his increasing ties with the independent-minded Tito, Nasser and Mao, lead to a split in the ruling coalition
By 1961, Sukarno begins to lean more and more on the largely anti-Communist army, but remains wary of their influence. Sukarno, seeking to maintain control over the military, purges its upper ranks through forced retirements, corruption trials and several assassinations. He has loyalists appointed in their places, stirring up tension within the military, which is now divided between right-leaning old guard generals, Sukarno loyalists, and a small but growing contingent of Marxists. This demoralization of the military proves nearly fatal for the Indonesia state, which loses the West and East Kalimatan districts of the island of Borneo in a short war with Malaysia in 1964, as well as seeing Sarawak and Brunei annexed.
The growing problems of Indonesia come to a head in January 1965. A revolt breaks out in the early morning of January 5, with Moscow-leaning army officers and the PKI launching a coup against Sukarno after orders for the resignation of the leaders of the main Marxist officers group, the Awakening Society, arrive at their barracks. Sukarno is arrested for "dictatorship and oppression of the Indonesian people", and many Sukarno loyalists are shot. Loyalist forces, who soon become known as "Yellow Flags" for the yellow bandanas they wear tied to their arms, counter attack and manage to seize the Presidential Palace and Salemba Prison, freeing Sukarno. Sukarno then escapes the city, fleeing to the East Javan city of Surabaya, where his remnant government begins to try to scrape together loyalist forces. Communist, "Red Flag" forces in Jakarta, with uncontested control, declare the Peoples' Democratic Federation of Indonesia, and quickly ask for aid from Moscow. American forces, already on high alert, launch joint operations with Australian troops and move to secure several islands, including importantly Timor.
Politics in Indonesia continue to collapse, as a third, American-backed, right-wing military faction emerges, under retired army general Suharto. This group, calling itself the "National Salvation Council", declares itself the legitimate government of Indonesia and soon establishes its temporary capital in the city of Makassar on the island of Sulawesi. This government, with the aid of the US Navy and a growing volunteer force of "Green Flag" paramilitaries (drawn mostly from Muslim religious students and peasants), establishes control over most of the large number of small islands making up the archipelago of Indonesia. Soviet arms and advisors soon find their way into the Javanese Communist camp, which begins to press-gang thousands of people into a "liberation army". Sukarno's government, relying mostly on Chinese aid and a significant amount of remaining popular support throughout the country, controls a few small islands, the eastern third of Java, the remaining Bornean provinces, and (technically) the island of Sumatra, whose local administrators and security forces have largely declared neutrality.
The Indonesia Civil War continues for the next five years, with shifting alliances and allegiances bringing warfare to much of the archipelago. In the end, with the Saigon Accord signed, several new states are born, although unresolved territorial claims and contested sovereignty continue to bedevil the region. The countries are:
- The Republic of Indonesia, which is based in the islands, and is heavily propped up by American aid.
-The Indonesian Democratic Republic (Sumatra) is ruled by a mix of old Sukarno loyalists, Maoists, and anti-junta nationalists. It controls most of the island of Sumatra, as well as an tiny enclave in East Java. It mostly relies on Chinese aid, but generally tries to pay the superpowers off of one another.
-The Peoples' Democratic Federation of Indonesia (Java) is an old fashioned Communist dictatorship, ruled by the PKI. It controls most of Java, except for the DRP's small enclave in the east. It is propped up by the Soviet Union.
-Aceh is a small state in the north of Sumatra, which declared its independence just after the Sumatra theatre's bloodiest period, in May-September 1968, when almost 250 000 troops were killed, mostly from the invading Red Flag forces. The still heavily weakened Sumatrans were unable to prevent the secession, and soon moved fully into the Yellow Flag camp, which moved its primary base of operations to the island. Aceh is one of the least war torn parts of the region, and is ruled in a "protected democracy" by its Sultan, Hassan Tero.
-The State of Timor is a western-leaning state, made up of former Indonesian West Timor and former Portuguese colony East Timor. The island has a relatively functional democracy, and is heavily guarded by the world's largest American naval base, housing the US Third Fleet and the Second Marine Division.