Sukarno introduced the concept of guided democracy , an attempt to create a wholly Indonesian political system based on the traditional, hierarchical organization of Indonesian villages. Decisions were to be made with the consent of everyone, and not simply the majority; the various political factions would all have their say, though Sukarno would now play the part of village chief, with all the power that entailed.

In reality, guided democracy was the first step on the road to authoritarian rule , removing power from the elected cabinet and investing it instead with the presidency and a non-elected cabinet. Unsurprisingly, many people, both within and outside government, were suspicious of Sukarno's real motives, and lengthy protests in Sulawesi and Sumatra marred the early years of guided democracy.

Meanwhile, Sukarno began to forge strong ties with the Soviet Union , who appreciated his Marxist leanings and anti-Western foreign policy. They began financing the Konfrontasi ("Confrontation"), Sukarno's bid to wrest the northern Borneo states of Sabah, Sarawak and Brunei from neo-colonial Malaysia, which he saw as a puppet of the British. However, Sukarno was unwilling to commit too many troops to the jungles of Kalimantan and his ambition to bring Sabah, Sarawak and Brunei into the Indonesian republic failed.

Sukarno's ties with the Soviet Union made him more sympathetic towards the views of Indonesia's communist party , the PKI, and openly sided with them against the increasingly powerful Indonesian army . This led to the polarization of the entire parliament, with Sukarno and the communists on one side, and the army and its unlikely allies - including the Islamic NU and nationalist PNI - on the other. The political fighting in parliament was mirrored by pitched battles between the various factions on the streets of the capital, and law and order began to break down.