Jose Manuel Tesoro and Tom McCawley – "We were hunted like pigs." That's how Madurese farmer Amidi describes being driven from his West Kalimantan home recently. After his house went up in flames and one of his neighbors was decapitated, Amidi, his wife and child fled into the jungle. A mob of ethnic Dayaks chased them with hunting dogs. The terrified family hid out, eating snakes and bats, before being rescued by soldiers and taken to a refugee camp.

So it goes in Indonesia. Since strongman Suharto was deposed nearly one year ago, the lid has blown off a cauldron of simmering resentments. Every day brings new reports of unspeakable acts. On the lush island of Ambon, a Muslim brags off-handedly how his friends burned Christian houses, while a Christian stabs her finger into a map of the city. "This has to be bombed," she says, pointing to a Muslim neighborhood. Across the Banda Sea in Dili, capital of East Timor, marauding militias have been murdering pro-independence supporters. On April 29, violence returned to Jakarta when a bomb exploded in the Istiqlal mosque, located a few hundred meters from the presidential palace. Not long after, a bomb threat was called in to the nearby cathedral while, 1,400 km away, a church in Sulawesi was set ablaze.

Sometimes it seems the entire nation has gone mad. In fact, tens of millions of Indonesians live in peace. Yet even those not personally threatened by the lynchings, beheadings and beatings are painfully aware that Indonesia has come to be seen as the most violent nation in Southeast Asia – more so even than Cambodia.

How to explain this eruption of murder and mayhem? Post-Crisis economic desperation plays a role, of course. Not surprisingly, all kinds of crime are up. And people everywhere use times of national upheaval to settle old scores. Besides, ethnic clashes are no real surprise in as polyglot a nation as Indonesia. But in truth, much of the violence can be blamed on the policies of Suharto's New Order government – because even as the strongman kept a lid on the tensions that threatened to tear Indonesia apart, he systematically destroyed the social architecture that allows a nation to resolve conflicts.

Suharto relied heavily on the armed forces to protect those in power. "Laborers, street sellers and farmers know personally how violence was used to protect the interests of the elite," says Munir, who heads the Commission for Missing Persons and Victims of Violence, or Kontras. Jakarta's glittering skyscrapers are built on land grabbed from ordinary citizens who often were forced off their property. Suharto's West Java ranch was built on hectarage now claimed by more than 600 farmers.

Using the army as an instrument of control impoverished institutions that manage conflict in other nations. Like the courts, which the elites bent to suit their interests. In Indonesia, the "law is like a spider's web," says Anton Medan. "It can catch little insects, but a big rat will tear it apart." In other words the police come down hard on ordinary people but let the big guys go. Medan should know. He is a former gangster who claims he had a general on the payroll.

If the law was malleable, so were local authorities and traditions. In truth, says anthropologist Stephanus Juweng, "this brutality is quite out of Dayak tradition." He explains that there was no established way to resolve the tensions between Dayaks and Madurese. Although hostilities have erupted nine times since 1968, authorities repeatedly submerged them. When the Dayak-Madurese clashes broke out in 1997, Juweng says, the local government rushed through a "peace" process that had both sides shake hands – but did nothing to address the actual roots of the resentment.

Much of the communal animosity stems from the government's transmigration policy. Since the 1960s, tens of thousands of people have been sent from crowded Java to less-populated regions. In West Kalimantan, Dayaks and Malays gripe about the Madurese settled there under the program. "The only way to solve the problem is for all the Madurese to leave," says Linus, 19, a choirboy. "They are violent and aggressive."

The family-planning program also has spawned resentment. It makes sense in Java. But in Irian Jaya, locals see it as a ploy to reduce the indigenous population so more Javanese can move in. The trouble, says political scientist Sujati Jiwandono, is that while the Suharto regime aimed to achieve "national unity through uniformity," it imposed the policy by force.

In today's Indonesia, no one can impose that unity or uniformity – especially not the military, which has proved to be wholly unprepared for the sheer ferocity of change post-Suharto. In West Kalimantan, the troops' main role has been to evacuate frightened refugees, rather than go after the perpetrators. "The army used to randomly take people away," says Andi, a local. "Now they are too scared." A soldier in a refugee camp explains: "To be honest, this is beyond us. We are undermanned and underfunded." In Ambon, soldiers bulldoze gutted buildings as if their main duty is to clear the ring before the next round.

Moreover, the armed forces' legacy of using criminal and paramilitary groups to do their dirty work has prompted many to believe that the violence is being encouraged to tilt power toward one party or another. There are "forces at work who want to preserve the status quo," warns Medan. According to conspiracy theorists, these "forces" range from Suharto to rogue generals to gangsters seeking profit in troubled times. Government and religious leaders appealed for calm after the mosque bombing; most believe its aim was to stir up trouble between religious groups. When Munir's Kontras group tried to bring soldiers to trial for abducting activists, his offices were attacked by men supposedly recruited from Jakarta slums. Businessman Des Alwi is convinced troublemakers make money off local unrest. He draws a direct link between Ambonese toughs sent home after being involved in religious-related rioting in Jakarta last November to the outbreak of Muslim-Christian hostilities in January. He says "organized anarchy" pays well.

One does not need conspiracies to see that the violence is a product of massive failures: failure to institute a system based as much on law as order, failure to be sensitive to local tensions, and failure to put lives of citizens ahead of power. For the killings to stop, says Munir, the leadership must "learn that the military is not a medication to be used to make people submissive and that government is not a business of repression."

Many Indonesians are hoping that the June 7 elections will lead to a more progressive government that recognizes the role for official channels that people can use to release resentment without resorting to guns or machetes. Sadly, the past 15 months have served only to deepen stereotypes and misunderstandings – making the healing process that much more difficult.

The longer the country stays on this path, the harder it will be to get off. "Muslims don't want to live with Christians," says Adhy, a Christian student from Central Sulawesi. In West Kalimantan Dayak and Malay families express fear of the Madurese that their brethren are driving out. "We're afraid they'll seek revenge," says Manap, a teacher. "We want them to leave." Separation could bring peace. But not a permanent one.

[With additional reporting by Dewi Loveard]