The passing of Law No. 18 of 2001 on 'Special Autonomy for the Province of Aceh Special Region as the Province of Nanggroe Aceh Darussalam' signified a major development in the Indonesian government's strategy to resolve Aceh's protracted conflict. Ratified by President Megawati Sukarnoputri on 9 August 2001, the 'NAD law' conferred unprecedented authority to Aceh over its internal affairs. This paper evaluates the challenges that have been involved in implementing the three main tenets of the legislation -- aspects of Syari'ah (Islamic law), the return of Aceh's natural resource revenue and a provision to hold direct local elections. The paper argues that the Megawati administration's failure to redress Acehnese grievances through special autonomy largely stems from its suspicion of the NAD law itself, its greater reliance on militaristic measures than on political policies in Aceh, and pre-existing systemic factors such as Aceh's dysfunctional state infrastructure, corrupt political culture and war economy.
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