After more than a decade of relatively peaceful centre-periphery relations, Acehnese discontent resurfaced in the early 1970s. The centralizing policies and practices of Suharto's New Order did not fulfill Acehnese expectations of the restoration of Islam as a dominant sociopolitical force. As Acehnese ulama became increasingly politically marginalized by the New Order's 'secular' nationalist policies, so too did their calls to implement the Daerah Istimewa formula. Provisions to create institutions to promote and enforce Islamic law failed to materialize and the jurisdiction of Islamic courts became increasingly restricted under the New Order. By 1974, when the New Order issued Law No.5/1974 on 'The Principles of Regional Government Administration', Aceh's Daerah Istimewa formula had been completely stripped of meaning. This law further increased Jakarta's grip over regional administrations by establishing presidential control over gubernatorial appointments and gubernatorial responsibility for managing provincial government.
The New Order's centralized rule was solidified through the reorganization of Acehnese society. Reflecting its dual priorities of national stability and economic development, the regime nurtured two key groups in Aceh. First, the armed forces became permanently embedded in the province to defend national economic interests, to prevent the emergence of opposition forces, and to monitor and control those 'legitimate' political parties that had helped to elevate Suharto to power. Second, Suharto fostered the growth of a class of indigenous Acehnese technocrats to implement national development directives and counteract the influence of the ulama. This bureaucratic elite tended to be highly conscious of their distinctive Acehnese identity and sought to elevate Aceh's position within the Indonesian state by generating regional development.
Acehnese discontent was also fuelled by the 1971 discovery of vast oil and natural gas reserves in North Aceh and the subsequent growth of the Lhokseumawe Industrial Zone (Zona Industri Lhokseumawe , ZILS). Most of the profits were siphoned out of Aceh, with the result that development under the New Order produced few substantive improvements to the local economy. Although parts of Java and eastern Indonesia experienced higher poverty levels than Aceh during the New Order, the expansion of ZILS compounded regional anger as villagers were forced to resettle outside the industrial zone and large numbers of skilled non-Acehnese, non-Muslim workers were introduced to operate the oil and gas companies. Lucrative assets in North Aceh also attracted thousands of Indonesian security forces personnel, whose depredations against the civilian population hardened local attitudes against Indonesian authority.
It was within this context of growing regional discontent that Aceh's first separatist insurgency was born. On 4 December 1976, Tengku Hasan Muhammad di Tiro, a successful businessman and self-appointed Darul Islam 'ambassador' to the UN in New York, returned to Aceh to launch the Acheh-Sumatra National Liberation Front (ASNLF, also called GAM). The ASNLF/GAM shared some common grievances with the Darul Islam rebels. Like Daud Beureueh, Hasan di Tiro had previously promoted a federal state of Aceh within an Islamic Indonesian Republic and only pursued the extreme option of armed separatism after the Daerah Istimewa formula produced no fundamental change to the relationship between Aceh and Jakarta. However, unlike the Darul Islam rebels who sought to change the form of the Indonesian state but not to secede from it, the ASNLF/GAM 're-declared' the 'free and independent Sovereign State' of 'Aceh-Sumatra' with the intent of severing all ties with the 'foreign regime of Jakarta and the alien people of the island of Java.' Also in contrast to the earlier generation of Darul Islam rebels, GAM's demands were not religious and were explicitly nationalist in nature. Though virtually all GAM rebels were Muslim, they based their claims to territorial sovereignty on the construct of a distinctive ethnic, cultural, historical and geographically specific identity and never sought to establish ties with Islamic movements in Indonesia or elsewhere.
The different responses by Jakarta to the Darul Islam and GAM insurgencies reflected the varying objectives of the two uprisings, as well as the changing character of the central government from Sukarno's so-called 'Old Order' to President Suharto's New Order. Whereas Sukarno had relied on a combination of military force and negotiations to contain the Darul Islam rebellion in Aceh, Suharto's New Order demonstrated its intolerance of separatism by relying primarily on military force. By the late 1970s the rebels had been forced underground and only resurfaced as a cohesive fighting force after 1986. In large part, GAM's resurgence was made possible by Hasan di Tiro's ability to secure support for GAM from Libyan dictator Colonel Muammar al-Gaddafi. GAM's growth was also made possible by continued central government neglect and interference.
In 1989, Jakarta forcefully responded to the expansion of GAM by launching a large-scale counterinsurgency campaign against the Acehnese rebels. Aceh was officially transformed into a 'Military Operations Area' (Daerah Operasi Militer , DOM), widely understood as the imposition of martial law, for the next decade. It is unclear how many Indonesian troops were stationed in Aceh during DOM as no official figures were released, but most sources estimate that about 12,000 security forces personnel were involved. The number of conflict-related deaths from the DOM period is also disputed, and the more time passes the less likely it is ever to be clarified. A 1998 Indonesian National Human Rights Commission (Komnas HAM) investigation into the atrocities committed against civilians during DOM produced contradictory findings that while 944 Acehnese were killed or disappeared during DOM, some 3000 women were widowed and 15,000 to 20,000 Acehnese children were orphaned. Since most sources do not distinguish between 'victims of violence' and 'fatalities', even relatively uncontroversial estimates of DOM-era fatalities tend to fall within the broad range of 1600 to 6000 deaths. What did become clear when DOM ended was that the human rights violations that accompanied these operations had further alienated Acehnese society from Indonesian rule and created ripe conditions for the regeneration of GAM in the post-Suharto era. By mid-1998 Acehnese antipathy towards Jakarta had become deeply entrenched and manifested itself in widespread demands for retribution, compensation and social justice. It was Suharto's appointed successor, B. J. Habibie, who formally 'lifted' DOM in August 1998 and withdrew thousands of security personnel from Aceh.