•  How the elite made a deal

•  Sectarian violence kills eight in Maluku
•  Major policy shift to agriculture
•  Malang in chaos after rampage
•  Riau students protest Wahid threat
•  IMF given Bank Bali scandal report
•  Muslim mob torches church in Jakarta

•  Minister suggests no Aceh poll soon
•  Newspapers urge quick solution in Aceh
•  Acehnese have right to referendum: Wahid
•  Thousands rally for referendum
•  Troops break up protest in Irian Jaya
•  Protesters burn parliament building

•  Political prisoners seek rehabilitation

•  The lobby that loved Indonesia
•  The new cabinet: Everybody happy?
•  Will President Wahid remain a democrat?
•  Soldiers destroy market in Jakarta
•  Habibie aides stole $123m, says audit

•  Military announces sweeping reshuffle

•  Bargain hunting in Jakarta
•  October inflation up 1.58% year-on-year

Man behind Timor massacre named

Tom Fawthrop, Suai -- As red tape and obstruction delay the United Nations investigation of human rights abuses in East Timor, a witness has identified an Indonesian army officer who allegedly directed one of the worst atrocities. His account, and those of other survivors, indicate that killings inside a church compound in the town of Suai could have been on a greater scale than first reported.

The killings took place on 6 September, two days after the announcement of the pro-independence vote in the 30 August referendum. The victims were among the thousands who had sought shelter from pro-Indonesian militia in the compound.

Lieutenant Sugito Carman has been identified by survivors of the Suai massacre as the man "giving the orders" on 6 September, which led to the murder of three priests, the mutilation of corpses, the burning of the church and a death toll reported to be between 200 and 300. A pile of female underwear at the foot of the cathedral's staircase appears to indicate that dozens of women were raped.

During a visit to Suai last week, Bishop Carlos Belo celebrated a Mass in which witnesses of the massacre were invited to come forward and tell what happened.

Twenty-eight-year-old Jose Santos (not his real name) said the church compound, including a school, a new cathedral still under construction, and the old church, was full of refugees on 6 September before the attack.

Estimates of the number of refugees seeking sanctuary from the pro-Jakarta militia based in Suai vary from a conservative 300 to several thousand.

A number of people have identified an Indonesian military officer as being among the combined force of militia, soldiers and Brimob (police mobile brigade) that surrounded the compound at 2.30pm on 6 September.

Mr Santos said: "I was looking through a window in a room behind Father Hilario's office [Father Hilario Madeira was the senior priest of Suai]. I recognised Lieutenant Sugito. He fired a pistol into the air.

That was the signal. Then the militia, everybody, all of them started firing." Lieutenant Sugito was identified by other Suai residents as the Koramil chief, or sub-district military commander, and as an active participant in the attack on the church. "I know Sugito very well," Mr Santos said. "He was head of Koramil."

Mr Santos said: "I saw Father Hilario killed. He was standing on the veranda outside his room. The militia shot him from about 10 metres. Two shots were fired by a G3 rifle and Father Hilario fell to the ground."

Two other priests, Father Francisco Soares and an Indonesian who had just been ordained, Father Tarcissus Dewanto, had already been killed. The attackers were armed with automatic rifles, machetes and grenades.

Six or seven grenades were thrown into the church packed with refugees, according to Atanasio de Costa, a 13-year-old nephew of Father Hilario. Other witnesses recall three or four grenades and that afterwards they set fire to the church and nearby buildings.

Another witness, Mr Eliziu Gusmao, said that from his hiding place near the convent he overheard the militia discussing what to do with all the bodies.

"I saw three military trucks loaded up with the corpses, but some were still alive and screaming as they were taken away with the dead. I guess they had around 200 in the trucks but I am not sure."

Around 6pm, Mr Santos, believing the militias and military had dispersed, emerged from his hiding place. "I saw around 100 dead bodies on the ground. Some inside the church, others outside.

Some were on top of each other with big gashes and cuts in the flesh, and some had no arms. Legs had been cut off and some activists had been decapitated." The mutilations are confirmed by other witnesses.

If their accounts are correct, the death toll is much higher than the previous estimate of around 100, cited in a news report by Fides, the Vatican newsagency, based on the evidence of another witness, a Canossian Sister from Suai.

InterFET is mystified about the disappearance of all the bodies. Timorese reports that most of the corpses were dumped into crocodile-infested lakes near the border with West Timor have yet to be seriously investigated.

A mixture of bureaucratic bungling and political opposition from Indonesia, China and other allies has combined to obstruct the efforts of the UN's inquiry into East Timorese human rights violations from getting off the ground, according to Ms Lucia Withers from Amnesty International's Asia and Pacific Department.

The UN Secretary-General, Mr Kofi Annan, has asked Mrs Mary Robinson, head of the UN Human Rights Commission, to arrange for her East Timor Inquiry to present its findings on human rights abuses by 31December.

But six weeks after the UN inquiry was called for, the investigation is yet to set foot in East Timor and is still lacking a mandate from New York. Amnesty International says that "after 24 years of turning a blind eye to human rights violations committed in East Timor, the international community has a responsibility to ensure redress and justice for the East Timorese".

Human-rights activists recall that in Kosovo, teams of forensic experts rushed in behind NATO forces to gather evidence of Serb crimes against the Albanian ethnic minority.

Dr Andrew McNaughton, who works for Timor Aid in Dili, says: "It appears the international community lacks the same political will to indict Indonesian generals for crimes against humanity."

Militia violence against refugeees intensifies

Maliana -- Returning East Timorese refugees on Friday said militia in West Timor had seized their belongings and forced them to pay to cross the border.

Constantino Marquez crossed the frontier at a stony river bed near the town of Maliana with his family of seven. They carried a mattress and a few green vegetables.

The man and his wife broke down in tears when they saw journalists, who gave them candy and water. "They took our belongings and jewellery and money," he said after returning from more than a month in West Timor.

Marquez was among 416 refugees who trudged along the dry river bed that divides East Timor from West Timor after the Indonesian miltiary opened the border for a hour. Friday's influx was the first significant flow in many days. Lieutenant Colonel Nick Welch, the commanding officer of the Australian troops in the area, said militia were preventing people from returning and voiced his frustration at the complicity of the Indonesian military (TNI).

"We are hearing stories about militia keeping people from crossing. The TNI are there and don't appear to be doing anything," he said.

He also expressed concern that militia were extracting between 50,000 rupiah and 200,000 rupiah from returnees. "You've got to address the issue ... some with no money have had to hand over cattle, or anything that is made in Indonesia," he said.

Welch said that the regular flow of between 1,000 and 1,500 refugees returning per day had dried up, frustrating the efforts of relief workers.

"We want to put some pressure on Indonesia," said a field officer for the United Nations High Commissioner for Refugees (UNHCR). "It has become more serious in the past five days. Things have deteriorated. It's as if sombody has shattered the pattern," she said, adding that the militia were splitting some families at the border.

Only four people crossed on Thursday, a girl and her three cousins. She said her parents and brother had been kept behind.

The aid workers said delay of the returning refugees was putting at risk the season's rice crop, which needs to be planted before the onset of the monsoons.

"They will lose a year of their lives. That has a big impact on the local economy and whatever rebuilding of East Timor is needed," the field officer said.

Welch also said there were disturbing reports of intimidation inside West Timor, including "stories of sexual intimidation and rape by the militia."

The delays have also caused anxiety among hundreds of family members who daily await the return of the refugees, camped with their belongings on the eastern bank of the riverbed about 100 meters from a wooden sign reading "Stop. Frontera."

The growing concerns over militia violence in West Timor were echoed by a UN official in Jakarta and the UNHCR.

The official in Jakarta said on Thursday militiamen had forced two refugees off a UN-organised ferry taking some 1,000 East Timorese home from the West Timor port of Atapupu.

"We are particularly worried about this because we thought the militias were not active in this area," the International Office of Migrationofficial told AFP.

In Geneva the UNHCR said militiamen had opened fire with automatic weapons in front of a UNHCR office in Atambua on Thursday, and again near a truck convoy carrying 200 refugees. No injuries were reported.

The action was "apparently aimed at disrupting UNHCR's repatriation program to East Timor," it said, and urged Indonesia to take action.

An estimated 260,000 refugees fled or were forced into West Timor after pro-Jakarta militias unleashed a campaign of terror in the aftermath of East Timor's independence vote on August 30.

The IOM says only about 37,000 refugees, most from West Timor, have returned to East Timor of which about 12,500 had made their own way home.

Timor genocide: the grim counting begins

David Lague, Dili -- There are 80,000 East Timorese still missing more than seven weeks after Interfet, the Australian-led international force, halted a violent rampage in the former Portuguese territory, according to estimates compiled by the peacekeeping troops.

Some United Nations officials believe the number may be closer to 200,000 but an accurate picture of the human cost of Indonesia's bloody withdrawal from East Timor may takeyears unless Indonesia allows the speedy return of refugees from West Timor and other parts of Indonesia.

The commander of Interfet, Major-General Peter Cosgrove, said yesterday he was unable to rule out the possibility that many of the missing people had met a "tragic fate".

"The number of bodies actually located by Interfet is just over 100," he said. "I can'trule anything out. The evidence is all we can go on. I just don't know. We may never know."

The UN estimates that more than 75% of East Timor's population was displaced, many forcibly taken to West Timor,in the wave of destruction and violence after an overwhelming majority voted for independence from Indonesia at aballot on August 30.

Pro-Jakarta militias and their supporters in the Indonesian military were forced to halt this rampage when Interfet was deployed on September 20 but vast areas of East Timor remain empty of people.

General Cosgrove said yesterday that of a total population of 800,000 before the crisis, Interfet believed about 720,000 could be accounted for, including up to 250,000 still in West Timor and 40,000 elsewhere in Indonesia.

However, UN officials believe the total population was between 850,000 and 890,000 before the ballot, according to 1998 projections drawn from Indonesian census figures. Confidence in these projections increased when more than 430,000 East Timorese registered to vote in the ballot.

UN officials believed that almost all eligible voters registered, and this was about the proportion of the population that could be expected to be in that age group, based on the total population estimate.

Refugees continue to trickle back into East Timor from West Timor but General Cosgrove said yesterday he was frustrated that Interfet had been unable to meet senior Indonesian officers to co-ordinate security for bringing East Timorese home.

Relations with senior Indonesian military in West Timor over border issues had become "chronic", he said. General Cosgrove wanted a system in place so troops from each side could communicate and notify each other if they planned to operate close to the border.

He had made repeated requests for a high-level meeting so arrangements could be made for refugees to be "seamlessly" shifted across the border, with Indonesian troops guaranteeing their security up to the border, where Interfet would take over.

"Our whole intention is to reduce to nil the chances of soldiers, who are essentially doing their countries' bidding, shooting at each other, and facilitate the return of thousands of people.

"We are a modern military force. If necessary, I will provide radios on both sides of the border."

Press calls for reconciliation with East Timor

Jakarta -- The Indonesian press on Monday expressed relief the country's army had completed its withdrawal from East Timor in a dignified manner, and called for reconciliation to heal the bitter wounds of the past.

The leading Kompas daily said the weekend ceremony in Dili marking the departure of the last 1,000-strong garrison from East Timor was emotional and highly significant for many Indonesians.

"We are heartened that the withdrawal of the last TNI troops from the land of Loro Sae [East Timor] and the lowering of the red and white flag took place in an honorable way," said the paper.

The English-language Jakarta Post heaped praise on East Timorese independence leader Xanana Gusmao for shaking the hands of the departing Indonesian top brass in a ceremony at Dili's Comoro airport on Saturday.

"The East Timorese can consider themselves fortunate to have this kind of leader at a time when they are poised to embark on the arduous road to full independence," said the paper.

The Post said Indonesia's 24-year occupation of East Timor had been a painful mistake which had cost the lives of around 5,000 Indonesians and 200,000 East Timorese.

"The 24-year-long conflict can be appropriately called a historical error given the sacrifices that have been made on both sides and the international complications which the problem has caused for Jakarta."

And it urged new Indonesian President Abdurrahman Wahid to learn the lessons of the East Timor debacle in dealing with separatist movements in other areas of the vast archipelago such as Aceh and Irian Jaya.

"For Indonesia the whole episode can serve as a valuable lesson in how popular resistance movements should not be handled. Indonesia's fatal mistake in East Timor was that during its 24- year-long presence in the territory it failed to win the hearts and minds of the East Timorese people," it said.

However Kompas said the issue of East Timor was not "black and white," adding that Indonesia's invasion of the former Portuguese colony in 1975 had to be seen in the context of the Cold War.

"Geopolitics, seen from the perspective of the Cold War, was a determining factor to superpowers like the United States, let alone to Indonesia, a developing country still prone to intervention and instability," said Kompas. The paper also pointed to the "prevailing division and civil war among the people of East Timor" at the time of the invasion.

The Indonesian Observer focused on the damage done to relations with Australia over the eruption of army-backed militia violence that greeted the overwhelming vote by the people of East Timor for independence on August 30.

The paper said the international peacekeeping force Interfet was now being well run under the "efficient" leadership of Australian Major General Peter Cosgrove and that militia violence had tailed off.

"The prospects for a recovery in the relationship between Indonesia and Australia look quite good," said the Observer, pointing to reconciliatory statements by Wahid and Australian leaders.

All three papers called for Indonesian and East Timorese leaders to work together for a better future. "In the spirit of reconcialition we can build relations or at least be a good neighbor," said Kompas.

The Jakarta Post added: "With the kind of wise leadership that now exists in Jakarta -- and hopefully in the near future in Dili -- there is every reason to believe that such a rapprochement is possible."

Rights group calls for militia to be disbanded

Jakarta -- An Indonesian rights body said Monday it had found evidence of organized human rights abuses by pro-Jakarta militia in West Timor, and urged Jakarta to protect the remaining 230,000 refugees East Timorese there.

The National Commission on Human Rights (Komnas HAM) said at a press conference here that approximately 21 militia groups in Indonesian-held West Timor had committed "systematic and organized human rights violations."

"Forced disappearances, arbitrary detention and violence against women have occured there. The freedom with which they can operate has created a deep and widespread fear among the refugees.

"Neglecting the militia operation shows a significant relationship between [Indonesia's] security forces and the militia," Komnas HAM said.

That relationship had "hampered the work of the commission team of inquiry and that of international human rights groups," said Albert Hasibuan, head of the inquiry team. Hasibuan said the vicious Aitarak (Thorn) and Red and White Iron groups had been intimidating refugees in several camps in Kupang, the capital of West Timor.

Therefore, the government had to increase "security guarantees" for the refugees to return to East Timor and to put "an immediate stop to" and "disband the militia groups," said Hasibuan.

"Testimonies from witnesses revealed that militia have arrested, threatened and terrorized the refugees ... one militiamen supervises 10 to 15 people. The militia often threatened the refugees if they said they wanted to repatriate.

"Other witnesses have also reported that militiamen have kidnapped East Timorese girls from the camps -- and the lack of security have made these girls susceptible to sexual violence," Hasibuan added.

The United Nations High Commissioner for refugees (UNHCR) has been assisting refugees to return by land, sea and air to East Timor from West Timor, where more than a quarter of a million East Timorese were pushed or fled during the wave of militia violence that greeted the August 30 independence vote.

A total of 16,938 refugees had returned to East Timor under UNHCR auspices as of last Monday, 10,867 by air and 5,955 by boat. An estimated 4,000 other people had returned unaccompanied on foot, and additional 116 crossed the border last Friday in trucks and on foot.

The UNHCR and other relief groups, as well as journalists, have reported terrified refugees telling them of disappearances, especially of young East Timorese men from the camps.

There have also been unconfirmed reports of killings by the militias of those wanting to return. The refugees have said they feared the young men were being drafted into guerrilla style militia armies to fight United Nations troops in East Timor, with the threat that their families in the camps will be killed if they don't.

Atrocity evidence feared at risk

Alexander Higgins, Geneva -- Failure by a UN panel last week to approve a special investigation of alleged atrocities in East Timor risks the loss of evidence that could be used in any future international trial of militias or the Indonesian military, an official said today. "There will be inevitably some degradation of evidence," said Mr Jose Diaz, spokesman for the top UN official on human rights.

The UN Economic and Social Council, which was supposed to approve the special commission of inquiry at its meeting last Tuesday, apparently will wait until its next meeting on November 15 to take up the matter, Mr Diaz said. "We would have liked to have seen the commission of inquiry to get in there as soon as possible," he said.

The investigators, appointed as a result of an emergency session of the UN Human Rights Commission last month, are to examine allegations of atrocities following the territory's vote for independence on August 30. They are to report their conclusions to the UN Secretary-General, Mr Kofi Annan, by December 31.

Mr Diaz, spokesman for the UN High Commissioner for Human Rights, Mrs Mary Robinson, declined to comment on whether there had been delaying tactics by countries on the council. But he noted that three UN investigators -- on torture, extrajudicial killings and violence against women -- planned to go to East Timor from November 4-10, accompanied by forensic experts. "There has been some evidence collected by the international force there, and we have very good testimony from UNAMET staff," Mr Diaz said, referring to the UN Assistance Mission in East Timor, present for the referendum. And some evidence was likely to last in any event, he said.

"If the reports of the massive and grave violations of human rights are correct, you won't be able to erase all the evidence that's there, but of course the sooner we get in there, the better." Mrs Robinson has named a five-member team to make up the commission.

It is to be led by a Costa Rican legislator, Sonia Picado. Also on the team are A.M. Ahmadi, a former Indian Chief Justice; Mari Kapa, Deputy Chief Justice of Papua New Guinea; German politician Sabine Leutheusser-Schnarrenberger; and Judith Sefi-Attah, of Nigeria.

Mrs Robinson has said the scale of atrocities committed by pro- Jakarta militias with Indonesian Army backing may warrant the creation of an international tribunal.

East Timor is not yesterday's story

According to recent reports, the UN mission in East Timor has been able to account for just over 150,000 people out of an estimated population of 850,000. It reports that 260,000 "are now languishing in squalid refugee camps in West Timor under the effective control of the militias after either fleeing or being forcibly removed from their homes," and that another 100,000 have been relocated to other parts of Indonesia. The rest are presumed to be hiding in the mountains. The Australian commander expressed the natural concern that displaced people lack food and medical supplies. Touring camps in East and West Timor, US Assistant Secretary of State Harold Koh reported that the refugees are "starving and terrorized," and that disappearances "without explanation" are a daily occurrence.

To appreciate the scale of this disaster, one has to bear in mind the virtual demolition of the physical basis for survival by the departing Indonesian army and its paramilitary associates ("militias"), and the reign of terror to which the territory has been subjected for a quarter-century, including the slaughter of hundreds of thousands of people when the Carter Administration was providing the required diplomatic and military support.

How have its successors reacted during the current "noble phase" of foreign policy, with its "saintly glow," to quote some of the awed rhetoric of respected commentators in the national press through the 1990s? One way was to increase the support for the killers -- for "our kind of guy," as General Suharto was described by the Clinton Administration before he fell from grace by losing control and failing to implement harsh IMF orders with sufficient ardor. After the 1991 Dili massacre, Congress restricted arms sales and banned US training of the Indonesian military, but Clinton found devious ways to evade the ban. Congress expressed its "outrage," reiterating that "it was and is the intent of Congress to prohibit US military training for Indonesia," as readers of the Far Eastern Economic Review and dissident publications here could learn. But to no avail.

Inquiries about Clinton's programs received the routine response from the State Department: US military training "serves a very positive function in terms of exposing foreign militaries to US values." These values were exhibited as military aid to Indonesia flowed and government-licensed sales of armaments increased five-fold from fiscal 1997 to last year. A month ago (September 19), the London Observer international news service and the London Guardian Weekly published a story headlined "US Trained Butchers of East Timor." The report, by two respected correspondents, described Clinton's "Iron Balance" program, which trained Indonesian military in violation of congressional bans as late as 1998. Included were Kopassus units, the murderous forces that organized and directed the "militias" and participated directly in their atrocities, as Washington was well aware -- just as it knew that these long-time beneficiaries of US training were "legendary for their cruelty" and in East Timor "became the pioneer and exemplar for every kind of atrocity" (Ben Anderson, one of the world's leading Indonesia specialists).

Clinton's "Iron Balance" program provided these forces with more training in counterinsurgency and "psychological operations," expertise that they put to use effectively at once. As they and their minions were burning down the capital city of Dili in September, murdering and rampaging, the Pentagon announced that "A US-Indonesian training exercise focused on humanitarian and disaster relief activities concluded August 25," five days before the referendum that elicited the sharp escalation in crimes -- precisely as the political leadership in Washington expected, at least if they were reading their own intelligence reports.

All of this found its way to the memory hole that contains the past record of the crucial US support for the atrocities, granted the same (null) coverage as many other events of the past year; for example, the unanimous Senate vote on June 30th calling on the Clinton administration to link Indonesian military actions in East Timor to "any loan or financial assistance to Indonesia," as readers could learn from the Irish Times.

For much of 1999, Western intellectuals have been engaged in one of history's most audacious displays of self-adulation over their magnificent performance in Kosovo. Among the many facets of this grand achievement dispatched to the proper place was the fact that the huge flow of brutalized refugees expelled after the bombing could receive little care, thanks to Washington's defunding of the responsible UN agency. Its staff was reduced 15% in 1998, and another 20% in January 1999; and it now endures the denunciations of the (also saintly) Tony Blair for its "problematic performance" in the wake of the atrocities that were the anticipated consequence of US/UK bombing. While the mutual admiration society was performing as required, atrocities mounted in East Timor. Even prior to the August referendum, some 3-5000 had been killed according to credible Church sources, about twice the number killed prior to the bombing in Kosovo (with more than twice the population), according to NATO. As atrocities skyrocketed in September, Clinton watched silently, until compelled by domestic and international (mostly Australian) pressure to make at least some gestures. These were enough for the Indonesian Generals to reverse course at once, an indication of the latent power that has always been in reserve. A rational person can readily draw some conclusions about criminal culpability.

At last report, the US has provided no funds for the Australian- led UN intervention force (in contrast, Japan, long a fervent supporter of Indonesia, offered $100 million). But that is perhaps not surprising, in the light of its refusal to pay any of the costs of the UN civilian operations even in Kosovo.

Washington has also asked the UN to reduce the scale of subsequent operations, because it might be called upon to pay some of the costs. Hundreds of thousands of missing people may be starving in the mountains, but the Air Force that excels in pinpoint destruction of civilian targets apparently lacks the capacity to airdrop food -- and no call has been heard for even such an elementary humanitarian measure. Hundreds of thousands more are facing a grim fate within Indonesia. A word from Washington would suffice to end their torment, but there is no word, and no comment.

In Kosovo, preparation for war crimes trials has been underway since May, expedited at US-UK initiative, including unprecedented access to intelligence information. In East Timor, investigations are being discussed at leisure, with Indonesian participation and a tight deadline (December 31). It is "an absolute joke, a complete whitewash," according to UN officials quoted in the British press. A spokesperson for Amnesty International added that the inquiry as planned "will cause East Timorese even more trauma than they have suffered already. It would be really insulting at this stage." Indonesian Generals "do not seem to be quaking in their boots," the Australian press reports. One reason is that "some of the most damning evidence is likely to be ... material plucked from the air waves by sophisticated US and Australian electronic intercept equipment," and the Generals feel confident that their old friends will not let them down -- if only because the chain of responsibility might be hard to snap at just the right point.

There is also little effort to unearth evidence of atrocities in East Timor. In striking contrast, Kosovo has been swarming with police and medical forensic teams from the US and other countries in the hope of discovering large-scale atrocities that can be transmuted into justification for the NATO bombing of which they were the anticipated consequence -- as Milosevic had planned all along, it is now claimed, though NATO Commander General Wesley Clark reported a month after the bombing that the alleged plans "have never been shared with me" and that the NATO operation "was not designed [by the political leadership] as a means of blocking Serb ethnic cleansing ... There was never any intent to do that. That was not the idea."

Commenting on Washington's refusal to lift a finger to help the victims of its crimes, the veteran Australian diplomat Richard Butler observed that "it has been made very clear to me by senior American analysts that the facts of the alliance essentially are that: the US will respond proportionally, defined largely in terms of its own interests and threat assessment ..." The remarks were not offered in criticism of Washington; rather, of his fellow Australians, who do not comprehend the facts of life: that others are to shoulder the burdens, and face the costs -- which for Australia, may not be slight. It will hardly come as a great shock if a few years hence US corporations are cheerfully picking up the pieces in an Indonesia that resents Australian actions, but has few complaints about the overlord.

The chorus of self-adulation has subsided a bit, though not much. Far more important than these shameful performances is the failure to act -- at once, and decisively -- to save the remnants of one of the most terrible tragedies of this awful century.

Sun sets on Indonesia's occupation

Dili -- Standing bolt upright after singing the national anthem, the Indonesian soldiers cleared their weapons in unison and marched off across the tarmac as the sun set on Dili's Comoro airport.

Chanting military songs as they headed towards the waiting C-130 Hercules, some of the 75 air force and special service troops peeled out of formation to exchange hugs and handshakes with watching international peacekeepers.

As they mounted the ramp into the aircraft some turned back and waved at the troops from the International Force for East Timor (Interfet), most of whom returned the gesture as the Hercules roared down the runway.

Throughout Saturday the mood at the airport was relaxed as the last Indonesian troops in East Timor stowed away their equipment and loaded it onto the two waiting transport planes.

The aircraft took 131 of the 909 remaining troops. The rest were due to leave on two ships from Dili's port, with the last vessel expected to depart around midnight.

Some Indonesians posed for snapshots with Interfet soldiers, others sat under a tree listening to a colleague strumming a guitar.

East Timorese resistance leader Xanana Gusmao arrived by helicopter from the Falintil rebel base at Remexio east of Dili for a remarkably relaxed and informal farewell ceremony with the departing Indonesian top brass.

Wearing military combat fatigues, Gusmao exchanged salutes with Indonesian officers and could be seen smiling, chatting and shaking hands with the Indonesian commander Brigadier General J.D. Sitorus.

The East Timorese resistance leader spent nearly seven years in jail in Jakarta for his role in leading military resistance to Indonesian occupation, but betrayed no hint of animosity as he chatted with his former enemies.

At one point during the casual ceremony in the old terminal building a beaming Gusmao nonchalantly lit up a cigarette. He later made an emotional appeal for a positive and prosperous relationship with the new Indonesian government.

"I believe in the new government and the Indonesian people and the process of democracy that is going on in Indonesia," Gusmao told reporters after the ceremony.

Ambassador Taufik Sudarbo, head of the Indonesian task force which stayed behind in East Timor after Interfet peacekeepers arrived in mid-September, was also emotional and conciliatory.

"I am very sad because at long last we are to be separated from our brothers in East Timor, but history will show what we can do in the future to build a new state of East Timor," he told AFP.

Interfet troops were out in force to ensure there were no incidents as the bulk of the Indonesians prepared to leave on two troop ships.

Roads leading to main downtown barracks and connecting them to the port area were sealed off as East Timorese began to gather along the waterfront and outside the main barracks as news of the final evacuation spread.

East Timorese at the port to welcome a boatload of refugees returning from West Timor, jeered and cursed 20 armed Indonesian troops heading for the port in a truck.

The Indonesian troops on Friday night abandoned the telecommunications and power facilities they had jointly occupied with Interfet.

And on Saturday they lowered the red and white Indonesian flag fluttering over their downtown barracks -- symbolically ending 24 years of military occupation of East Timor.
 

Presidential succession

How the elite made a deal

Jeremy Wagstaff, Jakarta -- It's 2am on October 20, and Indonesia's parliament has delivered a stunning rebuke to President B.J. Habibie. It has just rejected his "accountability speech" -- the equivalent of a no-confidence vote. In the expansive parlor of the presidential mansion, Mr. Habibie receives the news, then quietly addresses a handful of the country's elite assembled there.

"Morally I cannot continue," he says. With that statement, Mr. Habibie set off one of the most frantic 10 hours of politicking in Indonesia's two-year lurch toward democracy.

The next morning, a special body would be convening to elect a president, and now Golkar, the governing party for three decades, had no candidate.

Presumably this would clear the path for Megawati Sukarnoputri, the wildly popular daughter of Indonesia's founding father, Sukarno -- her party won the most votes in June's parliamentary election. Instead, before the day was out, Indonesia would get a charismatic, blind cleric, Abdurrahman Wahid, and the threat of new unrest.

How that deal was made, and how others collapsed, reveals the extent to which a small group of power brokers controls the political machine here, democracy notwithstanding. While the nation slept, at least two candidates would rise and fall, a party stalwart would pull a gun in the halls of parliament, and Mr. Wahid would conduct a jocular interview with several Golkar courtiers, dispensing compromises that could later haunt his presidency.

The events of the morning would also lay bare the political ineffectiveness of the nation's most popular politician, Ms. Megawati, and her inability to capitalize on utter breakdown in her rival's camp.

Now is the moment

Back in the president's parlor, wheels are already turning. Among Mr. Habibie's guests are several people with ambitions to high office themselves -- among them, armed-forces chief Gen. Wiranto, Muslim leader Hamzah Haz, newly elected assembly speaker Amien Rais, and Golkar party chairman Akbar Tandjung. Mr. Habibie locks eyes with Mr. Tandjung, the man many suspect of engineering the embarrassing no-confidence vote. "Now is the moment you've been predicting," Mr. Habibie says pointedly. "Tell us what your [plan] is."

The prologue to this evening came in May 1998, when President Suharto resigned amid economic breakdown and rioting. He was succeeded by his vice-president and longtime protege, Mr. Habibie, who promised free parliamentary elections within a year. The new 500-member parliament would constitute the bulk of a 700-member electoral college, which in turn would select Indonesia's first democratically elected president in nearly a half-century.

The June 1999 parliamentary vote produced no outright winner, but it confirmed the strong popularity of Ms. Megawati's Indonesian Democratic Party of Struggle, or PDI-P, which took 32% of the electable seats. Golkar, the party of Messrs. Suharto and Habibie, came in second with 25%, showing that despite waning fortunes it was no weakling. Other parties didn't do nearly as well. The National Mandate Party of the popular Muslim leader Amien Rais, for instance, won only 7%.

Although any party could nominate a presidential candidate, it seemed likely that only Ms. Megawati and Mr. Habibie had a real chance.

The real game

But in the electoral college, the game isn't popularity but politicking. That's where Ms. Megawati was stumbling. By the night of the accountability-speech vote, the all-important slots of electoral-college speaker and parliament speaker were both held by leaders of rival parties, Messrs. Rais and Tandjung, respectively -- offering a hint of the deals to come.

It's 2.30am. One by one, Mr. Habibie and his friends go around the parlor, suggesting alternatives. Mr. Hamzah, Mr. Habibie's ally and leader of the tiny Muslim United Development Party, declines to run.

Yusril Mahendra, a law professor and leader of the 13-seat Bulan Bintang party, says his party is too small. Mr. Rais, who won the assembly speaker's position with Golkar's backing, is noncommittal: "I have a deal to support Gus Dur," he says, using Mr. Wahid's nickname.

He leaves, apparently to negotiate with Mr. Wahid. An hour or so later, Mr. Habibie departs for Jakarta's main mosque to pray with thousands of supporters. By then the word is out that he's not running.

When he gets back at 5.30am, dawn is breaking and pressure is growing. Ninety minutes remain until the deadline for registering candidates. With no word yet from Mr. Rais, there's only one viable runner left: Mr. Tandjung, the Golkar chief.

A barrel of a man, with a low, lisping voice, Mr. Tandjung is as much an echo of the past as everyone else in the room. A minister under both Messrs. Suharto and Habibie, he owes his current party position to the behind-the-scenes deal-making 16 months earlier by Mr. Habibie and Gen. Wiranto. (The military is a powerful political force in Indonesia. With Gen. Wiranto at the helm, it controls a key 5% of the 700 electoral-college votes.)

Cloud of suspicion forms

However, longstanding suspicions that Mr. Tandjung has been secretly cutting deals with other parties are coming home to roost: In the hours since Mr. Habibie pulled out of the race, Mr. Tandjung has been punched and insulted twice by Habibie supporters.

Nevertheless, in these desperate hours he is Golkar's last hope. "You've got the support of the second-biggest party," Mr. Habibie tells him.

After a few minutes of persuasion, Mr. Tandjung agrees. Mr. Habibie and others rush forward to hug him, and many people in the room -- including Mr. Tandjung -- have tears in their eyes. Golkar still has a chance.

It's 6am and one by one, the assembled depart Mr. Habibie's house to prepare for the parliamentary session. However, doubts remain. Mr. Tandjung "looked completely uncertain," recalls Abdul Gafur, former Golkar chairman. "He knew he couldn't count on the support of everyone in Golkar."

Mr. Gafur's doubts proved correct. Even as his name is being submitted to the assembly -- five minutes before the deadline -- Mr. Tandjung faces heated opposition in a meeting room on the ninth floor of the assembly's newly finished wing. Many Habibie supporters are livid that he is standing. Twenty or so people in the crowded room are yelling. A senior party official and Tandjung supporter whisks a gun out of a holster in his sock and shouts above the din. "Don't push Akbar! Push him and it means you push me!"

It's clear to Mr. Tandjung he doesn't stand a chance. At 7am he slips out to the mosque in the parliament complex, and then quietly consults some colleagues. At 7.30am his candidacy is pulled, 35 minutes after being submitted.

For Golkar, this seemingly is the end. The party is entering the presidential election with no candidate. The party's 180 electoral-college votes -- a quarter of the total -- are now up for grabs.

A dark horse moves ahead

Mr. Tandjung's withdrawal elevates the chances of someone until now considered the outsider: the cleric Mr. Wahid. His National Awakening Party won a paltry 10% of the seats in the parliamentary vote. But he is a beloved figure, and as a Muslim leader is palatable to one of the key constituents allying against Ms. Megawati's brand of secular nationalism.

Ms. Megawati's party has so far been slow off the block in cutting deals in the assembly, and tonight is no different. There has been scant sign of party lobbyists since they registered their candidate, a half-hour after Mr. Habibie lost the vote on his accountability speech.

PDI-P leaders had gathered earlier at their makeshift base in the cavernous grand ballroom at the Hilton Hotel, a half-mile from the parliament. But the meeting lasted less than an hour. Euphoric after Mr. Habibie's defeat, they did their sums again -- by their most conservative calculation, party members reckon they can count on 371 votes, enough to win the presidency. That's because of earlier secret deals with Mr. Tandjung's wing of Golkar, and their firm belief that Mr. Wahid will back down.

By 2am, when Mr. Habibie was gathering his guests in his parlor -- a political lifetime ago -- most PDI-P leaders had retired to their hotel rooms, including Ms. Megawati. It's only when PDI-P members turn up at parliament for the vote itself that they realize their deals have been overtaken by events.

For Golkar's Habibie supporters, once Mr. Tandjung is out, it's a no-brainer about whether to approach Ms. Megawati or Mr. Wahid with their votes. A group of them pile into two cars to make the five-minute run to the marble lobby of the Hotel Mulia. There, in an unobtrusive conference room on the mezzanine floor, they patiently await the 59-year-old cleric.

Mr. Wahid is helped in, as usual, by two companions. Even after a night of politicking, he is his customary jovial self, describing how he just got off the phone with US Secretary of State Madeleine Albright. A few hours earlier he had sealed his own alliance with assembly speaker Rais and other Muslim leaders, giving him a fighting chance of the presidency. Suddenly, Mr. Wahid -- a candidate who had long professed support for Ms. Megawati -- looks set to become her most dangerous rival.

Trading time

The Golkar leaders are businesslike. They offer at least 150 votes in return for Mr. Wahid's support for their vice- presidential candidate.

Fine, says Mr. Wahid, according to Golkar members attending the meeting. Golkar also wants 10 seats in his 35-member cabinet. Fine, says Mr. Wahid again -- "I only want three or four for myself, you can have the rest," he says, chuckling.

One of the Golkar members, businessman Laode Kamaluddin, recalls: "We weren't sure if he was being serious." But there's no time to check. The electoral-college vote is due to start in 15 minutes.

In Makassar, the capital of Mr. Habibie's home province of South Sulawesi, hundreds of students are in the streets protesting his withdrawal. At a massive traffic circle in Jakarta, tens of thousands of Megawati supporters are gathering. And in parliament, house speaker Rais has read the final list of candidates -- and it contains a surprise.

The tiny, Muslim-oriented Bulan Bintang party has registered its chairman, Mr. Mahendra, as a candidate after all, despite his protestations in Mr. Habibie's parlor hours before.

A handsome law professor with an intellectual disposition, he is a serious potential spoiler. As a Muslim figure, he could drag vital support away from Mr. Wahid. Baffled supporters of Mr. Wahid beg Mr. Mahendra and his supporters for him to withdraw. But when the session opens at 11.30am, an hour late, he's still there.

It's a gambit by veteran politician Hartono Mardjono, who along with Bulan Bunting's members, fears that the mercurial Mr. Wahid will withdraw his candidacy at the last minute, leaving the field to Ms. Megawati. Mr. Hartono's plan: to keep Mr. Mahendra's name in the ring as a substitute Muslim-oriented candidate until they are sure Mr. Wahid won't withdraw. "Don't interfere," Mr. Hartono tells other assembly members. "Trust me."

Hedging bets

As the session starts, a bomb goes off at the city's central roundabout, injuring several Megawati supporters. In the assembly, however, party leaders are hunched over pencils calculating how many votes they can count on. As long as Mr. Mahendra is a candidate, it's a three-horse race likely to benefit Ms. Megawati. As party elder it's up to the diminutive Mr. Hartono to seal the deal directly with Mr. Wahid, a few seats away.

It's nail-biting time. Mr. Rais calls the house to order -- the vote is about to begin. A phalanx of officials from Ms. Megawati's party, PDI-P, have surrounded Mr. Wahid in a last- ditch attempt to persuade him to give way to Ms. Megawati. Mr. Hartono struggles through. A TV camera hovers inches away.

Mr. Hartono whispers in Mr. Wahid's ear: Are you serious about your candidacy? I am, says Mr. Wahid. Will you give up your candidacy? In the name of God, no, Mr. Wahid replies. Don't worry, Mr. Wahid adds, your party will be looked after, Mr. Hartono recalls him saying.

At last, Mr. Hartono is satisfied Mr. Wahid isn't about to gather up votes, only to hand them to Ms. Megawati. "It was a very, very tense moment," recalls fellow Bulan Bintang member Hamdan Zoelva. With his party persuaded that Mr. Wahid is willing to fight Ms. Megawati, Mr. Mahendra is ready to formally withdraw. A few moments later, as he calls on his Muslim brothers to support Mr. Wahid, there's an uproar. Supporters rush to embrace Mr. Mahendra. Some are crying. The outcome looks clear -- presidency for Mr. Wahid.

Victor emerges

At 2.48pm that result is announced: Mr. Wahid has won by 70 votes. Supporters of Ms. Megawati are distraught. In the streets outside, they begin to converge on parliament. Another bomb explodes, killing several PDI-P supporters.

In the name of stability, Mr. Wahid spends the next evening patching together support for Ms. Megawati as his vice president. One by one, rivals fall away -- among them Mr. Tandjung and Gen. Wiranto.

By the time the vice-presidential vote is taken, 24 hours after presidential vote, only one rival stands: Mr. Hamzah. Ms. Megawati wins by more than 100 votes. The PDI-P protests turn to celebrations.

Within a week Mr. Wahid announces his cabinet. Tellingly, the ministers include Mr. Mahendra, the spoiler presidential candidate; Mr. Haz, Ms. Megawati's rival for the vice- presidency; Marzuki Darusman, a deputy to Mr. Tandjung; and Mr. Habibie's first choice as running mate: Gen. Wiranto. It's a hodgepodge of nominees from all the main political parties and the military, reflecting the political concessions Mr. Wahid has made to attain the presidency.

It will be a cabinet populated with strong personalities and divergent politics, held together by Mr. Wahid, a man who despite his infirmities has proved himself adept at backroom dealing. It ranges from two outspoken economists from Ms. Megawati's camp, a former head of the government-sponsored national trade union, to three senior generals. Whether it holds will depend on the depth of ties sealed in the early hours of October 20. Only one group appear left out: Mr. Habibie's supporters. After being promised 10 seats, they only have two of their nominees in the cabinet. "We lost the power game," says Mr. Gafur, the Golkar member.
 

Political/economic crisis

Sectarian violence kills eight in Maluku

Jakarta -- Eight people have been killed and some 100 homes burned down in the latest outbreak of Muslim-Christian violence in Indonesian's province of North Maluku, reports said Friday.

The clashes in Tidore island in the district of Central Halmahera on Wednesday erupted following the distribution of leaflets by an unidentified group calling for an uprising, the official Antara news agency said.

The violence forced some 700 people to seek refuge in the district's military installations, Antara said.

Some 70 members of the police mobile brigade unit have been flown from neighboring North Sulawesi province to the island to contain the unrest. Police and military on the island could not be reached for comment.

The Maluku islands, known as the spice islands, have been rocked by bloody sectarian clashes since the beginning of the year.

It started in Ambon, the capital of the Malukus, and later spread to other islands. Tens of thousands of people have fled to other provinces.

More than 200 people have been killed and more than 600 injured since the violence resurfaced in late July after a few months' lull. The first wave of Muslim-Christian violence in the islands between January and March left about 350 people dead.

Major policy shift to agriculture

Shoeb Kagda, Jakarta -- In a major shift in economic direction, Indonesia's newly-elected President Abdurrahman Wahid has asked the International Monetary Fund (IMF) to focus more on agriculture under its US$49 billion (S$81.5 billion) rescue plan for the country.

Speaking to reporters after meeting the president yesterday, the IMF's Asia-Pacific director Hubert Neiss said that the Indonesian leader wanted the new policy direction to be spelt out in the next Letter of Intent (LOI), which is expected to be completed by mid-December. Countries that receive IMF funding agree with the multilateral body on periodic economic targets under the so- called LOI.

Apart from agriculture, the president asked for more resources for small and medium-sized enterprises because a large part of the country's population work in these sectors, Mr Neiss said. The IMF official said it is willing to accommodate the new policy directions although the final decision rests with its central executive board.

Mr Neiss noted that the IMF's programmes are not rigid and can be modified and adapted to suit changing economic conditions. "I think the president did make the point several times that he wants to carry out economic policies with specific Indonesian conditions ... and now I am standing in a specific Indonesian world and I assured him that we will respect it."

While details are still sketchy, the back-to-basics policy drive of the new administration is a dramatic turnaround from the policies adopted by his two predecessors -- former presidents Suharto and BJ Habibie -- both of whom put their faith in the manufacturing sector and hi-tech industries as the main engines of economic growth.

As a result, the agricultural sector, which in the 1980s was the largest contributor to gross domestic product (GDP), slipped to third place behind the manufacturing and services sectors by 1997. Last year, agricultural output contributed 19.5 per cent to Indonesia's GDP, against 24.8 per cent by the manufacturing sector and 19.8 per cent by the services sector, which includes finance and communications. But with both these sectors devastated by the two-year-long economic crisis, the agricultural sector has once again moved to the forefront of economic policy- making.

According to various estimates, between 60 and 70 per cent of the country's 210 million people live and work in the countryside, making the sector the biggest employer.

HS Dillon, an agricultural economist who serves as an informal adviser to the president, told BT that the new policy direction was primarily aimed at ensuring food security and enhancing the productivity of farmers.

"The farmer was marginalised in the drive to industrialise," he noted. "But with 70 per cent of the population living in the countryside, you are developing the people rather than just a sector by improving agricultural output."

Mr Dillon said that it was important to distinguish between boosting agricultural output and expanding the agribusiness sector. "In the agribusiness sector, the commercial considerations demand that companies maximise short-term profits but in agricultural development, you have to take the long-term view."

The new focus on agriculture, however, has some analysts wondering if this will be at the expense of manufacturing which in the past has been the main engine for export growth. They note too that a heavy emphasis on agriculture could lead to higher subsidies for farmers for the purchase of fertilisers, for example, and that would be a drain on government coffers that Indonesia can ill-afford at present.

It also remains unclear what the role of the National Logistics Agency (Bulog) -- the country's agricultural distribution monopoly under the Suharto regime -- would be within the new framework.

Created to maintain price stability for commodities such as rice and wheat, Bulog was heavily criticised because it benefited the family and friends of Mr Suharto.

"The new policy makes sense because given Indonesia's comparative advantage, more attention should be focused on the agricultural sector which was largely unaffected by the crisis," said Joshua Tanja, head of Research at PT Paribas Asia Equity. "What does not make sense is protecting the farmers from competition and allowing Bulog to control the prices of commodities."

If that were to happen, it would go against the grain of the IMF-led economic reform programme and "would not be seen favourably by the market", he added.

Sri Mulyani Indrawati, a senior economist at University of Indonesia, also noted that currently, there was too much price distortion and government intervention in the agricultural sector. "The government needs to redefine its policy towards the agricultural sector but it should not be a trade-off vis-a-vis the manufacturing and service sectors," the senior economist said.

Rebuilding the agricultural sector should go hand-in-hand with reforming the banking sector and restructuring debt-laden corporations, analysts said. Given endemic corruption at all levels of the government bureaucracy, there are also fears that any new money diverted to promoting agriculture could instead land up in the pockets of bureaucrats who still exert considerable influence in the villages of the vast archipelago.

Malang in chaos after rampage

Malang -- Mass unrest and riots on Friday and Saturday (29th-30th October) followed the looting of coffee and cocoa belonging to the Sumbermanggis Plantations in Jogomulyo village, Tirtoyudo subdistrict, south of Malang.

Thousands of furious people vandalized and burned the factory of Sumbermanggis Plantations. A fuel storage facility, rubber treatment unit, diesel power station, fertilizer storage and employees' cooperative office in the factory area were all burned to the ground. After burning the factory, the mob also burned two trucks and a jeep.

As of Sunday morning (31st October], the wreckage of the vehicles still lay in front of the factory. Satisfied with the burning, the mob then looted stuff from the factory that could still be used such as fertilizer, zinc plates and iron.

Based on the information gathered by Suara Karya, the clash began with the looting of coffee and cocoa in the Sumbermanggis Plantations area, which the plantation management reported to the Malang Police.

As the result, four persons suspected as the "masterminds" behind the looting were arrested and detained at the Resort Police. Jogomulyo villagers got angry after the four suspects were detained.

Thousands of villagers came to the factory carrying cudgels, bladed weapons, petrol and Molotov cocktails because they considered the company as the cause of their fellow villagers being detained by the police.

There, they forced the director of the company to release the four villagers detained by the Malang Police. Getting no response, they got angry and together they burned the factory of Sumbermanggis Plantations.

To cool down the mob's anger, hundreds of troops of the Mass Control unit of Malang Resort Police, along with troops from Tirtoyudo, Gondolegi, and Dampit Sector Police Stations were deployed to the scene. However, the mob's rage was so tremendous that the security personnel could not stop the burning of the factory. Eight villagers were reportedly wounded by rubber bullets.

At the peak of their anger, tens of police officers were "held hostage" at the nearby village hall. They demanded the release of the four villagers. After long negotiations, the four villagers were finally released and handed over to the villagers. Malang Police Chief Colonel Aryanto Sutadi confirmed that the police had released the four detainees.

Riau students protest Wahid threat

Jakarta -- Hundreds of Indonesian students lowered the national flag outside the Riau provincial governor's office in protest after President Abdurrahman Wahid warned separatist activists would be arrested, a report said Wednesday.

The protesters, who also burned tires, urged Governor Saleh Jasit to convey to the president the misery of the people in the oil- rich province on Sumatra island, the Media Indonesia newspaper said.

Riau parliament Speaker Chaidir was quoted by the daily as saying he regretted Wahid's statement and described the government as "arrogant."

"I deplore Gus Dur's [Wahid's] statement that Riau people in Jakarta have instigated the people to break away," from Indonesia, Chaidir said. "The council is not scared of Gus Dur's threat," he said.

Tabrani Rab, an intellectual who first aired the idea of an independent Riau, said Tuesday that Wahid's warning would not deter the Riau people's struggle to break away from Indonesia.

"Riau will not beg to Jakarta or the central government for independence, because Riau wants to free itself," he said.

"Malaysia could let go Singapore and Brunei in a peaceful manner. Why can't [Indonesia]?" he said, refering to the 1960's when then Malaya and Singapore were freed from British colonal rule.

The president said on Monday he had identified some of those making the calls for Riau to break away from Indonesia as coming from the Indonesian capital, but did not reveal their names.

The idea of an independent Riau has been aired by several local community leaders but there has been no armed resistance in the province.

Wahid has said his government would opt for a federal-type system to appease rising demands for independence by several regions such as Aceh, Irian Jaya and Riau.

IMF given Bank Bali scandal report

Jakarta -- Indonesia's senior economy minister, Kwik Kian Gie, on Tuesday handed a copy of an audit into the murky Bank Bali scandal to the IMF, paving the way for a resumption of multilateral aid to Jakarta.

Parliament made copies available to the public in both English and Indonesian, prompting a rush on the politically-explosive report which named the beneficiaries of embezzled millions and how much each had received.

Kwik, coordinating minister for the economy, finance and industry, personally handed the full report to the International Monetary Fund's Asia-Pacific director, Hubert Neiss, at a ceremony at the National Development Planning Board.

He said President Abdurrahman Wahid had directly ordered him to give Neiss the audit, conducted by international accountancy firm PricewaterhouseCoopers (PwC), and denied that Jakarta was yielding to pressure.

"It's not correct to say that the IMF pressured us," Kwik said. "We did in fact promise to disclose this audit." The decision to release it was made "in order to fulfill the aspirations of the public during the current era and to implement greater transparency and avoid misunderstanding," he added.

The Jakarta stock market reacted cautiously to the publication of the report, slipping 0.11%, with analysts saying most investors were waiting for concrete action to tackle the report's findings.

The report confirms some of the worst suspicions over the scandal which revolves around an 80 million dollar commission paid by Bank Bali to a private firm connected to the then-ruling Golkar party to collect interbank loans.

It said that 2.2 million dollars of the money was paid directly into Golkar coffers and some into offshore accounts. It also recommended that further investigations be made into the roles of two former ministers and central bank governor Syarhil Sabirin.

The government of former president B.J. Habibie, who had been supported by Golkar for a second term in office, had cited banking secrecy laws in allowing only an abridged version of the audit to be released to parliament. "A list of the robbers!" said one Indonesian reporter gleefully after collecting a copy.

Neiss, whom Kwik said was to meet Wahid on Wednesday, has said that the IMF is prepared to resume sorely-needed loans to Jakarta before the full legal process on Bank Bali is completed.

But he has insisted on "full transparency" -- including the release of the audit to the public -- as a condition of aid resumption.

Kwik also said an IMF technical team was due to arrive in the country next week. The team will work with the government on formulating a fresh letter of intent which should be finalised by mid-December so that IMF aid, suspended in early September over the scandal and the East Timor crisis, could resume.

Neiss said the IMF wanted to see the Bank Bali report followed up with legal action to speed up the return of international support.

Financial experts estimate the combined amount of aid from the IMF, the World Bank and the Asian Development Bank that has backed up since September at some 4.6 billion dollars.

Earlier Tuesday parliament speaker Akbar Tanjung said the decision to release the full report had been made in conjunction with the heads of two parliamentary commissions probing the scandal, one dealing with legal and internal affairs and the other with finance and planning.

Muslim mob torches church in Jakarta

Jakarta -- A mob of some 200 Muslims armed with crude weapons set fire to a church in a town south of Jakarta early Tuesday, residents said.

Some 30 police who rushed to the burning Jemaat Salom church in the Depok township were helpless as they were outnumbered by the arsonists, armed with machetes and other home made weapons.

Residents said Muslims had been threatening to demolish the building for the past month because the church had yet to obtain a special building licence from the authorities, as required by law. But they said the arsonists had come from outside the area.

The burning came a day after a church leader signed a security guarantee for the church, witnessed by the mayor of Depok, which lies some 20 kilometers south of the capital. Police contacted by AFP confirmed the incident but refused to give further details.
 

Aceh/West Papua

Minister suggests no Aceh poll soon

Agencies in Jakarta -- Home Affairs Minister Suryadi Sudirja indicated yesterday the troubled province of Aceh was unlikely to get a referendum soon to decide its political status.

Special autonomy within the "unitary state of Indonesia" was a better solution to Aceh's problems than "separation from the family", Mr Suryadi said.

His statement came just a day after President Abdurrahman Wahid said he agreed in principle to the notion of an East Timor-like self-determination ballot for the people of the resource-rich province on the northern tip of Sumatra.

"We must work hard to reach a compromise ... We don't want an attitude that seeks only one's self-interest to prevail," Mr Suryadi said after a meeting with President Wahid. "Causing many people misery is not the right thing to do," the minister said.

People's Consultative Assembly Speaker Amien Rais warned yesterday that the separatist conflict in Aceh needed to be resolved soon if Jakarta wanted to avoid an East Timor-style independence referendum there.

"If the problem of Aceh cannot be resolved immediately, it will be no surprise if a referendum in the province becomes a reality," Mr Rais said in a public warning to Mr Wahid.

"The issue of Aceh is real, and there should be quick steps taken to resolve the problem." In East Aceh on Thursday, tens of thousands of demonstrators paraded peacefully through the town of Sigli, in the second large-scale protest in the area in two weeks.

Even Mr Wahid emphasised that his support for self-determination did not mean an immediate vote on autonomy. This was because many more discussions and consultations within government and with ordinary members of society were needed, he said. "A way to know the feelings of Acehnese" on the referendum must be sought, Mr Wahid said. Foreign Minister Alwi Shihab said the decision on a referendum might have to be made by all Indonesians and not just the Acehnese.

Newspapers urge quick solution in Aceh

Jakarta -- Indonesia's leading newspapers on Friday urged Jakarta to find a peaceful settlement to separatist unrest in Aceh, a day after President Abdurrahman Wahid said he was open to a ballot on independence in the rebellious province.

The Kompas daily said in an editorial that separatist tension in the resource-rich, staunchly Moslem province on the northern tip of Sumatra stemmed from heavy-handedness by the military and central government, not a genuine desire for independence.

"A referendum which could result in Aceh being a separate country is indeed very shocking ... after the traumatic experience in East Timor," Kompas said.

"At the same time, we should be able to see the preference and campaign for a referendum ... are triggered by disappointment against unfair, repressive treatment rather than the urge to become an independent country," it said.

"We are hoping ... the solution towards the problem in Aceh be given top priority and is done in accordance to the aspirations of the Aceh people."

The military, charged with years of human rights abuses in Aceh, said this week it would start pulling troops out of the territory this month, conceding its hardline approach failed.

"Earlier this week Jakarta made its latest reconciliation gesture by stating that it was ready to abandon its 'security approach' in the province," the Jakarta Post newspaper said.

"These developments are encouraging. The problem is that at this point, Jakarta's offers of a new and more humane approach could be regarded as too little too late by the Acehnese.

"With Abdurrahman as the president of Indonesia, now it is time to push for a settlement that will restore the peace in Aceh once and for all."

Acehnese have right to referendum: Wahid

Jakarta -- Indonesian President Abdurrahman Wahid said on Thursday the people of the volatile province of Aceh had the right to an East Timor style referendum, but that his government would not be pushed into a vote.

"I don't know what time, but I support a referendum of course. That's their right. If we can do that in East Timor, why can't we do that in Aceh," Wahid told a press conference here.

"But that's not the question. The question is, if there is a referendum, when. And we do not like to be rushed by these things."

There is "also a question of whether there will be a referendum, or not. It is not decided by me, but the Aceh people themselves, so we have to develop a way to know the feelings of the Acehnese on this."

But Foreign Minister Alwi Shihab qualified Wahid's statement at the same press conference, saying the president's comments did not necessarily constitute an offer.

"The principle and the spirit are there. They have the right as people but that doesn't mean it should take place before or prior to a consulation with all parties involved -- bureaucrats and the military."

Wahid's comments came after a week of tumultuous developments on Aceh which saw the military promise to end its tough tactics there and several large demonstrations demanding a referendum -- one of which ended with troops opening fire and injuring 19 people.

Wahid has put mounting demands for a referendum in the oil and gas-rich province on the northern tip of Sumatra island at the top of his agenda since taking office two weeks ago and at the weekend received members of the Aceh Merdeka (Free Aceh Movement) for the first time.

Shihab said he thought any decision on an Aceh referendum would have to be decided by all the people of Indonesia, and he also raised fears about the possible breakup of the country. "You have to know that you are opening the gates, which means that disintegration will be in place," he said.

He said he himself did not believe the Acehnese wanted to quit Indonesia and that they could be satisfied if a solution could be found to the "injustice and military malpractice" they had suffered.

New Indonesian military chief Widodo on Thursday promised to abandon the military's tough methods of combating unrest in the province. He has already pledged to withdraw feared special forces troops.

"I truly understand that maybe the security approach alone is quite incorrect," said Widodo at a ceremony to mark the handover of power from former armed forces chief General Wiranto. He called for better communication to create an atmosphere for dialogue.

Shihab was asked if force would be used to quell protests if they continued. "No, no, force and violence are behind us, we would like to use a persuasive approach," he replied.

In a new development, Aceh Merdeka chairman Husaini Hasan, based in Sweden, told the Strategist Oil Report this week he could not rule out attacks on oil and gas companies in Aceh if they supported military operations against civilians. The heavily- guarded installations have been largely spared in the conflict so far.

Thousands rally for referendum

Associated Press, Sigli -- More than 50,000 people rallied in Aceh on Thursday in a massive demonstration of pro-independence fervour, two days after troops opened fire on rock-throwing protesters in Indonesia's troubled province.

The demonstrators are demanding a referendum on whether to remain part of Indonesia or break free, saying Aceh was never part of Indonesia. They have been emboldened by East Timor's decision to secede and angered by new President Abdurrahman Wahid's statement on Monday that now is not the time for such a vote in Aceh.

A Red Cross official said three people were killed and 22 injured Tuesday in Meulaboh, on Aceh's west coast, by soldiers when pro- independence supporters began torching government buildings.

Hundreds of trucks, vans and motorbikes -- packed with people carrying broken-off palm branches to shield themselves from the scorching sun -- drove on Thursday through Sigli, a town of 20,000 people 110 kilometres east of the provincial capital Banda Aceh.

They banged drums and chanted, "Referendum, freedom, independent state, Allah Akbar (God is great)" as huge banners fluttered in the strong freeze with the single word "Merdeka" (freedom).

Indonesian soldiers looked on sullenly as the noisy procession snaked past their headquarters. In contrast, local policemen waved back at the demonstrators and held up the clenched-fist symbol of the resistance movement.

The rally, organised by a coalition of pro-independence groups, is designed to further increase political pressure on new President Abdurrahman Wahid, who in the past has promised to support popular demands for an East Timor-style referendum in Aceh.

Since his inauguration two weeks ago, Mr Wahid has appeared to backtrack on those promises, saying instead that the decade-long conflict in the province could be resolved by giving it wide- ranging autonomy instead of independence.

Troops break up protest in Irian Jaya

Jakarta -- Security forces broke up a peaceful protest by thousands of residents in Indonesia's remote Irian Jaya province, reports said Tuesday.

The state Antara news agency said the mass demonstration in the district of Fakfak was staged shortly after noon Monday to push for the resignation of district head, Colonel Suparlan Pasambuna.

The protestors walked in procession from Sungai village five kilometers to the district administration office in Fakfak town, on the far west coast of the territory, Antara said.

When the huge banner-waving crowd descended on the district administration office, the staff panicked and fled, Antara said.

Security forces then broke up the demonstration and herded the crowd into military and police trucks to take them back to Sungai village.

But the convoy was halted on the way by a mob of Seram island settlers armed with crude weapons, axes and machetes. While the Irian Jayans fled the Seramese flooded into Fakfak and began to threaten security forces.

Antara said the Fakfak police and military chiefs were out of town at the time and duty officers refused to comment Tuesday without the approval of their superiors.

Last week, hundreds of Fakfak residents ran amok and damaged a number of government offices in protest against a land dispute ruling by the Fakfak court.

Irian Jaya, formerly Dutch New Guinea, has seen rising protests in the past two years, most recenly against Jakarta's splitting the huge province, which shares a land border with independent Papua New Guinea, into three separate provinces.

Protesters burn parliament building

Associated Press in Jakarta -- A day after President Abdurrahman Wahid said it was not yet time to discuss an independence referendum, thousands of people protested violently in strife- torn Aceh province on Tuesday to demand an immediate vote.

A crowd of about 10,000 people reportedly set fire to a local assembly building and a police post in Meulaboh, 1,700kms northwest of Jakarta. Witnesses reported several injuries.

Late on Monday, hours after Wahid recalled all Indonesian military units that had been deployed to Aceh to quell the independence movement, hundreds of soldiers reportedly attacked villages in the province's north, seeking revenge for the killing of a colleague earlier in the day.

The local military commander confirmed the attack, saying 36 houses were burned and 136 people arrested. "It was difficult to control the soldiers as they were angry after finding one of their colleagues was shot to death by the rebels," said Lieutenant Colonel Suyatno.

A Red Cross official said at least four people were injured in the attack, including two local Red Cross workers trying to tend to the wounded.

One of the leaders of the Free Aceh Movement rebel group warned against attacks on civilians. "If the military wants to fight, let's do so away from the civilian areas," Darwis Djeunieb said.

On Sunday, Mr Wahid launched negotiations with the rebels in an attempt to bring peace to the region. It has suffered from a decade-long struggle for independence that has left more than 2,000 people dead and 150,000 displaced.

He met with several rebel leaders in Jakarta and tried to convince them of the government's good intentions. "I hope the government can convince the people of Aceh that it is very serious about solving the problem," Mr Wahid said.

Insurgents have intensified their independence campaign in the past year. Their leaders say they were encouraged by international support for an independence referendum for East Timor.

Mr Wahid said he has ordered a full investigation into the alleged killing of civilians by the military in July.
 

Human rights/law

Political prisoners seek rehabilitation

Jakarta -- Some 100 former political prisoners jailed by the authoritarian govenrment of ousted president Suharto on Wednesday urged the new government to restore their good names.

In a petition lodged to the national parliament, the group also called for the return of assets lost when serving their terms and demanded general amnesties to all political prisoners still languishing in jails throughout Indonesia.

The group also urged the scrapping of discriminatory requirements applied for former political prisoners, including the obligation to report to the local military office every month.

The petitioners called for a lifting of a draconian ban on children of former prisoners jailed for involvement in the aborted 1965 coup, which was blamed on communists, from joining the civil service and other professions.

An estimated 500,000 people were killed in a harsh military crackdown on suspected communists and sympathizers that followed the coup, and hundreds of thousands more were jailed.

Among the signatories of the petition was Sri Bintang Pamungkas -- a politician jailed for organizing a protest against Suharto in Germany when the former strongman was visiting the country several years ago.

Suharto resigned in May 1998 after bloody riots rocked Jakarta amid a severe economic crisis. The 78- year-old former autocrat is now in poor health.
 

News & issues

The lobby that loved Indonesia

Lenore Taylor -- A photo album of the past 30 years of Australian/Indonesian relations would contain some memorable snaps. Look closely and a lot of them would show the same faces. Here's Prime Minister Keating and President Soeharto in the Presidential Palace, beaming as their foreign ministers, Gareth Evans and Ali Alatas, sign a security treaty in 1995. Here's ex- prime minister Keating at the president's home in 1998, offering advice and consolation as the Asian crisis closes in on Soeharto's ailing regime.

There's Evans and Alatas again, joking and arm-wrestling after signing the Timor Gap Treaty in an aeroplane above the Timor Sea.

There's a youthful Richard Woolcott, then Australia's Ambassador to Indonesia, at the Jakarta funeral of the five Australian journalists killed when Indonesian forces invaded East Timor in 1975. There he is again, ushering Australian editors into a meeting with Soeharto in 1996.

It's not only the same faces that reappear throughout the album. Put the images in context and it becomes clear that for all that time Australia has viewed Indonesia through the same frame.

For 30 years, ever-closer political, military, business, academic and media ties with our northern neighbour have been based on a foreign policy assessment that became an article of faith, an orthodoxy with a total stranglehold in the corridors of power.

There were dissenters -- an array of exiled Timorese, activists, academics and members of the Catholic Church. But to the powerful elite they rated as little more than an annoyance.

The orthodox view among the elite was that Australia's security and economic interests were best served by Indonesia remaining a united and stable nation, that the reign of Soeharto was delivering that stability and economic growth, and therefore deserved Australia's support and friendship. Human rights blemishes had to be seen against that backdrop and should on no account overshadow the bigger, friendly picture.

It was a view actively promoted by the "Indonesia lobby", powerful politicians and opinion-makers who based their policy decisions, intellectual reputations, careers and often financial interests and personal friendships upon it.

It was embraced by the Department of Foreign Affairs and Trade (under successive secretaries, including Michael Costello -- now chief of staff to Opposition Leader Kim Beazley -- and present secretary Ashton Calvert, a former foreign affairs adviser to Paul Keating) in advice to prime ministers from Whitlam to Howard and through DFAT-funded organisations like the Australia Indonesia Institute.

It had bipartisan political support. It was espoused by academics, particularly Australian National University scholars like Jamie Mackie, Harold Crouch, Heinz Arndt and Hal Hill, some of whom received funding or consultancies from DFAT or agencies in Indonesia. It was advanced by journalists like Paul Kelly (who is also on the Australia Indonesia Institute's board and the Government's foreign affairs advisory council), and Greg Sheridan, both writing for The Australian.

It was argued in newspaper columns by former departmental secretaries like Richard Woolcott (founding chairman of the Australia-Indonesia Institute, one-time consultant to BHP on Indonesia-related issues, director of Bonlac, which exports to Indonesia), former ambassadors to Indonesia like Rawdon Dalrymple (also chairman of the consulting and investment business, the Asean focus group).

Former politicians like Keating, Allan Griffiths, Gerry Hand and John Button used their Indonesian contacts to further post- political careers.

The Australia Indonesia Business Council and its sister organisation, the Indonesia Australia Business Council, forged closer business ties. Educational links grew strongly.

The Australian and Indonesian militaries conducted joint exercises. Australia trained Indonesia's special forces troops, Kopassus, who were used for many years to maintain control in Timor, Aceh and Irian Jaya. Indonesian military figures invited top Australian brass to their daughters' weddings.

The political, academic, business and military networks were being woven ever tighter, based on the view that, under Soeharto or his successors, change towards democracy or greater respect for human rights would be at best incremental.

"At Government level," wrote Woolcott in 1995, "both Australia and Indonesia have attempted to construct a framework of institutional and high-level contacts, which would be strong enough to withstand occasional shocks."

Problems in the relationship boiled down to differences about human rights violations which had to be seen as "aberrations in a turbulent society's struggle for unity and stability".

Indonesians were aggrieved by anti-Timorese demonstrations in Australia, he wrote, and more and more Australians were also resentful of "the misuse by political refugees of the hospitality of this country".

But from 1997 the Indonesia lobby's world turned upside down. The Asian economic crisis and the political instability in Indonesia stunned them, but still they could not conceive of a fundamental change to the status quo in which they had invested so much.

Woolcott wrote in January 1998 that in Indonesia "there will be no people-power movement comparable to that in the Philippines in 1986", A month later Paul Kelly wrote that "Indonesia in the 1990s is not a re-run of the Philippines of the '80s. There is no political reform movement." By May, Soeharto had been forced from office.

And then this year the unthinkable happened. The Howard Government broke ranks. The Prime Minister declared that East Timor marked a turning point in Australia's relations with Indonesia and Asia, that he was abandoning the policy of "please at all costs" and that he would "defend the values we hold as Australians". According to the Indonesia lobby, Howard has trashed in a few months what had taken decades to build.

According to its critics, the Indonesia lobby should be eating large helpings of humble pie, with its views proved fundamentally wrong.

Keating, under whose prime ministership the relationship with Indonesia was at its closest, launched a passionate defence of his government's stance, saying it had been impossible to do more for Timor under Soeharto and that governments had to steer a course between competing objectives. "The human rights absolutists might not like it, but no government policy can base itself on absolute morality," he said.

Woolcott, who successfully nominated Alatas for an AO in 1995, who prepared Alexander Downer for his first meeting with Soeharto for a $13,000 fee, who has dedicated much of his working life to building relations with Indonesia, is in shock.

"Forty years of bipartisan effort to build up a relationship with Indonesia has been seriously eroded by recent events," he says, choosing his on-the-record words carefully.

"It is a matter of great regret that our policy towards Indonesia has been driven by our policy towards East Timor ... the Government has been excessively responsive to the East Timor lobby and pursued short-term populist policies rather than long- term visionary policies."

Dalrymple is incredulous. "The relationship has been destroyed," he says. "Indonesians feel betrayed by Australia, who they had come to see as a friend. There almost isn't a relationship any more." But according to Scott Burchill, lecturer in international relations at Deakin University, it is the Indonesia lobby's long-term strangehold on foreign policy that is the matter of great regret. "By any criteria they are totally discredited," he says. "There is nothing to show for their appeasement of Jakarta over several decades.

"They were complicit in denying basic human rights to the people of East Timor ... They were falling over themselves to develop a relationship with Soeharto, who I believe has a war crimes record comparable to Pol Pot ... They boasted of access to [the former head of Indonesian defence forces] Benny Murdani, who I regard as an unindicted war criminal."

Michael Backman, former Liberal Party staffer and author of Asian Eclipse: Exposing the Dark Side of Business in Asia, says the Indonesia lobby "ought to be very embarrassed".

"Their whole raison d'etre has been cut from under them. For years they have been telling the Government what to do and now it is no longer listening," he says. "Instead of trying to construct a way forward, they are all scrambling around trying to justify their past positions.

"The taxpayers have for a long time subsidised their activities, through DFAT and through academic funding. I think it's fair to ask what we have got for our money."

Another long-term critic of the orthodox view is Brian Toohey, former editor of The National Times and a columnist for this newspaper.

"The prevailing view was that it was smart to get closer and closer to the Soeharto regime as it became more corrupt, more violent and more offside with the Indonesian people," Toohey says.

"The core problem was that Australian policy actively supported the anti-democratic forces in Indonesia when our long-term interests were better served by a more democratic state. That's not a moralist argument, it's a realist argument. We were acting against our own interests."

But the Indonesia lobby remains convinced its stance was correct -- although after the massacres in Timor some concede the close ties with the military may have been misjudged.

According to Sheridan, achievements like the Cambodian peace process and the establishment of APEC would have been impossible without sharing a close relationship with Indonesia.

"The Left say we should have destroyed our relationship with Indonesia in order to demonstrate our bona fides on human rights," he says.

"I disagree, and they are not entirely consistent because China and Vietnam also have far from perfect human rights records and I don't see the Left arguing we should cut off relations with those countries."

Dalrymple says it is "absurd to suggest that Australia should have put the well-being of some Timorese people above its overall national interest". Crouch, senior fellow at the ANU's research school of Pacific and Asian studies, says that while "quiet diplomacy" may not have prevented the present breakdown in relations, the "megaphone" diplomacy advocated by the Timor lobby would also certainly have failed.

But all three concede policy mistakes with regard to the military. "Training the Indonesian military did not lead to their substantial reform," says Sheridan.

"Some politicians and officials believed for too long the Indonesian military were redeemable. There were people who basked in the idea that they could be friends with a famous killer like General Murdani," says Dalrymple.

"The major flaw in policy towards the military was the belief that they were a defence force, like ours, but actually they are an internal security apparatus. That was always a mistake, and I said so at the time," says Crouch.

One of the Indonesia lobby's aims was to educate the Australian media about Indonesian culture, customs and sensitivities. The Australia Indonesia Institute organised regular meetings between senior Australian and Indonesian editors and political leaders, including in 1996 with Soeharto, and earlier this year with President B.J. Habibie and Timorese leader Xanana Gusmao.

Some are now blaming the Australian media for inflaming the present situation. Peter Church, founding board member of the institute and managing director of the Asean focus group, says: "The Australian media has a higher duty to think globally, to think about the incredible emotive impact it has in Indonesia when they publish something like that photograph of an Australian soldier standing with a gun behind an Indonesian with their hands on their head."

So where does the new reality of the Australian/Indonesian relationship leave the Indonesia lobby?

Economic links so painstakingly built have certainly suffered because of the economic crisis, and the present wave of anti- Australian feeling in Indonesia could make things worse.

"The business relationship has always weathered political ups and downs," says Church. "The new government will be more nationalistic and if it uses Australia as a whipping boy in the same way as [Malaysian Prime Minister] Mahathir has done, then business could be very affected."

Most of the former politicians have already abandoned or scaled back their business interests in Indonesia.

Button quit working as an adviser to the then Research and Technology Minister Habibie after a year because he "found it difficult working in an environment of what seemed to be chronic corruption".

Griffiths is also understood to have scaled back his business involvement in Indonesia. Hand worked as an adviser to Robbie Sumampow, who owned the Christmas Island casino until it was placed in the hands of an administrator in 1997.

Hand says he has no ongoing active business involvements with Sumampow. Keating, now an international business consultant, has had several clients with interests in Indonesia, including Macquarie Bank and Aus-pac Aluminium, proponent of a $3 billion aluminium smelter at Lithgow.

Aus-pac is run by Keating's business partner Chris Coudounaris and John Benson, the businessman who helped find an Indonesian buyer for Keating's share in that now-famous piggery.

Besides detrimental effects on economic links, there is the uncomfortable fact that many senior bureaucrats have held, and many Government advisers and people in senior institutional positions continue to hold, different views to the Government about the appropriate weight to be given to human rights in the setting of foreign policy. The policy and opinion-making apparatus is out of step with the policy.

When the time comes to start building from scratch a relationship with the new Indonesian regime, both sides are likely to tread far more cautiously. The passionate embrace of the past 30 years is unlikely to be rekindled. Dalrymple echoes the sentiment of the Indonesia lobby when he says of the Soeharto years, with some regret, "I fear we shall not see the like of him again."

Burchill echoes the sentiment of the Timor lobby when he responds that the Soeharto years "may have been diplomatically convenient for Australia, but won't be missed by the people who lived under repression".

The new cabinet: Everybody happy?

Nisid Hajari -- Abdurrahman Wahid doesn't call himself a holy man, but the new Indonesian President seemed to pull off a miracle last week. On Tuesday, Wahid met the challenge of picking a cabinet that reflects the diversity of the country and the 11th-hour coalition that voted him into power, while cleansing the slate of those associated with the worst excesses of previous regimes. His 35 appointees include individuals from each of the seven leading political parties, plus the military.

Members of Indonesia's five major faiths are represented, as are all of its main islands. Those ministers who have government experience are generally considered reformers; those who do not are generally free of the taint of corruption.

The catholic nature of the selection, however, raises very real questions about whether effectiveness has been sacrificed for political expediency -- whether a "National Unity" cabinet that pleases everyone is too good to be true. After years of unbending, one-man rule, the dilemma is ironic: Is there such a thing as sharing power too widely? "To be candid, this is more a case of accommodation than the right person for the right job," says environmental activist Erna Witoelar, who was named Minister of Settlement and Regional Development. "It remains to be seen how we are going to work as a team."

The benefits and pitfalls of Wahid's inclusiveness show most strikingly in his economic team. Although heartened by the absence of ex-President Suharto's cronies among the appointees, analysts note the newcomers' lack of experience. Kwik Kian Gie, an aide to Vice President Megawati Sukarnoputri, was tapped to oversee economic policy, even though he has made his name as a commentator and government critic. His colleague Laksamana Sukardi -- a former banker named to head the Ministry of Investment and State Enterprises -- wins praise for his market- friendly philosophies more than any concrete macroeconomic credentials.

The selections for the other two critical economic posts -- Finance Minister Bambang Sudibyo and Trade Minister Jusuf Kalla -- stand out mostly for their political connections.

Wahid's military appointments seem more likely to succeed. By naming General Wiranto as a coordinating minister for political and security affairs, Wahid grants a promotion that also takes troops away from Wiranto's command. The general's replacements -- respected academic Juwono Sudarsono as Defense Minister and a Navy admiral as armed forces commander -- reduce the army's dominance of the military as a whole without slighting its pride. Wahid did appoint two serving generals to the ministries of transportation and mining and energy -- departments long milked for their healthy cash flow. But he chose the army's two leading, and presumably incorruptible, reformers -- Agum Gumelar and Susilo Bambang Yudhoyono. "Those were positions very much craved by political parties," says Faisal Basri, secretary general of Rais's National Mandate Party. "The appointment of those generals shut them up."

Wahid sent a message about his priorities by creating new ministries for human rights and regional autonomy, even though the responsibilities of the first could overlap with the National Human Rights Commission and those of the second were already subsumed under the Ministry of Home Affairs. Similarly, even though he personally does not favor jailing Suharto for corruption, Wahid was careful to note that new Attorney General Marzuki Darusman would reopen the investigation into allegations that the ex-dictator enriched himself illegally.

Wahid's eclectic cabinet could be read either as an example of political payback or as an attempt to give a broad range of Indonesians the feeling that they have a stake in his administration.

Kwik's ethnic Chinese background, for instance, could have as great an impact on the sentiment of wealthy Chinese entrepreneurs who moved much of their capital offshore as any specific policies he may implement. "I predict that within the next six months we will see a significant return of capital," says Sudamek Sunyoto, deputy chairman of the Chinese Indonesian Association.

But Wahid's appointees will quickly face challenges that could expose their inexperience. "Alwi Shihab may speak English and Arabic very well," a political analyst says of the urbane new Foreign Minister, a former professor of comparative religion at Harvard. "But I doubt knows anything about foreign relations." Many echo the fear that Wahid, in trying to be all things to all people, has put the wrong people in the wrong places -- a government hack in charge of labor, a general with no mining background in charge of mines, an engineer with mining expertise in charge of transmigration. Says Witoelar: "The President expects that the new people will learn by doing." Wahid's attempts to spread responsibility around to more groups could actually have the opposite effect. "The success of the cabinet depends on the vision of the President," says Sarwono Kusumaatmadja, who heads the new Ministry of Maritime Exploration. Not only will Wahid have to keep his disparate ministers focused on a unified policy, he will very likely have to intervene to resolve disputes among those with overlapping responsibilities.

Putting such a broad-based slate together all but guarantees that this won't be the last miracle Wahid is asked to perform.

[Reported by Zamira Loebis and Jason Tedjasukmana/Jakarta]

Will President Wahid remain a democrat?

Jakarta -- George Aditjondro has just ended a three-month trip to 10 countries -- the United States, the United Kingdom, the Netherlands, Belgium, Switzerland, Germany, the Philippines, Hong Kong, Singapore and Malaysia -- doing what he has always done: tracing the wealth of Indonesia's autocrat Soeharto and his cronies.

A former journalist, a noted scholar on East Timor, a human rights activist and an outspoken critic of the government, George is now teaching sociology of corruption at Newcastle University, Australia.

He was forced to flee to Australia in 1995 when his name appeared on a police's wanted list for "slandering" Soeharto. At that time he was a lecturer at Satya Wacana University, Salatiga, Central Java.

His passport was confiscated in 1997 but was returned by the Indonesian Embassy in Australia soon after Soeharto fell from grace in May last year. He came back to Jakarta for the first time last September when he launched his book From Soeharto to Habibie: Two Peaks of Corruption, Collusion and Nepotism in the New Order Regime. His other book is Harta Jarahan Soeharto (Soeharto's Plunder) published in 1998.

Question: What is your view about our newly elected President Abdurrahman Wahid, who is popularly known as Gus Dur?

Answer: To me, Gus Dur is the third president of Indonesia. What I mean is Habibie became president by accident since Soeharto was forced to step down and Soeharto anointed Habibie as his successor. It is also important to delegitimize Habibie's leadership because people didn't choose him as president in May 1998. In short, Habibie is not a constitutional president of Indonesia.

I have known Gus Dur since he was a columnist for Tempo magazine, where I worked from 1971 to 1982. I got to know him in the late 1970s. He would type his articles on a desk beside mine. At that time, Tempo was still in its old office in Senen (Central Jakarta).

After I left Tempo, I met Gus Dur as an NGO activist, when he set up his Islamic school in Ciganjur and joined the LP3ES (a research NGO) program. The two of us also became members of the Asian Cultural Forum on Development. In late 1980s we joined the International NGO Forum on Indonesia, which later became the International NGO Forum on Indonesian Development.

We fought hand in glove against the government's plan to build a nuclear reactor at Muria (a Central Java village). At that time, Gus Dur made his famous threat to hold a hunger strike if the government went ahead with its plan.

Since I left Indonesia (in 1995), I have never met him again. Recently I felt that we had a fundamental difference of opinion, especially on the East Timor issue.

During my visit to Europe months ago, I heard that Gus Dur had earlier traveled to several European cities and that he had changed the issue of mass killings by pro Jakarta militia in East Timor to foreign intervention, notably Australia.

In my opinion, we should pay more attention to the mass killings in East Timor by the militia, supported by the Indonesian Army.

I also felt sorry for Gus Dur when he raised an ultranationalist sentiment, which I think is not true. It's very untypical of him to utter such a thing. It is not the Gus Dur that I knew in the past, whom I exalt as a statesman.

If we look at this issue with a cool head, we can see that Indonesia was the real aggressor when it annexed East Timor in 1976. Now, when the proindependent group won the ballot, the militia terrorized the East Timor people. It was so terrible that only the UN troops could stop the destruction and killings.

Was this the first time you felt sorry about Gus Dur?

No. Prior to the 1997 elections, to the surprise of many, Gus Dur shifted his support to Tutut (Soeharto's daughter), right after he said that he supported Megawati Soekarnoputri in the elections.

I was also disappointed with Gus Dur when he, as one of the signatories of Ciganjur Declaration, together with Megawati, Amien Rais and Sultan Hamengkubowono IX, stated that they would give the military six years to relinquish its political role. It means the Ciganjur signatories did not respond to students' demands.

And although the police force is already separated from the military, I still cannot find a difference between the two. They still repress the people.

And I did not agree with Gus Dur when he said that Soeharto should return his family wealth to the government and be given a pardon. It goes against our efforts to uphold equality before the law, or it indicates that there are still some people who are untouchable, especially when he or she is a president.

Forgiving is not Gus Dur's or our problem. It's a matter that should be left up to God. But in terms of respecting the law, Soeharto must be responsible for his acts of corruption. During his reign, he issued hundreds of presidential or ministerial decrees, giving privileges to his family and cronies.

I also want to criticize Gus Dur about the time he doubted the credibility of studies on Soeharto's wealth. How could we distinguish his ill-gotten wealth and from his other wealth, as the Soehartos themselves have argued. We have to rely on such studies. We can use them for the best benefit of our country.

Speaking of corruption, both Megawati and Gus Dur have a lot of homework to do since the People Consultative Assembly (MPR) issued a decree to fight corruption in 1998. But Habibie didn't do his homework well. Not only the Bank Bali case, there are many more cases that have to be solved.

What about Megawati Soekarnoputri as vice president, what is your comment about her leadership?

Megawati is consistently conservative on a range of issues, from Timor to Aceh to the military's dual function. But in terms of amendments to the 1945 Constitution, Megawati and the PDIP (the party she led) were very progressive when they proposed to revise the stipulations for an Indonesian president. If we stick to the old stipulations, I can say that the Constitution does not only give too much power to the executive, but is also racist.

It seems you have little hope for this new government...

I am a bit skeptical about this new government since it is built upon negotiations among the political parties and the military. The third biggest faction, the Islamic parties, has won three of the most important positions in the MPR: chairman of People's Consultative Assembly, chairman of House of Representatives and President.

Hence, when PKB (the National Awakening Party, which was founded by Gus Dur) nominated Megawati as vice president (in the MPR General Session) it was simply an effort to win sympathy from Megawati's supporters.

I hope I got the wrong information, but I heard that Gus Dur had a deal with Gen. Wiranto to persuade Mary Robinson, the UN Commissioner for Human Rights, not to investigate the mass killings in East Timor because that would link Wiranto to the killings. If it is true, I will be very angry. How could a religious leader protect someone who is responsible for the death of hundreds or maybe thousands of people?

Rather than putting faces from the New Order government in the Cabinet, Gus Dur could have appointed intellectuals from universities, like Faisal Basri, who are uncontaminated by Soeharto's cronies.

I remember Faisal was the one who spoke out bluntly about mismanagement in BPPC (the clove monopoly agency) when Soeharto was still in power. The appointment of Kwik Kian Gie is all right, but he should first resign from his position as a president commissioner at ABN AMRO, a Dutch bank which actively supports Soeharto's family companies in the Netherlands.

You seem to be pessimistic about the future...

I will not make a judgment until I see what Gus Dur does in his first weeks as President. I agree with one TVRI viewer when he reminded Gus Dur to release all political prisoners. Will Gus Dur respond to this demand? We shall see.

I hate to imagine Gus Dur following Habibie's line when he released a number of political prisoners like Mochtar Pakpahan and Sri Bintang Pamungkas. It was a half-hearted move to show the world that Habibie cared about political prisoners.

If Gus Dur is committed to democratization and reconciliation, he must release all political prisoners without reserve, and he should guarantee that in the future, people cannot be jailed because of their differing opinion or policy with the government. Speaking for my personal interest, I would like to appeal to Gus Dur to annul my case of slandering Soeharto in 1994. The case is like a Loch Ness monster that can reappear suddenly. Although Soeharto was replaced by Habibie in 1998, my case is still there.

I also want to contribute something in the making of a New Indonesia, but the unsettled case is an obstacle. I heard that Sofjan Wanandi (a businessman), who fled abroad during the Habibie rule, is back because Gus Dur told him to, but what about me?

How do you see the prospect of civil society in Indonesia and the growing signs of political awareness among professionals or the middle class?

Civil society and the middle class are different in concept, but both are bourgeois concepts. In the middle class they exclude the workers' movement, and the concept of civil society is also very middle-class minded. But it depends on who determines the concepts.

I prefer to choose a social movement concept, since different classes in society will dissolve in this concept. In fact, social movement was an important key to our political change and democratization in the past, starting from 1998, that is, student movements from many universities. Habibie was very proud to say that his Cabinet produced more laws and regulations than the previous Cabinets. But these laws were only responses to people's demands, to create a more democratic and transparent society.

I think it's better for Gus Dur and Megawati to invite students to settle misunderstandings between them. Moreover, Gus Dur should tell the police to release those people who protested in recent demonstrations. So it means Gus Dur has to pay more attention to controlling the security apparatus, something that Wiranto neglected in the past.

People were demanding their sovereignty in concrete terms. They wanted an end to the forestry concession system in Kalimantan, which was exploited by state capitalism or crony capitalism, and return the profit of their land to the indigenous people. Political parties seem to neglect such demands from grassroot communities.

I doubt that Gus Dur and Megawati can sympathize with the local Kalimantan people since they are both from eastern Java and have no experience in dealing with forest problems. I predict this kind of problem will intensify in the future and the separatist movement in Aceh and Irian Jaya will strengthen because political parties cannot detect dynamism in grassroots communities.

Meanwhile, in urban areas, like in Java, I predict, worker and farmer movements will toughen as well. One of the main reasons is that the political leaders are not ready to talk about agrarian reform, to provide better concepts for the farmers. Notably for Megawati, it was (her father) president Sukarno himself who started agrarian law reform by providing the 1960 Agrarian Law in order to increase the farmers' income.

How do you see the continuing religious clashes in Ambon? The moment Gus Dur used the term "federalism" in his first speech, I saluted him, because the word used to be very taboo. This is a good sign that Gus Dur and Megawati can accommodate people's interest -- local communities, students -- more than just bargaining their positions with other parties.

They were also right when they said our country is basically a maritime country, and they want to revive our potential maritime resources. The concept will have two consequences.

First, Army domination will decline, and the Navy will replace it. Second, it is also a sign that both Megawati and Gus Dur will pay more attention to eastern Indonesia development, most of which comprises maritime provinces. This will decrease the central government's control over the territory's economic potential.

Maluku, for instance, has been a "playground" of Soeharto's family businesses for a long time. Bambang Triatmojo, Soeharto's eldest son, together with businessman Tommy Winata, controlled fishing in Banda Sea, Maluku. Businessman Sudwikatmono (Soeharto's close relative) had a company, Dayaguna Samudra, operating in the southeastern part of Maluku.

In Central Maluku, Barito Pacific not only owned a plywood company, but also a cement company. In the northern part, Barito Pacific controls most of the forest in Maluku. So I think Gus Dur already knew that the root of communal fights in Maluku does not lie with religion or ethnicity, but with economic interests spearheaded by Jakarta capitalists, and they were the ones who orchestrated riots by exploiting ethnic and religious tensions.

What about the Republic of South Maluku (RMS) movement which has sought independence for a long time?

I would tend to say there is a new RMS because they see how the sea, forests, all were owned by Jakarta's people. And among the Christian groups in Maluku, there is a strong consciousness about Maluku nationalism. The Islamic groups in Maluku can identify themselves as being part of the central government since the leader (Soeharto) was a Muslim, and the local authority in Maluku, was also a Muslim.

Thus, the Christian groups in Maluku felt they were double- minorities since they did not have access in either economics or politics.

Although fighting between villages has been common for a long time in Ambon, they never burned down places of worship like mosques or churches (like they do lately).

These places of worship were built by both Muslims and Christians. This is a testimony to their tolerance of each other, until somebody engineered riots in the region.

I bet Gus Dur already knows the mastermind of these riots. Rather than saying it was orchestrated by a certain "General K" he should have looked at the root of the problem. I think this is the only solution to the Maluku problem. However, I think the major obstacle for Gus Dur is not in Ambon, but in Aceh.

Why is that?

I think Gus Dur is too confident to say that he is an Islamic leader and pretends to know the root of Aceh's problem. He thinks that he can still persuade the Acehnese to live in unity with the Indonesian republic. In fact, Acehnese nationalism does not only belong to Aceh Independent Movement activists in Sweden, or hundreds or thousands of political refugees in Malaysia, but also to Aceh's middle class or the educated people. Now the Acehnese are demanding Gus Dur's promise of a referendum that he once said in Aceh. I'm afraid that Gus Dur would fail because of the Aceh referendum, just like Habibie failed because of East Timor's referendum in August.

Weren't human rights violations by the military the real issue in Aceh? Is a referendum the best way for Aceh instead of investigating the mass killings during martial law in the 1990s?

I disagree with that kind of argument. For me, the problems in Aceh are not only military violations on human rights, but more seriously the military protection of foreign capitalists by violating human rights.

If a Jakarta businessman wanted to expand his forest concession area, and the local people rejected that proposal, he would easily label them separatists. That's why the Acehnese reject this sort of solution.

Second, the Islam practiced in Aceh is culturally different from that practiced in Java, notably as Gus Dur understands it. So, the seeds of Acehnese nationalism are based on three things: military repression (since martial law was imposed), economic inequity and a different interpretation of Islam. How Gus Dur will manage the Aceh problem specifically in the future, we have to see.

Do you think he will succeed?

The situation in Aceh is very complex because it also involves international political and economic interests. For instance, Soeharto's family businesses have been merged with the "Aceh mafia" businesses for a long time and Bambang Triatmojo, with his Singaporean-based company, has a 20-year contract to deliver gas from PT Arun to East Asia. With this contract, Bambang's company becomes one of the biggest tankers in Asia, transporting 10 percent of the world's total liquefied natural gas. His company also expanded into Gulf countries, like Qatar. Does Gus Dur have the guts to cancel that contract -- which means that he has to cut businesses with Pertamina, Mobil Oil, an international oil company and with the Soeharto family? If Gus Dur has the guts to do that, I will salute him and it will please many Acehnese.

What should Gus Dur and Megawati do to maintain harmony and unity of this nation which has been raked by continuous unrest and tension in a number of its provinces?

I would argue that one of our major mistakes is our obsession to see Indonesia, from Sabang to Merauke, as a whole nation and nation-state. I think Gus Dur and Megawati should follow what Gorbachev and Raisa did for Russia. They paved the way for Russia to become a commonwealth of independent states.

In the past, Russia was a unitarian state like Indonesia. It was centrally managed by the Communist Party. Like Indonesia, it also has many ethnic groups.

Now Russia is a federation. I hope Gus Dur and Megawati will succeed if they don't rely too much on the 1945 Constitution. Let go of the Constitution and see the reality, that Indonesia might become a commonwealth of states. Release Aceh and Irian Jaya after East Timor.

In fact, one of the biggest challenges for Gus Dur is West Kalimantan, where the native Dayaks see the Madurese as a new economic colonizer. That's part of the reasons why the two ethnic groups were involved in numerous clashes in the past.

Does it mean that all these regional issues can be solved only with an economic solution?

To exact an economic solution there must be legal reform. Traditional law should be incorporated into the national law. So we also need law reform. In this sense, admitting the traditional law means giving democracy to the grassroots.

It is true that we need representative democracy, but we need direct democracy more. As a consequence, for example, people who live under high-voltage electricity cables can protest directly or indigenous people can protest the government's land-reform policy.

Whether Gus Dur wants to conduct agrarian reform is still a big question, whereas NGO activists have, for a long time, built a consortium for agrarian reform.

Gus Dur, as I knew him before he became President, is a democrat and wanted to listen to other people's opinions, but will he remain so after becoming President? (Ignatius Haryanto)

Soldiers destroy market in Jakarta

Jakarta -- Dozens of Indonesian soldiers ran amok and destroyed a traditional market in the capital, seriously injuring two market workers, reports said Tuesday.

The Suara Karya daily said the soldiers were angered after four of their colleagues were reprimanded by the market's security guard for creating noise and drinking at a bar there on Sunday night.

The soldiers were later taken the security guard's post to settle the dispute and they apologized.

But soon after that a mob of some 50 soldiers, in army uniforms and in plainclothes and armed with teargas and batons stormed the market and destroyed several kiosks there.

Two market laborers were rushed unconscious to hospital after being beaten up and slashed.

Habibie aides stole $123m, says audit

Jay Solomon, Jakarta -- The $123.5 million secretly transferred out of Bank Bali went into the bank accounts of some of former Indonesian president B.J. Habibie's senior aides, as well as his own political party, and entailed a massive money-laundering effort aimed at hiding numerous beneficiaries, according to a report by auditors PricewaterhouseCoopers (PwC).

The report, commissioned by the Indonesian Government, recommends additional inquiries of the governor of the central bank, the outgoing finance and state enterprises ministers, and a handful of other senior government officials for their alleged involvement in a scandal that helped unseat Dr Habibie last month.

The International Monetary Fund, which is leading a $US43 billion bail-out program for Indonesia, wants the report by the US firm to be published, and is demanding that action be taken against any individual involved in the affair before the agency resumes lending to the country.

The Bank Bali scandal exploded onto Indonesian newspaper front pages in early August, and was cited by Dr Habibie's political opponents as proof that his then ruling Golkar party was trying to influence October's presidential election through "money politics".

The scandal centres on 546 billion rupiah ($123.5 million) that was transferred in June out of the recently nationalised Bank Bali to a finance company run by senior Golkar officials. The transfer was characterised by these officials as a payment for a "debt collection service". Dr Habibie and senior Golkar officials have repeatedly denied any involvement in the transfer of funds out of Bank Bali.

Banking regulators here say the transfer was improper because debt collection services weren't required -- after changing its mind, the central bank had said 904 billion rupiah in debts owed to Bank Bali were guaranteed by the government.

The 123-page report says government officials made at least 11 other attempts to collect fees from banks that were attempting to retrieve funds guaranteed by the government. PwC says "the substantial amount of money involved in the government guarantee scheme and the lack of resources of IBRA [Indonesian Bank Restructuring Agency] to examine claims present a high fraud-risk scenario".

The report cites the involvement of members of Dr Habibie's government and political party in a number of meetings related to the transfer. A February 11 meeting, according to the report, included Indonesia's former minister of state enterprises, Mr Tanri Abeng, central bank governor Mr Sjahril Sabirin, and a host of other senior Golkar officials. The topic was how to ensure that the 904 billion rupiah that Bank Bali said it was owed under the debt guarantee program was paid. Previously, officials at Bank Indonesia, the central bank, had said Bank Bali did not qualify for the program.

But at the meeting, a senior aide to Dr Habibie "requested the governor to have Bank Indonesia examine bank claims more closely", reads the PwC report. After the meeting, Bank Indonesia reversed its opinion on whether Bank Bali's debts were guaranteed, and the report said this was an issue of concern.

Mr Sjahril rejected PwC's conclusion that the governor and the central bank might have bent the rules. "On the process of the claim, we have explained this so many times ... there was nothing special done for Bank Bali," Mr Sjahril said.

Mr Tanri could not be reached for comment. Previously, he has said publicly that he did not act improperly in relation to the Bank Bali case. PwC says in its report that its recommendation of further investigations of Mr Sjahril, Mr Tanri and others "must not be construed as expressing an opinion or conclusion about the guilt or innocence" of any individual.

The report also recommends further investigation of the former finance minister, Mr Bambang Subianto, because of his appearance at crucial high-level meetings concerning the case and his failure to take proper administrative actions to stop the payouts. Mr Subianto has denied acting improperly.

Following the 546 billion rupiah payout to the Golkar-linked party, PwC says there was an "explosion" of additional transactions that equated with "money laundering".

Among the recipients of funds were accounts linked to five Golkar officials, a number of Indonesian legislators and the accounts of Golkar itself. Companies linked to Mr Tanri also received funds, as did a senior adviser to Dr Habibie.

A number of payouts also were made to foreign bank accounts, while other transactions involving the funds were made through currency swaps, foreign-exchange transactions and cash withdrawals, says PwC.
 

Arms/Armed forces

Military announces sweeping reshuffle

Jakarta -- The Indonesian Military (TNI) unveiled a major reshuffle on Thursday morning following the official handover of the force's command from Gen. Wiranto to Adm. Widodo A.S.

The reshuffle of a number of strategic positions at TNI Headquarters along with Army and military commands comes on the heels of the formation of a new Cabinet which includes three active generals. Among the most notable changes announced by TNI spokesman Maj. Gen. Sudrajat was the appointment of Lt. Gen. Fachrul Razi, a native of Aceh, to fill Widodo's previous post as deputy TNI chief.

The designation of the former secretary-general of the Ministry of Defense was considered particularly poignant given the increasing unrest in his home province.

Other changes include Lt. Gen. Agus Widjaja, former chief of TNI's School of Command, who was appointed chief of TNI's Territorial Affairs, replacing Lt. Gen. Susilo Bambang Yudhoyono. The latter will soon retire from active duty to assume his new civilian task as minister of mines and energy.

Maj. Gen. Suaidi Marasabessy, former chief of the Wirabuana Military Command overseeing Sulawesi, was appointed chief of TNI's General Affairs. He replaces Lt. Gen. Sugiono who fills Fachrul's former post at the defense ministry.

Maj. Gen. Poerwadi, former chief of the Siliwangi Military Command overseeing West Java, was appointed assistant to the TNI chief of General Planning, replacing Maj. Gen. Agus Wirahadikusumah who was appointed chief of the Wirabuana Military Command.

Maj. Gen. Abdul Rahman Gaffar, former chief of the Bukit Barisan Military Command overseeing Aceh, North and West Sumatra and Riau, will head TNI's Center for Infantry, replacing Lt. Gen. Agus Widjaja.

Maj. Gen. Adam Damiri, former chief of the Udayana Military Command supervising Bali, East and West Nusa Tenggara, was appointed assistant to the TNI chief on Operational Affairs, replacing Maj. Gen. Endriartono Sutarto. Endriartono now heads TNI's School of Command.

Maj. Gen. Yahya Kartawirya, former expert staff at the Ministry of Defense, assumes a new post as assistant to TNI's chief of Territorial Affairs. He replaces Maj. Gen. Sudi Silalahi. Col. Herman was appointed chief of TNI's Logistics Affairs.

Lt. Gen. Johny Lumintang, who formerly held the post of deputy Army chief, was appointed governor of the National Resilience Institute (Lemhannas). The post was previously occupied by Lt. Gen. Agum Gumelar, now the minister of communications.

Lt. Gen. Djamari Chaniago, chief of the Army's Strategic Reserves Command (Kostrad), took over Johny's former position.

Maj. Gen. Djadja Suparman, former chief of the Jakarta Military Command, will now head Kostrad. Djaja's command will be filled by Maj. Gen. Ryamizard, who previously commanded the Brawijaya Military Command overseeing East Java. Ryamizard was replaced by Maj. Gen. Sudi Silalahi.

Maj. Gen. Amir Sembiring, former chief of the Trikora Military Command overseeing Irian Jaya, was named assistant to the Army chief on Operational Affairs.

Brig. Gen. Albert Inkiriwang former deputy assistant to the chief of TNI's Territorial Affairs takes over from Amir Sembiring at the Trikora Military Command.

Maj. Gen. Affandi, former chief of the Sriwijaya Military Command overseeing South Sumatra, Bengkulu, Lampung and Jambi, is now chief of the Bukit Barisan Military Command supervising Aceh, North and West Sumatra and Riau.

Maj. Gen. Soetardjo, former chief of TNI's Infantry, was appointed to Affandi's former post at the Sriwijaya Military Command.

Maj. Gen. Slamet Supriadi, a former official at Lemhannas and a former military spokesman, was appointed chief of the Siliwangi Military Command.

Maj. Gen. Suharto, former chief of the Marine Corps, was appointed inspector general of the Ministry of Defense, replacing Lt. Gen. Farid Zainuddin. Suharto is replaced Brig. Gen. Amir P., his former chief of staff at the Marine Corps. Respect

In his inaugural address, Widodo A.S. called on all ranks to uphold military discipline and respect democracy and human rights in an effort to improve the military's tarnished image.

"Servicemen must stay out of unscrupulous deeds," he said. "TNI will face heavy tasks and challenges in the future and therefore all must abide by the military code of ethics." He appealed to those outside the military to put the nation's interests above their own.

Widodo, the first non-Army officer to hold the military's top position, hailed his predecessor's hard work in pioneering internal reform.

"General Wiranto has succeeded in enhancing and improving a sense of solidarity among soldiers in facing rapid changes which are laden with challenges and uncertainty.

"You have been successful in laying down strong fundamentals for changes and adjustments that the military must make in the future to enable it to carry out its defense duties."

Wiranto, who is now the coordinating minister for political affairs and security, recognized the military's challenges during his two-year tenure.

"The military has been faced with numerous, sometimes excessive, demands for changes while at the same time it has had to hold on to its own commitment of maintaining the nation's integrity," he said.

"The military has often been made the subject of blame on issues regarding the (1945) Constitution and the state ideology."

He said the military developed a new paradigm in line with its drive for internal reform. He said it would return to concentrating on its defense function and was committed to gradually phasing out its dual sociopolitical role, including reverting to a neutral stance in party politics.
 

Economy and investment

Bargain hunting in Jakarta

Despite current depressed prices and rental values, Chan Fookkheong sees opportunities for capital gains for cash-rich investors

The beleaguered Jakarta property market has not shown any signs of recovery since the recession began in early 1998. However, with the uncertainty of the presidential elections now removed, it is hoped that the new government would focus its attention on reviving the country's economy and restoring confidence.

Among the sub-sectors, only the residential market began to show some signs of activity since September. Otherwise, the property market remains in deep slumber.

Initial talk of abundant acquisition opportunities at "fire sale" prices failed to materialise as vendors and mortgagee banks remained deadlocked over debt re-structuring.

The Indonesian Banks Restructuring Agency (Ibra), with the responsibility of recovering distressed loans, has not shown any inclination so far to sell mortgaged property assets at current depressed valuations.

Thus, foreign investors hoping to acquire trophy properties in Indonesia have not met any success despite many attempts to persuade vendors to part with their properties at realistic prices.

Residential With a population of 16 million in greater Jakarta -- Jakarta, Bekasi, Tangerang and Bogor -- the residential market is constantly in short supply as housing projects in satellite towns are oversold. Total housing stock as at early 1998 was 1.6 million units with a cumulative absorption rate of 85%. Typically, the most popular houses are priced between 100 million rupiah and 200 million rupiah per unit as this price range is affordable to middle-class buyers.

These housing estates have mostly been developed in Bekasi, Tangerang and Bogor, as the land prices were low enough to be an incentive to develop quality middle-class housing. Typically, developers build whole townships on sites ranging from 500 hectares to 6,000 hectares.

A factor providing underlying stability to the housing sector is that 90% of the purchasers were owner-occupiers. The private sector dominates the housing market as government-owned companies are not competitive in this area.

Since the crisis in August 1997, sales turnover declined by 80% despite developers slashing prices by 50% to move units. The main disincentive for purchasers is the unavailability of home mortgages since local banks are under liquidity pressure.

A survey last year estimated that half of all housing developers in greater Jakarta stopped all development activities or had gone bust as a result of the recession, increase in building material prices and the plunge in sales.

Apartments and strata-titled condominiums did not fare much better than landed homes. With a variety of products targeted at middle-low income, middle-upper income and upper income groups, this sector is now experiencing the effects of overbuilding and excessive speculation.

A halt to all construction activity in this sector since January 1998 has ensured that total stock will be capped at current levels. The total stock of leased apartments as at September was around 5,600 units.

In the apartment sub-sector, where buildings are owned by a single owner and retained for rental income, the occupancy rate declined from 66% in 1997 to 50% by mid-1999. Average gross rents of US$22 per square metre (psm) per month in 1997 plunged to US$15 psm per month by the third quarter of this year.

The middle-upper income apartments that are located in the central business district have been more resistant to falling rents with average occupancy rates greater than 70%. In the strata-title condominium sub-sector, the total stock as at September was 25,500 units. With the recession, the cumulative sales rate is expected to drop to 60% by the end of this year, from 77% at the beginning of 1998.

Prices declined by 60% in US-dollar terms with transactions of existing condominiums being relatively active between January and June this year.

The buyers were Indonesians with ready cash taking a long-term view, knowing that the transacted prices are half of current replacement cost.

A middle-upper class three-bedroom condominium in the central business district (CBD) can now be bought for only US$800 to US$1,000 psm, compared to US$2,500 psm in mid-1997.

The additional attraction for local investors is that there is now greater leasing demand for condominiums located in the CBD as expatriates flock to renting condominiums and apartments for security reasons in the aftermath of the riots in May 1998.

Office

The office market comprises 3.06 million square metres of existing stock, mostly located along Jalan Jend Sudirman, Jalan MH Thamrin, Jalan HR Rasuna Said, and Jalan Jend Gatot Subroto.

More than 60% of this was developed for investment, so most Grade A buildings in the city are comparable to those in Singapore or Hongkong.

Demand for office space has plunged, and the vacancy rate now stands at 25%. It is forecast to rise to 29% by end-2000 as more companies go bust or reduce space requirements as business contracts. However, supply is capped as all construction activity was halted since March 1998. The higher vacancy rate had a disastrous impact on gross rents which fell from US$24 psm per month in 1996 to less than US$14 psm per month currently.

Furthermore, the depreciation of the rupiah against the US dollar created a new leasing practice among desperate landlords who now rent in rupiah. This recent leasing practice is popular in Grade B buildings where gross rents range from 60,000 rupiah to 80,000 rupiah psm per month.

The few strata title sales of office space over the past nine months were by local owner-occupiers at a price level of US$1,200 psm in Menara Kadin, a new office building located at Jalan HR Rasuna Said.

Development land prices have plummeted by over 70% with no interest shown by investors in the midst of a city dotted with partially-constructed office buildings.

The short-term outlook is continued downward pressure on rents, occupancy rates and capital values as the recession takes its toll.

However, the silver lining is that a recovery in the office sector beyond year 2001 is likely to be swift as future corporate expansion will be constrained by the existing office stock since all construction has been shelved.

Industrial

The industrial land market continues to experience downward pressure on values. The market is almost exclusively owner- occupied with limited rental opportunities.

Industrial parks developed by major developers are the standard source of supply of industrial land, ready-built factories and warehouses. Manufacturers and industrialists buy either land ready for construction, off-plan factories or factory buildings that are ready for occupation.

The industrial estates are located away from Jakarta in the conurbations of Bekasi in the east and Tangerang in the west.

Current stock of industrial land is 4,750 hectares and no new supply is anticipated in the next two years.

The main source of demand is from foreign manufacturers and joint-venture companies, led by Japanese and Korean manufacturers, while companies from Taiwan, Hongkong and Europe have an increasing presence over the past three years.

At the peak of the industrial market in January 1997, land prices within industrial estates were transacted at US$80 psm in Bekasi and at US$60 psm in Tangerang.

The occupancy rate stood at 80% in early 1997 but is now at 65%. Land prices have fallen to US$20-$30 psm and will stagnate at this level until economic recovery occurs.

Retail

The Jakarta retail market is divided into two sub-markets, namely shopping centres within the CBD and those outside the CBD. Total retail space stock stands at around 1.72 million sq m and is unlikely to grow in the next three years.

At end-1996, the vacancy rate in both CBD and non-CBD retail centres was less than 5%. By June 1998, the vacancy rate had risen to 20% and is currently at 30%.

Average gross rents declined to an average US$30 psm per month. Ground floor prime space is now pegged at US$50-$60 psm per month while anchor tenants are paying less than US$10 psm per month.

Outlook

Generally, investment yields are in the range of 5 to 8% cash-on-cash except for the apartment sector where yields are in the range of 12 to 15%.

Compared against a one-year rupiah fixed deposit rate of 25 to 30% per annum, it appears that the risks in property investment are not worth taking.

However, seen against a backdrop whereby historically property values resisted correction to a sustainable rate, existing property prices offer extremely good value when measured against current replacement cost.

It is now possible to acquire Grade A property at less than half the current replacement cost. With no new construction activity predicted in the property sector for the next three years, capital values will bounce back strongly once the economy recovers.

Further, the weak rupiah could provide another avenue of capital gain since it could have strengthened considerably against the greenback by the time the asset is sold.

Any investment strategy is likely to be driven by yields, as the assumption is that there will be no capital appreciation for the next two years, with a potential 10% downside from the acquisition entry price. Given the Asian penchant for investing in property, it is likely that an opportunistic foreign investor buying at current levels will be able to re-sell to local buyers at a healthy margin in three to four years' time.

Another factor in favour of cash-rich investors is that there are many cash-strapped and highly-leveraged property companies which are more than willing to discuss equity injection or buy-out deals.

Added to this distress list are banks saddled with non-performing loans that come with mortgaged properties of all types. Since banks prefer to recover loans than get into the property business, another opportunity lies in the buy-out of these loans at major discounts, with the buyer inheriting the mortgaged properties.

Indonesia has in recent times attracted mostly negative media attention. However, it should be stressed that the potential for the country to get back on its feet should not be under- estimated.

With a new government in place that will hopefully promote economic growth and equitable distribution of the economic pie, it will not be too surprising to witness capital, both from Indonesians and foreigners, flowing back into the country.

[The writer is executive director of investment sales and senior technical adviser (Indonesia) of CB Richard Ellis.]

October inflation up 1.58% year-on-year

Jakarta -- Indonesia's consumer price index (CPI) rose 0.06% in October from September, and was up 1.58% from a year earlier, the Central Bureau of Statistics said Monday. Bureau head Sugito Suwito said he saw the inflation rate for the whole of 1999 at no higher than 2.5% despite an anticipated rise in the index in December.

He said the CPI was down 3.85% in the first seven months of the fiscal year ending March 2000, but was up 0.08% in the 10 months to October.

In October food prices were down 0.76% from September, while prices of health-related products and services were up 0.03%.

Prices of processed food, beverages, cigarettes and tobacco were down 0.06% month-on-month, housing up 0.20% and clothing prices up 1.13%. Education, recreation and sport costs were all up 0.38%, and transport and communications up 0.81%.

Suwito said the main contributor to inflation in October was the rise in clothing prices. Festivities in December and early next year, including Christmas, New Year and the end of the Muslim fasting month, will likely push prices up, he said.

"Although prices are likely to go up at the end of this year, I don't think the inflation rate for 1999 will be higher than 2.5%," Suwito said, attributing the expected rise to higher transport fares and a cut in fuel subsidy.

He added: "There should be no problem with food supply in December. I'm not that concerned with rice supply." But Suwato did express concern about beef supplies in the coming months because of hostility among Indonesians toward Australia, a main source of Indonesian beef imports, caused by tensions over East Timor.