• Wahid names close friends as top aides
• Wiranto faces a showdown with Wahid

• Students lash out at Megawati over Maluku
• Holy war threat as violence rages
• Indonesia violence threatens to spread
• Australian company involved violence: Muslims
• Ninja killers haunt East Java again
• Growing protest challenge to regime
• Military moves to end Maluku violence

• Soeharto `took bribe money'
• Prabowo returns to Jakarta

• Miltary may use Aceh to seize power
• Generals lay blame on others
• Military's impunity under attack

• Foreign firms play the bully in Jakarta

Zacky's testimony deemed `mystical'

Jakarta -- Human rights activists have slammed the latest testimony made by Major General Zacky Anwar Makarim on the violence that destroyed about 70% of East Timor's infrastructure last year after the territory in August voted overwhelmingly to split from Indonesia.

Munir, a member of the Commission of Inquiry for Human Rights Abuses (KPP HAM) which yesterday questioned Zacky, said the general's answers were "unclear" and "mystical".

Zacky, who served as the main security adviser to the Indonesian task force (P3TT) that prepared East Timor for the August 30 ballot, is accused of conspiring with other senior generals to unleash the murder and destruction that devastated the territory.

"It just didn't make any sense when he [Zacky] said he didn't know who he was responsible to during his service in East Timor," said Munir, who questioned Zacky with fellow KPP HAM members Nursyahbani Katjasungkana, Asmara Nababan, Todung Mulya Lubis and Albert Hasibuan.

Munir said Zacky was obviously trying to make excuses for the military's conduct in East Timor after the referendum.

Zacky's testimony was similar to those of other generals already questioned by KPP HAM. He denied the Indonesian Defense Forces (TNI) had created, commanded and armed the pro-Jakarta militias that went on the rampage in East Timor in September.

Witnesses and the foreign press have said it's clear that TNI used the militias to punish East Timor for choosing independence and to set an example to other provinces wishing to secede from Indonesia.

Zacky's strong denial of TNI's role in the violence was seen as a bit over the top, especially when he claimed that all guns used by the militias were from Portugal or slain Indonesian soldiers.

He said the violence occurred spontaneously because the pro- Jakarta militias were so upset when it was announced in early September that only 21.5% of voters had opted to remain part of Indonesia.

The general then accused pro-independence supporters of being equally responsible for the massive violence. He also said the UN-sanctioned international peacekeeping force (Interfet) allowed violence to occur.

"Both feuding parties committed the atrocities in East Timor after the ballot. Please note that after martial law administrator [Major General] Kiki Syahnakri left East Timor and there were no TNI troops left, pro-independence supporters torched an Indonesian bank in front of Interfet troops," he told reporters.

He firmly rejected reports that the widespread arson was systematic and carefully planned. Citing examples of atrocities and killings in Ambon, Madura and Kalimantan, he said it was just the typical Indonesian way of running amok.

"I don't want to talk about what they refer to as systematic, total devastation and arson in East Timor. But I will admit there was some arson there. It's part of the pattern of people who run amok. They spill out their uncontrollable emotions by torching anything they consider precious, in order to satisfy their violent rage."

Zacky, who ended his service as security advisor to P3TT immediately after the ballot, admitted he had predicted there would be violence after the announcement of the result. "I knew there would be a big brawl which would led to riots, but I didn't expect them to be that big."

Asked about the many weapons and ammunition possessed by the militias, which he preferred to call Pam Swakarsa (civilian guards), he said their guns were left behind when Portugal abandoned East Timor in 1975.

"The Portuguese left 27,000 guns when they fled from East Timor. That arsenal was then used by both feuding parties. There were also guns from TNI which had been taken from TNI troops who were killed there."

Zacky insisted that pro-independence supporters had been assisted by a foreign country. However, he refused to name the country. "They had a more sophisticated communications system than TNI. They also had logistics supplies dropped by helicopters from that country."

Zacky said that to counter the "foreign assistance" TNI had arranged a contingency plan within the Udayana Regional Military Command. However, he refused to reveal any details of the plan. "That's the business of TNI headquarters."

Munir expressed doubt over Zacky's comment that pro-independence forces had received weapons from abroad.

"KPP HAM asked him whether he had reported this information to the government. He said he had. Then we again asked whether the government had filed an official protest [against this country]. He said not yet, because the government faces international pressure."

Munir said Zacky had admitted the guns from the pro-Jakarta militias were kept in local military headquarters. "So the militias could pick them up any time they needed them."

Aid groups accused of profiteering

Annie White: A top East Timorese official has accused Australian aid groups and businesses of profiteering in East Timor. The secretary-general of Timor's socialist party Avelino De Silva sits alongside Xanana Gusmao and Jose Ramos Horta at the National Consultative Council, Timor's de facto government.

Michael Vincent reports Avelino De Silva, in Australia to address a conference on Marxism, believes aid groups are importing alcohol as well as underpaying workers.

Michael Vincent: In the first major protest against the UN's transitional administration in East Timor, more than 200 workers rallied in Dili demanding better working conditions. The Timorese Socialist Party organised the demonstration. Its leader, Avalino Da Silva, says aid groups are paying workers a pittance.

Avelino De Silva: With twenty thousand rupiah -- I give you as a number -- 20,000 rupiah And one kilo of rice is 15,000 rupiah. One kilo of meat is 45,000. One kilo of sugar is 10,000. How can people survive with 20,000 today?

Michael Vincent: His message to aid groups is simple -- pay a fair day's wage for a fair day's work, and stop trying to get rich. Senior De Silva says some non-government organisations, or NGOs, are using the emergency situation in East Timor to import beer and other products to on-sell them. He says it's plain profiteering.

Avelino De Silva: Time will prove which NGOs are getting rich in East Timor, which NGOs are doing business in East Timor. Came with the flag of humanitarians, but behind it doing business.

Michael Vincent: How are they doing business?

Avelino De Silva: A lot of NGOs, they can import or bring beer to East Timor. [Inaudible] We don't identify yet which NGOs do it in East Timor.

Michael Vincent: Timor's Socialist Party is not opposed to a free market, but it's not happy about recent investments. Senor De Silva says Australian entrepreneurs have opened hotels and other businesses in Dili without asking permission of locals.

Avelino De Silva: We still [inaudible] our investments.

Michael Vincent: You think it's illegal.

Avelino De Silva: Yeah, because it is not regulated yet by United Nations treasury administration regulations.

Michael Vincent: Senor De Silva says entrepreneurs must not exploit East Timor as a tax-free haven.

Annie White: Michael Vincent with that report.

Protest at the UNTAET headquarrters

Sam de Silva, Dili -- About 400 people marched Wednesday from the office of protest organsier, the Socialist Party of Timor (PST) to the gates of the UNTAET headquarters to protest for the rights of the East Timorese people. The PST are linked to and supported by the Australian-based Democratic Socialist Party.

The protesters had five demands to make to UNTAET, the United Nations Transitional Authority in East Timor. These were: stop the importation of labour; give East Timorese the chance to work; lower the cost of food and construction materials; lift the minimum wage; and broaden rice and other food distribution.

The protesters left the office of PST at about 9:30am and arrived at the gates of UNTAET at 10am. They made no attempt to enter the compound, but some did climb the gate to hold up the signs and placards that expressed their demands. Speeches were made by various people and at about 10:30, some representatives were allowed inside to voice their demands directly to UNTAET officials.

Another group, much smaller in size, was also present at UNTAET. These were the ex-workers of the Timor Lodge (previously known as Dili Lodge) owned by Australian business man, Wayne Thomas. The Timor Lodge was evicted by UNTAET on the 3rd January 2000, from land which once belonged to the Indonesian military. The ex- workers, accompanied by staff from the East Timor Human Rights Commission, were at UNTAET to find out directly from the source why the Timor Lodge was shut down. There was concern by some that CNRT, the umbrella organisation representing some of the different political interests in East Timor, was involved in the decision, so the ex-staff had come to hear the facts about the eviction directly from UNTAET.

It was quite a spectacle outside the gates of UNTAET. While the representatives of PST were discussing their demands with UNTAET officials inside the compound, more speeches were given outside. Many cameras were present, snapping pictures of what was probably the first major public protest in the new East Timor. The gates were closed -- and no vehicles could enter or leave the compound. From inside the gates, many national (East Timorese) UNTAET staff looked on -- only to be told by the foreign security chief to go back to work, that the protest was not a tourist attraction. Many of the local staff seemed pleased to see a protest aimed at their employer.

By about 11:45am, the representatives returned to their supporters, accompanied by a staff member from the UNTAET Political Office, and addressed the crowd. The following information was obtained by speaking to some Timorese who could speak some English. The complaints of the protestors were going to be taken in to consideration, said the UN. About the demands specifically, the UN claim they have no influence over how much NGOs pay their staff. The wages are dependent on the country the NGO originates. Regarding the food distribution issue, UNTAET claimed it needs to be informed with accurate evidence. And on the issue of employment, UNTAET responded by saying it recently employed 50 East Timorese to work at airport.

With that, the crowd disappeared, and normal traffic flowed in and out of the UNTAET gates -- just in time for the lunch break. At this time, the situation regarding the Timor Lodge ex-workers is unknown, but no doubt, UNTAET would have addressed their concerns and clearly explained to them why Wayne Thomas's business had to be shut down.

General admits soldiers involved in violence

Agencies in Jakarta and Dili -- A senior Indonesian army general admitted yesterday that pro-Jakarta militias and some disgruntled Indonesian soldiers had committed murder and arson in East Timor.

Major-General Zacky Anwar Makarim, formerly in charge of military intelligence operations in the troubled territory, told the government-sanctioned Inquiry Commission on East Timor Human Rights Abuses the acts were committed partly because of dissatisfaction over the August 30 ballot, which they alleged the United Nations rigged in favour of independence for East Timor.

"There were murders and arson by militias and soldiers as individuals. It's part of the 'amok' culture of Indonesian society. But it was not something done systematically," General Zacky said after being questioned by the panel on his alleged role in the September atrocities. He did not answer when asked whether he had anticipated these outbreaks of violence, as the officer in charge of intelligence in the region since early July. Instead, he said: "Violence was also committed by pro- independence people."

General Zacky blamed the UN mission that organised the poll for "cheating" pro-Indonesian East Timorese. "In our prediction, we would either lose or win by a slight margin ... But only 21 per cent voted in favour of Indonesia's continued rule in East Timor ... It was really disappointing," he said.

Next week, the inquiry panel will question former foreign minister Ali Alatas and former co-ordinating minister for political affairs and security Feisal Tanjung.

The panel has so far questioned at least six generals, including the former commander of the Indonesian Defence Force, General Wiranto, and leaders of militia groups.

But former president Bacharuddin Habibie will not appear, one of his lawyers was quoted as saying yesterday.

Ruhut Sitompul said for Mr Habibie to testify would be "irrelevant" because he had already spoken about the violence in his accountability speech to the country's former legislature in September.

Fears rise of dependence on 'aid economy'

Keith B. Richburg, Dili -- At one of the two new floating hotels in Dili last week, it was standing room only at the upper-deck bar.

Relief workers, United Nations officials, foreign peacekeeping troops and journalists stood shoulder to shoulder, swapping stories and exchanging mobile phone numbers as cold beer flowed, music blared and the cook behind the counter had trouble keeping up with the cheeseburger orders.

Outside, the capital's main waterfront road was jammed with new vehicles, most of them with license plates from the Darwin area in Australia. They cruised past block after block of burned-out shells of buildings, although the street is dotted with colorful new restaurants, hotels and bars.

But at the local offices of the Roman Catholic charity Caritas, Rogerio dos Santos, the deputy director, still cannot make an overseas telephone call to his headquarters to ask for more rice.

Before East Timor voted August 30 to become independent from Indonesia -- sending Indonesian soldiers and their militia protigis on a rampage of killing and destruction -- Caritas was one of the main relief groups distributing rice around the territory.

The group bought rice from Indonesian government warehouses or got it from a companion aid agency in Jakarta. Now, its sources have been cut off, and dozens of foreign relief groups have arrived in town. And the local Caritas office, like every other building here, was looted bare, with all its phones and fax machines stolen.

Mr. dos Santos does not mind the massive influx of aid agencies into East Timor -- just as he does not mind seeing the increasing number of cars, hotels and restaurants springing up here to cater to the expanding foreign community. But, he said, "Something is wrong."

"It's not a priority for me -- hotels, big cars," he added. "The priority for me is that people need food and reconstruction materials for their houses."

It is a growing concern. With East Timor now essentially stable, under the protection of an Australian-led peacekeeping force and administered by the United Nations, the territory has moved from being an emergency case to being a kind of laboratory for development and reconstruction.

Everything here needs rebuilding -- and that has brought in hundreds of foreign relief workers from, at last count, 40 agencies, primed with theories of development and years of experience from disaster zones such as Cambodia, Somalia and Rwanda.

And behind the relief workers have come the entrepreneurs, mostly from Australia's northern coast, the "Northern Territory carpetbaggers," as they are sometimes jokingly called.

They supply the vehicles, set up the housing and ship in the beer, the refrigerators, the mobile telephones, the fax machines and just about everything else that the expanding expatriate community needs to survive in relative comfort in a devastated city without stores or basic supplies.

"There's a vacuum here that people are moving to fill," said one Darwin-based businessman, explaining his decision to come to Dili. "Businessmen go everywhere in the world, and this is virgin territory."

While Australians may be the largest and most visible contingent, they are not the only one. Portugal, East Timor's colonial ruler before Indonesia invaded and annexed the territory in 1975, has returned in force, announcing plans for East Timor's first bank and giving back pay to its former civil servants -- in Portuguese escudos.

All this has created a bewildering mishmash of currencies -- Australian dollars, escudos, US dollars and the Indonesian rupiah, now used mostly by small traders and taxi drivers. On the floating hotels, which sailed here from Singapore, the crew is Singapore-based and is paid in Singapore dollars. The concern now is that with all the resources being poured into expatriate logistics, the more basic needs of the East Timorese may be ignored -- or at least may become far more glaring by contrast.

Veteran relief workers speak with horror about what they call "the Cambodia problem" -- the multibillion-dollar effort to rebuild Cambodia, a country where, eight years after the arrival of the UN transitional authority, the relief community is still the only major source of legitimate income. Average Cambodians remain as poor as they were nearly a decade ago.

Some say the "Cambodia problem" is already occurring in East Timor. "It's real bad," said a longtime official of a UN agency with experience in other disaster areas.

"I'd like to see some kind of spreading of the income over the population," the official said. "It's difficult. We need to put money into the real economy, and not just the aid economy. And we need to support the setting up of businesses -- and not only Australian businesses."

Among other things, he said, he hoped the ethnic Chinese businesses who fled during the violence in the territory could be persuaded to return.

Jose Ramos-Horta, the Nobel Peace Prize laureate and senior official of the National Council for Timorese Resistance, said he, too, was aware of the potential problem and was determined to prevent it.

"Frankly, I would never allow this to happen, because it would mean betraying the people," Mr. Ramos-Horta said. "For the time being, we understand," he said.

Protests over Indonesian workers

Dili -- In the first serious protest against the UN administration running East Timor, some 200 unemployed laborers demonstrated Wednesday against the use of Indonesian workers by companies contracted by the world body.

The rally was organized by a coalition of socialist groups angered by the influx of foreign construction workers, who are building several large helicopter landing pads at Dili airport.

"Anyone with an inch of intelligence would not make such a policy decision. It's a bit like asking Iraqi workers to build a helipad in Kuwait, or asking a Serbian company to go to Kosovo to build a helipad there," said Nobel laureate Jose Ramos-Horta, who did not take part in the peaceful but noisy protest.

Although there are no unemployment statistics in the region, it is believed to stand at close to 100 percent.

The Indonesian workers were brought in by an international firm contracted by international peacekeepers to build the urgently needed helipads. Military officers justified the move by insisting there were no local workers with the appropriate specialized engineering skills.

UN officials declined to comment on whether they would continue to use the Indonesian workers.

"There are many problems. Unemployment, I'm afraid, is first and foremost," said Sergio Vieira de Mello, who heads the UN transitional authority.

He said that some of the $520 million pledged by donor countries at a conference in Tokyo last month will be used to reduce unemployment by providing jobs on reconstruction projects. Demonstrators also called for the United Nations to control market prices, set a minimum wage for workers and improve the distribution of humanitarian assistance throughout the nation.

Indonesia looms as top trade partner

Joanne Collins, Dili -- East Timor is likely to count Indonesia, its old and often brutal master, as its top trade partner as the devastated fledgling nation strives to rebuild, the United Nations and World Bank say.

Laid waste less than five months ago by pro-Jakarta militias opposed to independence, East Timor is still tied economically to Indonesia despite its bloody severing of sovereign ties.

UN chief in the territory, Sergio Vieira de Mello, named the Indonesian-ruled Western half of Timor island and two major Indonesian cities as likely centres of the trade.

"It is clear to me that West Timor in particular and other areas like Surabaya and Denpasar will become the main trade partners of East Timor," he told Reuters on Thursday.

Most investment in the fledgling nation, which voted for independence on August 30, has so far come from Australia, but Indonesia has regained a firm business footing in the territory it ruled as a province for 24 years.

Government-owned Merpati Nusantara Airlines said this week it would be the first to resume commercial flights. The first diplomatic mission in East Timor will be Indonesian.

The World Bank says it makes economic sense for East Timor and Indonesia to exchange goods and services, especially as the Indonesian rupiah is the de facto legal tender in East Timor.

"East Timor is in a really tough spot -- it's surrounded by Indonesia which is a really good market...," a World Bank official said. "I don't think it's impossible for Indonesia to be the number one trading partner of East Timor but there are political issues."

One of those is the border between East Timor and Indonesia's West Timor, which is still officially closed.

Independence leaders Xanana Gusmao and Jose Ramos-Horta plan a regional tour to canvass investment opportunities beyond Indonesia.

Ramos-Horta told Reuters that on January 23 the two men would leave for China, South Korea, the Philippines, Thailand, Malaysia and Singapore.

"This is a great opportunity for a lot of infrastructure to be developed -- tourism and agriculture," Ramos-Horta said. "There is tremendous agricultural potential along East Timor's south coast where the country is very fertile and production could feed the entire territory and be exported to northern Australia."

Agriculture would be the mainstay of East Timor's economy, Vieira de Mello said. Arabica coffee would be the main export earner, with 8000 tonnes exported in 2000 valued at $20 million to $22 million. It would be followed by rice and maize, which are still at subsistence level.

Vieira de Mello, a Brazilian, said East Timor's mineral base was an unknown quantity and that income generated by gas and oil would be limited but important in the two to three years the United Nations took to guide the territory to full independence.

"We're not talking about an income of hundreds of millions of dollars per year at this stage, but under $10 million per year for the next two to three years," he said.

But the United Nations' focus is on the nuts and bolts of the economy: establishing a central fiscal authority, an official currency and a central payments office and tackling unemployment.

"What we're trying to do is to establish the basis of a sound economic environment ... and once we have established this legal basis for the economy to be re-activated then obviously you need an injection of capital to tackle the fundamental problem here which is unemployment," Vieira de Mello said.

He said funds announced at a donors' conference in Tokyo last month would be used to launch rehabilitation and reconstruction projects to provide thousands of jobs across the country.

Border residents terrified of attacks

John Martinkus, Memo -- Local residents here on the East-West Timor border remain terrified of an Indonesian attack following this week's shooting incident between Indonesian troops and Australian Interfet soldiers.

Panic broke out as Indonesian troops began shooting across the border to provoke the Australians from Delta company Second Royal Australian Regiment who were stationed in the village, local residents told AAP.

"The women took their belongings and ran and we got our spears and knives and were ready for an attack," said Arnauldo Dos Santos, a resident of Memo. The Interfet statement concerning the incident released last night said only two TNI (Indonesian soldiers) were involved but the residents tell of a much larger Indonesian force and a heavy volume of shooting.

"It was a lot of soldiers we saw it with our eyes," local leader Apolinario Dos Santos said. "I was watching from near the Interfet post. They shot from here, there, over there and there," he said indicating with his hand the entire length of the shallow river that forms the border near here, less than 800 metres from the village.

Apolinario described how Interfet fired two bursts of automatic fire at the Indonesians as a warning and they withdrew.

"TNI were in the scrub along the river bed," he said pointing at the area which is almost a kilometre from the first sign -- a skull and crossbones and a warning -- that indicates the border of Indonesian controlled West Timor.

The residents of Memo are used to the shooting. Apolinario produced a log book of four seperate shooting incidents from across the border since November 28. yesterday morning when the eight Australian soldiers manning the post overlooking the river withdrew to other positions.

Interfet had manned the post continuously since they arrived on the border on October 20 and the local people feared the Indonesians would attack.

At the regional command for the Second Royal Australian Regiment in Balibo -- 120 kilometres west of Dili - Lieutenant Colonel Mick Slater, commander of 2RAR, told reporters that an investigation into the incident would be carried out in the next few days. "Interfet troops would only return fire if their own lives or the lives of the people they are here to protect were threatened within the mandated area of operations," he said.

Lieutenant Colonel Slater did imply that the cause of the shooting may have been Indonesian troops hunting buffalo. But local residents who have endured Indonesian troops and pro- Indonesian militia attacks on their village on three occasions before their withdrawal in October see the continual shooting as a provocation for the Australians based here.

"In my opinion the TNI is ill disciplined. They shouldn't be firing so close to the border with international forces here," said Arnauldo Dos Santos, who witnessed the incident.

There are no millenium celebrations planned for the villagers or troops stationed along this ill-defined frontier, just the constant grind of ensuring the Indonesian military on the other side doesn't conduct it's so-called buffalo shooting into the territory of East Timor.

Document ordering Timor burning, is valid

Jakarta -- The Investigative Commission for Human Rights Abuses in East Timor [KPP HAM] yesterday confirmed the existence and validity of the Garnadi Document which ordered the burning of the troubled region.

Commission member Munir told reporters yesterday KPP HAM has obtained a document containing a letter from Indonesian Military [TNI] Headquarters appointing Brig.-Gen. Garnadi as secretary of P4OKP, a unit set up by the office of then-Coordinating Minister for Political and Security Affairs, Feisal Tanjung.

"We have also obtained a copy of the Garnadi Document, as the document is now known, which contains the order to burn down vital buildings in East Timor. The document, which bears the letter head of the Coordinating Minister of Political and Security Affairs, was signed by Garnadi," Munir said after the commission questioned Garnadi.

After the August 30, UN-led ballot on East Timor, the now independent territory saw massive atrocities -- including killings, tortures, rapes and burning -- allegedly conducted by military-backed pro-integration forces, better known as militias.

KPP HAM has demanded that former TNI commander Gen. Wiranto, who is now coordinating minister for political and security affairs, and scores of top generals be held accountable for the atrocities.

"Garnadi has confirmed his signature, number and letter head of the Document Garnadi, but denies knowledge of the contents of the document," Munir said without elaborating.

The questioning of Garnadi is aimed at cross-checking information given by the former head of the Timor ballot task force Dino Patti Djalal.

"KPP HAM has established the validity of the Garnadi Document. It's strange if Garnadi claims he didn't know his staff or his own team," Munir said.

"One thing's for sure, the document does exist," Munir added. The statement conflicts with the military's denial of the existence of the document.

Government/politics

Wahid names close friends as top aides

Jakarta -- President Abdurrahman Wahid installed on Wednesday two veteran government critics, who are also close associates of his, as top aides, amid mounting criticism of the effectiveness of his government.

Abdurrahman installed Marsilam Simajuntak as Cabinet secretary and Bondan Gunawan as secretary of government supervision in a brief ceremony at the State Palace.

The President explained that as the head of state he would be assisted by State Secretary Ali Rahman, while as head of government Marsilam and Bondan would aid him.

"The President in the context of his daily activities, both at his office and residence, is assisted by the Cabinet secretary whose duty it is to assist the head of state. While to regulate the management of the government, I appoint a secretary of government supervision," Abdurrahman explained.

The President's official office is the Bina Graha presidential office, while he resides at Merdeka Palace.

Both Marsilam and Bondan are members of Forum Demokrasi, a loose association of social-political observers established in 1991. The forum was once chaired by Abdurrahman.

With their appointment, the President now has five official personal secretaries and assistants.

In addition to Ali, Bondan and Marsilam, there is also a military secretary, Rear Marshal Budhy Santoso, and Ratih Kaniawan Hardjono, who is the presidential secretary.

Ali Rahman reportedly plans to quit the Cabinet as he is not satisfied with his job description, which often overlaps with Ratih's. The President had said Ali's main job is to keep state archives.

According to Presidential Decree No. 141, issued in November, the presidential secretary is responsible for preparing state functions led by or attended by the President and Vice President, domestic and overseas tours by the President and/or his wife.

Ratih is in charge of press affairs, administrative matters, including incoming and outgoing letters for and from the President, the handling of about 500 civil servants working for the presidential household and the maintenance of the presidential palaces.

Former president Soeharto abolished the Cabinet secretary position in March 1998, but retained the position of vice Cabinet secretary for Bambang Kesowo.

Soeharto's successor B.J. Habibie then replaced Bambang with Erman Rajagukguk. Abdurrahman reportedly has decided to discharge Erman. Bambang currently serves as the Vice President's secretary.

"I will return to the University of Indonesia," said Erman, a professor of law. Marsilam was born in Yogykarta in 1943, and graduated from the School of Medicine at the University of Indonesia. He finished his studies at the Faculty of Law at the same university in 1989.

It is still not clear whether Bondan will take over the position of secretary of development operations supervision from Lt. Gen. (ret) Sintong Panjaitan. Sintong is no longer at his post and his office has been taken over by Ratih.

Speaking to journalists after his inauguration, Bondan said his main job was to prepare all the necessities and information needed by the President before making a decision and to monitor the implementation of government policies.

Separately, People's Consultative Assembly Speaker Amien Rais questioned the President's decision to establish these new posts.

He also queried the President's appointment of people who had no clear political track record. "These persons have suddenly entered the center of power and have strategic positions without having made any clear contributions to national life," he said.

He said an unhealthy atmosphere could develop at the State Palace as certain groups now had direct access to the president's ear and could redirect policy.

He asked Abdurrahman to consult with the House of Representatives prior to setting up a new body. "I think the House would react to the installment [of Marsilam]," he said.

Wiranto faces a showdown with Wahid

Tim Dodd, Jakarta -- How long can the general stay on top? From the Soeharto era, which ended in May 1998, through to the beginning of the Wahid presidency, General Wiranto is the only one of Indonesia's political players to continuously maintain a senior role in the Indonesian Government.

Since being appointed armed forces chief by the former President Soeharto in early 1998, Wiranto, the Teflon general, has proved untouchable.

He survived Soeharto's resignation and a brutal bid to topple him by Soeharto's son-in-law, former General Prabowo Subianto. A failure to keep order in strife-torn Maluku province, where more than 800 people have died in religious violence in the past year, has not dented his prospects. International and domestic opprobrium for the military's role in masterminding violence in East Timor has not yet damaged him. And being kicked upstairs by President Wahid in October, to a job which formerly held little power, has not diminished his influence.

These are only a few of the perils through which Wiranto has survived, and even prospered.

He endured tension with President B.J. Habibie after the army shot protesting students in central Jakarta in November 1998; he has been able to brush off calls for a serious investigation of army human rights abuses over the past decade in the province of Aceh; and now he, along with other generals, is under investigation by an Indonesian human rights inquiry for his role in the destruction of East Timor.

Now, as has often happened before, the Jakarta rumour mill has it that Wiranto is about to be displaced, that a showdown is coming between him and the President which will see him sidelined, or perhaps stung into orchestrating a military takeover.

So far there is no hard evidence that Wiranto will lose his job as Co-ordinating Minister for Political and Security Affairs. Jakarta's always active rumour mill has proved particularly unreliable under a president who loves spreading rumour himself, and is very unpredictable to boot.

So Wiranto's meteoric career, which saw him move from a colonel with no great prospects to armed forces chief in 10 years, may not be over. But he is likely to face another testing period in the next few weeks because there is certainly rising tension between him and the President.

Wiranto's greatest potential setback came last October when President Wahid replaced him as armed forces commander and defence minister and named him Co-ordinating Minister for Political and Security Affairs, a role which, although nominally senior to the military chief, has usually exercised little power.

However, he remained very influential in the early days of the new government and played a key role in selecting the Cabinet and reshuffling military posts. With guile and foresight, he managed to remain the most powerful figure in the armed forces.

His replacement as commander is Admiral Widodo, who had been hand-picked by Wiranto to serve as his deputy last July. Because Widodo is from the navy, he will never establish his own power base in the dominant army. The admiral's power is further limited because he does not hold concurrently the post of Defence Minister, which Wiranto held as armed forces commander.

The new Defence Minister is a civilian, Mr Juwono Sudarsono, who is close to the military but no threat to it. And in the subsequent armed forces reshuffle in November, Wiranto was able to promote his own supporters and ensure that reformers and potential rivals were sidelined.

Major-General Agus Wirahadikusumah, who launched his book on military reform last year, was shifted out of the national power structure to head a regional command in Sulawesi. Two other reformers, Lieutenant-General Susilo Bambang Yudhoyono and Lieutenant-General Agum Gumelar, were appointed to the Cabinet, which probably ends their active military careers. The new army chief-of-staff is a Wiranto ally, Lieutenant-General Tyasno Sudarto.

But more recently there have been clear signs of tension between Wiranto and the President. Firstly, when General Wiranto was summoned to appear before the Indonesian human rights inquiry on East Timor last month, the President said he would not support him or other officers if they were implicated.

Even more public tension has been evident between the President and the armed forces senior spokesman, Wiranto-appointee Major- General Sudrajat.

The armed forces ignored a call from President Wahid several weeks ago for Sudrajat, who had been vocal in backing military action to bring rebels in Aceh to heel, to be sacked.

Last week General Sudrajat said that Article 10 of the Constitution, which gives the president the "highest power over the army, the navy and the air force" does not give the president the right to interfere in the armed forces' internal affairs.

In an extraordinary claim, he said the TNI (armed forces) would give its loyalty to the people and the State, but not automatically to the president.

The Jakarta Post editorialised that the spokesman's remarks left a very big omission. "To whom is TNI accountable? ... If he [the president] is not the supreme commander, then we have virtually removed any mechanism that allows the public to indirectly control the military and it becomes accountable to no-one but itself," it said.

General Wiranto's fate is likely to be clear next week when the President makes it clear whether his hints of a Cabinet reshuffle will be fulfilled.

Notwithstanding the Jakarta gossip circuit, it is very unlikely Wiranto would attempt a coup. The armed forces, and the general particularly, put great store in appearing to follow the Constitution. But should Indonesia's political situation worsen, he is well positioned to engineer a constitutional takeover, just like his mentor, Soeharto, did in 1966.

Regional conflicts

Students lash out at Megawati over Maluku

Jakarta -- Some 600 students grouped in the Indonesian Muslim Student Action Union (KAMMI) protested outside the vice presidential palace on Wednesday, demanding Megawati Soekarnoputri be held responsible for the prolonged sectarian unrest in Maluku.

They accused the Vice President of being sluggish in her attempts to solve the strife which began a year ago.

They also urged President Abdurrahman Wahid to revoke his mandate, entrusted to Megawati last October, to solve ethnic and sectarian violence and threats of separation in the eastern part of Indonesia, including the archipelagic province of Maluku.

"The Vice President has proven unable to solve the conflicts in Maluku. The President, therefore, must withdraw his mandate from Megawati and give it to competent figures," coordinator of the protesters M. Najib said in reading from a KAMMI statement. Najib did not identify the competent figures.

Abdurrahman announced in October a list of Megawati's responsibilities, including dealing with unrest in Irian Jaya (now Papua), Maluku and Riau, and human rights and environmental matters. The President said he would focus on troubled Aceh and the country's economic recovery.

Megawati was heavily criticized after she and her family went on a year- end trip to Hong Kong. Critics said the timing of the trip was improper as unrest continued in Maluku and Aceh.

Official estimates put the number of deaths at about 450 in North and Central Maluku. However, unconfirmed sources claim a much higher death toll.

Student protesters arrived in front of the vice presidential palace on Jl. Medan Merdeka Selatan in Central Jakarta at about 10 a.m.

Attired in Muslim apparel and with white headbands stating the organization's name in capital letters, they repeatedly chanted "Allahu Akbar !!" (Allah is Great).

They unfurled banners and posters with messages including "Mega's tears cannot be compared with the blood of Ambon's Muslims".

The students demanded the Indonesia Military (TNI) remain neutral in handling the sectarian conflicts.

"The military must provide impartial protection to all people in Ambon. The military must settle the conflicts quickly to prevent them from spreading to other areas," said Najib.

They also demanded replacement of the local military commander, who they said was biased.

After a two-hour peaceful protest, the students marched to the Ministry of Defense to air the same demand. They continued to the nearby Istiqlal Grand Mosque, where they dispersed peacefully. Dozens of Police Mobile Brigade personnel guarded the protest.

Holy war threat as violence rages

Agencies in Jakarta and Ambon -- Muslim students yesterday threatened a holy war against Christians unless the Government stems sectarian clashes in the eastern Maluku islands that have left more than 700 dead in two weeks.

As violence raged in four areas on Halmahera island, the head of the Indonesian armed forces (TNI), Admiral Widodo Adi Sudjipto pledged the military would "settle the problem".

Renewed clashes were reported in Seram island, where at least 23 people have been killed since Friday.

North Maluku province police chief Lieutenant-Colonel Didik Prijantono said at least 502 people had been killed on Halmahera since December 26. He denied a report the death toll was 2,000.

Adjit Tahir, of the Muslim Al Fatah emergency post in the capital Ambon, said at least 1,400 Muslims had been "massacred" in Tobelo, a sub-district of Halmahera.

Thousands more fled the violence yesterday, seeking shelter in Ambon and elsewhere.

More than 10,000 people have left their homes and taken shelter in mosques, churches, schools and military barracks.

Reports of attacks on Muslims in Halmahera prompted about 1,500 Muslim students to protest outside the office of Vice-President Megawati Sukarnoputri -- charged by President Abdurrahman Wahid with restoring peace in several regions, including Maluku. Many called on her to resign. Some repeatedly shouted, "Burn churches".

"If peace is hindered, Jihad [holy war] becomes the choice," read one banner. Another warned: "Muslim genocide in Ambon can also mean Christian genocide in Jakarta."

The military has assumed responsibility for security in the islands, where a year of sectarian conflict has left more than 1,200 dead.

Indonesia violence threatens to spread

Chris McCall, Jakarta -- Mounting violence between Christians and Moslems in Indonesia's eastern spice islands threatens to set off a chain of religious unrest nationwide unless handled with utmost urgency.

But the shaky government in Jakarta seems unable to take the firm steps needed to stop the violence, political analysts say.

A sudden upsurge in the year-old violence between Christians and Moslems in the Moluccas island killed hundreds in December. It has left President Abdurrahman Wahid and Vice-President Megawati Sukarnoputri -- tapped by Wahid to end the violence -- looking like lame ducks.

The crisis now looks nearly as intractable as that in the Sumatran province of Aceh, where armed separatists want an independent state. It is arousing strong emotions in other areas and could spread.

"The time for constructive action has almost past," said strategic studies analyst Alan Dupont. "It has now been caught up in this anti-Christian thing. Is is now spilling over into other parts of Indonesia. More drastic action is required."

Calls for jihad

Thousands of Moslems demonstrated in Jakarta last week to demand a holy war or jihad, calling the Moluccas violence an attack on Islam. The Christian community there says it is being exterminated and has called for foreign peacekeepers, which Jakarta has ruled out.

But its own efforts to solve the year-old crisis are floundering badly. Its troops have been accused of taking sides, killing unarmed civilians and looting during house-to-house weapons searches. There are reports of arms being smuggled in for both sides and a naval blockade set up last week may have come too late.

Moslem businessman Des Alwi, an influential figure in the Moluccas, says one group of Moslem intellectuals has already declared a jihad on Ambon island at the heart of the Moluccas.

"There are people going in from all over Indonesia to join in a jihad," said Alwi. "It is not rational any more. You are either a Moslem or a Christian." Jihad may be declared elsewhere, Alwi said, citing the large island Halmahera, where most recent violence occurred.

Any solution would need to begin with the military, said Dupont. But Wahid and the military leadership have not been getting on well, amid rumours that he wants to remove former military chief General Wiranto from his cabinet.

"The military is increasingly reluctant to take firm action when it is needed," said Dupont. "The senior military leadership is concerned about being hauled before human rights tribunals. They have never been very subtle in the way they deal with civil disturbances."

Over the past year the violence has gradually spread from island to island, often along the routes taken by refugees.

Security forces put the number of dead at above 1,500, around one-third of them in December. The independent Commission for Missing Persons and Victims of Violence (Kontras), which has carried out its own monitoring, says several thousand have died.

"A big fire"

The violence has been partly fuelled by local disputes between Christian and Moslem communities over land rights and similar old grudges which are not directly related to religion. Similar tensions between Christian and Moslem communities exist on nearby Sulawesi island, where many refugees have gone, and in Irian Jaya.

Analysts say any attacks during the forthcoming Chinese New Year festival on the Chinese minority on Java and elsewhere -- targetted in the past out of resentment over their perceived wealth -- might signal serious problems to come.

Megawati was handed personal responsibility by Wahid for solving the crisis but her inaction has prompted calls for her dismissal by Moslem groups, many of whom opposed her appointment. Wahid, who has spent considerable time abroad since his election in October, also lacks a sense of crisis, said academic Arief Budiman of the University of Melbourne. Meanwhile, elements in the military may be prepared to allow the violence to continue, believing it will strengthen their hand politically.

If it spreads to other parts of Indonesia the consequences were likely to be disastrous, Budiman said. It is an issue of mass emotions, which are not always rational, unlike the Aceh crisis where there are clear issues to be addressed. "When that happens it will very quickly become a big fire," he said.

Australian company involved violence: Muslims

Jakarta -- A local Muslim group has accused an Australian gold mining company of involvement in the Muslim-Christian bloodshed in eastern Indonesia's North Maluku islands, the state Antara news agency said Thursday.

The Australian company, Newcrest Mining, immediately denied the reports, which were reportedly based on members of the Ternate Jihad Force sighting the company's helicopter hovering over the troublespots. Newcrest said however that it had lent its helicopter to Indonesian security forces in the North Malukus, where it has a mining site.

North Antara quoted the head of the Jihad (Holy War) force, identified only as 'Achmad' as saying the group believed the helicopter had supplied ammunition and explosives to one side of the conflict in the Koa district. Newcrest has a mining site in Gosokong in the Koa district.

Achmad charged that on December 30 the company helicopter had been seen landing in a crowd during an attack by Koa residents on neighbouring Sidangoli district.

"During the attack ... we saw a helicopter landing amid a large crowd which was attacking Sidangoli residents," Antara quoted him as saying, adding that members of his group also suspected the helicopter of flying people into the clash sites.

The agency also said that on New Year's Eve hundreds of people vandalized the helicopter which had landed at Sultan Babullah airport in Ternate. Hundreds of people also vandalized Newcrest's offices in Santiong, North Ternate district, it said.

In Australia, Newcrest's Australian-based managing director Gordon Galt denied the company was involved in the conflict. But he admitted that the company helicopter had been used by Indonesian authorities.

"We have not been involved in the conflict in any way and we don't seek to become involved, and in fact we'll go to great pains to stay out of it," he told ABC radio.

"None of our equipment or support equipment like helicopters has been used to do anything like that at any time.

"On a number of occasions they've [the Indonesian security forces] moved some of their personnel and commanders from place to place on legitimate peacekeeping activities, and they've asked us could they have access to the helicopter and of course we've given it to them."

Galt said he believed the helicopter had just been seen in the vicinity of clashes over the last few weeks.

"I suspect the helicopter's been seen around areas where there have been conflicts and so people might draw some conclusion," he said. "We're certainly not transporting ammunition or anything else of that nature."

Ninja killers haunt East Java again

Retno Heriwati, Sumberkerto -- Deep in the remote jungles of Indonesia's East Java a mysterious spate of ninja-style murders has prompted a local Moslem group to take the law into its own hands.

At least 10 people have been brutally killed in the past month in the area. Residents say most of the victims were found in grotesque conditions with slice wounds all over their bodies.

Accusing the police of being too slow in handling what looks like a repeat of a major wave of killings a year ago, local representatives of Indonesia's largest Moslem mass organisation have organised their own defence.

In late 1998, unidentified black-garbed killers roamed East Java villages at night murdering Moslem clerics and suspected black magic practitioners. Well over 100 were killed in that wave of killings, which remains unsolved. The killings also spread to some parts of central and west Java.

Many saw the 1998 killings as a bid to trigger widespread violence in the strongly Moslem region at a time when the country was racked by its worst economic and political crisis in decades.

Grotesque killings

Last week two Moslem teachers were killed in Sumberkerto, a sleepy village to the south of the town of Malang. Their heads were smashed. One body was found in a gutter and the other outside the victim's house.

Some locals said they saw five men clad in black masks taking the victims away from their houses the night before.

On Wednesday an 80-strong party of Moslem men in camouflage armed with rattans and knives patrolled the vast green paddy fields in Sumberkerto, a farming village with no electricity and a population of just 197 people.

"People in this village have already been targeted by the ninjas, therefore we are safeguarding the area from further threats," said Hanif.

He belongs to Ansor, a wing of Indonesia's largest Moslem group, Nahdlatul Ulama (NU). Most of the victims so far have been members of the NU, formerly headed by President Abdurrahman Wahid.

To reach the village, you have to trek for two hours through dense tropical forest on a muddy winding path. A bouncing trip on a motorbike from the nearest road to the village, a mosquito-infested highland, can cut the journey to 45 minutes. Hanif said in the past week they had not let any outsiders enter the village in a bid to prevent further killings.

Police accused of foot-dragging

Local religious leaders said police had been moving too slowly in handling the killings and warned of spreading violence if the government did not move quickly to stop it.

"The killings are part of a systematic scenario to destabilise some parts of East Java and if it is too late it could flare to the whole of the province," said Moslem leader Hasyim Musadi in Malang, some 685 km east of Jakarta.

He added he had received reports implicating local military officials in the murders, claims which security forces dismiss.

"We heard reports from our sources that one of the main perpetrators is a criminal from Jakarta who had been trained by military headquarters," said Musadi.

But police said some locals had hampered the probe by refusing to talk to the officials. "What can we do? The residents have so far refused to talk to the police," said Malang police chief Lieutenant-Colonel Herry Prastowo.

Growing protest challenge to regime

Nancy-Amelia Collins and Agencies in Jakarta -- Tens of thousands of Muslims demonstrated in Jakarta yesterday to demand a holy war against Christians in the violence-torn Maluku Islands.

The protest, by far the largest yet, posed a serious challenge for President Abdurrahman Wahid's Government and could exacerbate its differences with military leaders over the fighting, diplomats and analysts warned.

Chanting "jihad", up to 50,000 protesters gathered in Jakarta's Merdeka Square. On Wednesday, fewer than 3,000 had marched, while on Thursday there were only about 5,000.

"We give [Mr Wahid] one month to stop the killings of Muslims," said Husin Ali al-Habsy, one of the speakers at the rally. "Otherwise, we are ready to send at least 10,000 people [to the Malukus] to defend the Muslims."

One protester carried a banner reading: "Thousands of Muslims are slaughtered by Christians. Blood must be paid for with blood."

Calls for a jihad, or holy war, are a relatively new phenomenon in Indonesia, a multi-ethnic nation where the Muslim majority among its 210 million people has generally been seen as moderate.

The gathering gave politicians a chance not only to show they are sympathetic to the plight of the Muslims in the Malukus -- who are being slaughtered by Christians, according to the protesters -- but also to gain political advantage.

Speaker of the People's Assembly, Amien Rais, admonished the Government, and particularly Vice-President Megawati Sukarnoputri, for failing to take decisive action in the ravaged territory. He told the crowd the conflict in the Malukus was an attempt to weaken Islam in the country.

Mr Wahid has personally charged Ms Megawati with reducing tensions in the Malukus and elsewhere. So far, aside from a short trip to the territory in December with Mr Wahid, Ms Megawati has done little to halt the conflict and said nothing about her plans for doing so.

"Rais is pacifying Muslims because nothing is being done," said political analyst Andy Mallarangeng. "But he also has a political motive. This is the perfect time to show how incompetent the Vice-President is."

Mr Wahid said yesterday violence on Halmahera and other northern Maluku islands was not sectarian but political. "Local Muslims have been using Christians to slaughter other Muslims," Mr Wahid said.

The President also said a ship carrying Muslims planning to fight a jihad was on its way to the islands. The Indonesian navy said it had blockaded waters around the Malukus.

Mr Mallarangeng called the Jakarta protests a warning to the Government, which he said would lose its legitimacy if the situation in the Malukus was not resolved soon.

"I believe Gus Dur [as Mr Wahid is widely known] can survive, but he must take decisive action now. I am really worried," the analyst said. "If this violence spreads to the other islands, it will spread to Jakarta and could bring down this Government."

A diplomat said the military wanted the authority to control the situation in the Malukus because it was a chance to show it was still powerful and "indispensable". "This is a power struggle between hardliners in the military and the President," the diplomat said.

Military moves to end Maluku violence

Jakarta -- The military in Indonesia's Maluku islands, where more than 300 people have died in the past two weeks, has begun seizing weapons and arresting suspects in a fresh bid to pacify warring Muslims and Christians.

"The operation to seize weapons is continuing," Second Private Abidin of the Maluku military command told AFP on Monday from the main city of Ambon.

"We have also arrested several people for possession of firearms," he said, but refused to disclose the number of residents rounded up.

The operation, which includes house to house searches, was launched on Sunday by the military, which is now in charge of reestablishing law and order in Ambon. Ambon was calm Monday but tension remained, Abidin said.

Maluku military chief Brigadier General Max Tamaela said three standard Indonesian military firearms and scores of home-made weapons and bombs were confiscated in the first raid on Sunday.

"Two of the standard weapons were guns and the other one is an SS1 rifle," Tamaela was quoted as saying by the official Antara news agency. The operation included house to house searches, he added.

Rahman, a member of the Muslim Al Fatah emergency post, said the Muslim side would be willing to surrender their weapons provided the security forces guarantee their security.

"What happened in the past was that as soon as we surrendered our weapons the Christians attacked us," Rahman said.

"We want peace but they [Christians] have always breached agreements," he charged, echoing similar complaints of bias on the Christian side. Tamaela said that in further raids troops seized 52 homemade rifles, 12 homemade handguns, 22 makeshift bombs, one standard military handgrenade, uniforms of the military police and police and more than 150 rounds of ammunition.

Several people were arrested, including one policeman, Tamaela said without giving more details. The troops also cleared several main streets of makeshift barricades set up by rival Muslim and Christian groups.

The Indonesian military on December 29 took over responsibility for security in Maluku, known as the Spice Islands under Dutch colonial rule, as the wave of deadly Muslim-Christian clashes there showed no sign of abating.

The military leaders have said that the transfer from police control now allowed security forces to "use repressive measures," including house searches, random checks, arrests and weapons' seizures.

They have however denied that the imposition of such measures amounted to a civil emergency, a rung lower than a declaration of martial law.

A year of bloody conflict between Muslims and Christians in Maluku has left 1,134 killed, over 2,300 injured and more than 8,500 buildings, including more than 122 places of worship, either damaged or burned.

The clashes, which erupted on January 19, 1999 on the island of Ambon and have since spread to at least five other main islands in the province, once noted for its religious harmony.

The violence has also forced tens of thousands of people to flee their homes and seek refuge in local military installations or in other Indonesian regions.

Indonesian President Abdurrahman Wahid was quoted Monday as warning foreign countries aginst getting involved in the country's trouble spots, including the Malukus, Irian Jaya and Aceh.

"I warn other countries against (giving) any kind of support, such as sending weaponry to promote the establishment of a country within the Unitary State of Indonesia," the president was quoted by the Indonesian Observer as saying.

The Netherlands late last year offered assistance in helping to stem the rising bloodshed in the Malukus, and last week parliament speaker Akbar Tanjung ruled out any deployment of UN peacekeeping troops to restore peace there.

News & issues

Soeharto `took bribe money'

Jakarta -- The Indonesian Government's internal auditor has accused former President Soeharto and other government officials of receiving bribes from a consortium run by United States and Japanese companies to allow the construction of a power plant at an inflated cost.

In a report obtained by Dow Jones Newswires, the auditing agency also alleges that PT Paiton Energy, a consortium led by units of Edison Mission Energy of the US and Mitsui & Co (MITSY) of Japan, inflated its costs by up to $US600 million ($937 million) so it could sell electricity to a government company at an artificially high price.

"We allege there were inappropriate payments by the consortium, which related to the finalisation of the negotiation process, to certain people who had the authority to make decisions," the audit agency said in a report on the $US2.45 billion Paiton I power plant in East Java.

Paiton Energy is 40 per cent owned by Edison Mission Energy of the US, while Mitsui has a 32.5 per cent stake. General Electric's GE Capital unit holds 12.5 per cent of the company. The local partner of the project is PT Batu Hitam Perkasa, which owns the remaining 15 per cent.

Batu Hitam is controlled by Hashim Djojohadikusumo, a brother-in-law of former President Soeharto's daughter, Siti Hediati Prabowo. Paiton I and other projects built by foreign independent power producers have been dogged by accusations of corruption since the fall of President Soeharto in 1998. Indonesia's State-owned electric utility, PT Perusahaan Listrik Negara, or PLN, sued Paiton I last year to void the power supply contract it signed with them in 1994, claiming the contract was based on elements of "corruption, collusion and nepotism". The companies have repeatedly denied any wrong-doing. The auditor's report was the first by a government body to review accusations against Paiton I and another 25 power projects. It recommends the Attorney-General investigate everyone involved in negotiating the contract but it is not clear what action the Attorney-General will take.

The auditor said its bribery allegation was based on the finding of $US22.23 million of funds listed as "Project Development Costs" in Paiton Energy's 1994 financial report. The auditor said it could not find any explanation of the item, although the amount accounted for more than half of the company's assets. The agency urged the Attorney-General to investigate bank accounts of government officials involved in negotiating the power project.

Prabowo returns to Jakarta

Tim Dodd, Jakarta -- Mr Soeharto's son-in-law and former army general Mr Prabowo Subianto has returned to Indonesia openly for the first time since he left Indonesia in disgrace in 1998.

The former army power broker, who challenged General Wiranto over leadership of the armed forces in the turmoil after Mr Soeharto's resignation as president in May 1998, returned to Jakarta on Monday and met two senior army generals.

His return coincided with growing army dissatisfaction with the leadership of President Abdurrahman Wahid, who has resisted army pressure to use armed force to crush the independence movement in Aceh and impose martial law in Maluku, where hundreds have been killed in violence between Christians and Muslims since Christmas.

Mr Prabowo, who was one of the army's most ruthless hardliners, is blamed for creating turmoil on the streets in the last days of the Soeharto rule and pressuring his successor, Dr B.J. Habibie, to appoint him head of the armed forces.

On the night after his swearing-in, President Habibie stayed away from his house for fear that Mr Prabowo would surround it with Kostrad (Strategic Reserve) troops.

His reappearance is an ominous sign given his wide support among army hardliners and a split in the top ranks of the armed forces. The dominant hardline faction wants to keep the army's traditionally powerful political and economic role and favours tough and brutal action in Aceh and Maluku. The reform faction, which lost out in a shuffle of the top ranks last November, wants the army to become a more professional and disciplined force, divorced from its role in politics.

Adding to the instability are rumours that General Wiranto is about to be axed from his job as the senior Defence Minister.

During his two-day visit Mr Prabowo met the army chief-of-staff, Lieutenant-General Tyasno Sudarto, and the commander of Kostrad a strong Prabowo power base Lieutenant-General Djaja Suparman. The two are arguably the most influential officers in the present army structure, given that the new armed forces chief, Admiral Widodo, is from the navy.

One army source told the Media Indonesia newspaper that Mr Prabowo "was invited to help the reform process in the the TNI [armed forces]. Even though he is not active any more in the TNI, he is still a diligent contributor of opinion on an informal basis".

Since leaving Indonesia, Mr Prabowo has spent time in Jordan, where he has wide contacts with the royal family and the army. He is rumoured to have been in West Timor at the time of the independence ballot in East Timor, fuelling speculation that he was an orchestrator of the militia violence.

He is married to the former president's middle daughter, Siti Hediati Prabowo, known as Titiek.

Arms/Armed forces

Miltary may use Aceh to seize power

Singapore -- A noted Southeast Asian political scientist warned Thursday that Indonesia's military may overthrow the democratically-elected government of President Abdurrahman Wahid if he stumbled on the future of strife-torn Aceh province.

Armed separatists are fighting for an independent Islamic state in the oil-rich province in the north of Indonesia's large Sumatra island.

Michael Leifer, director of the Asia research centre at the London School of Economics and Political Science, singled out Indonesia's future as "the overriding problem" of Southeast Asia at a forum on the region's political and security outlook for 2000.

"Indeed, should Gus Dur [Wahid's popular name] stumble over Aceh, there is a danger that the Armed Forces, which have closed ranks over civilian attempts to hold them to account for human righs abuses, will seize on the issue of the integrity of the Indonesian state as a pretext for usurping political power," he said.

Leifer noted that former military chief General Wiranto had maintained his active service status in his new office as coordinating minister for political affairs and security, "which would seem a platform for a future bid for the presidency."

Leifer criticised Indonesian policy in Aceh, saying it "has consistently been a matter of too little too late with shades of Kosovo about the conflict.

"By way of exaggerated analogy, Indonesia's army has taken on the role of the Serbs, while the Achenese resistance would seem to have learned from the example of the KLA (Kosovo Liberation Army)," he said.

He said that Indonesia in one sense was facing a "crisis of national identity because of a rationale for nationhood based on empire."

He said his inclination was that Indonesia would remain intact after East Timor but that would depend very much on the "cohesion and unity of purpose" of the diversely-constituted government of ailing President Wahid.

This, he said, could not be taken for granted because the Armed Forces, apparently determined to hold on to the "prerequisites of power," still insisted on operating as a state within a state.

"Indonesia continues to live under the Damocles sword of military intervention, which is a double-edged weapon capable of doing incalculable damage to political order and economic recovery," said Professor Leifer, who has held visiting positions at universities in Australia, the Philippines and Singapore.

Generals lay blame on others

Jakarta -- The Indonesian Military (TNI) top brass tend to blame lower-ranking officers for the mayhem in the ravaged territory of East Timor after the August 30 self-determination ballot, a member of the government-sanctioned inquiry team said on Sunday.

"During the questioning, there was a tendency to shift the responsibility [for the violence] to other officers," secretary of the Commission of Inquiry into Human Right Violations (KPP HAM) in East Timor Asmara Nababan, told The Jakarta Post.

"They suddenly said that they did not know anything about it. This is not helpful and it is clear that they are trying to save their own necks," Asmara added.

The commission, in its midterm report, claimed that, based on preliminary investigations and witness accounts, TNI was directly or indirectly involved in the East Timor violence perpetrated by prointegration militias. A number of TNI top brass, including the forces' former chief Gen. Wiranto, were questioned last month and they all denied the allegations, saying that the violence was an emotional outburst which was neither premeditated nor controllable. Wiranto, who is now the coordinating minister for political affairs and security, was at TNI's helm when the ballot was held and during the resulting violence which broke out in East Timor. The generals also denied the alleged links between TNI and the prointegration militia groups.

Asmara said, however, that the inquiry "will look at the strongest evidence" before it drew a conclusion by the end of this month. "We will analyze all of the information that we have and at that point we will be able to separate the false and misleading information from the accurate information in order to give the public a comprehensive picture of what really happened in East Timor," Asmara said.

The inquiry was established in September by then president B.J. Habibie after the government rejected calls for an international inquiry that might lead to war crime tribunals for Indonesian officers.

Asmara said that the next officers to be questioned this week would include former military intelligence chief Maj. Gen. Zacky Anwar Makarim, former head of the Restoration Operation Command in East Timor Maj. Gen.

Kiki Syahnakri and former East Timor military commander Col. M. Noer Muis. Asmara also said that former foreign affairs minister Ali Alatas was also scheduled to be questioned this week.

Attorney General Marzuki Darusman had said earlier that if the inquiry found evidence of rights abuses an ad hoc committee would be established to prosecute the perpetrators in a national human rights tribunal.

Military's impunity under attack

David Lamb -- After more than 50 years of unchecked power and widespread human rights abuse, the Indonesian military suddenly finds itself humiliated and on the defensive, besieged by a wrathful public demanding accountability for past misdeeds.

The reversal of fortunes, initiated by the reform-minded, democratically elected government of President Abdurrahman Wahid, has stunned the military and sent its top generals scurrying to hire a team of lawyers to answer allegations that troops under their command were responsible for murder, rape and torture. The circle of impunity that once allowed soldiers to ride roughshod over the Indonesian people is coming more and more to resemble a noose, a human rights activist said.

Each day the press runs unflattering articles about military abuses, and generals in recent weeks have been hauled into the national assembly and grilled about their conduct, an unthinkable exercise just a year ago. In East Timor and in Aceh province, in northern Sumatra, human rights teams-one of them sponsored by the United Nations-are investigating possible war crimes by the army. Human rights sources said there is sufficient evidence to bring some of the top brass to trial.

Last Wednesday, UN investigators said an international tribunal should be set up by the Security Council unless Indonesia quickly investigates its military's involvement in atrocities in East Timor.

Significantly, Wahid, unlike past presidents, says he will not protect his generals, including Wiranto, the former defense chief and now a Cabinet minister. Wahid, however, objects to any trial before an international tribunal, saying Indonesia should handle such cases itself.

Wahid is well aware, Western political analysts said, that nothing could give his government more domestic credibility than to demand accountability of high-ranking soldiers involved in terrorizing a sizable percentage of the population for more than a generation.

Still, it's a risky proposition for Wahid. The military, which continues to wield great power, regards itself as the backbone of national unity, and senior commanders are divided over whether to support reform or cling to the traditional authority the constitution gives the military. Some generals have publicly said that, if they thought the country was disintegrating-the territory of East Timor voted Aug. 30 to secede from Indonesia, and Aceh is agitating for independence-the army would step in to stop the process.

But though Wahid's political survival may depend on military support, the army's room to maneuver is limited. If it usurped civilian authority, the international community almost surely would cut aid, foreign investors would flee, and Indonesia's Southeast Asian neighbors would shun the ruling generals. The economic repercussions for Indonesia would be catastrophic. And if the military opts for reforms, it loses its arbitrary authority to control the civilian population and create fiefdoms that bring promotions, power and riches. "It's a lose-lose situation for the top brass," a Western military attache said.

Once revered as a people's army that won Indonesia independence from Dutch colonialists in 1949, the military increasingly has come to view large segments of society as the enemy. More than 500,000 civilians were killed when the military tracked down perceived Communists in 1965. Indonesia's 1975 invasion and later annexation of East Timor, a former Portuguese colony, left an estimated 200,000 dead because of warfare, disease and starvation. Two thousand people are said to have been killed in Aceh since Indonesia declared the province a military zone in 1990. Twelve hundred died in May 1998 riots in Jakarta, the capital, that were triggered by the army's fatal shooting of six students.

The Jakarta riots led to the forced resignation of President Suharto, himself a former general, and calls for the military to be reined in. Its bloc of nonelected seats in parliament was cut in half, to 38, and Wahid-who succeeded President B. J. Habibie, Suharto's protege-sent a clear signal when he was elected in October: He made a civilian the minister of defense, bypassed the army with its sullied reputation to appoint a naval admiral as the armed forces chief and refused the military's request to reinforce its army contingent in Aceh. "More military is not the answer for Aceh," he said.

"You can't expect the soldiers to go back to the barracks overnight," said Human Hamid, a human rights activist in Aceh. "It will take time to change their culture of violence. They're used to thinking they're the only segment of society that's capable of saving the nation. But in fact, the opposite is happening. They're destroying it."

The immediate focus of human rights teams is East Timor, where the military was closely linked with pro-Jakarta militias that went on a rampage of killing and destruction after the territory voted for independence. Among those under investigation are four two-star generals who answered to Wiranto: Zacky Anwar Makarim, a former intelligence chief;

Adam Damiri and Tono Suratman, both former provincial military commanders; and Sjafrie Sjamsoeddin, former security advisor to the defense minister.

A UN panel of five jurists-led by Sonia Picado of the Inter- American Institute of Human Rights-recently concluded its inquiry in East Timor and will present its findings and recommendations to UN Secretary-General Kofi Annan by month's end. Similar inquiries in Africa and Europe led to the establishment of tribunals for Rwanda and Yugoslavia.

An independent Indonesian human rights team also visited East Timor in November and December. One militia leader, Joni Marques, told investigators that he killed two nuns, four male clergy and an Indonesian journalist on the orders of military commanders, a member of the team, Helmy Fauzi, told journalists. And the head of the team, Albert Hasibuan, said, "I believe Wiranto could be charged with omission or failure to take action" to stop the violence.

Wiranto had been summoned to appear last Wednesday for the Indonesian inquiry but requested more time to prepare, officials said.

In Aceh, another inquiry by a national commission is underway and a civilian-military tribunal has been established to try soldiers accused of abuses.

Economy & investment

Property sector expected to recover in 2001

Jakarta -- The country's property sector is predicted to show a healthy growth in 2001 if the economy continues to be on the right track to recovery.

Property observer Panangian Simanjutak said the property sector would grow 4.5% this year and 7% in 2001. Last year the sector still suffer a contraction of 10%.

Simanjuntak said the process toward recovery began in September 1999 starting by the hotel sector.

Leading property developer Ciputra said house transactions would increase 50% this year and the property industry would return to a normal condition in 2001.

Observers made their predictions based on the projection that the country's economy would improve starting this year, when the country's gross domestic products (GDP) is forecast to expand 2%-3.5% and inflation would be between 4% and 6% and the rupiah exchange rate would be stable at Rp6,000-Rp7,000 per US dollar.

Last year the country's economy was estimated to suffer a contraction of 2.1%.

When the country's economy contracted 13.8% in 1998, the property sector shrank by 37.9%. A positive growth is predicted to start this year by 4.5%. Boom is predicted in the property sector in 2003 and 2004 when the sector expand by 10% and 12% respectively.

Foreign firms play the bully in Jakarta

Shoeb Kagda, Jakarta -- Whichever way one looks at the issue, Indonesia's new leadership is in no-man's land when trying to deal with the massive energy and gas contracts endorsed by the former Suharto government.

Most of the contracts are riddled with corruption and collusion and the state almost always comes out the loser. If the government and the newly elected Parliament decide to nullify these contracts, it will send a shock wave through the international investor community which would almost definitely ricochet to hinder the country's efforts to pull itself out of its economic slump.

But if, on the other hand, the government honours these contracts, it will continue to bleed as most of these have been structured to ensure that the "privileged" partners in the joint venture projects enjoy unnatural profits. More importantly, the government would also face the rising groundswell of a nationalistic backlash as it would be accused of pandering to foreigners who want to lay their hands on the country's most prized assets.

The only step forward, therefore, is to renegotiate these contracts to ensure that they are more fairly structured and the Indonesian government and its citizens receive what is rightfully due them. But as the case between independent power producer Paiton Energy and national power company PT PLN has illustrated, even this path is fraught with minefields.

The fact that President Abdurrahman Wahid has had to personally step in to try and resolve the problem indicates just what is at stake and just how powerful these investors are. Paiton Energy is owned by American giants General Electric and Edison Mission, Mitsui of Japan and local Indonesian firm PT Batu Hitam Perkasa, which is controlled by businessman Hashim Djojohadikusumo, who had close ties with the former first family.

After months of legal wrangling between PLN and Paiton to change the terms of the purchase agreements, particularly the price of electricity sold to the state power company, PLN sued Paiton in a Jakarta court for engaging in corrupt practices. As international pressure began to build, Mr Abdurrahman instructed PLN to drop the suit and return to the negotiating table.

At its crudest level, the international pressure being applied is pure bullying, as the Paiton Energy owners engage all the diplomatic and political muscle they can muster to pressure the Indonesian government into continuing to honour the contract and settle the dispute out of court. Paiton Energy has even been rumoured to have called in two former US secretaries of state -- Henry Kissinger and Warren Christopher -- to intervene on their behalf.

No doubt Paiton will argue that it is within its rights to protect its investment -- which amounts to about US$2.4 billion -- and the interest of its shareholders. The power purchase agreement, it will add, is a commercial document that is legally binding and can only be revoked by a special court in Washington DC under the Indonesian foreign investment law. The issue, however, is not just about adhering to a legal contract, but about doing business with a corrupt government with full knowledge of the kind of contract entered into.

The international community has supported the current government's stand on rooting out corruption and collusion in business and government, but when those same standards are applied to foreign investors, cries of breach of contract ring out. The truth is that if such contracts were signed in the home countries of these foreign investors, be it the United States, Japan or Europe, those at the top might well end up behind bars for engaging in criminal activity.

Double standards are, thus, being applied by those who shout the loudest about getting rid of corruption in Indonesia. After having enjoyed unnatural profits for so long, they are reluctant to give up such windfalls and are resorting to threats and other means to preserve their golden goose. Only after the threat of legal action have Paiton and the other independent power producers agreed to renegotiate the terms of their contracts.

It cannot be denied that Indonesia is heavily dependent on foreign investors to revive its moribund economy and thus needs to treat them fairly and honourably. The government must also abide by commercial contracts signed by the previous regime.

In its efforts to clean up corruption, the same standards must be applied to both local and foreign businessmen. A clear, transparent playing field must be created for all business contracts involving the government and state-owned enterprises and must apply to even the most economically powerful players.