• Bank restructuring head rolls - Australian Financial Review

• Komnas Ham sets up inquiry on Maluku - Jakarta Post
• Crack troops to be sent to Malukus - South China Morning Post
• Elite 'stirred Ambon unrest' - Sydney Morning Herald
• Ethnic and economic rivalry to blame - South China Morning Post
• Archipelago in flames - Asiaweek
• Chaos in the islands - Time
• Malukus violence heightens tensions - The Age
• Hundreds of dead Muslims found - South China Morning Post

• Calls for independence are growing louder - Los Angeles Times
• GAM rejects Wahid's offer of protection - Jakarta Post
• Thousands attend separatist ceremony - Agence France-Presse
• Irian Jaya separatist sets sights on 2003 - South China Morning Post
• Six badly hurt in Aceh shoot-out - South China Morning Post

• New inquiry into alleged 1998 rapes - Jakarta Post

• Balinese seek greater independence - Australian Broadcasting Corporation
• Indonesia's press concealed violence - Towards Freedom

• US warns military over coup rumours - Sydney Morning Herald
• Arms embargo lifted to allow sale of jets - The Independent
• Indonesia reshuffles military posts - Associated Press

• Violence prompts meltdown fears - South China Morning Post
• Secret blueprint for financial shock therapy - Business Week
• Government to step up taxation efforts - Jakarta Post
• Consumer demand boosts ad spending - Dow Jones Newswire
• More state companies to be privitised - Asia Pulse
• Malpractice in bank bailout uncovered - South China Morning Post

Violence injures three at UN jobs push

Three people have been injured in Dili during violent scuffles when thousands of poor and unemployed East Timorese scrambled to apply for jobs offered by the United Nations administration.

They were frustrated their applications for about 2,000 available positions had been rejected. When the UN recently advertised the positions it received 9,000 applications.

This morning 7,000 people turned up at Dili's gymnasium where the UN was interviewing applicants. The crowd became impatient and people jostled and pushed.

Australian Interfet soldiers attempted to move the crowd outside of the gate perimeter and it was then they were pelted with rocks.

One Interfet soldier was hit on the head and is suffering from minor concussion. Another UN worker was hit in the mouth with a rock before Nobel laureate Jose Ramos Horta visited the site and calmed the crowd.

He said their anger stemmed from a perception that speaking English was prerequisite for UN employment. Jose Ramos Horta visited the site and calmed the crowd.

Returning militiamen, families attacked

Dili -- A number of pro-Indonesian militiamen and members of their families were attacked when they tried to return to their homes in East Timor, a UN official said Friday.

Several people were injured in fights with their neighbors in recent days, said Paul Stromberg, spokesman for the UN High Commissioner for Refugees.

He said the victims had all belonged to pro-Indonesian militias responsible for much of the destruction, rape and murder that gripped East Timor in September following the overwhelming vote for independence. "This is the first known case of a community refusing to reintegrate several families," Stromberg said.

The militia members fled to Indonesian-controlled West Timor after international peacekeepers landed in East Timor on Sept. 20.

Stromberg said 51 militiamen had already been reintegrated into their former neighborhoods. Fourteen East Timorese serving with the Indonesian army also have returned home, he said.

East Timorese local leaders have repeatedly invited militiamen and their supporters to return to their homeland.

Friday, the former editor-in-chief of East Timor's only former newspaper, Suara Timor, returned home with the intention of restarting the daily.

Salvador Ximenes Soares said he had been personally invited by East Timorese leader Jose Alexandre "Xanana" Gusmao to return home and restart the Indonesian-language paper.

According to UN figures, 129,032 East Timorese refugees have so far returned from West Timor. About 120,000 others are still in West Timor or have moved to other parts of Indonesia.

Militiaman arrested for mass murder

United Nations civilian police have arrested a pro-Indonesian militiaman implicated in one of the first mass murders in East Timor last year.

A spokesman for the UN Transitional Administration in East Timor, Mr Refik Hodzic, said yesterday that a man had been arrested at his home in Liquica on Monday over murders committed in April last year.

The suspect, a member of the Besi Merah Putih (Red White Iron) militia, was now in the Dili jail run by international peacekeepers, Mr Hodzic said.

He declined to provide the suspect's name or say which massacre he was allegedly linked to because he had yet to appear before a judge.

East Timor's new judges were only appointed last Friday and would not be able to review the man's case until Monday at the earliest.

UN police believe at least 56 people, and possibly more than 100, were murdered in early April in a church massacre in Liquica.

Days later, 12 or 13 people were killed when militia attacked the home of independence leader Mr Manuel Carrascalao, who had been sheltering refugees in Dili.

They were the first mass killings by Indonesian-backed militias in a campaign of terror before and after an independence ballot on August 30.

Police arrested the murder suspect a day before they began exhuming the bodies of some of the victims from the two April massacres. The bodies were buried in 16 graves beside the sea in the village of Maubara, just west of Liquica and about 45 minutes drive west of the capital, Dili.

The graves were marked with crosses inscribed with the date of their death and their names. A police investigator said it was a clear message to residents that if they supported independence they would also be killed.

Meanwhile, in Jakarta yesterday, the former minister for political and security affairs, Mr Feisal Tanjung, denied seeing documents issued by his ministry in July. The documents, signed by his then expert staff member Major General Garnadi, contained five recommendations, one of them Indonesia's plan to "pull its troops" and simultaneously "destroy vital state objects" if the East Timorese voted for independence.

Timorese dying in NTT refugee camps

Jakarta -- Over 400 East Timorese who fled their violence-ravaged homeland following the August 30 self-determination ballot have died from various diseases in their refugee camps throughout West Timor in Indonesia.

Antara quoted the latest data issued by the East Nusa Tenggara administration on Tuesday, which revealed that 310 of the victims were children, 262 below five years of age. Adults made up 185 of the mortalities. There were no details about the diseases which caused the deaths.

A recent joint study conducted by the United Nations Children's Fund (Unicef) and the Indonesian government revealed that 24 percent of the children in the Belu refugee centers were malnourished.

The research team recommended that the government provide supplementary food for children. Supplemental food has thus far been restricted to youths and adults.

Most of the deaths, 236, were found in Kupang regency, followed by Belu regency, which abuts East Timor, with 177. Other deaths were reported in Kupang mayoralty, North Timor Utara and South Timor Utara regencies, at a figure of below 20 each.

All the province's 12 mayoralties and regencies have become home to some 270,000 East Timorese since the violence erupted in East Timor in September of last year.

The province's disaster handling unit reported that 79,324 refugees of 15,493 families were repatriated as of January 10. It said the remaining East Timorese had yet to decide whether to follow suit or to remain part of Indonesia.

The government has set the March 31 deadline for the displaced East Timorese to choose their nationality.

The province's official in charge of social affairs, John Payong Beda, said the local administration would refresh the data on refugees in order to determine further policies regarding the refugees.

"We will inform them that the government will stop the emergency humanitarian aid for them at the end of February," John said. The government allocated Rp 20 million for each refugee in the current fiscal year ending March 31.

Coordinating minister for people's welfare and poverty eradication Basri Hasanuddin said that the government lacks the funds to continue the humanitarian program.

Gangs battles challenge UN's authority

Associated Press, Baucau -- Gang warfare has broken out in East Timor's second largest city leaving several people injured, UN officials said on Tuesday.

For the past two weeks, gangs of youths have fought pitched battles in Baucau, 110km west of the capital, Dili, vying for control of city's streets, said Sergey Lashin, chief of the UN's police force in East Timor.

He said one of the gangs had links to the pro-Indonesia movement, which lost in a UN-sponsored independence vote last year.

Officials of the UN Transitional Administration in East Timor, which is preparing the territory for self-government, fear the clashes could lead to widespread criminal violence.

Baucau's bishop, Basilio de Nascimento, said it was imperative that the UN immediately put a stop to the violence.

"I'm a little afraid that all these troubles are caused by the people who are in love with Indonesia," he said. "We need to have law and order." Bishop Nascimento said he expected gang warfare to continue in coming weeks.

Sergio Vieira de Mello, who heads the UN mission, said the violence was motivated by other factors apart from political allegiances. "Unemployment is not the only reason but, I am sure it is part of the problem," he said.

Rubbing shoulders with wealth

Dili -- A piece of cardboard torn from a Tiger beer carton covers the small beef satays (kebabs) to help them smoke on Emilio Gomes' grill.

They used to sell for 300 rupiah (40 cents) each stick but a 66 percent price hike has pushed the cost to 500 rupiah a skewer.

"Since independence, the price has gone up," says Gomes, one of the vendors in a makeshift food court under the trees beside a floating hotel in Dili harbor.

The floating hotel is leased by the United Nations Transitional Administration in East Timor (UNTAET) for its staff.

East Timorese stop at the satay stalls here to lunch. Portuguese bread rolls are priced at 1,000 rupiah each.

A woman sells one grilled fish for 5,000 rupiah. "Singapore and Thailand people already ate here," Gomes told AFP. "Australians didn't buy here yet."

None of the satay vendors -- whose own homes were destroyed four months ago and still lie in ruins -- have eaten at the air conditioned, floating hotel. "You must use dollars. That's expensive," said Ermenegildo do Rosario, who works with Gomes.

This glaring division between the East Timorese and foreign economic sectors is raising concern among East Timorese community leaders.

"There is a big disparity between the international people and the East Timorese in terms of economics," said Joaquin Fonseca, of the human rights group Yayasan Hak.

Dinner on the Amos W. floating hotel costs 14 Australian dollars, roughly the same price as 112 sticks of Gomes' satay.

UNTAET brought in the Amos W. and a second floating hotel and anchored them in Dili Harbor to help solve the accommodation shortage for its foreign staff.

Most houses here were razed during the September campaign of murder, arson and forced deportation by anti-independence militias and their backers in the Indonesian armed forces.

The violence followed the August 30 ballot in which East Timorese voted overwhelmingly to move toward independence.

Under UN administration, East Timorese have moved toward political freedom, but community leaders like Fonseca worry that their economic liberty is in danger.

"We think that a dual economy is going on in East Timor, where the East Timorese are placed on the losing side of the whole process," said Fonseca.

"By nature, after the destruction, they don't have that many resources to compete with the newcomers," he said of the listless unemployed East Timorese who wander Dili's waterfront, and the sporadic demonstrations that are beginning to break out.

Some East Timorese have opened small restaurants, but Australians are operating others. One Australian restaurant is selling hamburgers piled with egg, bacon, processed cheese and beetroot for eight Australian dollars: bacon and cheese are not available on the East Timorese market.

"If there is no mechanism in place to start small-scale business, agro-business, then I'm afraid that in the long-run people will not be able to live their lives, while the international (UN) people can still survive with goods imported from Darwin," Fonseca said.

Dili's bustling city market, where few foreigners ever go, carries an increasing but still basic stock of green vegetables, small tomatoes, potatoes, rice, noodles, canned sardines, cigarettes and chillis.

"It's still expensive but if we buy from the Chinese it's cheaper," said Manuela dos Santos, an East Timorese woman who sleeps on a thin mat outside a former church compound because her house was damaged in the violence. "There's no money here yet," said the woman who wants to open her own restaurant.

Foreign-operated hotels, one of which charges 110 Australian dollars a night for a small room, pay local workers five or six Australian dollars a day. The average wage for an East Timorese UNTAET worker is 50,000 rupiah a day.

"I'm very worried," said David Ximenes, of the National Council of Timorese Resistance (CNRT) that fought for 24 years for East Timor's freedom. "The people that come from outside are developing their own economy to look for profit. That is the problem."

They should be coming to help the East Timorese, said Ximenes. Refik Hodzic, an UNTAET spokesman, said a joint CNRT-UNTAET committee was reviewing a regulation that "will deal with many aspects of business."

At the same time, UNTAET was trying to re-launch the local economy by hiring thousands of civil servants and starting road repair and other labour-intensive job creation projects. "As time goes on the situation will only improve, with the re-launch of the local economy," Hodzic said.

Militia leader wants to go home

John Martinkus, Kupang -- Exiled pro-Indonesian militia leader Eurico Gutteres who was widely blamed for the destruction of Dili wants to negotiate a return to East Timor for himself and his men.

"I want to return but it's not that easy," Gutteres told AAP from a safe house in Kupang, West Timor, where the leader of the feared Aitarak militia is planning his next move.

Slumped in an armchair on the verandah of the house, the man who was the public face of the Indonesian military-sponsored militia said the May 5 agreement between the United Nations, Indonesia and Portugal should ensure his protection by the UN in the new East Timor.

"If the May 5 agreement from last year is followed by the UN ... there should be a guarantee of every party's right to security in East Timor, " he said.

The Aitarak militia have been blamed for much of the violence, murder and looting in Dili in the lead up and after the territory's vote for independence from Indonesia last August 30.

Gutteres blames the chaos in Dili on the UN and the Australian government. "I told people that the situation was not safe to have a ballot, I spoke to your Foreign Minister Mr [Alexander] Downer and someone from your army and told them what would happen if they did not send in peacekeepers before the ballot," he said.

"They said they couldn't send them in. I often said we could still do it [hold the ballot] but postpone it. The situation was not safe."

Like other pro-Indonesian leaders, Gutteres maintains that the UN was not neutral in its conduct of the ballot that resulted in a 79 per cent independence vote. "The local staff were pro- independent. The people watching the ballot were always pro- independent," he said.

Following the arrival of the Australian-led peacekeeping force in September, Gutteres and other militia leaders vowed to fight a guerrilla style war.

But he said he had now abandoned that option. However, he warned the UN administration due to take over the peacekeeping operations from the Australian-led Interfet forces in late February not to ignore the demands of his men.

"To reach peace in East Timor is not as easy as many foreigners think," he said. He also denied claims that his Aitarak militia had disbanded. "My people are still the same as before, not more and not less. We are waiting to see what Xanana Gusmao wants from us," he said.

Gutteres said he did not know if his men could keep their weapons -- that was something he wanted to discuss with the UN administration in East Timor.

The militia leader has appeared in Jakarta before the Indonesian commission on human rights abuses in East Timor on December 21 and left Kupang today for Jakarta to meet with them again tomorrow.

Gutteres said he would try to make the human rights inquiry look into violence by both sides before 1975. "It's bullshit that Falintil never carried out any violence," he said, referring to the pro-independence guerrilla army of East Timor.

The involvement of the Indonesian military in the violence throughout the ballot period is something he said would be left to the commission.

Asked if the Indonesian military (TNI) had no part in the violence carried out by his Aitarak militia, he said: "If I say yes TNI had no part, that would be wrong."

Mass vanishing remains a mystery

Carmel Egan, Dili -- Murder, rape and torture erupted on the East Timorese capital's streets as soon as the historic referendum was declared a victory for independence on September 4, and the killing and looting continued even after Australian-led Interfet troops arrived on September 20.

Somehow, 80,000 people went missing in the chaos. How could so many have vanished or have been silenced? What evil was perpetrated against them?

East Timor's most accurate census, based on the number of adults registered to vote in the independence referendum, put the population at 850,000 in August but, by mid-October, one in every 10 was missing.

"The missing people could either be in the hills, or West Timor, or in other parts of Indonesia," Interfet chief Peter Cosgrove said in November, but he could not rule out the possibility that "a tragic fate" may have befallen some.

Since then, questions about the missing have been met with shrugs and head shakes. "We are not very far in terms of overall figures, partly because the number of people in West Timor and anywhere else is so unclear," said the UN's East Timor human rights head, Sidney Jones.

"But we are not talking about tens of thousands of dead," she said. "We are talking about people who are possibly separated by thousands of miles and cannot get in touch.

"At times of mass population displacement you will not know if they are safe and alive but out of contact, not safe but not allowed to return, or dead. If it were tens of thousands of dead we would have reports back of grave sites by now."

East Timorese who have returned from West Timor total 126,000. Of those, 83,500 have returned with the assistance of the UN High Commission on Refugees, and 42,500 have made their own way home.

The Indonesian Government estimates 110,000 remain within its borders, but it is not clear if this is just West Timor or if it also includes other islands in the archipelago.

Many aid workers are sceptical of the Indonesian figures. Indonesia receives international aid based on the number of displaced people in its care and there is concern the number still in camps in West Timor has been overestimated to keep the aid money flowing.

"The main problem is going to be that until everybody returns from West Timor, we will not know," said human-rights lawyer Danny Brown. "That could take six months, it could take two years.

"There are a wide range of reasons for people not returning. Most of them are being intimidated by militia, who are still active in the camps and towns across the border. Some are not wanting to return until after the rains, others because of their horrific experiences and still more because of militia rumours about Interfet killing and raping people.

"An estimated 40,000 will never return because they are pro- Indonesian, pro-autonomy, militia or collaborators. Then there are the people who were taken to other Indonesian territories, such as Flores, Sulawesi and Irian Jaya."

Internal displacement within East Timor also adds to the confusion. Some towns and villages had a 300 percent increase in population between August and December, while others now have less than 20 percent of their original population.

Most controversial of all the uncertainties in accounting for the missing people of East Timor is the death toll from September's mayhem.

Although some mass graves and massacre sites have been identified at Liquica, Oecussi, Los Palos, Ermera, Atauro and in Dili itself, most bodies have been lying scattered -- sometimes in the open air, sometimes buried in shallow graves. In many cases, all that remains is bones and body parts and rags. And the fetid humidity of East Timor's wet season is a forensic investigator's nightmare.

In the first weeks after Interfet's arrival, a unit of 14 military police (MPs) was doing all the investigative work on humanitarian atrocities -- despite the fact they had no forensic experience. By November, they had 135 murders to investigate. The enormity and urgency of the task dwarfed the team, which focused on recording bodies found lying above ground and noting their final resting places.

They have since been assisted by CivPol -- the UN's civilian police force, which includes a contingent of 39 Australian Federal Police -- but they too have been starved of expert help from pathologists, forensic anthropologists and chemists.

Two forensic experts were due to arrive from Australia yesterday, as the first of a revolving allocation of specialists to be assigned to the East Timorese crisis, but they may be too late to help much.

The Interfet death toll based on bodies recovered and reports of grave sites now stands at 1650. Once a body has been recovered it is bagged and buried, with the point of recovery and burial place recorded in case body samples or identification are required in a future prosecution. But accurate identification is usually impossible.

Many of those who have disappeared are the nation's most capable -- people who worked within the Indonesian administration, who managed and owned businesses, who are bi-lingual, have clerical skills and certificates of competency. East Timor needs them to come home as soon as they can. If they can.

Police office could be charged over truth

Andrew West -- An Australian Federal Police officer could face charges after revealing the truth about the bloodbath in East Timor to Australia's Parliament.

Detective Wayne Sievers is under investigation by the AFP internal affairs division for alleged "unauthorised disclosures of information" to the Federal Parliament's joint standing committee on foreign affairs, defence and trade.

On 22 November last year, Detective Sievers, who spent almost three months in Timor as a United Nations intelligence officer, told a meeting of the committee about a top-level conspiracy between Indonesian police and military chiefs to raze the territory after the expected victory of pro-independence forces in the 30 August referendum.

He also tabled secret reports he had sent the UN -- reports the Australian Government could have easily acquired through its embassy in New York -- that predicted the violence that erupted immediately after the ballot.

In the two weeks following his appearance before the committee, the AFP contacted Detective Sievers and demanded he make no further comment about his experience in Timor. He was placed on stress leave and told he would be needed for a further interview, pending possible disciplinary action.

He refused to talk when approached at his Canberra home late last week, saying "I'm sorry, but I'm under instructions not to make any comment to the media."

Detective Sievers is not a conventional policeman. He ran for Parliament last year as a Democrat and established one of the first police gay-liaison units in Australia. He was one of only a handful of AFP officers chosen for UN duty in Timor, and five years ago won a National Medal of Service, one of the AFP's highest honors.

Detective Sievers arrived in Dili on 22 June and immediately began duty as an intelligence officer. According to colleagues, he threw parties to which he invited UN and aid-agency workers, local business people and officials -- and members of the Indonesian military. From these gatherings, with intelligence skills gained through investigating drug kingpins, he picked up snippets of valuable information.

One of his first reports, on 30 June, detailed a violent incident at Viqueque. A despatch on 5 July identified a militia leader in Liquicia as also being an Indonesian army intelligence sergeant.

Another report, dated 7 July, tells of how intelligence officers found the business card of one Augustaviano Sojan, of the "Government of Indonesia, Taskforce on the Implementation of Popular Consultation", at the site of a militia disturbance.

But his most dramatic report came on 6 August. In it, he recounts details of an alleged 24 July meeting at the Dili military headquarters, attended by a Mr Suratman, an Indonesian military commander, and a Mr Silaen, a police commander. Also allegedly there were Mr Armindo Mariano Soares, head of the puppet East Timor assembly, and leaders of pro-Jakarta militias.

"The major decisions taken were done so in the recognition that the pro-integration side was unlikely to win the vote," Detective Sievers reported.
 

Government/politics

Bank restructuring head rolls

Tim Dodd, Jakarta -- Indonesian President Abdurrahman Wahid yesterday sacked a key economic official over the snail-like pace of banking reform, which is becoming a drag on economic recovery. The head of the Indonesian Bank Restructuring Agency, Mr Glenn Yusuf, will be replaced today after a nightmare six months for the agency in which its officers have been implicated in a corruption scandal and it has made little progress in liquidating the assets of failed banks.

Mr Yusuf's former job is one of the most important economic posts in Indonesia as the agency holds more than $100 billion in assets which were taken over from failed banks.

Its task is to manage the assets and then sell them to offset the $140 billion cost of injecting new capital into Indonesia's surviving banks.

But it is likely to fail to meet even the modest target of raising $4 billion by this March.

Even worse for Mr Yusuf, agency officials were involved in the Bank Bali scandal that tarnished the clean image needed to close deals with foreign investors, who are now very wary of corruption in Indonesia.

Mr Yusuf has a clean reputation but was unable to control some of his officers. Two of his deputies were arrested for their involvement in the scandal, in which about $120 million in funds meant to help recapitalise Bank Bali ended up in a political slush fund linked to associates of the then-president, Dr B.J. Habibie.

Last November President Wahid put the bank restructuring agency under direct presidential control and appointed Mr Cacuk Sudarijanto to a new position as the senior deputy to Mr Yusuf.

The Government announced yesterday that Mr Cacuk would be Mr Yusuf's successor, but the market greeted the appointment hesitantly.

The Jakarta Composite Index was down 1.1 per cent in afternoon trading, which was partly attributable to uncertainty about Mr Cacuk.

Mr Yusuf is well respected by the market and his demise is viewed as the result of a political struggle within the Government.

Another cause for business concern is that Mr Cacuk is linked to the former minister for co-operatives in the Habibie government, Mr Adi Sasono, who was an advocate of reviving the economy by redistributing resources to small businesses and co-operatives.

Analysts estimate that about 40 per cent of Indonesian production is now controlled by the bank restructuring agency, which has wide powers to seize assets and liquidate defaulting companies.

Yesterday the Government also replaced the head of the State- owned electricity utility, PLN, which was found in a recent audit to have been losing more than $1 billion a year through mismanagement and inefficiency. The new chief is former mines and energy minister Mr Kuntoro Mangkusubroto.

The Government is still trying to remove the governor of the central bank, Mr Syahril Sabirin, who is responsible to Parliament rather than the Government.
 

Regional conflicts

Komnas Ham sets up inquiry on Maluku

Jakarta -- In the wake of mounting criticism for its alleged indifference, the National Commission on Human Rights (Komnas Ham) set up on Friday a commission to investigate atrocities in Maluku and North Maluku.

Joko Sugianto, the commission's newly elected chairman, said the inquiry team was established due to the quick spread of sectarian conflicts in the Maluku islands, which firstly broke out in Ambon in mid-January last year.

"We found indications that clashes in the two provinces have spread to other regions, so we will carry out an intensive investigation to help solve the conflict," Joko told journalists after the election, which lasted two and a half hours.

He denied that the move had something to do with the growing demand for its dissolution due to its alleged discriminative policies in handling human rights violations in the country.

"On August 13, we wrote to then president B.J. Habibie, urging him to promptly visit Ambon to curb the violence, but we received an unsatisfactory response.

"We also sent a similar request to the new government. It's evidence that we do not turn a blind eye to the humanitarian tragedy in Maluku," he said. Some Muslim organizations have urged the government to disband the commission for its sluggish handling of the mayhem.

Pressure on the commission continued on Friday when some 300 supporters of the Joint Forum of Islamic Legions rallied in front of the commission's office, demanding it carry out an investigation of human rights abuses in Maluku's two provinces. In Medan, North Sumatra, about 1,000 people grouped under the Defenders of Ummat Islam (FPUI), gathered at Merdeka square after Friday prayers to urge the government to immediately solve the problems in Maluku.

Chanting "Allahu Akbar! Allahu Akbar!" (God is Great) the demonstrators called for an end to violence. Among the attendants at the event were North Sumatra Governor T. Rizal Nurdin and some of his staff.

Antara reported on Friday that while Ambon was calm, the situation on Halmahera Island, where the latest outbreak of violence has prevailed over the past three weeks, remained tense.

Hundreds of the deceased killed in December 29 clashes are left unburied and more than 1,500 people, mostly women and children, are still missing after fleeing the attacks.

Hussen Bassalama, director of the General Hospital in Tobelo, said the island was facing a threat of epidemic diseases from the hundreds of deceased bodies killed in the recent clashes in Tobelo and Galela subdistricts.

Some 300 people injured in the fighting are undergoing intensive treatment at the hospital.

Bahdar Kharis and Muhammad Albaar from the local chapter of the Al Khairat Muslim organization said they had requested the local military search for more than 1,500 villagers who went missing after they escaped an attack on December 29.

The missing people, who are residents of Papilo, Gurua, Gamangi II, Gomhoko and transmigration settlement areas in Togolinwa, are believed to be hiding in forests on the island.

The central government sent on Friday 300 tons of rice and medicine to around 50,000 refugees in North Maluku.

Burhanuddin, an assistant to the coordinating minister for social welfare and poverty alleviation, said the government would team up with other ministries in supplying humanitarian relief to victims and refugees in the two provinces. The refugees were accommodated in safety areas on Ternate and Tidore islands, he said.

Meanwhile, around 120 religious and traditional leaders from numerous religious and social organizations met here on Friday to strive for a reconciliation among the conflicting groups in the provinces.

Spokesman for the Ministry of Religious Affairs Muchtar Zarkasyi said President Abdurrahman Wahid, Indonesian Military (TNI) chief Adm. Widodo A.S., noted sociologist Selo Sumardjan and many other intellectuals were expected to speak during the two-day meeting.

In a related development, more than 1,500 refugees from Central Maluku arrived in the South Sulawesi capital of Makassar on Friday on board the KRI Teluk Penyu navy ship on their way to their homeland in Java.

Most of the refugees were employees of the state-owned rubber plantation company PTPN XIV in Kebun Awaya and Telpaputih in Central Maluku.

Crack troops to be sent to Malukus

Reuters in Jakarta -- Indonesia's military said on Friday it would send hundreds of crack troops to the bloodied Malukus to help quell widespread violence between Muslims and Christians.

Army spokesman Colonel Panggih Sundoro said 600 soldiers from an airborne unit of the Kostrad strategic reserve and an infantry unit would fly to the Malukus, or spice islands, where possibly thousands have died in the worst bloodshed this month. Thousands of extra soldiers have already been sent to the islands, home to about two million people and spread across 86,000 square kilometres.

There were no immediate reports of fresh violence in the islands on Friday and Colonel Panggih said life was returning to normal in the capital, Ambon, about 2,300km east of Jakarta. "Everything is open as usual ... markets, schools, and the streets," he said.

Troops are still searching for hundreds of people missing on Buru island, west of Ambon, most of them believed to be hiding in thick jungle after the latest violence.

Authorities say more than 1,500 people have died in the past year in the once-idyllic region in Indonesia's worst religious war. Human rights groups put the death toll at thousands.

Elite 'stirred Ambon unrest'

Jakarta -- The National Commission on Human Rights (Komnas HAM) claims to have uncovered a plot to provoke violence in Ambon and clashes in other parts of the Maluku province, where thousands have been killed and injured in a year of religious rioting.

Komnas HAM secretary Mr Asmara Nababan told reporters in Jakarta that forged documents had been discovered scattered in the streets of Ambon following battles between Muslims and Christians.

"The documents, which provoked and inflamed people's emotions, were not something produced by amateurs," he was reported as saying yesterday by the Suara Merdeka newspaper. "There is a strong suspicion that the documents were produced by members of the political elite in Jakarta," said Mr Asmara, without identifying the provocateurs.

Communal and religious fighting has been provoked in Indonesia in the past by competing military and civilian factions seeking to discredit or destabilise the government or military leadership.

The documents found in the streets of Ambon contained plans to exterminate one ethnic group in Maluku. This led to the mobilisation of members of that ethnic group, who quickly assembled with their weapons on the pretext that they had to defend themselves, Mr Asmara said.

He emphasise that the bloodshed could not be simply viewed as tension between religious groups, but power struggles within the political elite.

Ethnic and economic rivalry to blame

Vaudine England -- Throughout the telling of their individual stories of fighting and displacement, the Christian refugees now in Bitung, North Sulawesi, are clear on one point -- the root of each quarrel which became a killing spree was not religion but ethnic and economic competition.

"The first problem is between tribes," said Otniel, a Sulawesi man born in Halmahera. "The trouble is between the original people and the migrants."

Most Christian refugees blame the people of Makian island, south of the sultanates of Ternate and Tidore, for initiating attacks, saying religion became a convenient way to describe the fighting. This soon took on a life of its own, so casual talk was all about how Muslims attacked Christians.

Journalists and other observers are unable to visit Muslim areas, such as Ternate, for themselves, but reports show that Muslim refugees -- who have also lost families and homes -- blame the attacks on Christians.

"There was a story that a man from Sanggir [Sulawesi] had killed a Makian person," said Mr Otniel. "It is all just stories." His view was supported by about 20 village elders gathered in a Bitung refugee camp.

"The first problem is because not everybody is originally from Ternate," a Ternate Christian said. "So on November 6, we in Ternate got the message we had to leave. It was the same in Tidore, but on November 3," he said. "Everyone knows that it's not about religion -- it's between tribes," a fellow elder said.

The other point clearly made in various stories was that the violence appeared to be well organised. These refugees described in detail how two pamphlets were distributed in Ternate, allegedly by Muslims, suggesting Christians would soon mount attacks.

While the local religious leaders gathered to discuss and counter the propaganda, a Muslim mob outside hurled abuse at Christians and, when a local priest refused to admit to any planned aggression, he was killed. The mob, said this group of elders, then laid waste to Christian homes and churches.

Several refugees said their attackers carried walkie-talkie radios for communication, and all carried similar knives. The existence of pamphlets also suggests some organisation.

But even these Christian victims said the first spark was not religious, adding that local police had publicly denied any threats had come from Christian groups in a bid to calm the situation. But after the first killings, details of tribal origin and village competition were lost.

The word of fighting in Tidore was heard about the same night in Ternate, Moses Watratan said. "Rumours abounded. So the fear spread that what happened there would happen to us."

Highlighting the persistence of friendships across religious lines is the fact that and several others fled to the homes of their Muslim friends when they feared attack from Makian people.

Mr Watratan's uncle was killed because he could not run fast enough to a Muslim house, he said. He said he was alive today because his Muslim friends had protected him.

Archipelago in flames

Sangwon Suh and Tom McCawley, Jakarta -- Abdurrahman Wahid must have the toughest job on the planet. As if governing the fourth-most populous nation in the world isn't challenging enough, Indonesia's president has inherited a host of problematic legacies, each of which has the potential to derail a government that is not even 100 days old.

Despite the winds of change blowing through the country, the culture of corruption remains entrenched and vested interests are proving resistant to efforts at reform. The military may have had its wings clipped, but it remains an unpredictable factor in the political equation. East Timor's recent split from Indonesia has given fresh impetus to pro-independence agitations in Aceh and Irian Jaya (recently renamed Papua). And now the Maluku archipelago, the site of bitter religious strife over the past year, has gone up in flames once again.

The latest round of bloodshed was triggered by a traffic accident in Ambon, capital of Maluku province. A Christian bus driver ran over a Muslim child; the accident victim later died, leading an angry Muslim mob to torch a local church. The violence escalated and spread to other parts of the Malukus. As Muslim and Christian mobs fought each other and razed entire towns, thousands of refugees fled to nearby islands. Vice President Megawati Sukarnoputri was charged with resolving the crisis. "Ambon is like a war zone," says an American who just returned from the islands. "When the military commander can't get to his own office, it is a good sign that no one's in control."

After a week and a half of rampage, the army estimated that over 600 were dead. Unconfirmed reports put the number at 2,000. Over 12 battalions have been deployed in Ambon to quell the fighting and disarm local inhabitants, but the troops have proved to be largely ineffectual in preventing outbreaks of violence. In one case, they even added to the death toll by firing into battling mobs.

The roots of the current crisis go back deep into history. The Malukus, which are divided into Maluku and North Maluku provinces, are situated in eastern Indonesia between Sulawesi and Papua.

The hundreds of islands that make up the archipelago include Ambon, Halmahera, Buru and Seram. During the colonial period, they were known as the Spice Islands, and clove and nutmeg remain major export items. Unlike the rest of Indonesia, the Malukus' population is evenly divided between Muslims and Christians -- a legacy of the proselytizing efforts of Portuguese missionaries in the 16th century. Under Dutch rule, Muslims claimed that Christians were being favored with government posts. After Independence, it was the Christians who were feeling alienated as the Malukus experienced an influx of Muslim immigrants from neighboring islands. Not only were there sharp cultural differences, there emerged an economic gap between the prosperous Muslim traders in the north and the Christian farmers and fisherfolk in the south.

Recent national events helped turn the simmering discord into open conflict. The violence and wrenching political transition following Suharto's downfall broke down social inhibitions and corroded the authority of village elders. "The youth no longer listen to traditional or tribal leaders," says Tamrin Amal Tomagola, a Maluku-born Muslim sociologist at the University of Indonesia. As to how long it will take to rebuild Ambon, "it will be one or two generations," sighs Abdullah Soulisa, chief preacher of the Al-Fatah mosque in downtown Ambon. "Mothers and children have been murdered, Ambon lies in ruins."

There may, however, be more to the conflict than just historical enmity. There is suspicion that elements of the Indonesian military are involved in the unrest.

Police sweeping operations have netted not only homemade firearms and machetes, but also French-made assault rifles and grenades, which are only available through the army. It may well be that disgruntled members of the military are provoking the riots in order to weaken President Wahid's position. The relationship between the government and the army has been uneasy lately, as typified by the souring relations between Wahid and Gen. Wiranto, formerly the armed forces chief, now the coordinating minister for security and political affairs. Wahid has pursued the investigation of the military's role in East Timor's violence last fall, and several top figures have been questioned, including Wiranto. Many inside the army are said to be deeply unhappy at the probe and at the new democratic climate in which the soldiers are being portrayed as human-rights abusing brutes.

According to intelligence sources, the army is now determined to swing the balance of power back in its favor. The Maluku unrest, they say, is an effort to distract the attention of the navy and the marines, who are Wahid's allies, leaving the army with a freer hand in Java and the national capital Jakarta.

Meanwhile, rumors have been swirling in Jakarta of a cabinet reshuffle in which Wahid would drop Wiranto. Both Wiranto and House speaker Akbar Tanjung denied that a reshuffle was imminent. Still, the rumors served to underline the friction between Wahid and Wiranto, as manifested in the disagreement over the approach to pacifying Ambon. The general wanted to impose martial law, but the president opposed it. (On January 5, however, Wiranto did announce that press coverage in Ambon would be restricted.)

The challenges that now face Wahid are daunting. In order to resolve the crisis, not to mention secure his own position, he must build bridges with a military that is angry and defensive. He must prevent the violence from spreading and stoking separatist sentiments elsewhere. He must balance the interests of the disparate elements in his government, including those who would take sides in the current conflict. "The ethnic cleansing of Muslims in Ambon saddens me," said Amien Rais, chairman of the People's Consultative Assembly and a former Muslim leader. "My heart is hot, my head is hot. Religious law teaches a life for a life, an ear for an ear, an eye for an eye." The new year may have so far proved Y2K-free, but for Wahid it is hardly turning out to be happy.

[With reporting by Dewi Loveard/Jakarta]

Chaos in the islands

Terry McCarthy -- On the streets of Ambon, people describe what's happening in their homeland as perang -- war.

What was a bad situation last year has suddenly turned horrific. Hundreds of people have been killed in the past two weeks in Muslim-Christian clashes that have spread across the Moluccas. Mobs, newly armed with automatic weapons, roam the streets of Ambon, the capital city, sometimes dragging the decapitated bodies of their enemies around with them.

Snipers have begun picking off civilians from positions atop buildings. Units of the supposedly neutral security forces have been seen firing on crowds and even at each other. Curfew starts at 10pm, but the streets are empty long before then. The situation may be even worse in some outlying islands -- there are widespread rumors of a massacre in Halmahera, but the army says it simply doesn't know. Christians and Muslims used to live together in relative harmony on the 1,027 islands that make up the Moluccas. The only thing that the two communities have in common now is fear.

"It is terrifying," says Alto, a 24-year-old architecture student who lives in the Christian neighborhood of Galala, about 1 km from the center of Ambon, the focus for much of the violence. "People don't talk about riots any more," he says. "When you can hear shooting and explosions all day long, it doesn't just sound like war. It is war."

But Ambon is a war without a name. The outside world has barely noticed how the region -- once known as the Spice Islands for the cloves, nutmeg and mace that grew only there -- has slipped into a self-perpetuating spiral of bloodshed. East Timor attracted the world's press with its struggle for independence, which generated widespread international sympathy. In the Moluccas, where the death toll over the past 12 months is already estimated to be several times higher than in East Timor during the same period, there is no simple issue or cause for the world to latch on to.

Some political analysts say the violence is a result of long- simmering tensions between the two religions that exploded in the power vacuum left by the fall of former dictator Suharto in 1998. But there are no obvious heroes or villains: the Moluccas' population of 2 million is split fairly evenly between Christians and Muslims. Each side blames the other for starting the violence. Neither appears to have anything to gain from the conflict. Nobody has any idea how to stop it.

In Jakarta, Muslim fanatics are trying to give the war a name of their own choosing. Last Friday some 100,000 rallied in the city's central Merdeka Square to call for a jihad, or holy war, against Christians in the Moluccas. Some prominent politicians attended, including Amien Rais, the speaker of the country's legislature, who incited the crowd by saying the fighting in the Moluccas was a bid to weaken Islam in Indonesia. "Our patience has limits," said Rais. One protester carried a cross with a dead rabbit smeared in blood; another held a banner that read "Tolerance is nonsense, slaughter Christians". The protesters also called for the resignation of Vice President Megawati Sukarnoputri, who was given official responsibility for Ambon by President Abdurrahman Wahid but has done little to help solve the conflict. When the latest bout of violence broke out on December 26, Megawati blithely flew off to Hong Kong on a New Year's trip.

The killings in the Moluccas began on January 19 last year when a dispute between a Christian bus driver and a Muslim passenger in Ambon city escalated into riots and the burning of a market. Violence flared again several months later but was calmed when Jakarta sent additional troops to the region. But it broke out with a fury the day after Christmas when a Christian minibus driver was blamed for knocking down a 14-year-old Muslim boy. This led to the burning of Silo Church, the largest Protestant church in Ambon, and an intensified round of killings. Few people now choose to travel by road on Ambon because the two warring sides have set up roadblocks. Jalan Diponegoro, the main business street in Ambon with the largest number of high-rises, has become Sniper's Alley; few dare to cross it. Christians and Muslims patrol their own neighborhoods after dark. Ominously, both sides now have automatic rifles; previously they used spears and crude homemade pistols.

The appearance of such weapons has raised suspicions that the army is deliberately stirring up trouble. "The military is very involved," claims Jan Nanere, a former professor at Pattimura University in Ambon. "They are the ones making the problem worse and spreading the chaos throughout the Moluccas. Perhaps they are planning a coup." Others accuse the army of inaction. "In terms of the military, the difference between East Timor and Ambon is one of collusion versus omission," says Todung Mulya Lubis, vice chairman of the Commission Investigating Violence in East Timor.

"In East Timor the military was involved in creating the violence, whereas in Ambon they have simply let it get out of hand." At the end of last week, Ambon residents said the military, perhaps belatedly, was trying to defuse tension by conducting a sweep to round up illegally held guns and dismantling roadblocks.

While few Indonesians these days would entirely rule out a conspiracy theory, there is little evidence of a military provocation. Equally frightening, however, is the chaos theory: that nobody is in control. With the President and Vice President under assault for extensive overseas travel at a time of national crisis, and with the military trying to fend off accusations that it was behind last year's violence in East Timor, it may be that no one in Jakarta's disheveled corridors of power can get a grip on the war in Ambon. "There is no chain of command from the top," says Alto, "just emotional involvement by individual soldiers down in the ranks." But with hundreds already dead, enraged mobs toting powerful automatic weapons and fanatics calling for a holy war to slaughter all Christians, emotional soldiers are the last thing Ambon needs.

[With reporting by Zamira Loebis and Jason Tedjasukmana/Jakarta]

Malukus violence heightens tensions

Peter Symonds -- Continued intense fighting between Christian and Muslim groups in the Indonesian provinces of Maluku and North Maluku is fueling religious antagonisms in other parts of the archipelago and threatens to open up divisions within the fragile "national unity" government of President Abdurrahman Wahid.

Speakers at a large rally in the capital of Jakarta on Friday threatened to call for a holy war or "jihad" to defend Muslims in the Malukus unless the government ends the recent fighting that has cost hundreds of lives.

The demonstration, organised by Islamic groups and parties, was variously estimated at between 50,000 and 300,000. One large banner read "Tolerance is nonsense, slaughter Christians".

Husain Umair, chairman of the Muslim Committee for World Solidarity, blamed Christian officers in the army for trying to "Christianise Indonesia". He called for three million Muslims to be sent to Ambon (in the Malukus) for a holy war if military personnel were not replaced. Another speaker warned that militia would be dispatched to the area in a month if the killing of Muslims was not stopped. Hamzah Haz, leader of the Islamic United Development Party (PPP) said it was time for a military emergency to be declared and for Muslim parties to unite.

The rally puts pressure on the Wahid government to find some means of ending the fighting, which began last January but has greatly intensified over the last two weeks. According to the police, more than 700 have been killed over the last week or so but unofficial estimates put the figure as high as 2,000. The human rights group Kontras said last Thursday that more than 4,000 people had died on Halmahera island since August.

About 17,500 refugees have fled Halmahera island to neighbouring Ternate island.

Over the last year, more than 1,700 people have been killed, 2,300 injured and over 8,500 buildings burned or destroyed. Large sections of Ambon city, the capital of Maluku Province, have been laid waste. What remains is divided along religious lines and patrolled by militia groups. Other towns and villages have been completely razed. An estimated 200,000 people out of a population of two million have fled or been displaced.

The latest round of fighting was triggered by a traffic accident in Ambon. A Christian bus driver ran over a Muslim child setting off a series of reprisals, including the destruction of Ambon's oldest church. The violence rapidly escalated and spread to other parts of the Malukus, in particular the predominantly Christian Halmahera island where many of the recent deaths have taken place.

Underlying the sharp tensions in the Malukus are longstanding religious enmities that have been intensified by Indonesia's economic crisis over the last two years. The Malukus, formerly known as the Spice Islands, were one of the areas of Indonesia longest under Dutch colonial rule. In 1950, after independence, the largely Christian ruling elites made an abortive attempt to form their own Republic of the South Moluccas (RMS), which was quickly crushed by Indonesian troops. Many Ambonese Christians fled to the Netherlands where a self-styled government-in-exile still exists.

Over the last 50 years, the position of the Christian elites has increasingly been eroded, firstly by the influx of mainly Muslim immigrants from the Sulawesi, and secondly, in the 1990s, by the Suharto regime's policies of favouring Muslims over Christians for civil service jobs. Rivalry over business interests and political positions, exacerbated by the impact of the economic crisis, has created the atmosphere of deep suspicion and hostility, which is being exploited by the ruling class both locally and nationally to further their own interests.

Accusations of bias by the largely Muslim army are countered with arguments that the local police force is favouring the Christian community.

According to some commentators, the TNI leadership has encouraged the violence, or is at least exploiting it, to strengthen their hand in an increasingly open feud within the government. The army has an estimated 6,500 troops in the region and has called for the declaration of a state of emergency in the Malukus and also in Aceh in northern Sumatra to suppress the secessionist "Free Aceh" movement. Wahid has so far refused, prompting rather open hints by the military that it would assume power in the event that government policies failed. Just last week, TNI spokesman Major-General Sudradjat argued that the Armed Forces should give their loyalty to the people and the state, but not automatically to the president.

An article in the latest issue of AsiaWeek speculated that the sharp rise in violence in Ambon is connected to a power struggle within the government. "There is suspicion that elements of the Indonesian military are involved in the unrest. Police sweeping operations have netted not only homemade firearms and machetes, but also French-made assault rifles and grenades, which are only available through the army. It may well be that disgruntled members of the military are provoking the riots in order to weaken President Wahid's position.

"The relationship between the government and the army has been uneasy lately, as typified by the souring relations between Wahid and Gen. Wiranto, formerly the armed forces chief, now the coordinating minister for security and political affairs. Wahid has pursued the investigation of the military's role in East Timor's violence last fall, and several top figures have been questioned, including Wiranto. Many inside the army are said to be deeply unhappy at the probe and at the new democratic climate in which the soldiers are being portrayed as human rights abusing brutes. According to intelligence sources, the army is now determined to swing the balance of power back in its favor. The Maluku unrest, they say, is an effort to distract the attention of the navy and the marines, who are Wahid's allies, leaving the army with a freer hand in Java and the national capital Jakarta."

Rumours have been rife in Jakarta that Wahid has been considering a cabinet reshuffle in which Wiranto would be removed. Wiranto, and another key political powerbroker Golkar leader Akbar Tanjung, both of whom played central roles in the manoeuvres that led to Wahid winning the presidency, have publicly denied that any change to the cabinet was imminent. In spite of the fact that martial law has not been imposed, Wiranto announced on January 5 that press coverage of the Malukus would be restricted.

The military appears to have garnered some support from another key political figure -- the "reformer" Amien Rais, head of the National Mandate Party and People's Consultative Assembly (MPR) chairman, and one of the speakers at last Friday's rally. The previous day Rais had lashed out at the National Commission on Human Rights for turning a blind eye to the bloodshed. In a calculated appeal to the military, he accused the commission of spending too much time serving international interests with its investigation into atrocities in East Timor and the Indonesian Armed Forces (TNI).

Wahid, who was chosen as president only last October, sits uneasily astride a precarious coalition of parties including the military, Golkar -- the party of the Suharto regime, PAN, his own National Awakening Party and Megawati Sukarnoputri's Indonesian Democratic Party-Struggle (PDI-P), all of which are represented in the cabinet. Wahid and Megawati, who is charged with the responsibility of resolving the Maluku crisis, visited Ambon in December. The failure to end the fighting will further heighten the pressure on both of them. At Friday's rally, calls were made for Megawati's sacking -- "Mega -- your silence is poison for Ambon," one banner pointedly said.

The tensions within the government will only heighten should pressure mount for an international intervention. Christian leaders in the Malukus have called for the replacement of the army with an international force along the lines of the UN force in East Timor. The demand has received some support from the Netherlands where the Dutch Foreign Minister Yozias can Aartsen recently called for an international taskforce to be stationed in the Malukus and indicated that the Dutch government was willing to contribute to it. The Indonesian government has categorically opposed the suggestion.

Hundreds of dead Muslims found

Vaudine England, Jakarta -- Hundreds of charred and rotting Muslim corpses are being bulldozed into mass graves on the North Maluku island of Halmahera, say aid workers, police and military sources. "It is difficult to count the bodies ... they were torched and burnt by unidentified people," said Mursal Amal Tomagola of Medical Emergency, a Muslim aid group. "We found most of the bodies inside the mosques that were also burnt," he said, adding the number of dead could run into thousands after two weeks of vicious communal clashes.

A military source in Galela town on Halmahera told a similar story. "We found most of the bodies in the mosques and the other bodies were found on the roads and in other buildings," he said.

Protestant leaders from North Maluku called for stricter security arrangements there and urged President Abdurrahman Wahid to facilitate peace talks between government, civic and religious leaders.

Armed forces commander Admiral Widodo Adi Sudjipto was booed by Christians yesterday when he flew to Ambon, the southern Maluku capital and site of a year-long religious war, after naval ships began patrolling the waters around the islands.

The idea is to prevent rioters from moving from one island to another and to help evacuate residents from riot-torn areas.

He left last night for Ternate, capital of North Maluku, where two parliamentary commissions will also head tomorrow to help seek ways to end the violence.

Fears the fighting would spread beyond the two provinces of Maluku and North Maluku are being realised.

In neighbouring Sulawesi, four people were found dead and more than 100 houses burnt after residents clashed with migrants from other islands.

Local military commander Major-General Agus Wirahadikusuma told the Jakarta Post that the fighting in Luwu, south Sulawesi, which broke out on Friday, was only the latest round of violence that has claimed hundreds of lives in the past few years.

"I hope the sectarian conflict will not escalate as is happening in Ambon," he said. In the former sultanate of Ternate, thousands of refugees are walking the streets looking for shelter.

Correspondents who visited Ambon at the weekend described a city devastated by a year of communal killings. One Christian man told the BBC the army should be withdrawn so that a final and decisive battle could begin.

In Jakarta, there is talk of deposing Ambon Governor Saleh Latuconsina and of replacing the regional military commander with a Hindu, while criticism of apparent government inaction over the crisis is growing.

Human rights activist Munir says his group, Kontras -- the Commission for Missing Persons and Victims of Violence -- and the Institute for Reconciliation and Peace have agreed to set up a humanitarian command post.

"This would be a peacekeeping team to bridge the gap left by the armed forces and build a bridge for inter-societal communication. It should be composed of people without any bias towards either side in the conflict," he said.

Human Rights Minister Hasballah Saad proposed the creation of peace zones in Maluku, adding he planned talks this week with Christian and Muslim leaders to seek ways to resolve the crisis.

"The best way forward is to create violence-free zones," he said. "And the armed forces must act objectively. Up to now, the TNI [Indonesian Defence Force] is involved."

Police say at least 1,500 people have been killed in the Maluku Islands since last January, but Kontras says several thousand have been killed in Halmahera alone.
 

Aceh/West Papua

Calls for independence are growing louder

David Lamb, Banda Aceh -- Emboldened by East Timor's breakaway, the people of Aceh have embarked on a dangerous journey that could determine the fate of Indonesia itself. It is a passage, born of the collective memory of military abuses and broken promises, that is leading this bloodied province to one of three extremes: war, autonomy or independence.

Day by day, the killing continues, in twos and threes, interspersed with an occasional massacre by army soldiers. Anti- government rebels, trained in Libya, grow more confident. The appeal of fundamentalist Islam spreads. And as politicians in Jakarta, the capital, dither over the fate of Indonesia's resource-rich, westernmost province in northern Sumatra, the calls for independence become louder. Last month, on the 23rd anniversary of the Free Aceh Movement's founding, 1 million people -- one-fourth of all Acehnese -- rallied in this sleepy city to support a split from Indonesia.

"Politically, the loss of Aceh could ruin Indonesia's fragile democracy and restore the power of the armed forces," said Jeffrey Winters, an Indonesia expert at Northwestern University. "Indonesia needs Aceh more than Aceh needs Indonesia. Aceh has the potential to become a viable country whose GDP per capita would be higher than the rest of Indonesia and would probably grow faster."

Indonesia's new president, Abdurrahman Wahid, has taken personal responsibility for resolving the Aceh crisis. However, so far he has only muddied the waters by whetting the Acehnese's appetite with a pledge he can't deliver on -- a referendum that included the choice of independence -- then backtracking in the face of opposition from generals and politicians at home.

"Any act to separate Aceh from Indonesia cannot be tolerated," he declared. "Aceh is part of our domain." Now Wahid is offering a referendum on autonomy.

Unlike East Timor, a province whose vote in August for independence led to an orgy of bloodshed, Aceh has no charismatic leader and its rebels have virtually no international support. But like East Timor, Aceh's disdain for the government is rooted in the army's penchant for brutal suppression and the politicians' tradition of siphoning the province's resources. The Arun natural gas fields in northern Aceh, for example, generate $4 million a day -- almost all of which goes straight into the pockets of the government in Jakarta, 1,100 miles to the east.

"It's hard to say where we are headed," said Ahmad Humam Hamid, a university professor and human rights activist, "but what you are seeing today is an expression of the betrayal and injustice everyone feels. Ever since [Indonesian] independence, Indonesia has treated us like dogs. They just do whatever they want to here. There is no accountability."

Added Yusany Saby, a respected moderate Muslim scholar: "Oh, my goodness, you have no idea how uncivilized the army's behavior is. They have no pity on the people. It is like a soldier's prestige is based on having done something bad in Aceh."

Last year, armed forces chief Gen. Wiranto went to Aceh and apologized for the military's actions, which had claimed an estimated 2,000 civilian lives over nine years. But little changed. In July, soldiers surrounded the home of religious leader Tengku Bantaqiah in the town of Beutong Ateuh. They lined up women and children as spectators and gunned down Bantaqiah and 56 Free Aceh Movement supporters.

The armed forces have 16,000 soldiers and police officers in Aceh, and top commanders told the government late last year that they needed more troops and a declaration of martial law to regain control. Wahid turned them down. It was one of many gestures he has made in an attempt to build goodwill with the Acehnese.

Among them: An Acehnese has been appointed deputy military commander; a $60-million railway project in Aceh is about to get off the ground; the provincial island of Sabang, north of Banda Aceh, will become a free-trade zone; a deal is on the table to let Aceh keep 75% of its forestry, agriculture, oil and gas earnings. Perhaps most important, in an effort to convince the Acehnese that it wants to make amends for past misdeeds, the government has established a civilian-military tribunal to prosecute soldiers accused of human rights abuses.

Wahid has been criticized for scurrying off to 15 countries in the first months of his presidency and not spending more time on Aceh, which many analysts consider the biggest threat to Indonesia's unity. But Wahid came home with important dividends. At each stop, from Washington to Manila, he received pledges supporting a unified Indonesia and backing the notion that Aceh is a domestic issue -- pledges that in effect internationally isolated the Free Aceh Movement.

"It's rather late in the game for the government to win the people's confidence, because of human rights and all the violence done by the military," said Syamsuddin Mahmud, an Acehnese who is the Jakarta-appointed governor of the province. "Still, a solution is possible, as complex as the situation is. Everyone says there must be dialogue, but who do we start the dialogue with, especially since the rebels say they won't negotiate?"

The founder of the independence movement, Hasan di Tiro, who is 77 and has been living comfortably in a Stockholm suburb since 1979, is irrelevant to most Acehnese, many of whom would settle for a life free of fear and intimidation in lieu of independence. The Acehnese are divided over whether an independent Aceh should be an Islamic state, a tightly controlled monarchy or a democracy. The rebel movement is far from unified in vision or strategy, and rebel commander Abdullah Syafie, 47, is adamant that separatists not even speak to any Indonesian official until Aceh achieves sovereignty.

"What we're hoping for is support from the international community, especially the United States," he said at a rebel- controlled village near his mountain hideaway. "We want an international group to come and see how much killing and suffering and torture has been inflicted on Aceh people by the military. We really don't understand why the international community has been silent on this."

The silence is due, at least in part, to concerns that Aceh -- located on the Strait of Malacca, a key international waterway -- is essential to the integrity of Indonesia. Its separation, the reasoning goes, would encourage independence movements in Irian Jaya, Riau and other places, leading to the Balkanization of the world's fourth most-populous country. That in turn would destabilize Southeast Asia politically and economically.

Another reason Aceh has not captured the world's attention as East Timor did is that the rebels, whose armed faction is believed to number about 1,000, have been guilty of many misdeeds. They have burned uncooperative villages, turned villagers into refugees and moved them to camps in mosques in a bid to control the civilian population. Rebels also have gone door to door in Banda Aceh to demand donations of money and material. Their often-unprovoked attacks on soldiers come as the army is spending more time in the barracks, on orders of Wahid.

In an eight-month period last year, the official Antara news agency reported, 75 soldiers and police officers were killed in Aceh, 84 seriously wounded and 19 kidnapped. More than 100 civilians died, either at the hands of the military or unknown provocateurs, some of whom dress in army uniforms and others in rebel fatigues.

"Even though Aceh does not have security, our mission now is to take a defensive approach," said Lt. Col. Iro Suparmo, the deputy military commander in Aceh. "At the same time, our units are undergoing rehabilitation training so we can get more control over our soldiers' actions."

For Aceh, the latest conflict is part of a long history of warfare waged by a tough, independent-minded people.

As far back as 1607, under Sultan Iskandar Muda, Aceh fielded the region's most powerful fighting force, controlling the seas with 800-man galleys and the land with an army that had Persian horses, an elephant corps and a conscript infantry. The Acehnese fought Dutch colonialists to a draw in nearly a century of warfare and were loyal supporters of Indonesia's struggle against the Dutch for independence, which was recognized in December 1949.

To reward the devoutly Muslim Acehnese, Indonesia's first president, Sukarno, promised -- but did not deliver -- autonomy to the province. His successor, Suharto, vowed to raise living standards and increase religious freedoms. Instead, he took control of Aceh's resources and sent his soldiers to crush rebels demanding the imposition of Islamic law. Aceh first rebelled against Jakarta in 1953, and from 1989 until earlier last year Jakarta designated it as a military zone, in effect putting the province under the army's control.

"The army's culture in Indonesia is one of violence against the people," said student activist Mohammed Nazar, 26. "The only way to end that is with a referendum, and the referendum must include the choice of independence. For us, the students, the most important thing is to create a democratic environment. We're obsessed with the idea that our future should be cast in a democratic tradition."

GAM rejects Wahid's offer of protection

Banda Aceh -- Representatives of the separatist Free Aceh Movement (GAM) have rejected President Abdurrahman Wahid's offer of protection and possible clemency if leaders of the rebel group attend an Acehnese gathering slated for January 25.

"We will not except such a motion unless it is granted by the United Nations," GAM commander Tengku Abdullah Syafi'ie said on Tuesday night.

"And we don't need any security guarantees from a lying government, colonials from Java, Indonesia," Abdullah lambasted.

Abdullah also reiterated the group's refusal to hold talks with the government in settling the prolonged dispute in Aceh.

President Abdurrahman has offered protection for GAM commanders if they join the planned dialog in a bid to find a solution for Aceh.

Minister of Law and Legislation Yusril Ihza Mahendra earlier raised the possibility of Hasan Tiro, a senior GAM leader who lives in Sweden, being absolved of wrongdoing by the President if he returns home and partakes in a national reconciliation.

"We do not need such absolution, because we have never conceded that we are part of Indonesia," Abdullah said.

Separately, students continued their demonstrations here to demand a referendum in the province.

"Give Acehnese the chance to decide their own fate through a peaceful referendum," said Muhammad Nazar, chairman of the Information Center for an Aceh Referendum (SIRA).

Rebels have stepped up their attacks since the New Year leaving at least 26 dead.

Meanwhile, Aceh Police chief Brig. Gen. Bachrumsyah Kusman during a briefing with journalists on Tuesday evening claimed six GAM field leaders had been killed in the past six months, either shot by security officers or murdered by locals.

He identified them as Abdul Muthalib, alias Abu, Arafah chief in the Meureuhom Daya area, West Aceh, who was shot on December 20, Hamdani, a leader in Sagoe Jamboaye, North Aceh, shot on December 27 and Benyamin Yusuf, chief of the Sagoe Buloh Blang Ara area, North Aceh, who was shot dead along with his wife.

Other rebel leaders killed were Abu Tausi, a spokesman in Meurohom Daya, shot in the Simpang Kramat area of Lhokseumawe, North Aceh, Tengku Usman, a leader in Nagan, West Aceh and Khalis, chief in Simeulu regency, who died in a mob assault on January 9.

On the other side, Bachrumsyah revealed that 53 policemen had been killed on duty in Aceh in the last six months. He said 62 were injured while 15 remained missing.

However, Bachrumsyah said not all personnel were victims of rebel attacks. "There were also armed gangs who took advantage of the chaotic and unlawful situation in Aceh," he said.

GAM spokesman Ismail Syahputra separately confirmed the deaths of the six rebel leaders.

But he defiantly asserted that the struggle for independence would continue and made a threatening call to Acehnese to join the movement.

"The chance is still open for Acehnese to join us. If not, you'll end up being killed by either us or the security officers," Ismail said on Wednesday.

More victims of violence were found on Wednesday afternoon. Nine unidentified bodies were exhumed by locals at Alue Glem village in Lhokseumawe, North Aceh.

"The remains had already decomposed when they were delivered to the hospital and it was hard for us to identify them. Locals found a pile of dirt near the Mobile Oil pipe line and dug it out.

"There will probably be more bodies found as people continue to open up the ground," said Syukri Thaher, the administration chief of Lhokseumawe Hospital.

The nine bodies were later buried in a mass grave at the public cemetery in Lhokseumawe.

Thousands attend separatist ceremony

Jakarta -- Thousands of people attended a ceremony to hoist the separatist Free West Papua flag in a town in Indonesia's easternmost province of Irian Jaya, a report said here Tuesday.

The flag raising ceremony was held at a coordination post of pro-independence supporters in Sorong in southwestern Irian Jaya on Monday, the Suara Karya daily said. No clashes with Indonesian security forces were reported.

The crowd first raised the Indonesian flag and sang the Indonesian national anthem, before hoisting the separatist flag and singing the independentist hymn.

The huge crowd blocked the whole area surrounding the venue barring access to Indonesian security personnel, the daily said.

The flag-raising ceremony was led by the local West Papua representative, Yacomina Isir, and was followed by a mass Christian prayer led by a local Protestant priest.

The daily quoted the head of the Sorong district police, Lieutenant Colonel Ch. Sitorus as saying police had taken no action to stop the ceremony because they received no instructions.

"Whatever the instructions of my superiors, I will enforce them, but for the moment I cannot yet give information on the flag- raising ceremony," Sitorus told the daily.

Indonesian President Abdurrahman Wahid spent New Year's Eve in Irian Jaya when he flatly rejected any attempt by Irianese to break away from the Republic of Indonesia.

But during a meeting with local leaders in the Irian Jaya capital of Jayapura on New Year's Eve, he agreed to officially change Irian Jaya's name to Papua -- the ethnic name of the Melanesian nation, which borders independent Papua New Guinea. He had also apologized for past human rights violations in the province.

Local and international human rights activists have the accused Indonesian military of committing the abuses in Irian Jaya under the pretext of a military operation to suppress the Free Papua (OPM) separatist movement.

Although separatist sentiment in Irian Jaya is strong, the violence has been on a lesser scale than in other regions such as the Muslim stronghold of Aceh or the former Portuguese colony of East Timor which voted on August 30 to break away from Indonesia.

A Free Papua state -- rich in gold, copper, oil and gas and other natural resources -- was declared by Irian Jaya leaders while the territory was still under Dutch occupation on December 1, 1961.

Indonesia claimed Dutch New Guinea as its 26th province and renamed it Irian Jaya in 1963 -- a move recognised by the United Nations in 1969.

But the people of the province consider themselves closer to the Melanesian people of the South Pacific than the dominant Javanese in Indonesia.

The Jakarta Post daily meanwhile said police in Sorong had intercepted a shipment of thousands of rounds of ammunition for automatic rifles, believed to be bound for neighbouring unrest- stricken Ambon island.

The ammunition was discovered on board the state Dobonsolo inter-island ferry on Monday, but the man to whom the crates belonged was still at large, the daily said.

Ambon has been rocked by Muslim-Christian violence since January last year, which has left more than 1,700 people dead.

Irian Jaya separatist sets sights on 2003

Reuters in Jakarta -- Separatist leader Thom Beanal says Indonesia's eastern Irian Jaya province could be independent by 2003 but freedom may have a bloody price, as it did in East Timor.

Mr Beanal said yesterday separatists planned to convene a congress later this year to map out a strategy for independence, which they want to achieve through dialogue with Jakarta.

"I want freedom. I don't want anything from Indonesia. I just want Indonesia to give us independence," he said in Jakarta. "Papuan people want independence through dialogue."

But he feared elements in the Indonesian military would try to thwart any move towards separation, as they did in East Timor, where thousands are believed to have been killed after voting for independence last August.

He warned that ethnic Javanese migrants, who many Papuans see as allies of the military, would be particularly vulnerable.

"I am a bit scared," he said. "If the military is hard the people will be hard, but they will not kill the military. They will kill Javanese migrants because they don't have weapons."

Hundreds of thousands of Javanese have gone to Irian Jaya, many under a government-backed scheme, since it joined Indonesia under a controversial UN deal in 1963.

The congress, still in the planning stage, should take place later this year in the provincial capital, Jayapura, Mr Beanal said.

Indonesian President Abdurrahman Wahid, in a gesture to separatist sentiment, has said the province should be renamed Papua.

Six badly hurt in Aceh shoot- out

Associated Press in Jakarta -- At least six people were seriously injured in a gun battle between security forces and separatist rebels in the strife-torn Aceh province, witnesses said on Monday.

A local journalist said soldiers opened fire on a group of rebels in the town of Lhoksukon in north Aceh, about 1,750km northwest of Jakarta on Sunday.

The journalist, who spoke on condition of anonymity for fear of retribution, said six people were injured in fighting that started after security forces set fire to several houses and a market place in the town.

During the clash, three reporters were arrested and beaten by the soldiers before having all their camera equipment confiscated, he said.

A military official in Lhoksukon, also speaking on condition of anonymity, confirmed the shoot-out and said there were no deaths.
 

Human rights/law

New inquiry into alleged 1998 rapes

Jakarta -- The government decision to start a fresh investigation into alleged widespread sexual abuse during the May 1998 riot received mixed reactions from female activists concerning the relevance of the inquiry.

Feminist and human rights activist Rita Serena Kalibonso said a new inquiry was a waste of time, as the government should now be concentrating more on concrete actions to fulfill its political responsibility for the riot.

"The case does not necessarily have to be settled inside the courtroom. The government should carry out rehabilitation and compensation programs as a legal and political solution for the riots," Rita told The Jakarta Post on Friday.

A joint ministerial meeting led by State Minister of the Empowerment of Women Khofifah Indar Parawansa announced on Thursday its decision to begin a new investigation into the matter as past inquiries had not uncovered concrete evidence to support claims of sexual violence.

She revealed that the inquiry could not find a single victim or witness who saw the alleged mass rapes.

Khofifah asked the general public to cooperate, particularly victims and witnesses, if the case was ever to be resolved. The government also decided to draft a law for witness and victim protection.

Rita seemed to reject the idea that the inquiry had not been able to discover concrete evidence. "The fact-finding team has already admitted the presence of various violence, including sexual abuse, during the three-day outbreak so what's the point of collecting the testimony again?" she said.

Rita argued that the most important thing now is to set up legal instruments to prevent a recurrence of such violence. "If the government is really concerned about the case, they should open a registration for those who suffered from the riot," she said, citing that during the riot many innocent people died and lost their home.

Separately, female activist Tini Hadad said she supported the reopening of the investigation, stressing that a legal closure should prevail by naming people responsible for the violence. "The case should be unraveled legally and the guilty parties should be brought to justice," Tini said.

She noted that such a thorough investigation, like the one being conducted on human rights abuses in East Timor, should also be undertaken in the May riot case.

Tini stressed the importance of legal action to settle the case once and for all. "If there are victims then the guilty one should be brought to justice," she argued.

When asked, Tini also fired back at Rita's suggestion that it was more important to provide a rehabilitation and compensation program. "How can you offer rehabilitation and compensation without first knowing who the victims are," she said.
 

News & issues

Balinese seek greater independence

Community and business leaders on the Indonesian island of Bali have asked their local parliament to seek greater autonomy within Indonesia.

The Indonesian Observer newspaper said the proposal, citing Bali's religion and its status as a tourist magnet, was made at a meeting of the leaders of the local parliament's representative faction.

Some leaders also suggested that Bali could stay within the legal Indonesian definition of autonomy if it introduced special courts to conform with the local Hindu customs.

Others argued for a fairer distribution of profits from the lucrative tourist trade, most of which ended up in Jakarta.

Officials of the Bali branch of the Indonesian Restaurant and Hotels Association said the island received only 8 per cent of the annual tourist-generated income of $28 billion.

Indonesia's press concealed violence

Marianne Kearney -- A week after the East Timorese voted overwhelmingly for independence and hundreds of journalists and observers fled, one thing was obvious. The violence engulfing this half-island wasn't just the work of a ragtag group of pro- Indonesian militia, but rather reflected a highly organized campaign. Although obvious to Western reporters, that fact nevertheless escaped the notice of most of Indonesia's press.

On the surface, the story centered on two warring political groups. But this was mainly a convenient fiction, designed to perpetuate the idea that factions had been warring in East Timor since 1975. Conclusion: without the Indonesian army, the place would descend into civil war.

Unfortunately, Indonesia's press largely reported events from this perspective, despite the fact that pro-integration militias overwhelmingly committed the violence against unarmed civilians -- in short, any accused or known independence supporters. Once the pro-independence guerrilla army Falantil signed a peace agreement in July, it wasn't involved in these clashes. Evidence of the Indonesian military's involvement was easy to find during the week of the vote. Yet, the Indonesian press largely presented the violence as a conflict between two factions.

When the Indonesian police announced, two days before the vote, that it would stop the attacks and arrest anyone carrying weapons, the mainstream press dutifully covered this. But the fact that armed, pro-Jakarta militias were still rampaging around Dili the next day -- without being stopped -- wasn't. Nor did the press dwell on the fact that the police didn't stop attacks on unarmed people, or disarm and arrest any of those responsible.

For the Western press, presenting both sides of the story became almost impossible. As Karen Polglaze, correspondent for Australia's AAP wire service, explained, "When it becomes obvious that one side is patently lying, do you put it in the story because you're obliged to provide balance?"

In the week following the vote, the militia stepped up attacks on pro-independence supporters and foreigners, making travel dangerous for both journalists and their Timorese drivers and translators. Terrorizing Timorese who helped foreigners became an effective way to limit the movement of journalists, particularly in the western districts where militia violence was increasing.

Within a week, the campaign had achieved its aims. Only a handful of journalists remained in Dili, basically confined to the UN Assisted Mission in East Timor (UNAMET) compound.

Mary Robinson, the UN's High Commissioner for Human Rights, has concluded that all evidence points to the army's involvement in "directing attacks which moved from the western regions of Timor to Dili in order to move out the international observers and then indulge in more violent killing."

The violence wasn't random, committed by rogue elements in the Indonesian army, Robinson added, but "appears to have been systematic according to reports by UN police, UNAMET staff, and local staff. Their evidence suggests that TNI [the Indonesian army] was fully involved." In the aftermath, most Indonesian papers mentioned nothing about such UN conclusions -- or the true extent of the devastation. If they covered it, there was very little to suggest that that violence was largely orchestrated, and conducted, by Indonesian troops.

The media essentially believes the military can get away with anything, explained Taufik Darusman, editor of the English language Indonesian Observer. Darusman is one of the few Indonesian editors who thinks East Timor is still worth covering, since senior military officers may be called before a war crimes tribunal. Most others aren't following this, he notes, because "they don't understand the seriousness of the issue."

In fact, if the actual number of militia members was really as low as locals say -- perhaps a tenth of the 50,000 supporters that pro-integrationists claim to have -- it becomes less likely that this was mainly the work of the militias. Certainly, without military direction, they wouldn't have destroyed as much as they did. Evidence from eyewitnesses also suggests that soldiers new to Timor -- about 6000 men brought in just before the vote results were announced -- did much of the damage.

The Indonesian press did meticulously cover every perceived or potential violation by UN troops who were sent to East Timor because the army hadn't stopped the killing, burning, and looting. Newspapers and TV news were filled with images of "aggressive" UN troops pointing guns at East Timorese, along with reports of human rights abuses toward Timorese civilians.

The Indonesian press had apparently forgotten that until two weeks into the operation, UN troops didn't fire a single bullet or kill anyone in East Timor, said August Parengkuan, editor of Kompass. Thus, most papers believed the national news agency Antara's report that UN troops had burnt two militia members alive, even though no bodies were found. A senior journalist with Pos Kupang said Antara's story didn't hold up to cross checking, so they didn't feel obliged to run it. Nevertheless, it was reported in most papers, as well on the state-run TV station. The result was a wave of anti-Australian demonstrations, and threats to burn Australians.

The papers also trumpeted comments by pro-Jakarta militia spokesmen that independence leaders Xanana Gusmao and Bishop Belo should be held responsible for the social chaos in West Timor resulting from an influx of thousands of refugees. But they neglected to mention how many people were killed and what towns were destroyed by pro-integrationists.

According to Parengkuan, although Indonesia's press is relatively free, many papers still "don't dare report the real situation because they don't want to risk a reaction from the military."

The difference between how the Western and Indonesian journalists viewed the same story is encapsulated by their different takes on the referendum itself. Pointing to a general ambivalence about East Timor, Darusman notes that most Indonesians didn't expect such a large portion of the population to support independence. "We took it for granted that the Timorese would think Indonesian society was a better one than the Portuguese." Predictably, most Western observers weren't at all surprised by the outcome of the vote.

[Marianne Kearney, a freelance journalist who spent two months in Timor, writes for papers in Singapore and Australia.]
 

Arms/Armed forces

US warns military over coup rumours

New York -- The United States warned Indonesia's military on Friday not to overthrow the country's new president and to cooperate with national and UN investigations into human rights abuses in East Timor.

Failure to cooperate will only increase pressure overseas for an international tribunal to try those accused of carrying out a wave of terror in East Timor, said Richard Holbrooke, the US ambassador to the United Nations.

His warning came amid speculation that some of Indonesia's top generals, angered by efforts aimed at prosecuting them for human rights abuses, may be planning a move against President Abdurrahman Wahid.

"We have seen news reports about the possibility of military coups in Indonesia," Holbrooke said in a conference call with US and Indonesian reporters Friday morning. "We would view with the greatest possible concern any such event. It would do Indonesia immense, perhaps irreparable damage," he said.

On Thursday, Wahid fired armed forces spokesman Major General Sudradjat, who had publicly denied that the military would carry out a "conventional coup" but had confirmed that the generals intended to pressure the 3-month-old administration to stay out of military affairs.

Sudradjat is believed to be a close ally of General Wiranto, the former military commander and now Wahid's senior security minister.

"Any Indonesian army officers or any military officers who are thinking of military adventurism have forgotten that we are now in the 21st century," said Holbrooke. "The damage to Indonesia would be unbelievable."

Holbrooke later told reporters at the United Nations that it was vitally important for Wahid, Attorney General Marzuki Darusman and others to ensure that the military generals responsible for the violence in East Timor be prosecuted.

"The Indonesian generals should know that their own efforts to thwart internal accountability and openness and inquiry are only going to result in greater pressure," for a tribunal similar to those for the former Yugoslavia and Rwanda, Holbrooke said.

A government human rights investigation has accused Wiranto and other top commanders of permitting the frenzy of violence that swept East Timor in September after the territory voted to secede from Indonesia, which had occupied it in 1975.

A separate UN human rights commission also has submitted a report on atrocities in East Timor, and three UN human rights investigators have recommended that the Security Council establish a tribunal if Indonesia fails to carry out effective trials.

Holbrooke accused the military of hampering both probes. He also cautioned pro-Jakarta militias based along the border with Indonesian-held West Timor not to "test" the UN troops who will soon replace the Australian-led emergency force sent to East Timor to halt the post-referendum violence. "Anyone who tries to use the transition as an excuse to create chaos again will suffer very severe consequences," he said.

After a briefing by UN officials to the Security Council, Holbrooke said the militias continue to inflict physical terror and psychological intimidation on the estimated 100,000 East Timorese in West Timorese refugee camps, preventing many from returning home.

Arms embargo lifted to allow sale of jets

Severin Carrell -- Tony Blair is to resume the sale of Hawk jets and other arms to Indonesia by lifting a Europe-wide embargo imposed during the East Timor crisis. Whitehall sources say the Prime Minister and Robin Cook, the Foreign Secretary, are expected to vote to allow renewed arms sales to Indonesia at a Council of Ministers meeting in Brussels next week.

But the likely resumption of arms sales has infuriated the Liberal Democrats and the Campaign Against the Arms Trade. They claim British-made Saladin armoured vehicles were used by Indonesian forces during violence over Christmas in the Maluku Islands.

Anne Feltham, of the Campaign Against the Arms Trade, accused the Government of sending a "dangerous" signal to Indonesia that Britain tolerated the abuse of human rights.

Jenny Tonge, the Liberal Democrats foreign affairs spokeswoman, said: "The Government should extend the embargo. Looking at what happened in East Timor, it would be very unwise to lift the embargo until things are more stable."

The row will increase pressure on the Government after a leaked memo disclosed yesterday that the Foreign Office and the Department for International Development are in a dispute with the Department of Trade and Industry and the Ministry of Defence over resuming sales to Pakistan.

Clare Short, the Overseas Development Secretary, and Mr Cook are resisting attempts to agree to new arms export licences to Pakistan, now under the control of the military ruler, General Pervez Musharraf.

Charles Kennedy, the Liberal Democrat leader, claimed ministers had replaced their ethical foreign policy with a "commercial policy with a foreign dimension".

But the Foreign Office and MoD hope that Sir Charles Guthrie, Chief of the Defence Staff, will help defuse the rowduring talks in Pakistan today.

Indonesia reshuffles military posts

Daniel Cooney, Jakarta -- Indonesia's president ordered a major shake-up of the military and bureaucracy Thursday, replacing an armed forces' spokesman who had challenged his authority and appointing a new head of military intelligence.

The bureaucratic shake-up in Jakarta included the firing of the chief spokesman for the armed forces, Maj. Gen. Sudradjat.

Speaking to reporters at the presidential palace, President Abdurrahman Wahid said Sudradjat had been replaced by air force Marshal Graito Husodo.

Sudradjat, a critic of Wahid, told the Republika newspaper last week the president did not have "the right to interfere in the internal affairs of the military" even though he is commander in chief under the constitution. Wahid did not say why he fired Sudradjat, but said only "we need to replace officers who are not suitable." Analysts view Sudradjat as a strong ally of Gen. Wiranto, the former military commander and Wahid's senior security minister.

There has been local media speculation recently of a rift between Wiranto and Wahid. "This is part of a very serious attempt by [Wahid] to consolidate his power," said Kusnanto Anggoro, a military analyst at Jakarta's Center for Strategic and International Studies. "Wiranto's influence in the military seems to be fading away." The president also named air force Marshal Ian Halim Perdanakusuma as the new head of the military's intelligence arm. He replaces former intelligence chief Gen. Tiasno Sudarto, who was named army chief of staff in November. It is the first time the intelligence job has not gone to an army man.

Since Wahid became president in October he has called for reform within the armed forces, which have played a traditionally powerful political role.

Wahid has matched the military reshuffle with big changes to senior management positions in Indonesia's bureaucracy and state-owned industries. In the past week, he has replaced the heads of the powerful Indonesian Bank Restructuring Agency and the state-owned electricity company and said he will replace the leaders of the state oil company and the nation's stock market watchdog group.
 

Economy & investment

Violence prompts meltdown fears

Reuters, Tokyo -- Indonesia faces a bank-sector meltdown and a political break-up that could trigger a financial crisis, according to a senior official of the Japan Bank for International Co-operation (JBIC).

Takuma Hatano said Japan, Indonesia's biggest creditor, supported the three-year programme of financial recovery that Jakarta was drawing up with the International Monetary Fund.

"I think Indonesia can basically implement that programme and obtain a soft landing, but still the political risk is very hard to anticipate," said Mr Hatano, JBIC's executive director for Asia and Oceania.

He singled out the risk of the political disintegration of the sprawling archipelago, engulfed by separatist and religious violence.

"Is there any country which has the risk of a [political] split that can implement a very harsh IMF programme over three years? Nobody knows," Mr Hatano said. JBIC is owed more than US$33 billion by Indonesia.

Mr Hatano said the worst case would be if the government's revenue-sharing arrangements broke down as a result of political unrest. He said Indonesian President Abdurrahman Wahid had mentioned that risk at a recent meeting.

Loss of the revenue would threaten Indonesia's financial sustainability, especially if the cost of rescuing the country's battered banking system mounted, Mr Hatano said.

Indonesian banks have suffered tremendous damage during the past two years of political and economic turmoil. The cost of recapitalising the banks has already reached 5 per cent of national income.

Mr Hatano feared Indonesia's non-performing loans could exceed the published level of 60 per cent of all loans. "We are very much concerned, or afraid, that the Indonesian banking sector is almost, you could say, in a meltdown," Mr Hatano said.

Despite the problems, Mr Hatano reaffirmed Japan's opposition to any cut in Indonesia's official foreign debt, which Jakarta puts at about $72 billion.

Secret blueprint for financial shock therapy

Michael Shari, Jakarta -- Indonesia is preparing to take stern measures to regulate its debt-plagued financial system. The new government of President Abdurrahman Wahid plans to audit large military expenditures, punish violators of toughened regulations, and raise capital targets for state banks, according to a confidential government document obtained by Business Week Online.

The document is the most convincing evidence yet that the recently elected Wahid has mustered the political will required to clean up errant financial institutions and expose mismanagement -- at both government agencies and commercial banks. To prove his determination, Wahid sacked the chairman of Indonesia's Trust Resolution Corp. on January 12 for failing to get tough on politically connected debtors.

He is also seeking the resignations of the central bank governor and the president of Indonesia's largest state-owned bank. Economists in Jakarta say these developments could set the stage for an unprecedented level of compliance with the new regulatory agencies, rules, and targets that are described in the document.

Entitled Memorandum of Economic & Financial Policies: Medium-Term Strategy & Policies for 1999-2000 and 2000, the 42-page document is signed by Coordinating Minister for Finance, Economy & Industry Kwik Kian Gie and Bank Indonesia Governor Syahril Sabirin. Economists familiar with the document describe it as the basis of a new "letter of intent" that the Indonesian government is scheduled to sign with the International Monetary Fund on January 20 as a condition of continued IMF aid.

The document says the measures will be part of a "new economic program" that will require more IMF funding -- in an as-yet unspecified amount -- through December, 2002, and will "replace" an earlier "extended arrangement that was approved on August 25, 1998," by the IMF.

Confidence in Indonesia's financial system was badly shaken on December 31, when Kwik announced that an independent audit of Bank Indonesia by KPMG had found that the central bank was in the red to the tune of $7 billion. Wahid responded by asking Sabirin to resign in a closed-door meeting. Sabirin refused, citing year-old legislation that made the central bank independent -- and also made it impossible for the President to sack the central bank governor.

Then, on January 12, Sabirin sacked Indonesian Bank Restructuring Agency Chairman Glenn Yusuf for delays in asset disposal, and for failing to blow the whistle on the disappearance of $80 million from the accounts of Bank Bali, in which the former ruling Golkar Party was involved.

Heads will roll next at Bank Nasional Indonesia 1946, the country's largest state-owned bank, which is named after the year it was founded. Sources close to the Finance Ministry say BNI President-Director Widigdo Sukarman will resign, accepting responsibility for allowing Texmaco Group, a textile and petrochemical conglomerate that was supported politically by former President Suharto, to accumulate more than $1 billion in bad debt. This move is intended to make way for a massive recapitalization program at BNI by the middle of the year, which will be financed by some of the $28.6 billion in new bonds that the government plans to float by mid-2000, according to the document.

And that's just the beginning of Wahid's show of strength. According to the document, the government plans to begin two separate audits this month. The first will "consolidate all information on all bank accounts of off-budget activities" in what a well-informed Jakarta banker says is an attempt to curb corruption among government officials. The second audit will focus on "all military-related funds" that involve "significant financial exposure." The Jakarta banker says this is an effort to curtail the role of army generals in high-risk investments such as real estate. "These audits will be initiated by the BPK [an acronym for the Supreme Audit Board] in January, 2000, and will be expected to be completed by June 30," the document says.

In addition, a new "independent financial supervisory agency" is to be created by 2002 for "prudent supervision of the financial system," the document says.

As part of this tightened supervision, the government will soon require that all foreign-exchange transactions in excess of $10,000 be reported to the central bank. This is an unprecedented move that Indonesian economists say is intended to stem capital flight.

Powers and penalties

At the same time that the government is planning to stiffen existing penalties, it will give the new agencies enforcement powers.

The document says the government will introduce "powerful disincentives for corrupt practices [including prosecutions of the parties that engage in such practices]" and "enhance the role of the attorney general and seek parliamentary confirmation for all appointments to the Supreme Court."

The document also says the Finance Ministry will improve the oversight of nonbank financial institutions, adopt a new code of corporate governance, and strengthen existing capital market regulation. And new legislation is to be brought before Parliament "sometime in 2000" to allow the government to audit -- for the first time ever -- "charitable foundations" that are linked to the government, including several that were chaired by Suharto and his wife Tien until the late 1990s.

If implemented, the new measures could make up for more than three decades of lax supervision of financial institutions that were run by revered Western-educated technocrats. They simply failed to blow the whistle on corruption and negligence in the central bank and the Finance Ministry under Presidents Suharto and Habibie from 1965 to 1999, complains Mohammad Sadli, a Berkeley-educated economist. "The technocrats suffered from blind spots," says Sadli. "They were naive."

Public audits

But now, after 12 weeks in office, Wahid is consolidating his influence and moving to uproot entrenched bureaucrats whose collusion with politically connected business leaders brought down the economy and crippled the central bank. Part of his show of strength is an unprecedented policy -- by Indonesian standards -- of auditing financial institutions, followed by public announcements of the findings.

"This is a great step forward," says Emil Salim, chairman of Wahid's new Economic Council, an advisory panel. The goal, to hear this Berkeley-educated economist tell it, is to offer investors the brutal honesty they've been demanding ever since Indonesia's capital markets and bank sector deregulated in the 1980s -- and gamble that it won't scare them away.

Government to step up taxation efforts

Jakarta -- The government will intensify taxation efforts and reduce new foreign borrowing and investment spending to control the budget deficit for the 2000 fiscal year at a maximum of 5 percent of the gross domestic product, finance minister Bambang Sudibyo said on Friday.

"We will go all out to broaden the tax base or increase the tax coverage through tax and excise-duty reform," Bambang said after a plenary Cabinet session which finalized preparations for the 2000 draft budget.

Unlike the current budget which runs from April to March, the coming budget will cover only nine months until December as the government will adjust the fiscal year to the calendar year starting in January 2001.

"But, please, don't ask us to give any figures because we can't until the draft budget is unveiled to the House of Representatives on January 20," added Bambang.

He was accompanied by Coordinating Minister for the Economy, Finance and Industry Kwik Kian Gie and chief of the National Development Planning Board Djunaedi Hadisumarto at the news conference.

Kwik earlier said the budget would be made more transparent, easier to understand and more straightforward in its definitions.

"For example, foreign loans will be entered as foreign borrowings and not development revenues as in the past budget documents," Kwik added.

Kwik said details in the budget would be more transparent regarding the deficit and how it would be financed.

Bambang added the 2001 budget would be made more transparent to enable the House to assess individual spending items in detail.

Over the past 30 years, the budget document outlined spending only by sector and subsector, thereby making it extremely difficult to ascertain how taxpayers' money was used.

The finance minister said the budget deficit would be decreased gradually so the budget would at least be balanced in the medium term.

He added that asset sales by the Indonesian Bank Restructuring Agency and privatization of state enterprises would play a crucial role in controlling the deficit and enabling the government to gradually cut down new foreign borrowing.

Another outstanding feature of the coming budget will be the greater appropriation to regional administrations in preparation for the implementation of the laws on regional government and intergovernmental fiscal relations beginning in January 2001, Bambang added.

Djunaedi said budget appropriations for investment (defined as development budget) would be reduced. "The small investment budget will focus on the maintenance of basic infrastructure and public facilities to improve their efficiency."

He added that his agency would no longer be involved in preparing projects or programs for public investment. "My agency will only outline investment spending by subsector and major program. Technical details such as project and program activities will be programed by regional administrations in cooperation with the provincial offices of technical ministries."

Bambang did not disclose substantive details of plans to phase out price subsidies for fuel, electricity and other basic needs. He only repeated that subsidies would gradually be cut down and would be better targeted to those in need.

But he reiterated the importance of a substantial pay rise for senior state and government officials to match the market rate.

The pay level of lower rung civil servants has by and large matched the market rate, Bambang said, but top officials' salaries were below the standard of the private sector.

He used his own salary as an example. "It is quite strange that my official pay is much lower than that of the head of the Indonesian Bank Restructuring Agency, while it is the finance minister who recommends who will be appointed by the President to lead the agency. This is an anomaly that has to be corrected gradually."

Bambang argued that meritocracy was one element of democracy and should be reflected in the pay structure of an organization.

The government has planned to drastically raise the pays of top officials, including the president, vice president and Cabinet ministers, and those of civil servants and military and police members by 20 percent, beginning in April.

The proposed pay increases will be included in the 2000 draft budget which will be submitted to the House next week.

Consumer demand boosts ad spending

Rin Hindryati -- Indonesian ad agencies say their business is heating up, thanks to improving consumer demand and a strong holiday season. And foreign multinationals are among the big spenders.

Despite Indonesia's continuing social unrest, consumers across the archipelago are buying more soap, shampoo and cars as the economic crisis abates. Foreign companies, meanwhile, are eager to expand their operations into what is potentially Southeast Asia's biggest market.

"Our clients say their sales are going well and, therefore, they're ready to spend on advertising," said Bukit Ketaren, of the Indonesian advertising company Inter Admark. The country's total advertising revenue is now 90% of what it was in 1997, the year before the country's economic meltdown.

Many leading advertising agencies have been in a rush to secure advertising slots on several private Indonesian television stations in the past two months. This is despite advertising costs that have increased between 10% and 15% from a year ago. One private Indonesian TV station, Rajawali Citra Televisi Indonesia, or RCTI, said it had to reject requests for advertising space because of its booked schedule in recent weeks.

"This is the first time we've received so many orders that we can barely meet demand," said Kanti Imansyah, the head of advertising sales at RCTI.

"All the golden time spots have already been fully booked, while the second- and third-grade periods are 90% full."

Indonesia's improving economic trend has partly induced this upsurge. The government is predicting 4% economic growth in 2000, with interest rates continuing to come down and product demand improving. Consumer-product companies such as automaker Astra International and Matahari Putra Prima, an operator of retail malls, have been reporting profits over the past two quarters of 1999, after suffering sharp losses in 1998. "This trend should continue," says James Riady, whose Lippo Group owns Matahari.

Indonesian ad companies say that multinational companies have been particularly aggressive in increasing their advertising in recent months. They've been seeking to cash in on Indonesia's December-to-February holiday season, which includes the Muslim fasting month of Ramadan, Christmas, New Year's Day and the Lunar New Year.

According to a report by research company Media Scene, ad spending for personal-care products, such as hair-care products, has shown steady growth over the past two years, despite the crisis. The ad companies agree that consumer and personal-care products have commanded among the largest spending for advertising in the past three months. These are including cigarettes, women's care products and milk, said Lisa, marketing director of Adforce Indonesia.

Seen from ad spending budget allocations, Unilever has been the largest advertiser. According to data from Media Scene, in 1998, the company spent at least 92.59 billion rupiah ($12.8 million) on advertising five of its brands, namely Sunsilk and Clear shampoos, Lux bath soap, Rinso detergent and Pepsodent toothpaste.

"The rise in monthly ad spending over the last three months is around 43%, compared to the monthly average for the first nine months of 1999," said Wanlie one word is of Indo Ad, an affiliate of Ogilvy & Mather. Among Indo Ad's clients are Unilever Indonesia, Astra International, Diageo, with Guinness beer, Food Specialties and American Express. Indonesian consumers generally spend more during these months, particularly on the post-Ramadan Lebaran holiday.

The election of President Abdurrahman Wahid and the calming of Indonesia's fractious political environment have also persuaded companies to increase their marketing budgets, advertisers say. Before October's presidential election -- and particularly during last year's campaign season -- many clients of ad companies said they were freezing their advertising spending until the situation cleared.

RCTI, the TV station, for instance, saw a 60% rise in its December advertising sales from a year earlier. The sales group manager, Ms.

Imansyah, declined to disclose the figures, but said, "December is always a good sales season for us, but this time it has been multiplied by the fact that many clients have held their budget for the first semester and, therefore, doubled their spending this month." According to the Indonesian media watch dog, P3I, total revenue from television advertising in 1998 was 2.2 billion rupiah.

Ad promotions are changing with Indonesia's improving economic fortunes. Last year, when the economy crashed, the advertisers say promotions focused on themes of "national unity" and public- service announcements. Indonesia's Mega Bank, for example, tried to promote racial harmony on advertising spots that ran on RCTI. The two-minute spot described scenes from a lifelong friendship between three men from different ethnic groups: Javanese, Batak and Chinese.

Now, companies in Indonesia are focusing again on more-commercial themes, and pitching luxury goods. Astra International, for example, is running an ad featuring a couple who just had a child and so need a comfortable new Astra car.

Advertising companies also are focusing on TV, rather than magazines and newspapers to get their message across. "It's now in a ratio of 2 to 1," said Bukit Ketaren, account director at Inter Admark agency, an affiliate of Japan's Dentsu.

But the question these advertisers keep asking is will this last? Indonesia's financial system remains saddled by nonperforming loans and shortages of new credit. And social unrest is keeping foreign investors cautious. Still, says Ms. Wanlie, "as long as the greater economic growth figures continue to improve gradually, advertising businesses will too."

More state companies to be privitised

Jakarta -- The office of Indonesia's Minister for State Enterprises said fertiliser company PT Pupuk Kaltim, coal mining company PT Bukit Asam and plantation operators PTPN II and IV are among the state companies to be privatized this year.

Meanwhile more shares of PT Telkom and PT Indosat, both telecommunication service providers, and of general mining company PT Aneka Tambang, would be divested, said Herwidiyatmo, an assistant to the Minister in charge of State Enterprises.

Herwidiyatmo said he could not give an estimate of fresh funds to be raised through the share divestment.

So far in the current fiscal year ending in March, the government succeeded in raising only US$860 million from the privatization of PT Pelindo II and PT Pelindo III, both port operators, PT Indofood, a food processing company and PT Telkom. Privatization target was to raise US$1.5 billion for the fiscal year.ormer 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.

Malpractice in bank bailout uncovered

Agence France-Presse, Jakarta -- The central bank may have violated procedures relating to US$11 billion worth of emergency liquidity for debt-ridden banks during the Asian financial crisis, according to an audit report.

Almost half the liquidity support channelled into Indonesia's banking system by the central bank at the height of the crisis may have been lent in violation of procedures, the report obtained yesterday claims.

The report by the government's Supreme Audit Board, and international consultancy KPMG, alleges that Bank Indonesia did not follow proper procedures in providing 80.24 trillion rupiah in liquidity support to prop up crippled banks in 1997 and 1998.

The total handed out by the bank to help stem panic runs on deposits amounted to 164.53 trillion rupiah, all of which has been refunded by the government.

The money, some of which has allegedly disappeared offshore, has been reimbursed by the government in the form of obligations. But the amount is still subject to verification and review.

The audit, which runs into hundreds of pages, covers Bank Indonesia's books as of May last year, just before its debut as an independent monetary institution. The documents contain numerous allegations of procedural violations and lax accounting and supervision practices.

It also alleges that the bank did not properly make provisions for 22.56 trillion rupiah in foreign-exchange losses.

The figures from the audit have yet to be officially released, but preliminary data indicating that Bank Indonesia's books were in the red was made public late last month.

The government and the International Monetary Fund have since called for Bank Indonesia to be recapitalised.

They have also urged a new investigative audit be conducted to see whether there were any criminal violations by central bank officials.

"The Supreme Audit Board believes that of the total Bank Indonesia liquidity support injected into the banks amounting to 164,536.10 billion rupiah, the amount eligible to be taken over by the government was 74,866.06 billion rupiah, while that which should not have been taken over by the government was 80,248.38 billion rupiah," the documents said.

Bank Indonesia earlier said the amount in question was only 51.7 trillion rupiah. Bank officials have yet to comment on the leaked report.

The audit documents claim that among the violations, the central bank continued to inject funds into problem banks after they had suffered negative clearing for more than five days running.

Other violations occurred in its allotment of liquidity credit to individual banks, including its treatment of discount facilities covering 26.6 trillion rupiah in liquidity credit owed by Bank Central Asia, the audit alleged.

It also said Bank Indonesia had not properly provisioned for 8.9 trillion rupiah in doubtful loans owed by private, state and nationalised banks.

In addition, it failed to write off potential losses from 7.36 trillion rupiah in trade credits it awarded to two conglomerates, the Texmaco Group and the Bakrie Group. The Texmaco Group has denied in the past allegations of corruption relating to the facilities.

The audit also cast doubt over Bank Indonesia's accounting of 129.5 trillion rupiah in foreign exchange treasury bills and bonds. It alleged that the weaknesses meant it could not give an official opinion on the true state of the central bank's books.