• New nation has opportunity for gains in the Gap - Sydney Morning Herald
• Timor set for oil windfall - Sydney Morning Herald
• World Vision workers strike in East Timor - Green Left Weekly

• The mess in Megawati's lap - Asiaweek
• PBB seeks to impeach Gus Dur over communism - Jakarta Post
• Central Axis may abandon Wahid - Indonesian Observer
• Wahid says South South co- operation important - Asia Pulse
• Jitters plague Jakarta in Wahid's absence - South China Morning Post
• Ban on communists will stay, says Amien - Associated Press

• Aceh congress postponed by troop deployment - Jakarta Post

• State aircraft manufacturer to lay off 2,500 workers - Agence France-Presse
• Teachers begin strike in defiance of government - Jakarta Post
• Teachers protest in Bali and Java - Jakarta Post
• Teachers' strike stalling recovery, says Gus Dur - Straits Times
• Jakarta teachers protest at palace for higher pay - Straits Times
• Jakarta teachers take to the streets for higher pay - Straits Times
• Gudang Garam suspends operation after strike - Jakarta Post
• Jakarta averts transport shutdown - Straits Times
• Schools close while teachers take to streets - Jakarta Post

• Judge's verdict for sale? - Agence France-Presse
• Jakarta removes five district judges in legal cleanup - Straits Times

• US wary of Indonesia's ties with China - Strathfor
• Gus Dur's plane not allowed to refuel in US - Straits Times
• Jihad force agrees to leave training camp - Agence France-Presse
• Syarwan Hamid implicated in PDI HQ takeover - Indonesian Observer
• Tackling Indonesian corruption head on - Australian Financial Review
• Suharto grounded for six months - South China Morning Post
• Red-light area a new focus of democracy - Sydney Morning Herald
• Jihad trainees beat up reporters visiting camp - Agence France-Presse
• Lynch mobs, gangs rule Jakarta streets - South China Morning Post
• 'Laskar Jihad' worry Bogor residents - Jakarta Post

• Bakorstanas officially dissolved - Jakarta Post
• Jakarta forced to ship Hawk fighters - Agence France-Presse

• Australian activists fined - Canberra Times

• Divisions seen hampering reforms - Business Times
• Jakarta to go ahead with VAT in Batam - Straits Times
• Rural poor increasingly vulnerable: World Bank - Agence France-Presse
• Paris Club grants Indonesia time to repay 5.8 bn dollars - Agence France-Presse
• Indonesia wins IMF backing for Paris Club restructuring - Dow Jones Newswires

Four questioned after Soeharto protest

Jakarta -- Jakarta Police chief Maj. Gen. Nurfaizi said on Friday that police investigators were questioning four people in connection with a violent student protest in Central Jakarta on Thursday.

"They are being questioned at city police headquarters," he announced after addressing the inauguration of the Matraman Police Substation in Central Jakarta.

The two-star general, however, did not elaborate on whether the police had been tipped off about the four, who the police consider to be key players in the protest.

He said three of them were students and the other a journalist with Kapital weekly economic tabloid, Aldi Syahbana. Nurfaizi did not say why the journalist was arrested. "They mingle with the masses. However, we'll prosecute them only if we have strong evidence implicating their involvement in the protest," said Nurfaizi.

Commenting on an attack on the Foundation of the Indonesian Legal Aid Institute (YLBHI) secretariat on Jl. Diponegoro, Central Jakarta, allegedly by city police personnel, Nurfaizi said city police's internal affairs department was investigating the incident. "Should the investigation reveal that our personnel were involved in the attack, we'll take stern measures against them," he said.

Police personnel chased the student protesters to the YLBHI secretariat when the protesters ran amok after protesting near Soeharto's residence on Jl. Cendana in Central Jakarta. They were demanding that the government formally arrest the former president and confiscate the wealth of his family and cronies.

When the protesters pelted them with Molotov cocktails and stones, the police fired tear gas at them, sending the protesters in all directions, including to the YLBHI secretariat, Dozens of members of the police's Mobile Brigade (Brimob) stormed into the secretariat's compound at 6.30pm on Thursday and reportedly pelted stones at the two-story building and hit student protesters seeking refuge in the building. Two window panes were broken in the incident. Separately, YLBHI executives held a media conference on Friday to condemn the attack. "The police personnel's attitude is similar to those of street criminals. We demand the city military police investigate the case," said Irianto Subiyakto, head of YLBHI's civil and political rights section.

Daniel Panjaitan, another executive, said he had reported the incident to the city military police on Friday morning. "City police should be held responsible for the attack," he said.

He also accused the police of aggressiveness, adding that they entered the building without permission. "Without our permission, the police personnel forced their way into the building and hit student protesters seeking refuge in the building," he said.

Apong Herlina, chairwoman of YLBHI's Jakarta chapter, said the police were apparently ready to compensate all the losses. "Second Sgt. Djoko of the Central Jakarta Police precinct has telephoned me, asking the amount of damages caused by the attack. Even Second. Sgt. Maxwell Tambunan of the city police headquarters took pictures of the damages this morning," she said.

Shots fired as student protestors demand Suharto trial

Jakarta -- Indonesian police fired warning shots and tear gas Thursday to disperse hundreds of militant students protesting near the residence of former president Suharto to demand he be brought to trial.

The first shots were fired in the air as dusk fell and as the some 750 students, frustrated at their inability to get closer to Suharto's home, began to pelt the security personnel with stones and molotov cocktails.

The students, mostly from three militant student groups -- Famred, Forkot and KMJ -- had converged on the upmarket Menteng residential area where Suharto lives. But they were held off some 200 metres from the former president's home by at least 500 security troops, including police in full riot gear.

Police pushed the students back some 400 metres north to a market area where the protestors began to burn rubbish and tyres and damaged a police post there. After a brief respite when both camps stayed in their own lines, the police charged into the crowd with battons and chased the students for another 400 metres from the market area.

As the cat-and-mouse street battles dragged on until after dark, police used water cannons to disperse the last resisting groups and douse the small fires they had lit, and used tear gas against the students who remained in the market area.

Suharto, who on Monday escaped questioning by officials over alleged corruption during his 32-year rule for medical reasons, and on Wednesday was slapped with a travel ban, was believed to have been inside his residence during the protest.

There were no immediate reports of serious injuries, but several students and at least one reporter were at the receiving end of stones thrown by both sides during the violence.

The students carried flags of their organizations and anti- Suharto posters, including one that recommended five ways of punishing the former president -- including hanging and castration.

Thursday's protest was the latest of several near Suharto's home in the past month. Two of the demonstrations have turned violent, with clashes between the students and police leaving scores injured.

Opposition grows to IMF plan

Pip Hinman -- Mounting pressure has forced the Indonesian government to delay implementing key elements of an economic restructuring package negotiated with the International Monetary Fund (IMF). The April 1 budget did not include a controversial fuel subsidy cut, nor the promised wage rise for senior civil servants.

The partial backdown highlights the Indonesian elite's nervousness about the social and political repercussions of the austerity program, a condition of the IMF's US$5 billion three- year loan. However, the budget did contain cuts to electricity, telephone, education and transport subsidies.

The elite has good reason to be worried. On April 1, thousands of students and workers across Indonesia rallied in opposition to the plan and mass leaders have vowed to step up their campaign against it (see article below).

The IMF loan, agreed in January, is to be delivered in tranches, as the "reformist" government of Abdurrahman Wahid and Megawati Sukarnoputri implements the IMF's conditions.

With little progress to the IMF's liking to date, the second tranche of US$400 million due on April 4 has been delayed until May. The IMF has also hinted that the Paris Club of creditors at its April 12 meeting may refuse Indonesia's request to reschedule US$2.1 billion of its foreign debt. Indonesia's total foreign debt is some US$200 billion, with private debt making up US$65 billion.

The IMF package has provoked much public debate. Muhammad Ma'ruf, editor of Pembebasan (Liberation), the newspaper of the People's Democratic Party (PRD), told Green Left Weekly: "There was a slight improvement in the economy last year, but that has now reversed. The government's neo-liberal austerity program is leading to other crises: there's been a big rise in unemployment; inflation has increased to 29%; there has been an increase in public service costs by between 30-75% and there have been many more strikes by workers and protests among small farmers."

Some of Wahid's chief political rivals are adding fuel to the fire. House of representatives speaker and Golkar party chairperson Akbar Tanjung told a seminar organised by Strategic Intelligence two weeks ago, "The government does not have a sense of urgency in economic fields". He criticised the President for sparking further economic uncertainty by talking up possible coup attempts and differences between him and the military.

Some of Tanjung's criticisms are being repeated by the IMF and its backers. On a visit to Indonesia in March Stanley Roth, US assistant secretary of state for East Asia, advised the government to make haste with its economic restructuring program, for its own sake.

Roth made no bones about the US's and IMF's chief preoccupation: Jakarta needed "to take the steps necessary to deal with the formidable economic problems that can get the private sector functioning again".

But he also underscored what seems to be a growing concern among Indonesia's main Western backers -- Jakarta must get its economic house in order or risk more social and financial stability.

Elite nervous

The build-up of mass pressure was a key factor in the Wahid government's partial backdown. On March 30, Dita Sari, president of the Indonesian National Front for Workers' Struggle (FNPBI) and spokesperson for the newly formed People's Committee for Justice (KEKAR), vowed that the campaign would continue until the austerity measures are abandoned.

The People's Committee for Justice comprises the FNPBI, the National Student League for Democracy (LMND), the Indonesian Workers Prosperity Union (SBSI), the Workers' Committee for Reform Action (KOBAR), Anti-Fascist and Racist Action (AFRA) and Tionghoa Youth Solidarity for Justice (Simpatik).

Those unions grouped under the FNPBI umbrella have rejected the government's offer of a 25-30% wage rise, saying that a 100% increase is necessary. Senior public servants were to be given pay rises of 2000%.

Ma'ruf told Green Left Weekly that LMND and other student groups have organised pickets outside the ministry of education to protest cuts to the education budget which will push up fees at some state universities by 300%. He said FNPBI and LMND plan to continue their demonstrations in the lead-up to May Day.

PRD branches across Indonesia are also campaigning against the subsidy cuts. On March 31, many targeted state parliamentary offices for their protests, to highlight the support that the government and other parliamentary parties are giving to the IMF-driven austerity program.

The PRD has met with MPs who seek a cancellation of the subsidy cuts and has even received invitations from bourgeois economists to participate in discussions.

Hypocrisy

The PRD has lashed out at the five big governmental parties -- Golkar, Megawati's Indonesian Democratic Party of Struggle, National Mandate Party, Star and Crescent Party and National Awakening Party -- which claim to be reform-minded but nevertheless support the IMF-Wahid austerity package.

"Not one of the five big parliamentary parties has spoken out against this oppressive economic policy", said Ma'ruf.

"They have again shown their hypocritical character; when the people's opposition grows stronger, they pretend to be on the same side", he said, referring to statements by, among others, Amien Rais, the People's Consultative Assembly speaker and leader of the National Mandate Party, who has argued that the government should prioritise raising the wages of low-ranking civil servants.

Even the Indonesian United Democratic Party (PUDI) led by Sri Bintang Pamungkas, a dissident and political prisoner under the Suharto regime, has supported the IMF-government deal. According to Ma'ruf, it argues that getting as much foreign investment as possible is the only way to overcome the economic crisis.

Alternative program An April 1 statement from the PRD's Central Leadership Committee (KPP-PRD) put the government's decision to delay some of the cuts down to its inability to come up with a compensation package for the poor and its fear of the opposition campaign. "Several times the government presented a plan to the parliament to distribute fuel subsidies to the poor -- the coupon method, monetary compensation -- but they were knocked back because of concern over corruption at the operational end", a KPP-PRD statement said.

The party has warned the people not to be swayed by this latest Wahid manoeuvre, saying "In reality this policy of delay means that the government has not cancelled the decision". Government officials say the fuel subsidy will be cut within three months.

The PRD says that while the price of fuel, electricity and transport are yet to be worked out, prices of basic goods are sure to increase as the cuts are passed onto the consumer. Already, prices of kerosene and cooking oil are going up as speculators begin to stockpile.

The PRD's extra-parliamentary campaigning for an alternative economic program has also bought it new notoriety.

The programme was launched by PRD leader and former political prisoner Anom Astika on a TV chat show on March 29. The programme, which includes the seizure of the illegally accumulated assets of Suharto and his cronies and a progressive income tax, received positive coverage from Kompas, Indonesia biggest circulation daily newspaper.

According to Ma'ruf, the party is looking at a longer-term anti- cuts campaign which involves different sectors.

"We're planning to set up anti-cuts `posts' on campuses and in neighbourhoods, so that they become both places where discussion can be had as well as serve as locations from which people can be mobilised to campaign against the austerity drive", he said.
 

East Timor

New nation has opportunity for gains in the Gap

Comment by Andrew McNaughtan -- When the Australian and Indonesian foreign ministers toasted the signing of the Timor Gap treaty in 1989 it was presented as a diplomatic coup and a sign of a friendly, co-operative relationship.

The reality was different. The treaty was an implicit acknowledgment that the governments had failed to agree on a seabed boundary because of some thorny political issues.

The significant petroleum potential of the Timor Sea has influenced strategy and politics since before Indonesia invaded East Timor, and sovereignty over these resources remains a controversial issue.

In 1972 Canberra and Jakarta signed a seabed boundary agreement that many considered favourable to Australia. Canberra had argued that its ocean territory was determined by its continental shelf, resulting in a seabed boundary much nearer Indonesia. However, Australia and Portugal could not agree on a maritime border between Australia and what was then Portuguese Timor, now East Timor. This resulted in a gap in the boundary known as the Timor Gap.

The Portuguese felt the division should be half way between the two coastlines because they were aware this was about to become the new standard. This median-line norm for boundaries between opposing coastlines was subsequently introduced under the United Nations Convention on the Law of the Sea in 1982 and confirmed by International Court of Justice case law.

Both governments realised the seabed boundary, giving sovereignty over the oil and gas resources, was of vital economic importance. In the early 1970s Portugal and Australia issued overlapping exploration permits in the disputed area to different oil companies to strengthen their competing sovereignty claims.

Australia felt a line should simply be drawn to connect the (favourable) boundaries it had just agreed with Indonesia to the east and west, whereas Portugal expected a mid-line boundary (favourable to Lisbon) would ultimately be adopted. This confusion and frustration was a factor in Gough Whitlam's well publicised dislike for the Portuguese.

In 1975 the attitude of the Department of Foreign Affairs and ultimately the Australian Government was clearly articulated in a secret cable to Canberra from Australia's Ambassador to Jakarta, Richard Woolcott.

He suggested that "closing the present gap in the agreed sea border could be much more readily negotiated with Indonesia ... than with Portugal or independent Portuguese Timor". He also said, alluding to the potential resource wealth, that the Department of Minerals and Energy would have an interest in this.

The view that it would be strategically and economically advantageous to Australia if Indonesia took East Timor was a factor in Canberra's passivity about the invasion. Australia had every reason to expect Indonesia would "do the right thing" and simply draw a line connecting existing dots on the map, giving Australian sovereignty over the Gap's potentially vast oil and gas wealth.

Australia was then confronted with the brutality of the Indonesian occupation. This made it politically difficult, and legally dubious, to recognise formally Indonesian sovereignty over East Timor. Yet such recognition was a prerequisite for negotiating with Indonesia to settle the seabed boundary between occupied East Timor and Australia. Canberra could not legally negotiate with a country that it did not recognise as sovereign.

Australia became an international advocate for Indonesia's occupation. In 1979, after it was hoped the Timorese resistance had been destroyed, Australia began negotiations with Indonesia on the Timor Gap, signifying Canberra's formal recognition of the annexation of East Timor.

However, Australia ultimately would have reason to be disappointed with the outcome of the talks. Indonesia, believing it had given too much away in the 1972 agreement and miffed that there had been criticism from Australia over its invasion of Timor, did not agree to simply connect the seabed boundaries to the east and west.

It now did not need to concede so much territory in this oil-rich area since it had already achieved its aim -- Australia had been manoeuvred into accepting Indonesian sovereignty over East Timor. Jakarta wanted more territory and was playing hard ball. It now sought a mid-line boundary agreement that would be consistent with the new international convention.

Such an agreement would be politically unpalatable and unacceptable to Australia. Apart from the negative financial impact, Canberra, for all its trouble in becoming an ally in Indonesia's takeover of East Timor, had been given a worse deal in the Gap than on either side of it.

Observers would see a falling out among thieves, with Australia taken in and duped by Indonesia. So ensued 10 years of wrangling before a tortuous political compromise could be worked out. The result -- the establishment of a Zone of Co-operation under the Timor Gap treaty -- was a complex agreement that blurred the boundaries in a way that made it hard for most outsiders to interpret.

The Timor Gap treaty, far from being an enduring resolution of the disputed border, was the outcome of a failure to settle the underlying seabed boundary dispute.

The original Timor Gap treaty is now defunct, Indonesia having formally withdrawn. There is now a temporary memorandum of understanding between the interim UN administration, representing the East Timorese, and Canberra, pending final resolution of the issue.

A Canadian authority on international maritime boundary law, Jeffrey Smith, who is about to publish a treatise on an independent East Timor's maritime entitlements, says there is a unique opportunity to clarify the boundaries of one of the few disputed zones in the world. The East Timorese could almost certainly claim sovereignty to the mid-line of the Gap and receive significantly more desperately needed revenue.

[Andrew McNaughtan, a Sydney doctor, is convener of the Australia East Timor Association.]

Timor set for oil windfall

David Lague -- An independent East Timor would have a powerful legal case to renegotiate the Timor Gap treaty and win a bigger share of potentially massive oil and gas revenues, according to legal and oil industry experts.

The terms of the controversial treaty between Australia and Indonesia carving up the seabed oil and gas have continued under an interim arrangement with the United Nations Transitional Authority in East Timor, but a new government in Dili would have the right to renegotiate its ocean boundary with Australia. There are potentially billions of dollars in revenue at stake for an impoverished East Timor.

Since the treaty was signed in 1989, it has become accepted under the UN Convention on the Law of the Sea that the exclusive economic zone boundary between two states that are less than 400 nautical miles apart should be the mid-line between their coasts.

If a new government in Dili succeeded in redrawing the boundary to this mid-point, the bulk of the oil and gas Australia shares in the Timor Gap would fall in East Timorese territory.

An oil and gas industry consultant and Timor Gap analyst, Mr Geoffrey McKee, believes the birth of the new nation will clear the way for a new deal. "All our research points to the fact that a settlement in accordance with international norms would be in East Timor's favour. I think this will be settled by international arbitration. If it goes to arbitration East Timor can't lose."

A Canadian lawyer and oceanographer, Mr Jeffrey Smith, has thrown his weight behind legal arguments that East Timor could do better from a new deal with Australia. He is about to publish a lengthy legal paper on East Timor's maritime entitlements, and he also believes that a middle line will become the new boundary.

The Howard Government and the oil industry have been anxious to preserve the existing arrangements to exploit the Timor Gap resources during the transition. A spokesman for the Minister for Foreign Affairs, Mr Downer, said yesterday that the Government was happy with existing arrangements but the future of the treaty was under "active consideration".

The convener of the Australia East Timor Association, Dr Andrew McNaughtan, said yesterday that it would be up to the future government of East Timor to decide how it would deal with Australia on the Timor Gap, but there was now an opportunity to agree on a legitimate oceanic border. "The Timor Gap treaty is a pretty shonky piece of work that is a by-product of Indonesia's illegal occupation and annexation of East Timor and Australia's collusion with Jakarta over this," he said.

There are projections from oil industry sources that government revenues for oil alone from the Bayu-Undan field in the co- operation zone could reach $5.2 billion over 24 years if this went ahead. Under existing arrangements, this would be split evenly between Australia and East Timor. A consortium headed by Phillips Petroleum late last year announced that it would go ahead with initial development of the field.

Critics of the Timor Gap treaty say that Australia had expected a generous deal from Jakarta after recognising its rule over East Timor but that Indonesia had taken a tough line after conceding too much in earlier agreements on common oceanic boundaries. They say the complex treaty with its sharing arrangements demonstrates that the two sides failed to agree on a border.

After initially condemning the treaty, East Timorese leaders have assured the oil industry and the Australian Government that they want the development to go ahead under existing arrangements while East Timor is under UN control, but there have been signals that they will want the border renegotiated as they begin to redevelop their economically backward homeland.

However, in this sensitive transitional phase, the leadership is unwilling to antagonise Canberra or deter the oil industry with claims for a bigger share of revenues.

World Vision workers strike in East Timor

Akara Leon and Vanja Tanaja, Dili -- Sixty East Timorese workers at the aid agency World Vision walked off the job and demonstrated on April 3, demanding an explanation from management for the sacking of eight security guards.

World Vision management claimed the organisation lacked funds and needed to reduce staff, an explanation which failed to convince the workers who demanded to be told the full story of their employer's financial position. If it's as bad as management say it is, maybe World Vision should leave East Timor, the strikers argued.

Strikers demanded an assurance from World Vision that it would stop treating them as "objects", would cease arbitrary sackings without notice and would stop bringing more workers into the country.

World Vision asked for a representative of the National Council of Timorese Resistance (CNRT) to mediate but, as World Vision was unwilling to go to the CNRT office, the workers called on Avelino da Silva, the secretary-general of the Socialist Party of Timor and a member of the National Consultative Committee which advises the United Nations, to represent them. Da Silva also demanded that World Vision explain in full its reasons for the sackings.

Management eventually gave in to some of the workers' demands, agreeing to pay six weeks' wages in lieu of notice and to give each worker building materials sufficient for an eight-metre by nine-metre house. Workers warned that they would bring more people out to demonstrate if the agency did not cease arbitrary sackings.

World Vision's programs in East Timor include one for the provision of roofing kits in Bobonaro, Ermera, Liquica and Aileu districts, as well as others in the areas of health, food and agriculture.

Meanwhile, on April 7, workers at the office of the United Nations High Commission for Refugees (UNHCR) went on strike, citing broken management promises to pay workers a 5000 rupiah ($1.25) meal allowance.

The strikers were also unhappy that those driving road vehicles received higher wages than those operating heavy vehicles and machinery, and that wages were frequently paid late. They demanded an increase in daily wages and overtime rates and that a workers' compensation scheme be put in place. UNHCR forklift drivers, employed on a 10-day contract, receive only 40,000 rupiah ($10) a day. The workers have decided to continue their strike, in the absence of a response or offer to negotiate from UNHCR management.
 

Government/politics

The mess in Megawati's lap

Jose Manuel Tesoro -- One can always rely on the Indonesian Democratic Party of Struggle for a public spectacle. At its six- day party congress, which ended April 3 in the Central Java capital of Semarang, its supporters held the regular loud motorbike rallies. Red party flags were ubiquitous. Stalwarts dutifully dyed their hair crimson or drew the party's black-bull symbol on their bodies. And of course there was the unavoidable scent of menace: from the barely disciplined crowds to grim security officers who harassed journalists, observers and delegates.

The fact that so little has changed with PDI-P, as it is known in Indonesian, might comfort a few. Since its last congress in October 1998, the former outcast party has become the largest part of Indonesia's ruling coalition. It still retains its character as a party of the largely poor and disaffected who have sworn loyalty to party standard-bearer Megawati Sukarnoputri, now the vice-president.

Yet the party's lack of direction has been more a cause of confusion and worry, even among its loyal cadres. On April 2, Megawati, daughter of Indonesia's first president Sukarno, was re-elected as chairperson by acclamation.

There had been no question that she would win. But some senior party members wished the victory had been served up in a more democratic manner. The decision to avoid an open election completely shut out two party figures, Eros Djarot and Dimyati Hartono, who had planned to contest the chairman's position. The two were not appointed to the party's new executive board, which was elected during the same congress. Neither were they allowed to attend the opening ceremony.

As most parties in Indonesia are, PDI-P is a combination of image and reality. The face it presented to voters -- Megawati's lineage, plus her suffering at the hands of Suharto -- helped it win 33.8% of the popular vote last July, which translated into 154 seats in the 500-member parliament. This was largely thanks to Djarot, a film-maker, publisher, and gadabout intellectual, who had helped craft Megawati's public persona via conversations with the press (especially foreign media) and speech-writing. His stated goal in contesting Megawati's position was that he wanted to modernize the party -- to turn it from the gaggle behind Megawati into an organized and principled political force. (Hartono is a party veteran, and his challenge seemed intended mainly to introduce healthy competition in choosing a chairperson.)

The reality is that PDI-P is far from modern. It relies more on Megawati's drawing power than anyone's skill at strategy or organization. As a group, it falls back on Indonesia's feudal political practices -- the ties to religion or region, the dependence on patronage -- which belies its name as a party of democracy.

And it is traditional politics that is the forte of Taufik Kiemas, Megawati's husband. Keimas is a small businessman, and he dominates the party's rank and file. He undoubtedly saw Djarot's growing influence as a challenge. The shutout of Djarot is an unquestioned victory for Kiemas -- but at the cost of disaffection among many of the party's leaders.

What happens now? The short answer: drift. For one thing, given the unseemly split, conservatism will be the natural reaction (which incidentally strengthens Kiemas). It would be unlikely now for PDI-P to come to grips with its failure last October, when the party's arrogance coupled with inexperience cost Megawati the presidency. Despite holding numerical majorities in many provincial and city councils, PDI-P has lost mayoral and provincial races it should have been able to win. Instead, look for more corruption scandals as old habits dominate.

(Already 16 MPs from the province of North Sumatra have turned in their resignations over charges that they threw the election of the province's speaker.) There could be high-level defections -- that is, if other parties were not just as mired.

But do not count on Megawati to come to the rescue. She seems powerless to heal the divisions in her party. Another reality of PDI-P is that its revered leader is a very imperfect politician, ferociously private and often aloof and insensitive even to her own followers. Journalists who show up unannounced on her doorstep are rarely welcomed -- a surprise for those who arrive expecting an Indonesian Aung San Suu Kyi, enthusiastic to discuss principled democracy.

There are those who see her loss in last October's presidential polls as the logical consequence of her flaws. And if the country's largest party fails to live up to its potential or, worse, disintegrates, the fault will probably lie, too, on the shoulders of Sukarno's daughter.

PBB seeks to impeach Gus Dur over communism

Jakarta -- The House faction of the Muslim Crescent and Star Party (PBB) called on the People's Consultative Assembly (MPR) on Friday to hold an emergency session to demand the accountability and possible impeachment of President Abdurrahman Wahid, popularly known as Gus Dur.

Faction chairman Achmad Sumargono told reporters that the President violated his oath of office and the 1945 Constitution by seeking to lift the ban against communism. "We are lobbying the other factions," Achmad said when asked about the faction's move.

PBB, a minority faction in the House, along with a number of other Muslim parties and the National Mandate Party (PAN) forms the Axis Force which pushed Abdurrahman's candidacy in the presidential election in October. It is not immediately clear to what degree its demand for impeachment is supported by the PBB executive board, whose chairman Yusril Ihza Mahendra serves in Abdurrahman's Cabinet as minister of law and legislation. The President has proposed to lift the 34-year ban on communism, Marxism and Leninism saying that the decree has been responsible for the killing of hundreds of thousands of innocent people who were accused of being communists under president Soeharto.

His suggestion has prompted mass protests in the last month, and has been followed by calls for his impeachment. "If the decree [banning communism] is lifted, then communism will grow robustly again in Indonesia because the Indonesian Communist Party (PKI) will once again become legal," Achmad said.

Achmad disputed Gus Dur's contention that the ban on communism was infringing on people's rights. "The decree was issued because of the bloody coup by PKI to topple former president Sukarno's government," he said.

He also said Gus Dur's policies on fuel prices and civil servants' salaries would widen the gap between rich and poor and turn Indonesia into a fertile breeding ground for communism to flourish.

The Golkar Party and National Awakening Party (PKB) factions dismissed PBB's demand for an MPR session before the next scheduled meeting in August. The two parties are respectively the second and fourth largest factions in the House.

Golkar chairman Akbar Tandjung, who is also the House speaker, said he disagreed with the contention that the President's proposal to end the ban on communism violated the constitution or his oath of office. While regretting Gus Dur's proposal, Akbar pointed out that the decision to lift the decree was in the hands of the MPR, and not the President. "If PBB objects to the President's intention to revoke the decree, it should say so in the MPR's general session in August," he said.

Muhaimin Iskandar, deputy House speaker from PKB, said the President was within his rights to propose ending the communist ban and PBB should respect his right to freedom of speech. "It is wrong for PBB to try to silence Gus Dur," he said.

PKB is a party that relies largely on the support of members of the Nahdlatul Ulama (NU) Muslim organization which Gus Dur chaired until his election to the presidency in October.

In Surabaya, NU chairman Hasyim Muzadi vowed on Friday to defend Gus Dur against any attempt to unseat him. "He is the President. NU members will defend him for constitutional reasons. It has nothing to do with the fact that he was former NU chairman," Hasyim said. On Gus Dur's call to end the communist ban, he said the President was a democrat who respects human rights.

Central Axis may abandon Wahid

Jakarta -- Three elements of the Central Axis, the main supporters of President Abdurrahman Wahid in the latest general session of the People's Consultative Assembly (MPR), have hinted that they may withdraw their support for Wahid's administration.

Leaders of the three parties -- the United Development Party (PPP), the National Mandate Party (PAN), and the Crescent and Star Party (PBB) -- expressed their dissatisfaction over a number of policies made by Wahid, better known as Gus Dur.

Husnie Thamrin, a PPP deputy chairman, said that the party will discuss the performance of Gus Dur and his leadership in the upcoming party national working meeting. "During the meeting, we will make a decision on whether we will still support Gus Dur or not," said Thamrin here yesterday.

Chairman of the Reform Faction in the House of Representatives (DPR) Hatta Rajasa said Indonesia needs a leader who is not only democratic and a reformist, but also someone who does not spark conflict.

He stressed that the MPR annual session could be changed into an MPR special session which could be used to evaluate President Wahid's performance. "Indonesia has many leaders who are recognized by the people like Megawati Soekarnoputri, Akbar Tandjung, Hamzah Haz, and Amien Rais," said Rajasa, who is also a PAN's legislator.

Achmad Soemargono, a PBB de-puty chairman, said that Wahid has violated the constitution because many of his statements have caused horizontal conflicts in the society. Therefore, he urged all factions in the House, to use the momentum of the annual MPR session to evaluate the performance of President Wahid's administration. "As a consequence of any violation against the constitution it is the MPR special session [which will be used to evaluate president's performance]," according to Soemargono.

PPP, PAN and PBB are the three main parties of the Central Axis, which became the main sponsor of Wahid's presidential bid in October 20, 1999. PPP has 59 seats in the House, PAN 35 seats and PBB 12 seats. The Central Axis is also supported by other smaller Islamic parties.

Wahid defeated Megawati in the presidential election after the central Axis was supported by Golkar and Gus Dur's national Awakening Party (PKB). The Indonesian Democratic Party of Struggle (PDI-P), chaired by Megawati, won a majority vote in the June 7 general election, but she did not obtain significant support from other parties.

The latest statement which sparked public debate over President Wahid was his wish to lift the MPR decree on the ban on communism. Most of the Central Axis elements reject the president's proposal. PPP is also unhappy with the sacking of PPP Chairman Hamzah Haz from his cabinet position. "Pak Hamzah Haz has been thrown in to rubbish can," said Thamrin.

Although the party decision will be decided at the party meeting, Thamrin himself said that PPP needs to revise it's role in the President Wahid administration. He said that as a party which won significant seats in the House of Representatives, PPP has no significant role in the government.

Thamrin also said that his party is ready to cooperate with PDI- P. "It is very possible that PDI-P will cooperate with Golkar and the Central Axis," Thamrin said. He was referring to the possibility of making Megawati president in the next August MPR session. "If such a cooperation has a mutual benefit, why not," he said, adding that he has met with Megawati several times.

Wahid says South South co-operation important

Havana -- Indonesian President Abdurrahman Wahid in his address during the opening of Group of 77 (G-77) Summit here has stressed the importance of co-operation among South countries for the development of economy and democracy.

The G-77 Summit was opened here on Wednesday by the group's chairman, President Olesegun Obasandjo of Nigeria. According to Wahid, G-77 member countries are facing problems, not only among themselves but also in relation to developed countries in the North, which would hamper progress. G-77 member countries should help one another, Wahid said.

On the occasion, Wahid underscored the urgency for co-operation in promoting South solidarity. "We should work hand-in-hand to overcome difficult situations," he said.

The G-77 groups developing nations and the summit will end today. The opening day featured Cuban President Fidel Castro and United Nations Secretary General Kofi Annan as well as presentations by other countries.

Jitters plague Jakarta in Wahid's absence

Vaudine England, Jakarta -- A familiar sense of insecurity was afflicting Jakarta yesterday. With President Abdurrahman Wahid overseas, politicians as sailed his alleged over-confidence amid small protests against various perceived ills.

House of Representatives Speaker Akbar Tanjung said at the weekend Mr Wahid and his Government "may face a sort of impeachment from the people if social unrest continues to escalate".

About 500 Muslims dressed in blue and white robes and carrying swords and machetes gathered at the parliament yesterday to demand the right to go to the eastern Maluku Islands to fight a holy war against Christians.

Meanwhile, reporters who tried to visit a training camp for the jihad fighters at Bogor, near Jakarta, were violently prevented from doing so. "We were asking our way to the main post to seek permission to look around in the camp when several youths fell on us and started beating us up," one journalist said.

Witnesses watching the camp from outside said the participants were practising martial arts using machetes and swords, and nearby residents said they felt scared and nervous.

The jihad demonstrations, replete with weaponry on the capital's main streets, have raised public concern at the failure of police to disarm the men or intervene in the protests and training. Police said yesterday they had so far not intervened for fear of provoking violence, but they would act if it became clear the protesters planned to use their weapons.

According to Mr Akbar, a crisis of confidence in the Government could evolve from the mass rallies by Muslim groups, and the House could press the People's Consultative Assembly (MPR) to call for a special session to appraise the President's performance.

The atmosphere has not been improved by the Government's failure to meet a deadline for crucial economic reforms, needed to justify the next instalment of funding from the International Monetary Fund (IMF).

State Secretary Bondan Gunawan maintains that Mr Wahid's position is secure, despite his absence, because of broad support among most Indonesians. "We are now learning how to practise democracy," he said.

Some commentators have even suggested that Mr Wahid's comments in favour of fresh discussion about communism were intended as a threat to the IMF, to force through new funding regardless of an agreed schedule of reform and reward. This conspiracy theory is barely plausible, however, as Mr Wahid has long been renowned for his religious and political tolerance, and is committed to restoring Indonesia's reputation on the world stage.

Threatened public transport chaos failed to seriously damage the capital's traffic flow, following the cancellation around midnight on Sunday of a strike planned by private bus companies angry at a delay in fare rises.

Ban on communists will stay, says Amien

Jakarta -- The chairman of Indonesia's People's Consultative Assembly, Mr Amien Rais, said yesterday that lawmakers would block a plan by President Abdurrahman Wahid to end a 34-year-old ban against communists.

"I give a 100-per-cent guarantee that the decree will not be revoked," the official Antara news agency quoted Mr Amien as having said in an interview with a Jakarta radio station.

He said most Indonesians did not want communism to reappear as it contravened the national philosophy of Pancasila, which called for a belief in God. "Communism has no place in Indonesia because it is based on atheism," he said.

Indonesia's Communist Party, once the world's largest in membership, was stamped out and outlawed by the nation's armed forces under former President Suharto after it was accused of staging an abortive coup in 1965. Thousands of communists and leftist supporters were killed and many more were imprisoned.
 

Aceh/West Papua

Aceh congress postponed by troop deployment

Banda Aceh -- A major congress to forge peace in Aceh scheduled to start next week has been delayed indefinitely following the massive deployment of security forces in recent weeks.

Organizers of the Aceh People's Congress (KRA), in announcing the delay, say the presence of so many police officers in Banda Aceh has unnerved the local people and the invited participants. "Security in Banda Aceh and neighboring Aceh Besar regency is not getting any better. We have no choice but to postpone the congress," Abdullah Ali, deputy chief of organizing committee, said on Wednesday evening.

The organizers have not set a new date for the week-long congress, originally due to start on April 22. "We're waiting for further developments because we have seen more violence recently," Abdullah said.

Banda Aceh, the provincial capital, and Aceh Besar have been rocked by a series of bombings and arson attacks in the past week. Local people were reportedly also worried by the arrival of a fresh batch of security forces in the area.

On Thursday, 400 members of the police's elite Mobile Brigade disembarked from ships at Malahatyati Port east of Banda Aceh. Two days earlier, 580 police officers landed at Kreueng Geukeuh Port in Lhokseumawe, the capital of North Aceh.

"We don't feel comfortable with so many troops around us," Abdullah said. "People are afraid that their presence will trigger more unrest because the chances of conflict with rebels has also increased." Dozens of students marched to the Aceh Legislative Council building on Thursday and later to the Aceh Police Headquarters to demand that Jakarta withdraw all troops from the province.

State Minister of Human Rights Affairs Hasballah M. Saad confirmed in Jakarta on Thursday the delay. "God willing, the postponement will be only for two weeks. But it all depends on the security condition in Banda Aceh," he said.

He also confirmed the recent deployment of police officers, stressing that they were sent to secure the trial of military officers, accused of human rights abuses, scheduled to start in Banda Aceh on Monday. Hasballah said the government played no role in organizing the congress. "It is only a coincidence that the dates for the joint tribunal and the congress were close," he said.

The minister also disclosed that the government and senior members of the Free Aceh Movement (GAM) were scheduled to open talks this week to find a solution to the Aceh problem. "The meeting will take place somewhere in Europe," he said. "Actually a series of talks took place earlier between government officials and GAM figures abroad. President Abdurrahman is very committed to solving the Aceh problem peacefully," he said, refusing to give details about the meeting.

President Abdurrahman Wahid has voiced support for the congress, although he has ruled out independence as an option for Aceh. Abdurrahman has also vowed to protect any members of GAM who wish to attend the congress.

Meanwhile, unidentified gangmen fired at a trailer truck belonging to Exxon-Oil Inc. at Jl. Lem Pipa Km 24 in the industrial regency of North Aceh on Wednesday. A staffer identified as Aswar Nahar was injured in the third attack on Exxon Oil facilities this week. North Aceh Police chief Lt. Col. Syafei Aksal said the truck was ambushed even though it was escorted by members of the company security unit.

In West Aceh, an armed gang attacked a police outpost in Krueng Sabee on Wednesday. A day earlier, a women was killed when gunmen tossed a grenade at a police truck, missed the truck and hit a kiosk at Padang Kling of Teunom district, Lt. Col. Satrya Hari Prasetya of West Aceh Police said.
 

Labour struggle

State aircraft manufacturer to lay off 2,500 workers

Jakarta -- Indonesia's state-owned aircraft manufacturer, PT Nusantara Aircraft Indutries (IPTN) will lay off another 2,500 workers over the next 10 months through early retirement, reports said Saturday.

The company, the brainchild of former president B.J. Habibie, laid off some 5,000 of its 15,750 staff last year under the retrenchment program, and the new cuts will trim the workforce to some 7,500, the Jakarta Post said.

"The ideal number is 7,500," the Post quoted Jusman the company's human resources development and administration manager as saying. Jusman added that to fund the huge amounts of severance pay needed, the equivalent of a year's pay for each employee, IPTN would sell off 46 houses it had built for expatriate staff in the West Javanese city of Bandung.

IPTN assembles several types of helicopters and produces small passenger planes in cooperation with Spain's CASA.

Teachers begin strike in defiance of government

Bogor -- Some 7,000 teachers began their three-day strike on Thursday to demand, among other things, a 300 percent increase in their salaries, defying the government's call on them not to do so.

The strike, in which teachers from both state and private schools participated, paralyzed school activities in the town, forcing students from kindergarten to senior high school to stay home. The teachers threatened to continue their strike if there were no signs that their demands would be fulfilled by the government by Saturday.

The head of the Bogor chapter of the Indonesian Teachers Association (PGRI) Aim Halim Hermana solicited support from local universities for their strike. "If they fail to follow suit, they don't support our struggle," Aim said. He admitted that not all schools were closed down on Thursday since some teachers told their students about the strike long after it was too late. But for Friday and Saturday, he called on all the schools to stop activities, and advised the teachers to give their students homework.

Aim acknowledged that he discussed the strike with local officials of the National Education Ministry which earlier asked the teachers to cancel the strike. But the teachers decided that the strike should go ahead and that homework would be given to the students in place of class time.

Meanwhile, in Yogyakarta, education observer Suyanto said that President Abdurrahman Wahid had every right to reject the teachers' demands, but urged the president to consider their situation. "The problem is closely related to rewarding the teachers whose welfare has been neglected for years. It's time to give them more of our concern," Suyanto who is also the rector of the State University of Yogyakarta, told The Jakarta Post on Thursday.

That's why, he said, it was understandable if teachers are staging protests demanding salary increases. "I feel it's okay for them to stage rallies, but I do hope they would not continue it by refusing to teach if the government rejected their demands. The consequence would be very hard to bear in the long term," he said.

The strike has drawn concern from President Abdurrahman Wahid, who is in Havana for the Group of 77 summit. Speaking before Indonesians living in Cuba, Abdurrahman called on the teachers to maintain composure, saying the government is considering measures to meet their salary demands. "Teachers should understand that despite their right to strike, it doesn't mean that they are free to just do it," the President said.

Abdurrahman said the last Cabinet meeting on Wednesday should have dealt with the matter. "It should have been decided that the government would increase teachers salaries," he said.

After the Cabinet meeting presided over by Vice President Megawati Soekarnoputri, Minister of National Education Yahya Muhaimin promised the government would double the salaries of the nation's teachers.

Teachers protest in Bali and Java

Denpasar -- Hundreds of teachers and members of the Bali chapter of Indonesian Teachers Union (PGRI) staged a street demonstration here on Friday urging the government to take concrete steps in improving the welfare of the nation's teachers.

Unlike the noisy protests by teachers in other cities over the past week, the demonstration in Denpasar was one of silence. As they marched to the Bali Legislative Council, the teachers -- dressed in their PGRI uniforms -- did so without uttering a sound.

"Our actions are different from the others. Because Bali is a major tourist destination, we prefer the use of silence," PGRI Bali chairman I Gusti Lanang Jelantik said. "We guarantee the protest has not affected classes. Each school has sent only one delegate," he said after a dialog with council members to discuss their demand for higher salaries.

The PGRI chapter in Bali boasts 42,000 members. There have been similar protests elsewhere in Indonesia in the past week, all calling for an increase in salary. In some regions, teachers have threatened to go on strike or boycott the final national school examinations which will begin next month.

In contrast to the silent protest, the dialog was far from peaceful, with teachers talking down a council member who was making a long-winded speech. "We are fed up with empty promises and pointless flattery. We have been a political commodity for decades and we now want the government to take serious steps to make our lives better," said a teacher. The teachers demanded a 100 percent increase in their monthly salaries and a 300 to 400 percent increase in functional allowances.

In Semarang, 20 members of the Committee for Teachers' Welfare (KP2KG), marched to the Central Java Legislative Council calling on its support for teachers who want remunerations. "We come from all parts of Central Java to represent our 250,000 colleagues. We support the teachers' struggle for a better life," committee chairman Taruna said. He warned that the committee would bring thousands of teachers to the streets if the government failed to heed its demands.

In Bandung, more than 100 students of the teacher training University of Pendidikan Indonesia (UPI) marched to the West Java legislative council demanding that the government overhaul the nation's educational system. The student spokesman Wasmin stated that education could be improved if the government allocated more money, including raising the salaries of teachers. "Teachers deserve better wages. It will prevent them from having to do other kinds of work to make ends meet," Wasmin said.

Teachers' strike stalling recovery, says Gus Dur

Jakarta -- President Abdurrahman Wahid has criticised the decision by teachers to strike for higher wages, saying that their action could damage the country's economic recovery.

His comments were clearly a response to a series of protests by state school teachers across the country demanding a 300 per cent pay hike and an increase in their daily allowance.

Speaking to reporters in Havana, Cuba, the President said it would be unacceptable for teachers to go on strike if their demands are not heeded. "Teachers should understand. Although they have rights, expressing their opinions does not always mean they are free to go on strike," the Indonesian Observer newspaper quoted him as saying. He added that the strike will stall the country's recovery efforts, stressing that a teacher's strike would disturb many people.

His comments come as Education Minister Yahya Muhaimin promised to fight on teachers' behalf and to try to double their salaries. But the minister said he had no idea where that money would come from. "I beg the teachers not to continue their strike. God willing, the government will be able to improve their situation," he said.

Unimpressed protesters said that they would continue with their agenda and dozens of schools south of Jakarta closed their doors yesterday as thousands of teachers entered the second day of a three-day strike. However, only 7,000 teachers of an estimated 1.5 million across Indonesia were off the job.

Teachers have been among the lowest paid of public servants for many years in Indonesia and for many teachers of state schools, monthly salaries do not cover their daily needs. A teacher with nine years of service, for example, may earn as little as the equivalent of US$22 a month.

Jakarta teachers protest at palace for higher pay

Jakarta -- Hundreds of teachers, demanding a massive pay hike, demonstrated in front of the presidential palace in central Jakarta yesterday in a third day of protests.

Singing songs, the protesters -- clad in teachers' batik uniforms -- demanded to see Vice-President Megawati Sukarnoputri who was due to chair a Cabinet meeting.

A delegation from the teachers conveyed their demands to Ms Megawati inside the Merdeka Palace while others protested outside. "Teachers: a general's rank but a corporal's pay," said one of the posters they carried, while another said "Smart pupils don't want to become teachers because teachers have dismal salaries."

Ms Megawati was handed a petition, carrying the teachers' demand for a 100 per cent salary rise and increases in their allowances and compensation scheme. The petition, signed by the association's Jakarta chapter deputy chairman Srifin Rusmana, also threatened strikes and mass disobedience if the demands were ignored. President Abdurrahman Wahid is overseas on a world tour.

The demonstration followed similar action in several Indonesian cities over the past week and came about two weeks after other civil servants had been given significant pay increases. Many schools in Jakarta have been closed since Monday because of the strike. Several teachers have said they would boycott final student examinations to pressure the government to boost their salaries.

Meanwhile, the leaders of the House of Representatives have expressed sympathy for poorly-paid teachers but stopped short of endorsing the strike. "Teachers deserve a significant hike in their salaries because our children's futures are in their hands," said House Speaker Akbar Tandjung on Tuesday. However, he made no promises as to whether the House would push for an increase within this fiscal year.

The average salary of teachers in Indonesian state schools is 250,000 rupiah (S$60) a month, less than the official minimum wage in Jakarta. The Association of Indonesian Teachers has hailed the protests as the culmination of decades of frustration.

Jakarta teachers take to the streets for higher pay

Jakarta -- Thousands of teachers closed schools in at least five Indonesian cities to protest a new government pay policy for senior civil servants and to demand a 300 per cent increase in basic salaries and a 500 per cent increase in allowances.

The teachers -- from elementary, junior and senior high schools in Bogor and Tangerang in West Java -- threatened to launch a massive three-day strike starting tomorrow and boycott final exams if the government failed to meet their demands.

The rally at the Parliament building followed numerous strikes on Monday, which were organised by local chapters of the Indonesian Teachers' Association and the Committee for the Fight for Better Teachers' Prosperity.

Teachers -- among the lowest paid of Indonesia's civil servants -- said the government's policy of allowances and compensation for senior officials was unfair and would cause tension.

Because of the nature of the scheme, in which the increase vary according to position and conditions, vast gaps in income have appeared between workers with the same length of service and between senior and junior staff.

The chairman of the committee which coordinated the rally, Mr Wildan, said that while they respected government efforts to improve their welfare, not enough was being done to alleviate their plight.

The government has set aside Rp 8.6 trillion (S$2 billion) for the allowances of nearly 6.5 million civil servants from this month. The allowances of elementary, junior and senior high school teachers, lecturers and researchers were recently raised by 100 per cent, 50 per cent and 30 per cent, respectively.

But some teachers have complained that although their monthly allowance was raised by 100 per cent, their monthly income will remain at no more than Rp150,000. The teachers' monthly allowance rose from Rp 25,000 to Rp 50,000.

On Monday, thousands of teachers refused to take classes from elementary to senior high school in Karawang, 45 km east of here. In Bogor, West Java, a massive strike was staged with nearly 7,000 teachers taking to the streets, bringing school activities in the town to a complete standstill. Similar action was held by hundreds of teachers in nearby Sukabumi, 60 km south of Bogor.

Over in Jayapura -- the main town in the Indonesian province of Irian Jaya -- about 200 local teachers, backed by the parents of some students, picketed the provincial parliament. They called on the MPs to help them get a pay raise, housing and transport facilities. "When is the fate of teachers given any attention?" said one of their posters.

In the Central Java town of Bantul, 1,000 teachers picketed the office of the local district head who was presented with an undersized shirt to symbolise what the small pay of teachers could afford.

Education Minister Yahya Muhaimin has called on teachers to refrain going on strike. "I ask teachers across the country not to carry out the threat because it will affect students," he said.

Mr Yahya, one of the few ministers who have openly opposed the rise in the allowances of senior officials, said he was already discussing increasing teachers' salaries.

Gudang Garam suspends operation after strike

Surabaya -- Giant publicly listed clove cigarette producer PT Gudang Garam in Kediri, some 125 kilometers southwest of here, suspended operations for five days starting on Tuesday following a huge labor strike for better conditions.

Reports said that a group of workers blocked delivery trucks from leaving the factory compound on Tuesday morning. Others persuaded thousands of colleagues, who were approaching the factory to start work, to join in the strike. No clashes were reported at the factory.

Disgruntled workers had staged a series of demonstrations since March 30 over arbitrary actions by the management, workers said. The workers are demanding higher salaries, changes in their status and transparency on the part of management.

The protests were a prelude to Tuesday's strike, which was triggered by the resignation of two drivers' assistants, Poniman and Suyanto. The two both got Rp 12,000 extra when they resigned. This apparently offended the workers, who thought it was severance pay. They then announced a strike to demonstrate solidarity. The management, through its spokesman Mohammad Hasyim, said the total of Rp 24,000 for Poniman and Suyanto was supposed to be leave pay for days off in January and February, not severance pay.

Hasyim also confirmed the suspension of the company's operations, saying that according to a circular signed by the human resources development and general affairs manager, the suspension was meant to avoid the situation from worsening, which could affect both the workers and the general public. The letter also said that during the five-day closure, casual workers would not get any compensation. "They must reregister if they want to continue working in the company," the letter said. The circular also said the strike was against the law, but gave no detailed explanation.

According to Hasyim, the management was still discussing the strike seriously, but no deals had been reached with the workers. "As a publicly listed company, all substantial policies must get approval from shareholders. Moreover, some of the commissioners are abroad. A decision is expected to be issued on April 17," he said. Hasyim was not available to answer questions relating to how much the 42- year-old cigarette company would lose during the five days.

Meanwhile, Kediri Police chief Lt. Col. Ign. Soembodo said some 500 police officers had been deployed to control the strikers. Additional police officers from the nearby town of Tulungagung are included in the number. "Luckily there has been no violence," he said. The management has strongly denied that personal conflict within the Wonowidjojo family, who own the company, was behind the strike.

Jakarta averts transport shutdown

Robert Go, Jakarta -- Indonesia's government reached a preliminary agreement with bus operators on fare increases and additional government subsidies -- averting a possible shut down of the capital's transportation system at the eleventh hour.

The actual quantum of the fare increase will be decided by the end of the week. Fourteen privately-owned firms, operating over 6,000 of Jakarta's public-transport vehicles and united under an umbrella association called Organda, threatened to stop services yesterday should the government keep a freeze on ticket prices which date back to before the economic crisis hit three years ago.

Organda representative Aip Sjarifuddin confirmed that a late Sunday meeting with city officials led to his organisation's consent to run at least partial service for the day.

Mr Aip also explained that city security officers had also warned of possible rioting by the public and further disruption of the city's already fragile economy and social stability should Organda members press ahead with their strike plan.

After a morning meeting yesterday with Organda representatives, Jakarta Governor Sutiyoso said: "I urge the public to understand that a tariff increase is unavoidable and will be effective as soon as the exact figures are negotiated. "Organda has agreed to resume normal operations in the meantime, but with a guarantee that there will be a tariff increase."

The government, aiming to keep consumer costs down, has been supporting public transportation in Jakarta for the last few years. The list of subsidised costs includes terminal, vehicle registration and travel permit fees. But Governor Sutiyoso stressed that fare increases will not be as high as the 100 per cent to 300 per cent range proposed by Organda.

He also referred specifically to one Organda complaint -- that inflated spare parts costs have forced mechanics to cannibalise almost 40 per cent of their fleet for components to be used on roadworthy vehicles. On this point, he conceded that the government would consider exemption of importation taxes on four categories of spare parts including engine oil, brake pads, tyres and transmission components.

But in indicating that his negotiators would play hardball on the issues, he pointed out that the government is losing millions of rupiah a year paying the existing levels of subsidies.

Schools close while teachers take to streets

Bogor -- Most state schools in Bogor and Sukabumi were closed on Monday as teachers took to the streets to protest the government's pay policy in what was seen as a prelude to a nationwide strike planned by teachers this week.

At least 3,000 members of the local chapters of the Indonesian Teachers Union (PGRI) marched from Sempur sport field to the Bogor legislative council demanding a 300 percent hike in their salaries.

The teachers from elementary, junior and senior high schools in Bogor and nearby Sukabumi also demanded higher structural allowances, in line with the government's decision to increase such allowances for top civil servants by up to 9,000 percent beginning in April. The spokesman for the group, Sahiri Hernawan, said the teachers should not be treated like government workers. "Teachers should be paid as teachers, not as civil servants .... Our salaries must be managed under an educational paradigm, not the bureaucracy."

In Bantul, near Yogyakarta, more than 1,000 elementary school teachers gathered outside the regency office to demand a 100 percent increase in their salaries and the cancellation of the hike in structural allowances for top government employees. Taking part in the three-hour protest were teachers from Bantul and nearby regencies, all from the local PGRI chapters.

Surtini, a teacher at Pandansimo elementary school, said she and her husband could barely make ends meet on their current salaries. "I've been teaching for 20 years and I only get Rp 536,000 (US$71) a month," she said. The authorities in Bogor and Bantul promised the teachers they would raise their concerns with the central government in Jakarta.

The two protests were seen as a foretaste of things to come, as teachers have threatened a nationwide strike from Thursday to Saturday to press their demands. The threatened strike comes as schools are preparing their students to take national final examinations scheduled for May.

The government appealed to teachers on Monday to reconsider the strike, promising to look into their demands. "I ask teachers across the country not to carry out the threat because it will affect students," Minister of National Education Yahya Muhaimin said on Monday.

Yahya said he took the threat of a national strike seriously, but added that the government had no plan to penalize striking teachers. "No, I will not sanction them, but [I ask them to] please think of the students," he said. Yahya broke ranks with President Abdurrahman Wahid, saying he did not support the government's plan to increase structural allowances for top civil servants, adding that the money would best be used to increase the salaries of teachers.

Coordinating Minister for People's Welfare and Poverty Eradication Basri Hassanudin said teachers should trust the government's political will to improve their welfare. "There will be further discussions on raising teachers' salaries. Please be patient and do not go on strike," he said.

Basri said teachers already had been given a 100 percent increase in their functional allowances, in addition to the 30 percent across-the-board increase in civil servants' salaries beginning on April 1.

Although the striking teachers on Monday used the PGRI banner, the union's leaders in Jakarta denied the organization was behind the planned nationwide strike. PGRI chairman Muhammad Surya told The Jakarta Post the union did not recommend the strike and had asked teachers to air their concerns without abandoning students.

He said that teachers could, for example, prepare a package of work for students to complete in class if they were going to be absent from school for several days. "We asked them to stage protests that would not disrupt the learning process. We only want to draw public attention to our condition. We have no intention of harming students' interests," Surya said. Any call for a strike came from organizations other than PGRI, he said without specifying which organizations he was alluding to.

The government has doubled the functional allowance for teachers to between Rp 90,000 and Rp 140,000 a month, with the increase taking effect on April 1. "This 100 percent hike is very insignificant," Surya said, adding that PGRI had already proposed to the government an increase in functional allowances to between Rp 150,000 and Rp 900,000. "We only ask for better appreciation, we don't intend to burden the government. Any improvement in our salaries will benefit the general public because we are responsible for their children's education," he said.
 

Human rights/law

Judge's verdict for sale?

Jakarta -- Indonesia's Supreme Court was red-faced yesterday when newspapers splashed the transcript of a tape recording in which one of its clerks could be heard saying that a verdict was for sale to the highest bidder.

The 20-minute 1997 recording was released to the local press by lawyer Kamal Firdaus in Jakarta on Wednesday in the presence of Supreme Court secretary-general Pramono and several lawyers, the Kompas daily said. "I am hurt. This is sickening, embarrassing and saddening for law enforcement in Indonesia," Mr Pramono said after listening to the taped conversation.

The clerk, identified only as Mr Anhar, could be heard advising Mr Firdaus by phone that it was not the amount that counted in winning his case, but whether he offered more money to the court than his opponent. "If you give us 50 million rupiah but your opponent gives us more, then the case will be won by your opponent," Mr Anhar told Mr Firdaus in the taped phone conversation. (The sum of 50 million rupiah amounted to US$20,830 at the time)

Mr Anhar also told Mr Firdaus to "hurry up" and place money into a Bank Central Asia account which he said was his wife's, if he wanted to speed up the case which had dragged on for five years. Details of the case were not revealed.

Mr Pramono was quoted by the Indonesian Observer as saying the interrogation of Mr Anhar had begun and the matter should be resolved within three weeks.

The case, which Mr Firdaus said had been won by his client in 1998, came to light as the government began selecting 22 new judges for the Supreme Court. The government's nominees must be approved by the People's Consultative Assembly, the country's highest legislative body, and intense lobbying by political parties is underway.

Meanwhile, the business weekly Warta Ekonomi charged yesterday that at least six commercial court judges were in the practice of regularly "selling verdicts" in bankruptcy cases. It said the commercial court, which was supposed to help rebuild the credibility of the country's bankruptcy system, had produced judges and lawyers willing to deal in judicial rulings.

A member of the national commission for law, Mr Frans Hendra Winata, was quoted as saying it was apparent that certain judges handed down verdicts regularly in favour of certain lawyers. "If you look at ... the bankruptcy cases that have been heard so far, you can see that cases involving particular lawyers are often handled by the same judges ... and those lawyers always win their cases," Mr Winata said. A lawyer, who declined to be named, told the magazine that corrupt judges typically demanded a percentage of the value of the case.

Jakarta removes five district judges in legal cleanup

Jakarta -- Indonesia's government will remove the chiefs of all five district courts in Jakarta and reassign almost 70 per cent of judges to other areas as it mounts a campaign to clean up its much-criticised court system.

The campaign starts in Jakarta, with an aim to replace the current judges with the best recruits from remote areas," Justice Minister Yusril Ihza Mahendra said. "The intention is to fulfil the public's demand to reform the court system."

He said he would consult the Supreme Court, the institution that supervises judges, on the plan, which is also likely to affect seven out of every 10 judges in the capital.

Mr Yusril said that further discussion with the Supreme Court had been scheduled for next week. "We are also going to discuss the presence of 'ad hoc' judges in the commercial court," Mr Yusril added.

Indonesia has five types of courts: civil, military, state administrative, religious, and commercial. "We have yet to make certain regulations for the commercial court. We are trying to officially inaugurate the judges for the commercial court on April 15," the minister said.

The Supreme Court, in February, suggested that four individuals be appointed as "ad hoc judges" but they have yet to be inaugurated. Attorney-General Marzuki Darusman announced last week the the government was moving ahead with the "ad hoc" judges concept as part of efforts to not only clear the backlog of commercial and civil cases now awaiting trial -- but to also improve the image of the legal system.

His disclosure of the appointment appeared to be part of the government's strategy to convince the global community that Jakarta was committed to instituting reforms of the legal and court systems demanded by the International Monetary Fund (IMF).

Under the plan for "ad hoc" judges, the government will look to industry experts or academics -- untainted by association with the previous government -- to serve on the bench.

The capital's reform campaign is likely to affect seven out of every 10 judges in Jakarta. Jakarta is considered the most lucrative area for postings in the judicial system. Observers believe most Jakarta judges will resist moves to other areas as it will affect their incomes.
 

News & issues

US wary of Indonesia's ties with China

The Indonesian air force announced plans to ask China to provide and help maintain aircraft and weaponry, reported Agence France- Presse April 10. In particular, Jakarta lacks adequate radar and navigation equipment.

Officials cited the need to fill the supply vacuum created by US suspension of military cooperation after the violence following East Timor's September 1999 independence referendum.

On the surface, it appears that US refusal to reinstate military ties is self-defeating, rapidly pushing Indonesia closer to China and other Asian allies. Yet going deeper, the apparent US inflexibility toward the current Indonesian regime may in fact be a reaction to what US officials consider a fundamental element of Wahid's strategy: a realignment of Indonesia away from the West and toward China. Rather than attempt to woo Wahid and strengthen his position, Washington may prefer to facilitate a transition in power.

Washington's reluctance to reinstate military ties with Indonesia appears, at first glance, inexplicable. Wahid's policy with regards to domestic affairs has been everything US officials have wanted. Indonesia's president has cracked down on the military, sought a peaceful resolution to separatism in Aceh and held his country together when every indicator suggested sudden and violent disintegration.

The source of US hesitation likely lies not in Wahid's domestic policy, but in his foreign policy. Since he came into office, he has sought closer ties with China. His first official state visit was to Beijing, where he promised President Jiang Zemin that his government would strive to guarantee equal rights to Chinese- Indonesians, who were the target of riots in 1998. In recent weeks, he has discussed plans to lift the country's ban on communism, likely in an attempt to facilitate close relations with China. Moreover, the president has conspicuously avoided the United States and Australia in his search for aid and investment. He has also aligned closely with Malaysia, which has a strong anti-US and pro-Russia and China orientation.

Today's announcement from the Indonesian air force may conflict with the US agenda in more ways than one. Through military cooperation with China, Indonesia will become more independent from the United States. As well, it may enable Wahid to purchase military equipment from Israel, which has so far shirked US pressure to discontinue lucrative arms sales to China. Israel does bustling trade with Beijing, particularly in the field of avionics. Beijing could easily act as go between, allowing Wahid to trade with Israel without incurring the wrath of his political opposition and that of the public, which is 80 percent Muslim.

Historically, the United States has not taken well to pro-China Indonesian leaders. In the 1960s, President Sukarno appeared to lean toward communism, anti-Westernism and a Chinese alliance. The CIA reportedly supplied lists of Indonesian Communist Party members to Gen. Suharto, aiding him substantially in his bloody overthrow of Sukarno. Suharto's regime, while autocratic and repressive, ushered in a long era of alignment with the United States. Yet with the collapse of Russia, the United States abandoned Suharto's regime; his corruption and violation of democratic and human rights began to outweigh his value as a pro-US bastion in the region. Now Russia and China are reestablishing old ties in the region, and old US priorities are resurfacing.

To the US government, Indonesia's alignment may once again appear in flux. The failure to reinstate military ties would be part and parcel of this anxiety. On the one hand, the Clinton administration may be afraid to cash in its major bargaining chip when it looks as though it may fail to win Wahid's loyalty.

On the other hand, the administration may be hoping that internal politics will either force Wahid to reconsider, or force him out of office entirely. While the president now enjoys fairly solid support, his Muslim opposition has recently risen in popularity. These parties concur with the US agenda on two main points: They tend to be anti-Chinese and anti-Israeli.

Muslim parties like Assembly Speaker Amien Rais' National Mandate Party (PAN) have attacked Wahid's attempts to establish trade and diplomatic links with Israel.

More recently, they have decried his controversial plans to lift the ban on communism in order to gain more support. Rais, long Wahid's rival for power, has led the criticism. On April 7, 5,000 demonstrators rallied in Jakarta against the plan. If the Muslim parties continue to successfully foment such opposition, they can easily link the communism issue to Wahid's engagement of China in order to rile up more support.

At this point, Washington is likely still deciding which constitutes the safer bet: Wahid or his competition. The decision is not nearly as clean-cut at it was in 1965.

Given the political winds blowing in Asia, a new government could be just as wary of the United States as is Wahid. More significantly, supporting Wahid's less-moderate Muslim competition could deliver the country into the hands of extremism. In coming months, Washington will be watching Wahid's opposition very carefully, hoping to ascertain their attitude toward the United States and toward Indonesia's alignment.

Gus Dur's plane not allowed to refuel in US

Jakarta -- The United States prevented Indonesia's presidential airplane carrying President Abdurrahman Wahid and his entourage from making a refueling stop in the country, forcing the plane to make a stop-over in Canada, the Indonesian Observer reported yesterday.

"There was this prohibition ... by the US government, but everything is OK. The President moves on with his trip," Communication Minister Agum Gumelar was quoted as saying by Antara news agency on Friday.

According to the Observer, an official from Garuda Indonesia said the aircraft went on to Vancouver for the refueling stop. "When the plane was told not to land, the pilots contacted the nearest airports. It finally managed to refuel in Vancouver. It is back to normal now," Garuda spokesman Pudjobroto said.

"Better still, the President can save some time by making the stop in Canada because it is closer to Japan," he added. The newspaper did not say at which airport the plane was prevented from landing.

A day earlier, Mr Abdurrahman, better known as Gus Dur, said on the sidelines of the G-77 Summit in Havana that Washington had tried to prevent him from visiting Cuba.

The Observer quoted him as saying that senior US State Department official Tom Pickering had asked him not to visit five non-US allies: Cuba, Libya, Iran, Iraq, and North Korea. But he added: "We are not a lackey of US. We are free to go anywhere. If we didn't go to Cuba, it would be clear that we are colonised by the US."

Jihad force agrees to leave training camp

Jakarta -- A group of 3,000 militant Muslims preparing for a holy war against Christians in the strife-torn Maluku islands has agreed to leave a training camp near the Indonesian capital by Sunday and surrender their weapons, police and a group leader said Friday.

"The Laskar Jihad (Jihad Force) has agreed to leave the location on April 16 at the latest and to surrender their weapons," Marwan, an officer at the Bogor regional police, told AFP.

Marwan said the agreement to vacate the Kayumanis "Cinnamon Tree" camp in the hills near Bogor some 50 kilometers south of Jakarta was reached at a meeting on Thursday between group leader Jaffar Umar Thalib and Bogor police chief Colonel Edi Darnadi at the latter's office. He declined to give further details of the agreement.

Hilal Thalib, the chairman of Al Irsad Foundation, whose land was used for military-style training by the jihad group, the Ahlusunnah wal Jama'ah Forum, said the volunteers were preparing to leave the area. "We are preparing everything. In fact the training participants are not Bogor residents," Hilal told AFP.

The training camp, which the group says drew volunteers from all Indonesian provinces -- except easternmost Irian Jaya which is predominantly Christian -- had been scheduled to end on April 16, Hilal said. "That's the schedule. As soon as it ends, they will go to their respective hometowns," he said.

But he warned that the group would remain active, was preparing "a surprise" and would continue to fight against "communism and Zionism". "We call on Muslims to continue to fight against communists and Zionists with their material and physical strength," he said. "The two powers are plotting to undermine Islam and the ban on our activity is part of that plot," he added.

"Why don't the authorities act against Forkot who often use Molotov coctails in their demonstrations?" he said of a radical student group which has staged demonstrations demanding that former president Suharto be tried for corruption.

Police on Thursday ordered the closure the jihad group's camp and threatened to use force if they failed to do so. Police said residents around Kayumanis were living in fear as members of the jihad force were going around armed with sharp weapons, the waters of a local river had become polluted with the presence of thousands of men at the camp, and the forces were barricading a village road.

Local press reports said 3,150 people were training in a seven- hectare field in a valley in the hill area. The group announced on April 6 that the force planned to send up to 10,000 Muslim volunteers to the Malukus to break what they called a "Christian rebellion" in the islands.

Thalib, during two armed shows of force in Jakarta -- one at the presidential palace and the other at parliament -- also threatened to divert the fight against Christians to Java island if the government thwarted his plans.

The sectarian violence originated in Ambon, the capital of the Malukus, in January 1999, and was sparked by a trivial dispute between a local Christian driver and a Muslim.

The brawl quickly degenerated into open clashes between Christians and Muslims and within weeks had spread to other islands, leaving thousands from both religions dead, and forcing tens of thousands of others to flee.

Syarwan Hamid implicated in PDI HQ takeover

Jakarta -- Ex-chairman of the Indonesian Democratic Party (PDI) Soerjadi disclosed yesterday that Lieutenant General (ret.) Syarwan Hamid played a pivotal role in the 1996 hostile takeover of PDI headquarters, paving the way for a thorough investigation into the involvement of the government and military in the melee.

"Syarwan Hamid took part in a series of secret meetings in the Regent Hotel on June 26, 1996, in BPD Plaza, and in Cibubur on July 23. A meeting also took place in his office. All of them [the meetings] discussed plans to take over PDI headquarters," Paskalis Pieter, Soerjadi' lawyer, told the press on the sidelines of Soerjadi's interrogation at Police Headquarters here.

Soerjadi was grilled yesterday over his role in the hostile takeover of PDI headquarters on Jalan Dipo-negoro in Central Jakarta on July 27, 1996. A government-backed, controversial party congress in early 1996 appointed Soerjadi as PDI chairman. He took over the position from the legitimate chairperson, Megawati Soe-karno-putri, who is currently the Vice President of Indonesia.

Megawati's staunch backers, however, did not recognize Soerjadi's leadership and refused to leave the headquarters. On July 27, Soerjadi's "Mr. Fix It", Buttu Hutapea, spearheaded a massive attack on the headquarters. He led hundreds of hired thugs backed by military personnel. The violence triggered a massive riot. At the time, Syarwan was the Chief of Military Sociopolitical Affairs.

Following the ouster of Soeharto in May 1998, Megawati and her new political party, called the Indonesian Democratic Party of Struggle (PDI-P), moved ahead to emerge as the 1999 poll winner.

"The police are still hesitant to probe high-ranking military officials accused of masterminding the takeover," Pieter said. Soerjadi and Huta-pea, however, have been named suspects in the case. "Other top military officers allegedly involved in the fracas include General (ret.) Feisal Tanjung who was the Military Commander at the time, and Major General Sutiyoso who was then the Jakarta Mlitary Chief. Sutiyoso is currently serving as city governor of Jakarta.

"Their names are mentioned in the dossier on the case. However, they haven't been summoned," Pieter said.

Initially, Soerjadi's group planned to negotiate with Megawati's supporters, Pieter stated. "Suddenly, there were people everywhere, surrounding the head-quarters -- and violence broke out," he said. "Therefore, I'm of the opinion that this cannot be blamed solely on Soerjadi and his team," he added.

Jakarta Police Colonels Makbul Patmanegara and Hasikin Husein questioned Soerjadi about the secret meetings between him and scores of PDI and military officials. Police spokesman Brigadier General Dadang Garnida said yesterday in Bandung, West Java, that his office "is now well-prepared to summon a number of military officers including several generals" over the July 27 case. "The Police will summon a score of military officers, from the lower to higher ranks," Garnida said.

Tackling Indonesian corruption head on

Tim Dodd, Jakarta -- While President Abdurrahman Wahid hogs the headlines as leader of the country's reform effort, his Attorney General, Mr Marzuki Darusman, is the one sweating in the engine room dealing with the crises.

He is the key minister in every one of the major changes the Wahid Government is trying to make. Whether it is the prosecution of Mr Soeharto, justice for victims of the former president's human rights abuses, eliminating official corruption, investigating Indonesia's role in East Timor or removing the army from politics, the point man is Mr Darusman.

He is even bearing the major load for reviving Indonesia's wrecked economy, where the prospects for recovery are being destroyed by the inability of the corrupt court system to make insolvent companies bankrupt. This means the assets of failed banks, now held by the Government, cannot be liquidated to help pay for the recapitalisation of the banking system.

His job is herculean, and it starts in his own department, corrupted through and through during Mr Soeharto's 32-year rule. "I've already moved 80-plus people," he told The Australian Financial Review this week. He plans to make more changes and said he would overhaul his top executives this month before moving on to build a new system for recruitment, promotion and advancement of his legal staff.

Mr Darusman is in some ways an unlikely reformer because he comes from the Golkar party, the political vehicle created by former President Soeharto to keep himself in power. But he has long been a staunch advocate of democracy and human rights. In 1992 he lost his parliamentary seat due to his outspokenness. But he was a dissident who was difficult to ignore and, the following year, President Soeharto appointed him vice-chairman of the new Human Rights Commission, which gave him a political platform. Meanwhile he stayed in Golkar and became deputy party chairman during the Habibie era.

Now, as Attorney-General, his reform agenda is never ending. This week he imposed a city arrest on former President Soeharto, preventing him from travelling outside the Jakarta area while the investigation into his corruption proceeds.

Mr Darusman also said his proposed new 25-member anti-corruption committee would be formed this weekend with a priority to "tackle corruption cases within the court system".

It will also have a mandate to take on cases in other tough areas including "white collar crime, banking fraud and electronic crime" and next year will be expanded into a permanent Independent Commission Against Corruption.

Then he plans to continue his shake-up of the court system by bringing in more "ad hoc" judges, who are supposed to break the cycle of corruption entrenched in the existing judiciary.

But it is difficult to find people willing to do the job. "It turns out that some of them are hesitant to have themselves appointed because of ... the risk that they will have to face possible bribes. If they try to reject that then they feel there is further risk ... which could even include personal consequences," he said.

Mr Darusman said he personally favoured a controversial proposal, not yet adopted by the Government, to bring in foreign judges temporarily to obtain clean decisions from the courts. "It would have to be a last resort. But one has to consider every option," he said.

Mr Darusman will also soon be setting up new system to officially uncover the truth about past human rights abuses in Indonesia. He faces a difficult decision over how to decide which offenders will be spared punishment in return for testifying, and which will be prosecuted and sentenced.

The new system is expected to be based on South Africa's Truth and Reconciliation Commission and Mr Darusman said it would be a "two-track" process. The commission would deal with less serious cases while "gross violations" would go before a new Human Rights Tribunal and be sentenced. But how will it be decided which "track" a case takes? Mr Darusman said he viewed favourably a two-year period for suspects to confess and receive amnesty.

Five months after his appointment as Attorney-General, Mr Darusman has chalked up a few wins. His inquiry into the role of former army chief General Wiranto in the destruction of East Timor provided President Wahid with the excuse to stand the general down.

And this week there were signs that the court system could deliver sound judgements. On Wednesday the Supreme Court in Jakarta overturned two decisions of lower courts which were damaging investor confidence in Indonesia.

It reinstated charges against one of the key suspects in the Bank Bali scandal, Mr Djoko Tjandra, dropped by a lower court last month. Mr Djoko's company, linked to friends of former President B.J. Habibie, last year siphoned off $130 million of government funds intended to recapitalise Bank Bali. And it reversed a decisionby a district court to immediately shut down a gold mine owned by a US company in dispute with the local government over a tax issue. But these are only small steps forward. Mr Darusman has a long way to go.

Suharto grounded for six months

Associated Press, Jakarta -- Worried that ex-president Suharto might try to escape prosecution for massive corruption, state investigators yesterday barred the former dictator from leaving Indonesia for six months.

Chaerul Imam, a government lawyer who is heading the probe against the 78-year-old, said he had received reports Mr Suharto's wealthy children had been planning to get him out of the country. "Based on these reports, we imposed the ban," he told reporters.

Mr Suharto's defence lawyer, Juan Felix Tampubolon, denied his client, who claims he is too sick to face interrogation after suffering two strokes, planned to skip the nation that he had ruled for 32 years. "Suharto does not want go abroad. He wants to die in Indonesia," Mr Tampubolon said. Earlier, officials from the Attorney-General's Office said Mr Suharto had been placed under "city arrest" -- a legal procedure that would prevent him from leaving the capital. Attorney-General Marzuki Darusman declined to comment on the move, which appears designed to pressure Mr Suharto to co-operate with the probe.

Other members of Mr Suharto's defence team gave conflicting information on Wednesday night. Privately owned SCTV television quoted one Suharto lawyer, Denny Kailimang, as saying he had received a fax from the Attorney-General's Office telling him of the travel ban.

Another Suharto counsel, who spoke on condition of anonymity, said three prosecutors tried to deliver a letter to Mr Suharto's home on Wednesday notifying him of the city arrest, but were turned away by aides and relatives.

Red-light area a new focus of democracy

This city in the West Java hills is home to Indonesia's state phone company, a moribund aircraft project and the country's best-known technical school. But it is the local brothel district that has everyone's attention.

A honeycomb of alleys, hovels and open drains, the unsavoury neighbourhood has become a playing field for the new national sport -- democracy. It has already produced a star player: a turbaned, youthful Muslim cleric by the unlikely name of Abdullah Gymnastiar.

Participatory politics is in its infancy in Indonesia, but Mr Gymnastiar may be a fair reflection of how it is evolving. He holds no position and has never run for office. He is not affiliated with any of the political parties that have sprouted in the two years since former president Soeharto's downfall. His primary activity is running business management seminars steeped in Islamic teachings.

But Mr Gymnastiar, 37, has crafted a formidable power base, mobilising thousands of university-educated youths through his homespun mix of management-guru philosophy and religion. He has succeeded where other moral crusaders have failed: he has closed down much of the city's gambling and narcotics business. Mr Gymnastiar and his white-robed followers want to wipe out Saritem, a red-light district in Bandung's Chinatown.

Their campaign shows how politics -- elitist and highly centralised during Mr Soeharto's 30-year rule -- is fragmenting, allowing individuals to build support by tapping into local issues, including sensitive ethnic and religious ones.

On the surface, movements such as Mr Gymnastiar's are not overtly political. Largely Muslim Indonesia has always been prone to occasional outbursts of moral anger. But the ethnically and religiously diverse country is officially a secular state and a substantial segment of moderate Muslims opposes the socially conservative versions of Islam prevailing in, say, Saudi Arabia or Iran.

Although gambling, prostitution and drug-taking have long been illegal, law enforcement has been lax. Protected behind a wall of corruption, such pursuits have quietly thrived. The economic crisis of the past two years has only fed the business.

But as Indonesia opens up, the line between political and moral issues is blurring. Outbreaks of vigilante violence in the name of Islam are increasingly common. Such incidents have occurred in Indonesia in the past. But since Mr Wahid took office in October they have steadily increased.

It is not clear how such outbursts may influence future national politics. In Jakarta, would-be political barons still play by the old, elitist rules. But at the local level, politics already is starting to look different in many parts of Indonesia. About 10 district chiefs have been fired by new local parliaments.

The result is room for new power-brokers like Mr Gymnastiar, who declares a clear goal which goes beyond ridding Java's third- largest city of sin. "I need to make Bandung an example of what Indonesia could be," he said. "If Bandung is a clean city, then others could follow."

Since he began his campaign in December, Saritem has become a ghetto under siege. Slung across its main entrance for the past two months has been a banner warning of drastic action if the prostitutes and pimps do not quit: "Let's struggle until the wickedness disappears," it reads. Business in the area is down by half, says Hasan, a pimp.

The campaign has already helped change how Bandung is run. Local generals have quietly backed Mr Gymnastiar's effort, withdrawing their protection from gambling and prostitution rackets.

Many of Mr Gymnastiar's followers have attended training courses organised by the local military academy -- a sign the once -- powerful military is looking for new, cleaner allies. Indeed, Mr Gymnastiar was recently invited to lecture 1,500 local soldiers on regaining public trust. "You cannot buy the hearts of the people with your muscles," he told them. "Many of the officers cried," Mr Gymnastiar recalled.

Officials not known for their speed are busy drawing up plans to replace the red-light district with a mosque, an Islamic boarding school and a car park.

Jihad trainees beat up reporters visiting camp

Jakarta -- Three Indonesian journalists, including an AFP reporter, were beaten up by youths taking jihad (holy war) training at a camp 50 kilometers south of here Sunday.

The three journalists -- the AFP correspondent, a reporter of the BBC's Indonesian service and a freelance photographer -- were beaten and kicked after they had entered the training camp from the back gate, the AFP reporter said.

"We were asking our way to the main post to seek permission to look around in the camp when several youths fell on us and started beating us up," the reporter said. The journalists were then interrogated for hours before finally being taken to the local police station.

The camp, in a valley in the Kayumanis village in Tanah Sareal sub-district of West Java, is a site for training Muslim volunteers fighting in the strife-torn Maluku islands where clashes with Christians have been going on since January last year. Other journalists trying to approach the site from the main entrance were threatened with machetes and told to go away, an AFP photographer said.

The camp, set up on seven hectares of land belonging to a Muslim foundation, is only accessible by foot three kilometers from the hill town of Bogor.

Witnesses watching the activities of the camp from the outside in the morning said the participants were practising martial arts using machetes and swords.

The Jakarta Post daily on Saturday quoted a member of the camp's "special guard" as saying 3,150 people were taking part in the first phase of the program which started April 6. The guard said phase one will end on April 16 and the group will leave on April 23 for Ambon, capital of Maluku province where Muslim- Christian violence has claimed more than 3,000 lives in the past year.

The Jihad training camp is organized by a radical Muslim group, which calls itself the Ahlus Sunnah Wal Jama'ah Forum. Group commander Jaffar Umar Thalib announced the jihad plan in a mass rally attended by some 10,000 people in the capital on Thursday. He was quoted by the Post as saying some of the trainers in the Kayumanis camp had "experience in Afghanistan, Bosnia and Moro" in the southern Philippines.

Indonesian President Abdurrahman Wahid, a moderate Muslim scholar, reportedly lost his temper when the group visited him after the rally on Thursday. Wahid told journalists that should the group go ahead with their plans, they would face "stern action" by the country's security forces.

In Thursday's rally, Forum speakers in fiery speeches said the number of youths who had signed up for the jihad had reached 10,000. Their aim was to break what they called the "Christian rebellion" in the islands.

The sectarian violence originated in Ambon, the capital of the Malukus, in January 1999, and was sparked by a trivial dispute between a local Christian driver and a Muslim. The brawl quickly degenerated into open clashes between Christians and Muslims and within weeks had spread to the other islands in the Malukus. More than 80 percent of Indonesia's 210 million people follow Islam, making it one of the world's largest Muslim-populated nations.

Lynch mobs, gangs rule Jakarta streets

Vaudine England, Jakarta -- Lynchings of suspected thieves and violent eruptions of long-running neighbourhood disputes have claimed at least 30 lives in and around Jakarta this year in a sign of growing disrespect for the law.

A recent, typical example was that of 26-year-old Hermansyah, who was burned alive by angry residents of Poris in Tangerang, on the outskirts of Jakarta. Hermansyah was seen with two other men running away with a motorcycle. "Some of the residents screamed 'Thief! Thief!' Hundreds of people ran after the men ... two escaped, but one was burned to death," police spokesman Lieutenant-Colonel Zainuri Lubis said. The victim was badly beaten and then, as he lay on the ground, residents doused him in petrol and watched him burn alive.

An endemic conflict rages between gangs living either side of a major road in Jakarta. The Berlan gang and Palmeriam gang, separated by Jalan Matraman Raya, frequently clash in armed street battles, damaging shops and houses.

"We are angry with everyone -- the Government, the Palmeriam gang, and anyone who supports our enemies," said Bes, a youth from Berlan, explaining a conflict that has continued, off and on, since the 1970s.

Eko, another Berlan youth, said: "If locals hear bells ringing and power poles being beaten non-stop, they will know it's time to come out of their houses equipped with machetes, swords, knives and iron bars, ready to fight." The investigation into the March 5 assassination attempt on Matori Abdul Djalil, head of the National Awakening Party, was foiled by the coincidental beating and burning to death of the suspect. Angry motorcycle-taxi drivers allegedly lynched the man, identified as Tarmo, for not paying for his ride, saying they were unaware he was suspected of shooting Djalil.

"We have yet to find a way of controlling the increase in vigilantism here," said Colonel Zainuri. "We have repeatedly told them, via the media, that they can only arrest the thieves and then hand them over to the police immediately. But they don't listen."

Reasons for the violence are not hard to find. About half the capital's 10 million people are homeless, millions are unemployed and those hit hardest are often young men with little better to do than hang out on street corners waiting for something to happen. In addition to gross disparities in wealth, the standard of police work is shockingly low, not only because of pervasive bribery but also the lack of training, equipment and detection skills.

'Laskar Jihad' worry Bogor residents

Bogor -- Residents of the otherwise peaceful Munjul village of Kayumanis in the Tanah Sareal district expressed on Sunday their deep concern and fear over the presence of the military-style training camp of the Laskar Jihad (Jihad Army).

The army has been giving training there since April 6 to some 3,150 male Muslim youths who are taking part in the first phase of a program which will end on April 16. The youths are scheduled to leave for Ambon on April 23.

"These men came on Thursday [April 6] and set a camp on the seven-hectare field, which is in this neighborhood unit. They go around in military pants, some go around holding swords and daggers ... we are scared," said the wife of Botong, chief of RT (neighborhood unit) 006 of neighborhood community (RW) 05.

The camp is located on a field owned by the Al Irsad foundation, in the midst of a thick forest area in the 006 neighborhood unit. It is filled with some 300 pink and blue colored tents, which stand on bamboo, cut off from the abundant bamboo trees at the field.

"They don't say anything to us, but they really scare us. They all wear white Muslim garb and turbans ... but underneath it we can see the military-style pants and combat boots. Why have they come here?" A housewife, Iin, said the men were very particular about training.

"By dawn, they are already up and running ... they run in thousands, past the Kayumanis Military Subdistrict Command (Koramil) and further. By 10am. or 11am. they are back. They train again at their camp and go running again at about 2pm," Iin told The Jakarta Post. "Nobody is allowed to enter their camp, except for Botong, and kids. Women are just forbidden to enter." When the Post tried heading for the camp, which had a green flag with Laskar Jihad Ahlus Sunnah Wal Jama'ah written on it attached at the entry gate, they were stopped. "Can't you read the sign: 'Reporters Not Allowed'?" one member said.

The Post heard commanders of the camp gathering their members, mostly holding sticks, swords and white flags with huge black crosses on them, to assemble at the open field.

Speaking via megaphones, the Post heard: "Batalyon Enam ... disini ... Batalyon Tujuh ... kesini (Battalion Six ... here... Battalion Seven ... here)." The Ahlus Sunnah Wal Jama'ah Forum has planned to send 3,000 men to Maluku at the end of April, commander Jaffar Umar Thalib said.

Chairman Ayip Syafruddin said the group hoped to send 10,000 people to Maluku eventually. The volunteers are being trained at the camp by men with experience in the Afghanistan, Bosnia and Moro (Philippines) wars, Ayip said.

According to a police source, the "holy men" were probably not only being trained by men with experience in the Afghanistan, Bosnia and Moro (Philippines) wars, but were also sent to Moro and other countries, for training.

The group's activities have drawn concern of the National Awakening Party (PKB). Chairman of PKB faction at the House of Representatives Taufiqurrahman Saleh called on the police to disband the camp and seize their weapons. "Instead of helping solve the problem [sectarian violence in Maluku], they would only terrify people. They would also frighten off foreign investors," Taufiqurrahman told the Post.

He said the police should have confiscated the swords and machetes carried by demonstrators during a rally outside the presidential palace on Friday. He believed the vast rally was funded by people who have their own political agendas, including undermining the legitimate government of President Abdurrahman Wahid.

Chairman of the Nahdlatul Ulama (NU) Muslim Organization Hasyim Muzadi indicated that certain people or groups funded the jihad group. "I suspect that a 'company' with huge funds and certain political interests is providing financial aid to the group," Hasyim, who recently replaced President Abdurrahman as NU chairman, said as quoted by Antara.

He regretted the police's failure to arrest the leaders of the demonstrators although many of them carried swords and machetes, during the rally on Friday. He said NU had from the outset opposed the idea of a holy war in Maluku to defend Muslims, saying that it would create other problems.

House Speaker Akbar Tandjung has also asked the jihad group to cancel its plan to send "trained warriors" to Maluku, saying that it would create bigger problems.

The group's chairman, Ayip Syafruddin, announced on Friday that some 3,000 volunteers were being trained in a camp in the Kayumanis area in Bogor. Ayip said the volunteers, who were being trained by men with combat experience, would be shipped to Maluku later this month.

Separately, a Tablig Akbar (Mass gathering) of around 2,000 people in Surakarta was held on Sunday, in a bid to show resistance towards President Abdurrahman Wahid's proposal to lift the ban on communism. The gathering, held at Wisma Bathari, was attended by chairman of the Indonesian Committee for World Muslim Solidarity (KISDI) Ahmad Sumargono, poet Taufik Ismail and Husein Umar of the Dewan Dakwah Islamiyah Indonesia (DDII) Muslim organization.
 

Arms/armed forces

Bakorstanas officially dissolved

Jakarta -- The majority of the archives compiled by the much- feared Agency for the Coordination of Support for the Development of National Stability (Bakorstanas) will be destroyed following the official dissolution of the agency on Monday.

"The larger part of Bakorstanas' database is related to persons and groups. This [information] will be annihilated because it is no longer needed," Lt. Gen. Djamari Chaniago, general affairs chief for the Indonesian Military (TNI), said following a ceremony marking the agency's dissolution at TNI Headquarters in Cilangkap, East Jakarta. Djamari said the archives would be destroyed soon, but he did not name a specific date.

Bakorstanas was established by former president Soeharto in September 1988 to replace the Operational Command for the Restoration of Security and Order. The agency was founded to deal with any perceived problems to the country's stability. The agency screened prospective state officials and also was reportedly used by Soeharto's New Order administration to silence government critics and take action against anyone believed to have links with the banned Indonesian Communist Party (PKI). President Abdurrahman Wahid recently ordered the dissolution of the agency in response to public criticism.

Djamari, who is a former secretary of Bakorstanas, said TNI was seeking new positions for hundreds of TNI personnel from the agency. "TNI is considering providing them with new jobs, although only some of them can be accommodated in the Army," he said.

TNI Commander Adm. Widodo A.S., who presided over the ceremony at the military headquarters, refused to comment on the decision to disband the agency. "All matters regarding stability will no longer fall under Bakorstanas' auspices. It is no longer compatible with the reform era," he said.

Jakarta forced to ship Hawk fighters

Jakarta -- The Indonesian armed forces have been forced to take delivery of six British Hawk-200 fighter planes by ship, because vital navigation and communications equipment was blocked by a US arms embargo.

"Three of the six planes have already been transported from Britain last week," the head of the Indonesian air force base in Pontianak, West Kalimantan, Colonel Drajat Raharjo said, according to the Kompas daily on Saturday.

"They are expected to arrive in Pontianak end of April," he said, adding that the other three were currently being dismantled and packed into containers. They would be shipped to Pontianak next month. The decision to send the planes by sea had been taken after the US refused to sell radar, navigational and communication equipment, and power generator controller units for the fighters.

The US imposed an embargo on military equipment sales to Indonesia following the post-ballot violence in East Timor last year. Col Raharjo said that technicians from the British producer of the fighters would be on hand to assemble the fighters on site when the shipments arrived.

The air force would also cannibalise some of the missing components from other planes for temporary use on the new fighters. "But, if the US maintains its stance, then we will buy the four important components from other countries," he said, adding: "There are still many other countries capable of producing those components and the only question is our financial capability."

Jakarta bought the British-made Hawks as part of its efforts to diversify its sources of arms and reduce dependence on the US. Indonesia's dependence was most evident in its air force, which relied on US-made F-16s as its backbone.
 

International solidarity

Australian activists fined

David McLennan -- Despite the "admirable commitment" of four East Timor independence activists to a "compelling cause", their actions during a protest at Parliament House were illegal, Magistrate Karen Fryar said yesterday. Former United Nations volunteer in East Timor Gareth William Robert Smith was found guilty of trespassing and damaging Commonwealth property, and Mark William Gwynneth, Robert Samsa and Charlo David Grech were each found guilty of trespassing.

The charges related to an incident on September 10 when the men made their way to the roof of the great veranda of Parliament House. They hung a protest banner on the coat of arms.

Smith had told the court that while there, he had seen school children in the foyer who reminded him of children he had left behind in East Timor and, "he then decided that he wanted to do something outrageous to match the outrageous situation in East Timor and to get maximum publicity". He remembered a can of spray paint in his backpack, and used it to paint the words "Shame Australia shame" on the building. Magistrate Fryar said there was "no reason to question the integrity of the defendants" but they should have acted within the law.

"Their concern and anguish at the plight of the East Timorese people following the referendum in August last year was, I have no doubt, genuine and indeed, understandable," she said. "Their commitment to their cause to support the East Timorese people in their quest for independence is even admirable. But they must pursue that cause within the law.

"We can all agree that the cause they were supporting was most compelling and clearly the defendants felt that the steps they took were morally justified. However, the courts and the community cannot condone breaches of the law."
 

Economy & investment

Divisions seen hampering reforms

Political divisions within the Indonesian cabinet and a lack of political support for agencies charged with implementing financial reforms are hampering changes in the financial sector, the World Bank said.

"The cabinet's difficulty in building an internal consensus and providing the political will to support the agencies tasked with financial sector reform reinforces concerns that differing political interests may hamper progress in the financial sector reform programme," it said in its macroeconomic update. It said while several steps such as the recapitalisation of Bank Mandiri and trading of bank recapitalisation bonds were encouraging, the challenges remain "daunting".

Jakarta to go ahead with VAT in Batam

Derwin Pereira, Jakarta -- The Indonesian government, brushing aside the threat of foreign investors pulling out from Batam, said yesterday it would go ahead with plans to impose a value- added tax (VAT) in the once tax-free-haven.

But in making the announcement, Trade and Industry Minister Jusuf Kalla said that given the possibility of social unrest, Jakarta would apply the 10 per cent VAT gradually and selectively over a three-month period. It will come into force fully only in July. "The government needs time to make this palatable," he said. "But we won't cancel it."

Mr Jusuf, who was standing in for Finance Minister Bambang Sudibyo who is overseas, said Indonesia had to apply the same rules to the industrial island as it did in other regions. "We have to be fair across the board," he said. "We cannot give special privileges to Batam, which has the highest per capita income in Indonesia, and ignore the fact that taxes are applied in our other islands and industrial zones."

It is clear that revenue from the taxes is a primary reason why Jakarta is standing firm. Mr Jusuf revealed that the central government stood to gain about 300 trillion rupiah (S$69 billion) by the end of the financial year with the new levy.

Mr A. Sjarifuddin Alsah, the Director-General of Taxes, told The Straits Times that the government was not worried by recent threats made by at least 60 predominantly American and Japanese firms to quit Batam if the decision on VAT was not reversed.

He said that the 700 companies now operating in the island were likely to stay on given its nearness to Singapore, good infrastructure and cheap labour. "It is very hard for them to leave Batam," he said. "If they leave for other countries expecting tax-free privileges, they will be disappointed. The same conditions in Batam will apply elsewhere."

But the government appears concerned about the reaction from local residents after the VAT and levy on luxury goods were introduced on April 1. Earlier this week, 2,000 people staged a demonstration on the island over the rise in prices of consumer goods, a result of the VAT kicking in. Some speculate that protests will continue as a means of putting pressure on Jakarta to do away with the taxes.

But the government yesterday sought to diffuse the problem by saying that the VAT would be applied in stages over a three-month phase to help residents and businesses get used to the change. Said Mr Jusuf: "We need more time to publicise and explain the taxes."

He took pains to point out that export-oriented firms in Batam would not have to pay the taxes, in line with what the International Monetary Fund had stipulated. The IMF, in its latest letter of intent with Indonesia in January, demanded that Jakarta impose the VAT for non-exporters in Batam and suggested that exemptions be made only for "bonded warehouses".

Rural poor increasingly vulnerable: World Bank

Jakarta -- Low-income rural people appear to be most vulnerable to growing wealth inequalities in Indonesia following the economic crisis, the World Bank said Thursday.

Citing recent poverty data, the bank said in a macro-economic update there were indications that overall poverty has fallen since February last year. But "this does not mean that all sections of society are coping equally well," it said.

The bank said analyses that take into account household incomes in relation to consumption showed that urban inequality fell due to declining incomes in richer households.

But rural inequality rose, apparently driven by worsening conditions for landless agricultural labourers, the bank said. "The rise in rural inequality is found to be due to increasing inequality in the bottom tail of the distribution [chain] ... while lower urban inequality is primarily driven by a collapse in incomes of the top half of the income distribution," the bank said.

"These results can be interpreted as an increase in vulnerability for rural households, with some sections, likely to be agricultural labourers, who are net consumers, suffering a very strong drop in incomes."

It said data on agricultural real wages, which fell about 40 percent between 1997 to 1998, would support these conclusions. Formal sector wages, meanwhile, have fallen 34 percent in real terms, a shock for the upper and middle income groups in urban areas.

Separately the report said government moves to impose a 30 percent import duty on rice means local prices will remain high, negatively affecting efforts to reduce the poverty rate. Between February 1996 and February 1999, the price of rice rose 180 percent, while non-food items rose 80 percent, making rice prices a major factor in the poverty level.

"This contributed to the rise in the poverty rate over and above what would have been expected due to the fall in output," the World Bank said. "In this regard, the government's decision to impose a tariff on the price of rice -- 430 rupiah/kilogram -- and hence maintain the high price dictated by the floor procurement price set by Bulog, the National Logistics Agency, is particularly unfortunate," it said.

The report also singled out political divisions within the country's five month-old cabinet and a lack of political support for agencies charged with implementing financial reforms, as hampering changes in the financial sector.

"The cabinet's difficulty in building an internal consensus and providing the political will to support the agencies tasked with financial sector reform reinforces concerns that differing political interests may hamper progress in the financial sector reform program," the macroeconomic update said.

It said while several steps such as the recapitalisation of Bank Mandiri and the trading of bank recapitalisation bonds were encouraging, the challenges facing the government remained "daunting".

Key requirements going forward include strengthening the Indonesian Bank Restructuring Agency's (IBRA) internal operations, accelerating asset resolution, and demonstrating the government's commitment to foreign ownership of banks, it said.

Paris Club grants Indonesia time to repay 5.8 bn dollars

Paris -- The Club of Paris, a group of leading creditor nations, agreed Thursday to reschedule 5.8 billion dollars of Indonesia's public debt. The sum -- a far bigger slice than Indonesia had hoped for -- will be repaid on a medium- and long-term basis between now and the end of March 2002.

"For us, this memorandum of understanding is a clear signal of the confidence we have in the recovery of the Indonesian economy," Philippe de Fontaine Vive, vice-president of the Club of Paris, told reporters.

Before Indonesian finance ministers began the two-day meeting with the Club of Paris on Wednesday, Bank Indonesia had said it hoped the deal would cover at least 2.1 billion dollars.

That is the amount of interest Indonesia owes on offshore debts this year. "We trust that in the medium term, Indonesian recovery is happening and so the international community wants to be a part of it through the public creditors," the Club vice-president said.

The Club signed an memorandum of understanding with Indonesia. Technical details of the rescheduling will be negotiated bilaterally in the coming months.

Indonesia's largest creditor, Club-member Japan, has already agreed to reschedule debt repayments totalling 1.6 million dollars this year. "In these circumstances, we are sure that this new memorandum of understanding should contribute to better capital in-flows, particularly private capital flows into Indonesia which has been part of the successful revival of the Indonesian economy."

Indonesia wins IMF backing for Paris Club restructuring

Simon Montlake, Jakarta -- Indonesia should find it easier to restructure $2.1 billion in sovereign debt owed to donor countries at the Paris Club meeting on April 12 after catching up on its economic reform program, the International Monetary Fund said Monday.

"I think the Fund will be supporting the request" to reschedule the debt, said John Dodsworth, IMF country representative to Indonesia. Indonesia has recently made good progress on bank recapitalization and private debt restructuring that should pave the way for the IMF to send a review team in the second half of April, Dodsworth told Dow Jones Newswires in a telephone interview.

The government is struggling to implement a slew of economic reforms after missing the IMF's original March 31 deadline. Missing the target date caused the IMF to delay disbursing $400 million in loans, triggering a slide in the Indonesian rupiah amid concerns over President Abdurrahman Wahid's ability to push through reforms agreed in a Letter of Intent signed on January 20. "There will be discussion in Paris as to the timing of the review," Dodsworth said.

The delayed loan disbursement cast a shadow over this week's Paris Club meeting as some donor countries were reluctant to allow Indonesia to reschedule its sovereign debt unless it remained on track with the IMF program.

However, Dodsworth said the Indonesian government had started to make headway in meeting its deadlines, including recapitalizing PT Bank Negara Indonesia over the weekend and beefing up the Jakarta Initiative, an agency tasked with facilitating negotations between private debtors and creditors. "We've seen some step-up in implementation of reforms in the last few weeks, and are very encouraged by that," he said.

But pressed on the government's claim to be back on track with its reform program, Dodsworth added that "I wouldn't say they've caught up." Wahid's cabinet secretary, Marsilam Simanjuntak said over the weekend that an IMF review team would begin work on April 21 and conclude a week later, but Dodsworth declined to comment further on the review timing.

On Friday, the Indonesian Bank Restructuring Agency said it had implemented nine out of the 14 programs Jakarta had agreed to with the IMF earlier this year. New deadlines have been reached for the other five measures.

It has also registered the initial public offering plan of PT Bank Central Asia with Indonesian regulators. BCA was formerly Indonesia's largest privately owned bank before it was nationalized in 1998. IBRA plans to sell up to 30% of BCA to the public between May 16 and May 19 and hopes to raise around IDR1.4 trillion ($1=IDR7,660) from the IPO.

However, Wahid's government has been slow to tackle deep-rooted problems in the judicial system to the detriment of high-profile legal cases including the takeover of Bank Bali, which was recently annulled by a Jakarta court.

It also backpedalled on a plan to lift fuel subsidies April 1 after political opposition and threats of mass protests against the measure. The government has still not said when it will cut subsidies, but admits that delaying by more than three months would undermine its budget provisions.

The International Monetary Fund says Indonesia doesn't urgently need the $400 million loan as it can easily meet its balance-of- payment requirements.