• UN peace mission at war with itself - Sydney Morning Herald
• Former militias form party to contest first election - Antara
• Militiaman wounded in border skirmish - Sydney Morning Herald
• Falintil fighters to work with UN - Sydney Morning Herald
• Phone company's East Timor blunder - Australian Broadcasting Coorporation
• US hopeful on Timor investigation - Reuters

• Suharto's controversial son-in-law back - South China Morning Post
• Petisi 50 group warns of New Order regime elements - Jakarta Post
• Legislators seen to have low productivity - Jakarta Post

• Laskar Jihad members enter riot- torn Maluku - Jakarta Post

• Soldiers confess to executing civilians - South China Morning Post
• Aceh, a defiant Muslim stronghold through the ages - Agence France-Presse
• Aceh separatists stay firm in goal for independence - Agence France-Presse
• 'Fragile peace that can be easily destroyed' - Straits Times
• Aceh ceasefire pact signed amid secrecy - Straits Times
• Sketchy deal unable to answer prayers for peace - South China Morning Post
• Aceh guerillas sign historic pact in Geneva - South China Morning Post

• Texmaco workers seek support from FNPBI - Green Left Weekly

• Prosecutors suspected of taking huge bribe - Straits Times
• Skepticism clouds inquiries into shootings, atrocities - Jakarta Post

• Mob attacks Chinatown - South China Morning Post
• Bargain sales hide trail of lost millions - New Zealand Herald
• Rise in abortions worries Jakarta - Straits Times
• Australian spy planes secretly watch Indonesia - Australian Financial Review
• Hot off the press: the story that wasn't - Australian Finanical Review
• Residents' blockade forces gold miner to vacate mine - Agence France- Presse
• The 'new' relationship - Green Left Weekly
• 'Political patron' blamed for July 1996 incident - Jakarta Post
• Masked mobs torch kiosks, discotheque - Jakarta Post
• Surabaya paper forced to carry front-page apology - Agence France-Presse

• Rupiah breaches 8,500 level in panic selling - Jakarta Post
• Rupiah weakens on panic selling, propped up by banks - Agence France-Presse
• 2000 GDP growth at "top-end" of 3-4 percent - Agence France-Presse
• Political discord 'hampers business' - Jakarta Post
• Investment in forestry, plantations at zero level - Jakarta Post
• Indonesian unrest: 20 firms may pull out - Straits Times
• Government, military to ensure security for investors - Jakarta Post
• Attack of the Indonesian hypermarkets - Businessweek

Anti-Suharto march repelled

Agencies in Jakarta -- Indonesian police fired tear-gas yesterday to disperse militant student protesters trying to reach the home of former president Suharto to demand he be taken to court.

The first volleys were fired after nightfall as the 1,000 or so students, frustrated at their inability to get closer to Mr Suharto's home, began to pelt the security personnel with stones and molotov cocktails. The rally was to mark the second anniversary of the shooting of four students, which fuelled the riots which toppled the veteran ruler two years ago.

After an almost three-hour stand-off during which both camps stayed in their own lines, the police charged into the crowd with batons. They then chased the students into side streets in the plush central Jakarta residential area, lobbing tear-gas canisters at them. Eleven students were seen being beaten up and arrested by plain-clothes policemen, and 10 policemen and one journalist were injured in the melee.

Police pushed the students back about 400m north to a market area, where the protesters began to burn rubbish and tyres and damaged a police post there, the reporter said. It was not immediately known whether Mr Suharto was inside his house at the time.

The students, from student bodies city-wide, had earlier marched from the Attorney-General's Office after Friday prayers and headed towards Mr Suharto's home, where they staged a joint rally near Jalan Cendana in the upmarket Menteng residential area where Mr Suharto lives, but they were held off about 200m from Mr Suharto's home by about 400 police in full riot gear posted on every junction leading to the house.

The students had earlier stopped outside the Atma Jaya Catholic University, near parliament, carrying the flags of their respective universities and anti-Suharto posters, including one that recommended five ways of punishing the former president, including hanging and castration. A giant white banner which read "Suharto must be hanged by the people" was held aloft as they marched down Sudirman Avenue.

This year's turnout was significantly smaller than last year's anniversary rally, which brought thousands of students to the streets. "This is because people don't believe that demonstration is the best way to resolve problems. Now there are so many other channels for people to air their demands, like going to Parliament," said a former student activist. "In the past, there were no channels to voice the people's aspirations."

Also yesterday, a ceremony was held to unveil a new memorial at Trisakti University honouring the four students who died there two years ago. Funded by teachers, students and relatives of the victims, the memorial includes four 10-metre-high steel pillars.

Each pillar contains a large bullet hole near the top. The memorial was installed in a parking lot in front of Trisakti University, where the students were shot.

Several hundred students and a few relatives of the victims placed four large wreaths at the base of the monument. "We really feel the loss of our four colleagues ... we will continue the struggle for them and the fight for democratic reforms," said Raja Tobing, president of the student union at Trisakti.

Student protestors call for faster probe of Suharto

Jakarta -- Indonesian student protestors on Wednesday urged Attorney General Marzuki Darusman to speed up a government probe into the wealth of former president Suharto which has dragged on for almost two years.

The students, from the City Network (JARKOT) group, many of whom camped overnight at the attorney general's office, met with Darusman in an open field in the office grounds, witnesses said.

The students, who have threatened to expand their protest as the second anniversary of Suharto's fall approaches, asked Darusman whether or not he had the courage to bring Suharto and his family to trial for their alleged corruption and abuse of power during his 32 years in office.

JARKOT activist Yervis asked Darusman to prove he was "willing to prosecute Suharto." Darusman told the students his office would "prosecute Suharto as soon as possible," and said questioning of the former president's family members and cronies was underway.

"I support your demand because we are currently investigating Suharto. Legal actions which have been taken were questioning of Suharto, his cronies and family," he said.

Darusman said he could give no time frame as legal procedures had to be followed. Placing Suharto under city arrest last month -- under which he is not allowed to leave Jakarta -- was evidence of his office's determination, he said.

Suharto, now 78, is being investigated for alleged graft and abuse of power before he stepped down amid mass protests on May 21, 1998. He was questioned once on the graft charges at his home on April 3 but the questioning was halted on advice from a team of doctors. A second questioning session last month was also cancelled on medical grounds.

Darusman, citing new evidence, late last year reopened the probe into Suharto, which had been halted under former president B.J. Habibie for lack of evidence.

The probe has so far focused on Suharto's seven tax-free charitable foundations, worth some four trillion rupiah (526 million US dollars), management of which was handed over in late 1998 to the Habibie government.

Lawyers for Suharto have cited his ill health and inability to communicate properly as reasons for not answering three summonses for him to appear for questioning.

Suharto, who says he is not guilty, has sued US magazine Time for alleging last year that the Suharto family was sitting on wealth totalling some 15 billion dollars, much of it in banks or as assets overseas.

Chinese protest in Indonesia

Thomas Wagner, Jakarta -- About 25 youths held a protest outside the presidential palace on Thursday that appeared to be the first public demonstration by Indonesia's ethnic Chinese minority in many years.

The youths demanded that former President Suharto and previous military and police commanders be put on trial for allowing rampages by the Muslim majority in the late 1990s. The rampages, in cities such as Jakarta, involved the burning of Chinese homes and businesses and the rapes of Chinese women.

Nobody has ever been arrested or charged in the attacks, even though a government inquiry confirmed reports by human rights groups that such crimes were committed.

"The rapes happened, Gus Dur!" said one banner, using the nickname of President Abdurrahman Wahid, who has taken steps to allow greater freedom for the Chinese minority since coming to power in October. "The state must prosecute and punish the attackers," the sign read. The demonstration ended peacefully after several hours, and 10 policemen standing nearby did not intervene.

The protest was small by Indonesian standards, but it was an unusual and potentially risky step for the Chinese minority to take. "This was a first," said Ignes Kleden, head of the Institute for Indonesian Affairs, a local think-tank. "For many years the Chinese haven't been able to practice their own culture. Now they can demonstrate. It's a big change for Indonesia. This shows they are finally getting their political rights," he said.

The Chinese make up only about 3.5 percent of the country's 210 million population. But their success in business and commerce has generated resentment among many indigenous Indonesians.

Suharto, who came to power in 1966, blamed the Chinese for a bloody, but abortive, communist coup that he claimed took place against his predecessor, President Sukarno. Thousands of Chinese were imprisoned or slaughtered with other suspected leftists following the coup. Suharto also banned the use of the Chinese language and forced Chinese families to adopt indigenous names in a campaign of assimilation.

During the massive pro-democracy protests that drove Suharto out of power in 1998, Muslim mobs rampaged through many areas, often burning the Chinese homes and shops, especially in Jakarta's Chinatown.

Since coming to power, Wahid, a reformist Muslim cleric with a Chinese ancestor, has promoted religious tolerance and lifted a ban on public Chinese festivities, such as the Chinese Lunar New Year in February. The government also now allows the minority to operate Chinese-language schools and to use store signs written in Chinese characters.

Budiman Sujatmiko: democracy is yet to be won

Budiman Sujatmiko, chairperson of Indonesia's People's Democratic Party (PRD), has been active in the movement for democracy in his country since 1988, when he was a student at Yogyakarta's Gadjah Mada University. After having been jailed for more than three years by dictator Suharto's "New Order" regime, Sujatmiko was released in December 1999, six weeks after the election of Abdurrahman Wahid to the presidency.

Sujatmiko, together with Timorese Socialist Party general secretary Avelino da Silva, visited Australia last month on a speaking tour organised by Action in Solidarity with Indonesia and East Timor (see advertisement on opposite page). Green Left Weekly's Nick Everett spoke to Sujatmiko in Sydney on April 12.

Since his election, Wahid has continued the reform of Indonesia's political system begun by his predecessor, B.J. Habibie. The reforms Habibie initiated -- legislating for multi-party elections, reducing the armed forces' representation in parliament, withdrawing some repressive labour laws and instituting a UN-supervised referendum in East Timor -- were forced by the growing strength of a mass anti-dictatorship movement demanding "reformasi total".

Since Wahid's election, the government has forced Golkar- appointed military commander General Wiranto out of the cabinet, released the remaining political prisoners and launched its own investigation into human rights abuses by the Indonesian armed forces in East Timor last September.

IMF `reforms'

These reforms have been widely touted by Australian and other Western governments as proof of the new government's commitment to democracy.

However, as Sujatmiko said: "These are just the minimum criteria for democracy.

"Freedom of speech, freedom of assembly, these offer the chance for the majority to rule. But if those liberties do not actually result in majority rule, we do not have democracy in the true sense." Sujatmiko conceded that Wahid, unlike his predecessors, "is not a bureaucrat".

However, "he has no policy to deliver better living standards and end the threat of unemployment. His policies cannot deliver people-friendly outcomes."

This is most clearly demonstrated, Sujatmiko said, by Wahid's pursuit of an economic restructuring program imposed by the International Monetary Fund.

"If the policies dictated by the IMF are fully implemented in the next three years, the majority of the people will have to bear the burden of an increased cost of living, driving them under the poverty line. The 1997-99 economic crisis resulted in 37 million unemployed; this figure will continue to rise if the IMF policies are implemented further."

"Wahid has given a commitment to the IMF that he will make cuts to state subsidies, resulting in increases in petrol, electricity and transport prices and increased education fees", said Sujatmiko. "He said he has to do this to reduce dependency on foreign debt and the IMF."

Mass opposition to the proposed price hikes forced Wahid to delay the fuel price increase.

Two poles

"Wahid is playing between two poles", noted Sujatmiko, "the IMF and the people. He wants to win sympathy from the people, but his concessions are still not enough. He has created anger by proposing to increase salaries for the first echelon bureaucracy by 2000%.

The PRD believes that the Wahid government remains loyal to the dictates of the IMF and Western governments and that Wahid "is seeking to use his popular following to position himself to implement this austerity program", Sujatmiko said.

He explained that there is no serious opposition to this economic program emerging from the parliamentary parties. "The PRD is the only political party criticising this program."

"This is occurring "in unity with the student movement and trade unions.

Workers and students have come to the parliament to protest the cutting of subsidies and teachers have mobilised in many centres in Indonesia demanding a 300% salary increase. Bus drivers, taxi drivers and others have taken action against the increase in transport costs.

"This has given confidence to the people: they can now act as political groups to put pressure on the government so that it must listen to the people."

Growing opposition to the IMF's demands has strengthened the PRD's advocacy of an alternative economic program. "We have already met with parliamentary members and presented our proposals", Sujatmiko said. He explained that the PRD advocates cancellation of the foreign debt, implementation of a progressive tax on high incomes, taxes on luxury goods, a reduction in the military budget and expropriation of the assets of Suharto (estimated to be worth US$16 billion), corrupt bureaucrats and military businesses.

"One of these proposals has been accepted already: taxes on luxury goods.

These measures are required to create a fund for maintaining state subsidies for essential items and services."

Suharto

Commenting on the prospects of Suharto being tried, Sujatmiko said: "There are student protests almost every day in Indonesia now. These have included attempts to occupy Suharto's house and demand that he face a `people's tribunal'. The students have no confidence in the Indonesian justice system.

The PRD supports this demand. "A fair trial of Suharto, corrupt bureaucrats and the generals responsible for human rights abuses cannot possibly occur under Indonesia's current justice system", Sujatmiko said.

XN P Body Text al tribunal to try the generals responsible for the violence in East Timor, Sujatmiko observed: "The UN is not demanding an international tribunal, but is there any alternative?

"The campaign for an international tribunal not only has the potential to address past injustices, it will draw attention to the political role of the armed forces in Indonesia. While the factions in the parliament have agreed not to give seats to the armed forces in the next parliamentary term, the structural issue of the role of the military in the regional command has yet to be addressed."

Last month, Wahid indicated his intention to introduce legislation to un-ban communism, while retaining a ban on the Indonesian Communist Party (PKI). Sujatmiko added that Wahid has issued a statement of apology to the PKI for the murder of more than 1 million PKI members and sympathisers following the Suharto regime's seizure of power in a military coup in October 1965. "Wahid has no phobia about any ideology and permits people to live with any faith or ideology in Indonesia; he is liberal- minded.

"However, both the conservative Islamic forces and the military are opposed to this, including forces inside the cabinet such as the Star and Crescent Party and Amien Rais [chairperson of the National Mandate Party]. Vice-president Megawati is silent on the issue. Opposition within Wahid's own cabinet pressed him to concede to maintaining the ban on the PKI."

Sujatmiko explained, "While the un-banning of communism would enable the distribution of Marxist literature, the question of whether we would openly campaign for socialism is a tactical one.

"We need to give a socialist perspective, not as something that is attainable in the near future, but as our longer-term objective. More immediately, we must continue to campaign for `people's democracy' ... this lays the basis for raising consciousness.

People's democracy

What does the PRD mean by the term "people's democracy"? "The Indonesian economy, while capitalist, is dependent on imperialism", Sujatmiko replied.

"That is, the economy is still dominated by foreign capital. Imperialism represses, contains the development of the Indonesian people.

"We cannot defeat imperialism and advocate socialism at the same time. It is not a question of delaying the tasks for achieving socialism, but ending the most reactionary elements of the present system.

"The challenge for us now is to understand how the workers and peasants could progress to managing our country, and to encourage the development of Indonesia's productive forces, which still cannot compete with those in the imperialist countries. The struggle for liberating Indonesia's productive forces from the domination of imperialist powers is a struggle which is still capitalistic in nature, in the sense of developing productive forces under the control of a people's revolutionary democratic government."

Reflecting on the repression the PRD experienced under New Order rule in Indonesia (its members have been hunted down, jailed, kidnapped and killed by the regime), Sujatmiko said, "Commitment [to the struggle for revolutionary change] is something that cannot be explained in a few words. It has to be explained in deeds. You have to look for the answer in practical experience."

He stressed, "For us, the existence of the PRD does not depend on the objective political situation. Democracy or not, we are still there.

"The new democratic space provides us with an opportunity to develop and disseminate our ideas, which have been discussed and debated since the founding of the PRD.

"Based on a solid theoretical and ideological standpoint, we believe that the struggle for democracy and socialism in Indonesia is a struggle that has to be based on the development of a working-class movement. That is why we have the slogan to give spirit to our cadres: `Build the party, build the working class'.

"These are two aspects of one thing: rebuilding the movement. The party is the organiser of the working class and the working class is the class that gives the party its direction."

Sujatmiko explained that the PRD draws on the lessons of the revolutionary struggles against Dutch colonialism in Indonesia and of people's movements around the world. "If you want something worthy you have to pay for it", he said. "You may have to go without, to live in prison to win bigger freedom for the people you want to defend. If you live in a society where the exploitation is very naked and very repressive, your decision to fight for the greater liberty of all by reducing your own personal liberty is logical."

Indonesia: fighting the IMF

Thousands of people protested in Indonesia on April 1 against policies demanded by the International Monetary Fund (IMF) in exchange for loans -- these include cuts to subsides on fuel, public transport, electricity and education. An increase in prices on basic needs will drastically affect the lives of millions of poor Indonesian people.

Concerned that political instability could result, the IMF advised the government to postpone the cut to fuel subsidies and the government agreed to delay implementing that measure. However, it said that cuts to electricity, telephone, education and transport subsidies would go ahead.

All major parties in Indonesia's parliament and President Abdurrahman Wahid support the IMF "reforms". However, the newly formed People's Committee for Justice (KEKAR) has vowed to continue the campaign to force the abandonment of the austerity measures.

The committee has representatives of the Indonesian National Front for Workers Struggle (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).

The FNPBI unions are demanding a 100% increase in the minimum wage, and have rejected a government offer of a 25-30% rise. The LMND and other student groups will continue to protest cuts to the education budget which will increase fees at some state universities by 300%.

The People's Democratic Party (PRD) has launched an extra- parliamentary campaign for an alternative economic program which includes the seizure of the illegally accumulated assets of depose dictator Suharto and his cronies, and a progressive income tax.

Australian companies and banks in the region are major exploiters of workers and resources. The Australian government provides military and other aid to governments that repress dissent. The Australian people can play a vital role by exposing and opposing the government's and big business activities and by giving solidarity to the people's struggles in Indonesia.
 

East Timor

UN peace mission at war with itself

Mark Dodd, Dili -- Autocratic decision-making by a few senior United Nations officials in Dili threatens the development of democracy in East Timor and the ultimate success of the peacekeeping mission, according to a protest note signed by angry UN district administrators.

"As you will now be aware, there is widespread concern amongst the District Administrators, in particular about the clear lack of consultation and the consequent lack of input on policy issues," the memo says. "This is particularly worrying as the exclusion of the DAs tends to exclude the concerns of the Timorese people with whom we work on a daily basis."

The memo paints a grim picture of a UN mission at war with itself, while lacking direction and unable to focus on delivering a successful and peaceful transition for the East Timorese struggling to rebuild their country after 24 years of destructive Indonesian rule.

It follows the resignation in March of the UN's head of district administration, Professor Jarat Chopra, who complained of persistent interference in his work by a small group of senior UN officials based in Dili.

The memo concedes complaints by the pro-independence National Council of Timorese Resistance that the UN is failing to engage East Timorese in the transition to full independence. Dated April 11, the three-page memo is addressed to Mr Jean-Christian Cady, the Deputy UN Special Representative and head of UN administration, and signed by the 13 UN district administrators.

It contains a sharp rebuke about the lack of consultation with DAs on important policy decisions, specifically the creation of district advisory councils and the appointment of East Timorese as deputy district administrators.

"There is a strong risk that we [UN] will miss the golden opportunity of carrying out a hands-on democracy-building process at local level if there is no local participation in a transparent system," the memo warns. The decision to appoint East Timorese as deputy DAs, if not handled correctly, could politicise the embryonic East Timor public service, it adds.

"These high-level posts might satisfy the international community's demand for involvement but will not increase our authority at a local level if the process is not handled correctly. Unless it is part of a broader integration strategy it is likely to be perceived as tokenism."

The absence of a "coherent program" for training East Timorese could result in an unwelcome dependence on former pro-Jakarta public servants, some of whom are returning under the UN's refugee program, the memo says. Under Indonesian rule, East Timorese were excluded from senior positions in the public service. The UN opened a public service training school last week.

The memo warns of tensions posed by the return of refugees with links to the former Indonesian administration and appeals for urgent steps by the UN to address the issue of reconciliation.

It suggests the UN register claims by East Timorese who lost property in post-ballot violence last September as one means of avoiding "popular justice".

Meanwhile, more than 300 students met in Dili yesterday to protest at delays in the resumption of their tertiary education, including the reopening of Dili University, closed since September.

Former militias form party to contest first election

Kupang -- The Timorese People's Party (PPT) intends to soon register itself with UNTAET [UN Transitional Authority in East Timor ] and become one of the political parties to contest the first East Timor elections, expected to be held at the beginning of 2001.

"We don't know the exact timetable for the elections yet, but we are making preparations to be one of the parties contesting those elections," Herminio da Silva da Costa [former deputy commander of the pro-Indonesian PPI, Integration Fighters Force], now general chairman of the PPT, told reporters in Kupang on Wednesday [10th May]. PPT would send a delegation to East Timor in June to register the party with UNTAET and also to form local party branches in all the districts, Herminio said...

Herminio said he was optimistic that the party would be able to win seats in the [new] parliament in East Timor because he had more than 300,000 [as received] supporters there. These supporters, he said, were people previously loyal to Indonesia and young people under their guidance while they were living in East Timor, who were ready to campaign for the party throughout East Timor.

He said that the UN would not be opening any polling booths outside East Timor so he would be discussing the matter with UNTAET and the UN peacekeeping force, to seek guarantees for the security of East Timorese living in NTT [neighbouring Indonesian territory] wishing to return to East Timor to exercise their right to vote.

Herminio said that, if his party was able to get a majority of the votes and take power in East Timor, they would give three choices to the East Timorese through which to determine their future. The choices were: to become an independent country and work day and night [to repay the national debt], to become "half independent" and cooperate with neighbouring countries, or to revert to being part of the Republic of Indonesia...

The PPT, whose symbols are red and white as in the Indonesian flag, was declared in Kupang on 7th May 2000.

Militiaman wounded in border skirmish

Mark Dodd, Dili -- At least one suspected militiaman was wounded in a heavy exchange of fire between Australian peacekeepers and a group of pro-Jakarta militia who had crossed into East Timor yesterday, a senior United Nations military official said.

"Military casualties still are not known. No peacekeeping force soldiers were injured in the exchange of fire," said Captain Dan Hurren, spokesman for the UN's Sector West, that covers the border region between East and West Timor. "However, a short time after the exchange, one of the suspected militiamen presented himself at a TNI [Indonesian army] post suffering from gunshot wounds."

Captain Hurren said the incident happened close to Batugade, less than a kilometre from the West Timor border. It ends four weeks of relative peace along the border and underscores the determination of hard-core pro-Jakarta militia to continue to wage armed cross-border incursions from bases in Indonesian West Timor.

In an interview with the Herald last month, the Sector West commander, Australian Brigadier Duncan Lewis, warned that his soldiers would maintain a high state of readiness while armed militia roamed freely across the border in West Timor. He estimated the number of hard-core militiamen to be a "few hundred" while total pro-Jakarta militia strength was about 1,500.

Captain Hurren said the five-man patrol comprising soldiers from 6th Battalion Royal Australian Regiment was conducting a routine patrol security operation south of Batugade when it was fired on without warning at close range. "The weight of fire directed against the PKF [peacekeeping force] was considerable," he said.

Falintil fighters to work with UN

Mark Dodd, DilI -- In a groundbreaking decision, East Timor independence fighters will work alongside United Nations peacekeepers as liaison officers, a senior UN military official said yesterday.

UN military spokesman, Lieutenant-Colonel Brynjar Nymo, confirmed that four senior members of the Falintil independence force would serve on the UN headquarters staff in three military sectors and at central command headquarters in Dili.

The decision is the first formal acknowledgement by the UN that the former guerilla force that waged a bloody 24-year insurgency against the Indonesian army will provide the core of any future East Timorese defence force.

"We cannot be seen to leave East Timor in a total security vacuum," Colonel Nymo said. "They need to be able to start and develop their future security force and Falintil could be the core of this group." In recent months the pro-independence CNRT (National Council of Timorese Resistance) umbrella group has been pressuring the UN mission here to provide a role for 1,500 Falintil troops cantoned in the mountain town of Aileu south of Dili. Falintil -- under the command of Taur Matan Ruak -- is a well-trained and highly disciplined guerilla force, active since 1974 and equipped mostly with small arms captured or bought from the Indonesian military.

Colonel Nymo said the UN administration's chief, Mr Sergio Vieira de Mello, had sought further instructions from UN headquarters in New York to clarify Falintil's military status.

He described the decision to appoint four Falintil officers as liaison officers as "just adopting to the realities of the status of Falintil". Their duties will likely include assistance with communications, but they could also play a key role in helping identify pro-Jakarta militia infiltrators.

Reliable UN military sources said the CNRT now wants a 5,000- strong tri-service defence force instead of the smaller French- style gendarmerie, or paramilitary security force it envisaged before last year's pro-Indonesian militia violence.

The question has been subject of heated debate in the CNRT. Several senior CNRT officials, including Mr Jose Ramos Horta, have been opposed to any type of defence force for East Timor.

Colonel Nymo said that specialists at Kings College, London, would undertake a study on behalf of the UN to report on the best type of defence force for East Timor, after the 8,500-strong UN force is wound down. A military training role for Australia has also been raised.

Falintil's commander-in-chief, Mr Xanana Gusmao, is known to have asked the former commander of Australian-led peacekeepers, Major-General Peter Cosgrove, for unspecified military assistance.

The present international peacekeeping force is drawn from 24 nations, with its main combat elements of Australian, New Zealand, Fijian and Irish troops deployed along East Timor's 170-kilometre border with Indonesian West Timor.

Phone company's East Timor blunder

Compere: An embarrassed Telstra is confronting something today; that its operation in East Timor is in breach of the local law.

Telstra went into Timor with the Interfet troops last September. It stayed on after Interfet's departure on a short-term with the UN to supply telecommunications. The UN, however, inadvertently outlawed Telstra's business and now everybody seems to be ducking for cover. Gerald Tooth reports.

Gerald Tooth: Mobile phones are big business in East Timor. There is no other real option after landline infrastructure was destroyed. With 10,000 United Nations personnel alone, there's more than a few users.

And Telstra has had a monopoly on their business since it came in to provide morale services to Australian troops last September. A situation that continues under short-term contracts with the UN, which is the temporary government in East Timor. But now Telstra's found that that monopoly is illegal.

Telstra Country Manager in East Timor Tony Reed.

Tony Reed: Well it means that it's just another issue that needs to be dealt with. I think that we've been in an environment virtually from the day that we came here of uncertainty and the prime objectives for us was to restore the communications here. If that presents a problem for us then it's a problem that needs to be addressed and we'll seek to address it.

Gerald Tooth: Telstra has fallen foul of the first regulation of the UN passed when it took over from Interfet. That reinstated Indonesian law as the law of East Timor until a government was elected. The foreign investment provisions state that any telco operating in the country must enter into a joint venture with East Timorese.

Telstra has not done this, and has no plans to do so at the moment. The UN administration, unaware that it had inadvertently outlawed the country's only telecommunications system, is floundering for a way to remedy the situation. The man in charge of infrastructure at the UN in East Timor is Bob Churcher.

Bob Churcher: We've inherited a situation which was not necessarily of our making and we're going to make the best of it there is, on behalf of the people of East Timor.

Compere: Bob Churcher of INTAET, and that's our program today; Gerald Tooth reporting there.

US hopeful on Timor investigation

Washington -- The United States said on Friday it saw "promising prospects" for Indonesia's domestic investigation into atrocities in East Timor last year. But if the Indonesian judicial system failed to deliver credible justice, the international community would have to take on the task, Secretary of State Madeleine Albright told a seminar for editors on war crimes.

Indonesian Attorney-General Marzuki Darusman has set up a 64- strong team to investigate the violence which swept East Timor after it voted for independence last year. The United Nations has welcomed general progress by Indonesia.

Albright said: "The [Indonesian] team wasted no time in bringing in several top generals for questioning. The prospects are promising for a credible and effective domestic accountability process that hardliners cannot dismiss as a Western-imposed, politically motivated version of victors' justice," she added.

The investigation is into killings by militias opposed to independence for East Timor, a former Portuguese colony invaded by Indonesia in 1975, and possible assistance to the militias by elements of the Indonesian military. The territory is now under UN administration in preparation for independence in about two years.

Albright said: "The bottom line is that those responsible for orchestrating this blood bath must be brought to justice. If the Indonesian judicial system is capable of delivering credible justice, so much the better. "If that is not ultimately the case, the international community can and should exert its prerogatives to see that the perpetrators are brought to justice."
 

Government/politics

Suharto's controversial son-in-law back

Vaudine England, Jakarta -- The discredited former special forces commander, Prabowo Subianto, has announced in Jakarta that his almost two-year exile in Jordan is over and that he is transferring his commercial activities back to Indonesia.

Mr Prabowo is a controversial figure due to his as-yet unexplained role in the deadly riots and manoeuvring which brought down President Suharto, his father-in-law, in May 1998. He has visited Jakarta occasionally but is now no longer avoiding the limelight.

"Disaffected armed forces personnel, both active and retired, could be behind political and social unrest in the country," he said at his first press conference in Jakarta in two years.

"Anybody in this country is capable of fomenting unrest," he said, adding that not only the military has the power and means to do so. The possibility of foreign intelligence groups being involved also could not be ruled out, he said. Just as provocative were his comments about protests by students yesterday against the slow pace of investigations into the corruption of Suharto. "We should all be fair ... everybody has his merits and demerits. We should respect a leader of this nation and his good deeds," he said.

Mr Prabowo once headed the Kopassus special forces, but was sacked from the military in 1998 after troops under his command kidnapped and tortured anti-Suharto activists. He was also accused of inciting the 1998 riots that helped topple Suharto and of trying to topple his successor, president Bacharuddin Habibie.

The former armed forces chief, General Wiranto, triumphed over Mr Prabowo in the power struggle of two years ago, but General Wiranto is now retired from the military and suspended from cabinet due to claims of rights abuses arising from his troops' behaviour in East Timor.

In April, reports emerged that Mr Prabowo was visiting Indonesia, and that he had found time to meet his "friend" Amien Rais, the chairman of parliament. Also present were two radical Islamic leaders. Mr Prabowo so far has disclaimed political ambitions.

Indicative of how divisive his return might be was the exchange of views in Asiaweek magazine after a recent cover story on Mr Prabowo, which many reformist and human rights figures regarded as overly favourable to him.

"People still wonder who was responsible for the riots: they could not have happened on such a vast scale without a 'mastermind'," wrote Jesuit priest Sandyawan Sumardi, a member of the joint fact-finding team which aimed to find culprits for the May 1998 events.

In reply, the editors of Asiaweek said their research "does not eliminate the possibility which Sandyawan suggests: that Prabowo could have used his personal links with soldiers for a certain end during the riots. But up to this point, we have found no evidence or witnesses to prove that he indeed did so."

Petisi 50 group warns of New Order regime elements

Jakarta -- After two decades of opposition, the Petisi 50 (Petition 50) group was unrelenting on Tuesday, marking its anniversary with a strong warning that allies of its old foes, the New Order regime, were still threatening democratization.

To mark its 20th anniversary the group issued a statement titled We are Called to Save the Nation, warning that political supporters of the New Order regime were quietly continuing efforts to regain power. "The nation and the state are under threat, therefore we are called upon to save it," Chris Siner Kei Timu said reading the statement.

The statement was signed by the group's chairman Ali Sadikin and members Azis Saleh, Gen. (ret.) Hoegeng Iman Santoso, S.K. Trimurti, Hari Sanusi, Rajab Ranggasali, Wachdiat Sukardi and Chris himself. The gathering marking the group's jubilee was held at Ali Sadikin's residence on Jl. Borobudur, Central Jakarta.

Ali, a retired marine lieutenant general, is one of the cofounders of the group, which was established on May 5, 1980. The group consists mostly of former senior government officials and military officers. At a time when there was rarely strong public opposition toward the government, the group was steadfast in its criticisms of Soeharto's rule.

President Abdurrahman Wahid visited Ali Sadikin in March and praised him as the country's pillar during the difficult times under Soeharto's rule. "He was very strong in facing the hardship. I am very appreciative of him," the President said of Ali. Ali himself said at that time Abdurrahman's Cabinet would need at least one year to show its progress due to the complexity of the country's problems.

In their statement on Tuesday, the group did not explicitly criticize Abdurrahman's presidency, however they did express concern over Cabinet disunity. "The formation of the Cabinet was a compromise between the old regime and reform forces," the group said, while suggesting the upcoming general session of the People's Consultative Assembly (MPR) in August be a forum to acquire a progress report from the President.

Legislators seen to have low productivity

Jakarta -- Despite being more democratically elected and rambunctious in its work, the current legislature is seen to be less qualified and productive than previous ones, a senior observer and politician has said.

Political scientist Arbi Sanit said during a "reunion" of former political activists and ex-political prisoners here on Saturday, "Only one law, which is on the state budget, has been passed by the DPR (the House of Representatives) in six months." "Legislators still wait for the government's initiative [to make laws] despite having the right to propose one," Arbi told The Jakarta Post.

He asserted that several new laws were urgently needed, particularly those concerning the Supreme Court, police and the Attorney General's Office.

Indonesian Democratic Union Party chairman Sri Bintang Pamungkas charged that compared to previous legislatures under former presidents Soeharto and B.J. Habibie, the current legislature's performance was not only disappointing but also "mad".

"During Soeharto's era, about 10 laws were passed every year. Legislators during Habibie's government passed 60 laws in only 10 months," despite the fact that people did not know and did not participate in them, Sri Bintang said.

Arbi remarked that the legislators' low productivity was, in part, caused by their lack of experience. "Legislators from most political parties still lack technical competence," Arbi said, while calling on them to "work harder".

Moreover, Arbi said, many party representatives in the House tended to stroll into long and unimportant debates in discussing an issue. There are 15 political parties represented in the House, with the Indonesian Democratic Party of Struggle taking most of the seats with 153 out of 500.

Arbi also expressed regret at the decision to raise the salary of legislators, which would effectively double their monthly income.

Arbi noted that the House's passiveness has so far been overshadowed by public demonstrations and protests on various issues, such as a corruption case involving Soeharto. "People should urge the House to be more active," Arbi said.
 

Regional conflicts

Laskar Jihad members enter riot-torn Maluku

Ambon -- Up to 200 members of the Laskar Jihad (Jihad Force) Muslim group have entered riot-torn Ambon from Namlea Port on neighboring Buru island, police said. Maluku Police spokesman Maj. Jakriel Phillip said on Monday that police and intelligence officers have been deployed to monitor the group's activities.

He said the group was closely watched by security personnel aboard two patrol ships, but was not prevented from landing at the Slamet Riyadi port. They went straight to the Al Fatah mosque upon arrival.

According to Jakriel, the first group of 87 jihad members from Ahlus Sunnah Wal Jamaah reached Maluku on Friday night on board KM Lambelu ship and stayed on Buru island before traveling to Ambon on Danau Rana ferry the following day.

"Based on our latest information, the number of Laskar Jihad members has reached between 112 and 200 people," Jakriel said. Laskar Jihad Ahlus Sunnah Wal Jamaah chief Jafar Umar Thalib said earlier that a total of 3,000 members would leave for Ambon through Tanjung Perak Port in Surabaya, the capital of East Java, beginning on Sunday.

Pattimura Military Commander Brig. Gen. Max Tamaela warned the Muslim volunteers against instigating further unrest in Ambon. "We cannot stop them from coming [here]. But if they act badly in Ambon, we will take firm measures. I've urged them to refrain from provoking trouble," Tamaela said.

He said security forces could not prevent the group's arrival as they were unarmed and did not commit any crime. "They say they want to help rehabilitate Ambon and that they are here to do social work as well as propagate Islam. Let's see if the group keeps its word," he said.

Sectarian conflict has rocked Maluku islands for 15 months since breaking out in Ambon in January last year. A semblance of peace has been seen in the last few months, although minor clashes still occur.

In the latest incident on Monday, two residents from Laha village were injured as a group of people from the neighboring village of Tawiri fired homemade guns at them. The villages are located near Pattimura Airport, about 40 kilometers east of here.
 

Aceh/West Papua

Soldiers confess to executing civilians

Agencies in Banda Aceh -- For the first time in Indonesia's landmark human rights trial in Aceh, soldiers yesterday admitted they had executed civilians but said they were innocent of murder because they were only following their commander's orders.

The 13 soldiers testified one after another that 26 students who had been injured in a military raid on their Islamic boarding school in Aceh last July were then taken into the countryside and shot dead.

While the trial continued, five people were killed in the latest round of fighting, three days before Indonesian officials and Aceh rebel leaders are scheduled to meet in Geneva for peace talks that could lead to a ceasefire in the 25-year-old separatist insurgency.

The unprecedented rights trial was launched in April by Indonesian President Abdurrahman Wahid as a way of reaching out to the war-torn province in northwestern Indonesia. The rebels are fighting for independence, a greater share of the profits from the oil-rich region and the right to impose Islamic religious laws.

The 13 soldiers who admitted executing the students said they should not be held accountable for the crime because they were following orders.

One of the defendants, Lieutenant Trijoko Adiwiyono, said he questioned the order to shoot the injured students but was slapped by his commander, Lieutenant-Colonel Sudjono, and was forced to carry out the order. Sudjono later disappeared and remains at large. "He might have shot me if I had rejected his order," Adiwiyono testified in the heavily fortified courtroom.

The executions followed the deaths of 30 students and a teacher who were shot dead by the military during the same anti-guerilla sweep. The 11 soldiers and a civilian accused of being responsible for those deaths testified on Monday that they had opened fire in self-defence. The prosecution is seeking the death penalty in the case against the 24 military and one civilian defendants.

Since coming to office in October, Mr Wahid has been reducing the tremendous power that the military enjoyed under former president Suharto, the authoritarian leader who was driven from power in May 1998 by widespread pro-democracy protests and rioting. During Suharto's 32-year regime, police and soldiers were often accused of killing civilians, especially in areas where insurgencies were under way, such as Aceh and East Timor.

In the latest fighting, Lieutenant-General Syafei Aksal, a local police chief, said three rebels were shot dead in a gunbattle with security forces that also left seven soldiers wounded in northern Aceh. But rebel spokesman Teungku Ismail Syahputra said the three people killed were civilians.

On Monday, unidentified gunmen shot dead a civilian on the outskirts of the provincial capital, Banda Aceh, police spokesman Lieutenant-Colonel Sayed Huseini said. An Indonesian Red Cross volunteer, Ridwan, said another civilian was found dead in the capital. The killings bring this year's death toll in Aceh to 345.

Also yesterday, the state-appointed National Human Rights Commission's chairman, Djoko Soegianto, announced he would appoint a new team of officials to investigate ongoing human rights abuses in the province, saying that atrocities were still being committed.

Aceh, a defiant Muslim stronghold through the ages

Jakarta -- Aceh, at the westernmost tip of the Indonesian archipelago, has remained through the ages a staunch Muslim stronghold which has defied all outside attempts at domination.

One of the first regions in the archipelago to come into contact with Islam around the eight century, along with the first Islamic kingdom established in Perlak in 804, Aceh has since remained strongly linked to Islam.

A succession of kingdoms flourished there, peaking under the rule of Sultan Iskandar Thani in the mid-17th century. After Thani's demise in 1640, the fiercely independent sultanate of Aceh become a battle ground for influence between the British and the Dutch until the 1824 London Treaty left the area to the Dutch in return for a British free hand in India.

Recalcitrant Acehnese rulers and Muslim leaders led a resistance against the Dutch in the Great Aceh War from 1873 which ended only with the Japanese occupation in 1942 during World War II.

The Dutch colonial authorities, who dominated most of the archipelago by the turn of the 20th century, had managed to secure a only small area around Banda Aceh, the capital of Aceh.

The people of Aceh were among the staunchest supporters of the Indonesian Republic when it was proclaimed in 1945, and during the years of freedom fighting that culminated with the official recognition of Indonesia's independence by the Dutch in 1949.

But after 1950 the Acehnese quickly became disillusioned with the Republic's leadership, which was generally perceived as corrupt, neglectful and "un-Islamic". Resentment also grew as the country's first president, Sukarno, merged Aceh with North Sumatra as a single province.

A rebellion erupted in September 1953 under Daud Beureu'eh and the Aceh revolt formally joined the broader Darul Islam movement for an Islamic Indonesia. Conciliatory policies by Jakarta and a willingness to compromise on the part of the Acehnese ended the revolt in the late 1950s.

In 1959, Aceh was granted the status of a special territory with considerable autonomy in religious and educational affairs -- but once again it only turned out to be so on paper, and the Acehnese felt betrayed.

Resentment against Jakarta in Aceh has been fuelled by religious, economic, and political grievances. The region is more orthodox Muslim than the rest of the country and has sought to protect its strong religious character.

Disillusionment also developed over what they perceived as continued Javanese economic and political domination over their natural resources -- huge reserves of fossil fuels and extensive, undeveloped forests.

In December 1976, the Aceh Merdeka (Free Aceh) movement, led by businessman and local nobleman Hasan di Tiro, proclaimed independence for Aceh. Jakarta responded by killing some of the movement's leaders while driving others, including Tiro, into exile in Sweden.

Armed opposition to the central government arose again in 1989, prompting a decade of violent anti-rebel military operations that lasted until August 1998 and saw at least 2,000 people killed and widespread gross human rights violations by soldiers.

The end of the repressive regime of Suharto in May 1998 allowed greater freedom throughout Indonesia, spawning more open demands for independence an a redress of past human right violations by the authorities and its military.

The change in government allowed human rights workers to uncover proof of the long-suspected rights abuses committed by the military, especially during the decade of military operation.

Jakarta's reply to the growing demand for a referendum on self determination for Aceh has been a categorical rejection. President Abdurrahman Wahid has instead offered broader autonomy.

Despite the lifting of the anti-rebel operations in 1998, violence has continued between rebels and soldiers and more than 400 people have been killed so far this year.

Aceh separatists stay firm in goal for independence

Geneva -- Separatists from Indonesia's northern Aceh province remain committed to their goal of independence, according to a written statement released hours after agreeing a three-month ceasefire with Jakarta here Friday.

The Free Aceh Movement (GAM)'s commitments to achieve its solemn goal remains intact until Aceh gains its independence", said the GAM's statement.

The accord, signed in Geneva by representatives of the Indonesian government and the GAM, was an agreement from both sides to "explore means to stop violence in Aceh", it said.

But it added the move did not mean GAM is "becoming weaker in its struggle for the independence of Aceh." And it said: "It was clearly and firmly explained that there was no agenda for political solution for Aceh."

The truce due to start on June 2 will last an initially agreed three-month period and aims to reduce human suffering and violence in the restive province, where rebels having been struggling since 1976 for independence.

'Fragile peace that can be easily destroyed'

Marianne Kearney, Jakarta -- Even as Indonesia's landmark ceasefire accord with separatist Acehnese rebels was being hailed yesterday, analysts warned that the pact could be easily sabotaged by rogue elements who do not want to see an end to the 24-year conflict.

They say that unless the accord is tightly monitored, provocateurs who for the last year have conducted random killings, bombings and burnings, could gain the upper hand and destroy the ceasefire.

"The agreement is a good opportunity for other rogue elements to show that the President can't solve the problem. If they don't want the president to succeed they can use it to embarrass him," one military analyst predicted.

Both President Abdurrahman Wahid and Human Rights Minister Hasballah M. Said have blamed the violence on either enlisted members of the Indonesian armed forces or deserters who are possibly backed by groups in Jakarta.

Casting doubt on whether even a committed police force can stop such rogue violence, non-government groups pointed to the recent spate of bombings in the provincial capital of Banda Aceh, which has continued despite a heavy security presence.

They say the provocateurs are elements in the military who do not want the current trial of soldiers, accused of massacring civilians, to continue. Other western analysts say that some of the rogue elements are criminal gangs who instigate the violence for their own business ends.

And despite public guarantees from armed forces (TNI) commander Admiral Widodo that he supported the accord, an analyst said he doubted that all factions of Indonesia's "fragmented" military would support the agreement -- even if they have no connection to the rogue elements.

"By signing this agreement the President dramatically shows his distrust of the military. It is clear proof that he is willing to venture into unchartered waters and turn to the international community rather trust TNI," the analyst said.

He added that that while publicly supporting the agreement, privately, the military were very concerned that the accord gave de facto recognition to the rebels as representatives of the Acehnese people. They felt that this would open the door for the rebels to gain international recognition.

Mr Abdurrahman has tried to squash such criticism by referring to the agreement a "humanitarian pause not a ceasefire" because he said the term ceasefire implied equal status to both parties.

But his attempts to satisfy his critics has created distrust among those in the Free Aceh Movement (GAM). Rebel spokesman Ismail Sahputra said that by insisting it was not a ceasefire, Mr Abdurrahman was backing away from the spirit of the agreement.

"We don't believe it can work because Gus Dur says it one way before it is announced and them says it is like this. A ceasefire and stopping human rights violations have to go together," he said, adding that he doubted the government could control all its troops.

Another analyst Salim Said asked whether the breakaway Malaysian-based faction of the separatist rebels would try to sabotage the agreement. "How about the other GAM? If you are the other GAM that is not represented by Hasan di Tiro, you could create trouble," said analyst Salim Said.

While analysts and non-government groups have hailed the government for taking the landmark step of trying to open up negotiations with the rebels, the move has also attracted much flak from Jakarta-based politicians.

"There is a feeling of concern among politicians that what the President is doing is leading us to second Timor fiasco. They are really afraid that by bringing it to an international level we will open a Pandora's Box and encourage another disappointed region to go internationally to address the problem," Mr Salim said, referring Irian Jaya's growing independence movement.

Former president Habibie's agreement to hold a referendum last year in East Timor contributed to his failure to be endorsed as presidential candidate for the Golkar party.

Aceh ceasefire pact signed amid secrecy

Geneva -- The Indonesian government and Aceh separatist rebels yesterday signed a ground-breaking three-month ceasefire agreement at a secret location in Geneva aimed at ending more than two decades of violence in the province.

A government statement said the ceasefire, signed under a strict news blackout, would come into effect on June 2 and would be reviewed regularly.

"This joint understanding is an early step of a hundred-step journey in the efforts to find a final solution to the Aceh problem," said Indonesia's ambassador to the United Nations in Geneva, Mr Hassan Wirajuda, who signed the deal with Mr Zaini Abdullah, Health Minister of the Free Aceh Movement.

The signing followed three rounds of talks between the two sides facilitated by the Geneva-based Henri Dunant Centre for Humanitarian Dialogue.

The Indonesian statement said both sides had expressed hope that the agreement "will not only help decrease the human suffering and violence in Aceh, but will also help boost the confidence towards finding a peaceful solution to the conflict there".

The deal came despite repeated assertions by Indonesia's President Abdurrahman Wahid that the government would not bow to rebel demands for independence.

Instead, Mr Abdurrahman is promising provinces more autonomy and a greater share of their own wealth in an effort to reduce anti-Jakarta sentiments elsewhere in the archipelago. Facing intense domestic pressure and a public fearful that the agreement could lead to Indonesia's break-up, Jakarta played down the significance of the deal.

"This deal is called a humanitarian pause. So there is no business about giving recognition to anyone by anyone," the President told reporters in Jakarta.

And in a sign of the delicate balancing act he faces, Mr Abdurrahman decided against sending Foreign Minister Alwi Shihab to witness the signing as planned because of "concerns from inside the country".

The Indonesian statement said both sides would set up two joint committees to oversee the ceasefire. One committee would coordinate humanitarian aid deliveries while the other would seek to ensure the reduction of tension and the cessation of violence.

The committee on security "will prepare ground rules for the conduct of activities pertaining to the humanitarian pause, guarantee the absence of offensive military actions and ensure the continuing of normal police function for the enforcement of law and the maintenance of public order", the statement said.

The committees will be based in Banda Aceh but a "joint forum" comprising representatives of both sides will be based in Switzerland and will be regarded as the highest decision-making body.

The ceasefire comes at a time when demands for an East Timor- style independence ballot are mounting in resource-rich Aceh.

Sketchy deal unable to answer prayers for peace

Chris McCall -- Aceh's prayers for peace have not been answered despite a landmark deal to halt the violence that has ravaged the Indonesian province.

The agreement signed in Geneva yesterday between Jakarta and the Free Aceh rebels was a milestone, but stumbling blocks remain, particularly whether the de facto ceasefire will hold. A Malaysia-based rebel leader rejected the deal before it was even signed and insiders say there are serious fears within Indonesia's military that it could lead to their withdrawal from the province.

Free Aceh, also known by the acronym GAM, insists it has not given up its demand for an independent Islamic state, something the military has vowed to prevent.

"This is a step forward, however small. It may enable the humanitarian situation to improve," said Saifuddin Bantasyam, executive director of Care Human Rights Forum, a top human rights monitor in Aceh. "But I have the impression that the military does not want there to be a dialogue with GAM. In truth, there has been no meaningful change in the intensity of the conflict. The battle is still between GAM and the Indonesian military and police."

Sources close to the talks say that if the deal works, police may ultimately be expected to conduct joint security operations with guerillas, a tall order since this year's death toll includes 38 police and soldiers. Police stations have become prime bombing targets in a wave of attacks spread across virtually the entire province of 3.5 million.

Key issues -- including when and if a referendum on independence might be held -- have been skirted. Neither have the rebels said whether they would consider autonomy within Indonesia as an interim solution. But the main body campaigning for a referendum welcomed the deal, despite its limitations.

Despite a series of public statements by the military backing the deal, insiders say it insisted that the word "ceasefire" be left off. The top brass appear afraid to give away too much ground, fearing the exposure of the true nature of the largely secret war in the province before former president Suharto's downfall in May 1998. "They don't want disarmament," a source close to the talks said.

Leading Indonesian human rights group Kontras has outlined a series of follow-up measures it sees as necessary, including disarmament, the formation of an investigative team into past human rights abuses and an agreement on the future relationship between Aceh and Jakarta.

The conflict had been largely seen as unsolvable amid fears that independence for Aceh would trigger a messy break-up of the whole of Indonesia. Most leading Acehnese believe a referendum would result in a vote for independence, but many doubt it would be a resounding victory as in East Timor.

Aceh guerillas sign historic pact in Geneva

Reuters in Geneva -- Jakarta yesterday signed an historic agreement with the Free Aceh rebels to halt fighting in the troubled province. The deal for a three-month "humanitarian pause" was signed in Geneva by Indonesian Ambassador Hassan Wirajuda and the rebels' health minister, Zaini Abdullah.

In Jakarta, Human Rights Minister Hasballah Saad looked delighted as he announced the signing a few minutes later. The native Acehnese minister, flanked by other leader figures from the province, was optimistic it would succeed. "As I member of a nation that loves peace I pray that this agreement will bring peace," he said.

Life came to a virtual standstill for much of the day in the war-weary Sumatran province, as its people held mass prayers to mark the deal, amid hopes it will lead to a lasting peace. "People are very enthusiastic about this agreement. All the people in Aceh support it and want it to happen," said a resident from the capital Banda Aceh.

Thousands crowded into mosques in the staunchly Muslim region to pray for the accord to work. Schools stopped classes in the morning so children could say prayers, while government workers and others also stopped work. But there were doubts about whether it would succeed, as the rebels had not abandoned their demand for an independent Islamic state.

Thousands have been killed in a war which has lasted more than a decade. Until recently it was seen as almost unsolvable. At least 366 people have died this year alone amid a police-led crackdown on the rebels, rights groups say. The conflict has also brought massive human rights abuses, including rape and torture for which most Acehnese blame the military.

But, at the last minute, Indonesian Foreign Minister Alwi Shihab was ordered not to witness the deal, amid fears by the Government it would be seen as political recognition of the rebels. President Abdurrahman Wahid said, however, that this was not an important element. "It has absolutely nothing to do with the recognition by either the Government or rebels," he said.

Meanwhile, rebel spokesman Ismail Sahputra said Mr Shihab's absence was not a problem for the rebels. Mr Sahputra added the movement's military chief had ordered its men back to barracks and would ensure that they did not break the accord. Military commander Abdullah Syafii would also be staying in barracks and welcomed the deal.

"This is a first step. We want to go to a dialogue for Aceh to become an independent country," Mr Sahputra said. "The Indonesian military and police must get out of Aceh. This is still a low- level discussion."

The deal was put together with the help of the Henry Dunant Centre, a humanitarian agency with extensive experience in conflict resolution. But insiders said the talks that led to the agreement were awkward. Exiled rebel leader Hasan Tiro, who styles himself as Aceh's head of state, refused to sign it himself on the grounds that Mr Wahid had not.

The deal establishes four committees, including one on humanitarian action and one on security, all with an equal number of representatives from each side.

An overall joint forum will be established in Geneva to supervise its implementation. The understanding is that the government nominees should be indigenous Acehnese. A humanitarian action plan is part of the deal, with a timescale of two to three weeks for a rapid security assessment.
 

Labour struggle

Texmaco workers seek support from FNPBI

Julia Perkins, Jakarta -- After marching with thousands of other workers on Parliament House here on May 1, 1500 workers from the Indian-owned textile company Texmaco camped outside overnight to protest against their treatment by their employer and demand higher wages.

The workers are all compulsorily enrolled in the All Indonesian Trade Unions (SPSI), the government-run puppet union formed under ex-dictator Suharto.

The SPSI had agreed to Texmaco's offer of a 15% wage rise without consulting the workers.

However, the workers wanted a 30% pay rise, which would allow them to cover their basic living expenses, and a reduction in the number of Indian expatriates in top management positions at the company, who the workers claim are driving the company's costs up and thereby blocking their chances of better pay.

Because parliament was in recess, the workers could meet with only a few parties' representatives, including from the PDKB (the Love the Nation Democracy Party), the PKB (the National Awakening Party of President Abdurrahman Wahid) and Golkar, formerly Suharto's party. Neither the PKB nor Golkar were willing to give a firm commitment to help the workers. The PDKB promised to write a letter to Texmaco management supporting the workers' demands.

The company has not only refused to meet the workers' demands but has, with the agreement of the SPSI, closed the factory for three weeks and told the striking workers that they have until May 16 to re-register for their jobs.

The Texmaco workers have turned to the newly formed independent union federation, the Indonesian National Front for Labour Struggles (FNPBI), for assistance. The FNPBI's international relations officer, Romawaty Sinaga, told Green Left Weekly, "The workers are likely to win their demands if they stick together and refuse to re-register".
 

Human rights/law

Prosecutors suspected of taking huge bribe

Jakarta -- In what is seen here as another blow to the Indonesian justice system, the Attorney General's Office admitted that five state prosecutors are suspected of taking a 12 billion rupiah (S$2.4 million) bribe to conceal evidence. The five are currently under investigation by the A-G's Office's Internal Affairs Division for their actions in a graft case involving the former finance manager of Jakarta-based PT Aerowisata Catering Service.

Attorney-General Marzuki Darusman confirmed that an internal investigation was underway and that the five were being questioned. "Yes it's true, but we're still awaiting further reports," he said on Wednesday when asked about the investigation into the five prosecutors who are still active at the Directorate of Special Crimes.

The graft case in which the five prosecutors were allegedly involved centres on the reported swindling of some rupiah 28 billion from PT Aerowisata's account by then finance manager Kosasih.

The Indonesia Reform Advocacy Institute (LARI), in a report handed to the A-G's Office on Monday alleged that the five prosecutors seized several of Kosasih's properties earlier this year as evidence, despite the fact that their ownership was not in his name.

The seized properties, worth some 12 billion rupiah, included an apartment in East Jakarta, a plot of land in the Pulogebang area, an automobile showroom in Tangerang with five Mercedes-Benz cars, Kosasih's own private car and several houses located in Jakarta, Bogor and Bandung.

The report, signed by LARI chairman Edi Soemarsono, alleged that the prosecutors then sold off the evidence and divided the spoils. According to the report, the five also told Kosasih to flee -- thus hampering the case. Mr Edi claimed that part of the information in the report was testimony from Kosasih's wife, Betty.

One of the five prosecutors being investigated, who spoke on condition of anonymity, admitted that there had been a "bribe" to impede the investigation. But he claimed that the seizure and eventual liquidation of assets was only conducted by the head of the prosecutors team, while the other four only signed the seizure notification.

"I only met Kosasih once during the first questioning... Moreover, I never saw the seized properties and was never involved in the seizure plan," he said.

Skepticism clouds inquiries into shootings, atrocities

Jakarta -- Once powerful generals are facing inquiries into various crimes. Munir, co-founder and advisory board member of the Commission for Missing Persons and Victims of Violence (Kontras) shares his reasons for pessimism with The Jakarta Post. An excerpt of Thursday's interview follows:

Question: How do you feel about the inquiries by the National Police Headquarters, the Attorney General's Office and that by the Commission of Inquiry into Human Rights Violations (KPP HAM) in Tanjung Priok respectively investigating the 1996 attack on the Indonesian Democratic Party (PDI) Headquarters, East Timor atrocities in 1999 and the 1984 shootings in Tanjung Priok, North Jakarta?

Answer: I'm pessimistic about all those cases because of the lack of clarity in the inquiries. But the National Police are relatively doing a better job; they are serious. They are showing that the police want to improve themselves.

They are working in the context of wanting to show a firm attitude toward the incident [of July 27, 1996] although they are constrained in their legal capacity when it comes to military elements [reportedly also involved in the case]. I respect the police more in these inquiries compared to the National Commission on Human Rights (Komnas HAM, which set up KPP HAM).

Why do you respect the police more?

The police, in their limited capacity, seem to be doing their best while Komnas HAM, which now has all the authority it needs under the new law [on the commission], is not doing enough.

For example, they asked Gen. (ret) L.B. Moerdani where he was at the time of the incident on September 12, 1984. They're approaching this like an ordinary criminal case.

This is a case of crimes against humanity; they should have asked for instance, whether he as then armed forces commander had intelligence information prior to the incident and what measures were taken. The level of planning on the part the state had in the violence that took place could then be revealed.

Then the inquiry is a setback; KPP HAM in East Timor attempted to reveal the chain of command involved.

This is a problem of political will, of capacity and of the political interests of the Tanjung Priok investigating team. The East Timor inquiry can be a model of proper investigation [of similar crimes].

Komnas HAM then faced threats of an international tribunal regarding East Timor. Now there's no such pressure and political interests such as members' affiliation to the military influence [investigators.] Such shortcomings would only confirm allegations that the Komnas HAM does not care about Muslims.

I fear the inquiry [into the Tanjung Priok case] will remain only a gesture to people's disappointment [that the case until now was never investigated]. Imagine an investigator asking a [Tanjung Priok] victim, "Do you support Pancasila [state ideology]?"

What about the East Timor inquiry?

How could the Attorney General's Office announce that only five significant cases would be looked into? Again the approach of regular crimes is used here.

I was shocked to know that only 21 people would be investigated; if only two institutions were investigated -- the Indonesian Military (TNI) and National Police -- at least 130 officers would have to be questioned.

Then there's at least 21 commanders of 21 militia groups. This is just a lot of stalling for certain interests.

What would those interests be? International trust of the government's seriousness in investigating [atrocities in] East Timor, following the results of KPP HAM in East Timor (involving Munir -- Ed.), is being used to ward off possibilities of an international tribunal.

Now the international community is watching whether Indonesia really has the capacity [to continue investigations on East Timor].

Is there hope of victims and their families getting some justice?

Urging the legal system to settle human rights violations is inevitable. This is the key [to providing justice] and the consequence of giving Komnas HAM more authority.

But Komnas HAM worked more effectively when it was only based on a presidential decree instead of a law. This means there is an urgent need to revamp the structure, personnel and role of the commission. All human rights violations are now dependent on the commission which it cannot handle in its present state.

There's the kidnapping cases [of activists], Lampung, Irian Jaya [areas of atrocities against civilians suspected as rebels], Maluku [alleged lack of impartiality of security forces in communal violence] ... waiting for the commission would be like waiting for Godot.

How will ongoing inquiries affect attempts at national reconciliation?

There's a new problem now. I feel that while there's a push to set up this commission of truth and reconciliation, the prolonged debate entailed has been used as an excuse for stalling.

There's a new kind of immunity here, as if all inquiries [on rights violations] should wait for the outcome of this debate on the commission.

We should not wait for that; legal process should continue as we have the laws, and also the government regulation in lieu of the law allowing the establishment of human rights violation courts.

Now we see odd things; the attorney general says this regulation is still effective, although the House of Representatives revoked it. But Komnas HAM rejected the regulation, saying it had been revoked by the House. So with regard to East Timor, the regulation could be used, and in relation to the Tanjung Priok case it was not possible.
 

News & issues

Mob attacks Chinatown

Associated Press in Jakarta -- Police fired tear gas and warning shots at an angry mob of people in Chinatown on Saturday in a clash that began when officials tried to remove street vendors from the area's crowded sidewalks, authorities said.

As the mob fled the police assault, it threw rocks that broke the windows of a McDonald's restaurant and a BMW dealership, and set fire to at least one police motorcycle. Dozens of people were arrested and taken away in police vans, said police officer Pramono, who like many Indonesians uses only one name.

Several policemen were seen being treated for minor injuries, and many of the shops in Chinatown closed to avoid the violence. Hundreds of police lined the streets after the mob fled. By midday, the area's streets and sidewalks reopened to traffic and pedestrians, but police remained on the scene.

The attack occurred two years after a student-led, pro-democracy movement's massive protests and riots forced President Suharto to resign. Some of that violence targeted Indonesia's wealthy but small Chinese minority, especially in Chinatown, where a shopping mall was burned down. But police said the dispute on Saturday morning did not seem to involve a clash between Indonesia's majority Muslims and minority Chinese.

Mr Pramono said the Chinatown clash began when officials tried to clear the sidewalks of the many vendors who gather there each day to sell items such as pirated video compact discs, some of which contain pornography. The vendors responded by throwing rocks and the small desks and beach umbrellas they use to sell their products on the crowded sidewalks, setting off the police attack. In the assault on the BMW dealership, the mob ransacked the showroom and burned one of its computers, Mr Pramono said.

Johanes Wijaya, 50, an Indonesian-Chinese shopowner who rushed to his electronics store in Chinatown when he heard about the violence said: "This was not an anti-Chinese attack. This was just criminals who illegally sell hot property in front of our shops." Nevertheless, he said he was happy that police quickly responded to prevent the violence from targeting Jakarta's Chinese minority.

Bargain sales hide trail of lost millions

Mathew Dearnaley -- Indonesia's corruption inquiry into the vast wealth amassed during the Suharto clan's long stranglehold on power reaches deep into New Zealand's heartland.

New Zealand, the United States and Switzerland have been asked to help recover billions of dollars that Indonesia's new Government suspects are salted away around the world.

But Weekend Herald efforts to discover what the family of deposed President Suharto still owns in New Zealand have been stymied by ownership changes in which assets have been sold for token amounts. Suspicions that the assets have simply been "parked" have prompted calls for a more thorough investigation than the Government is now making.

Suharto -- dubbed the "smiling general" -- was toppled by civil unrest in 1998.

Despite the inroads of Indonesia's currency collapse, a Time magazine investigation concluded last year that the former first family retained holdings of $US15 billion. It said much of that fortune had disappeared overseas.

During 32 years at the top, Suharto fingers were in everything from airlines, oil and gas exports, television stations and toll roads to chopsticks, condoms and mineral water. The family's more than 4 million hectares of land holdings included nearly 40 per cent of East Timor.

The pace was set in the 1970s by Suharto's wife, the late Madame Tien -- dubbed "Mrs Tien Per Cent" for her questionable business deals -- but the couple's six pampered children pushed the limits of public tolerance by soaking up lucrative Government concessions once they came of age.

Suharto, now aged 78, protests that he has not taken a cent overseas and is suing Time, for three times the magazine's estimate of his family's fortune. He has been ordered to remain in Jakarta until doctors deem him well enough to cooperate with the corruption inquiry.

Foreign Minister Phil Goff, who promised to help Indonesia during a visit there last month, has already sent a dossier about South Island resort assets linked to two of Suharto's children.

Campaigners say the probe must go deeper if the full picture of their ownership here is to be uncovered. Mr Goff, who acknowledges that property has changed hands "in somewhat suspicious circumstances," says the Government will consider further investigation if Indonesia asks for it.

But his Associate Foreign Minister, Matt Robson, says the inquiry should be widened to "give consideration to corporate links between Suharto and New Zealand-based companies who may have got themselves unwittingly involved."

Suharto's youngest son, 37-year-old Hutomo (Tommy) Mandala Putra, and second daughter Siti Hediyati (Titiek) Prabowo have ostensibly severed their holiday-home links with this country.

But the Campaign Against Foreign Control in Aotearoa believes Tommy has simply "parked his holding." Last year, he sold a luxury hunting lodge built for more than $6 million at Lilybank Station high in the Mackenzie Country to a Singaporean associate, Alan Poh, for $1.

Mr Poh has turned the loss-making lodge, which once charged more than $700 a night for a room, into a "homestay" with a more modest $250 tariff while he concentrates on developing a deer farm. A spokesman for Mr Poh said the sale was genuine and took account of big liabilities on Lilybank.

Titiek -- whose husband, Prabowo Subianto, headed the Kopassus special military forces accused of atrocities in East Timor, Irian Jaya and Aceh -- sold two Queenstown chalets for $498,000 to an Indonesian company she is believed to control.

Campaign spokesman Murray Horton says New Zealand's peacekeeping role in East Timor makes it imperative to find out if any "blood money" remains in Queenstown.

He and the Auckland-based Indonesia Human Rights Committee want the inquiry extended to properties held by "cronies" of the Suharto family, and to corporate links between them and New Zealand.

Weekend Herald inquiries confirm that the son of long-serving Suharto cabinet minister Radius Prawiro has four chalets in the same Queenstown subdivision as the Prabowo property, and visits often with a retinue of children and servants. The Prawiros are believed to control at least 81 Indonesian companies, including joint ventures with Suharto concerns.

Australian-based Indonesian corruption researcher Dr George Aditjondro wants the Government to also investigate the man who introduced the Prabowos and Prawiros to Queenstown, businessman Firdaus Siddik.

Mr Siddik is in Indonesia and could not be reached for comment on a claim by Dr Aditjondro, a defence witness for Time, that he had Suharto links through a Dutch bank. But Queenstown property agent Mae Young described Mr Siddik as a generous man who had done a lot for the town, including building a community ice- skating rink.

Another Queenstown property source said he had heard that Mr Siddik, who chairs the New Zealand-Indonesia Business Council, had been offered a powerful regulatory position in the new Indonesian Government.

The campaigners claim that some corporate links with the Suharto regime reach further than just into resort playgrounds. Foremost in their sights is Brierley Investments Ltd, which owns 30 per cent of Air New Zealand and a big chunk of New Zealand's fishery through its half share in Sealord.

Brierley is effectively controlled through a 24.4 per cent stake by the Malaysian-based Camerlin consortium of Chinese investors, which includes the Salim Group of Suharto's main financial backer, Liem Sioe Liong.

Mr Liem, who supplied stores to Suharto's military unit in the 1940s anti-Dutch independence struggle, exploited monopoly concessions dispensed in return for his financial services to become Indonesia's richest man.

Brierley had an even more direct link with the Suharto regime by having to take Tommy Suharto as a minority shareholder in its troubled $1 billion Wayang Windu geothermal power project near Bandung in Java.

The Suharto son bowed out of the project after his father was toppled from power, but Brierley has yet to be paid for a 15 per cent "carried interest" held by Indonesian shareholders. Brierley, with a 75 per cent share, has written off its $420 million investment in the project.

And New Zealand state-owned electricity generator Mighty River Power does not expect to see much return from its 10 per cent of the project, inherited from the Government's carve-up of ECNZ.

Brierley chairman Sir Selwyn Cushing admitted the geothermal venture had been "a terrible experience," but referred all questions to chief executive Greg Terry, whom the Weekend Herald could not reach in London.

Murray Horton's group also criticises the involvement in Indonesia of Edison Mission Energy, which bought 40 per cent of electricity generator and retailer Contact Energy from the New Zealand Government last year.

The Wall Street Journal said Edison and General Electric gave Titiek Prabowo and other Suharto associates slices of an overpriced 1230MW coal-fired power station now caught in the same bind as the Brierley project.

Rise in abortions worries Jakarta

Jakarta -- The government of President Abdurrahman Wahid has expressed concern over the increasing number of abortions in Indonesia, having noted that at least 2.3 million women resorted to terminating their pregnancies last year.

"The number of abortions in the country is tending to increase," the Antara national news agency quoted Women's Empowerment Minister Khofifah Indar Parawansa as saying. She blamed casual sex among young people, rather than rape, for the upward trend. "Teenagers who practise free sex and rape victims will resort to abortion to avoid having a baby," she said.

Referring to a survey, she said that 60 per cent of teenage girls in Surabaya, East Java, have lost their virginity and that in big cities like Jakarta, abortions ranged in price from 500,000 rupiah (S$106) to 2 million rupiah. Village-price charges by "backyard abortionists" start at about 100,000 rupiah, but the level of safety and hygiene is often negligible.

According to the Indonesian Observer newspaper, the minister also blamed the prolonged economic crisis for prompting an increasing number of children to become sex workers. Citing an example, she said that over the past two years, the number of child sex workers in Karimun, a resort island off mainland Riau, had increased by 12 per cent annually.

Ms Khofifah urged all relevant groups and organisations to take preventive measures to save children from sexual exploitation. "We are preparing a draft law on the protection of children," she said, stressing that the empowerment of women is not merely the government's responsibility. "Parents should also actively monitor the behaviour of their teenage daughters."

Australian spy planes secretly watch Indonesia

Geoffrey Barker -- Specially modified RAAF PC3 Orion aircraft are flying electronic spy missions against Indonesia in secret operations that gravely threaten Canberra's efforts to restore relations with Jakarta.

Today's disclosure of the spy flights is a major national security embarrassment for the Federal Government which denies unauthorised penetration of Indonesian airspace by Australian aircraft.

It comes at a sensitive moment for the Prime Minister, Mr John Howard. On Tuesday, Mr Howard said he had written to the Indonesian President, Mr Abdurrahman Wahid, inviting him to make his delayed visit to Australia.

Indonesia has claimed repeatedly that Australia has been making spy flights over its territory since last year's Australian-led Interfet operation in East Timor.

A spokesman for the Defence Minister, Mr John Moore, last night again denied Australian military aircraft had undertaken intelligence collection flights involving unauthorised penetration of Indonesian airspace. The spokesman said the Government would not comment further on matters involving national security issues.

But The Australian Financial Review has learnt the RAAF Orions are monitoring Indonesian military and other communications from flights that remain in international airspace. They operate under the cover of RAAF regular maritime reconnaissance flights to the north-west and north of Australia. The secret operation is understood to have been code-named "Peacemake".

Two of the RAAF's 19 PC3 Orions, based at Edinburgh, South Australia, have been fitted with sophisticated monitoring and recording equipment by the Defence Signals Directorate to undertake the operation.

First indications of the spy operation emerged yesterday in the British magazine Flight International, which reported that Australian PC3s had been converted to operate as intelligence platforms between 1995 and 1998. The magazine said operations were continuing "at a reduced tempo".

In fact, the spy flights are hardly surprising. Australia has major security interests in events in the Indonesian archipelago from troubled Aceh in the far west to West Irian, which borders Papua New Guinea. Interest in Indonesian military activities in West Timor remains high as East Timor struggles towards full independence under the United Nations transitional authority.

But disclosure of the flights is perhaps the most embarrassing security leak since disclosures five years ago of an Australian- US electronic spying operation against the Chinese Embassy in Canberra.

Senior government sources fear disclosure of the spy flights will prompt Indonesia to take counter-measures to reduce the ability of the Orions to monitor and record Indonesian military and other communications.

Late last month two Indonesian F-5 aircraft intercepted and flew close to four RAAF F/A-18 Hornet jets and a RAAF Boeing 707 refuelling tanker on a flight between Australia and Singapore.

The Minister for Foreign Affairs, Mr Alexander Downer, attributed reports of Australian secret flights to "people who resent Australia's intervention in East Timor'. He denied there had been spy flights over Indonesia, but was silent on intelligence collection from international airspace in the region.

Hot off the press: the story that wasn't

Tim Dodd, Jakarta -- For five days this week Indonesia's media was in hot pursuit of the story that President Abdurrahman Wahid planned to retire on his 60th birthday in September this year.

Newspapers, radio and television ran the story. It hit the front page of several newspapers. On two consecutive days it was on page one of the Republika daily. It became common currency that the President had said he would stand aside.

But the story was wrong. The source was a mistranslation of an interview with Mr Wahid by this reporter, published in The Australian Financial Review last Friday.

The tale of how a translation error came to get such a run in the Jakarta press is an insight into how the Indonesian media is developing since then president Soeharto resigned two years ago.

It is boisterous, vigorous, pushes political barrows unashamedly and is often very loose with the facts. All traces of the media control of the Soeharto era are gone. Anybody, especially the president, is fair game.

Last Friday the AFR story reported Mr Wahid as wanting to cut his term as short as possible so he could enjoy his retirement, although he stressed he was committed to staying until his goals were achieved.

"You know, my idea was to live at peace after 60 years of life. To write a book, to lead a pesantren [a Muslim religious college] and then I was catapulted into the presidency. I hope that it can be over soon," he had told the AFR.

"I would like to have it as short as possible, but if necessary I will have to go to see the completion of the [five-year] term. That's what I mean by the ideology of human rights, of the rule of law; it's more important to me than anything else. It's my life."

Mr Wahid's wish, before he became president, to retire at 60 soon became, in many reports, an intention to step down from the presidency in September. And once a story starts running in the Indonesian press it is very difficult to put down.

His close colleague, the Minister for Foreign Affairs, Mr Alwi Shihab, corrected the mistake. The President himself corrected it, while confirming the AFR story, but still it kept running. Some reports attributed the original interview to The Sydney Morning Herald.

This reporter, keen to ensure the AFR was not associated with the false story, wrote to newspapers to correct the error. The letter was run in several papers the next day, with his name spelt three different ways.

Indonesia's media has expanded greatly since it was freed in 1998. The standard of the thousands of new journalists is generally not high and much of the misreporting can be put down to honest mistakes.

But there are also political motives. One influential Jakarta commentator believes the "resignation in September" line was spread by supporters of Vice-President Megawati Soekarnoputri who want to see President Wahid step down.

The culmination was an interview with this reporter on Wednesday which led the evening news of the Indosiar television channel, ahead of the Economics Minister denying rumours he would resign due to illness. One wrong story can go a very long way.

Residents' blockade forces gold miner to vacate mine

Jakarta -- A gold mining firm has started vacating its mine in Indonesia's East Kalimantan following a three-week blockade by residents angered over land compensation issues, a mine official said Tuesday.

"Since May 7, we have been facing a force majeure ... we can no longer control the situation nor supply electricity for the workers," PT Kelian Equatorial Mining (KEM) spokesman Kasan Mulyono told AFP by telephone from the mine's location in Kelian, West Kutai.

"Under these conditions, we are finally forced to cancel all non-essential contracts with our contractors and begin to evacuate the workers home," Mulyono said. Only a skeleton security and ecosystems monitoring crew would remain from the 1,050 staff, about 90 percent of whom are local, and 600 workers with subcontractors, he said.

London-based Rio Tinto Ltd. holds 90 percent of the equity in PT KEM with the remaining 10 percent held by its private Indonesian partner PT Harita Jayaraya.

Mulyono said the access road from Jelemuq, site of the company's logistics harbour on the Mahakam river, has been blocked at four points since April 19. One blockade has since been lifted. The company was forced to temporarily close production on April 29 because of interrupted supplies of fuel and lime.

"We are continuing negotiations with the protesters and late yesterday [Monday] they agreed to let two trucks pass to supply fuel and limestone to the mining operation," Mulyono said. He said limestone was especially important if the locals wanted their water supply to remain unaffected, as lime neutralized the acidity of minerals from the mines which become oxidized when they come into contact with water and air.

Mulyono said local people had blocked the access road over land compensation issues. The claim that some of the land the company bought in 1990 and 1994 for the mine operation had been priced at less than market value. They also say compensation has yet to be paid for some parts of the land used by the mining firm, he said.

A Jakarta-based PT KEM spokesman, Anang Rizkani Noor said the company had almost completed verification of some 6,000 claims on the mine, the Jakarta Post said. Noor said that the surface area covered by the claims exceeded the surface area of the mine itself.

PT KEM, which has operated the mine since 1992, produces 13-14 tonnes of gold annually from the concession, which will expire in 2004.

The 'new' relationship

In the wake of Labor leader Kim Beazley's meeting last week in Jakarta with Indonesia's President Abdurrahman Wahid and PM John Howard's response to Wahid's announcement on April 27 that he was postponing his May visit to Australia, media commentators have claimed that there is a major policy difference between Beazley and Howard over Australia's "relationship" with Indonesia.

Asked by journalists to comment on Wahid's announcement, Howard responded that after Australia's military involvement in East Timor, the relationship between Jakarta and Canberra "will never be the same and that's not necessarily a bad thing".

According to the Australian Financial Review's Louise Dodson, Howard "made it clear that the relationship with Indonesia in the past had been too accommodating, especially over the brutal annexation of East Timor". Dodson interpreted Howard's comments as setting a "radical new direction for Australia's relationship with Indonesia".

Other commentators, however, criticised Howard for allowing Canberra's relationship with Jakarta to "drift", particularly after his May 1 comment that, "I have been keen to see the relationship rebuild, but it can't be rebuilt overnight". The AFR's Jakarta correspondent, Tim Dodd, for example, complained in an article in the paper's May 1 issue, "We don't yet know what Howard's vision for the relationship is, assuming that he has one".

By contrast, Dodd was glowing in his response to Beazley's statements during his May 2-3 visit to Jakarta. "In Jakarta this week, Opposition Leader Kim Beazley has managed to do what John Howard finds too difficult", Dodd claimed in a May 3 article run under the headline "Neighbourly Beazley gets line right on Indonesia".

According to Dodd, "[Beazley] set out a new blueprint for relations between Australia and Jakarta based on the fact that our northern neighbour is now a nation struggling to entrench democracy and human rights after decades of Soeharto autocracy ...

"Beazley calls his new approach `neighbourliness', a term carefully chosen to avoid any resemblance to `engagement' or `regionalism', words that would revive unpleasant memories of [former Labor PM] Paul Keating's enthusiastic embrace of Soeharto's Indonesia ...

"Beazley believes Australia should push forward with building relations with newly democratic Indonesia and give all the assistance it can to Indonesia evolve into a stable democracy." However, apart from the new rhetoric about Australia and Indonesia being "neighbours in democracy", the only substantive proposal in Beazley's "new approach" was that Canberra invited Wahid to visit Australia and immediately resume cooperation with the Indonesian military -- the chief obstacle to a genuine transition to democracy in Indonesia! Just as with all his predecessors -- from Whitlam to Keating -- the stability of Indonesia's military is of more concern to Beazley than any evolution to democracy.

Nevertheless, Dodd claimed, "Although the Beazley blueprint is sketchy, it is far more than Howard has put forward as his vision for a new relationship between the two countries".

For 24 years, Australian governments -- both Liberal and Labor -- sought to gain an advantage for Australian corporate plunderers of Indonesia's natural and human resources over their Japanese, European and US rivals by being the West's most outspoken defenders of the Indonesian military dictatorship's annexation of East Timor.

When Howard was forced by the pressure of public opinion in Australia to abandon this policy and send Australian troops to end the Indonesian military's attempt to physically exterminate the East Timorese independence movement after the August 1999 referendum, Australian imperialism lost the key instrument for its "special relationship" with Jakarta. Howard's comment that Canberra's relationship with Jakarta " will never be the same and that's not necessarily a bad thing" was simply an attempt to put this loss in a rosy light.

Beazley's "new approach" is as "sketchy" as Howard's "radical new direction" is "lacking in vision", because neither of them is able to formulate a new foreign policy approach toward Indonesia that would enable Australian imperialism to gain more favourable treatment in Jakarta than its imperialist rivals.

'Political patron' blamed for July 1996 incident

Jakarta -- Two retired generals separately testified before National Police investigators on Thursday and Friday that the country's former "political patron" was behind the July 27, 1996, violence.

"The country's former political patron was involved in the execution of a government-sanctioned congress of the Indonesian Democratic Party (PDI) in the North Sumatra capital of Medan in June 1996, which ousted Megawati Soekarnoputri from her party's leadership and appointed Soerjadi as her replacement," the former armed forces chief of sociopolitical affairs, Lt. Gen. (ret.) Syarwan Hamid, told journalists on Friday at National Police Headquarters after being questioned for six hours by investigators.

"I myself then received information of the planned PDI congress from the Ministry of Home Affairs. The decision was made after an evaluation by the former political patron," Syarwan said. At the time Syarwan said he received the information, Moch. Yogie S. Memet was minister of home affairs.

Syarwan, who was appointed home affairs minister during B.J. Habibie's presidency, did not name the former political patron, but it is believed he was referring to former president Soeharto.

The congress in Medan was held just one month prior to the forcible takeover of PDI headquarters on Jl. Diponegoro in Central Jakarta on July 27, 1996, from supporters of Megawati, who is currently the country's Vice President.

Syarwan was questioned in connection with the unrest in Central and East Jakarta which followed the takeover of the party headquarters. "I was then doing my job ... I mean to keep the capital safe," he said.

Lt. Gen. (ret.) Sutiyoso, who testified on Thursday, said the July 1996 incident was a logical consequence of a political decision by the national leadership to remove Megawati from the PDI leadership.

Sutiyoso, who is currently the governor of Jakarta, denied any involvement in planning and organizing the takeover of PDI headquarters. "I was just doing my job to ensure security in the city, because the city police were unable to control the riots," he said during a media conference at the South Jakarta mayor's office on Thursday evening.

"I managed to localize the riots in Salemba, Central Jakarta, and save the city from the possibility of wide-spread riots. We kept Senen, also in Central Jakarta, clear of riots." He spoke to the media after being questioned for seven hours at National Police Headquarters over his alleged involvement in the incident.

Sutiyoso, who was Jakarta Military commander at the time the takeover and ensuing violence took place, admitted the military command was aware of plans by the Soerjadi-led camp to take over the headquarters by force. "I ordered my intelligence officers to closely monitor developments, but we weren't involved there," he said.

Sutiyoso said he attempted to reconcile the Megawati and Soerjadi-led factions. "I suggested that the central government give the Soerjadi-led PDI a party secretariat of its own, separate from the Megawati-led faction, but there was no response." He also responded to allegations he received hundreds of million of rupiah to finance the attack on PDI headquarters.

"I have to clarify this. I asked for a money transfer on July 28 to feed the soldiers who were attached to my command, after then city police chief Maj. Gen. Hamami Nata, through then National Police chief Gen. Dibyo Widodo, officially asked me to take over security in the city," he said.

"There were 10,000 military and police personnel deployed in the city at that time. I asked for Rp 10,000 per day per person for five consecutive days, or a total of Rp 500 million. "So the money was for operations to secure the city," he said.

Masked mobs torch kiosks, discotheque

Bogor -- A group of 100 masked-men brandishing sharp weapons and wooden sticks raided and burned nine dimly lit kiosks and a discotheque at Kampung Kemang and Kampung Kirey at noon Sunday.

According to witnesses, the reason for the attack remains unclear as the kiosks only sell drinks, including alcoholic beverages, to their customers. No fatalities were reported in the fray as losses in the incident were still being calculated.

Witnesses said the incident started around 10.30am when the armed gang, disguised in Ninja-style shawls, raided eight kiosks in Kampung Kirey and burned two motorbikes parked in front. "They carried machetes, sickles and thick wooden bats and they also looted five television sets from the kiosks before setting them on fire," a local named Ahin said.

From Kampung Kirey, the group moved to Viva Yuli discotheque about 100 meters away from the first scene. The mob burned the discotheque, band equipment and sound system. The mob also attacked Kemang Indah kiosks next to the discotheque.

Yusuf, the owner of Kemang Indah kiosks, said the unidentified gang was probably instigated by "jealousy and negative sentiment." Locals only managed to put out the fire at around 1pm.

Due to the arson, traffic congestion became a big problem, especially in Parung and Semplak area of Bogor, where queues of vehicles stretched at least seven kilometers. The case is being handled by Semplak Police subprecinct.

Surabaya paper forced to carry front-page apology

Jakarta -- An Indonesian newspaper has agreed to run a front- page apology for seven days and build a mosque following protests over an article which angered a Muslim group, a journalist and a report said yesterday.

The Surabaya-based Jawa Pos daily also agreed to fire three journalists who wrote the article that offended the Nahdlatul Ulama (NU), the country's largest Muslim organisation, the Kompas daily reported.

"Yes, there was an apology ... but personally we were pressured to do so since the Banser [an NU civilian guard] had gone upstairs," one of the daily's correspondents, Azrul Ananda, told AFP referring to how protesters invaded the editorial offices.

More than 100 people from the Banser and the NU's youth group, Ansor, forced their way into the newspaper offices on Saturday and demanded the cancellation of Sunday's edition of the newspaper.

They were protesting against an article published on Saturday which alleged that leading NU members, including Indonesian President Abdurrahman Wahid, who is a former chairman of the NU, were involved in corruption, collusion and nepotism. Media organisations and human-rights groups have strongly criticised the actions of the NU-affiliated group.
 

Economy & investment

Rupiah breaches 8,500 level in panic selling

Jakarta -- The rupiah continued falling on Friday, breaking through the 8,500 mark against the US dollar as investors remained concerned over the future of the country's economy and the prospect of a hike in US interest rates.

The currency, which opened at around Rp 8,400 against the dollar, plunged after the lunch break to Rp 8,775, its lowest level since late September last year, amid panic selling.

The Indonesian currency managed to recover in late trading to close at Rp 8,380 due to Bank Indonesia's intervention, forex dealers said.

The central bank's intervention reversed the market trend and forced investors to change their position from buying (for US dollars) to profit-taking, the dealers said.

In addition to the central bank's intervention, the change in the direction of the rupiah before the close of trading was also prompted by President Abdurrahman Wahid's statement about a plan to cope with the slide.

The President blamed the rupiah's free fall on reports of a massive student rally later in the afternoon to mark the second anniversary of the shooting of four students at Trisakti University, an event which led to the fall of former president Soeharto.

Abdurrahman, more popularly called Gus Dur, said he would make an "all out" effort to curb the rupiah next week if the currency continued weakening.

"Wait until the next three days. If the rupiah continues falling, then we will do something to stop its fall," he told journalists following Friday prayers. "The government is not stupid, we will wait until May 15 [Monday]. If the rupiah remains weak, then we have a method to overcome it," Gus Dur said.

Analysts said uncertainty of the direction of the country's economic policy and an anticipation of a further increase in US interest rates next week remained the major factors behind the rupiah's fall. "But the fall in the last three days was too much," one of them said.

The analysts said the rupiah, which had been undervalued against the American greenback since it passed the Rp 7,500 level a few weeks ago, would not have fallen to below Rp 8,000 if Gus Dur and his economic team had restrained from making unnecessary statements.

"I think from now on government [ministers] should be more disciplined and stop making unnecessary statements," Pardi Kardi, a foreign exchange dealer at a local bank, said. The rupiah's fall started on Thursday after Coordinating Minister for Economy and Trade Kwik Kian Gie made a negative statement about the investment climate in Indonesia.

But forex dealers said Friday's fall in the rupiah was more due to market sentiments rather than economic fundamentals. "The rupiah's free fall today is more due to the market's reaction to the friction within the Cabinet rather than due to the economy," other analyst said. "News about uncertainty in investment and security are nothing new for us and have almost become a part of our lives ... so I don't think these kind of stories are very sensitive these days," he said.

The rupiah would not have breached the Rp 8,500 level if Bank Indonesia had been sensitive enough to monitor the market, the analysts said. "The central bank had the momentum to revise the rupiah's direction before the lunch break when the panic selling of rupiah was slowing down but it did not do it," he said.

Bank Indonesia Governor Sjahril Sabirin's statement made earlier in the afternoon that the central bank would only intervene if the move would be effective was also counterproductive because it triggered more buying rather than reversing the rupiah's movement, the analyst said.

"We will intervene if we think it will be effective," he said about possible central bank action to halt the fall of the Indonesian currency. Sjahril's remark indicated the lack of the central bank's seriousness in dealing with the falling rupiah, the analyst added.

Rupiah weakens on panic selling, propped up by banks

Jakarta -- The Indonesian rupiah dropped sharply in panic selling Friday, breaching the psychological support level of 8,500 against the dollar before strengthening on state bank intervention, foreign exchange dealers said.

The rupiah was trading at 8,350-8,425 against the dollar in late trade, close to its opening level today of around 8,380 and well off its lows earlier in the afternoon of nearly 8,800. A foreign exchange dealer with an international bank said the currency came off its low of 8,765 in midafternoon trade.

The comeback was sparked by aggressive selling of dollars by state banks, the dealer said. "The confidence just isn't there," a forex dealer with a European bank said earlier when the rupiah was tumbling from its opening rate of around 8,390.

A forex dealer with a local bank said the currency was under continued selling pressure "as players panicked after the rupiah breached the support level of 8,500.

The selling eased slightly after President Abdurrahman Wahid said the government had its own "formula" to contain the declines if they continue.

Wahid, speaking after Friday prayers, said he was consulting with Kwik Kian Gie, the Coordinating Minister for the Economy, Finance and Industry, on the rapid weakening of the rupiah. "At the moment there is a rush for dollars by business groups that want to expatriate money overseas. This is causing the rupiah to fall."

He said the rush was due to concerns among business people about the social situation ahead of the anniversary on Sunday of the May 1998 riots, which led to the fall of former president Suharto a week later.

"We hope this [the rupiah weakness] will only be temporary," Wahid said. "The government will wait until May 15. If the rupiah rate does not [strengthen] by then, the government will take action ... We already have a formula to solve the problem of the rupiah's weakness." Wahid also said he had no plans to sack Kwik, despite his reported comments on Thursday warning foreign investors against coming to Indonesia -- which foreign exchange dealers said had contributed to the rupiah's slide. "Relations between myself and Kwik are good," Wahid said. "I am not interested in replacing him."

Central bank governor Syahril Sabirin said the bank would intervene in the currency market only if intervention would be clearly effective and such an intervention would not be dependent on the level of the rupiah. "Whether we take action depends on market conditions, not on the level of the rupiah," Sabirin said.

Acting state secretary Bondan Gunawan dismissed comments that the rupiah's fall was largely because of domestic political concerns, and blamed the nervousness on the anniversary of Suharto's fall along with concerns over a US rate hike. "Rumours circulating out there are saying that there will be a [big protest] on the anniversary of the May 13 riots. It is normal that people are scared," Gunawan said.

Standard Chartered Bank's treasury analyst in Singapore Steve Brice said there were fears that if the rupiah weakens beyond 9,000 against the dollar, the Indonesian authorities would impose capital controls.

"While such measures cannot be ruled out, unlike in Malaysia, such measures would damage the economic recovery [of Indonesia]," he said in a report Friday. "Indeed, the only rationale for imposing capital controls would be if the authorities become convinced that they could not gain the confidence of international investors. As such, the imposition of capital controls would be seen as very negative as it would likely slow the reform process rather than accelerate it," he added.

2000 GDP growth at "top-end" of 3-4 percent

Jakarta -- Indonesia's economic growth this year should easily meet official forecasts of between three and four percent, the government said in the latest revised letter of intent to the International Monetary Fund (IMF).

"We now expect 2000 growth to be at the top end of the targeted three to four percent range," the government said in a draft copy of the review obtained on Tuesday by AFX-Asia, an AFP financial news subsidiary.

"End-period inflation should be well within the targeted five to six percent range," the review said, adding that the scenario was supported by figures for the final quarter of 1999, when economic growth reached 5.8 percent.

The review, which is scheduled to go before the IMF board May 31 for approval before a delayed tranche of 400 million dollars in bail-out funds can be released, said the economic recovery has been sustained in the first quarter of this year.

The review noted that parliament had approved a total increase of 30 percent in the base wages of civil servants, but that final agreement was reached only on an initial increase of 15 percent, which was implemented on April 1.

In other budgetary matters, the review said the government also agreed with parliament that cash recovery from the Indonesian Bank Restructuring Agency (IBRA) and privatisation targets should total 25.4 trillion rupiahbillion dollars) for the year. "On this basis, foreign financing of the fiscal year 2000 budget is expected to be 18.7 trillion rupiah (2.0 percent of GDP)," it said.

The review also said IBRA and Bank Indonesia would publish audits of their 1999 accounts by end-June, and that the government hopes to finish interim recommendations by the end of this month on a new governance and oversight framework for IBRA. "A new governance framework for IBRA, including an independent governing body, will be established by end-June," the review said.

In another pledge it said that the government will finalise regulations on its new telecommunications law by June, and set up an inter-ministerial team to oversee the restructuring and privatisation of the sector.

"This team will be responsible for preparing a detailed and comprehensive action plan by June 2000," the review said. It also said PT Telekomunikasi Indonesia (Telkom) and PT Indonesian Satellite Corporation (Indosat) have been told to rationalise their holdings in other telecommunications enterprises and divest stakes in non-core businesses this year to prepare for the opening of the sector.

"We remain firmly committed to transforming the telecommunications sector into a fully competitive business environment," the review said.

Answering concerns on decentralization, it said the central government will seek to place firm restrictions on borrowings by provincial and local governments as part of laws covering decentralisation.

"Specific mechanisms will be developed to ensure that any borrowing by sub-national governments is kept within strict limits," the document said.

IBRA, it said, will seek to complete restructuring terms of 35 percent of the loans of its largest debtors by June, and is concentrating on the 21 largest debtors, who account for 36 percent or 12.4 billion dollars of the agency's loans.

IBRA is charged with rebuilding the country's banking sector shattered by the financial crisis which started in mid-1997. The slow loan and corporate restructuring process is one of the reasons often cited for Indonesia's slow economic recovery.

Political discord 'hampers business'

Jakarta -- The Indonesian Chamber of Commerce and Industry (Kadin) urged politicians and the government on Tuesday to enhance political stability by not exaggerating political differences.

Kadin chairman Aburizal Bakrie said the highest concern of the business community at present was that of political stability. "Optimism about the reform movement has deteriorated due to increasing political differences between political leaders and the government itself," Aburizal said at the opening of Kadin's 10th national meeting at Vice President Megawati Soekarnoputri's office.

Heads of provincial Kadin offices, industrial associations and foundations are attending the two-day meeting at the Aryaduta Hotel here. "Our political elite have to refrain from acts or statements that could disrupt the market," Aburizal later told reporters.

According to Aburizal, the domestic investment climate would not improve if government policies and statements created political uncertainties. He said the recent Cabinet reshuffle, which saw the replacement of two economics ministers, was an example of how volatile the political situation still was.

Aburizal added that much of the capital which fled the country during the political crisis in 1998 had yet to return. "Money doesn't have nationality," he said, referring to Indonesian financial assets that are now parked at overseas banks.

Aburizal added the business community was also concerned about trends of intimidation by individuals with strong political affiliations.

Last week, a group of civilian Banser guards from the country's largest Islamic organization, Nahdlatul Ulama (NU), occupied the office of Jawa Pos daily in Surabaya, following a story by the largest East Java newspaper about alleged corruption involving NU leaders. NU was chaired by Abdurrahman Wahid before he was elected the fourth Indonesian president last October.

Kadin, he said, also noted a trend of increasing local resentment toward foreign investors. This resentment might either be engineered or caused by misunderstanding of the autonomy laws, which the government planned to enforce next year, he said.

Aburizal further urged the government to ensure investors' security and the military to act firmly on protesters that burn and loot stores. He said that investors were worried about protesters occupying production facilities, thus preventing companies from conducting their business.

According to the business leader, the "reform euphoria" has encouraged people to assert their rights and aspirations, sometimes in radical and violent ways. "The military should not hesitate to take strong action," he said, but added that they should also not overact in facing protesters.

Minister of Industry and Trade Luhut Pandjaitan concurred that security factor here was still a "gray area" to many investors. "The military seems reluctant to act firmly to maintain investors' security here, while the police are not capable of handling security problems alone," he said during a dialog session with Kadin members.

He cited the army's reluctance to stop the recent occupation by protesters of a power plant on Bintan island, near Singapore, due to fears of violating human rights. "In Singapore they told me that occupying a power plant is a declaration of war," Luhut, a retired two-star general, who is still Indonesia's ambassador to Singapore, said.

Luhut said on Monday he had met with the TNI (Indonesian Military) commander to discuss measures on how to ensure security to boost's the country's exports.

According to him, eight of the Indonesian major business associations, including the Indonesian Textile Association (API) and the Association of Indonesian Wood Panel Producers (Apkindo), had complained to him about domestic security situation.

He said he had urged TNI and the police to work together with the people to provide security for investors. Luhut, however, said that maintaining security was not the sole responsibility of the military. "It is up to us if we want to maintain stability here," he said.

Investment in forestry, plantations at zero level

Jakarta -- Virtually no new money has entered the forestry and plantation sectors the past two years because potential investors have been frightened off, an executive said on Tuesday.

Agribusiness Club secretary-general Tony Kristanto said the country's questionable security and the government's unfavorable investment policies combined to make investors hesitant to enter these sectors.

He said government regulations requiring investors to include the local community in the ownership of plantations and forestry estates were certainly discouraging.

This regulation, in addition to the uncertainty surrounding the security situation in the country, has deterred potential investors, according to Tony.

"I think foreign investors will not enter these sectors until security is established and the government is willing to review unfavorable regulations," he was quoted as saying by Antara news agency during a dialog on the forestry industry hosted by Harvest International.

Director General of Plantations Agus Pakpahan acknowledged the country had seen a drop in new foreign investment in the forestry and plantation sectors. However, he said the decline was mainly the result of foreign investors having difficulty securing soft loans to finance their investments, not due to changes in the government's investment policies. He did not provide any figures on foreign investment in the forestry and plantation sectors.

In the view of most foreign investors, the policy requiring them to involve local residents in the ownership or management of plantations and forestry estates is a setback.

The current regulation requires timber companies to sell at relaxed terms at least 20 percent of their shares to cooperatives, hand over its plantation or factory to local residents after the company's concession period has ended and allocate a certain portion of their concession areas for locals to work on.

The regulation was issued early last year as part of the government's effort to provide local communities an equal opportunity to manage forest assets. According to the government, the involvement of local communities would help reduce conflicts between companies and residents.

A number of timber firms have been involved in heated disputes with local residents over ownership of the forest since Soeharto was toppled from the presidency in 1998.

Some residents have carried out illegal logging in companies' concession areas, while others have gone so far as to seize control of entire areas in their efforts to receive some sort of compensation from timber companies.

A number of foreign investors in the plywood industry have reportedly delayed contracts with local timber companies due to concern over the conflicts.

Over 50 timber companies in Irian Jaya, Kalimantan and Sulawesi were forced to halt their logging operations due to uncertain security and continued threats from locals.

Tony said the government should establish a profit-sharing mechanism in which timber companies would distribute a share of their revenue to local residents in return for their contribution to the companies' operations.

Agus, however, insisted the existing regulations were fine and that his office had not received any complaints from foreign investors. He also said the government's policy was to protect the welfare of residents living near plantations and forestry estates.

Foreign investment projects must be able to bring benefits to the locals, Agus said. "Investment is important, but people's welfare is much more important."

Indonesian unrest: 20 firms may pull out

Bandung -- Continuing worker protests may prompt at least 20 foreign manufacturing companies to relocate outside Indonesia, the Indonesian Business Council says.

Council chairman Sofyan Wanandi said the companies, mostly owned by South Korean investors, included 13 firms operating in Jakarta and its surrounding areas and seven in Karawang, West Java.

"They said they wanted to meet Gus Dur to receive assurances about security and the certainty of their operations in Indonesia," he said, referring to President Abdurrahman Wahid by his nickname. "If there is no longer any certainty, they said they would pull out," he added.

Mr Sofyan said the companies were hampered in their operations by the continuing demonstrations. Seven of the companies, including leading Japanese electronics firms Aiwa and Sony, have already halted production due to protests by their workers.

"Sony has threatened to relocate its factory to Malaysia if its workers continue their protests," he said. He noted that electronics exports were one of the main sources of government revenue.

He was sorry about the government's response to the issue, which he said mostly favoured the workers, warning that most foreign investors would leave the country if the situation remained unchanged.

"Actually, worker demonstrations are something which the President does not need to handle directly. I believe the Minister of Manpower can handle it and I have asked him to do so."

He also called on investors to be transparent with their balance sheets, noting that many demonstrations were sparked by workers' anger with investors' lack of transparency about their profits and losses.

"Transparency is important. If the investors are making profits, why not agree to the workers' demands for pay hikes as long as the demands are reasonable?" he asked.

Government, military to ensure security for investors

Jakarta -- The Ministry of Industry and Trade, and the Military have agreed to work together to create a conducive and safe environment for businesses operating in the country, according to Minister of Industry and Trade Luhut Pandjaitan.

Luhut said on Monday that this was also part of efforts to boost the country's exports. "The TNI (Indonesian Military) commander has agreed and will launch measures at his disposal, together with the Indonesian Police, to help ensure security to boost our exports," he told reporters after a meeting with TNI Commander Adm. Widodo AS.

Luhut said that eight of the Indonesian major business associations, including the Indonesian Textile Association (API) and the Association of Indonesian Wood Panel Producers (Apkindo), had complained to him about the domestic security situation.

"I demand moral support from TNI and the police to be able to work together with the people to provide security for investors," said the newly appointed minister, who is still an active Army lieutenant general.

Luhut, who was appointed last month to replace Jusuf Kalla, is also still the Indonesia Ambassador to Singapore. Luhut has said that his current top priority was to boost exports to help drive the country out of the more than two-year economic crisis.

He had also been involved in intensive talks with various government institutions, including the Indonesian Bank Restructuring Agency (IBRA) and state banks, to immediately resume lending to the real sector.

Social unrest and rioting have gripped several parts of Indonesia since the country plunged into its deepest economic crisis in three decades, and as Indonesia transforms into a more democratic society.

Many companies have complained of rampant lootings, and the taking over of land by local people, particularly after the downfall of the former regime of Soeharto and his hand-picked successor B.J. Habibie.

This problem has deterred businesses, including exporters, from making new investments. Mining companies and oil and gas operations have also faced similar problems.

The gold mining giant PT Kelian Equatorial Mining (KEM) in East Kalimantan reportedly had no choice other than to close down its operation as local people blockaded the road toward the mining site, leading to the mining operation being unable to procure necessary supplies. The protesting villagers have that demanded KEM pay compensation for their land which they claim was acquired by the company. Oil and gas company PT Mobil Oil Indonesia, in the troubled Aceh province, has been attacked with explosives, although so far no serious fatalities have occurred.

Luhut stressed that the government's efforts to provide security for investment could not be effective without the active participation of the people.

"If we all want this nation to be better, we need to work together to create a conducive environment to recover the economy. Please don't ruin the good steps already taken by the reform movement," he said.

Luhut said that his discussions with TNI also focussed on the rampant smuggling of natural resources out of the country, including fuel, timber and sand. There have been allegations that the certain people in the military have been involved in the crimes.

Attack of the Indonesian hypermarkets

Warren Caragata, Jakarta -- Can the country's grocers fight off foreign giants? The new Carrefour supermarket on Jalan Sudirman, Jakarta's busy main thoroughfare, may look like the French hypermarches in Paris or Marseille: food on one side; electronics, books, and clothing near the door. But the resemblance ends there. The deli carries no goose-liver pate or Camembert. Instead, there is coleslaw with chilies, and stacks of tofu snacks. "We have to adapt to the local market," says Triyono Prijosoesilo, business-development manager with Carrefour's Indonesian subsidiary, Contimas Utama Indonesia.

With its ravaged economy and unstable politics, Indonesia hasn't exactly been high on foreign investors' shopping lists lately. But Carrefour and Holland's Makro have moved into Jakarta's retail sector, and Indonesians have responded, drawn by the large selection of merchandise as well as by prices far lower than at small retailers.

The stores are stirring up the industry and sparking a supermarket war with more established players. They also are challenging traditional open-air markets and Chinese-owned mom- and-pop groceries. In response, local retailers have had to seek powerful backers, lower their prices, improve quality, and plan bigger stores of their own. "They are changing the whole retail sector in fundamental ways," says Hans Vriens, vice-president of consultant Apco Worldwide in Hong Kong.

The Europeans may be hard to catch. Carrefour, the world's second-largest retailer, entered Indonesia at the height of the Asian crisis in 1998 and has since opened six stores. Dutch-owned Makro Asia has opened eight outlets and plans two more. Even though modern supermarkets nationwide account for only about 15% of grocery sales, the figure is double that in Jakarta, according to research firm ACNielsen Corp. And that share will likely grow as the middle class recovers its buying power.

While clothiers, electronics stores, and other retailers are also feeling the heat of the hypermarches, the real battle is taking place over food. Hero Supermarkets, Indonesia's largest chain, with 66 stores, is on the defensive. Unable to beat Carrefour's prices without losing money, the 29-year-old chain has been fighting back by focusing its price cuts on a few high-profile goods, such as rice, and offering periodic specials. "I have to be honest; I'm quite nervous," says Ipung Kurnia, Hero's president and the eldest son of the company's founder.

Normally, for example, chicken drumsticks at Hero's Plaza Senayan store cost 5% more than at Carrefour nearby. But on a recent day, they were sharply discounted to $1.85 a kilogram. Papayas were also on sale, but sugar was 12% above Carrefour's price.

The inability to compete on daily low prices forces Hero to rely on volume sales at its stores. It also must compete on freshness and has built a special warehouse to handle perishable items; the chain uses "Think Fresh" as its slogan. Also, while Carrefour's giant stores are mostly in central Jakarta, Hero has opened small outlets in almost every new neighborhood and big mall. But Hero is still losing market share. Although it recently posted record 1999 operating profits of $10.2 million, an 11% increase over 1998, retail analyst Teguh Hartanto of Danareksa Securities says Hero's fourth quarter should have been better because of the holidays.

So Hero has recruited foreign help of its own, selling a 32% stake to Hong Kong's Dairy Farm (a subsidiary of Jardine Matheson Holdings Ltd.), which operates supermarkets around the region. The infusion of foreign cash is helping, but the store still tries to promote a homegrown image. "Regardless of who the shareholders are, Hero is still a local company," says Kurnia. Small independent retailers are fighting back, too. The 280- member Indonesian Retail Merchants Assn. has urged Jakarta to impose zoning restrictions on the hypermarkets.

To fend off the anti-foreign backlash, Carrefour also is trying to appear local. It is training Indonesians to fill management positions. And because Indonesians are used to picking out fish themselves at local markets, the stores display seafood on ice- layered tables instead of behind display counters.

Indonesians clearly are enjoying the better choice. Oni, a 30- year-old woman who usually shops at Hero, recently tried Carrefour for the first time. "It's cheaper," she says. "But at Hero, the produce is higher quality." Just the kind of competition consumers need.