Indonesia/East Timor News Digest No 20

Jakarta -- On the eve of the second anniversary of Suharto's downfall, more than 500 students protested in front of the ex- dictator's home Saturday, demanding he be brought to trial for alleged corruption during 32 years in power.

Students burned posters of the former strongman and chanted slogans, while hundreds of police stood guard, forming a barrier about 1,600 feet from Suharto's home.

In a move to pre-empt any violence on the anniversary, the attorney general investigating Suharto told a news conference Friday that Suharto would face trial by August 10.

However, Attorney General Marzuki Darusman also said that if Suharto's family failed to cooperate with his investigation, he would water down its security arrangements, seemingly giving student groups the green light to organize rowdy protests in front of Suharto's house.

Last week students clashed with police in demonstrations to mark the second anniversary of the slaying of four university students by police. At least one journalist was injured after police fired tear gas at the protesters. Several people were later arrested for setting fire to a local police station.

Suharto, 79, is the leading suspect in a scandal involving the misuse of millions of dollars from charitable foundations he once controlled. A violent pro-democracy movement forced him to resign on May 21, 1998, but he left behind a legacy of endemic corruption and nepotism.

On Saturday, Indonesian President Abdurrahman Wahid defended his suggestion to lift the ban on communist ideology, which Suharto imposed in 1966 after he seized power. "I suggest we revoke the decree banning the teaching of communism," he said on television. "We have to respect human rights."

Wahid has previously called the ban undemocratic and unconstitutional. He has been criticized by Muslim groups opposed to communism's atheist principles.

Up to 500,000 leftists were slaughtered by troops under Suharto's command in the aftermath of a still- unexplained military mutiny. Suharto claimed it was instigated by the Indonesian Communist Party. The party was banned, although no direct link with the abortive coup was ever proven.

East Timor

Church in western Timor reports ongoing intimidation

Catholic News Service - May 16, 2000

Jennifer E. Reed, Washington -- Priests assisting people in western Timor's refugee camps say the "vast majority" want to return to East Timor, but intimidation by pro-Indonesia militias is keeping them there, said a US human rights activist.

Karen Orenstein of the Washington-based East Timor Action Network was co-leader of a delegation of congressional staffers, human rights activists, journalists and filmmaker John Sayles that made a weeklong fact-finding visit to Indonesia, western Timor and East Timor in late April.

"In some areas, the refugee population outnumbers the indigenous community," said Orenstein. "The best solution to the refugee crisis, repeatedly voiced by humanitarian aid workers, is repatriation. The only way to increase the rate of repatriation is to remove militia intimidation and control of the camps."

The Catholic Church "is very much involved" in aiding the refugees by providing humanitarian assistance as well as counseling in the Indonesian- government run camps, said Orenstein. "Church workers have more access and people are more apt to feel comfortable with them" than other aid workers, she said.

Some 270,000 East Timorese fled to or were forcibly moved to western Timor when violence by pro-Indonesia militias and Indonesian troops escalated following an August 30 referendum. In the vote, almost 80 percent of East Timorese chose independence from rather than autonomy within Indonesia, which had integrated the former Portuguese colony as a province in 1976.

Tens of thousands of refugees remained in western Timor as of early May, and the United Nations said some 150,000 people had returned to East Timor since October. Aid agencies and human rights activists have criticized the presence of militias in the camps, saying they spread misinformation about conditions in East Timor and make refugees fearful of returning home.

East Timor is under control of the UN Transitional Administration in East Timor, which is overseeing the region's transition to independence.

In western Timor, the US delegation met with Bishop Anton Pain Ratu of Atambua, whose diocese is near the border with East Timor, and a number of priests, who stressed the importance of the refugees' return to East Timor. The bishop noted the strain the refugee crisis is putting on the local population in terms of overcrowding and occupation of land, said Orenstein. She added that land for the camps was taken by the Indonesian government without compensation for local residents.

Church and international relief organizations have pledged to continue food aid to refugees in western Timor after the Indonesian government stopped such support in April, reported UCA News, an Asian church news agency based in Thailand.

Divine Word Father Jerry Lanigan, director of the St. Joseph Foundation of Atambua Diocese, told UCA News May 8 that since mid-April the foundation has worked with Catholic Relief Services to channel food aid to some 43,000 refugees in Belu district. CRS is the US bishops' international relief and development agency.

Among the difficulties faced by relief workers are poor transportation, long travel times and the changing number of refugees in the camps. "The number of refugees in the camps changes always because the refugees often move from one camp to another. This creates a headache for the relief activists," said Father Lanigan.

Orenstein said the US delegation visited a transit camp in Kupang where some 300 refugees, including many ex-Indonesian military members, had gone through the UN registration process and were to return to East Timor in two days.

One ex-military man told the delegation he was "ready to embrace an independent East Timor with open hands," said Orenstein. Others told the delegation they had received letters from East Timor telling them it was safe to return.

In the large refugee camps, people told the delegation of a lack of health care and education. In one camp, some refugees who were teachers set up a tent school where children receive some education a few hours a week, Orenstein said.

Indonesia's East Timor probes: a whitewash?

Straits Times - May 18, 20000

Former Indonesian military chief General Wiranto was grilled for more than seven hours on Tuesday by the Attorney-General's Office over his allegedly complicity in the devastation of newly-free East Timor last September.

Human rights activists here and abroad say he must bear criminal responsibility because he was then the commander-in-chief and did not do enough to stop the carnage by East Timorese militiamen aided by soldiers. And they claim the government is not serious about putting him on trial and that the official probe so far has been a sideshow to divert international attention.

Devi Asmarani of The Straits Times Indonesia Bureau looks at the progress and roadblocks ahead.

President Abdurrahman Wahid is very keen to avoid the international tribunal that the United Nations Security Council has threatened to set up to try his generals.

He has stated many times his government's intention to bring perpetrators of the East Timor violence to court. But his government has been slow to put in place the laws required to prosecute people at the top of the military and civilian commands who are politically responsible for the destruction.

Progress so far

Sept 23, 1999 -- The National Commission on Human Rights, under then chairman Marzuki Darusman, establishes the Commission of Inquiry into Human Rights Violations in East Timor (KPP HAM).

Jan 31, 2000 -- KPP HAM implicates former armed forces chief Gen Wiranto and 32 other military and civilian officers in the mass killings, tortures, rapes, forced evacuations and destruction of East Timor after the announcement of the August 1999 ballot.

Feb 13, 2000 -- President Abdurrahman Wahid suspends Gen Wiranto, his Coordinating Minister for Security and Political Affairs, from the Cabinet.

April 19, 2000 -- Mr Marzuki Darusman, now Attorney-General, forms a 64-member investigation team to find evidence and name suspects:

The team is focussing on five cases:

An April 17 attack on pro-independence leader Manuel Carrascalao's house in Dili in which at least 12 people were killed;
The Sept 6 attack on the home of Dili Bishop Carlos Felipe Ximenes Belo;
A refugee massacre in a church in Liquica in April;
A massacre in a church in Suai in September where at least 26 people died, and;
The shooting of Financial Times correspondent Sander Thoenes in the East Dili area of Becora on Sept 21.

Since May 1, 2000 -- 21 civilians and military and police personnel have been summoned by the team, with General Wiranto the last person to be questioned on Tuesday.

Other military officers questioned include:

Former army deputy chief of staff Lt-Gen Johny Lumintang;
Former armed forces intelligence chief Zacky Anwar Makarim;
Former East Timor military commander Brig-Gen Tono Suratman;
His immediate superior, former regional commander Maj-Gen Adam Damiri;
Brig-Gen Tono's successor, Col Noer Muis; and
Former East Timor Police chief Brig-Gen Timbul Silaen

Out of the 21 summoned, five failed to show up. They were former local government officials in East Timor, including governor Jose Abilio Osorio Soares.

All of them were questioned as witnesses. The A-G's team says it will look for evidence and more testimonies from witnesses in East Timor and the neighbouring province of East Nusa Tenggara before it decides on the status of each person some time this month. No date has yet been set.

But why do critics remain skeptical? The government does not have sufficient legal instruments to convict any high-ranking army officer found responsible for the destruction of East Timor but not directly involved in the violence.

The ongoing investigation on East Timor is made possible by the September 1999 law on human rights that stipulates that gross violations of human rights can be prosecuted once a new law sets up a Human Rights Tribunal within four years. But the law has not yet been passed.

Oct 8, 1999 -- President B.J. Habibie issues a decree in lieu of a law.

March 13, 2000 -- The House of Representatives rejects the decree because it does not contain a clause that would enable past human rights crimes to be tried in court.

March 2000 -- The bill on a rights tribunal undergoes another revision. The retroactive clause is scrapped, and replaced by a clause that permits the government to set up an ad-hoc tribunal to try rights violations.

Another revision says "every state official, military or police officer, who allows or fails to prevent his or her subordinates from committing gross human rights violations is liable to face the same possible punishment as those who directly commit violations." The bill varies punishment from three years to life imprisonment.

March 2000 -- The bill is submitted to Parliament for deliberation, but the House has not made it a top priority.

So what's the score? Without the human rights tribunal law, the government has no legal means to prosecute top army officers. It can apply the criminal code but that does not have provisions for collective responsibility and omission of crimes.

Human rights activists criticize the A-G 's Chambers for treating the investigation as "ordinary crimes" instead of political crimes and crimes against humanity. They suspect that A-G officials have been "bought-off" to buy the suspects time.

The A-G's Office had a three-month deadline, as of January 31, to build a case, but at the rate it is going -- and with the absence of a pertinent law -- it will likely only be able to prosecute middle and low-ranking officers who were immediately present at the time of the attacks.

Although Gen. Wiranto has privately indicated he is prepared to assume political responsibility, he and the other army generals may just get away with any criminal liability. He also announced on Tuesday that he was resigning from the Cabinet post he has been suspended from since February.

Wiranto quits cabinet after grilling about bloodshed

South China Morning Post - May 17, 2000

Chris McCall, Jakarta -- Former military chief General Wiranto yesterday finally resigned his cabinet post, after hours of official questioning over the bloodshed that hit East Timor last year.

Condemning soldiers who took sides in the aftermath of the historic vote for independence, General Wiranto said he was stepping down after four months suspension from his post.

He said the decision was to help restore harmony within President Abdurrahman Wahid's cabinet and was not connected to his interrogation. "I take the decision to step down as co-ordinating minister for political and security affairs and will report to the Indonesian President at the first opportunity," he said.

Flanked by his high-powered team of lawyers, including former justice minister Muladi, the man once seen as a possible president appeared drawn after seven hours of questioning at the Attorney-General's office.

Wearing civilian clothes, he said Indonesia's police and military had not taken sides in the conflict, something independent observers dispute. General Wiranto was armed forces chief at the time of the bloodshed and is one of six Indonesian generals named after an Indonesian inquiry implicated them in the violence.

"I must convey my respect and pride to all the soldiers and members of the community who truly and with full dedication and full heart did this very heavy and difficult task," he said. "On the other hand I am very disappointed, and I ordered firm action against, army and police personnel who in fact did not honour a mission they were entrusted with, which means they broke their oath to the country."

General Wiranto's chief lawyer, Adnan Buyung Nasution, stressed he had been questioned as a witness only. General Wiranto is due to face further questioning next Tuesday.

The Attorney-General's office said that next week's session would go into further detail about his role as armed forces chief. A total of 13 questions were put to him yesterday on general issues relating to the organisation of the ballot.

But a leading Indonesian critic of Jakarta's involvement in East Timor condemned the whole questioning as a "whitewash". Yeni Rosa Damayanti said she did not believe any of the six generals would ever face trial unless there was constant pressure from abroad and slammed Attorney-General Marzuki Darusman's handling of the probe.

"Is the intention of this really to collect information to prove that General Wiranto had a part in the riots following the ballot?" she said. "We doubt the seriousness of this Attorney- General in questioning certain generals."

West Timor: Militia terror continues

Green Left Weekly - May 17, 2000

Jon Land - The 100,000 East Timorese refugees in camps in West Timor face daily hardship and terror from the pro-integration militia gangs which control or are active in many of the 200 camps. The repatriation of refugees to East Timor has slowed considerably.

At a United Nations briefing on May 8, the UN High Commission for Refugees (UNHCR) chief of operations in Dili, Bernard Kerblat, stated that, due to the presence and activity of the militias, in the previous week there had been a record low in the number of returning refugees. Only 65 people returned and 48 came from Australia.

Kerblat said that the UNHCR was "losing the propaganda war launched by UNTAS [a pro-integration organisation]". As a result, refugees are apprehensive about the state of security and general living conditions in East Timor.

On May 11, SBS news showed footage from some of the refugee camps and interviewed the notorious Mahidi militia leader Cancio Lopes De Carvalho. The Mahidi militia were responsible for vicious attacks in Covalima district, south-west East Timor, in January 1999.

De Carvalho freely admitted that Mahidi members remain armed and ready to carry out their "patriotic" duty. In the same news report, East Timorese leader Jose Ramos Horta said that United States intelligence sources knew of at least one militia training camp in West Timor where Indonesian military personnel are present.

Also on May 11, fighting between suspected militia members and UN peacekeeping troops took place near the East Timorese town of Batugade, close to the West Timor border.

A group of US congressional staff, representatives of human rights organisations and journalists who went to West Timor confirmed on May 11 the dire situation facing East Timorese refugees. "Despite the Indonesian government and military denial of militia presence in West Timor's refugee camps, there was obvious fear on the faces of most East Timorese in the camps. Intimidation and tension created by militia leaders was palpable", said Karen Orenstein, a representative of the US-based East Timor Action Network.

The delegation's statement added: "Continued discovery of modern weapons in the camps points to direct TNI [Indonesian army] collusion with militia leaders.

Several separate reports of a low-level training plan ... further connect TNI to militia repression."

The delegation called on the US government to maintain its ban on military ties with Indonesia and "support the establishment of an international tribunal in East Timor with significant East Timorese and Indonesian participation".

Scrap the Timor Gap Treaty

Green Left Weekly - May 17, 2000

Jon Land -- Media reports during the recent visit to Australia by East Timorese leader Xanana Gusmao highlighted the improving diplomatic relations between Australia, East Timor and Indonesia. Not so widely reported during Gusmao's trip were renewed calls for the Timor Gap Treaty to be renegotiated.

Speaking on ABC radio on May 7, National Council of Timorese Resistance (CNRT) vice-president Jose Ramos Horta called for the treaty to be renegotiated with terms fairer to East Timor.

Horta stated that East Timor is entitled to up to 90% of gas and oil royalties from exploration in the area covered by the treaty. Commenting on the possibility of the treaty being changed, Horta said: "I believe that Australia is an enormously rich country and I am confident it is prepared to take the initiative itself, so that the East Timorese can benefit much more from the treaty."

In response to questions on the Timor Gap Treaty raised by journalists at the National Press Club on May 5, Gusmao hinted that the future East Timorese government would seek to renegotiate the treaty. "Hopefully, as soon as possible, when East Timor is independent we will have also a team of experts to deal with this matter", he said.

The treaty was also raised in a forum held at federal parliament on May 5.

Representatives of the federal Coalition government and the Labor opposition skirted questions on where they stood on renegotiation. Labor's shadow foreign affairs minister Laurie Brereton said it was matter to be dealt with "in the future", while Liberal Senator Marise Payne (speaking on behalf of foreign affairs minister Alexander Downer) declined to comment. Downer was just as evasive when asked by reporters on May 8 whether the government would consider changes to the treaty. He could only bring himself to say that the government "will be happy to talk with the East Timorese on this issue [the Timor Gap Treaty] as East Timor moves toward independence".

A more blunt and forthright reply was made on May 7 by Northern Territory chief minister Denis Burke. He told Radio Australia that "the negotiations that were done when the Indonesians had control was

a very good deal for Indonesia at the time and that deal passed directly through to East Timor. It's probably the best deal they would get. I wouldn't be fearful if I were East Timorese about loss of revenue."

Burke also urged the federal government to do "everything possible" to assist oil and gas industry developments projected for the Timor Sea because "there are plenty of alternate suppliers".

Burke's claim that the Timor Gap Treaty is the best deal for East Timor is false.

If the area which the treaty covers is renegotiated under internationally accepted norms and laws, then a vast amount of territory would return to East Timor. This would result in a substantial amount of oil and gas reserves and associated royalties from exploration coming under the control of the United Nations Transitional Administration in East Timor (UNTAET) or the East Timorese state, once the mandate of UNTAET concludes.

When the Timor Gap Treaty was signed in December 1989 it signified a big step forward in relations between Indonesia and Australia. The treaty marked the end of lengthy negotiations (which had begun as far back as 1972) to bridge "the gap" in the sea bed boundary between Australia and Indonesia.

The gap existed in the territorial waters of East Timor because the Portuguese government -- the administering power of East Timor prior to the Indonesian invasion in 1975 -- refused to accept the Australian government's claim that the boundary be set along the edge of the continental shelf, rather than along the median line.

The signing of the treaty was only able to take place because successive Australian governments acknowledged Indonesian sovereignty over East Timor.

Though not entirely acceptable to oil and mining interests in Australia, the Timor Gap Treaty enabled exploration and development of lucrative oil and gas deposits to begin.

The treaty divides the gap into three zones: zone A, the largest zone, which is jointly administered, with revenue raised from taxes shared equally; zone B, which is under Australian jurisdiction (with most of the revenue going to Australia); and zone C, which was under the jurisdiction of Indonesia (now UNTAET).

There is potentially billions of dollars in royalties and taxes to be generated from oil and gas developments, especially in Zone A. When the Senate passed the Timor Gap Treaty (Transitional Arrangements) Bill 2000 on March 16 -- under which UNTAET formally replaced Indonesia as the co-signatory for the Timor Gap Treaty -- industry minister Nick Minchin stated: "It is likely that projects currently awaiting approval could, if developed, provide several tens of millions of dollars per annum to both East Timor and Australia for a period of 10 to 20 years commencing in about 2004".

According to a report in the April 13 Sydney Morning Herald, the Bayu-Undan field (located in Zone A) alone could potentially generate $5.2 billion in government revenue over a 24-year period. Under the current terms of the Timor Gap Treaty, this would be split evenly between East Timor and Australia.

If the sea bed boundary was changed to the median line between East Timor and Australia, the Bayu-Undan field would fall within East Timor's territory, so all revenue from Bayu-Undan would go to East Timor.

The hypocrisy of the Howard government's grandstanding on its aid commitment to East Timor is more apparent when the current terms of the Timor Gap Treaty are considered. According to budget figures, the government is only prepared to commit a paltry $150 million in aid to East Timor over the next four years. This is less than 6% of the expected revenue from the Bayu-Undan field income alone -- which rightfully belongs to East Timor.

The Howard government is trying to hoodwink both the Australian and East Timorese people by claiming to provide much aid and assistance to East Timor.

If it was really committed to helping East Timor, it would scrap the Timor Gap Treaty immediately, and return the territory and revenue it gained by giving support to Indonesia's murderous and illegal occupation of East Timor.

Revolutionary front turns back to mainstream

Sydney Morning Herald - May 16, 2000

Mark Dodd, Dili -- One of East Timor's biggest and best known political groups, Fretilin, which spearheaded the bloody 24-year struggle for independence from Indonesia, yesterday began an historic conference to discuss its transformation from revolutionary front to mainstream political party.

The conference is expected to hear an unprecedented apology for political killings carried out by Fretilin between 1975 and 1978.

Fretilin, a Portuguese acronym for Revolutionary Front for an Independent East Timor, is the political wing of the armed independence group, Falintil, whose 1,500-strong armed fighters resisted Indonesia's occupation from 1975.

More than 2,000 people including grizzled war veterans, overseas supporters, radical splinter groups, students, church and women's representatives attended the opening ceremony in Dili yesterday.

Senior independence leaders, including Mr Xanana Gusmao, and Taur Matan Ruak, the current field commander of Falintil, were at the opening ceremony. There were also numerous supporters of the UDT (Timorese Democratic Union), a party with which Fretilin once waged a brief and bloody civil war after an ill-fated coalition of the two groups dissolved four months before Indonesia invaded East Timor in 1975.

"Fretilin comes from a resistance struggle but now we have to prepare ourselves to convert to a political party. We have to clarify how to make the transition from a resistance movement to a political party in a democratic way and pave the way for a democratic society," said Mr Mari Alkatiri, one of three surviving founders of Fretilin.

"I think this really is a defining moment that traces its roots back to 1975. It is reconciliation, but it is also the redefining of a resistance organisation."

A Brisbane lawyer, Mr Joe Texeira, an East Timorese who fled to Australia as a refugee in 1975, told the Herald he believed the conference was a symbol of East Timorese unity for the future.

Fretilin still retains widespread support in rural areas, an advantage it has over other political parties. One group of old men had walked down from the hills to attend, including "Senor Moroi". Barefoot, dressed in a sarong and clutching a wooden staff, he introduced himself by pointing proudly to his battered World War II felt hat. Mr Alkatiri estimated some 15,000 people had belonged to the former secretive network set up by Fretilin during the Indonesian occupation.

The five-day conference aimed to explain the reason for reforming into a properly constituted political party, he said, although there was still some resistance among splinter groups to dismantling its clandestine structure.

It was vitally important, however, that Fretilin prepare itself to contest UN-supervised elections tentatively scheduled for the end of next year. "For Fretilin it is impossible to separate development and democracy," Mr Alkatiri said.

Fretilin admits its bloody past to ensure Timor's future

Sydney Morning Herald - May 15, 2000

Mark Dodd, Dili -- It is one of the darkest chapters of East Timor's independence struggle, Fretilin's purges and murder of several hundred dissidents and political prisoners in the aftermath of Indonesia's bloody 1975 invasion.

As East Timor makes the transition to United Nations-supervised independence, Fretilin is preparing a historic acknowledgement and apology for past crimes committed against its own people.

The appeal for forgiveness includes the December 1975 execution of about 150 political prisoners, mostly from the pro-Indonesian party Apodeti, but also the rival UDT (Timorese Democratic Union).

One of three surviving founders of Fretilin, Mari Alkatiri, said an apology would also extend to victims of a series of bloody internal purges carried out in the early years that followed the Indonesian invasion.

"Now the war is over, it is time to rehabilitate a lot of names and particularly put an end to the suffering of their families," he said. "Sometimes they are still being discriminated against by Fretilin. We must put an end to this."

Mr Alkatiri, 50, a Muslim who has spent half his life fighting in the cause of independence, said the call for a full investigation into past political abuses comes from Jose Xanana Gusmao, the former guerilla leader now president of the National Council of Timorese Resistance (CNRT), which includes both Fretilin and UDT.

At a national conference in Dili this week, the issue of redress for victims of political violence will be a major theme, Mr Alkatiri said.

In contrast to members of the Indonesian armed forces who have had to be hauled reluctantly before a government-backed investigation into military abuses, Mr Gusmao's call has the strong backing of party cadres, including former commanders, who believe there can be no democracy in East Timor without a full examination of Fretilin's own past sins and omissions.

One of the tasks of the conference organisers will be an investigation into a precise death toll during the years 1975-78, Mr Alkatiri said. Apart from the 150 prisoners, he thought up to 200 others, mostly Fretilin dissidents, may have been executed on the orders of hardliners who supported an all-out war for independence.

"In every war people die but the reasons have to be considered seriously when there is no reason for them to pay with their lives. This means something wrong was done," he said.

Asked if the investigation into Fretilin's internal purges was a difficult decision, Mr Alkatiri, said: "For me personally, it would be harder not to."

Mr Alkatiri dismissed claims that Fretilin was responsible for the deaths of more than 1,000 political opponents and so-called traitors during the late 1970s. "This is nonsense! We [Fretilin] were not the Khmer Rouge," he said, referring to Cambodia's fanatical Maoist rulers, whose reign of terror from 1975-1978 left more than a million people killed from execution, disease or starvation.

Among those whose names will be formally rehabilitated is the first Fretilin president, Xavier Do Amaral, expelled in 1977 after he was accused of being a traitor. "We realise there was no need for him to suffer so much. He is still alive, a very old man now, 65 years old. He is a good example of how we are going to rehabilitate people," Mr Alkatiri said. Mr Do Amaral will attend the conference.

To understand the reasons for the bloody violence and subsequent purges, Mr Alkatiri said Fretilin and its armed wing, Falintil, was fighting a battle of survival against more than 40,000 Indonesian troops who within days of landing in Dili on December 7, 1975, had massacred as many as 2,000 East Timorese.

Fretilin, a Portuguese acronym for Revolutionary Front for an Independent East Timor, drew on the Marxist rhetoric of Frelimo, the leftist party that had just taken control in another former Portuguese colony, Mozambique.

In January 1975, Fretilin formed an uneasy coalition with UDT, a party whose aims were not altogether dissimilar to Fretilin. The only other political party of any size in East Timor was Apodeti, which advocated union with Indonesia.

Fretilin's leftist leanings sounded alarm bells in Jakarta, and in August 1975 UDT launched a coup against Fretilin based partly on propaganda supplied by Indonesian intelligence agencies that its partner, infiltrated by communists, was planning its own coup.

By mid-September, after fighting which saw atrocities committed on both sides, Fretilin had gained the upper hand and controlled most of East Timor. It had also captured about 2,000 Apodeti and UDT prisoners.

Mr Alkatiri said the massacre of UDT and Apodeti prisoners in Aileu was not officially ordered but was a response from several Falintil commanders, many of whom are now dead, to the violence instigated by Indonesia and its East Timorese allies following the invasion. "The Fretilin Central Committee had decided to release all of them. Some Fretilin commanders did not accept this. However, there was a clear decision by the Central Committee to release them," he said.

The former Australian Consul in Dili, James Dunn, yesterday recalled how he had visited the prisoners before the invasion and appealed to the Fretilin leadership to uphold the Geneva Convention regarding their welfare. Mr Dunn believes a Fretilin commander named Alarico Fernandes was responsible for giving the orders for some of the executions.

Among the prisoners shot was Osorio Soares, the brother of the last Indonesian-backed governor in East Timor, Abilio Soares. Another was the former Portuguese Chief of Police, Brigadier Maggioli Gouveia, who had joined forces with UDT. "I spent a bit of time with Maggioli. He passed me a letter to give to his wife.

At that time they [prisoners] did not know what was happening," Mr Dunn said. "If the Indonesian invasion had not been so bloody and murderous they [prisoners] would probably not have been killed [but] I was aware of their danger and I asked the Fretilin leadership to spare their lives."

Government/politics

Fraying at the edges

Far Eastern Economic Review - May 25, 2000

Michael Vatikiotis, Jakarta -- Is Indonesia's new-found stability coming apart? Events this past week certainly make it seem so. A resurgence of popular protest and social tension has caused nervousness in financial markets and sent the rupiah tumbling. Meanwhile, opposition to the six-month-old administration of President Abdurrahman Wahid is starting to flex its muscles. Left unchecked, these developments could undermine Wahid's ability to push through vitally needed reforms and even lead to his removal.

Wahid's response has been poor. In public he grumbles about a host of enemies, and displays flashes of anger at criticism from the country's freewheeling press. A senior palace official identifies a motley crew of former ministers from the previous regime, disgruntled businessmen and military officers as the core interests behind this groundswell of opposition and the source of a swirl of rumours about alleged corruption in Wahid's administration. Yet even friends and allies of the near-blind president are unhappy. They complain about his overconfidence, unwillingness to listen and apparent failure to dispel the whiff of scandal from the palace.

Compared with the optimism that marked the first months of Wahid's administration, something of a siege mentality has set in. Meanwhile, concern is mounting over the value of the rupiah, now at its lowest levels against the US dollar since Wahid came to power.

This toxic blend of political pressure and flagging international confidence has many administration officials worried. Based on the growing litany of complaints, a senior palace official concedes that the threat to Wahid's legitimacy is real. Matters are expected to come to a head in August at an annual session of the People's Consultative Assembly, known as the MPR. Some critics say that a two-thirds-majority vote could result in Wahid's impeachment from the floor. "The MPR has no limit to its power," says Heri Achmadi, a member of parliament from the Indonesian Democratic Party of Struggle, which sits in Wahid's coalition government.

Most people hope things won't get this far. A move to impeach would set a precedent for the removal of the president on an annual basis. The constitution stipulates that if the president is removed, the vice-president serves the rest of the term. But Vice-President Megawati Sukarnoputri is seen as too close to military elements and lacks support from the Muslim political majority.

August is some way off, and Wahid's mercurial politicking makes a day, much less a week, seem like a long time in politics. But the sense of official insecurity and public uncertainty building up over recent weeks is critical because of the impact it is having on economic confidence.

The rupiah was already plunging when Coordinating Economic Minister Kwik Kian Gie told the foreign media on May 10 that he didn't see much reason for foreign investors to come to Indonesia. Market uncertainty was further fuelled by a violent demonstration by students demanding that members of the old regime be brought to trial, and then, more disturbingly, by unrest in Jakarta's Chinatown on May 13. On May 16, the rupiah was trading at around 8,500 to the dollar, up from a seven-month low of 8,760 days earlier. Faced with these difficulties, the Wahid government could veer in one of two directions, neither of which promise to do much to shore up the country's flagging image. The president could build bridges to disaffected coalition members. But that would mean making concessions on stalling reforms. The other option is to sweep his cabinet of dissent or disgruntled factions, replacing them with loyalists -- but that would invite more accusations of corruption and cronyism. The signs are that Wahid may be leaning toward the clean-sweep approach.

A recent cabinet reshuffle that ousted two ministers from coalition parties resulted in their replacement by close Wahid allies. A younger brother was appointed to the Indonesian Bank Restructuring Agency and a close confidant, Johan Effendi, will likely take over the state secretariat. Meanwhile, from the armed forces comes grumbling about Wahid's meddling. "We've given him an amber warning light," says one senior general, referring to rumours that Wahid is about to replace the army chief and his deputy with officers close to him.

News of these moves has reinforced perceptions that Wahid is faltering as a reformer. Local commentators clamour about the return of Suharto-era corruption and collusion. Specific allegations have been aired about a missing 35 billion rupiah ($4.1 million) from Bulog, the rice-distribution agency. Press reports have also hinted at corruption within Wahid's family. Wahid firmly denies these allegations. One of his daughters, Alisa, wrote a letter to the media insisting that "in terms of business, my father's stance is that it must be a matter of fair play and healthy competition."

Economic uncertainty

The broader concern, however, is that Wahid's government isn't performing on economic reforms, such as helping to sell off debt-burdened companies and repairing the country's moribund banking system. On Wahid's recent visits to Singapore and Thailand, the leaders of both countries urged him to speed up the process. True, exports are up -- albeit on the back of a weaker rupiah. But the primary concern businessmen have is that policymaking is haphazard at best.

Reflecting the growing uncertainty, Indonesia's State Statistics Bureau warned on May 15 that economic growth this year could be less than half as strong as previously expected, and could fall to 1.54%. Political uncertainty and the rupiah's weakness were blamed.

Inside the palace, exasperated aides complain that Wahid doesn't have a grasp of complicated economic issues (he often nods off in cabinet meetings), while his ministers tend to leave decisions up to him instead of offering concrete initiatives. "They give him room to make mistakes," says Sri Mulyani Indrawati, a member of the National Economic Council.

Wahid wasn't elected for his grasp of economics but for his commitment to tolerance and democratic principles. Yet there are concerns that his leadership is not healing the deep wounds inflicted on Indonesian society by more than three decades of authoritarian rule. The government has been slow to bring corruption charges against former President Suharto. As well as students and workers protesting on an almost daily basis, the military shows concern about the recruitment of paramilitary forces by political parties. Helping to polarize these forces, Wahid insists on lifting a ban on communism in the face of opposition from conservative quarters. Slow progress on the Suharto trial promises to invite further popular protest; pursuing a lifting of the ban on communism will help solidify a conservative alliance against the president.

Then, there's the army, still not totally disengaged from politics and watching from the wings. In an oblique warning to the government, Lt.-Gen. Agus Widjojo, a reformist officer, has hinted at a Pakistan-like scenario in which the military may be forced to act in the face of civilian disarray. "The ball is now on the civilian side to prove they are efficient and law- abiding," he told a public forum on May 14. "We're not waiting for them to fail, but if there is a threat to democratization, it is from civilians, not the military."

The way out for Wahid will get increasingly harder if the economic situation deteriorates. Many are mindful that the trigger for Suharto's downfall was a weak rupiah.

Sympathetic commentators believe Wahid has a reserve of popular support -- although opinion polls show his popularity waning -- and even his toughest opponents admit that the best solution for all would be for him to be persuaded to improve his performance.

That's where the MPR session in August could turn into a constructive warning instead of a mob scene, some analysts say. The assembly could send a strong message to Wahid on his performance, but hold off impeachment and instead allow him to form a functioning cabinet of experts, at the same time stressing that continuing failure could lead to censure or impeachment in the future. Even so, Wahid faces an uphill battle.

Wahid's support

President Wahid can count on considerable grassroots support, given his former leadership of the Nahdlatul Ulama, a Muslim organization with more than 30 million members. They include a paramilitary force, which recently mobbed the offices of a newspaper after it alleged graft in the Wahid administration. Speaking privately to a prominent politician, Wahid has threatened to bring two million supporters onto Jakarta's streets if the criticism continues.

Indonesian president's honeymoon is over

Agence France-Presse - May 19, 2000

Jakarta -- In the words of a close advisor, Indonesian President Abdurrahman's Wahid's honeymoon, especially with the country's press, is "sliding away fast" after only six months in office.

The clinically-blind moderate Muslim teacher -- popularly known as "Gus Dur" -- who was hailed last October as the nation's first democratically elected president in decades, has won admiration for his shrewd taming of the powerful military.

His accessability, relaxed style -- often greeting visitors barefoot -- and his regular candid press conferences, had all augured well for him.

Wahid's choice of Megawati Sukarnoputri as his vice president also gave hope that the bitterly-opposed post-Suharto factions might be able to pull together.

He had, he said then, a vision of a democratic Indonesia whose revitalised institutions would enable it to function successfully after decades of authoritiarian rule. Most critics then swallowed their reservations over his "make everyone happy" cabinet.

But now the tables seem to have turned. "Gus Dur, how low can you go," read the front page headline of the serious weekly magazine Tempo. The journal was appalled by an attack by members of the Muslim Nahdlatul Ulama movement -- which Wahid used to chair -- on the Surabaya-based Jawa Pos newspaper for its criticism of him.

Few were standing up for the Jawa Pos newspaper, whom some said had "had it in for" Wahid for a long time, but the shock waves of Wahid's methods -- or if he was not directly responsible, for failing to intervene to stop the attack -- were widespread.

The Jawa Pos and other publications, including Tempo, have also questioned Wahid's appointment of his brother Hashim, a man with little to no financial or economic experience, to the Indonesian Bank Restructuring Agency (IBRA).

The Jakarta Post Friday referred to the appointment as "nepotism in every sense of the word."

"By defending the appointment the president has undermined the trust that the nation gave him in October," the Post said in an editorial. "The betrayal," it said, struck at the heart of the reformation movement to eradicate the corruption, collusion and nepostism of the Suharto decades.

But the doubts and unease had begun before then. The often unclear comments Wahid is known for have turned from being seen as clever political chess moves to fatuous talks and sometimes downright dangerous bombshells, according to social commentator Wimar Witoelar.

The sacking of two economic ministers -- State Enterprises and Investment Minister Laksamana Sukardi and Trade and Industry Minister Yusuf Halla, was criticized by the markets.

The escalation of violence in Aceh, the Maluku islands and in Irian Jaya as Wahid made lengthy overseas trips to more than 20 countries, also attracted criticism.

Wahid's own political allies slammed him for not consulting parliament before the government signed the controversial Aceh peace agreement in Geneva. In addition, they said, signing the pact with the separatist "Free Aceh Movement" was tantamount to recognition.

And to cap it all last week, as the rupiah slid relentlessly against the dollar taking the stock market with it, suggestions arose that if Wahid was unable to run the government, he had better apppoint a prime minister who could.

Criticism is also mounting over Wahid's handling of the riot-torn Malukus, an area he officially ceded to the attention of Megawati. Tamrin Amal Tomagola, a sociologist at the state University of Indonesia Friday criticised the president for his inconsistent words.

"He himself promised that the Jihad Force [militant Muslims sailing from Java to the Malukus despite a presidential order not to] will be stopped but you can see the facts for yourself," Tomagola told Detikcom online news agency.

Reformist Emil Salim, Wahid's economic adviser, conceded that the president's barbed comments "sometimes work and sometimes don't" and suggested that the fault lay in Wahid's "un-politician-like" honesty. But, Salim stressed that Wahid was a consumate politician and insisted talk of impeachment was extreme.

The main problem in his administration lay with the political coalition that was supposed to be supporting him, but instead was moving against him and undermining his decisions, Salim said, hinting at a broad cabinet reshuffle in the offing.

PDI-P-Golkar- Central Axis coalition possible: Rais

Kompas - May 19, 2000

Kwangju -- A coalition is very possible between the Indonesian Democratic Party for Struggle (PDI-P) and the Golkar Party to build a force in the General Session of the MPR in August 2000. The chairperson of the People's Advisory Assembly (MPR) Amien Rais stated this because of the disappointment of the efficient work of Abdurrahman Wahid's government. If the Central Axis and the TNI join in this coalition it will become a tremendous force to press the president.

"I must speak honestly that the voices in the MPR/Parliament building are very audible that two victorious elephants of the election, namely the PDI-P and Golkar are attempting a more promising future and a more stable policy," said Amien Rais. The journalist from Kompas Pepih Nugraha reported this from Kwangju, S. Korea this evening.

Amien added however that this coalition was not to replace the president but to prevent the president from doing "all kinds of things" as he made often controversial statements.

Amien admitted that the Order of the MPR mentions that the annual session is for giving an evaluation. If the big fractions in MPR make a clear evaluation of what the president should do it was a step forward,

"If at the General Session the correction towards Gus Dur will be frontal and comprehensive, I think that Gus Dur's legitimization will become very critical," he said.

Amien gave as analogy that a good teacher always gave a second chance to a naughty pupil. If the teacher was not patient however, that pupil was probably dropped out.

In relation with President Wahid's intention to propose the revoking of Tap MPRS XXV/1966 on 20th May 2000 Amien expected that the proposal will not be valid because the situation makes it impossible.

He himself would do the utmost to maintain said TAP MPRS and agrees that the grandchildren of the PKI will get the same rights as the other citizens. Amien is in Kwangju on the invitation of president Kim Dae Yung to commemorate the bloody incident of the killing of students 20 years ago. Amien will give a speech at the commemoration of the fall of the dictator Chun Do Hwan. Amien also received the title Doctor Honoris Causa in Social Sciences at the Mok-Po University.

Regional conflicts

Nine killed as houses burned down in Ambon

Agence France-Presse - May 18, 2000

Ambon -- Nine people were killed and at least 60 injured Thursday as clashes raged for a third straight day between Muslims and Christian in the eastern Indonesian city of Ambon, witnesses said.

The violence came a day after at least 23 people were killed in the worst clashes in a month between Muslims and Christians in Ambon, the capital of Maluku province.

Three Christians were killed as Muslims mobs set ablaze a church and dozens of houses in the Ahuru area here Thursday, said Noya Dileopistos, an official manning the Maranatha protestant emergency post in Ambon.

"Three Christians were shot dead inside their houses and 52 others were injured," Dileopistos told AFP. Six Muslims were killed by gunshot wounds in the clashes in Ahuru and their bodies were taken later Thursday to the Al Fatah mosque, an AFP reporter saw. At least 60 people from the two religious communities were wounded, the reporter said.

Sammy Weileruni, a lawyer at the Maranatha church, said Muslim militants known as the Laskar Jihad (Holy Warriors), who had arrived from Java island, were behind the attack on Christian houses. "They have been launching attacks on Christians since Tuesday," he told AFP.

Witnesses said most of the 20 Muslims killed in the three days of clashes were native Ambonese. "You can tell from their names," one said.

An estimated 2,000 Laskar Jihad members have sailed from the East Java city of Surabaya to the Malukus in what they said was a mission to spread Islamic teaching, but local residents and the military fear their arrival will aggravate the religious conflict.

A Maluku military officer, who requested anonymity, said the latest attacks on Christians were triggered by the killing of two Muslims in the village of Passo on Tuesday. "They [Muslims] were angry and accused the military of covering up the incident," he told AFP.

Dileopistos said more than 100 houses and the Jacobus catholic church in the Ahuru Karang Panjang area of Ambon were burned down by Muslim mobs who have attacked the area since Thursday morning. He charged that members of the Kostrad army strategic reserves command took part in the attack.

The state Antara news agency said earlier Thursday hundreds of men in white or black Islamic dress attacked homes in the Ahuru Karang Panjang area of Ambon and burned them down, and the sound of explosions could be heard.

The attackers were backed by some members of security forces, who shot at those who got in their way, Antara quoted residents as saying. "Since this morning they have been burning dozens of houses in the Ahuru area," a resident told Antara. Sounds of grenade and home-made bomb explosions could be heard, Antara said, but there were no immediate reports of killings.

On Wednesday at least 23 people were killed and more than 50 injured, many of them shot by security forces, in the first major eruption of violence in Ambon since April 30 when six people were killed and more than 10 injured in the same downtown area near Ambon's port. Most of the victims were Muslims.

The renewed violence erupted Tuesday after a man, identified as Nyong Ferdinandus, was killed by a truck in a hit-and-run accident. Shops and businesses have been closed by the violence since Tuesday.

The wave of sectarian violence which has plagued the Malukus for over a year began with a January 1999 incident in the same area of Ambon as Tuesday's clashes.

Since the Muslim-Christian clashes began, more than 3,000 people have been killed, thousands of homes and buildings gutted and hundreds of thousands of people have been forced to flee to safety in other islands and provinces.

Island jihad's menacing turn

Sydney Morning Herald - May 20, 2000

As fresh violence erupts in Indonesia's North Maluku, an Australian-based mining firm trapped in a no-man's land has its own battle to fight. Lindsay Murdoch reports.

Islamic extremists have obtained a large cache of high-powered weapons they plan to use in a jihad, or holy war, on an isolated island in eastern Indonesia.

The weapons, seen this week being handed to self-declared holy warriors who have arrived in Ambon, the capital of the Malukus, formerly known as the Spice Islands, will dramatically escalate violence between Christians and Muslims.

Clashes have already left up to 6,000 people dead in two separate but religiously linked conflicts in nine months across the 2,000-island chain.

Halmahera island is also home to Australian-based company Newcrest Mining Ltd, which is determined not to abandon its $A200 million gold mine in the face of ongoing violence.

A cameraman working for an international news agency saw the weapons being handed to Muslim extremists on Tuesday from a ship container that had arrived in Ambon on the cargo boat Tanto Permai II.

Since then fresh religious fighting has erupted in Ambon, leaving at least 27 dead, scores wounded and dozens of buildings burnt down. Ambon is a staging post for up to 10,000 jihad fighters who have arrived or are heading for the islands, many of whom have vowed to retake Christian-controlled areas on the northern peninsula of Halmahera island, about 500 kilometres north of Ambon in Indonesia's North Maluku province.

It's an area that has already seen some of the worst atrocities, including the incineration of about 200 people when a bomb exploded in a mosque.

Church leaders in Australia with contacts in the islands have warned that 150,000 Christians on Halmahera are in danger of being wiped out as the Government in Jakarta appears powerless to keep the jihad fighters from leaving Java.

Community leaders from both sides have told the Herald that previously published estimates of the death toll and destruction in North Maluku have been greatly under-reported.

Until now fighters from both sides of the North Maluku war have used mostly traditional and home-made weapons and bombs in the fighting, which has caused Newcrest to evacuate most of its staff and suspend mining of one of the world's richest gold bodies three times.

But Newcrest's general manager (East Australia operations), Mr Bruce Price, told the Herald at the mine on Halmahera that the company was under strong pressure from the Indonesian Government to keep operating despite the mine being in a no-man's land between warring groups.

The company has already had a regional office on the island of Ternate trashed, one of its chartered helicopters hijacked and has had to dismiss hundreds of locally-employed workers for fear of trouble moving on to the mine site, where about 30 expatriates are working, most of them Australians.

"In [Jakarta's] view there would be a significant downside if we were to leave," Mr Price said. "We would not precipitously abandon the site ... it's our view that things are never quite as bad as you think. You proceed with constraint and caution.

"Local authorities have sent us a strong message: you are not responsible [for the conflict] ... you should get on with it. You are not under threat."

A 30-strong group of Indonesian combat troops are guarding the mine and the company has a barge and helicopters available to evacuate staff at short notice.

Early this year, Muslim leaders accused Newcrest, which is mining the gold through its majority-owned subsidiary, P. T. Nusa Halmahera Minerals, of siding with Christians. But the company has given emergency aid and built schools, kindergartens and other community projects for use by both sides.

Almost all the projects have since been destroyed. Villages near the mine have been abandoned and also destroyed since the worst of the violence in December and January.

Hundreds of Indonesian combat troops on Halmahera have orders to shoot jihad fighters who are trying to reach areas of the mountainous island where Christian vigilantes are dug into defensive positions.

At least eight Muslim fighters have been killed and several dozen more hurt in the past two weeks as troops have repelled groups trying to reach Halmahera's northern peninsula from Muslim- controlled Ternate, where the jihad forces have established a base.

Ambon's military commander, Brigadier-General Max Tamaela, this week travelled to Jakarta to complain about the inability of Indonesian authorities to keep the Jihad fighters from leaving Java. General Tamaela confirmed that nine containers on the boat Tanto Permai II were believed to be holding weapons.

Shoot-on-sight orders as Ambon snipers kill three

Agence France-Presse - May 20, 2000

Ambon -- Troops were issued with shoot-on-sight orders and three people were shot dead by snipers yesterday, as Christians called for UN troops to intervene in the escalating sectarian violence in Ambon. Meanwhile, trapped civilians tried to flee the troubled city.

Two soldiers and a civilian were shot dead by snipers early yesterday in a downtown area of Ambon, in the Maluku islands, with the two military victims taken to the Perigi Lima military hospital. One of the snipers was arrested and is believed to be a member of the police, military sources told AFP.

The shoot-on-sight orders follow three days of violence which left at least 32 dead, more than 100 injured and scores of houses including a church burned in Muslim-Christian clashes. The three killed early yesterday brought the total known dead to 35.

"The concrete action is to prevent riots from spreading ... therefore the shoot-on- sight order which I had instructed ... is to be implemented," the state Antara news agency quoted Maluku military commander Brigadier General Max Tamaela as saying in Ambon.

People trying to flee the city are allegedly being told the sole commercial flights to the city's Pattimura Airport had been cancelled until Sunday, and that the airport was closed.

However, an airport employee told AFP that although the daily Merpati Nusantara airlines flight had been cancelled, the airport was still officially open, though almost impossible to reach by road. "We will wait for further developments in the situation to decide whether or not we can resume flights," the official, Mr Suwardi, said. One Merpati employee in Ambon was allegedly hacked to death by Muslims armed with long swords while on his way to work.

Mr Sammy Waileruni, a lawyer at the Maranatha Protestant church, told AFP by phone late yesterday that the churches in Ambon had sent a letter by fax to the United Nations pleading for intervention.

"We have faxed the letter to the UN Security Council and are urging them to give aid in the form of security troops to protect the people of Ambon. We also called on the UN to look into Amien Rais' involvement behind the Jihad Force movement. We strongly believe that he is the mastermind behind the Jihad's presence in Ambon," he added. Dr Amien Rais is the Chairman of the national People's Consultative Assembly in Jakarta.

Ambon's police headquarters was packed with 2,115 Christian refugees, mostly women and children who had fled from the Uhuru area outside the city. The wave of sectarian violence which has plagued the Malukus for over a year began in Ambon in January 1999 and more than 3,000 people have been killed and hundreds of thousands forced to flee.

At least 23 die in Ambon as violence intensifies

South China Morning Post - May 18, 2000

Agencies in Ambon -- At least 23 people were killed and more than 50 injured as fighting between Muslims and Christians intensified in Ambon in the Maluku islands.

Those killed since late on Tuesday included two members of the security forces, at least 12 Muslims and at least one Christian, officials, witnesses and the state Antara news agency said yesterday.

Among the dead were a 19-year-old policeman and an army soldier, Antara said, adding that at least 59 people were injured. Most of the civilian victims were shot dead when security forces opened fire to disperse mobs of the two religious communities clashing in the centre of Ambon city.

More than 1,000 Islamic "holy warrior" militants have poured into Ambon in recent weeks. Sammy Waileruni, a lawyer with the Christian co-ordination post at the Maranatha Protestant Church, said he saw hundreds of the Laskar Jihad extremists armed with rifles and grenade launchers attack Christian houses in the Mardika area yesterday.

Authorities have discouraged the militants' departure to Ambon but have been unable to prevent them going because they were not armed when they boarded ships in Surabaya, East Java, to sail for the islands. About 3,000 militant recruits underwent military training in a camp near Jakarta last month. Mr Waileruni said seven houses in Mardika and around the Silo church had been torched.

Antara said two people were killed and 11 wounded in the first clashes late on Tuesday at the border separating the Mardhika and Batumerah areas. A further 21 were killed and 48 injured yesterday in similar violence nearby which triggered shooting by the security forces.

More than 2,500 people have been killed and hundreds of thousands have fled their homes in 16 months of sectarian clashes in Maluku province and neighbouring North Maluku, collectively known as the Spice Islands.

The strife is fuelled by old rivalries and more recent complaints by Christians that Muslim newcomers from other parts of Indonesia have been taking their jobs and are not respecting local customs. Before Tuesday there had been a sharp drop in sectarian violence in the islands.

The latest violence erupted after a young Christian man, identified as Nyong Ferdinandus, was killed by a truck in a hit- and-run accident. After the accident, rumours spread that a car, along with two passengers, had been torched. Soon afterwards Muslims and Christians started fighting in two districts of the city.

Aceh/West Papua

Inquiry into rights abuses urged as police kill nine

South China Morning Post - May 19, 2000

Chris McCall and Agencies -- Activists in Aceh yesterday urged Jakarta to set up a full human rights inquiry into abuses in the province if it wants a de facto ceasefire with separatist rebels to work.

The message came as Indonesian police said they had killed nine suspected separatists in the worst violence in the troubled province since the signing of a three-month "humanitarian pause" last week. Police said eight of the nine were killed in a firefight but residents said they had been shot in cold blood while sitting in a cafe. The incident came hours after a court jailed 24 soldiers for a massacre of civilians last year.

There were hopes the de facto ceasefire, set to start on June 2, could lead to a lasting peace, but anger over abuses by Indonesia's military has to be assuaged.

Activists said the mixed civilian and military court which jailed the 24 soldiers was not a model which would be readily accepted again.

The trial left unpunished those who ordered the massacre of Islamic teacher Teungku Bantaqiah and 56 of his followers. Human rights groups condemned it, even though the sentences were some of the harshest Indonesia has given its soldiers for rights abuses.

Public reaction in Aceh was virtually nil. "No one cares," said Saifuddin Bantasyam, executive director of Care Human Rights Forum in the capital, Banda Aceh. "They already knew the result of the trial. This trial could not bring justice to the people. We need a body to investigate all human rights abuses in Aceh."

A series of such inquiries have recently begun work looking at a range of unsolved business from the past, most notably last year's East Timor violence. But, noting a lack of similar inquiries in Aceh, rights activists suggest it may be just too delicate a subject to handle. Vice-President Megawati Sukarnoputri arrived in Merauke, Papua, yesterday at the start of a five-day visit to the easternmost province which her office called a fact-finding mission concerning Papuans' demands for independence. Papua was formerly called Irian Jaya.

Aceh massacre trial 'missed real culprits'

Sydney Morning Herald - May 19, 2000

Jakarta -- Two international human rights bodies yesterday dismissed as "seriously flawed" the just-concluded trial of 24 Indonesian soldiers and a civilian for a massacre in Aceh province, saying it had missed the real culprits in the slaughter.

Military commanders and not just their troops should have been held accountable for the massacre of more than 50 people last year, the London-based Amnesty International and New York-based Human Rights Watch said in a joint statement.

The groups expressed "serious misgivings" over the sentencing on Wednesday of 24 soldiers and a civilian to up to 10 years' jail for the killings last year of Teungku Bantaqiah and 57 of his followers. The flaws in the trial could make it seem only a "public relations exercise" in the eyes of the Acehnese people.

"The trial shows the Indonesian Government's resolve to put an end to military impunity in Aceh, and that is an important step forward," the joint statement said. "But it is a seriously flawed beginning. Commanding officers were not charged and key witnesses failed to appear."

None of the accused in the trial was "above the rank of captain and the majority were privates or non-commissioned officers". The accused troops' commanding officer, Lieutenant-Colonel Sujono -- who had been named as one of the accused -- has disappeared.

Another senior officer, Lieutenant-Colonel Syafrul Armen, who appeared as a witness, "admitted to having ordered troops to bring back Teungku Bantaqiah dead or alive and was not charged".

Wednesday's sentencing of the 25 by a joint civilian-military tribunal was considered a big step by authorities in addressing gross human rights abuses in Aceh, where troops and members of the separatist Free Aceh Movement have been fighting for more than two decades.

Amnesty and Human Rights Watch said the trial lacked credibility and legitimacy because of the lack of charges against senior officers, an argument also used by the defence lawyers during the trial and protesters who picketed the courthouse during several of its sessions.

"If the justice effort in Aceh is to be credible, the most senior culpable officers must be brought to justice," the statement said. "The exclusive focus on junior ranks weakened the legitimacy of the trial among Acehnese observers and among observers elsewhere in Indonesia. It suggests that the Government is still unwilling or unable to take decisive action against higher level military leaders."

The statement also said the non-appearance of some witnesses appeared to be because they had not been called or were afraid because of the lack of a witness protection program. "In Aceh, where the security forces have ... a long record of literally getting away with murder, the potential for intimidation is high," the statement said.

The statement warned that if the massacre trial was a "foretaste" of how Indonesian authorities planned to conduct trials into the post-ballot violence in East Timor last year, "it does not bode well".

The UN Commission on Human Rights has urged that an international war crimes court be convened to try those responsible for the wave of violence in East Timor carried out by Indonesian military-backed militia.

But the commission has said it is waiting first to see whether Indonesia conducts a credible legal process and brings those responsible to justice.

Masterminds got off scot-free, say activists

South China Morning Post - May 18, 2000

Chris McCall -- Top Indonesian human rights activists heaped scorn on yesterday's convictions in Aceh, saying they set a bad precedent for future human rights trials over a host of unsettled cases from the past.

The convictions of 24 soldiers and one civilian for murder under ordinary criminal law had allowed those who planned the operation against Islamic scholar Teungku Bantaqiah's school to get off scot-free, they said. This did not have to happen.

Asmara Nababan, secretary-general of the National Human Rights Commission, said the prosecutors should have waited several months for new laws relating to special human rights tribunals to get through parliament. Under these courts, those who ordered the killings of Bantaqiah and at least 56 of his followers could also have been brought to book.

"Human rights violations should be brought before a human rights tribunal," Mr Nababan said. "But of course it would have meant waiting another two to three months. My own opinion is it is would have been better to wait, but the Government had other considerations."

Indonesian law states that international standards can be applied in serious cases, but legislation to implement this domestically is still not in place. Although in theory President Abdurrahman Wahid has the power to order it by decree, there is great reluctance to govern through the same type of order that disgraced former president Suharto used to perpetuate his own hold on power for 32 years.

On the positive side, the sentences of 8.5 to 10 years handed down were far heavier than those imposed on soldiers in similar cases held when Mr Suharto was in power, Mr Nababan said.

Politics had taken priority over good legal sense, said Munir, co-ordinator of the leading rights lobby, Kontras. The consequences would be seen in future human rights trials in Indonesia, he added. A series of further cases may be brought later this year over last September's violence in East Timor. These may be the first that the new human rights courts deal with.

But the military insisted on a joint military and civilian court in the Aceh case, and Indonesia's police and military are those leading the inquiries into East Timor under the umbrella of the Attorney-General's Office, Mr Munir said.

Like other activists, he doubts Attorney-General Marzuki Darusman's commitment to dealing with these cases and suspects that Human Rights Minister Hasballah Saad, an Acehnese, is desperate to be seen as the man who can solve the Aceh crisis. Mr Saad also played a leading role in last Friday's preliminary peace accord. "This compromise with the military is a very bad precedent for the future of human rights," said Mr Munir.

Acehnese unmoved by 'scripted' trial

South China Morning Post - May 18, 2000

Chris McCall, Jakarta -- People in Aceh have reacted coldly to the jailing of 24 soldiers and their civilian informant over the massacre of 57 people at a school last July, saying it is just window dressing.

There were none of the prayers that greeted last week's peace deal, which the Acehnese hope will end a decade of violence and possibly pave the way for self-determination. Even the fact that a few soldiers had finally been made to pay for the misdeeds of the past left few people moved.

The court in Banda Aceh was not especially crowded for the verdict and most of the audience consisted of curious students. There were not even any protests. But leading Acehnese had plenty of hard words for the way the trial was conducted.

"The trial is not interesting to the people," said Nurdin Rahman, head of aid group Rata, which helps the thousands of torture victims dotted across the province. "These are only the men who did that, while those at the top were not held accountable."

The trial was controversially held in a joint civilian and military court and under criminal laws rather than laws specially designed to address human rights issues, which are now going through Parliament. Some human rights lawyers believe the case should have been delayed, but was pushed through because of its political significance.

The killing of Teungku Bantaqiah, an Islamic scholar suspected of supporting the Free Aceh rebels, and 56 of his followers occurred at a very sensitive time last July. Agitation for a referendum on independence was just getting into full swing, while investigations into human rights abuses under former president Suharto were proceeding at snail's pace. It was one of two major massacres in Aceh last year and followed Indonesia's historic first democratic election in 44 years, which was widely boycotted in Aceh.

A leading activist pushing for a referendum said many Acehnese jailed for membership of the rebel movement in the past had received far longer jail terms than the 8.5 to 10-year sentences handed down yesterday.

Muhammad Nazar, chairman of Sira -- the Aceh Referendum Information Centre -- said he doubted they would serve their full terms. "This is not going to solve the problem of human rights in Aceh," said Mr Nazar, whose organisation has experienced numerous threats over its agitation for a referendum. The most urgent thing was that a proper investigation team, like that for East Timor, be set up for Aceh, he said.

Human rights are a vital issue if a solution to the Aceh violence is to be found. The Sumatran province is strewn with torture victims and families whose sons, daughters or fathers disappeared or were killed at the hands of Indonesia's security forces. There is a deep desire for justice.

But the mysterious disappearance -- before the quest for justice even started -- of the man who led the operation, Lieutenant- Colonel Sudjono, cast a long shadow over this trial. Human Rights Minister Mr Hasballah Saad, who is Acehnese, has played a leading part in the arrangements and some believe he pushed the case through early.

The Acehnese are upset at the slow progress being made to end the bloodshed. But human rights monitors say last Friday's peace accord has not calmed the situation, with several reports of killings and torture since it was signed.

A wave of violence has swept the province amid a renewed a crackdown by police and military on the rebels. Human rights groups say at least 366 people have been killed this year, although some estimates put the true figure at more than 1,000.

Rebel spokesman Ismail Sahputra compared the trial to a piece of theatre and said not even all the bodies had been found from the attack on the school in West Aceh last July. "They had already written the script and they knew what would happen to them. It is a play," he said.

Albright pledges US humanitarian aid to support truce

Agence France-Presse - May 15, 2000

Washington -- US Secretary of State Madeleine Albright on Monday hailed last week's truce agreement between Indonesia separatist rebels from its northern oil-rich province of Aceh, pledging US humanitarian aid to support the pact.

But Albright -- speaking to reporters at a joint news conference with Alwi Shihab, her visiting Indonesian counterpart -- stressed that the deal, concluded Friday outside Geneva, was only an initial move towards a lasting peace in the province.

"The May 12 agreement is an important first step, but sustainable resolution of the conflict will require a comprehensive political settlement which addresses the core grievances which have [aggravated] conflict in the province," Albright said.

The deal, due to come into effect on June 2 and set to last for an initial period of three months, deserved support from the international community, Albright said.

The US secretary of state praised both Jakarta and the rebel Free Aceh Movement (GAM) for their willingness to embark on the path of peace.

"This is a genuine act of political courage on both sides and represents the best chance in over 24 years to end a conflict which has caused profound suffering and cost thousands of lives," Albright said, announcing the donation of an as-yet unspecified amount of US humanitarian aid.

"We call on Indonesia's friends in the international community to join us in this endeavor so we can help create an atmosphere in which this humanitarian pause can become a permanent peace," she added.

The agreement has raised hopes that the widespread violence that erupted in East Timor after that territory voted for independence from Indonesia in 1999 can be avoided in Aceh. Those hopes however have been tempered by statements that the rebels are still committed to the long-term goal of independence, something Jakarta opposes.

Both ministers stressed that the solution in Aceh must be based on the idea that the province remains part of Indonesia. "The United States supports dialogue aimed at achieving justice and peace in Aceh within the context of a united, democratic Indonesia," Albright said. Shihab noted that Jakarta had continually made clear its demand for territorial integrity as part of a long-term solution.

"We have emphasized the territorial integrity of Indonesia as has been supported by the United States," he said. "This is a historic event for the Indonesian people as well as the Acehnese people that at last we have succeeded in laying the foundation for a peaceful settlement in Aceh as well as in the region," he added.

Tragic tale of a good soldier betrayed for gold

South China Morning Post - May 15, 2000

Chris McCall, Sigli -- An Indonesian soldier cannot expect an easy life in troubled Aceh at the best of times, but most assume their own colleagues will not betray them. That was a mistake for former first sergeant Maju Ali Siagian.

If the preliminary peace deal signed in Geneva on Friday is to be more than a footnote in history, it has to deal with the war's human detritus.

Aceh's farming villages are dotted with people missing limbs, or whose nervous systems have been ruined by electric shocks inflicted during torture. Most accuse the military -- and particularly those brought into the province from outside, whom Acehnese generally hate. Of at least 366 people killed in fighting this year, 38 were police and soldiers, so they have to watch their backs.

Mr Siagian served in the province for decades, but was betrayed by more influential soldiers sent in by then president Suharto when the fighting escalated in 1989. "He is still free," Mr Siagian yells angrily when asked about the officer in the Kopassus special forces who first accused him of being a traitor.

His story perhaps illustrates why the Free Aceh Movement rebels are still demanding the special forces leave the province before they go further than signing an initial three-month "humanitarian pause" and join fully fledged peace talks.

Now 56, Mr Siagin has been out of jail for just a few months. He cannot speak clearly and has trouble moving his limbs. A military court convicted him of supporting the rebels after Kopassus soldiers tortured a confession out of him.

Reformist President Abdurrahman Wahid admitted the ruling was wrong after his election and ordered the conviction expunged from records. But by then Mr Saigian had spent nearly a decade in military jails.

The real issue, as so often in Indonesia, was money. Or rather gold. A career soldier from neighbouring North Sumatra province, Mr Siagian is a Muslim. He married an Acehnese wife and made the province his home.

Like most Indonesian soldiers, his life revolved around his work. He lived in army housing, socialised frequently with army colleagues and could look forward to a modest pension when he retired. Unlike soldiers based outside the province, Mr Siagian knew and respected Acehnese culture. He was liked by the local people and had just made the rank of first sergeant, with 14 men under his command.

But the rivers of Geumpang, the mountainous area where he served, contain gold. The locals pan for it and regard it as rightfully theirs. When Kopassus turned up, they wanted a piece of the pie. Mr Siagian said no. And he paid the price. Kopassus forces detained him. He was tortured and his subordinates were intimidated into testifying against him.

In the end he broke down and confessed. But he insists he never helped the rebels and only confessed to stop the torture. But his fellow soldiers, who understood little about life in the province, could not speak its language and were distrusted by the Acehnese, were easily convinced that a popular colleague was a traitor.

Worse than the jailing was the effect on Mr Siagian's family. His wife and children were thrown out of their military house. His pay was cut off, so they lost their source of income and the prospect of a pension.

Mr Siagian now receives a modest pension. A decade's missing back pay would amount to a small fortune in Aceh, but financial compensation is still a novel legal concept in Indonesia. At best he is free to live a modest life in a modest village house, a broken man."I feel sad," he says, when asked about his life. "Why am I like this?"

News & issues

The parties' democracy

Asiaweek - May 26, 2000

Jose Manuel Tesoro, Jakarta -- For three months, the third floor of Indonesia's parliament complex resembled a workers' dormitory. Figures dozed on the dirty floor as clothes hung out to dry.

Heaps of rice, soybean cake and chili sauce sat out, the daily sustenance of the some 50 laid-off laborers who had occupied the room on behalf of their 4,600 colleagues. Until October last year they had assembled sneakers. Now the workers wanted the MPs to pressure their factory's Hong Kong-based owner to grant all its employees a proper severance package. "They are representatives who were chosen by the people," said union leader Karel Sahetapi of the lawmakers. "So they should really struggle for the rights of the people."

It is a reasonable request to make of Indonesia's legislature, elected last July in the country's first free multiparty elections. But like the workers' demands themselves, it is not one legislators can very easily answer. (The protesters were eventually kicked out on May 10.) As reports of corruption -- from the president's inner circle down to lowly provincial councilors -- spread, Indonesians are finding that despite new political laws, their leaders remain largely unaccountable.

A local newsmagazine recently revealed that President Abdurrahman Wahid's masseur had gotten an official at the rice monopoly Bulog to withdraw over $4 million from workers' funds. In exchange, the ambitious official was promised he would become Bulog's new chief (he didn't). Attention has also focused on the appointment of Wahid's younger brother to the Indonesian Bank Restructuring Agency as a self-described "debt collector."

New laws passed in February 1999 restructuring elections, allowing new political parties and reconfiguring the make-up of parliament and the electoral college have not dealt a death blow to Indonesia's closed, collegial, elitist political culture. Nor have constitutional amendments passed in October asserting the authority of the legislature and limiting the power of the executive done much to check the president's oft-used -- and abused -- prerogative. The bad news is that despite Indonesia's exit from one-man rule, power has come to rest not in the hands of the people but instead in a handful of fractious party leaders. The good news is that legal experts, civil-society groups and, yes, even the legislature are slowly and quietly at work to start fixing the system.

The new laws largely preserved the old electoral system. The draft law had proposed a combination of two systems: the district (in which voters directly choose MPs in their areas) and the proportional (in which voters pick parties, which in turn select the representatives). The legislature opted for the latter system, retaining party leaders' wide-ranging authority to choose who gets the much-coveted MP assignments.

"With proportional representation, there is no accountability," complains Andi Mallarangeng, a member of the law-drafting team. "They are party representatives, not people's representatives." Hence, key decisions in the legislative body are monopolized ultimately by party bosses, among them President Wahid, Vice President Megawati Sukarnoputri and legislature chairmen Amien Rais and Akbar Tanjung. But as election experts point out, the district system is no panacea: In a first-past-the-post contest, candidates may still go all out to buy local voters. The debate continues.

Written into the new electoral law is a required review of the system three years after the July elections. The law's original drafters are starting by asking to change the composition of the General Election Commission, where infighting by representatives of small political parties had helped delay the final result of the polls. If the bill is passed, they will be replaced by independent figures with no party affiliations.

More changes are at work within the highest legislative body, the People's Consultative Assembly (MPR by its Indonesian initials). Since the end of last October's session, a 90-member "working group" has been planning amendments to the 1945 Constitution. After months of hearings, the commission is to begin drafting new amendments for debate and presentation to the MPR in August.

The possible proposed amendments touch upon a wide range of issues: the electoral system, the structure of the legislature, the balance between branches of government, the independence of the Supreme Court, even a bill of rights for Indonesians. The most controversial proposal could be to allow the president to be directly elected, rather than appointed by the MPR. If passed by the required two-thirds of the MPR, the amendments could have far-reaching consequences on both the structure of government and the nature of Indonesian democracy.

Over a dozen civil groups have banded together to get citizens to fax in support for a direct-election system. "There are a lot of advantages to direct election," says Muryono Prakoso of the Center for Electoral Reform. "It will form stronger legitimacy and the president's accountability to the electorate will be direct."

Ultimately, though, more representative politics depends on the parties, which have the authority to pass, revise or reject proposed laws and to choose MPs. How much are they willing to give up the power the system invests in them?

Ironically, one of the biggest opponents to change is Megawati's Indonesian Democratic Party of Struggle (PDI-P) -- even though Megawati would probably have been elected president last year had a direct system been in place. Jakob Tobing, a PDI-P lawmaker and chairman of the commission studying the amendments, says his party does not support direct election "because of the technicalities and the social and political costs."

Thus, there is a third -- and least observed -- aspect to perfecting Indonesian democracy: party reform. And that depends on party leaders, who, as recent party congresses have shown, have little interest in changing their top-down control. Julia Suryakusuma, director of an effort last year to catalog 141 registered parties, points out: "Parties are a creation of people just to grab a piece of power."

Beyond the imperfect laws and the patchwork Constitution, the continuing belief in parties as vehicles for personal ambition rather than popular aspirations may prove one of the biggest obstacles to reforming and cleaning out the airless and still unaccountable Indonesian political system. Whereas Thailand and the Philippines were able to get much of their new political framework in place early, Indonesia is evolving one slowly, incrementally and on an ad hoc basis. "The elites in Indonesia don't trust the people's will," explains Mallarangeng. "They think they know best. But the people know whom to choose and why." As Indonesia is learning, being a democracy takes more than just holding an election.

'The cabinet is not solid'

Asiaweek - May 26, 2000

A respected reformist in President Wahid's cabinet, Laksamana Sukardi was controversially dismissed as minister for investment and state enterprises on April 24. Sukardi claims vested interests were behind his sacking and is demanding clarification from Gus Dur (as Wahid is popularly known). He recently gave his views on the matter to Asiaweek's Dewi Loveard. Excerpts from the talk:

Before you were fired, your relationship with the president was said to be not very smooth. Can you explain?

Yes, there were a lot of rumors defaming me, such as that I spent a lot of time traveling abroad. After my dismissal, it was alleged that I put two corrupt officials into my ministry. Unfortunately, the president heard the whispers from somebody else, whom I can't mention by name here. Even though I explained everything, his decision was still different from what I expected.

Many people were saying that you concentrated more on past corruption cases rather than on how to improve foreign investment.

I've done a lot of campaigns and promoted license simplification. We're also preparing state-owned companies for privatization, but the implementation depends on the market. The market will not buy stakes if the board of management and the government are not clear of corruption. Political stability and just and fair law enforcement play a big role. That's the reason I pushed for good corporate governance. But I found a lot of interference. I cannot go into details.

If your work was really on track, why do you think you were fired?

Maybe because I am too rigid. I have no tolerance for corruption. I have never disbursed any money sourced from state-owned companies to any political parties. If I have condemned corruption in the past, it is to make the life of Indonesians better.

If Gus Dur refuses to make any clarification about you, what will you do?

I will file a lawsuit against the president. It will be a good exercise in telling Indonesians to be careful in making accusations. At the same time, it will show the foreign community that there is rule of law in Indonesia.

If Gus Dur were to offer you another position in the government, would you accept it?

I would take it if it was a gesture of apology or if Gus Dur has explained to the public first whether I am right or wrong. At one stage, I was offered the ambassadorship to Switzerland, but I refused. It would have been an exile posting. I am a professional and I love my country and my people, and I hope I can do something for them.

What do you think of Gus Dur's leadership?

He is a good man with a handicap. A lot of people try to get close to him and whisper something to him, and we don't know the truth behind the whispers. I personally don't think the cabinet is solid. How can it be solid when we are shaken with rumors? The cabinet has no program. Everything is ad hoc and impromptu.

Wahid says yes to visit

The Melbourne Age - May 21, 2000

Brendan Nicholson -- Indonesia's President Abdurrahman Wahid plans to visit Australia in July -- the first Indonesian leader to do so in 26 years.

Prime Minister John Howard told journalists in the South Korean capital of Seoul yesterday that President Wahid had telephoned to accept his invitation to visit Australia. The bilateral meeting would take place before a tripartite meeting involving East Timorese leader Xanana Guasmo.

On May 9 Mr Howard told Parliament he had written to President Wahid encouraging him to visit Australia and suggesting talks between officials to set a date. Mr Howard said President Wahid told him he was still looking forward to visiting Australia.

"I suggested some dates in July and they will be a matter of discussion between the Australian ambassador in Jakarta and President Wahid's office," Mr Howard said.

"This is the first occasion on which we have spoken. It was a very pleasant conversation. We're both looking forward to meeting each other."

Mr Howard said he told President Wahid he would receive a warm and generous welcome from the Australian people. He said he told President Wahid he admired the leadership he had given Indonesia since taking over in difficult circumstances.

"I expect that he will be honored with an honorary doctorate in at least one or perhaps two Australian universities. That, of course, is a matter for those institutions."

Mr Howard said he had made it clear repeatedly that the relationship between Australia and Indonesia was an important one.

The visit will provide an opportunity to improve relations between the two nations, which have been strained since the bloodshed that followed the independence ballot in East Timor and Australia's key military role in the international intervention there.

Suharto family's business empire largely intact

Business Times - May 18, 2000

Jakarta -- Two years after former Indonesian president Suharto was ousted from office, large parts of the industrial empire that was forged by his family are still very much in business.

PT Bimantara Citra, a telecommunications and broadcasting group, remains under the control of his second son Bambang Trihatmodjo. PT Citra Marga Nusaphala Persada, a toll road operator partly owned by his daughter Siti Hardyanti Rukmana, or "Tutut," is in the running to win a coveted contract to manage a Jakarta toll road.

The beginnings of an economic recovery have muffled calls for the dismantling of the firms, while the family's ties to the military and government ministries remain too strong to allow such an outcome anytime soon, analysts say.

"The current leadership is indecisive on whether [a purge of Suharto's family from the corporate sector] would not upset a lot of people in their own ranks," said Manish Singhai, a vice- president at Alliance Capital Management in Singapore. Although the premium attached to the companies' connections evaporated soon after Mr Suharto was thrown out of power by popular discontent on May 21, 1998, the fortunes of Bimantara and Citra Marga are not entirely tales of a dynasty in decline.

"The system hasn't come down as hard [on these companies] as many people expected it would," said Calvin Ho, vice-president and senior portfolio manager with Citicorp Investment Bank (Singapore), which manages $150 million worth of Indonesian assets.

While calls now for Mr Suharto's prosecution on corruption charges make headlines daily and foreign firms steer clear of the former first family, many Suharto firms remain largely untouched.

Bimantara continues to run the country's most-watched private television station, RCTI, and owns stakes in the popular Jakarta shopping mall, Plaza Indonesia, and its most fashionable hotel, the Grand Hyatt.

Analysts also point out that the company is well-positioned to take advantage of growth in the country's telecom business through its 7 per cent stake in Satelindo -- a mobile operator that also has a 14 per cent market share of international calls. Bimantara's loss narrowed 20 per cent to 218.4 billion rupiah (S$44 million) last year, thanks to foreign exchange gains.

Not surprisingly, its shares have done better than the Jakarta Composite Index in the two years since Mr Suharto's downfall. The shares have more than doubled compared with the index's 25 per cent gain in that period.

Citra Marga hasn't fared as well. The company reported a 61 per cent decline in 1999 profit. Still, it seems set to win a lucrative contract to manage the Jakarta Outer Ring Road, analysts said. It also continues to operate the toll road from the Jakarta airport to the city.

"The fundamentals of these companies are okay," said Steven Lim, portfolio manager, Daiwa SB Investment (S), which manages S$500 million of funds in Singapore. "However, institutional buying interest is low. The perception is that they are linked to Suharto and unlikely to be well-received. They're local favourites since the price is not too high."

Although these companies are no longer guaranteed government contracts and first go at lucrative franchises, they have shown greater resilience than had been expected of them, analysts said.

"These companies will carry on business as usual" because "the government has many problems to solve before" it can conduct "probes against them and possibly seize their assets," said Eric Poh, fund manager at ING Investment Management Asia Pacific (S) Pte, which manages US$1.2 billion worth of funds in Singapore.

Not all the six Suharto children are faring well. Youngest son Hutomo "Tommy" Mandala Putra, whose fortune was built on oil- delivery contracts he won when his father was president, was forced to sell his 60 per cent stake in Italian sports car maker Lamborghini SpA as his business empire collapsed. His Humpuss group is Ibra's third-largest debtor, owing it 5.5 trillion rupiah, and the Indonesian government is considering nationalising the company's unfinished US$100 million plant at Cikampek, near Jakarta. The plant, to build "Timor" model cars, was mothballed by the country's recession and by demands from the International Monetary Fund that the government retract favourable tax breaks given to the company.

Investors also warn that Bimantara and Citra Marga may be taken over by the government as pressure on President Abdurrahman Wahid's government intensifies to charge Mr Suharto and his family for the excesses of his reign.

After the probes, the first family will likely have "a minimal or no role in the companies", Mr Lim said. That may not be so bad for the companies, both of which have a lot of assets, and are "run by professionals", said Ahmad Munawar, Jakarta-based analyst with OCBC Sikap Securities.

For now, though, the Suharto family is sitting pretty. Mr Suharto and Mr Bambang still keep their homes in the wealthy central Jakarta neighbourhood of Menteng.

Palace press corps goes on strike

Agence France-Presse - May 18, 2000

Jakarta -- Some 150 Indonesian reporters accredited to the presidential palace went on strike yesterday to protest against shrinking access to information there.

The boycott followed the expulsion by presidential guards of journalists covering the arrival of ministers in the front yard of the Bina Graha, the office of President Abdurrahman Wahid, said one of the reporters.

"The yard is the only strategic place to get news from the horse's mouth, the ministers and presidential guests," said the reporter, who has been accredited to the palace for 15 years but asked not to be named.

"This is a culmination of restrictions to the right of access to information. As soon as Abdurrahman Wahid took office the press room at the palace, which had existed for 50 years, was closed and turned into an adjutants' room," the reporter said. He said unlike during previous governments, reporters had not been allowed to cover Cabinet meetings, and access to the Cabinet room entrance where ministers could be "doorstopped" for interviews was blocked by a dividing line. "This makes journalists' job more difficult because the ministers would not voluntarily come to us for interviews," he said.

The reporter said the presence of the journalists at the palace office was to the government's benefit because "what they report are basically in line with the government's interest". "We are very disappointed. Unless the government gives us full access, we'll continue the strike," he added.

Last month, Indonesia's Minister of Defence Juwono Sudarsono criticised the way the media had portrayed social conflicts, saying that they had inflamed and worsened disputes in Aceh and other provinces.

"The way TV stations -- such as RCTI, SCTV and ANteve -- have presented their flagrant coverage have frequently provoked the situation in the field," the minister was quoted by Antara as telling Indonesian citizens in New York last Friday. "This has happened in their coverage of the recent violence in Aceh, West Kalimantan and other provinces."

The minister observed that openness and freedom of the press were the cost democracy had to pay. But the cost was too expensive, with tension intensifying following news and comments broadcast by television stations which enjoyed the freedom of the press, the minister said.

General says Pakistan coup a warning for Indonesia

Agence France-Presse - May 14, 2000

Jakarta -- The military takeover in Pakistan because of the failure in democracy there should be a warning to Indonesia, an Indonesian general involved in the reform of the armed forces has said.

"We are reminded by various cases of democratization failure, the most recent one in Pakistan," Lieutenant General Agus Widjojo told a regional seminar on democracy here on Sunday, the text of which was obtained here Tuesday.

"It is to be hoped that the fate of civilian rule in Pakistan will serve as a warning to the new democracies in Indonesia," said the general, a US-educated staff expert on politics and security to the country's armed forces commander.

Widjojo said that in Pakistan "most civilians seem to have welcomed the military ... that relieved them of a corrupt and inefficient regime."

"There is no reason to say that what happened in Pakistan serves as an opening to possibilities of [the Indonesian] military's return to politics, but it is better to learn from the mistakes of others than to suffer from the same mistakes oneself."

The only military speaker at the seminar, Widjojo is credited as one of the authors of the reforms undertaken by the Indonesian military since the fall of former president Suharto two years ago after 32 years in power.

The general said the Indonesian military had now positioned itself as a part of the national decision to enter the democratization process and "intends to see that the process takes the nation to arrive at a more democratic Indonesia."

But he rejected outright the Indonesian student battle cry of "Back to the barracks" as describing the military's adjustment from being unchallenged number one in all walks of life including parliament, the provinces and business, to a tool of a democratic state.

Calling the reform process "repositioning," he insisted it must be carried out gradually, and involve the independence of the police from the military and a gradual change of the army's territorial role -- which under Suharto had the army paralleling the civilian administration at all levels of society.

Now, with the Indonesian press hammering the military for its past human rights abuses, the armed forces was "feeling a climate of ambivilance."

"There are those that would like [us] to be out of the social and political role totally and all at one," he said. "And on the other hand when something happens in the provinces, people say where are the military. What are we supposed to do?"

The general said one of the banes of the Indonesian military throughout its history and especially under Suharto's rule had been the centralization of authority in Indonesia without adequate checks and balances.

Describing the military as one of Suharto's "victims," along with political parties, he said Suharto turned the military's "right to assume a non-military role" from a choice to an obligation to support his grip on power.

One of the worries of the military now was that its withdrawal from politics and its territorial role should lead to "the filling of the empty spaces by civilian militiamen." The military was also determined to prevent the Balkanization of the archipelago.

Australian National University Indonesia expert Harold Crouch, speaking to the same seminar, said he hoped "the fate of civilian rule in Pakistan will serve as a warning to the new government of Indonesia."

Crouch said he saw no danger now of an attempt by the Indonesian military to make a comeback, as "they are not stupid" and knew they would be faced with massive public opposition.

But he said: "In the longer run -- perhaps in two or three years -- the real test will come if the civilian government has failed to establish its authority."

40 killed in Jakarta mob violence this year

Agence France-Presse - May 17, 2000

Jakarta -- Mobs who have taken the law into their own hands in the face of weak law enforcement in and around the Indonesian capital have killed 40 people this year, police disclosed yesterday.

"Increasing mob justice indicates a slide in the respect for the law," the Antara national news agency quoted Jakarta police chief Major General Nurfaizi as saying.

He told a parliamentary hearing here that since January, there have been 62 cases in Jakarta and surrounding areas where mobs dealt out summary justice to criminals or suspected criminals they had caught. Forty of those caught were killed, often beaten or burnt to death, while 32 others had been seriously injured, he said.

Since the fall of former president Suharto in 1998, Indonesian security forces, including the police, have been accused of past human rights violations and random violence, prompting extreme caution in their actions. The police are also seriously undermanned, with some 200,000 men for a population of more than 210 million.

President Abdurrahman Wahid said earlier yesterday he had asked the national police chief to draw up plans to swell their ranks. "To create a sense of security in the society ... the President has ordered the national police chief to formulate a plan for the addition of personnel and equipment in the framework of enforcing domestic security," according to a written summary of a Cabinet meeting seen here yesterday.

The President said the government will try to seek the necessary funding to cover the expansion and the new equipment, adding that most likely the funds would come from bilateral cooperation. However, no figure has been mentioned.

Until the police are entirely capable of assuring security at home, "the President has asked the Indonesian armed forces to help the national police in creating a sense of security in the society," the statement said.

The armed forces will contribute both personnel and equipment to that effort, he said, adding that soldiers assigned to help the national police will be under police command.

Disclosure of the scale of mob violence came as witnesses in Ambon said that at least 15 people were wounded yesterday when security forces opened fire to disperse an unruly mob in the latest outburst of sectarian unrest in the Maluku islands.

Villagers put blockade on mine in place again in Borneo

Agence France-Presse - May 15, 2000

Jakarta -- Angry residents have again blocked access to a gold mine in Indonesia's East Kalimantan region, an official said Monday as a row over land compensation threatened closure of the mine.

"As of Sunday morning, some 200 villagers have again blockaded the access road to our factory. Our company vehicles ... have not been able to enter the compound," PT Kelian Equatorial Mining (KEM) spokesman Kasan Mulyono told AFP by telephone.

There was only food and fuel at the mine for two more days, and if the blockade continued it would force the shut down of the mine's office and the evacuation of workers for the second time in a month, Mulyono said.

PT KEM, which has been mining gold in the area on Borneo island since 1992, ships its supplies to Jelemuq on the Mahakam river and uses the main road to transport them to the mine.

Mulyono said the villagers, who lifted a three-week siege only last Thursday, returned with a fresh demand for direct negotiations on compensation.

The company had previously dealt with the Institute for the Welfare of the Mining Society and the Environment, but after fruitless negotiations some of the protesters last week appointed their own representatives to talk with the company.

The first blockade, started on April 19 and caused the closure of the mine from April 29 until the blockade was lifted last week.

"Security authorities have attempted to take a persuasive approach to the group ... but to no avail," Mulyono said, adding the company would hold further negotiations with the residents on Monday.

The protesters were angry at apparent delays in the resolution of land compensation issues. They claim the mine is on land which the company bought in 1990 and 1994 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.

But mine officials say the 6,000 compensation claims made to the company covered a surface larger than the mine itself, and a selection and verification process had been required. The company normally employs about 1,050 staff, about 90 percent of whom are local, and 600 subcontracted workers.

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

Charity foundation admits funding Bob Hasan firm

Indonesian Observer - May 12, 2000

Jakarta -- The Dharmais Foundation, formerly controlled by ex- president Soeharto, has admitted that it channeled funds to timber tycoon Mohamad "Bob" Hasan's widely diversified Nusamba Group.

Dharmais' lawyer Hotma Sitompoel yesterday said the provision of money to Nusamba was not a crime, because the foundation is a shareholder in the limited liability business conglomerate. Nusamba is involved in mining, forestry, helicopter maintenance and a range of other activities.

Hotma denied that Dharmais had violated its status as a non- profit organization by giving money to Nusamba. "Although the foundation cannot be run commercially, PT Nusamba can be," he said.

The lawyer was speaking after Dharmais treasurer Hadiyanto was interrogated at the Attorney General's Office in South Jakarta as a witness in the Soeharto corruption probe.

Hotma said it does not constitute a violation of the law if Hasan uses the foundation's funds for Nusamba and later repays the money. "Besides, Bob Hasan is one of the managers of the foundation." Attorney General's Office spokesman Yushar Yahya on Wednesday said Hasan has also been interrogated over the alleged misuse of the foundation's funds by Nusamba.

Nusamba received cash from several of Soeharto's "charity" foundations. Of its operating capital, 30% was from Dakab Foundation, 25% from Dharmais Foundation, and 25% from Supersemar Foundation. Another 10% of its capital had been supplied by Soeharto's eldest son Sigit Hardjojudanto.

Hasan, a close friend and golfing buddy of Soeharto, was in late March arrested and detained by the Attorney General's Office in connection with an investigation into alleged misuse of funds involving a government contract for a forest mapping concession.

No charges have been laid but he is still being detained by the Attorney General's Office. Hasan is being questioned over allegations that one of his companies, PT Mapindo, misused state funds. The company was ordered by the Forestry Ministry to make aerial maps of Indonesian forests. It did not give the result it promised and apparently misused billions of rupiah.

Soeharto, who has carefully avoided questioning by state prosecutors due to alleged poor health, in March 1998 appointed Hasan as trade and industry minister in his last cabinet, which only lasted about two months.

Hartono ordered 1996 raid on PDI headquarters: Police

Indonesian Observer - May 13, 2000

Jakarta -- Police say former Army chief Hartono signed the order for the 1996 attack on the headquarters of the Indonesian Democratic Party (PDI).

Hartono and five other retired generals, including ex-president Soeharto, will soon be summoned for questioning over their alleged roles in the attack, police said yesterday.

National Police spokesman Brigadier General Dadang Garnida said the six are scheduled to be questioned between May 17-26, as police hope to wrap up the official investigation of the case by the end of the month.

Police Director of General Crimes, Brigadier General Engkeesman R. Hillep, on Wednesday said Hartono issued a document ordering the raid on the PDI headquarters on July 27, 1996.

Retired Lieutenant General Soeyono, a former Armed Forces (ABRI) chief of general affairs, told Mandiri.com the document was signed by Hartono, a close friend of Soeharto's eldest daughter Siti Hardiyanti "Tutut" Rukmana.

Apart from Soeharto and Hartono, the other retired generals due to be questioned are former Jakarta Military chief-of-staff Lieutenant General Susilo Bambang Yudhoyono, former home affairs minister Lieutenant General Yogie Suardi Memed, former Armed Forces (ABRI) commander General Feisal Tanjung, and former National Police chief Dibyo Widodo.

Garnida told reporters yesterday that Soeharto, a five-star general, would be questioned "if possible". Soeharto has this year avoided being interrogated by state prosecutors in a corruption investigation, because his doctors and lawyers claim he is too sick to answer any questions. Garnida said police prosecutors expect to process the results of their investigation over May 26-30.

Hired thugs backed by the police and military on July 27, 1996, stormed the headquarters of the PDI on Jalan Diponegoro, Central Jakarta, to expel loyalists of ousted PDI leader Megawati Soekarnputri, who had been dumped as party chairwoman the previous month at a government-organized congress.

The violent takeover sparked massive deadly riots. The exact death toll has never been confirmed, but reports range from five to "scores" of fatalities.

The investigation into the unrest was delayed earlier this week because Memed defied a summons from police on Wednesday. "Sorry about the delay, but there are witnesses who have to be re- questioned, and we have to adjust the questioning schedule to the times that the generals are available," said Garnida.

Much of the official investigation into the July 27 incident has focused on former members of the government-backed faction of the PDI. Garnida said police have sent dossiers on three suspects to the Attorney General's Office. The three are: former PDI leader Soerjadi, and two alleged tough guys who incited the attack -- M. Tanjung and Jonathan Marpaung.

The police spokesman said Megawati, current chairwoman of Indonesian Democratic Party of Struggle (PDI-P) and vice president, on Wednesday night met with National Police Deputy Chief Lieutenant General S. Bimantoro, as well as with the chiefs of the Air Force, Navy and Army, to discuss the July 27 case. However, Garnida refused to reveal the results of the meeting.

Environment/health

Malaysian military, timber co involvement in illegal logging

AFX-Asia - May 19, 2000

Jakarta -- A government sweep in Tarakan, East Kalimantan last week allegedly found indications of involvement in the multi- billion dollar Borneo illegal timber trade of Malaysian military elements and timber companies, Forestry and Plantations Ministry secretary general Suripto said.

"It is probably not the Malaysian government itself which is involved in the case but we have found in our recent operations there some indications of involvement by Malaysian companies," Suripto told a media conference.

"We have also found evidence of possible involvement by the Malaysian military in the form of rations discovered in the Tarakan area which bear the name of the royal Malaysian armed forces." Suripto said the evidence was discovered during an Indonesian military operation against illegal logging in Tarakan, which is on the border of East Kalimantan and the Malaysian state of Sabah.

The operation, ordered by President Abdurrahman Wahid, involved more than a battalion of the army's elite Strategic Reserve Command (Kostrad). However, it was largely a failure amid indications that news of the sweep had been leaked ahead of time to illegal operators, possibly from sources in the Indonesian military headquarters, Suripto alleged.

He said illegal logging and timber smuggling out of Tarakan to Sabah has been underway for 10 years, costing Indonesia 80,000- 100,000 cubic metres of timber monthly, or 8-10 mln usd per month.

He said the trade is believed to be run by Indonesian residents in cooperation with some timber companies and security authorities. However, he alleged that most of the money for the trade comes from timber companies in Sabah whose forest concessions are insufficient to supply their capacity.

"The illegal logging and timber trade is definitely organised by a large and powerful timber sector mafia in Indonesia and Malaysia," Suripto said. "It is so strong, they [the mafia] can even influence law enforcement and officials from the local ministries and the military."

Moral appeals won't stop spread of AIDS: Activist

Jakarta Post - May 19, 2000

Jakarta -- Graphic campaigns promoting condom use to prevent the spread of HIV/AIDS have failed to change sexual behavior, an expert said.

Publisher of the Jakarta-based journal WartAIDS Chris W. Green told The Jakarta Post on Wednesday that "if there was a reason not to use condoms, then people will use that reason".

Use of condoms, along with sexual abstinence and monogamy, are being advocated in television public service messages to prevent transmission of the Human Immunodeficiency Virus, which ultimately leads to the onset of AIDS.

The messages have provoked resistance from groups which fear they encourage promiscuity and argue the stress should be on religion and morality. Debates have also focused on whether condom use is effective in preventing HIV transmission.

"Sadly there are some parties who oppose the use of condoms, spreading misleading information that condoms are useless," Green said at a news conference.

Years of cooperation between activists and authorities have led to the 1994 National Strategy against HIV/AIDS. Among others is methods to prevent the spread of the virus "must stress religious and cultural values in Indonesia" and that "each person is entitled to accurate information to protect themselves and others against the infection of HIV/AIDS." Green said that in reality little had changed and "sex workers cannot impose the use of condoms" on their clients. The country should adopt all possible methods in curbing the spread of the virus, he added.

The news conference announced activities in conjunction with the 17th International AIDS Candlelight Memorial. A total of 124 organizations will hold a gathering in Jakarta on Sunday to show solidarity for people with HIV/AIDS.

The groups' representatives made a declaration at the conference to Coordinating Minister for People's Welfare and Poverty Eradication Basri Hasanuddin, demanding a stop to discrimination against people with HIV/AIDS.

"We appeal for open discussion about AIDS without the incessant reference to morality, without the prejudice which condemns people who are HIV-positive and without mocking those whose behavior is considered risky," the declaration said. An atmosphere of friendship will convince HIV-positive people to seek the support they need, it said.

Green said the religious approach stresses that "good-mannered people will not be infected with AIDS. This is very dangerous because the HIV virus does not discriminate".

Apart from sexual transmission, HIV is also spread through use of contaminated needles by drug users. There also were cases of transmission by blood transfusion before routine screening of blood donations.

Basri said the government was using special approaches emphasizing religion in anti-HIV/AIDS campaigns in Jakarta, Bali and South Sulawesi, but did not elaborate.

Green said official data showed there were 1,235 cases of HIV and AIDS in Indonesia this month since the disease was first reported in the country in 1987.

"In four months this year, HIV/AIDS cases have increased 25 percent." Green said reported cases were only a fraction of the actual incidence of infection. He said the United Nations Program on HIV/AIDS (UNAIDS) estimated there were about 25,000 people in the country who were HIV-positive.

Fire haze over Singapore, Malaysia may worsen

Associated Press - May 17, 2000

Singapore -- Mild haze in Singapore and Malaysia could rapidly get worse, with more smoke blowing in from forest fires on the Indonesian island of Sumatra, officials said Wednesday.

In Malaysia, a gray pall hung over Kuala Lumpur, obscuring the upper floors of the city's skyscrapers and the Petronas Twin Towers, the world's tallest building.

Meteorologists at the Kuala Lumpur airport confirmed the haze, but said it wasn't serious enough to start affecting flights. Malaysia's meteorological department declined to give air pollution figures or even confirm that there was a haze.

In Singapore, just south of Malaysia, officials admitted there was a potential problem. "We might get some slight haze over the next couple of days," said Wong Teo Suan, deputy director of Singapore's Meteorological Service Department.

The city-state's Pollutant Standards Index shot up from a safe 30 early Wednesday to a worrying level within hours. At 11am, the Index had crept up to 51. A reading of 50 or below is considered "good," while higher than 50 is "moderate" and higher than 100 "unhealthy." Indonesian fires, often set deliberately by logging and plantation companies as an inexpensive, but illegal way of clearing land, have become an annual problem during the dry season in Southeast Asia.

The situation was particularly severe in 1997 during the dry El Nino climate phenomenon, when thick smoke spread to Singapore and parts of Malaysia, causing respiratory problems for people and even affecting flights.

Earlier this week, Singapore's environment ministry said it had detected more than 90 hot spots in central Sumatra. Hot spots are areas where the temperature is abnormally high, generally indicating a fire.

Officials warned that haze could blanket Singapore and Malaysia if the fires continued to spread, and if the dry weather holds.

Satellite pictures released by the environment ministry showed smoke drifting from Sumatra toward peninsular Malaysia, which lies west of the Indonesian island, just across the narrow Malacca Straits. "By yesterday, some of that smoke would have reached the west coast of peninsular Malaysia," Wong said Wednesday.

Singapore has been spared from the worst effect of the Sumatran smoke so far, but if the fires spread, conditions could deteriorate, Wong said.

Environmentalists demand Freeport's temporary closure

Jakarta Post - May 16, 2000

Jakarta -- An environmental group demanded a temporary halt to operations of mining company PT Freeport Indonesia following a May 4 accident which resulted in four missing workers.

The chairwoman of the Indonesian Forum for the Environment (Walhi) Emmy Hafild also announced on Monday the organization's plans to sue Freeport on charges of environmental damage.

Walhi said Freeport had violated the 1997 environment law, and government regulations on water pollution, rivers and management of toxic materials and other harmful waste.

"We [Walhi] will be filing a lawsuit against the company this week and demand a temporary closure of Freeport until the company meets requirements for safe operation of its facility," Emmy said, adding that Walhi also wants a review of Freeport's contract.

Walhi is not recommending the permanent closure of the company in Irian Jaya, she said. "For who would take care of the environment rehabilitation then?" Walhi also demanded that Freeport reduce its production scale to a safe level.

Emmy said the Wanagon basin accident was caused because it could not accommodate the waste from Freeport -- some 260,000 tons every day. "Even at 33,000 tons during 1973 to 1990, the company's activities had a devastating impact on the environment," Emmy told a press conference. Emmy also said that an independent analysis was needed in order to determine an acceptable production scale for the company.

The accident at the Grasberg mine in Tembagapura, Mimika regency was caused by the slippage of overburden, which caused a wave of water and material to overflow the Wanagon basin spillway and enter Wanagon Valley. Company officials blamed four days of rainfall -- which reached an average of 40 millimeters a day -- as the cause of the accident.

Antara on Monday quoted Mimika regent T.O. Potereyauw as saying that the search had continued for the four missing victims, but so far with no results.

Walhi's report said 420 million tons of solid waste had been produced by Freeport's mining operation since 1995, about 95 percent of which was dumped in the Wanagon Valley.

Walhi activist Joko Waluyo, who observed the site after the incident, said that the 50-meter high wave had also destroyed pig stys, vegetable gardens and a burial ground of the Amungme tribe in Banti village, some 12 kilometers downstream of the basin.

Emmy said that the earlier statement of Freeport's president director Adrie Machribie's, which blamed heavy rain for the incident, was "unacceptable." She said that Walhi had warned Freeport "years ago" about the possibility of heavy rain damaging the dumping system but "Freeport said that they had already calculated [the rain factor]."

Meanwhile in Jayapura, hundreds of Irianese students held a peaceful demonstration at the local legislature demanding that the government re-evaluate the company's Environmental Impact Assessment (AMDAL).

Spokesman for the demonstrators, Diaz Gwijangge, said "Wanagon Lake is a sacred place for the Amungme tribe ... Freeport has been deliberately destroying the tribe's spiritual lands and culture." The protesters also demanded that Freeport stop dumping waste in Mimika's Ajkwa River, saying that the practice has destroyed thousands of hectares of mangrove and sago palm trees.

Yance Kayame, a member of the provincial council who met the students, said that they were collecting data -- to be eventually submitted to non-government organizations working on the environment -- to decide the company's fate.

Legislators in Jakarta announced that Freeport's contract could be revised if the company was found guilty of its involvement in the incident. Calls for a temporary halt to production operations, such as those raised by Walhi, evoke the controversy surrounding rayon and pulp producer PT Inti Indorayon Utama in North Sumatra and gold mining firm PT Newmont Minahasa Raya in North Sulawesi.In both cases the government issued conflicting decisions, raising feelings of insecurity among business operators.

Security personnel aid timber thieves

Jakarta Post - May 15, 2000

Jakarta -- The theft and smuggling of logs in the country is highly organized and supported by security personnel and some officials, a top government official said.

Secretary-general of the Ministry of Forestry and Plantations Suripto told journalists in Pontianak, West Kalimantan, on Saturday that the thieves equipped themselves with sophisticated communication devices.

"The equipment is even better than that belonging to the 30th Battalion of the Army's Strategic Reserves Command (Kostrad)," Suripto said, referring to the Army unit deployed on the border between Indonesia and Sabah in Malaysia to counter log smuggling.

Destruction of forests bordering East Kalimantan and East Malaysia has now reached 14 kilometers into Indonesia, according to Suripto as reported by Antara.

Suripto, a retired serviceman, said the logs were commonly smuggled to neighboring countries like from Jambi to west Malaysia, from West Kalimantan to Serawak, from East Kalimantan to Sabah, and from Irian Jaya and Maluku to the People's Republic of China.

The smugglers always manage to evade crackdowns, thanks to information leaked by the security personnel they recruit, he added. Suripto was accompanying forestry and plantations minister Nur Mahmudi Ismail, who visited Pontianak seaport to witness the seizure of 70 containers of stolen logs, which were to be shipped to Singapore onboard the Clover.

The ship was ordered to return to the seaport six hours after embarking on Wednesday after students held officials at the seaport hostage. The students resorted to the action after their efforts to convince the officials that the ship was carrying illegal logs failed. "We are very proud of the students," Mahmudi said on Saturday. He added he would award them.

Suripto said his office was trying to break the theft ring's infrastructure, including by destroying the road built by the group to smuggle the logs.

Meanwhile in Samarinda, East Kalimantan, spokesman for the provincial police Lt. Col. Faah Soemarno denied Suripto's allegation that local police were involved in the log stealing.

"It's not unfair to accuse the police and security personnel. There are only 30 police available to watch out a span of 1,000 kilometers along the border," Faah said, adding that the ministry and forest police were responsible for measures to prevent the destruction of the forest near Malaysia's border.

Faah said the personnel were simply unable to prevent the stealing, and that people suspected they allowed the thefts to go on. "The ministry's regional office should control the group's operations and provide security personnel with adequate facilities," Faah said, adding that the office had promised the police a helicopter.

International solidarity

Indonesian union leader tours Australia

Green Left Weekly - May 17, 2000

John Gauci, Sydney -- "The goal of our union is to create prosperity as a welfare state similar to that of Europe or the US", Indonesian union leader Muchtar Pakpahan told 50 unionists gathered in the Liquor, Hospitality and Miscellaneous Workers Union hall here on May 9.

"The first step to building prosperity is through building democracy through a set of principles", Pakpahan, the general chairperson of the SBSI, the Indonesian Prosperity Trade Union, said. "These principles include social justice, equality, rule of law and the protection of human rights. There can be no prosperity while religious fighting continues."

Pakpahan, touring Sydney, Brisbane and Melbourne with SBSI assistant secretary Rekson Silaban, thanked Australian workers for their support for the SBSI which, he claims, now has a national membership of 1.5 million.

Pakpahan explained that SBSI is "a social movement, not just a traditional movement", and is "working with a range of student organisations and NGOs to see what can be done for prosperity in the region".

"International solidarity is required to improve the conditions of Indonesian workers", he added.

Silaban explained the effects of Indonesia's $35 billion debt problem. "The Indonesian government has asked the International Monetary Fund for this money and now the government is being dictated to by the IMF. The Indonesian government has been forced to cut subsidies to gas, electricity and education", Silaban said.

Thirty per cent of this debt should be cut, he argued, as this "was going directly to Suharto's cronies".

"Indonesian workers shouldn't be made to pay for these corrupt cronies", he said. "We must bring the corrupt to prison."

Silaban also criticised the military's ongoing involvement in industrial issues. "The military are businessmen and are interested in profits", he explained.

However, Pakpahan defended the present ban on communism and Marxist parties, saying, "According to historians, the communists are still responsible for the coup d'etat that murdered seven generals in 1965, though there appears to be some evidence that links these murders to Suharto and the CIA.

"Until history is rewritten, the SBSI continues to support the ban on communism and Marxist parties. The SBSI has agreed to lift the ban, but now is not the time.

We need to settle the differences before lifting the ban, otherwise more killings could take place."

Pakpahan also defended SBSI support for subsidy cuts to tertiary education, saying this could fund compulsory education at lower levels.

"At the moment, 30% of classroom seats are empty because most parents can't afford compulsory education to a high school level. Cutting the subsidies would make this possible", he said.

In Brisbane, Tim Stewart reports that Pakpahan told 65 unionists about how he became involved in the workers' movement after becoming Indonesia's first labour lawyer in 1976 and about his involvement in the movement which eventually toppled Suharto in 1998.

The union leader also explained that, now Suharto has fallen, his union's main task is to set up "tripartite sectoral alliances" through which government, industry and worker organisations can negotiate realistic wage increases.

Pakpahan said he felt an "obligation to build a labour party" to further the work of the SBSI.

Economy & investment

Plunge of Rupiah exposes rifts in government

Wall Street Journal - May 15, 2000

Jay Solomon, Jakarta -- The rupiah's continuing plunge is exposing rifts inside President Abdurrahman Wahid's government and eroding confidence among many Indonesians in the country's economic prospects.

Last week the rupiah lost as much as 9% of its value against the US dollar and provoked chaotic scenes reminiscent of the financial crisis that hit this country in 1998. Currency traders initially attributed the sell-off in the rupiah to expected interest-rate increases in the US and concern over the slow pace of Indonesia's economic restructuring.

But panic selling eventually spread through the market Friday as the Indonesian currency plummeted against the dollar from its opening level of 8,390. Currency traders also sold down the baht and peso, as Indonesia's woes affected regional sentiment.

Unwelcome reminders

"It's just like January 1998, as people are just following the crowd" and dumping the rupiah for dollars, said the head of treasury at a US bank in Jakarta. In early 1998, the rupiah for the first time fell through the 10,000 level against the dollar, setting off food riots in the capital and calls for former President Suharto's resignation. On Friday, the rupiah fell to almost 8,800 against the dollar before state banks supported the currency by selling their own dollars. The rupiah closed the day at 8,290 against the dollar.

Mr. Wahid said late Friday that his government might continue intervening in the market to support the rupiah should selling pressure continue this week. But central-bank Gov. Sjahril Sabirin said such intervention would only take place if "we think it can be effective." Some currency market analysts doubt that it would. They believe the rupiah could again test 9,000 against the dollar in coming weeks, as local corporate demand for dollars remains strong and overseas investor interest in Indonesia is tepid.

Sentiment also may be hurt, at least temporarily, by an outbreak of rioting in a Jakarta commercial district over the weekend. The violence was quickly suppressed, but it was an unwelcome reminder of Indonesia's vulnerability to social and political unrest.

The rupiah's weakness caught many in Mr. Wahid's government off- guard, as Indonesia had released a slew of strong of economic and corporate indicators in recent weeks. The country's economy is expected to grow nearly 6% during the first quarter of 2000 from the same period last year, while interest rates are low and inflation remains tame. The central bank's foreign-currency reserves also have been rising and Indonesia's export sales have shown an improving trend. Government officials fear an interest- rate boost may now be needed to support the rupiah.

"The economic fundamentals look very good right now," said Indonesia's top economic minister, Kwik Kian Gie, who, in an interview, expressed his own confusion over the rupiah's slide. He added that Jakarta's anticipated agreement with the International Monetary Fund to release $400 million in new loans to the country, and a pact with foreign lenders to restructure almost $6 billion in sovereign debts had been expected to underpin the rupiah.

Outspoken Official Mr. Kwik himself, however, has exacerbated the rupiah's woes. Media statements he made last week questioning Indonesia's investment climate roiled the country's financial markets. Mr. Kwik continues to hold this view. While stressing that he's not against foreign investment, Indonesia's economic czar said he understands "why in this current environment foreign investors would be wary" of putting money into Indonesia because of political uncertainty. Mr. Kwik said the country is still changing its business culture from that of the corrupt and crony-ridden Suharto era to a more democratic and equitable system. That process "would take time," he said.

Mr. Kwik contended that Indonesia's new openness was preventing a recurrence of past abuses. He noted, in particular, that attempts to set up monopolies or misuse state funds were far more likely to be exposed than they were under Mr. Suharto. But he cautioned that "Indonesians are still learning how to make democracy work." Mr. Kwik's outspokenness has fueled speculation of growing rifts between himself, Mr. Wahid and other senior government officials. In recent months, the president has created an array of advisory groups on economic policy that are seen eroding Mr. Kwik's power and muddling policy implementation.

Indeed, government advisers describe a situation of not knowing from day to day which official or agency will hold sway over economic reform. Earlier this month, Mr. Wahid named two more advisers to oversee economic policy.

Mr. Kwik denied the widening bureaucracy was hampering his work, but he did question whether it was helping Mr. Wahid's own performance. The president said earlier this month that he would personally take charge of economic affairs after government bungling forced the IMF to delay in March disbursing its $400 million in loans. He sacked two of his ministers following the standoff, fueling speculation that Mr. Kwik would be next. On Friday, Mr. Wahid reaffirmed his support for his senior economics minister.

Unrest mars progress

But Mr. Wahid is coming under increasing fire. His appointment of his brother as an adviser to the Indonesian Bank Restructuring Agency has prompted charges of cronyism. And an attack by the president's political supporters on an Indonesian newspaper that criticized Mr. Wahid has stoked accusations that he's leading by mob rule. Mr. Wahid said he never incited his supporters to disrupt the paper's operations.

Mr. Wahid did score one success last week with the signing of a truce between his government and Islamic rebel groups in troubled Aceh province, where a stubborn separatist movement has plagued the central government. A peaceful resolution to the Aceh problem is seen as one of the president's top domestic challenges.

Still, that progress was tainted by renewed raucous student protests and a separate outbreak of rioting in Jakarta over the weekend that reminded the public of the citywide unrest that unseated Mr. Suharto two years ago.

Crony bank, anyone?

Business Week - May 22, 2000

Michael Shari, Jakarta -- What happens when a government puts its biggest bank up for sale and no one's much interested? Cacuk Sudarijanto doesn't even want to think about it. As head of Indonesia's vast debt cleanup operation, he's responsible for unloading Bank of Central Asia later this month. The initial public offering will be Sudarijanto's first and the government's largest so far. It's supposed to be a symbol of Indonesia's imminent recovery. Instead, it could be a sign of the country's continuing troubles.

Two months ago, underwriters were hoping to raise $2 billion. But with many foreign investors shunning the issue, they're now talking about as little as $200 million. Even BCA's former owner isn't bothering to try to regain control. Anthony Salim, one of Indonesia's biggest tycoons and now its biggest debtor, is only promising to hold onto his remaining 7% stake for six months after the launch at Sudarijanto's request.

Rioting

Prior to Indonesia's crash, BCA was the financial heart of the Salim family empire. The government took the bank over in 1998, after many of its 8 million depositors tried to withdraw their money within one week. The run was triggered by the resignation of Indonesian President Suharto, whose family owned 30% of BCA, and by riots that left the Jakarta home of Anthony's father, the 84-year-old patriarch Liem Sioe Liong, in ruins. The government feared BCA's collapse would destroy what remained of the banking system. So it backed the bank up with some $12 billion in bonds and cash. Jakarta has since taken over 12 other banks, bailed out seven, and suspended operations at another 48.

Now begins the process of selling off what banks Jakarta can. Sudarijanto expects to unload 30% of BCA's equity. The shares will be priced by May 23 and are supposed to start trading on the Jakarta Stock Exchange on May 31. If the launch goes well, it could prove that Indonesian banks can be nursed back to health, that foreign investors are regaining confidence, and that Jakarta may actually make good on its promise to the International Monetary Fund to raise $2.5 billion by December 31 to cover its budget deficit. If the IPO flops, it could be a long while before Indonesia sees any more money from the IMF. In short, BCA's fate has never been more important to Indonesia than it is now.

But there are already signs that the deal could go badly. Sudarijanto, a 52-year-old former IBM executive who took over the Indonesian Bank Restructuring Agency in January, postponed a March launch because of an internal dispute about how to boost BCA's balance sheet. And investors, at least those who heard BCA's presentation in Singapore last month during its global road show for the IPO, still have plenty of worries. First, they aren't convinced of BCA's ability to start lending like a normal commercial bank. In the past, its main borrowers were linked to the Suharto and Salim families.

Skeptics believe the bank's stock will be priced too high and that its accounting isn't up to international standards. Most of all, they want to know what IBRA plans to do with the 63% of shares that the agency could still hold after the IPO.

Working the phones

There are other hints of possible trouble with the issue: The underwriters -- Merrill Lynch, Lehman Brothers, Bahana Securities, and Danareksa Sekuritas -- have been working the phones since mid-April to sell the stock. Fund managers say they get calls from brokers every day. "If it were a really good issue, they wouldn't keep calling us," says Flavia Cheong, who manages a $3 million Indonesia equity fund for Aberdeen Asset Management Asia Ltd. in Singapore. Cheong says Aberdeen won't subscribe. At this point, few investors would be surprised if IBRA sold far less than 30% of BCA.

Granted, BCA was in terrible shape when IBRA took it over. BCA admits that the Salim and Suharto families borrowed much more than insiders are legally allowed in order to finance everything from their toll roads to auto plants. By the end of 1998, most of the Salim and Suharto businesses were insolvent -- and 85% of BCA's loans, worth $5.6 billion, were nonperforming. Last year, IBRA assumed all of the bank's bad loans. It also replaced the bank's board with executives from Salim's car assembler, Indomobil, and from two restructured state-owned banks. BCA's new finance director and consumer banking director also come from Indomobil.

In theory, the bank should be salvageable. Twelve percent of Indonesians who bank do so at BCA, and its deposits have risen 54% since April, 1998. Most other Indonesian banks were decimated during that time. BCA has by far the largest number and deepest penetration of branches and automatic-teller machines in Indonesia. It is the only Indonesian bank that will allow a deposit to be made at one branch and withdrawn the same day at another. The bank also has 5,000 terminals in retail stores that allow customers to make purchases with debit cards instead of cash.

Indeed, with its dud loans written off, BCA earned a profit of $85 million last year, after losing nearly $4 billion in 1998. That makes BCA one of the very few Indonesian banks operating in the black. At the end of last year, the bank could claim capital equal to 43% of its assets, well above the 4% required by the government. "With all of these ingredients, I think BCA could be a success story," says Sudarijanto.

But investors just don't seem to see it that way. For starters, analysts question the quality of BCA's balance sheet. Its assets include $173 million in tax write-offs and $140 million in revalued land rights and buildings in 1999. Potential investors say that when they challenged these entries at the Singapore road show, bank officials didn't offer satisfactory explanations.

There also are doubts over BCA's ability to resume lending at a time when creditworthy borrowers are rare, and the bankruptcy courts are a farce. According to the IPO prospectus, BCA plans to build up its loan portfolio by offering its depositors mortgages and car loans. But analysts say the bank has had trouble doing that so far. Neither Anthony Salim nor the bank's managers would comment for this article.

Default fears

Investors also worry about the quality of BCA's management. Mark Mobius, director of Templeton Asset Management in Singapore, says his firm would consider investing in a rehabilitated Indonesian bank if it were sold to a strategic investor that could actually run the institution. "But we frankly don't trust the local managers," he says.

Finally, there's the issue of pricing. Sudarijanto says that if BCA's stock were sold at book value, it would be a good deal. But fund managers say it is hard to judge the value of the government bonds that make up 60% of BCA's $12 billion in assets, because they've never been on the market before.

Mobius estimates the bonds would trade at a 25% discount. So the actual book value may be less than IBRA says it is, which increases the risk of the stock being overpriced at the offering. What's more, Standard & Poor's recently downgraded Indonesia's sovereign debt rating to "selective default" status. Says a foreign broker: "If you take the view that the government is going to default, then this bank is insolvent."

Sudarijanto's best chance of improving the IPO's prospects is to find a strategic investor. He has already shown an ability to do just that with the $506 million sale of car assembler Astra, which was seized from Salim and other shareholders in 1998. And Sudarijanto has said that he doesn't want IBRA to hold on to the remaining shares for long.

But right now, Indonesia can only hope that the underwriters can do a better job selling investors on BCA. "If they pull this offer, investors won't look at the next one," says Aberdeen's Cheong. And if Sudarijanto can't raise the money he's supposed to, Indonesia can forget about receiving more IMF aid this year. The Bank of Central Asia is worth a lot more to Indonesia than just what it will go for on May 31.

Currency shaken by political not economic woes: advisor

Agence France-Presse - May 17, 2000

Jakarta -- The slide in Indonesia's currrency, the rupiah, has been caused by political and not economic problems, a senior presidential advisor on the economy said here Wednesday.

"It was all OK during the last quarter of last year and the first quarter of this year, then in May it was suddenly not OK," said Emil Salim, the head of the National Economic Council (DEN) which advises the president.

"The issues are politics and security, not economics ... especially after the two ministers were taken out," Salim told a foreign correspondents' club lunch here, commenting on the slide of the rupiah from the 7,000 to the 8,000 range against the dollar.

He was referring to the largely unpopular decision by President Abdurrahman Wahid last month to replace two cabinet ministers, Investment and State Enterprises Minister Laksamana Sukardi, and Industry and Trade Minister Yusuf Kalla.

Salim, who served from 1970 to 1993 in various cabinet posts under former president Suharto and who was on the barricades with students who campaigned to unseat Suharto in 1998, said he had advised Wahid that his economic policies were not to blame. "You don't take an aspirin for a stomach ache, you take it for a headache," Salim said.

He said the new letter of intent signed with the International Monetary Fund (IMF) Wednesday made the country's economic direction clear and involved not only economic goals, but transparency of the courts and the rule of law.

As soon as the new letter is approved by the IMF, discussions will begin on the next letter, he added. "If the government can stick to that and say bluntly 'this is what we want to do,' then [investor and public] confidence will come back," he said.

"What is the problem -- we have a coalition cabinet, which is not supported by the parties involved," Salim said of the current political shakiness in Jakarta. "If this continues, I can see a reason for Gus Dur [Wahid's popular appelation] to review the cabinet [composition] after August," when the people's Consulative Assembly (MPR) meets to review the government's performance.

Saying he thought the "honeymoon is slipping away now" for the country's first popularly elected president in decades, Salim attributed some of the new harsh criticism of the Wahid government to ingrained habit.

"In the last years of Suharto there was a tendency for all of us to attack the establishment, everything was under attack, the same with [Suharto's successor B.J.] Habibie and now Gus Dur."

Saying the government was "in a learning curve" of making poltical and economic decisions in a democratic environment after decades of authoritarian rule under Suharto, Salim conceded that Wahid's off the cuff comments sometimes added to confusion in the markets.

But he called Wahid a "born politician," pointing to his handling of the country's powerful military and his election in October last year by a coalition of parties -- many of whom he said were now pulling against the president.

Answering questions on moves by some MP's to unseat Wahid when the MPR meets to assess his performance in August, Salim said he thought any such moves would be unsuccessful.

"The change from Suharto to Habibie came not through a coup, that was the important thing," he said. "So if [there is change in government] it must be through the MPR. If there are no big constitutional mistakes -- I don't think it (any such move) will be successful. There is a lot of noise of course, but I think the coalition is still strong."

Asked about accusations of nepotism levelled at the controversial appointment of Wahid's younger brother, Hashim Wahid, a non- economist, to the Indonesian Bank Restructuring Agency (IBRA), Salim said he felt he was there as a watchdog.

"IBRA is a very rich and powerful entity, with 40 percent of the whole state's assets. I think he wants to be darn sure he can trust them fully. My feeling is he is there as an informer," Salim said.

"Those are huge assets. It is in his [Wahid's] interests" to make sure there are no irregularities, he said. "Otherwise it could shake his position," he said, adding that there were plenty of professionals already in the IBRA. An ombudsman existed for anyone to run checks on IBRA if they had qualms, he added.

IMF says Indonesian economy on right track

Agence France-Presse - May 17, 2000 (slightly abridged)

Jakarta -- The International Monetary Fund (IMF) said Wednesday the Indonesian economy was now on the right track, and that it would not lower its 2000 economic growth rate forecast of three to four percent, despite the weakening rupiah.

"We took the decision that we think the economy is on the right track," IMF senior deputy resident representative and chief economist Joshua Felman said.

Felman was speaking as the government signed a new letter of intent which is expected to free 400 million dollars in blocked IMF support funds by early June.

"I would say we reached this agreement because the Indonesian economy is getting better. We all know of course that in the past week the rupiah depreciated but we also know this economic team has accomplished very significant things during its time in office," he said. He said that in the first quarter all sectors of Indonesia's economy except agriculture posted growth.

When asked about the latest downgrade of 2000 gross domestic product projections to 1.5 percent by the Central Bureau of Statistics (BPS) in Jakarta, Felman said he preferred to see the figures as a part of a "range" rather than a revision.

"I don't think BPS changed the projection. They just gave a range of possibilities," he said. "From our side, of course we are not going to change our assumption based on what happened during one week. We all know sometimes the rupiah goes up and sometimes it goes down," he said.

Bank Indonesia governor Sjahril Sabirin meanwhile predicted the signing of the letter would boost the rupiah. "I think it [the signing] will have a positive impact on the rupiah," Sabirin said. "The market has been basically awaiting the direction of economic policies so now, with the signing of the LoI [letter of intent], I think it is a very significant step. The market will see this as positive."

The letter was signed by Sabirin and Finance Minister Bambang Sudibyo at the National Development Planning building, and was handed to Felman to present to the fund's executive board in Washington.

IMF officials have said the new letter of intent, outlining the revised agreement between Indonesia and the IMF, will be taken to Washington for approval by the fund's managing director and later by its executive board. The IMF executive board is expected to meet on May 31 to approve the changes to the economic program outlined in the new letter.

Indonesia signs IMF letter of intent

Dow Jones Newswires - May 17, 2000

Leigh Murray, Jakarta -- Indonesia signed Wednesday the International Monetary Fund letter of intent that outlines key economic reform programs for the government to revamp the economy.

The letter was signed by Senior Economics Minister Kwik Kian Gie, Finance Minister Bambang Sudibyo and Bank Indonesia Governor Sjahril Sabirin. Kwik said the letter of intent was due to be signed at the end of May but Indonesia has already met the requirements demanded by the IMF.

"The signing of a letter of intent is a landmark in Indonesian- IMF relations," Kwik told reporter, "with the government and IMF agreeing to strengthen cooperation on the economic reform program." The signing of the letter of intent paves the way for the release of a $400 million loan installment early next month. The letter will now be sent to the IMF's executive board for review.

Indonesia has come under increasing pressure from the IMF to speed economic reforms in key bank and corporate areas as well as other sectors. The fund postponed the second disbursement of the $5 billion loan to Indonesia in early April due to the government's foot-dragging on a host of economic issues.

An IMF review team wound up its mission in Jakarta on May 3 and returned to brief the IMF's executive board on the state of Indonesia's reform efforts. IMF officials said at the time that if the board approves the government's new letter of intent to the IMF, the fund will release a $400 million loan to Indonesia in early June.

An IMF official said earlier Wednesday that the signing "means they have now fulfilled all the conditions for signing of the letter of intent, there's complete agreement." The IMF now says that Indonesia has made major efforts to speed economic reforms and is committed to implementing its restructuring program.

A cloud of gloom has descended over Indonesia

Reuters - May 17, 2000

Jonathan Thatcher, Jakarta -- A cloud of gloom has descended over Indonesia. Its financial markets have been plunging, along with hopes that a shambling government can lead the country out of economic ruin and political bedlam.

For Asia's youngest, and second largest, democracy the thrill of change after decades of autocratic and corrupt rule has flagged fast. "I find it difficult to be bullish these days," said Vickers Ballas research head Ferry Yosia Hartoyo.

Investors feel the same. They have wiped out all the gains and more that followed the excitement of Abdurrahman Wahid's victory last October in Indonesia's first contested presidential election. The rupiah has fallen more than 18 percent this year and the share market, in 1999 one of Asia's best performers despite political mayhem, has dropped nearly 27 percent since January.

Lack of coherent economic policy

Analysts say the chief problem is that Wahid's government has failed to set in place a coherent economic policy that will bring about genuine recovery and a measure of stability to the world's fourth largest population.

The International Monetary Fund, whose seal of approval is crucial to investor confidence, has already delayed its latest loan in a effort to goad the government into more reforms.

The strategy is having some impact -- on Wednesday the government said it was ready to sign its latest plan of action with the IMF -- but the reform process remains agonisingly slow.

Little has been done to settle the private sector's huge debts and the banking sector, whose fate is key to economic recovery, still looks very sickly. And the legal system is so riddled with corruption that few dare trust the courts for a fair verdict.

Economic growth at risk

The latest blow to confidence came from the government itself, with the Bureau of Statistics warning that economic growth this year could be a feeble 1.5 percent if the political uncertainty and rupiah weakness continue.

Hartoyo said that if the rupiah remains weak, which seems likely, inflation will inevitably rise. That will hit the consumer demand which is largely responsible for the little economic growth Indonesia now has.

"In order to improve the situation, we need a stable government with a clear mission," he said. "Investors have a host of issues on their checklist [of what they want the government to do]. But it's just empty boxes with no ticks." Many blame Wahid for the country's woes, arguing that his inconsistency and occasional irascible behaviour are undermining confidence in his government.

He has already sacked a number of ministers and the cabinet has repeatedly faltered on the introduction of reforms. "It's worsening all the time. It'll go down the drain if he [Wahid] doesn't make any changes," said Sri-Edi Swasono, an adviser to Indonesia's chief economics minister. "People perceive that he can't rule well. Now it's a matter of changing that perception," he said, warning that Wahid's "inconsistent" behaviour created uncertainty for the economy.

The country's open style of government has also seen the rise of mounting discontent in the provinces, some pushing hard for independence and others trying to grab more of the wealth they feel Jakarta has too long taken from them and in the process frightening off investors. Elsewhere, religious and ethnic tensions continue to spill over into violence.

Wahid unfairly blamed?

Some say it is missing the point to blame Wahid, who has only been in power for seven months and who took over a country close to social and economic collapse after 32 years of corrupt, autocratic rule.

It is a legacy that will take years to sort out. Those three decades has left a population -- much of it living in poverty -- with little real concept of democracy but with high expectations that their life should improve fast under a populist government. "We're lucky to have him [Wahid as president]. He is a visionary," political analyst Soedjati Djiwandono said.

Wahid has had some notable successes, especially in reining in the military which once took it as a given that it had the right to meddle in the nation's politics.

For some, his greatest hold on power is that there is no one else acceptable to a broad enough political support to replace him. His vice-president and leader of the party with the most seats in parliament, Megawati Sukarnoputri, is widely seen as having largely squandered her huge popularity by taking little public role in running the country.

Djiwandono agrees Wahid has failings. " ... in terms of management there are some weaknesses. His style [is a problem]. It's not entirely his fault. Maybe he thinks faster than other people," Djiwandono said. He doubted there was the appetite for another revolt on the scale which forced former President Suharto from office two years ago, but he said the risk of widening social unrest remained. "I hope it won't happen, but the danger is there."

Indonesia growth less than expected

Associated Press - May 15, 2000

Daniel Cooney, Jakarta -- Indonesia's economy grew slower than expected in the first quarter, leading a senior government official to warn that political instability could set back the country's recovery.

The gross domestic product grew by 3.21 percent this past quarter from a year ago, the Central Bureau of Statistics said Monday, less than the 4 percent to 5 percent growth that had been expected.

In a related development Monday, President Abdurrahman Wahid said the government has no plan to intervene in financial markets on behalf of the rupiah, which lost 9 percent of its value and hit a seven-month low last week. It fell another 2 percent Monday to 8,540 rupiah to the dollar.

Wahid also denied speculation that the government was considering some form of capital controls, saying that such action would go against its bailout loan agreement with the International Monetary Fund.

The slide of Indonesia's currency and the slow growth figures pose a serious threat to Wahid's eight-month reformist government in its quest to boost the debt-ridden, debilitated economy and to implement further democratic reforms.

The release on Monday of the new economic growth figures fueled speculation that Indonesia's economy may be in for a sharp downturn. "Political instability and legal uncertainties, as well as the security situation, really stifled the growth that we should have had," said Sugito, the chief of the Central Bureau of Statistics. "For the whole year, we will have to revise the growth from 4 percent to a worst-case scenario of 1.5 percent if those things continue."

Sugito, like many Indonesians, only uses one name. He appeared to be blaming infighting in Wahid's coalition government, continuing violence in Indonesia's painful transition to democracy after 32 years of rule by former President Suharto, and a weak judicial system that makes it hard to combat corruption and handle bankruptcies.

Despite the drop in growth, the bureau pointed out that it had revised upward its growth figures for 1999's first quarter, making this year's figure not quite so disappointing.

The rupiah's value has been driven down by a combination of expectations of higher US interest rates and a confusing barrage of comments by top Indonesian policy makers.

On Monday, Wahid blamed the weakness of the currency on violent demonstrations in the capital on Friday and Saturday, during the two-year anniversary of riots which led to Suharto's downfall. The first was led by students demanding that Suharto be tried for alleged corruption during his regime. Saturday's started in Chinatown in a dispute over the removal of street vendors selling pirated CDs.

But currency dealers in Jakarta said Wahid gave conflicting comments Friday and Monday on the likelihood of intervention and said that was evidence of policy paralysis within the government and indicative of the lack of understanding it has as to how to communicate with the financial markets.

Last week, Finance Minister Kwik Kian Gie said that while the economy is recovering, most conglomerates are still burdened with huge debts and corruption remains a major problem. He also said, "If I were a foreign investor, I wouldn't come to Indonesia. The law enforcement is not there, but not only that, the whole thing is so confusing."

Rice farmers down, but not out

Reuters - May 15, 2000

Grace Nirang, Sukra -- Tarjan stands barechested in the middle of his small rice field. Dejected. Already suffering from three years of economic crisis in Indonesia, Tarjan has watched rice prices tumble this season, forced down by too much rain and a flood of cheap imports.

"Normally I get around three million rupiah for my unhusked rice. This harvest I get only less than two million," he said in his field, in Sukra, part of Java's rice bowl about 175 km east of Jakarta. Cheap imports -- needed because Indonesia can no longer feed itself -- has combined with bad weather to push prices down to 600 rupiah/kg. That is less than half the official reference price, and the lowest in years.

A prolonged rainy season has disrupted drying activities, forcing farmers to sell quickly at rock-bottom prices before the crop starts to decay because of high moisture levels. But the crisis has its roots in disgraced former President Suharto's drive to industrialise the world's fourth most populous nation.

Focus switch

After a scheme that made his country self-sufficient in 1984 in rice -- a staple for most of its 200 million people -- Suharto turned his focus on building up the industrial sector. Millions of hectares of rice fields, especially in Java, were converted into industrial parks and housing complexes to cater for factory workers.

By 1986, imports were needed again and the state commodities agency Bulog, through its so-called silent operation, imported 500,000 to one million tonnes of rice a year to meet demand. That jumped to almost two million tonnes in 1998 after a drought caused by the El Nino weather phenomenon hit crops. And imports turned into a flood after Bulog's monopoly was abolished in September of that year as part of a programme of reforms agreed with the International Monetary Fund in return for foreign help in combatting the economic meltdown.

With a glut driving down international prices, imports undercut domestic Indonesian prices and traders turned to imports for their supplies. Traders said Indonesia signed deals to import about 3.6 million tonnes of rice last year, some of which is still to arrive.

Indonesia produced 49 million tonnes of unhusked rice last year, milled into 31.5 million tonnes of rice. Domestic consumption was 33 million tonnes. In 2000, unhusked rice production is expected to reach 51 million tonnes, to be milled into 32 million tonnes of rice.

Consumption is seen at 34 million tonnes and the government expects only about one million tonnes of rice to be imported because of the increase in production and stocks.

In January, the government imposed a 30 percent tariff on imported rice to help local farmers, and new Bulog chief Rizal Ramli has suggested raising the level to as high as 125 percent. He also wants Bulog's monopoly restored. "We can't help farmers with our position now," he said.

But analysts doubt the government will agree, saying it would be a setback for economic reform and would draw stiff opposition from the IMF.

Reference price

At the same time, the government has ordered Bulog to step in and buy from farmers at the government reference price of 1,020 rupiah/kg in an effort to shore up prices. It remains to be seen if that is the answer. The government has allocated 500 billion rupiah for the plan this harvest.

But slow disbursement means it may be too late for some farmers. "Most farmers had already sold their rice to private collectors when I received the money," said Djibran Asran, head of Bulog's office in Indramayu. The plan is is already creating fresh problems for Bulog, sticking the agency with tens of thousands of tonnes of rice it can't unload.

"I have 20,000 tonnes in my warehouses and I'm only able to sell 3,100 tonnes," said Asran. "And what happen next harvest, do we have to buy rice again? I think the government have to find a way to settle this problem." Since Bulog started buying at the official level, market prices have already jumped to 1,000 rupiah/kg from recent lows of 600 rupiah, giving new hope to the country's 22 million rice farmers and their families. "It's a little bit late but at least I can get fairer prices," Tarjan said.