• Buloggate `a test of Gus Dur's resolve to fight graft' - Straits Times
• BPS chief exits with snipe at Wahid - Jakarta Post
• Wahid under siege over cash scandal - South China Morning Post
• Wahid under siege over cash scandal - Straits Times
• Fund scandal could haunt Wahid - South China Morning Post
• Tens of thousands attend KPB rally in Banten - Jakarta Post
• Wahid: "We are beginning the rule of law" - Asiaweek

• Unrest blamed on Soeharto's supporters - Jakarta Post
• Christians pray in fear after explosions - South China Morning Post
• Centrifugal forces stir in Indonesia - Jane's Intelligence Review
• Christian villagers massacred in Maluku - South China Morning Post
• Suharto allies `may be behind arrival of jihad warriors' - Agence France- Presse

• Congress to affirm right to independence - South China Morning Post
• Golkar youth funding separatis - Sydney Morning Herald
• Aceh rebels blame TNI for murder of exiled leader - Agence France-Presse
• Aceh rights trial `does not bode well' - Green Left Weekly
• Mobil Oil halts production in an Aceh gas field - Agence France-Presse
• West Papua delegates call for independence - Straits Times

• Workers strike for one day at Jakarta port - Wall Street Journal

• Jakarta moves to prosecute rights abusers - Sydney Morning Herald
• Overhaul will see `suspect' judges moved - Reuters
• Are recent investigations about justice or politics? - Asiaweek

• Plantation firms told to return disputed land - Jakarta Post
• Police reluctant to act over attack on Solidamor - Tapol
• Indonesia bans 128 bankers from traveling abroad - Dow Jones Newswires
• Mobs storm, vandalize hotels and discotheque - Jakarta Post
• Protests upset Kalimantan oil firms - Jakarta Post
• Update on Solidamor attack in Jakarta - Tapol

• US excluding army from resumed military aid - Jakarta Post

• IMF approves loan to Indonesia - Associated Press
• The legacy of IMF and World Bank rule - Green Left Weekly
• How the IMF feeds graft and corruption - Green Left Weekly
• 10 firms prepared for privatization - Jakarta Post

Fretilin conference plans for the future

Jon Land -- From May 15 to 20, the Revolutionary Front for an Independent East Timor (Fretilin) held a conference in Dili, East Timor. It was the first Fretilin conference in East Timor since the end of the Indonesian occupation.

Some 1250 delegates discussed and debated issues of the past, as well as the future direction of Fretilin. "One of the main issues discussed was what Fretilin's relationship should be with CPD- RDTL [Council for the Popular Defence of the Proclamation of the Democratic Republic of East Timor], a new organisation here in Timor, as well as with Falintil and CNRT [National Council of Timorese Resistance]", Fretilin representative Harold Moucho told Green Left Weekly.

Moucho indicated that, for the time being, Fretilin sees itself remaining within the CNRT structure. "As Fretilin reorganises, from the grass roots all the way up to the leadership, this will strengthen both Fretilin's and CNRT's position during the transitional period", Moucho explained. "The delegates at the conference see Fretilin as playing the role of the first government in East Timor."

The CPD-RDTL, which formed last year, calls for the re- establishment of the Democratic Republic declared by Fretilin on November 28, 1975 (that declaration was aimed at gaining international recognition for East Timor as Indonesian military forces prepared to invade). This reflects a widespread public sentiment in East Timor, including among current and former Fretilin members, who were disheartened by Fretilin and other independence forces' decision in the mid-1980s to "de-recognise" the 1975 declaration.

The declaration of the republic was the theme of a speech to the Fretilin conference by Avelino da Silva, secretary-general of the Timorese Socialist Party (PST). Da Silva told Green Left Weekly: "The message the PST brought to the conference was, first, it is important for Fretilin to define its position on issues like the proclamation of independence and the establishment of the Democratic Republic. Secondly, Fretilin is faced with the decision of whether to remain a front or become a party."

Moucho said that a lot of the conference time was spent on reconciliation within Fretilin. "We haven't had a chance to have this type of meeting in East Timor before, so it was necessary to get all the cadres together, discuss different issues and problems, and try to resolve them."

The discussion about reconciliation included recognition by the Fretilin leadership that acts of retribution were carried out by Fretilin members against political opponents in the aftermath of the civil war in August 1975. The violence and pressure of the early years of the Indonesian occupation also resulted in "revolutionary justice" being meted out against those suspected of undermining the independence struggle or collaborating with the Indonesian military.

Another sensitive issue raised at the conference was language. "There was a lot of participation from young delegates who were very concerned about Portuguese being chosen as the official language", explained Moucho. "Fretilin's position at the moment is that Portuguese should be the official language, but we have also made it clear that programs should be established to modernise and develop Tetum, and that Indonesian should still be used in education and government departments."

Moucho stressed that the main perspective coming out of the conference was the reorganisation of Fretilin and its associated organisations. "From the village level up to the national level, we are going to develop our mass organisations, including women's and youth organisations. Political education programs will be organised in all areas of East Timor, involving the dissemination of the Fretilin political program."

Before the election of the new government, Moucho said, "Fretilin will be campaigning around the policies in the political program". He added that the 1998 program (a more moderate program than the one it replaced) will need new policies, "because when the program was finished in 1998, it was dealing with an East Timor that was still under Indonesian occupation. New policies are needed for youth and women's issues in particular."

The other key task that delegates discussed was preparing for the election of a new Fretilin leadership. "A special commission will be established to organise a congress, which will probably be held in the first three months of next year. A new central committee and national leadership will be elected at the congress", Moucho told Green Left Weekly. " The main concern for us is to be able to gather around all the cadres to make sure the structures are functioning, so that everyone can participate in the process of preparing for the congress."

UN, Jakarta put heads together on pursuing justice

Mark Dodd, Jakarta -- The United Nations chief in East Timor, Mr Sergio Vieira de Mello, has sought the co-operation of Indonesia's judiciary for investigations into crimes committed by pro-Jakarta militia and their army backers after last year's bloody vote for independence.

In talks in Jakarta yesterday with President Abdurrahman Wahid, the Foreign Minister, Mr Alwi Shihab, and the Attorney-General, Mr Marzuki Darusman, Mr Vieira de Mello promised UN support for a visit to East Timor by Indonesian investigators. The date for the visit has yet to be announced.

Mr Vieira de Mello said there had been an exchange of letters between the UN administration and Jakarta. He said discussions would focus on how the investigators Mr Darusman planned sending to East and West Timor could be assisted, and how the Indonesian judiciary would support the UN's investigation of special cases to be submitted in the future.

The talks follow the February 29 signing of a memorandum of understanding on judicial co-operation and support between Indonesia and the UN mission in East Timor.

Under strong international pressure, Indonesia is conducting its own investigation into those responsible for the deaths of up to 15,000 East Timorese and the looting and destruction of millions of dollars worth of property.

UN jails in East Timor now hold 112 prisoners, about half of whom face charges of multiple murder connected to last year's violence. Evidence from their trials could be used to indict senior militia leaders or Indonesian military officials.

Mr Vieira de Mello assured Indonesian reporters that East Timorese refugees who wished to return home from camps in Indonesian West Timor would have no security concerns.

Militia leaders implicated in crimes would be dealt with according to the law and by the new and independent East Timorese judiciary, he said.

Despite several recent incidents along the border involving suspected militia, Mr Vieira de Mello said security had improved and that "by and large the situation was stable". An Australian peacekeeper was slightly injured in a militia grenade attack on a border surveillance post on Sunday.

Mr Vieira de Mello said he was pleased with the outcome of talks with Mr Shihab on the opening of a transit route from the East Timor border to the Oecussi enclave, progress on pension payments to former civil servants and support for East Timorese students wanting to resume tertiary studies in Indonesia.

Mr Shihab said that in principle Indonesia had no objections to the Oecussi route. Senior UN officials and Dili-based diplomats have privately blamed the Indonesian military for obstructing negotiations on opening up the route through West Timor.
 

Government/politics

Buloggate `a test of Gus Dur's resolve to fight graft'

Marianne Kearney, Jakarta -- Donor countries and international aid agencies say that President Abdurrahman Wahid's handling of the Buloggate scandal will indicate how committed his reform government is to driving out corruption.

Foreign observers, including those from major donor countries currently pouring millions of dollars into governmental and legal-reform programmes, say they will be monitoring closely how the scandal unfolds.

But they add it is too early to tell if the President's inner circle has been tainted with corruption. "How it is handled is the key. If in the next two weeks, people start to say that was a real snow job, and there was a real attempt to cover up, then something has gone really wrong," said one Western observer.

The observer points out that, so far, this scandal looks far more amateurish than Baligate, indicating that those involved are not as experienced at hiding money as the actors behind the previous scandal.

In Baligate, 546 billion rupiah (S$114.7 million) from the Bank Restructuring Agency deposited into the bank accounts of some close associates of Golkar chiefs, reportedly for election funds, disappeared. Nobody has been prosecuted.

As a result, the International Monetary Fund suspended its loan programme. Mr Ravi Rajan from the United Nations Development Programme, one of the aid agencies promoting reform, said it was too early to tell if the UNDP would reassess the government's commitment to reform in light of the new scandal.

However, Western sources also said that regardless of whether Buloggate uncovered even small-scale corruption, it would be a strong indicator of just how transparently and efficiently the palace was run.

The fact that Mr Abdurrahman was looking into the possibility of using funds from the National Logistics Agency (Bulog) for a government project, even if it was the very worthy cause of humanitarian aid in Aceh, has raised eyebrows.

It also begs the question of why the President needed to go to Bulog when he could easily obtain the funding from the Finance Minister, said observers. It suggested, said one observer, that palace business, just like during the Suharto era, appeared to be organised along personal networks. Another foreign analyst agreed that even if corruption was absent, the suggested lack of accountable systems was disturbing.

BPS chief exits with snipe at Wahid

Jakarta -- Minutes before relinquishing his post as Central Bureau of Statistics (BPS) chief, Sugito Suwito fired back at President Abdurrahman Wahid, saying he was being truthful in scaling back his economic growth projection.

Sugito blasted the President on Wednesday for his comment that he lowered the projection out of spite because he knew he was about to be replaced. "It has nothing to with that. I'm 61 years old, and therefore I must retire," he said.

The feud erupted after the President chided Sugito last week for saying that economic growth this year would likely not exceed 1.5 percent. Abdurrahman, known as Gus Dur, said Sugito was frustrated at being replaced. Abdurrahman cited increasing exports and other encouraging signs which he believed would boost growth to about 4 percent.

Speaking to journalists before the transfer of duty ceremony to Soedarti Surbakti at the State Palace, Sugito said the President should blame political instability for the less than bright economic outlook.

Sugito acknowledged that BPS previously announced that economic growth would reach 4 percent this year, but it revised the figures to factor in the deteriorating national political situation.

Abdurrahman's address at Wednesday's ceremony seemed to contradict his comments from last week. He said that during the New Order regime, BPS often issued biased and misleading statistical data to appease the ruler. "During the old regime our statistics were often manipulated for its vested interests," Abdurrahman said.

Soedarti, formerly Sugito's deputy, defended her predecessor. She said a 1.5 percent growth estimate was based on objective calculations.

"Whoever holds the position, the result will be the same, because our work is not based merely on intuition, but empirical data," she told journalists before the ceremony.

"So there is no political motive behind it." Abdurrahman in his address at the ceremony praised Soedarti as a professional bureaucrat and expressed confidence that she would be able to produce a better performance than her predecessor in producing reliable and accurate data.

Wahid under siege over cash scandal

Chris McCall, Jakarta -- President Abdurrahman Wahid was fighting for his job yesterday as he and his closest allies struggled to defuse a political scandal.

In his most extensive comments yet on the issue, Mr Wahid denied he had authorised the removal of 35 billion rupiah (HK$35 million) from a pension fund for employees of the state commodities regulator Bulog. His inner circle has come under heavy attack over the issue, which has exposed the deep cracks in the coalition Government.

But Mr Wahid, in an interview with leading Indonesian daily Kompas, admitted he had considered using Bulog money to fund humanitarian work in violence-racked Aceh province.

Parliamentary Speaker Akbar Tanjung, who heads the powerful Golkar party, called for Mr Wahid to disclose everything he knew about what Indonesians have nicknamed "Buloggate".

Analysts have suggested the affair could herald a realignment in Indonesian politics. "Akbar Tanjung is playing his cards very well. They hope to gain political capital out of it," political commentator Wimar Witoelar said.

Mr Wahid's comments followed the resignation of an aide, Bondan Gunawan, as state secretary on Monday. Mr Gunawan, an old friend of Mr Wahid's, has denied any wrongdoing. During his interview with Kompas, the President was accompanied by another old friend he had promoted to high office, Cabinet Secretary Marsilam Simanjuntak.

Asked if he had approved the disbursement of the funds, Mr Wahid replied: "No. I only asked. I, let's say, heard that there were funds at Bulog. I asked, can it be used for Aceh or not?"

Mr Wahid said he was told that with the correct presidential authorisation it could, but concluded this would involve budget changes, which would have to go through Parliament and would simply take too long.

"It didn't happen. Later, I got help from Sultan Hassanal Bolkiah to the tune of US$2 million [HK$15.5 million] for Aceh. I used this money. I sent it to Acehnese people who used it to pay for various types of rehabilitation projects in Aceh," he said.

Foreign Minister Alwi Shihab, one of Mr Wahid's closest associates, also denied any involvement in the scandal. "I see a scenario to corner me. I don't have to defend myself because I know that I am clean," Mr Shihab said.

Although he played a major role in the appointment of former Bulog deputy secretary Sapuan, he had never met him, he said. "Maybe my closeness with the President has attracted jealousy," Mr Shihab said.

Since his election last October, Mr Wahid has increasingly surrounded himself with close allies and friends, leading to allegations of the cronyism for which disgraced former President Suharto was infamous. He has also sacked several ministers from rival parties, including Yusuf Kalla of Golkar, who was head of Bulog when the incident occurred.

Mr Kalla's former deputy Mr Sapuan has been fired and declared a suspect in the case. So has Suwondo, a businessman friend of Mr Wahid who sometimes acts as a masseur. He has gone missing.

The scandal has exposed Mr Wahid's political weakness, and there is talk among Indonesian politicians of impeachment. The top legislature which elected him meets again in August and has the power to sack him.

Mr Wahid's Nation Awakening Party is only the fourth largest in Parliament. He won office through a complicated series of alliances, largely with various Muslim-orientated groups, several of whom have since become disenchanted with him. His last-minute decision to run also irritated many supporters of popular favourite Megawati Sukarnoputri, who Mr Wahid had pledged to support in the election.

Analysts suggest the row may make or break the Government. It might survive and grow stronger as a result of facing the controversy, said Mr Witoelar. Or it could be replaced with a tighter coalition. One of the winners in this scenario could be Vice-President Megawati. Her Indonesian Democratic Party of Struggle is the largest in Parliament.

Abdurrahman does a Wiranto replay

Jakarta -- A funny thing happened on Sunday when President Abdurrahman Wahid went sailing with his top military commanders.

"I do not like it when my generals play politics with my acting State Secretary," he told his service chiefs and their commander-in-chief on the naval vessel Arun in the middle of Jakarta Bay.

"Why are some officers getting together with Bondan Gunawan to discuss politics. Why, I never asked for Lt-General Agus Wirahadikusumah to be made Kostrad chief. Did Bondan ask you to promote him in my name?" he proceeded to confound Admiral Widodo.

As some of the chiefs huddled on Monday with their advisers to ponder if their wildest hope was about to be fulfilled -- that the President would remove the thorn in their side, the non- government activist now running rampant in government -- he delivered the coup de grace.

Pulling off what a palace aide calls a "replay of Wiranto", Mr Abdurrahman summoned two local journalists on Monday evening to pass on the tip that his acting State Secretary was going to resign. Three hours later, Mr Bondan Gunawan had no choice but to announce his immediate resignation at a hastily called press conference.

By then he already knew his days were numbered; with news leaks all but implicating him in what has become known as Bulogate, he told a meeting of his staff last Monday that "his time was up". Bulogate merely provided his critics with additional ammunition, and the palace a convenient cover, to push him out.

The sudden rise and fall of Mr Bondan is a morality play with a fascinating cast of characters: A "bad bird" of a general whose rise to power threatened to destabilise a depoliticising military; a vice-president upset that he tried to hijack her party flag; and a constant parade of businessmen passing through a well-greased revolving door -- including a masseur and a deputy Bulog chief who never got what he paid for.

Mr Bondan overplayed his hand when he rammed through the promotion of Lt-Gen Agus -- a "bad bird" who broke ranks by criticising his superiors -- over the objections of senior officers.

True, the President did think highly of the general and thought he could speed up the military's retreat from politics.

But isolated overnight, the new Kostrad chief lost any effectiveness he might have had as the generals who considered themselves "professional soldiers" sought their own lines of access to the President to press their case against him and Mr Bondan. And they found no shortage of insiders ready to lobby on their behalf.

A senior general who met Mr Abdurrahman two weeks ago to assure him of the Indonesian military's (TNI) total loyalty and warn him against being used by politicised generals with no mass backing, told The Straits Times then that if there was no "counter-attack" from Mr Bondan, it would not be long before the aide found himself out in the cold.

Unfortunately for him, he and his political master, the President, had opened two separate, festering wounds in Vice- President Megawati Sukarnoputri's party -- the Indonesian Democratic Party-Perjuangan (PDI-P).

At the PDI-P's March congress, Mr Bondan antagonised Ms Megawati no end when he allegedly tried to buy his way into the secretary-general's post, infecting her local district chiefs with "the culture of money politics". A patiently fuming Ms Megawati found her chance to strike back at him last month when Mr Abdurrahman sacked one of her party elders from the Cabinet -- former State Enterprises and Investment Minister Laksamana Sukardi -- on alleged charges of corruption and nepotism.

With the President due to account for his first and largely confusing year in office before a highly critical People's Consultative Assembly in August, he has recently rediscovered the necessity of mending political fences with his erstwhile allies. If a quid pro quo with the quiet but still popular Ms Megawati required Mr Bondan's departure from government, so be it.

If sacking former military chief Wiranto, Islamic party boss Hamzah Haz, Golkar's Jusuf Kalla and PDI-P's Laksamana was about consolidating Mr Abdurrahman's power base, now is the time to find a new balance before these parties ganged up against him come August and embarrassed him with inconvenient questions.

Questions like why the State Audit Board discovered mark-ups in supplies to the palace, a result of kickbacks to certain officials around the President? Or more fundamentally, is access to the president for sale?

Suffice to say that the first reaction of the President's surviving close aide, Mr Marsillam Simanjuntak, whose puritanism is legendary, to Mr Bondan's resignation is one of "relief".

But the real question remains -- if a political sacrifice were not demanded to balance the power see-saw, would the whiff of corruption have been enough for the President to push out one of his closest aides and establish that absolutely no one is above the law?

Fund scandal could haunt Wahid

Chris McCall, Jakarta -- President Abdurrahman Wahid may have saved his own political skin by accepting the resignation of a leading confidant.

Bondan Gunawan's resignation late on Monday from the post of state secretary came amid mounting controversy over an alleged scandal at the state commodities regulating body, Bulog, in which members of Mr Wahid's inner circle have been implicated. The revelation is strangely reminiscent of last year's Bank Bali scandal, which ended the re-election hopes of former president Bacharuddin Habibie and paved the way for Mr Wahid's election in October. Indonesia's top legislature, which appoints the president and has the power to sack him, convenes again in August to review Mr Wahid's record.

Johan Effendi, now a senior official of the religious affairs ministry, will be sworn in as Mr Gunawan's replacement today.

Although this scandal has not yet taken on the scale of the bank affair, its implications for Mr Wahid could be just as serious as that issue was for Mr Habibie, political analysts say. Mr Gunawan's rapid departure from the post he had occupied for less than six months might be best for all concerned, even bearing in mind his insistence he did nothing wrong, they said.

"Gus Dur might be able to retrieve something from this. It is better to cut him [Mr Gunawan] loose than keep the doubts hanging. He cannot afford to have any dirty laundry," said political analyst Wimar Witoelar, referring to Mr Wahid by his nickname. "It is not impossible that things like impeachment might be on the horizon."

Since his election, Mr Wahid has surrounded himself with long- trusted aides and friends, leading to allegations of the cronyism that marked former president Suharto's 32 years in power.

Like several other key cabinet figures, Mr Gunawan is an old friend of the President. His is the latest in a series of resignations from Mr Wahid's awkward coalition cabinet, which is struggling to solve Indonesia's myriad problems.

Mr Gunawan said his resignation was intended merely to stop other politicians attacking the President by attacking his allies. He insisted he had done nothing wrong. "From the attacks on me, I see I was only a secondary target," he said.

The controversy revolves around 35 billion rupiah (HK$35 million) missing from a pension fund for employees of Bulog, a huge body which regulates supplies of key commodities such as rice. The money was allegedly taken by a businessman friend of Mr Wahid, Suwondo -- who sometimes acted as his masseur -- on the pretext the President needed it. Suwondo later disappeared.

The money vanished when former trade and industry minister Yusuf Kalla still headed Bulog. Mr Kalla was subsequently sacked from both posts. Bulog deputy chief Sapuan has been sacked, declared a suspect and arrested. Analysts believe the money may have been intended for some legitimate cause, such as humanitarian work in Aceh province, but handled badly.

Tens of thousands attend KPB rally in Banten

Pandeglang -- Newly established Work for National Care (KPB), a non-governmental organization dominated by Golkar Party figures, drew the attention of tens of thousands of Muslims here on Sunday by staging an anticommunism rally.

Numerous Muslim clerics who co-presided a prayer at the mass gathering expressed full support for the KPB in its mission to fight for people's aspirations to maintain the ban on communism and to help develop the economic, education and religious sectors in the region.

They said they would encourage Muslims in the region to support political parties and NGOs which were fully committed to accommodating people's aspirations.

"We support the KPB because it has made an effort to channel Muslim people's aspirations to keep the communism ban intact," said a local senior ulema.

KPB, founded by former Army chief of staff Gen. (ret) R. Hartono in April, plans to form a political party to contest the 2004 general election.

Hundreds of local youths waved anticommunist banners while thousands of others, dressed in green T-shirts bearing the KPB logo, traveled in a convoy across town on trucks and vans and buses. They yelled anticommunist slogans along the way.

President Abdurrahman Wahid has repeatedly defended his wish to have the 1966 Provisional People's Consultative Assembly decree banning communism revoked, while insisting it was the Assembly that would have the final say. Abdurrahman's call has failed to garner much support, with only the National Awakening Party (PKB) -- which he cofounded -- supporting his proposal.

Hartono called on President Abdurrahman Wahid to bow to the increasing waves of anticommunism demonstrations nationwide, saying they represented people's rejection of the President's intention.

"The government will likely lose the people's confidence if the President goes ahead with his plan," said Hartono, amid huge applause from the audience. He said the KPB would also call on the central government to develop Banten into a new province in order to accelerate development in the region.

Hartono said after the gathering that KPB would form a political party, claiming its presence and mission had gained support from 22 provinces. "We have organized such a mass gathering in 22 provinces and gained support from the people," he said.

He said KPB would face no difficulties meeting the legal requirements to set up a political party as it has branches in 22 provinces and millions of supporters.

Asked about funding for the KPB, Hartono, who was accompanied by former Golkar secretary-general Ari Mardjono, said the mass organization had no links, neither financially nor politically, with former president Soeharto or his family.

"Neither Pak Harto, his daughter Mbak Tutut [Siti Hardiyanti Rukmana] or her siblings have donated one cent to KPB. Nor do they have any connection with us," he said. Hartono was often seen accompanying then Golkar deputy chairwoman Hardiyanti during electoral campaigns ahead of the 1997 polls.

When asked about the National Police's plan to question him on Monday over his knowledge about the violence that followed the forcible takeover of the Indonesian Democratic Party (PDI) office in July 1996, Hartono said he was prepared for the session. He said as the Army chief he was not involved in the incident and knew nothing about it.

Wahid: "We are beginning the rule of law"

Nearly seven months in office, Indonesian President Abdurrahman Wahid can claim great achievements. Despite his blindness and diabetes, he has negotiated a ceasefire with separatist rebels in the gas-rich province of Aceh and staved off a military coup in Jakarta. But things look bleak on the economic front. The Indonesian rupiah, at almost 8,500 to the dollar, has weakened 21% since mid-November, shortly after Wahid took office. And the Jakarta stock exchange, measured in dollars, has slid more than 36% since the start of the year.

Both the currency and the stock market reflect rising investor anxiety over Wahid's ability to turn around the economy. His latest moves have achieved little to reassure investors. Wahid is taking control over economic policy from his official economic policy czar, Kwik Kian Gie -- a possible sign of turmoil inside his Cabinet. He also has drawn criticism for sacking the bearers of bad news, such as the head of the Central Bureau of Statistics, which just predicted a disappointingly low 1.5% growth rate for this year, less than one-third the growth rate predicted by Wahid himself. Foreign corporations are also growing alarmed over the often punitive measures now being taken by local officials against their operations in Indonesia's remote provinces.

Yet Wahid maintains that the economy is stronger than outsiders realize, while rumors of discord between him and Vice-President Megawati Sukarnoputri are wrong. On May 17, the Indonesian President spoke to Business Week about these issues. Refreshed by a two-hour afternoon nap, the Javanese Islamic cleric met with Singapore bureau chief Michael Shari in the Istana Merdeka -- a restored Dutch colonial palace that serves as the President's home.

Q: What have you accomplished since you took office?

A: Most important, we have achieved preservation of the national integrity for Indonesia. This happened in Aceh and the Moluccas and in Irian Jaya. But that doesn't mean the danger has passed, because now there are so many challenges. Second, there were many things not taken care of by [former President] Suharto, especially in the economic field because of his leaning on the economy just for the benefit of his children and his cronies. I have to rectify that. That's a very hard thing to do. I just hope I will be able to finish that during my administration. Third, we are beginning the rule of law. [In the past,] the law was not practiced.

Q: What's the most pressing priority on your agenda?

A: The first is to solve the economic crisis. That's why now I take the reins of the economy directly by myself.

Q: How are you taking the reins of the economy?

A: The [Cabinet] ministers should be coordinated. The Coordinating Minister for Economy & Finance, Kwik Kian Gie, is only a minister. In a sense, I become the Coordinating Minister's enforcer [laughter]. But we have to be careful to keep economic initiative in his hands. Otherwise, there will be a collision between myself and Kwik. If we collide, it will be disastrous for our economy.

Q: How can you avoid a collision?

A: I think the most important thing is that I should not look like the economic czar. That is Kwik's turf, not mine. For example, I would like to see the role of the government become smaller. That's my idea. Then Kwik has to go along with it. But never did I say, 'It's mine.' Every decision is his. I mean, the implementation is.

Q: Is there a danger that economic growth will fall below expectations?

A: [The danger] is caused by the current chief of the Central Bureau of Statistics [Sugito Suwito]. He knows he will be replaced. Because of that, his figure came to 1.5% growth. In Kwik's estimate, growth will be between 3% and 4% in the year 2000. In my estimate it will grow by 5% to 5.5%, because I know the exports, the economic activity, and so forth.

Q: You're saying that the chief of the Central Bureau of Statistics is trying to sabotage the economy?

A: Yes, precisely that. That's the thing about Indonesian bureaucrats. If they know they are going to continue [in their jobs] or be appointed to a new position, they'll give a rosy picture. If not, they will give a gloomy picture.

Q: Why is he being replaced?

A: It's just tradition that after a number of years the chief will be replaced. I don't know his replacement. It's a lady, but she has very, very strong qualifications.

Q: There is a perception that you're turning to trusted advisers. But are they capable of giving you the advice that you need?

A: Look at it this way. I was forced to accept Cabinet ministers whom I didn't know. So when they make mistakes, I take steps to rectify them. And in rectifying them, I have to rely on so-called close advisers. I believe them because I have known them for a long time. As for Rozy Munir [the new Trade & Industry Minister], I have known him for more than 20 years. I know that he has the capacity to become a minister. But the press doesn't believe it.

Q: Why not?

A: Because they are led by somebody. I won't say who. They are against me. They don't want to see me succeed [or] even Megawati. The news that she is boycotting the government is wrong.

Q: What are some of the most immediate dangers facing Indonesia?

A: The danger of disintegration. You see, now it's very easy for people to protest. The unions strike on everything. Then there's the land rights of the tribes. Today [in the Cabinet meeting], there was a report from the minister of education that nearly all the land used to build schools in Irian Jaya [a resource-rich province in the east] belongs to the tribes. They are protesting against the schools while their children are in the schools. It's crazy, you know?

Another danger is too much autonomy for the regions. One local government at the district level in North Sulawesi took Newmont Mining to court. It's rather wrong. There are contracts to be respected. It was because of this that we sent Mines & Energy Minister Bambang Yudhoyono. He reached a kind of compromise in which Newmont provides the local government with $4 million of aid for humanitarian reasons as well as for the development of the area. What's forgotten is that the contracts were made in the Suharto era just to please Suharto's children.

Q: How long will Indonesia have to depend on the International Monetary Fund for assistance?

A: I think in the short run, maybe in two or three years, we will not be encumbering the IMF anymore. But the principles used by the IMF in helping us will stay there -- cleanliness, openness, accountability -- and staying within the confines of free world trade. In those things we will see the legacy of the IMF.
 

Regional conflicts

Unrest blamed on Soeharto's supporters

Jakarta -- Minister of Defense Juwono Sudarsono said on Thursday he believed a series of riots and disturbances plaguing the country were linked to supporters of former president Soeharto.

Juwono said after a commemoration of the birth of state ideology Pancasila that "the New Order people" were stirring up trouble in a bid to shake the government of President Abdurrahman Wahid.

"These incidents were to anger and confuse Gus Dur, but Gus Dur will remain strong, and he said he would fight every attempt at such," Juwono told reporters, referring to Abdurrahman by his popular nickname.

Asked whether he thought followers of Soeharto were behind the attacks, Juwono said: "Yes, and based on the information which I have received from military intelligence sources, these people are in Jakarta." At least 47 people were injured on Sunday when a bomb exploded in a church in Medan, the capital of North Sumatra. Bombs were also found at two other churches and on a road linking Medan and Deli Serdang.

The bombs have raised fears that "provocateurs", who have often been blamed for inciting violence in the country, were trying to ignite sectarian riots similar to the Muslim-Christian conflict that has ravaged Maluku since early 1999.

Christians pray in fear after explosions

Chris McCall -- Fearful Indonesian Christians in Sumatra's main city prayed behind a police guard last night after a bomb exploded at morning service and two more were found at other churches.

Thirty-three people received medical treatment after the home- made explosive device went off at the GKPI Protestant church during a morning youth service. Many of the injured were teenagers. The blast reverberated across the city.

Of the other bombs found later, one at a church metres from the local police headquarters was detonated by a bomb squad. The other was found in a plastic bag at a third church, sources said.

Police refused to speculate on who might have been behind the clearly co-ordinated bombing attempts, but radical Muslim groups in Indonesia have made a series of thinly veiled threats against Christian targets in recent months. This follows widespread anger among Indonesia's majority Muslim population at massacres of Muslims by Christians in the eastern Maluku Islands.

Medan, a city of two million, has a mixed population of Christians and Muslims but an unusually high proportion of Christians, one of the highest of any major Indonesian city.

"We don't know who did it. It is still being investigated," a police spokesman said. Local police chief Brigadier-General Soetanto called for calm and urged the Christian community not to panic or be provoked into any violent reaction. He called an urgent meeting of community leaders and ordered police protection at churches for evening services, amid fears of new attacks.

Police pledged to search for any new devices and warned of the dangers of Medan degenerating into religious bloodshed like that seen in the Malukus.

Fighting between Christians and Muslims there has killed thousands since it began early last year. Clashes between Muslims and Christians, which broke out on May 22 in the town of Poso in central Sulawesi, have spread to surrounding districts, police said yesterday.

Centrifugal forces stir in Indonesia

Bertil Lintner -- Following years of military repression, Indonesia's new president, Abdurrahman Wahid, has adopted a new approach to solving ethnic and religious conflict in the archipelago. He has apologised to the peoples of East Timor, Aceh and West Papua (until recently known as Irian Jaya) for past misdeeds of the army, pledged to withdraw troops and listen to local grievances. He has even promised -- albeit in vague terms -- to consider autonomy for certain parts of the country and the assurance of a fair share of the natural resources in these areas instead of concentrating all the wealth in the capital, Jakarta.

The removal in February 2000 of former security minister and erstwhile army chief General Wiranto -- who has been accused of involvement in the violence that followed last year's referendum for independence in East Timor -- has been seen as a conciliatory step, aimed at creating a sense of unity in one of the world's most ethnically diverse countries. Wahid's new order will be based on consensus and democratic values rather than military might.

A Regional Autonomy Bill was passed on 22 April 1999 under the presidency of BJ Habibie, promising more power and government funds to the provinces. Wahid may go even further and create real autonomous provinces, a partial return to the principles under which Indonesia was founded.

'The Republic of the United States of Indonesia' was established as a federation of 15 autonomous states in November 1949. The federal concept was abandoned the following August in favour of a unitary state, which today contains 26 provinces (the 27th province, East Timor, was allowed to secede after last August's referendum). BJ Habibie's predecessor, General Suharto, was a staunch opponent of regional autonomy.

Will the new policies work? Is reconciliation possible after so many years of brutality? Is Wahid's political approach too late, and will Indonesia disintegrate?

Indonesia comprises 13,677 islands, its 210 million people speak over 300 different languages. Their only common history is a Dutch colonial past.

There is concern that the break up of Indonesia would jeopardise stability in the region. Therefore, Japan (whose vital oil supplies from the Middle East pass through Indonesian waters), Australia (the first country likely to be affected by a refugee crisis if Indonesia disintegrates) and the Association of Southeast Asian Nations (ASEAN), should do everything they can to prevent disaster.

Despite Indonesia's diversity and shaky foundations, over 50 years of independence has created a sense of nationhood that should not be underestimated. Malay, the trading language of the ports, became the national language (renamed 'Bahasa Indonesia') and has since become the common language of the archipelago.

Cultural affinities also exist between the islands due to centuries of trade, commerce and travel. Nationalism has been almost a state ideology since Indonesia was founded.

There has also been freedom of religion. Indonesia has resisted becoming an Islamic state -- despite the fact that 87.2% are Muslims -- as it would alienate religious minorities: 6% Protestants; 3.5% Catholics; 2% Hindus; and 1% Buddhists. Nevertheless, separatist movements are, or have been, active in much of the country.

East Timor

East Timor was not part of the original Indonesia. The Indonesian government claimed the territory after the revolution in Portugal in 1974, when its African colonies gained independence.

Portuguese Timor saw the emergence of independence movements, notably Frente Revolucion-ria de Timor Leste Independente (the Revolutionary Front for an Independent East Timor -- FRETILIN). Its clear leftist leanings worried Indonesia's then rightist government under General Suharto, as well as the Americans, who in 1975 had seen its allies in Indochina fall to communism.

On 28 November 1975 East Timor was declared an independent 'democratic republic'. Indonesia invaded the territory on 7 December, probably encouraged by the USA. However, the annexation that followed in July 1976 was never recognised by the UN. The East Timor issue remained a problem for Indonesia, internally and internationally, as FRETILIN guerrilla units continued their resistance to the occupation.

The Indonesian Army's brutality in East Timor helped foster a national identity in the territory. Under colonial rule it had been the most neglected part of the Portuguese empire, with 16 different tribal dialects.

The Roman Catholic church became a focal point for the resistance, and a refuge from repression and hardships: 90% of the East Timorese today are Roman Catholics. Tetum, the language of the church, became the territory's lingua franca and a local alternative to Bahasa Indonesia that underlined the separate identity of the East Timorese.

It is unclear why Habibie's government agreed in early 1999 to hold a referendum to decide East Timor's future. Observers believe that he thought it would remove the East Timor issue from the UN's agenda. BJ Habibie, and other civilian and military powerholders in Jakarta, misjudged the level of local discontent with Indonesian rule. Observers at the time speculated that the outcome would be in Indonesia's favour, or perhaps 50-50: the 80% vote for independence shocked Jakarta. Indonesia's leaders also misjudged the sentiments of the international community, which condemned the military action unleashed in East Timor after the vote. Indonesia was on the brink of becoming a pariah state at a time when it badly needed international assistance to help its crisis-ridden economy. It was forced to withdraw its forces and to accept international peacekeepers under a UN mandate.

The long-term implications of the loss of East Timor are difficult to gauge. It may not jeopardise Indonesia's unity as East Timor has always been a separate case. Critics, however, argue that by letting one part of the country go to save the rest, a process of disintegration may be set in motion that the authorities are unable to control.

The violent reaction of the Indonesian military to the outcome of last year's referendum was a clear signal to other provinces that want to break away.

Aceh

On the northern tip of Sumatra, Aceh was the first province to demand a referendum after the vote in East Timor. Last November nearly two million of the province's five million inhabitants rallied for a referendum and an end to military violence, which since 1988 has claimed 30,000 lives, according to the pro- independence movement. Indonesia's National Commission for Human Rights has confirmed 1,021 deaths and 864 disappearances.

Once independent, Aceh was conquered by the Dutch in the late 19th century. Aceh resistance against the Dutch continued and although Indonesia became a unitary state in 1950, Aceh was promised 'special territory status' in 1959. Demands for separation from Indonesia were raised and armed resistance broke out (supported clandestinely in the 1950s by the US CIA). It was not until December 1976 that Hasan di Tiro, a descendant of the old sultans, returned from exile in the USA and declared Aceh an independent state.

In early 1979 di Tiro left Aceh for exile in Sweden; his Aceh- Sumatra National Liberation Front or Gerakan Aceh Merdeka (GAM -- Free Aceh Movement) continued the guerrilla campaign from jungle hideouts in the province. In the 1980s an undisclosed number of GAM soldiers (di Tiro claims as many as 3,000) were trained in Libya. That connection now seems to have been severed as the movement is seeking support from the West for an independent Aceh.

Today, Aceh poses the most serious challenge to Indonesia's unity. GAM is stronger and much better armed than any other separatist group in the country. Wealthy Acehnese businessmen in Malaysia and Thailand are said to contribute money to the war effort and modern weapons have been obtained on the black arms market in Southeast Asia.

The GAM is divided into two factions: one led by the now 75-year-old di Tiro, who has ruled out any compromise with Jakarta; the other by the younger Dr Husaini, who is more willing to negotiate with Indonesia.

President Wahid has extended several olive branches to the Aceh militants, offering to negotiate and to investigate human-rights abuses. However, di Tiro has refused. "There'll be no solution until and unless the Javanese occupation army leaves Aceh", he told JIR last July.

Aceh is important to Indonesia. If it broke away, Indonesia would suffer a severe psychological blow.

Also, the province is very rich in oil and gas. Wahid has pledged to allow the province to retain more of the profits from industry, but even that has failed to placate di Tiro and other hard-line independence advocates.

West Papua

The western, Indonesian half of New Guinea comprises 418,000km[2]. Of its 1.8 million people, 50% are indigenous Papuans and 50% Indonesians from other islands. The West Papuans are Melanesians and are composed of about 240 different peoples -- each with its own language. Their historical, cultural and social ties with the rest of the country have always been tenuous.

Eastern New Guinea became independent in 1975 as Papua New Guinea, inspiring the western half to also seek independence.

When the Dutch in November 1949 agreed to transfer sovereignty to Sukarno's Indonesian government, it was decided to negotiate the future of western New Guinea the following year. No such negotiations were held. On 1 December 1961, some Papuan leaders declared independence while the territory was still under Dutch rule. The Indonesians then formed a special force, 'the Mandala Command', in January 1962 to 'liberate' the territory. Skirmishes erupted and the crisis was resolved only when the UN convinced the Dutch to negotiate. The outcome was that an interim UN administration took over in August, which led to the territory being turned over to Indonesian sovereignty on 1 May 1963. In 1969, Indonesia's annexation was ratified in an exercise called 'the Act of Free Choice' -- a 'referendum' which involved only 1,025 hand-picked Papuans.

West Papua -- sparsely populated but by far the largest in Indonesia -- was an early destination for the government's 'transmigrasi' programme (people from overpopulated Java were encouraged to migrate to outlying islands). The influx of 'outsiders' caused resentment among the native population and armed resistance began in the mid-1960s. In 1969 the Organisasi Papua Merdeka (the Organisation for Papua's Independence -- OPM) was formed to co-ordinate the struggle against Indonesian rule. The response was familiar: military action, arbitrary arrests and disappearances of suspected independence activists. This resulted in even more local discontent.

In 1973 western New Guinea was renamed 'Irian Jaya' -- 'the Victorious Irian'. In a conciliatory move, Wahid agreed in January 2000 to change the name of the province to Papua. He also publicly apologised for years of repression and human rights abuses. Wahid's statement came in the wake of massive demonstrations in Jayapura and elsewhere to celebrate the 38th anniversary of the 1961 declaration of independence. Some 800,000 people took part and the OPM's flag was hoisted all over the territory as rival factions of the movement finally agreed to co-operate in the struggle for independence.

The Papuans, who feel much closer to their Melanesian brothers than the Javanese in the east, have appealed to the South Pacific Forum, which groups 16 states (Australia, New Zealand, Papua New Guinea and more than a dozen Pacific islands). In an article published in the December 1999 Suva-based monthly Islands Business, exiled OPM leader Otto Ondawame stated: "We, the West Papuans, hope that one day, we (with the help of the Pacific Islands nations and others) will be able to fly our flag as a member of the South Pacific Forum. All we ask for is the opportunity to determine our own future."

However, Indonesia has strong reasons to retain Papua. The province is rich in timber, copper and gold.

The biggest mine, at Grasberg, is run by Freeport Indonesia, a private company, and is one of the country's most profitable businesses. After smelting, the copper and gold is worth an estimated US$2 billion a year. The 1999 revenues of the mine operator's parent company, the New Orleans-based Freeport McMoRan Copper & Gold Inc., are forecast at $1.6 billion. The Indonesian military still guards the open-cast mine, in which the government has a 9% stake.

The Moluccas (Maluku)

The approximately 1,000 islands of the Moluccas spread across 850,000km[2] -- of which only 10% is land - between Sulawesi, Timor and New Guinea. Also known as 'the Spice Islands', they were the first of the present Indonesian islands to attract large numbers of Chinese, Portuguese, British and Dutch merchants.

Before the arrival of the Europeans, most of the Spice Islands were ruled by local rajas, many were Muslim. The Portuguese introduced Catholicism and Dutch rule, which was firmly established in the early 19th century.

Christianity made the Ambonese more loyal colonial subjects than the Muslim Javanese, the majority population in the Dutch East Indies. Thus in 1830, when the Koninklijk Nederlands Indisch Leger (KNIL) or the Royal Netherlands Indies Army was founded, it consisted almost entirely of Ambonese and other Moluccans.

Indonesia's independence was a dilemma for many Moluccans and many feared retribution from the Javanese. In April 1950 local leaders proclaimed the independent 'Republik Maluku Selatan' (the South Moluccan Republic -- RMS) comprising Ambon, Seram, Buru and over 100 smaller islands. Armed RMS supporters clashed with Indonesian troops and the conflict became potentially more explosive as the Netherlands began to demobilise the KNIL. It was feared that many Ambonese soldiers would defect to join the RMS. Some 35,000 former KNIL soldiers and their families were evacuated to the Netherlands, believing that the transfer was temporary. However, 50 years on, tens of thousands of people of South Moluccan descent remain in the Netherlands where the independence movement has been kept alive.

In 1966 the Indonesian government executed one of the original founders of the RMS. His followers set fire to the Indonesian embassy in The Hague. Frustrations among the Moluccans in the Netherlands was heightened by two train hi-jackings in the mid- 1970s by young South Moluccans trying to draw attention to their cause.

Nevertheless, peace prevailed on the Moluccan islands -- until last year. Bloody clashes erupted between Christians and Muslims throughout the Moluccas and up to 5,000 people were killed. By the end of 1999 the Moluccas were on the verge of civil war. Islamic militants in Jakarta called for a jihad (holy war) to support their Muslim brethren on the islands.

In January 2000 security forces mounted a massive sweep for illegal weapons as reports had reached Jakarta that various armed gangs on the Moluccas had bought guns from East Timor's disgraced, pro-Indonesian militias, which were about to be demobilised. The roots of the conflict in the Moluccas can be traced back to the religious divide on the islands. The situation deteriorated when a Christian, Colonel Dicky Watimena, served as Mayor of the City of Ambon between 1985-91. He subdued areas controlled by Muslim migrants from Sulawesi. This influx of 'new Muslims' from other areas of the archipelago upset the delicate religious balance on some of the Moluccan islands.

The situation was reversed when a Muslim, Mohammad Akib Latuconsina, became governor of the province in 1992. All important positions in the administration, traditionally filled with Christians, were replaced by Muslims. All newcomers were Muslim. Fights among Christian and Muslim youth gangs erupted and within a few years Ambon was ready to explode. Indonesia's economic crisis has made competition for jobs and business opportunities fiercer. Although a semblance of peace and order has returned to the Moluccas, it remains one of Indonesia's potentially most explosive powder kegs. Many Ambonese have revived their dreams of an independent Christian republic.

Riau

In April 1999 1,500 people gathered near Pekanbaru in oil-rich Riau on Sumatra to demand that the government honour a promise to deliver 10% of all oil revenues back to the province. If not, they would fight for independence. Asia's largest oil field, Caltex-operated Minas, is situated in Riau. Together with the nearby Duri field, also operated by Caltex, it represents 15% of Indonesia's revenues. However, local activists claim that the province receives a mere 0.02% of its contributions in return through the national development budget.

Riau has benefited from being included in the so-called Sijori (Singapore-Johore-Riau) 'Growth Triangle'. The boom islands of Batam and Bintan have attracted considerable investment from nearby Singapore.

Demands for separation from Indonesia are new in Riau -- a province of three million people -- and it is possible that local autonomy and a fairer share of oil profits would pacify local militants. Saleh Djasit, governor of Riau, told Asia Business last June: "Our heart is still in Indonesia. The people just want a better balance of wealth."

Sulawesi and Kalimantan

In early 1999 the Sambas area of West Kalimantan saw some of the country's most vicious ethnic killings in recent years. The conflict did not follow 'normal' ethnic and religious patterns: local Malay Muslims, and indigenous Animist and Christian Dayaks confronted Muslim settlers from the island of Madura off Java.

In West Kalimantan, relative harmony between the Malays and the Dayaks has prevailed for generations. The balance was upset by a massive influx of Madurese, brought to Kalimantan (Borneo) under the transmigrasi programme. The bloody clashes in Sambas were not separatist per se, but could give rise to regionalist sentiments if the rights and needs of the local people are not safeguarded.

Similar problems exist on the nearby island of Sulawesi, with its many different ethnic and religious groups, as well as migrants. Demands for independence have also been heard in parts of the island, which in the late 1950s were drawn into the CIA-sponsored revolt against the then president Sukarno. In 1958 a group of dissident army officers set up the Revolutionary Government of the Republic of Indonesia (PRRI), based in West Sumatra. Munitions and other equipment were air-dropped by Americans based in Thailand, Taiwan and the Philippines. The rebellion was supported by leaders of the Islamic Masyumi party, whose aim was not to break up Indonesia but to oppose Suharto's policy of allying himself with the powerful Indonesian Communist Party, the PKI.

The rebellion on Sumatra and Sulawesi was eventually crushed by the Indonesian Army. However, the defeat of the rebels led to the increased militarisation of some of the outlying islands, which exacerbated local resentment with the central power in Jakarta.

Delicate balance

It is this decades-old resentment that Wahid has to change into a sense of unity under a more democratic leadership. This process, and the re-emergence of various separatist movements, does not have to lead to the disintegration of Indonesia.

It is hoped that attempts at restoring democracy will lead to the decentralisation of politics and administration, privatisation and the deregulation of business.

Wahid's challenge is to find a constitutional framework that does not upset the delicate balance between the centre, and the outlying islands and provinces. If decentralisation is underdone, the separatist sentiment in resource-rich provinces will escalate. If decentralisation is overdone, the central government will lose the ability to smooth revenue differentials across the country and the provincial rich-poor gap will increase.

The other major issue is religion. Wahid's view of tolerant, inclusivist Islam must prevail if Indonesia's religious mosaic is to hold together. If it doesn't, pockets of separatism, especially in the East, will grow.

Wahid must also convince the armed forces to accept a greatly reduced role in politics and society. Whether this means that 'the Republic of the United States of Indonesia' will be restored is too early to say.

Without more power to the provinces, less military action in response to local problems and a willingness by all sides to compromise, Indonesia's unity may be in serious jeopardy.

Christian villagers massacred in Maluku

Agencies in Jakarta -- Fifty-two bodies have been found in two mainly Christian villages in Indonesia's North Maluku province after attacks by Muslims, a priest said yesterday. The military said "jihad" holy war fighters from elsewhere in Indonesia were suspected.

At least 102 people were wounded, 300 houses torched and three churches set ablaze in Duma and Makete, the Reverend Jose Hadi, of the Tobelo Church Synod, said from Tobelo, 35km south of the villages on Halmahera island.

"Many of the dead were killed in their sleep," he said. "According to reports from a two-way radio ... the attackers were carrying automatic rifles and home-made bombs."

A military spokesman confirmed 47 deaths. An unconfirmed report said another 17 people were killed yesterday on Halmahera. More than 2,500 people have been killed in the Maluku island chain in 16 months of sectarian clashes. At least 800 Christians sought refugee at a church in Tobelo yesterday.

North Maluku military chief Lieutenant-Colonel Sukarwo said the military believed the attackers came from a neighbouring island and were members of a Muslim fighting force known as Laskar Jihad.

An Islamic activist on nearby Ternate Island said at least three Muslim attackers were also killed and seven others injured in Monday's raid after the Christians started fighting back.

Monday's attack was almost identical to a pre-dawn raid last week in the same area, which left 34 civilians dead according to some reports and 188 according to another.

A military spokesman said troops would be sent to the area. Another priest said local community leaders had so far rejected the presence of troops because they feared they were not neutral.

Troop reinforcements were rushed to Poso, on Sulawesi Island, adjoining the Malukus, where clashes between Christians and Muslims have killed seven people in a week.

Suharto allies `may be behind arrival of jihad warriors'

Ambon -- The governor of Indonesia's troubled Maluku province has said that allies of former President Suharto could be behind the arrival of some 2,200 Muslim jihad warriors in the islands.

"It is a very complicated, very big problem, because national politics is involved," Governor Saleh Latuconsina said in an interview in his office which overlooks the burnt-out shells of buildings torched in a year of Christian-Muslim violence here.

"The Laskar Jihad is connected to some political elite, because they can come to Ambon without anyone stopping them," he said, referring to a warning issued by President Abdurrahman Wahid that the warriors should be prevented from leaving Java island.

"We asked the Ministry of Transport to stop them and the answer was: "It is their human right to come here'," he said, recalling the arrival of 2,200 men -- from the reportedly 10,000-strong force -- from Java.

"Maybe it is from the people of the status quo... well, Suharto," he said, reflecting a widespread belief in Indonesia that loyalists of the former President were being paid to foment unrest.
 

Aceh/West Papua

Congress to affirm right to independence

Reuters in Jakarta -- A landmark congress discussing the future of Indonesia's Irian Jaya province is set to close on Saturday with an affirmation of the right to independence but without the setting up of a provisional separatist government.

Delegates at the six-day congress voted on Friday to reject the idea of creating a provisional government, fearing that such a move would provoke a harsh reaction from Jakarta, which is resolutely opposed to independence for its easternmost province.

"The idea would be tantamount to separatism and this would justify the Indonesian army and police to launch an operation to wipe us out," Fadal Ahmad, a student at Cenderawasih University in the provincial capital of Jayapura, told the Jakarta Post.

Delegates have, however, approved a motion that a United Nations plebiscite in 1969, in which Irian Jaya voted to become part of Indonesia, was flawed. They are also expected to include an affirmation of the right to independence in a list of declarations to be issued before the conference closes.

About 3,000 people, including tribal leaders, have gathered in Jayapura for the congress. The city is about 4,000 kilometres east of Jakarta.

The majority of delegates at the congress are in favour of independence, but there have been disagreements between moderates who want to achieve their goal through negotiation, and those who want an immediate declaration of independence and the setting up of a provisional separatist government. President Abdurrahman Wahid had originally been due to open the congress, but backed out when it became clear it would be in favour of independence. Jakarta has attacked the congress, saying it does not represent the wishes of the people of Irian Jaya.

Foreign Minister Alwi Shihab said this week the government would be very concerned if the congress "goes over the limit" by declaring support for independence.

But Tom Beanal, chairman of a 31-member presidium council at the congress, rejected charges that the delegates were unrepresentative. He told the Jakarta Post that the congress included representatives of all the province's regencies and groups, selected by local people.

The remote province on the western half of New Guinea island is rich in natural resources, including one of the world's largest copper and gold mines, the Grasberg mine majority-owned by US- based Freeport McMoRan Copper & Gold.

But many of its people remain poor, and separatist leaders say Jakarta has plundered its resources with little given in return. Like Aceh province in Sumatra, Irian Jaya has long had a low- level guerrilla movement against Jakarta rule.

Demands for independence have been fuelled by fears that Indonesians from other parts of the archipelago are taking over the province.

Golkar youth funding separatists

Lindsay Murdoch and Andrew Kilvert -- A Jakarta-based organisation with criminal connections and links to Indonesia's military and Golkar, the former ruling party, is secretly funding part of a burgeoning independence movement in the country's far eastern province of Papua.

Indonesia's armed forces are also believed to be training and funding an East Timor-style anti-independence militia which has already attacked and tortured scores of villagers in the province, formerly called Irian Jaya.

Observers in the provincial capital, Jayapura, fear that the organisation, Pemuda Pancasila, Golkar's youth wing, is backing independence leaders with the aim of fomenting enough civil unrest to force the armed forces to launch a crackdown that would crush the anti-Jakarta movement.

Papua's chief of police, Brigadier-General Silvanus Wenas, has confirmed to The Herald that Pemuda Pancasila's deputy chairman, Yorris Raweyai, is channelling money to the independence movement.

Before his downfall two years ago, president Soeharto used the organisation to perform "dirty tricks" such as provoking riots and attacking his political rivals.

The paramilitary organisation is understood to receive large amounts of money from illegal activities such as gambling, prostitution and protection rackets.

Yorris is awaiting trial in Jakarta on charges relating to a 1996 attack by his thugs on the headquarters of the then opposition leader and now Vice-President, Ms Megawati Sukarnoputri. Mr Soeharto is believed to have approved the attack, which left five people dead, 149 hurt and more than 23 missing.

Asked about money from Pemuda Pancasila, General Wenas confirmed it was being used by the self-proclaimed independence leader Mr Theys Eluay to build up his own 7,000-strong militia called Satgas Papua, or Task Force Papua, which provided the main security for a conference on the province's future in Jayapura this week.

Human rights activists have information that Indonesia's military is funding the training of its own militia, called Satgas Merah Putih, or Red and White Task Force, to counter Mr Eluay's militia.

The Merah Putih militia joined Indonesian troops in March to attack a village near the town of Fak Fak. The villagers had beaten up a Jakarta-appointed administrator. Human rights investigators have told the United Nations that 45 villagers were arrested and tortured at a Fak Fak police station.

Observers fear that some Indonesian authorities want to encourage clashes between the two militias that would see the independence side crushed and its leaders either killed or jailed. The Herald has found that Mr Eluay's militiamen have assaulted and threatened people they suspected of being opposed to independence. "We are afraid it's a case of give them enough rope and they will hang themselves," a social worker in Jayapura said.

Mr John Rumbiak, the head of ELS-HAM, the main human rights organisation in the province, said the militias "can be conditioned to commit crimes that will justify the military attacking and destroying the people's struggle. It's scary. It's very dangerous."

Tensions are high in the province following this week's landmark Papuan People's Congress, which is scheduled to end today. Most of the 2,700 delegates are demanding that Jakarta allow the province to break away, citing repression by the army and police, financial exploitation and Jakarta's failure to fulfil promises of autonomy.

Peace hopes high despite assassination

Chris McCall, Jakarta -- Aceh refused to abandon its hopes for peace yesterday as a much-desired truce finally took effect under the shadow of an assassination in Malaysia.

Accusations and counter-accusations soon flew over the gunning down of dissident rebel leader Teuku Don Zulfahri in a Kuala Lumpur restaurant. Malaysian police concluded the killing was politically motivated.

Leading Acehnese still expressed hope that neither his killing nor a spate of other violence in the run-up to the truce would derail it. Thousands turned out at Banda Aceh's main Baiturrahman mosque at Friday prayers, dominated, as ever, by hopes for an end to the war.

Zulfahri headed a dissident wing within the Free Aceh rebel movement, also known as GAM, leading to suggestions he fell victim to an internal power struggle.

The rebels strongly denied this, pointing the finger at Indonesian military intelligence.

Zulfahri did not recognise the leadership of exiled rebel chief Hasan Tiro, a controversial figure who many Acehnese distrust. Zulfahri initially rejected the historic deal signed in Geneva on May 12 by associates of Tiro, pointing out its weaknesses. But he later softened his stance and backed it as a first stage to something more concrete. He hoped to see independence by 2004.

Rebel spokesman Ismail Sahputra said Indonesian military intelligence had previously abducted several Free Aceh leaders from Malaysia. "They always make operations in Malaysia against Acehnese," said Sahputra, who is from the movement's mainstream. "We had different ideas but we didn't want to kill him. We feel very sad in Aceh. The Acehnese lost a good man and a valued asset. We hope the police can find out who killed him."

Indonesian military officials could not be contacted for comment on Sahputra's claim. Few independent analysts dared to speculate on the motive for the killing in the secretive and factionalised world of the Aceh conflict, nor why it happened a few hours before the start of the truce, officially termed a "humanitarian pause".

Nevertheless, the truce went ahead and early reports were good. A rebel delegation was staying at a major city hotel and appeared to be secure there. During the morning, details of joint committees between the Government and the rebels on security and humanitarian action were released in Banda Aceh amid widespread optimism.

"It was a very impressive meeting," said Mr Saifuddin Bantasyam, executive director of Care Human Rights Forum in the capital.

At least 30 people were killed in violence between the signing of the accord in Geneva and the day the truce took effect, with another 14 missing. A series of new acts of violence were reported in the last few hours before the truce took effect at midnight. Apart from the killing of Zulfahri in Malaysia, thousands of villagers were reported on the move in Pidie district amid sweeping operations by Indonesian security forces hunting for rebels. Explosions rocked the capital until late Thursday but calm returned later.

Human rights monitors said it may not have been realistic to expect the violence to stop so quickly after a war which has lasted more than a decade and killed thousands. Hundreds, mostly civilians, have been killed this year alone amid a government- sanctioned crackdown on the rebels.

Aceh rebels blame TNI for murder of exiled leader

Jakarta -- The exiled leader of an Aceh independence faction gunned down in Kuala Lumpur was killed by the Indonesian military, the main separatist movement in Aceh claimed on Friday.

"I'm sure he was murdered by TNI [Indonesian military] intelligence agents in Kuala Lumpur," Ismail Sahputra, spokesman for the Free Aceh Movement (GAM), told AFP by phone.

Zulfahri, aged 40, was shot twice as he ate lunch in a Kuala Lumpur restaurant on Thursday, his wife Putri Mei Abdullah and police told AFP. Zulfahri was secretary general of the moderate splinter faction of GAM and had lived in Malaysia for years. He was shot dead hours before a truce between the rebels in Aceh and the Jakarta government came into force at midnight Thursday.

Sahputra said Indonesian military agents had tried several times to kill GAM members in Malaysia. "One of the GAM members in Malaysia, Burhan, was tortured by TNI in Johor Baru and he later died in Pekanbaru," in Indonesian Riau province on Sumatra island, the spokesman said.

Sahputra said he and other GAM members were "deeply saddened" by the death of "one of the big leaders of Aceh." "His death is a great loss to the nation of Aceh," Sahputra said. "Although we have had differences in opinion, it doesn't mean he deserved to be killed," he added.

He said the differences were "trivial" and could be solved without either party having to resort to violence. Sahputra said Zulfahri had opposed armed struggle to achieve independence for Aceh, a resource-rich province on the northern tip of Sumatra.

"But we [the main GAM faction headed by exiled leader Hasan Tiro] are of the opinion that without military power our diplomatic efforts won't succeed," he said.

Sahputra called on the authorties in Malaysia to thoroughly investigate the murder "so that the truth can be established". Malaysian police have launched a hunt for the killer.

The rebel spokesman said that despite the killing of Zulfahri, GAM remained committed to a landmark truce signed in Switzerland on May 12, which came into force on Friday. The truce, dubbed a "humanitarian pause", will be in effect for three months.

"In this situation Aceh is in dire need of at least some peace. GAM will not do anything that will violate the memorandum of understanding and we urge the people to understand this," he said.

The violence has claimed more than 400 lives this year alone, at least 32 of them since the signing. Separatism in oil and gas- rich Aceh has been fuelled by Jakarta's failure to ensure the province benefits from its resources and by years of military repression aimed at wiping out rebellion.

Aceh rights trial `does not bode well'

James Balowski -- On May 17, 24 Indonesian soldiers and one civilian were sentenced to between eight and a half and 10 years' jail for the murder of Islamic teacher Teungku Bantaqiahand and 56 members of an Islamic boarding school in western Aceh in July 1999.

Although these are some of the harshest sentences ever meted out to military personnel for human rights abuses, according to the May 18 South China Morning Post, most people in Aceh "reacted coldly" to the verdict, saying it was just "window dressing".

Leading Acehnese had plenty of harsh words about 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 around the province. "These are only the men who did that, while those at the top were not held accountable."

Saifuddin Bantasyam, executive director of Care Human Rights Forum in Banda Aceh told the Post the next day: "No one cares ... 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."

Controversy

The trial was controversially held in a joint civilian and military court and under criminal law rather than the 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 in an attempt to quell increasing popular discontent and violence in the province. Nearly 400 people -- mostly civilians -- have died this year alone in a military crackdown against the Free Aceh Movement (GAM).

Indonesian human rights minister Hasballah Saad, who is Acehnese, played a leading role in the arrangements for the trial, and some believe he pushed the case through early.

Even before the trial began the mysterious disappearance of a key witness -- the officer who led the attack -- Lieutenant-Colonel Sudjono, cast a shadow over the proceedings. Sudjono, an intelligence chief at the Lhokseumawe-based Lilawangsa Military Command, was officially declared a "deserter" on January 18 after failing to return to duty after taking two weeks' leave in his home town in western Java.

The Indonesian military has repeatedly denied suggestions that they were involved in Sudjono's disappearance.

On February 16, the Jakarta Post reported that the Independent Commission on Rights Abuse in Aceh suggested that the disappearance of Sudjono was engineered to conceal the identity of the "intellectual perpetrators" of the violence.

Commission chairperson Amran Zamzami said it was too much of a coincidence for Sudjono simply to disappear after his name was implicated in the commission report: "His name has been included in our list [in the report] since September [last year]. After we pushed for trials, suddenly the attorney general says Sudjono is missing."

In their testimonies, several the defendants said Sudjono had ordered them to shoot 24 of the victims wounded after the initial attack.

A `public relations exercise'

Indonesian human rights activists also heaped scorn on the convictions, saying they set a bad precedent for future human rights trials for a host of unsettled cases.

They said that the convictions had allowed those who planned the operation against the school to get off scot-free.

Asmara Nababan, secretary-general of the National Human Rights Commission (Komnas Ham), was quoted in the May 18 South China Morning Post as saying the prosecutors should have waited several months for new laws relating to special human rights tribunals to get through parliament. Under these laws, those who ordered the killings could also have been brought to trial.

In a May 19 article titled: "Aceh massacre trial `missed real culprits'", the Sydney Morning Herald reported that international human rights organisations were also quick to dismiss the trial as "seriously flawed". A joint statement by the London-based Amnesty International and New York-based Human Rights Watch (HRW) said that military commanders and not just their troops should have been held accountable for the massacre. They also expressed "serious misgivings" about the sentencing and said that 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."

Amnesty and HRW 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. The statement also said the non-appearance of some witnesses appeared to be because they had not been called or were afraid because there was no 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 observed.

Amnesty and HRW 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".

East Timor whitewash?

Although Indonesia's President Abdurrahman Wahid has stated many times his government's intention to bring perpetrators of the East Timor violence to court, the 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.

On September 23, Komnas Ham established the Commission of Inquiry into Human Rights Violations in East Timor. On January 31, it implicated former armed forces chief General Wiranto and 32 other military and civilian officers in the violence and destruction.

On April 19, a 64-member investigation team, formed to gather evidence and name suspects, restricted the investigation to only five of the most prominent cases out of more than 100 alleged incidents. Since May 1, only 21 civilians and military and police personnel have actually been summoned by the team and of these, five failed to show up. They were former local government officials in East Timor, including governor Jose Abilio Soares.

All were questioned as "witnesses" and although the team says it will look for evidence and more testimonies from witnesses in East Timor and the neighbouring Indonesian province of East Nusa Tenggara before it decides on the status of each person some time this month, a date has not yet been set.

The investigations of the military's actions in East Timor were made possible only 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.

On October 8, President B.J. Habibie issued a decree in lieu of such a law, but on March 13 it was rejected by the House of Representatives because it did not contain a clause that would enable past crimes to be tried in court. The bill on a human rights tribunal underwent another revision with the retroactive clause being scrapped and replaced by a clause that permits the government to set up an ad-hoc tribunal to try suspects. Another revision stated: "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".

Although the bill has been submitted to parliament for deliberation, it has not been made a top priority and has yet to be passed.

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 provide collective responsibility.

As in the Aceh trial, human rights activists have criticised the attorney-general's office for treating the East Timor investigation as "ordinary crimes" instead of political crimes and crimes against humanity. They suspect that officials have been "bought off" to buy the suspects' time.

Wiranto has indicated privately that he is prepared to assume political responsibility for what happened in East Timor last year. However, if the Aceh trials are any indication of things to come, he and the other generals may get away with any criminal liability, while a few low-ranking officers take the blame for what was in reality a systematic and state-sanctioned campaign of mass killings, tortures, rapes, forced evacuations and destruction.

Mobil Oil halts production in an Aceh gas field

Jakarta -- Mobil Oil Indonesia has temporarily suspended production from a satellite of its eastern Aceh gas field in the wake of last week's hostage taking incident, the company's spokesman said Wednesday.

"We are temporarily suspending our satellite operation in Pase field pending further review," Mobil's communications advisor in Jakarta, Julia Tumengkol, told AFP.

The temporary halt came two days after armed men had ended their three-day occupation of an operations control room, when they took two men hostage at Mobil's A-1 natural gas well cluster in the Pase gas field, East Aceh.

The rebels, who had threatened to blow up the facility unless their demands were fulfilled, released the hostages after several hours. They left the area on Monday without claiming the four billion rupiah (476,190 dollars) they had demanded from Mobil to save the field, Tumengkol said.

Tumengkol said the suspension of production at the field at Pase -- which supplements production from Mobil's giant Arun field in North Aceh -- would not affect scheduled gas deliveries from the Arun field. Production from other fields would be temporarily used to offset the production from Pase field, Tumengkol said.

Meanwhile a spokesman for the Free Aceh (GAM) movement, Ismail Syahputra, in a statement received by AFP, repeated his insistence that GAM was not involved in the occupation of the gas field.

West Papua delegates call for independence

Jayapura -- Speaker after speaker at a landmark conference on the future of Indonesia's West Papua province called for independence yesterday as alarm bells over a possible new East Timor sounded in Jakarta.

The speakers, from the 14 districts of the resource-rich province of some 2.5 million people, at the week-long Papuan People's Congress unanimously called for independence.

They demanded that representatives of Indonesia, their old Dutch colonial masters and the United Nations meet them to negotiate independence demands.

The calls came after congress leaders met in closed session in a face-off between moderates and calls by a minority radical faction for an immediate declaration of independence and the formation of a provisional government in exile.

The congress, attended by some 2,700 delegates in this seaside provincial capital, is almost certain to end with a call for independence.

The moderates want a pledge to work for independence through peaceful dialogue with Jakarta and international mediation. But they also suspect the radicals of being manipulated by Jakarta to give Indonesian troops an excuse to crack down in Irian Jaya.

In Jakarta, alarm bells rang yesterday. Foreign Affairs Minister Alwi Shihab said the government is concerned about the possibility that delegates will vote for independence.

"That should be seen as something that is against the Constitution. We would then have to take necessary measures," he said without elaborating further.

At the Jayapura meeting, a vote on the independence motion was delayed until further notice, but the presidium agreed to increase the number of voting members to 501 from 420, to accommodate former political prisoners and veteran freedom fighters.

Senior presidium member and moderate, Mr Ismail Raja Bauw, told AFP that the eventual vote would be crucial. "It is very important for us because we are going to decide on the question of provisional government or government in exile. If we decide that, Indonesia will kill us," he said.

Jakarta said it is not bound by the outcome of the conference. President Abdurrahman Wahid, who renamed the province West Papua, has said that delegates are allowed to express their opinions peacefully, but has ruled out independence.

Yesterday's proceedings started two hours late because of security precautions. Congress sources said two people carrying handguns had tried to get past security on Tuesday.

Indonesian authorities have been unable to stamp out a low-level "Free Papua Movement" in the province, and years of harsh military rule under former President Suharto has created widespread sympathy for the rebels.

As on the first two days of the Congress, the Papuan "Morning Star" flag flew over the congress, flanked by the flags of Indonesia and neighbouring Papua New Guinea on smaller flagpoles.
 

Labour struggle

Workers strike for one day at Jakarta port

Jeremy Wagstaff, Jakarta -- Hundreds of Indonesian workers went on strike at Jakarta's main port, the first serious stoppage to hit the country's largest container terminal since Hong Kong- based Hutchison Whampoa Ltd. took over its management a year ago.

The eight-hour action at Tanjung Priok is the latest in a series of strikes by an increasingly vocal Indonesian labor movement, newly unshackled after years of authoritarian rule. In many cases -- such as a recent walkout at Sony Corp.'s Indonesian plant -- strikers are airing traditional labor concerns, demanding better working conditions and pay increases.

But in other cases, the strikes reflect more complex grievances: At Tanjung Priok, for example, strikers are demanding that state-run port operator PT Pelabuhan Indonesia II take back the 51% stake it sold to a Hutchison unit in March 1999. Workers claim the sale was illegal under Indonesian law. But a person close to Hutchison contends that Indonesian managers who corruptly benefited from past arrangements are trying to scuttle the company's efforts to run the port more professionally.

The stakes are high for both sides. Hutchison's deal allows its PT Jakarta International Container Terminal unit to manage two container terminals for 20 years, the first plank in Hutchison's strategy to turn Tanjung Priok into one of Southeast Asia's largest ports. That plan includes doubling the port's existing capacity and bidding for a 48% equity stake in PT Humpuss Terminal Petikemas, which operates an adjacent container terminal. Hutchison wouldn't confirm union claims the strike had caused two billion rupiah ($235,000) of damage. "Of course it's done a lot of damage," a person close to the company conceded.

Denting confidence

The strike may further dent investor confidence in the government's efforts to privatize state-run companies, or to sell off debt-ridden companies under the charge of the Indonesian Bank Restructuring Agency, or IBRA. Foreign stock-market investors have shown scant interest in the government's initial public offering of Bank Central Asia, partly because of growing political jitters about the country, which continues to be shaken by regional, religious and ethnic unrest.

Bomb blasts Sunday and Monday in the Sumatran city of Medan frightened investors into selling on the Jakarta Stock Exchange Monday, driving the composite index down 4.3%, or 20.68 points, to 461.39. Potential direct investors have also been lukewarm, in part, because of Standard Chartered Bank PLC's experience in the country last year. The British bank's attempted purchase of PT Bank Bali was aborted after strong worker protests.

The lack of investors is undermining Jakarta's efforts to raise 6.5 trillion rupiah this fiscal year to help finance the state budget.

State Enterprises and Investment Minister Rozy Munir said Monday that the government is considering selling some of its shares in the country's two leading telecommunications companies, PT Telekomunikasi Indonesia and PT Indonesia Satellite Corp., if it fails in its planned sale of eight state-owned companies. Those eight are: coal miner PT Bukit Asam, plantation companies PT Perkebunan Nusantara III and IV, fertilizer producer PT Pupuk Kaltim, pharmaceutical manufacturers PT Indo Farma and PT Kimia Farma, gold and nickel miner PT Aneka Tambang, and airport operator PT Angkasa Pusa II.

Hutchison faced problems even before Monday's strike. Serious rifts have emerged between the management team Hutchison brought in and local staff. Many of the Indonesian workers, including many senior managers, have been actively organizing since the port was taken over.

The strike leader, senior manager Abdul Razak, said earlier this month that workers didn't plan to strike because "we don't want to disrupt the port." Mr. Razak wasn't available to comment Monday.

Caught off guard

A person close to Hutchison said the company had been taken by surprise by Monday's strike. "They had been holding talks with the union, but were only informed of this strike at 7am this morning" just before the strike began, he said. Workers said they chose to stage the strike because it coincided with an invitation to appear before parliamentarians to discuss their grievances. "Coincidentally, the time is correct for us to demand other points," said Irma Suryani Chaniago, a staff member and secretary of the Communication Forum for the Labor Union.

Among their demands: the payment of bonuses workers said they are entitled to, and the removal of a clause in the original purchase agreement that, workers said, allowed for the dismissal of 20% of the work force. The person close to Hutchison said no such bonus or layoff plan existed, adding that the union was "trying to frighten workers." The strikers, who form about two-thirds of the container port's work force, returned to work by 3pm Monday. Ms. Chaniago said workers would strike again on or around June 5 if their demands aren't met by then.

[Special correspondent Rin Hindryati and Edhi Pranasidhi of Dow Jones Newswires contributed to this article.]
 

Human rights/law

Jakarta moves to prosecute rights abusers

Mark Dodd, Jakarta -- The Indonesian Government is taking a major step towards prosecuting those who committed the worst acts of violence around last year's independence vote in East Timor.

The Attorney-General, Mr Marzuki Darusman, will send a team of Indonesian experts to Dili within three weeks to take evidence relating to 12 acts of violence that occurred in the lead up to and immediately after the August 30 ballot.

Senior United Nations officials, who asked not to be named, told the Herald an advance team from the UN Transitional Administration in East Timor (UNTAET) would arrive in Jakarta next week to pave the way for the Indonesian visit to Dili.

Details of the agreement were reached following talks on Tuesday between Mr Darusman and, the visiting head of UNTAET, Mr Sergio Vieira de Mello. The Indonesian action has been welcomed by the UN mission in Dili. "It is in our interests that this investigation should be completed immediately and that cases then go before [an Indonesian] court," a senior UNTAET official said

"We are particularly interested in the Sander Thoenes' case, but there are other events which took place in Dili for which we are seeking more information."

Thoenes, a Dutch national, was a Jakarta-based reporter for the London Financial Times newspaper and was murdered by Indonesian troops in Dili on September 21 last year.

He was killed the day the Australian-led international force in East Timor arrived to restore order after several weeks of bloody violence, arson and looting that left more than 1,000 killed and millions of dollars worth of property destroyed or damaged.

Mr Darusman's department is also collecting evidence on 11 other cases, including the April 6 Liquica church massacre in which as many as 50 people, sheltering in church grounds, were gunned down or hacked to death by members of the Besi Merah Putih (Red and White Steel) militia.

Indonesia is under strong pressure from the international community to provide a clear and transparent investigation into the violence. The UN has warned Indonesia that if subsequent criminal proceedings are not totally impartial then it may hold its own East Timor war crimes tribunal.

The UN diplomats and human rights officials will be watching closely to see if the Indonesian investigation uncovers the role of senior Indonesian Army, police, intelligence and special forces commanders in instigating the violence.

In Geneva yesterday, aid agencies said a new spate of security incidents was hampering efforts to return East Timorese refugees to their homes from camps in Indonesian West Timor.

East Timorese and local residents at Tuapukan, the largest camp in the province, had been fighting each other with sticks, stones and knives over the past three days, a spokesman for the UN High Commissioner for Refugees said.

Overhaul will see `suspect' judges moved

Jakarta -- Indonesian judges suspected of graft will be transferred to remote provinces in a bid to overhaul the legal system after a series of dubious verdicts which have hit investor confidence, Justice Minister Yusril Ihza Mahendra said.

But the relocation of judges would not include those in commercial courts where bankruptcy suits are heard and which have been recently tainted by allegations of graft.

A new bankruptcy law introduced in 1998 in a bid to end the deadlock between debtors and creditors over the country's US$65 billion private debt burden has been ineffective in practice seemingly as a result of several dubious court decisions.

But Mr Yusril, in an interview with Reuters on Tuesday, denied the allegations, saying that "a few rulings cannot represent the system as a whole".

The International Monetary Fund has told Indonesia it must clean up its courts and improve the implementation of its bankruptcy law and has also demanded the use of "ad hoc" judges.

When President Abdurrahman Wahid came to power eight months ago, he said fighting corruption was at the top of his agenda. But many analysts say Indonesia's judicial system has remained untouched by political reform and there have been a string of embarrassing court decisions since Mr Abdurrahman was elected.

Mr Yusril said the country faced a shortage of "capable and clean judges" and added the government planned to set up a special school for judges. "We will only recruit the best pupils as the judges ... In a way it's kind of ridiculous because in this country you still have to do further study to become a notary public but not a judge. Human resources are basically our biggest obstacle," he said.

The government has also set out a five-year plan to revamp the legal system, including a planned hike in the salary of judges to try to curb corruption.

As for sending judges to the provinces, he said the government was in the middle of the process of transferring most of Jakarta's judges to other main cities, a move affecting between 50 per cent and 60 per cent of those now serving in the capital. At least 30 judges in Jakarta have been listed for transfer. They will be replaced by judges from other parts of Indonesia. There has been no comment from the judges and an official at the Justice Ministry said it had not received any protests from them.

Are recent investigations about justice or politics?

Jose Manuel Tesoro, Jakarta -- After two years of delays, false starts and even an outright cancellation, Indonesia's most- watched investigation is inching toward a conclusion. On May 19, Indonesia's attorney-general, Marzuki Darusman, announced that former president Suharto will be charged with corruption and abuse of power. The 78-year-old ex-ruler has been legally restrained from leaving the capital since the beginning of the month. On May 22, Darusman announced that the ex-president would be transferred to a state safe house to prevent further clashes between his security detail and protesters. Despite dithering on the economy and having to deny accusations of corruption within his circle, President Abdurrahman Wahid seems to have set a clear direction in at least one matter: exposing those responsible for past violations.

Since Wahid took charge, Jakarta has broken out in a rash of investigations. The Suharto inquiry had been revived last December after being halted in early October under Wahid's predecessor B.J. Habibie. On May 18, 24 soldiers and one civilian were sentenced to prison for their part in a massacre last July of an Islamic teacher and his students in Aceh. Two days earlier, the attorney-general's office had questioned former military chief Wiranto for seven hours. He was among 21 officers identified in late January as responsible for the violence before, during and after East Timor's August 30 referendum.

Meanwhile, since mid-February the national police have been looking into the 1996 government-backed attack on the Jakarta headquarters of the Indonesian Democratic Party (PDI) faction led by then-oppositionist and now Vice President Megawati Sukarnoputri. The inquiry has produced a steady stream of prominent officers and other figures summoned for questioning. Because of the investigation, two PDI officials and the chief of the shadowy Pancasila Youth paramilitary organization have each spent at least one night in prison. And then there is the National Human Rights Commission inquiry into the 1984 shootings of Muslim protesters in Jakarta's port district of Tanjung Priok. Among those summoned: retired intelligence chief L.B. "Benny" Murdani and former vice president Try Sutrisno, respectively armed-forces chief and Jakarta garrison commander at the time.

Before he became president, Wahid had often spoken of his commitment to establishing the rule of law in Indonesia. But Wahid would not be Wahid if by making a philosophical point he did not also win a political advantage. The investigations largely involve Suharto and the military. They thus keep potential, and powerful, rivals occupied and off-balance. The day he was grilled over East Timor, Wiranto confirmed that he would resign his position as a minister in Wahid's cabinet. (Officially, the East Timor case had resulted only in his suspension not dismissal.) Despite his publicly stated intention to pardon Suharto in exchange for some of his family's allegedly ill-gotten assets, Wahid has been pressuring Darusman to go after the ex-president.

In one recent meeting, says a source, Wahid chided the attorney- general for his inaction, pointing to his own decision to remove Wiranto. The president reportedly joked: Get him first -- "the law can come later."

One criticism lobbed against the investigations is that they are intended more to assuage popular demands, or achieve political ends, than to institute real justice. "If they are really serious," says Joncy Jonacta Yani, one of the victims of the 1996 raid on Megawati's party, "then the police headquarters would be empty because everyone was involved." As soon as the Aceh verdict was announced, human-rights activists were asking why high- ranking officers such as the regional commander or even Wiranto were not asked what they knew about the murders. The inquiries, says Australia-based Indonesia observer Arief Budiman, are partly intended "to accommodate political pressure." The biggest obstacle, he says, is "the weakness of the government.

The network of the old regime is still strong." More alarming is the absence of any investigation into economic infractions.

The same day Darusman announced he would bring charges against Suharto, his office revealed that it had stopped looking into the $1.18-billion Texmaco scandal. In December, Marimutu Sinivasan, the textile company's well-connected president-director, admitted to using millions of government pre-shipment credit to pay down debt and expand his business. As a result, exposure by state banks and the Indonesian Bank Restructuring Agency to Texmaco debt came to about $2 billion. In explaining the decision to halt the investigation, an official from Darusman's office said that "Texmaco has not been proven to have damaged state finances."

It is probably easier for Wahid to take the military to task, since there exists a broad, multipartisan consensus for getting the generals out of politics. But it is a lot harder for him and his government to bring to book businessmen and bad debtors, not least because many of them have been able to hang on to the money and assets that can be used to secure influence, as well as political or legal protection. Even in Wahid's investigation-mad Indonesia, justice may still depend on the right connections -- and the right politics.
 

News & issues

Plantation firms told to return disputed land

Jakarta -- President Abdurrahman Wahid, popularly known as Gus Dur, has instructed state owned plantation companies to return some 40 percent of land taken by force or bought at unfair prices from local people in the past.

Gus Dur said in a statement distributed following a late Monday cabinet meeting on the economy, that the plantation firms could return the land physically or provide shares to the affected people. According to the statement, the President stressed that this policy only applies to land which involves legal problems.

The statement said that the new government was aware that some of the land owned by state-owned companies or private companies had been seized unfairly from the people and had caused problems in the past.

It's no secret that many state enterprises and politically well- connected conglomerates had used force and intimidation to acquire land from people at prices far below market value during the previous authoritarian government of Soeharto.

The statement also said that Gus Dur supported efforts by the Minister of Mines and Energy Susilo Bambang Yudhoyono to "legalize" the illegal mining activities which were mostly conducted by traditional miners. "This will help avoid conflict between the people's mining and huge scale mining," the statement said.

Gus Dur has also agreed to demands from the West Sumatran people to spin off PT Semen Padang from the state-owned cement maker PT Semen Gresik on grounds that the former was built on heritage land.

The statement said that Gus Dur had ordered State Minister for Investments and State Enterprises Development Rozy Munir to make a valuation of Semen Padang's price to be used as a basis for negotiation with Mexico's cement maker Cemex SA de CV.

Semen Gresik owns up to 46 percent shares in Semen Padang. Cemex has a 25 percent stake in the publicly listed Semen Gresik. The company has plans to increase its Semen Gresik stake to around 40 percent.

The government had to drop plans to sell a majority stake to Cemex in 1998 following widespread protests from the West Sumatran people.

The President has also ordered the Coordinating Minister for Economy, Finance and Industry Kwik Kian Gie to study the "Blue Sky" project designed by the Ministry of Mines of Energy to help significantly reduce the lead content in fuel products. Gus Dur said that Kwik must also decide the source of financing and its mechanism for the project.

The cabinet meeting also concluded that the lending procedure for export oriented industries must be eased down in a bid to help recover the country's embattled real sector.

In an effort to boost the country's exports, Gus Dur has instructed Kwik and Finance Minister Bambang Sudibyo to coordinate with Bank Indonesia and the Indonesian Bank Restructuring Agency (IBRA) to seek ways to take advantage of some Rp 700 trillion worth of excess liquidity in the banking sector to help finance the export industries.

Police reluctant to act over attack on Solidamor

Jakarta -- As a result of his injuries, Coki Naipospos went to St Carolus Hospital for a medical report on his condition. Along with colleagues from PBHI, he took this report to the police but they refused to accept it because it was from a private hospital and told him to get a report from Cipto Mangungkusumo Hospital (RSCM).

Coki then went to the RSCM and while there, he recongised one of the attackers who was getting treatment. He immediately phoned Yeni at the Central Jakarta police station to tell her to urge the police to go immediately to the RSCM. They were slow to respond, but finally agreed to go to the hospital. When the group of eight policemen arrived at the hospital, they didnt seem to be interested in making any arrests although Coki said that, as a witness, he could testify that they had participated in the attack. After an hour during which the police still failed to make any arrests, Coki had to leave in order to make a report to the Central Jakarta police.

The police explained their reluctance to act, saying that they didnt wanted to make a wrongful arrest. Yeni who had remained behind at the hospital to urge the police to attack, reminded them that they had the powers to take people into custody for 24 hours.

Moreover, as she pointed out, the suspects at the hospital made no secret of their role, shouting to people that they were 'pro- integration East Timorese "who love the Republic of Indonesia". They poured abuse on Solidamor calling them "puppets of the CNRT and traitors to the nation".

In the end, after persistent pressure from Yeni, the police took away four men. Solidamor are not sure whether the men were held for investigation or set free.

The next day, 25 May, Coki, Yeni, Tri Agus, and Andryanto with a team from the PBHI visited the national chief of police, General Rusdihardjo to deliver a very strong protest about the attack on the Solidamor office, and expressing their concern at the lack of seriousness on the part of the Central Jakarta police in pursuing the investigation. Solidamor regards this as a very important test case for the Indonesian government to give proof of their willingness to pursue investigations of those involved in the events in East Timor following the ballot last year.

The attack on the Solidamor office was carried out in the same pattern as the acts of violence carried out by the militia/TNI in East Timor following the ballot last year. It was an attack by pro-integration people against pro-independence people, a physical attack aimed at destroying all the contents or carrying off whatever they could take. The only difference was that when attacking the Solidamor office, they took care to carry off all the printout files and disks they could lay their hands on.

It's a very straightforward case, Some of the attackers are now in the hands of the police, evidence is easily available, the men have made no secret of their involvement, and have been identified by Coki as a witness. If the police fail to investigate this case thoroughly, we will have to question the seriousness of the police to investigate the far more serious cases involving Indonesian generals and militia leaders.

Solidamor urges human rights activists around the world to press the Indonesian police to investigate the cases of the four men arrested as the Cipto Mangunkusumo Hospital and to investigate the attack. If these clearly identifiable men are allowed to go free, what can we expect will happen to top generals like General Wiranto.

Indonesia bans 128 bankers from traveling abroad

Edhi Pranasidhi, Jakarta -- The Indonesian government has extended a ban on 128 bankers and shareholders of closed banks from traveling abroad, according to a decree signed by Finance Minister Bambang Sudibyo, which was released to the media Monday.

The travel ban was extended for another six months, effective from May 15, in a bid to assist the investigation of government loans to private banks and ensure the bankers repay money owed to the government, the decree said. The decree was signed earlier this month. The previous six-month ban started November 1999 and ended April 21.

Among the 128 bankers and bank owners banned from traveling abroad are Bank Danhutama owners Sofyan Wanandi and The Nin King, Bank Indonesia Raya owners Atang Latief and Kaharudin Latief.

Others included in the ban are Al Njo Koh Kiong, the owner of Bank Papan Sejahtera and Anwari Surjaudaja, the owner of Bank Hastin.

Sofyan Wanandi is currently the chairman of the National Council for Business Development, which advises President Abdurrahman Wahid on finance and business issues.

During the past three years Indonesia has closed more than 50 private financially-ailing banks.

Mobs storm, vandalize hotels and discotheque

Jakarta -- Angry mobs raided and vandalized two hotels at separate locations in East and West Jakarta over the weekend, claiming both establishments offered the services of prostitutes.

Another crowd of angry residents in North Jakarta staged a rally in front of a discotheque in Pejagalan, demanding the owner lower the sound of the disco's sound system and close for business on Thursday nights and any other religious days.

No fatalities were recorded, although both hotels suffered serious damage after the mobs pelted the windows with stones and bricks and damaged parts of the buildings.

The first incident took place on Saturday night at Sofyan Rensa Hotel in Duren Sawit, East Jakarta, when some 200 locals raided the one-star hotel, alleging the hotel was also used for prostitution practices.

According to an eyewitness, the mob suddenly appeared at the site at about 11pm and hastily pelted the front doors and windows with stones. "Some of them managed to enter the hotel. They, however, fled at the arrival of the police," said the witness, a kiosk owner who has been running his business across the street from the hotel for several years. "As far as I'm concerned, this hotel has never been involved in such illegal [sex] practices," he said.

The hotel owner could not be reached for comment, but according to a staffer, the hotel -- the facade of which is in the style of West Sumatra's Minangkabau traditional Rumah Gadang house -- does not even sell alcoholic beverages. "We only provide standard one-star facilities, like a restaurant and 25 rooms," he said.

According to the police report, the residents were led by local Muslim leader K.H. Mustapa. No one was arrested in the incident.

On Sunday afternoon, hundreds of people ran amok at Pondok Hijau hotel in Kebun Jeruk. According to the mob, the place was closed down by the local authorities on April 11 for running such an illicit business.

The management, they claimed, resumed their business and hired bodyguards to escort the guests. The mob shattered the windows, removed roof tiles and scrawled "Tutup" [closed] across the hotel's signboard at the front gate.

The crowd left the scene upon the arrival of the local police. The hotel's staff could not be reached for comment.

At the Omega Discotheque on Jl. Jembatan II in Pejagalan, a crowd of some 100 people staged a protest in front of the discotheque at about 10pm on Saturday, asking the owner to respect the religious activities of the locals, the police said. The crowd dispersed peacefully four hours later after negotiating with the owner.

Protests upset Kalimantan oil firms

Jakarta -- Protests against oil and gas operations in East Kalimantan could escalate if gas company Vico Indonesia Ltd fails to settle its dispute with locals, a senior official at state oil and gas company Pertamina said on Saturday.

Spokesman of Pertamina's Foreign Contractors Management Body (BPPKA) A. Sidick Nitikusuma identified gas companies Unocal Indonesia and Total Indonesie as vulnerable to demonstrations.

Local residents have rallied against Vico for several weeks, demanding the company pay compensation for damage they accuse it of causing to their farms. The residents have blocked the access road to Vico's Serambah production plant in Kutai regency. "The blockading activities may spread to other companies," Sidick said.

Vico, Unocal and Total are Pertamina production sharing contractors that deliver gas to the Bontang liquefied natural gas (LNG) plant in East Kalimantan.

Sidick said that if Vico failed to negotiate an end to the blockade, it might encourage other locals to occupy the gas fields of Unocal and Total to make similar demands.

The dispute between the locals and Vico centers around claims the company's production activities affected the fields of local farmers. Locals filed the claim in 1998, demanding compensation of Rp 86 billion (US$10 million) for losses since Vico began operating in 1991, Sidick said. Negotiations led to a reduction of the amount to Rp 7 billion.

He said Vico accepted the reduced demand, but talks were still under way concerning the terms of payment. The locals, he said, demanded the money be paid in cash. Vico wished to compensate the farmers through community development programs.

Sidick said that a compromise agreement could entail partial payment in cash and community development programs. Vico's gas production activities continued as normal, he added.

He warned that environmental concerns and land compensation demands were possible triggers for demonstrations at other gas companies. "The trend is that locals quickly resort to using the masses in pressuring companies," Sidick said.

Vico is not the only company in East Kalimantan to experience pressure from the public. Gold mining company PT Kelian Equatorial Mining stopped operating since last Month after locals blocked the only supply road leading to its mine in the West Kutai regency.

Disputes between mining companies and locals have been on the rise since president Soeharto's resignation in 1998. Sidick said disputes in the past usually did not involve mass groups of people and companies would hold talks with local representatives to find solutions. He said the tendency for people to resort to mass actions was evidence they suppressed their demands for many years. "They're impatient now," he said.

Meanwhile, Minister of Mines and Energy Susilo Bambang Yudhoyono said the central government would not intervene in the dispute. He expected the provincial administration of East Kalimantan would facilitate talks between the two parties. "But don't let there be any pressure while negotiations are still under way," he told reporters last week. He believed the dispute would not affect the general investment climate as long as negotiations took place.

Update on Solidamor attack in Jakarta

London -- The Solidamor chair, Coki Naipospos sustained injuries all over his body and suffered wounds on his wrist and forehead. When the attack started, he grabbed hold of a laptop to shield his face from being beaten with sticks and stones. Sapollo was kicked and beaten and was badly bruised . He was taken to hospital for an x-ray. The two other members of Solidamor who were in the building at the time suffered minor injuries.

The material damage is estimated at around 100 million rupiahs (well over $10,000), not including Rp18 million in the cash-box and the Rp1.9 million stolen from Sapollo, the East Timorese who works in the Solidamor office. The attackers also broke into a large box containing documents. Solidamor still has to work out which documents are missing.

There are reasons to believe that the attackers are from the same group which recently launched an action at the MPR (People's Congress) and was responsible for the three-day occupation of the Komnas Ham (National Commission of Human Rights) office. They include some of the Timorese whose names are listed in the KPP Ham report as perpetrators of last year's violence in East Timor.

Recently, Eurico Gutteres, the notorious Aitarak militia leader who is now based in Kupang, was interviewed by El Shinta Radio. He vehemently denied that this group in Jakarta is under his command. He said that they were formerly members of Aitarak but had defected and were now under the control of Yohannes Yacob, one of the lawyers acting for "Big Daddy" Suharto. They are currently based in a transmigration transition camp in Kali Malang, in the centre of Jakarta.

Two people have been arrested and Solidamor has called on the authorities to keep them in custody until the investigations are complete. Yesterday, members of Solidamor along with Hendardi from PBHI had a meeting with General Rusdihardjo, the National Chief of Police, to demand that there be a comprehensive follow- up of this case. Polda Metro Jaya, the Jakarta Metropolitan Police, will handle the case from now on.

People in the neighbourhood were taken by surprise by the suddennes of the act and were rather slow to react. But when the attackers started trying to burn down the building, they stepped in and were able to prevent further damage. Our friends estimate that between 40 and 50 people were involved in the attack on the Solidamor office.

The attack was reported by all the main newspapers as well as on TV. It was not the lead item however because student protests have escalated in the past two days. Demands for Suharto to be put on trial have intensified and there was a major clash today between the students and the security forces, during which teargas was used. Six army vehicles were reportedly burned by the students.

Apart from tidying up the front room, the Solidamor office has been left as it was after the attack so as to be seen by the press and the authorities. The phone is still working, the fax machine was damaged and it will probably be possible to repair one of the computers. We think that the solidarity movement worldwide should start raising money to help pay for the damage sustained by our friends in Solidamor.

The Solidamor staff will start functioning again on Monday 29 May and they wish to convey their thanks to everyone worldwide for their expressions of concern and messages of solidarity.
 

Arms/armed forces

US excluding army from resumed military aid

Jakarta -- Minister of Defense Juwono Sudarsono confirmed on Friday the United States did not include the Army in the gradual normalization of military ties with Indonesia because of a lot of "unfinished business".

Juwono told reporters that while other military services were being approached by the US, the Army was not included in joint military training or support because it was still under scrutiny in many incidents.

"Frankly speaking, the Army has been in the spotlight lately because of too many problems," Juwono said. The Army has been accused of involvement in most alleged human rights abuses across the country.

The US earlier this week signaled it was taking preliminary steps which could lead to normalization of military ties which were suspended following the mayhem in East Timor in September.

Juwono said full military ties could be resumed only if the Indonesian government managed to settle East Timor border problems and with an improvement of civilian supremacy over the military.

"The Indonesian Navy and National Police in the near future will receive several [types of] support from the US government," Juwono said, adding the realization would be next month. The support will mainly cover the purchase of military equipment and spare parts.

"Besides military equipment, for the National Police there will be training, especially on human rights issues," he added. The training for the police will focus on the establishment of a responsible and accountable judicial system for criminal and human rights abuses cases, Juwono said.

Juwono explained that joint Air Force exercises could be held in late July, perhaps in the Maluku islands. "Hopefully, the US will consider helping the Air Force and the Army in the next two or three months."
 

Economy & investment

IMF approves loan to Indonesia

Martin Crutsinger, Washington -- The International Monetary Fund on Friday gave approval for a $372 million loan to support economic reform efforts in Indonesia.

The decision by the IMF's 24-member executive board came after a review of the country's recent actions to meet IMF-imposed economic conditions.

In a statement, IMF First Deputy Managing Director Stanley Fischer said the international lending agency "welcomed Indonesia's recent progress in implementing fiscal and structural reform measures."

IMF support for Indonesia had been suspended after the government failed in March to meet a deadline set by the agency to achieve various targets designed to restore growth and stability to the economy. The loan suspension put on hold further disbursements from a $5 billion assistance package the IMF has offered to Indonesia.

In April, Indonesian President Abdurrahman Wahid fired two key financial ministers after receiving a warning from Fischer that the country should guard against backsliding in its reform efforts.

Indonesia was one of the hardest-hit countries during the 1997-98 Asian financial crisis. The $372 million loan approved Friday would bring to $715 million the total loans the IMF has extended out of the $5 billion package.

New IMF Managing Director Horst Koehler is currently on a five- nation tour in Asia and is scheduled to meet on Sunday with Wahid.

Fischer said in his statement that recent market turmoil in Indonesia and declines in the value of the rupiah, the nation's currency, "underscore the need for clear and consistent implementation" of economic reforms.

"Critical priorities are the restoration of a sound banking system and resolution of the overhang of corporate debt," Fischer said.

The legacy of IMF and World Bank rule

Max Lane -- The role of the International Monetary Fund in determining economic policy in Indonesia came under the spotlight after the 1997 economic crisis. In the wake of the crisis, the Suharto, Habibie and then the Wahid regimes surrendered virtually all sovereignty over government economic policy to the IMF.

However, the Washington-based international financial institutions dominated by the US and other imperialist governments have exercised great control over the Indonesian state's economic policies since 1966.

Throughout the 1950s and early 1960s, the Indonesian economy faced a crisis caused by the sudden drop in the world market price for natural rubber, at that time the country's main export. The US and the World Bank seized on this "opportunity" and lobbied the left-wing Sukarno government to receive a delegation from the World Bank. The delegation offered substantial loans to Indonesia conditional upon the implementation of severe austerity measures and the denationalisation of the previously foreign-owned sector the economy.

The World Bank package was rejected and President Sukarno confronted the US ambassador before a mass rally in Jakarta with the cry: "Go to hell with your aid!".

In September 1965, General Suharto led a military coup and in 1966 reversed all the nationalisation measures of the Sukarno government. In October 1966, he adopted a "stabilisation plan" formulated with the "assistance" of the IMF.

The IMF insisted on the abolition of all discrimination against foreign investment and all preferential treatment for the public sector. It also demanded the abolition of the system of controls on foreign exchange that had existed under Sukarno, as well as a limit on government expenditure of no more than 10% of national income.

As part of gaining the IMF's "assistance", Suharto introduced the Foreign Investment Law in 1967. This gave foreign investors a five-year tax holiday and an additional five years of tax discounts.

Control over the Suharto regime's economic policies was exercised by the IMF and the World Bank through the Intern-Governmental Group on Indonesia (IGGI). This body emerged out of discussions in 1966 among Indonesia's debtors. By 1967 it included the United States, Japan, West Germany, Britain, the Netherlands, Italy, France, Canada, and Australia, as well as the IMF and the World Bank.

Each year, the World Bank prepared a "Report on Indonesia's Recent Performance" which was discussed at an IGGI meeting where representatives of the Indonesian government were also present. A few months after that examination, a second IGGI meeting would be held to assess how much "aid" (i.e. loans) would be provided to Indonesia.

Between 1967 and 1997, all the governments and institutions involved in the IGGI declared that the Suharto dictatorship had created a "miracle economy". This illusion was shattered by the massive economic crisis of 1997. The horrible vulnerability of the Indonesian economy to this crisis was a direct result of 30 years of IMF and World Bank control.

During this whole period, the IMF and World Bank ensured that the Indonesian economy was as open as possible to the dictates of the Western and domestic financiers, with more and more deregulation and privatisation. The only "market distortion" that the IMF and World Bank weren't able to vanquish was the Suharto regime's enrichment of the "first family" and its cronies.

At the same time, the whole economy was built up as fundamentally export-oriented with little investment in developing production to meet the needs of the Indonesian people.

When it became clear to the Western investors that, in a world capitalist economy addled with structural overproduction (overcapacity), the "Asian tigers" could not sustain their previous high levels of export growth, they pulled their money out, precipitating the 1997 Asian economic crisis.

Indonesia was the hardest hit by the 1997 crisis, which has thrown tens of millions of people below the poverty line. But what policy solution has been imposed on Indonesia by its economic masters in Washington? Cutbacks in government social spending, deregulation of economic activity and privatisation of the public sector.

That is, more of the same "remedies" that helped lead to the economy's collapse in 1997-98.

How the IMF feeds graft and corruption

Pip Hinman -- The Seattle and Washington protests against the International Monetary Fund (IMF) and World Bank (WB) have forced their chiefs into damage control. But despite all the PR bunk about the IMF and WB's "non-interference" in national economies, and their "pro-development" and "anti-poverty" agendas, the impact of their interference in the Third World is hard to hide.

Indonesia is perhaps one of the most devastating examples. For more than 30 years, the IMF and the WB helped to prop up -- economically and politically -- General Suharto's rule. It was only when the country was on the brink of economic collapse and a growing mass movement was about to shaft the dictator that the IMF suspended operations -- and then only temporarily.

What has been the impact of the IMF and WB in Indonesia? The IMF was set up in the wake of World War II as a distinctly anticommunist institution. Its purpose was to supervise the capitalist reconstruction of Europe and, from the outset, it established the right to intervene directly into other countries' economies.

The IMF protests that it does not interfere in countries' economic decisions, but reality shows otherwise. Its board, made up of government financial advisers from capitalist nations, makes decisions about borrowing countries' macro- and micro- economic policies, down the smallest detail, as all loan agreements reveal.

The IMF is an inherently undemocratic institution. Its one dollar-one vote decision-making system gives the United States, which has 20% of the votes, the biggest say in lending policy. Of 182 member countries, the nine most industrialised wield 56% of the votes within the IMF's group of 24 administrators.

The WB works closely with the IMF, receiving advice on how much to lend and on loan conditions. It works in a similarly undemocratic manner, with the richest imperialist countries having the biggest say. Both institutions appoint country managers, but neither they nor the institutions themselves are answerable to the countries that are placed under structural adjustment programs (SAPs).

SAPs, responsible for the de-development of Latin America and Africa, set out in considerable detail the neo-liberal austerity program that the borrowing government has to implement. For instance, in return for relatively low-interest, long-term loans, the Indonesian government has pledged to slash the social budget, privatise state assets, recapitalise insolvent banks, reduce tariffs, maintain low wages and continue the export-oriented character of the Indonesian economy. Contrary to the "growth miracles" and "export booms" that are supposed to have happened in Latin America and elsewhere, such austerity programs have brought greater poverty, more disease and less development. As Cuba's President Fidel Castro put it at the Group of 77 meeting in Havana on April 12: "After World War II, Latin America had no debt, but today we owe almost US$1 trillion. This is the highest per capita debt in the world. Also the difference between the rich and the poor in the region is the greatest world-wide."

IMF in Indonesia

From 1945 to the 1960s, the nationalist Sukarno government had rejected WB and IMF interference. This resulted in an economic blockade which, together with the collapse of the rubber export industry and the resulting economic and political crisis, forced a change of policy.

Indonesia joined the IMF in 1967, shortly after Suharto seized power in a bloody coup. Suharto looked to the WB and the IMF to assist in the stabilisation of capitalism in Indonesia.

The WB started lending money to the Suharto regime in 1967 and to date it has lent US$25 billion. For some 30 years, right up until the economic crisis hit in mid-1997, the IMF and WB helped the Suharto regime to transform the economy from a people-oriented to an export-oriented one.

The small producer sector was all but destroyed and the country became dependent on importing rice and other basic commodities. Yet, under Suharto, Indonesia was considered a model of development success and the dictator was lauded as the "modern" leader.

Selective economic data was highlighted in the regular country reports, along with unusually optimistic growth reports. Meanwhile, a blind eye was turned to the generals' rampant corruption, cronyism and nepotism.

Even in 1998, after the onset of the economic crisis, the WB predicted that the Indonesian economy would become the fifth largest in the world by 2020. In 1998, the country's economic output contracted by some 16%, the largest single year collapse recorded anywhere in the world. Tens of millions of workers were sacked, tens of millions more were forced into poverty and now, two years later, there are still no signs of real growth.

Time magazine last year estimated Suharto's wealth at US$15 billion. But this estimate is conservative given that the assets of the extended Suharto clan are not taken into account. According to researcher Dr George Aditjondro, the figure is closer to US$100 billion -- half of Indonesia's current public and private debt of US$200 billion -- and more than the private debt of US$65 billion.

How on earth could one man and his extended family have stolen so much over so many years if not for the help of close friends such as the IMF and WB?

When it became clear in 1998 that the economic "contagion" was going to spread from Thailand to the rest of Asia and beyond, and that the Indonesian economy was already in ruins (some 50% of businesses were on the verge of bankruptcy), the IMF temporarily suspended its program with Indonesia. The previous January, Jakarta had signed a US$43 billion "rescue" package designed to protect the corrupt government.

As one senior IMF bureaucrat put it: "The grim reality of zero growth, 20% inflation and the fact that fuel subsidies are going to be removed will be hard for local people to swallow. But the foreign investors will be relieved."

As it turned out, the Indonesian people did not swallow it. The 17% fuel price rise, the result of a subsidy cut, sparked the mass demonstrations across Indonesia which only ended when Suharto stepped down on May 21. A new arrangement with the IMF was brokered the following August.

Cronyism

Reports from the independent Indonesia Corruption Watch (ICW) group, which is investigating the extent of Suharto's corruption and cronyism, and the WB and IMF's complicity, indicate that some 20-30% of all development aid was siphoned off by Suharto and his cronies. The fact that loans for specific projects were given directly to the central government, which doled out contracts on the basis of political connections, facilitated the corruption.

One example from ICW is illustrative. A WB loan of US$255 million was promoted as a sub-district development program to improve the living standards of 20,000 villages. But apart from the application of some fresh paint and a few streets cleaned up, the benefits went to the paint brush suppliers who, in most villages, were relatives of government officials. With a 25% mark-up, the suppliers made a tidy sum.

ICW says WB officials knew of such problems for years but until the economy collapsed, they reasoned that the benefits greatly outweighed the graft.

The IMF is now leading another US$45 billion "rescue package". The first tranche (US$349 million) of a three-year US$5 billion loan was delivered in February. The second tranche (US$400 million) was delayed from April to early June as concerns mount about the ability of the Abdurrahman Wahid-Megawati Sukarnoputri government to restructure corporate debt and clean up the notoriously corrupt banking sector and court system.

To date, the Wahid government has lost a string of court cases against business people tied to the former regime. One prominent case was against Marimutu Srinivasan of Texmaco, a textile manufacturing company, who refused to repay debts to the state.

In another, prosecutors lost their case against Djoko Chandra, a fundraiser for the former ruling party, Golkar, despite evidence that Chandra had illegally channelled US$80 million away from the insolvent Bank Bali. This was followed by a court victory for former Bank Bali owner Rudi Ramli, who regained control of his bank from the government despite admitting that he made the payment to Chandra.

Given the Suharto legacy and political enmities within the Wahid cabinet, it's hardly surprising that progress on eliminating corruption has been negligible. Not that Wahid should be let off the hook; he is as mixed up in nepotism and cronyism as the leadeers of the rest of the five major governmental parties. Wahid's recent sackings of two leading economic ministers, one from the Indonesian Democratic Party of Struggle (PDI-P) and the other from Golkar, was seen as an attempt to stifle accusations about his own cronyism.

Whatever the reasons behind the economic ministry reshuffle, it's clear that the government is pursuing the same neo-liberal economic program as its predecessors. However, Wahid is attempting to mask this by whipping up nationalist sentiment and focusing on "national unity" and "reconciliation".

Against the advice of the US, Wahid attended the G-77 meeting in Havana in April and spoke of the need for greater South-South collaboration. He is also courting governments belonging to the Gulf Cooperation Council (Brunei, Iran, Malaysia, Singapore and Yemen).

But in return for IMF support, and in response to growing pressure at home, Wahid has to at least be seen to be trying to put things in order. The investigation into Suharto's foundations, the trial of lower-ranking officers in Aceh, the investigation of the military's role in East Timor last year, and other human rights inquiries such as the military's attack on the PDI offices in 1996, serve to shift the focus away from the persistent economic problems.

Whether the generals and cronies end up being bought to justice will largely depend on the pro-democracy movement and their international solidarity supporters.

People's opposition The latest IMF austerity program -- which will double the Indonesian people's cost of living -- comes on top of the economic crisis bought on by 32 years of corruption, cronyism and nepotism. Already, the United Nations estimates that one-third of all Indonesian children are malnourished, TB is on the rise, as are other curable diseases, and these statistics look set to worsen.

Since coming to power, Wahid has cut subsidies to essentials including rice, electricity, fertiliser and cigarettes. Phone and postal rates will rise in June, to be followed by a fuel price hike. Education fees have risen by 300% (even before the economic crisis, 80% of the population had received less than six years of schooling).

The lion's share of the IMF loan is being spent on propping up insolvent banks. A fire sale of state assets is also planned; bankrupt state enterprises will be sold off for a song to one or other government crony and, with the help of the IMF and WB, be made into profitable enterprises.

But the government faces a struggle to get its anti-people program implemented.

While the five main governmental parties (National Awakening Party, Star and Crescent Party, National Mandate Party, PDI-P and Golkar) agree with the neo-liberal program, they are squabbling about proceeds and timing while also trying to insure themselves against the inevitable political fall-out.

The People's Democratic Party (PRD) is the only party to lead an opposition movement to Wahid-IMF rule. A young party which has no parliamentary resources, the PRD has nevertheless made national headlines with its extra-parliamentary campaigning against the subsidy cuts and for its alternative people-friendly economic policy.

The party launched its opposition program on February 21 and has been organising with workers and students against the price rises. Its chairperson, Budiman Sudjatmiko, has received national coverage for the party's alternative economic program, which includes: cancelling the debt (now equal to some 93% of gross domestic product), nationalising Suharto's assets, cutting the military budget, increased funding for social programs, cleaning up corruption without privatising state assets, and no funds for insolvent banks.

Together with students from the Indonesian National Student League for Democracy (LMND) and workers from the Indonesian National Front for Labour Struggle (FNPBI), the PRD has been the main organiser of "the parliament of the streets" -- on April 1, when some prices went up, and on May Day. Their actions forced the government to delay the fuel rise. These are the people on the front line of the struggle against the IMF and WB.

Their livelihoods, and those of 210 million others, depend on their ability to develop and strengthen the pro-democracy movement.

We have reason to be optimistic. During the 1990s, a mass movement strong enough to overthrow the Suharto dictatorship politicised the whole of Indonesian society, preparing the way for the bigger and more radical struggle that is now needed.

Our assistance to the forces on the front line of the anti-IMF campaign is critical.

The Seattle and Washington protests alerted the world, once again, to the barbarity of the IMF and WB. Just as importantly, they highlighted the failure of the private-profit system to meet people's basic needs.

We should take up Fidel Castro's call to replace the IMF. He said: "A financial system that forcibly immobilises such enormous resources, badly needed by the countries to protect themselves from the instability caused by that very system, should be removed. The IMF is emblematic of the existing monetary system.

"Of crucial importance is for the Third World to work for the removal of this sinister institution [the IMF], and the philosophy it sustains, and replace it with an international financial regulating body that operates on a democratic basis, and in which no one country has the right of veto. An institution that would not just defend the wealthy creditors and impose interfering conditions, but would allow the regulation of financial markets to arrest unrestrained speculation."

Here in Australia, the campaign has to force the Coalition government to turn its $1 billion contribution to the IMF's Indonesian rescue package into a grant. The Australian government representative on the IMF board should be pressured to oppose the imposition of any austerity, deregulation or privatisation measures as conditions for grants or loans from the IMF.

The Australian government should also increase its humanitarian aid package to Indonesia, sever military ties with Indonesia and pressure the United Nations to conduct an international war crimes tribunal to try the generals responsible for last year's carnage in East Timor.

[This article is based on a talk presented to the Sydney University Action in Solidarity with Indonesia and East Timor club. Pip Hinman is the national secretary of ASIET.]

10 firms prepared for privatization

Jakarta -- Ten state-owned companies have been put on a primary list for privatization this year, according to an updated master plan to be issued by the Office of the State Minister of State Enterprises and Investment.

The companies are coal mining firm PT Tambang Batu Bara Bukit Asam, plantation firms PT Perkebunan Nusantara III and PT Perkebunan Nusantara IV, pharmaceuticals PT Indo Farma and PT Kimia Farma, fertilizer producer PT Pupuk Kaltim, general mining firm PT Aneka Tambang, airport operator PT Angkasa Pura II, surveyor PT Sucofindo and trading company PT Kerta Niaga.

"Stakes in these companies will be sold transparently through public offerings or direct placement to strategic partners," the office said in a statement. It said preparations for the sales were now well advanced with several underwriters, financial and other advisers already appointed.

The sales of the companies are expected to raise about Rp 6.5 trillion (US$812 million) to help fill the deficit in the state budget. If the proceeds from the sales of the companies' shares do not meet the target, the government has identified nine other state companies as candidates for the rapid privatization program to be held also this year. The office acknowledged that its privatization program in previous years fell short of targets.

The nine companies which have been put on the standby list are PT Telkom and PT Indosat, retail store PT Sarinah, hotel management company JIHD, mining company PT Tambang Timah, strategic industry holding BPIS, fertilizer producer PT PUSRI and hotel and office operators PT Wisma Nusantara and PT Perhotelan dan Perkantoran Indonesia.

The office also said that the government attached particular priority to the restructuring and privatization of the telecommunications sector in a bid to attract massive new investment to help the companies extend their coverage, range and quality of services as well as maintain their international competitiveness.

An inter-ministerial team has been formed in order to guide and oversee the preparation of a detailed action plan on the restructuring and privatization of the telecoms sector.

It said the Ministry of Communications was now working to finalize the implementing regulations for the new Telecoms Law, which would be effective in September. "The Ministry of Communications is also working to establish a medium term tariff policy and improved regulatory arrangements," it added.

It said it was now in the process of finalizing revisions to the master plan for the restructuring and privatization of the state-owned companies. The updated master plan, which sets out the government's goals and policies on restructuring and privatization, will be launched by the end of June.