Aceh

US, donors call on Indonesia to pursue peace in Aceh

Jakarta Post - May 17, 2003

Jakarta -- United States President George W. Bush welcomed on Thursday a decision by the Indonesian government and Aceh separatist rebels to hold weekend talks in Tokyo in a last-ditch effort to save their peace pact.

"The United States strongly supports efforts to pursue a negotiated peace in Aceh within the framework of a unified Indonesia," Bush said in a statement released by the White House. "I commend [Indonesian] President Megawati [Soekarnoputri] for demonstrating her government's commitment to the Aceh peace process and for her willingness to go the extra mile in pursuit of peace."

The Free Aceh Movement (GAM) said their exiled top leader, Hasan Tiro, would leave Sweden for Tokyo to monitor the talks but would not attend the meeting, AFP reported.

President Megawati Soekarnoputri delayed on Thursday the imposition of martial law in Aceh, which would allow the military to launch an operation to crack down on the rebels, to give GAM another chance to return to the negotiating table in Tokyo.

The government had set a May 12 deadline for the rebels to resume talks under the preconditions of their acceptance of the unitary state of Indonesia and disarmament. GAM said it would accept dialog only after the deadline passed.

Indonesian officials said preparations for a military operation in the natural resource-rich province, which would involve between 40,000 and 50,000 troops, would continue. It would be the largest deployment of troops ever in Indonesia's history.

"I call on the leadership of GAM to renew its commitment to a peaceful solution in Aceh and for both sides to pursue good faith implementation of the December 2002 Cessation of Hostilities Agreement," Bush said, referring to the peace agreement signed by Jakarta and GAM on December 9 last year in Geneva.

International donors grouped in the Tokyo Preparatory Conference on Peace and Reconstruction in Aceh have kept up the pressure on both Indonesia and GAM to avert a breakdown of the peace process in the province.

The group, comprising the European Union, Japan, the US and the World Bank, called for the continuing commitment of Jakarta to solve the question of Aceh through dialog.

"We call on the Indonesian government and the Free Aceh Movement to make every possible effort to revive dialog and restore peace. To that end, we call on the two sides to hold a Joint Council meeting, as provided under the terms of the Cessation of Hostilities Agreement, or an informal session to prepare for a Joint Council meeting, in Tokyo as soon as possible," the donors said in a statement on Wednesday.

The donors hope the two sides at the meeting reach a consensus to revive the agreement and return Aceh to a state of peace based on special autonomy. The donors added that they remain willing to continue to support the Cessation of Hostilities Agreement and to provide assistance for the future reconstruction of Aceh if peace prevails.

Thousands of Acehnese ready to take refuge

Jakarta Post - May 17, 2003

Nani Farida, Lhokseumawe -- Despite the apparent normalcy, hundreds of thousands of residents of North Aceh, a stronghold of the Free Aceh Movement (GAM), are preparing to flee their villages and take refuge if the government launches a military operation.

Last week, when President Megawati Soekarnoputri ordered the military to prepare for operations to quell the separatist movement, some locals remained skeptical and others were confused about what they should do.

"Now most people have packed up their belongings to take with them to the refugee camps. Even more, most of the houses in the villages where rebels were hiding have been vacated. The situation looks normal but the people are anxious about the possibility of war.

"Thousands of people have joined thousands of others already taking refuge in the Grand Mosque and a school in Bireuen," Maryani, an elementary school teacher in Simpang Keuramat, North Aceh, told The Jakarta Post here on Friday. She added that many people had left for North Sumatra and Java to join family members there because of the uncertainty in the regency.

Mariani said she regretted that the government and the international community had not listened to the Acehnese people's urgings that a peaceful solution to the Aceh question be found, adding that the people would be the victims of war. "GAM and the military should fight their war in unpopulated areas because the people just want to live in peace. Many people are living in fear and they are still traumatized from the previous military operation in the 1990s," she said.

The 35-year-old Mariani said a new military operation would create another lost generation in the province, with education being halted and schools being devastated. "We are now seeing tens of thousands of children who did not go to school and who are illiterate as a result of the last war. More and more children will be deprived of a formal education and more Acehnese will be expelled from their homes if a new military operation is launched," she said.

She called on Megawati to listen not only to her aides and foreign countries but also the people of Aceh, who are fearful of being expelled from their homes and having their lives devastated.

Teuku Usman, who along with his family and neighbors in Takengon, Central Aceh, has taken refuge in Banda Aceh, the capital of Aceh province. He is still hopeful the problems in the province can be solved peacefully, ending the suffering of the people.

"We don't know where we will go because our houses have already been burned down by unidentified people. We call on the people of Banda Aceh to allow us to stay here for a while until we can find someplace else to go that is safe," he said, adding that the refugees had already moved to three different mosques in the city.

The government has deployed hundreds of soldiers along the border between Aceh and North Sumatra to prevent rebels from infiltrating the neighboring province.

North Sumatra Governor T. Rizal Nurdin said there were already about 11,000 Acehnese refugees in the province, and that he had instructed his aides to prepare for more refugees if a military operation was launched. There are also thousands of Acehnese living in Riau after having fled previous violence.

Jakarta and Aceh rebels willing to hold last-ditch talks

Agence France Presse - May 15, 2003

The Indonesian government and Aceh separatist rebels said they are willing to hold talks in Tokyo on Saturday to avert a return to war in the province.

Sofyan Ibrahim Tiba, a senior official of the Free Aceh Movement (GAM), said there had been "a breakthrough" in talks between GAM's exiled leadership in Stockholm and foreign mediators.

The offer of new talks followed an emergency late-night meeting between the US, Japanese and European Union ambassadors and top security minister Susilo Bambang Yudhoyono, the minister's secretary Harsanto told AFP.

He said the government wanted a meeting held in Tokyo by Saturday at the latest. "We asked for the 17th because the date cannot be backed up any more," Harsanto said.

GAM's military spokesman Sofyan Dawood said in a statement the meeting is "not the result of a kind Indonesian heart" but of "international community pressure." Dawood said the Tokyo meeting would last until Sunday.

The government has already sent extra troops to the province and thousands more, along with aircraft and warships, are being readied.

Harsanto warned that the outcome of Saturday's talks will determine the future of the December 9 cessation of hostilities agreement (COHA) and whether the government will launch a military operation in Aceh.

"We'll look at the outcome of the meeting," he said. "If the meeting degenerates into chaos there is a big possibility Indonesia will pull out of the COHA." The government had previously set Monday of this week as its deadline for the rebels to solve the Aceh problem peacefully.

President Megawati Sukarnoputri is scheduled to meet parliament leaders Thursday afternoon to get their support for a possible military operation.

Tiba said GAM leaders in Stockholm had asked him and other rebel negotiators in the province to prepare to attend the Tokyo meeting. "GAM is ready to go to the Joint Council meeting because we never refused [before] to attend," said Tiba, a GAM negotiator who leads the rebels' team on the Joint Security Committee which monitors the shaky truce.

Harsanto said GAM must agree to the government's existing conditions that the rebels accept the existing special autonomy status for Aceh, and begin laying down their arms.

The Joint Council is the final arbiter of disputes over the peace pact. It groups government and rebel leaders with mediators from the Swiss-based Henry Dunant Centre (HDC).

HDC mediated the truce in Aceh, which had all but collapsed before the latest breakthrough. Foreign ceasefire monitors left the country this week. HDC could not be immediately reached for comment.

The EU, US, Japan and the World Bank, in a joint statement early Thursday, expressed "deep concern at the imminent breakdown of the peace process in Aceh." They praised the government's "continuing commitment" to dialogue and called on both sides to prepare to meet in Tokyo as soon as possible.

"We strongly hope that the two sides at that meeting reach a consensus to revive COHA and return Aceh to a state of peace based on special autonomy," they said.

The four hosted a conference in Tokyo last December on aid for Aceh. "The co-chairs remain willing to continue to support the COHA and to provide assistance for the future reconstruction of Aceh if peace prevails," they said. An estimated 10,000 people have died in the northern Sumatra province since GAM began its armed struggle for independence in 1976.

Aceh rebels, government step back from brink of war

Radio Australia - May 16, 2003

In a final bid to salvage Aceh's shaky peace pact and avert war, separatist rebels have agreed to meet with the Indonesian Government in Tokyo this weekend. The decision by the separatist Free Aceh Movement comes after an emergency late-night meeting between Japan, the European Union, the US and Indonesia's top security minister. It's hoped the meeting will iron out the growing differences over the five month old peace pact, which is on the verge of collapse following a recent upsurge in violence.

Presenter/Interviewer: Linda LoPresti

Speakers: Mohammed Nur, a spokesman for the Free Aceh Movement leadership in exile

Nur: We understand from the US embassy in Stockholm, [they] informed us that the Tokyo club requested both parties to attend their meeting in Tokyo. So we immediately agreed because this is the request from the international community to prevent further bloodshed, this is what we want. We have always, our position that we don't act on ultimatums; if there is sabre-rattling, then that's it, no talk.

Lopresti: You say that it's not about ultimatums, but just this week Jakarta gave GAM two days to get their act together otherwise it was threatening ... ?

Nur: Yeah they are always issuing ultimatums on the matter, you know. Every time they issue a statement it's an ultimatum, "You come before 12, you come before 10, you come before the 30th, you come to Jakarta, you come to Aceh." Yeah, so it's an ultimatum, but our position is always clear that we don't care whatever ultimatum, we don't act on that you know, we don't even respond to it, it's childish.

Lopresti: So what is GAM bringing to the negotiating table?

Nur: We are going to talk about COHA, how to implement COHA?

Lopresti: Sorry that's the peace pact that was signed in December?

Nur: The cessation of hostilities agreement, we feel that it's not only a good agreement, it's an agreement that has brought peace for at least three months in Aceh until it was wrecked by the militia, by the attack against civil society, and we are fully committed to that. We signed the agreement and we are committed to -- both parties should be committed to implementing it. We have problems in the field, it's now alleged that both parties have committed violations, of course one side will claim the other did more, but that's normal. So what we need to talk is how to implement this stipulation of COHA, how we are going to follow the roadmap of Gohar successfully.

Lopresti: But one of the conditions laid down in the December peace pact was that GAM would lay down its weapons?

Nur: No, no, no, no, no, the agreement says that we pledge to place our weapons on sites of our own choice. At the same time the Indonesian side will relocate their troops and reform the police mobile brigade, Brimob. And we have identified 32 sites for HDC [Henri Dunant Centre] to check you know? Of course we won't place our weapons there before Indonesia commit themselves, itself to the conditions, which they have refused. So if they refuse to do their part of course we won't do our part.

Lopresti: The outcome of these talks is quite crucial though isn't it; it will determine the future of Aceh pending what happens on the weekend?

Nur: Yes, we feel that COHA is a very good agreement that eventually will lead to such a solution. But COHA is not a peace agreement, it's just a frame, even the title says this, it's a frame agreement on cessation of hostilities. It's just a frame that we have to fill in with mechanisms. The first mechanism is the building of common trust, of confidence, and that lasted quite well in fact. The problem came when at the disarmament stage, when Indonesia refused to relocate their troops and re- format their Brimob as agreed. Now they started saying that we have to surrender our arms, which is not in the agreement at all!

'Indonesia should learn from its failure in East Timor'

Jakarta Post - May 14, 2003

Former foreign minister Ali Alatas talked to The Jakarta Post's Kornelius Purba about his views on Aceh. Now the advisor to President Megawati Soekarnoputri, he pointed out that Indonesia should not repeat the mistakes it made in East Timor, especially in regards human rights issues, in resolving the Aceh problem. The following is an excerpt from the interview:

Question: In your capacity as the advisor to President Megawati, and with your experience in handling the problems in East Timor and in Papua as a former foreign minister, what is your view on the current problems in Aceh?

Answer: I have always been one of those who, from the beginning, preferred that Aceh be resolved through peaceful negotiations -- for example, as we have tried through the Cessation of Hostilities Agreement (COHA).

We agreed in the COHA that one of the items on the agenda of the Joint Council dialog is to review this peace deal -- to make it better, but not to go beyond the terms of the agreement. We defined the word "review" as meaning that we would improve upon it. You review it, you look at it again.

COHA could have been the first good step toward resolving the problem through a peaceful path of negotiations. But I am getting very pessimistic now, and very concerned. I can now fully understand the concerns of the government and the limits to their patience because it is true that GAM, in the four months since the COHA was implemented, did many things that went completely against the agreement.

They never gave up their original purpose, nor have they changed their minds about not accepting a solution based on special autonomy for Aceh. Of course, they will have to rethink and to renegotiate this point, for which we are prepared. If the end objective between the two warring parties are disparate, it is very difficult to see eye-to-eye.

Why did the negotiations between the MNLF (Moro National Liberation Front) and the Philippine government succeed?

The MNLF, from the beginning, said, "OK, we drop our demands for independence. We accept a broad-based autonomy; but we want this and that." We needed two years to get to the agreement stage [in which Indonesia acted as a facilitator].

Look at Cambodia -- they were fighting for years, but when they agreed on the end objective, namely that the two sides would form a national government, that Cambodia would be a non-aligned, neutral country, and so on, negotiations could start. The negotiation, from start to finish, took from 1989 to 1991.

Now, look at Sri Lanka -- they waged a ferocious war against the government for many years. Now the Tamil Tigers (LTTE) have stopped their calls for independence; only after this could negotiations start in regards the special autonomy for them. It will certainly take a long time, but the end result is clear. GAM, though, does not behave like that.

Question: What if they pretend to accept the autonomy, but still have independence on their minds?

Answer: That is why we are still keeping the door open to a possible Joint Council meeting, which has failed to materialize. But this time we must be very clear because independence can never be accepted -- it will not even be accepted by our neighbors, by other countries, because they continue to declare that they are against separatism. That is what we mean by the phrase, "We support the territorial integrity of Indonesia." That is another way of saying that we are against separatism.

Question: But many other countries said the same thing in regards East Timor, didn't they?

Answer: No, No, they never did because East Timor was not recognized by the UN [as part of Indonesia]. They supported our efforts to find a solution. Only Australia recognized [our sovereignty over East Timor], but even Australia changed its position later.

Question: The President sent you to Stockholm to persuade the Swedish government to take action against GAM leaders residing there, didn't she?

Answer: I was sent there, first of all, to appraise the government of Sweden, which has given citizenship to one of the brains [behind GAM]. But more importantly, two GAM leaders, Hasan Tiro and Zaini Abdullah, maybe more, are there. So I asked the Swedish government, why they still allowed them to mastermind, to lead an armed insurrection and separatist movement against the government of a friendly country? They are Swedish citizens who are interfering in the affairs of other country. They are leading an armed rebellion in Indonesia, which has caused great suffering and difficulties for Indonesia, for the Acehnese people. Was this allowed, according to international as well as national laws?

The Swedish government started by saying that they supported the sovereignty of Indonesia and our efforts to find a solution on the basis of special autonomy. But in regards this question of the two men, Sweden was very sensitive. Besides, they [the two GAM leaders] hadn't broken any laws in Sweden; they were law- binding citizens. This is why Sweden needed additional evidence from Indonesia that linked them clearly to the activities I mentioned. I told them that no further evidence was needed.

Question: What can the government learn from our failure in East Timor, especially in resolving human rights violations?

Answer: We should learn from how we handled East Timor. We should learn from our past mistakes. In East Timor, I believe, there were a series of violations of human rights. Toward the end, especially, there were a lot of things that were done wrongly, for which we were severely criticized.

In East Timor -- we have to admit -- we failed to win the hearts and minds of the people. Our approach there was security -- but an approach we held onto for too long. Therefore, all our experiences must be lessons for us in what we choose to do and not do.

Question: How should the government face the Aceh issue?

Answer: Negotiate with the Acehnese people, talk to them directly; and therefore, we don't want to make it an international issue. But we can ask an NGO, the Henry Dunant Centre [HDC], to act as a facilitator. Already on that score, we have received many criticisms from within the country, but it [the facilitator] is not from the government or the United Nations.

Question: As a senior diplomat, how do you perceive Aceh from an international perspective?

Answer: The world cannot deny the sovereign right of the government to deal with its own internal problems, especially when the internal problem is an armed insurrection. The only way, perhaps, that we open ourselves to foreign criticism is if we commit human rights violations. We should be aware that we can only be faulted if we again commit human rights violations, which, according to the view of the West, are to be criticized.

Question: But we have human rights issues now in Aceh, don't we?

Answer: It can be prevented now. Let us learn from the past, let us not repeat the same mistakes we made during the DOM [1989-1998 Military Operation in Aceh].

Aceh: The more things change...

Asia Times - May 13, 2003

Lesley McCulloch, Melbourne -- Extrajudicial executions, disappearances, torture, rape and the targeted harassment of human-rights defenders. This was life in Aceh five years ago; it is also life in Aceh today. Add to that the attacks by unknown persons on peace-monitoring teams and their infrastructure, and the arrest of official negotiators, and one has described the environment within which the Cessation of Hostilities Agreement (CoHA) struggles to survive.

The agreement is an attempt to bring peace to the troubled Indonesian province, but the threatened collapse of the internationally brokered CoHA will pave the way for the Indonesian military to unleash its might on 4 million Acehnese, the majority of whom want an independent state.

The Free Aceh Movement (GAM) and the Republic of Indonesia signed the CoHA on December 9. The main points of the document are a gradual process of demilitarization, an all-inclusive dialogue, and elections in 2004. In addition, the agreement provides for a joint security committee (JSC) to monitor implementation and investigate violations.

But there are some fundamental and structural flaws within the agreement. The fine detail of some of these points could not be agreed upon in the negotiation phase, and so were neglected. The result? The CoHA had a crisis of identity which has led to its imminent failure. Its personality as recognized by the Indonesian government is quite different from that recognized by GAM. The three points over which the identity of the COHA is in crisis are the following:

Demilitarization: GAM has offered a phased storage of its weapons, Jakarta has offered to shuffle troops from one village to another while at the same time sneaking more military personnel in under cover of darkness and by sea.

All-inclusive dialogue: this remains elusive. Moreover, the process through which this dialogue will be achieved has yet to be agreed. And the identity of the dialogue itself remains a mystery.

Elections in 2004: the Jakarta-based government interprets this to mean the regular general elections due in that year. But to GAM (and to most Acehnese), it means local elections to allow the people a democratic voice about a local issue.

In addition to these structural flaws in the agreement, there have been three quite obvious and clumsy attempts by the Indonesian government to undermine the CoHA. First, attacks on the JSC by groups of militia. Cast our minds back to the militia in East Timor: recruited, armed and trained by Indonesian military. It is the same scenario in Aceh, and the presence of militia is not new there but has only recently been acknowledged. The JSC itself, thought by many to be pro-Jakarta, has said it believes the attacks were well orchestrated and acknowledged the likelihood of the involvement of these military-backed groups. The JSC was returned to Banda Aceh -- the provincial capital -- for security reasons, leaving the military free to act with impunity, as there is now no investigation of the violations of the CoHA.

The second attempt to undermine the agreement was the issuing of the ultimatum that GAM renounces its political goal of independence as a precondition of the continuation of the dialogue. The Jakarta government is also insisting that further dialogue take place in Indonesia. This is unacceptable to the separatist movement.

The third and latest worrying development is the arrest of four senior GAM negotiators in Aceh on Friday May 9. They were detained for two days before being released. In the interim, the police and military said they intended to charge these four with terrorism. All these actions are against both spirit and letter of the CoHA. The mandate of the agreement was narrow: a cessation of hostilities. This has proved to be unachievable.

GAM was motivated to sign this less-than-perfect agreement in the hope it would open democratic space for the civil-society movement in Aceh to pursue a peaceful and political solution to the decades-old conflict. Article 2(f) of the COHA makes provision for civil society to express their democratic rights or opinions without hindrance. But the common ground between what is written in CoHA and practical outcome is noticeable only by its absence. Since December there has in fact been a narrowing of the democratic political space in Aceh. Those who have dared to protest at the continuing violence and lack of justice, and to demand a platform for their voice to be heard, have themselves become targets.

At a demonstration in January, four villagers were shot by the elite mobile police brigade when they attended a peaceful rally to request the government's full implementation of the civilian's role in the CoHA.

In addition, police have arrested a prominent member of the civilian movement, Muhammad Nazar, chairman of the Aceh Referendum Information Center (SIRA). He spoke critically about the agreement at the January meeting. Now accused of spreading sedition against the government, the local chief of police has said he would like to see Nazar spend five years in prison.

The authorities have a growing list of those who they accuse of spreading hatred against the state, including Kautsar (former chairman of the Acehnese Democratic Resistance Front, FPDRA). Kautsar and many others have gone into hiding to avoid the same fate as Nazar. The local police and military, under orders from the government in Jakarta, are in effect silencing the voices of these people and of those whom they represent.

Troops in Aceh have been put on high alert; many more are on their way to the battlefield and provision has been made in neighboring areas for the expected refugee flow from the troubled area if war breaks out. The war clouds are gathering over Aceh. The international community with one voice has said it supports the unity of the state of Indonesia. The question is "at what cost?"

The international community must pressure the Indonesian government to uphold the letter and the spirit of the CoHA. The process of dialogue should resume with no preconditions, and a document signed on protection of negotiators. One cannot have a meaningful dialogue when one of the parties is under constant threat of arrest by the other. There should also be broad recognition and condemnation of attempts by the Indonesians to undermine the whole process.

This may be the last opportunity for peace in Aceh for several years. But the Indonesians have fired a "no interference" warning shot across the bow of the international ship. They have said this action is insignificant compared with the Iraq war, as only their own sovereignty is at stake. The unspoken message: We noted the precedent set by the invasion of Iraq and the ousting of an "undesirable" regime, and we intend to take full advantage of the current international political climate to pursue a military solution in Aceh.

Today's international political climate provides the perfect arena for a massacre. One of the world's most brutal military is converging on Aceh. The roadmap to war, death and destruction is clear for all to see. Our great champions of democratic values appear to be dancing to the tune of the Indonesian military. The Acehnese will be sacrificed in the name of the war on terrorism, economics and realpolitik. Lessons learned from East Timor? It appears, none.

[Lesley McCulloch is a research fellow at the Monash Asia Institute, Melbourne.]

Acehnese stock up on food

Jakarta Post - May 12, 2003

Jakarta -- Acehnese scrambled to store basic commodities on Sunday, one day before the deadline for separatist Free Aceh Movement (GAM) to abandon its demand for independence and disarm -- two non-negotiable prerequisites for peace talks to resume.

Meanwhile, peace facilitator, the Henry Dunant Centre (HDC), made a last-ditch effort on Sunday to spare Aceh from plunging into an all-out war, persuading the rebels to talk with the Jakarta government.

Residents of provincial capital Banda Aceh rushed to traditional markets and department stores throughout Sunday to buy various basic commodities in large amounts.

Virtually all roads to markets and department stores were crowded with motorcycles and cars, with people, especially women, flocking to traders selling basic commodities.

"I am buying basic commodities in large amounts to anticipate food shortages due to mass strikes protesting the government's decision to launch a military operation," Banda Aceh resident Nelli was quoted by Antara as saying on Sunday.

GAM leaders have called for a mass strike on May 12, the deadline for the rebels to accept the special autonomy status and disarm if they want to avoid an armed showdown with government troops. The secessionist movement had rejected the ultimatum.

The panic buying has pushed up prices of some commodities in the city of 370,000 people. The price of red chillies, for example, rose from Rp 7,000 to Rp 22,000 per kilogram, tomato from Rp 2,000 to Rp 4,000 per kilogram, and shallots from Rp 8,000 to Rp 10,000 per kilogram. The prices of rice, sugar, cooking oil, and flour, however, remained unchanged.

Ramli, a trader in Banda Aceh market, said the price increases were due to rumors of a massive strike on May 12. "As of today, goods ferried with trucks from Medan cannot enter Banda Aceh anymore," Ramli said.

David Gorman, HDC representative in Aceh, said on Sunday that mediators met GAM representatives in Stockholm, Sweden on Saturday to try to persuade them to return to the negotiating table. GAM's exiled top leadership is based in Sweden. The talks, Gorman said, had yielded "positive" results.

"We are still talking with the government and seeing what type of last-minute achievement can be made. We are doing whatever we can do to avoid a military operation and renewed fighting," Gorman was quoted by AFP. "The people of Aceh are generally very troubled and concerned about the situation," Gorman said.

More than 50 peace monitors from Thailand, the Philippines and Norway were preparing to leave the province on Sunday, strengthening speculations that an all-out war was imminent.

Thousands of villagers fled their homes in northern Aceh on Sunday to avoid clashes between government troops and GAM, adding to signs that civil war has returned to the country's westernmost province, where the rebels have been fighting for independence since 1976. Over 10,000 people, mostly civilians, have been killed since then.

Police detained on Friday four GAM negotiators at the airport as they attempted to leave the province. The four -- Sofyan Ibrahim Tiba, Pen Teuka Kamaluruzaman, Amir Bin Achmad Marzuki and Amri Bin Abdul Wahab -- are all senior members of the Joint Security Council (JSC) set up by HDC to help monitor a cease-fire agreement signed in December 2002.

The four were released on Sunday, after being declared "terrorist suspects" in past bombings in Indonesia. Their movements have been restricted to the capital.

Rebels meanwhile killed a policeman and critically wounded another, police said Sunday. A member of the Brimob paramilitary force was killed on Saturday in an ambush in East Aceh, they said. Rebels shot and critically wounded another policeman in North Aceh. The military has been gearing up for a military offensive against GAM, should the separatists fail to meet the government's Monday deadline for resuming peace talks.

On Thursday it dispatched 6,300 fresh troops to Aceh from Surabaya, East Java, and on Sunday an additional 625 marines were sent to the troubled province from the Jakarta Naval Base. The military currently has an estimated 30,000 troops stationed in Aceh, while the police and Mobile Brigade Unit (Brimob) forces add another 12,000.

Military top brass have said that the force in Aceh would be bolstered with up to 50,000 personnel to fight against an estimated of 3,000 armed GAM separatist rebels. They have vowed to crush the rebels within six months Violence has been on the rise in recent weeks in Aceh, following the cancellation of crucial talks between the government and GAM late last month to rescue the floundering cease-fire agreement.

West Papua

Troops kill rebels in Papua jungle

Jakarta Post - May 17, 2003

Jakarta -- Indonesian Military (TNI) officers troops said Friday they had shot dead two suspected separatist rebels in the jungles of Papua province.

The two suspected Free Papua Movement (OPM) members were killed in separate skirmishes on Wednesday and Thursday at Koyawage forest in the Central Highlands, said Papua military commander Major General Nurdin Zainal. Troops also seized a M-16 automatic rifle, Nurdin told ElShinta station. He said it was one of 29 firearms stolen in a raid on a military armoury in the town of Wamena on April 4.

"One of the dead rebels was believed to be an OPM commander", Zainal was quoted by AFP as saying. "Based on a red scarf tied to the rifle -- a symbol of a commander -- we believe that one of them is a high-ranking officer."

A group of 15 gunmen broke into the armoury during a power cut and made off with the guns and thousands of rounds of ammunition. Two soldiers and a suspected rebel were killed. The military has said the raid was carried out by a separatist rebel splinter group led by Titus Murib. It said some soldiers are suspected of assisting in the raid.

The Free Papua Movement, a poorly armed outfit, has waged a sporadic low-level armed revolt since Dutch colonisers ceded control of the resource-rich territory to Indonesia in 1963.

Rebels in Papua may be next target

Reuters - May 15, 2003

Jakarta -- As war drums beat louder in Indonesia's rebellious Aceh province, momentum is building at the other end of the giant archipelago for tougher action against separatists in Papua.

Unlike Aceh, the guerilla movement in resource-rich Papua is low key and the rebels are poorly armed. What frightens the government, diplomats say, is a political movement of influential Papuan leaders who seek independence peacefully through an entity called the Papuan Presidium Council.

Analysts say nationalist President Megawati Sukarnoputri would not rule out the same hardline approach for predominantly Christian Papua if it meant holding together the world's most populous Muslim nation.

"Of course, the issues of Papua and Aceh are different but the mood of the government and the mood of the country at the moment is much less tolerant toward separatist movements," said Mr Dewi Fortuna Anwar, a senior researcher at the Indonesian Institute of Sciences and an adviser to former president B.J. Habibie. "And the general world climate at the moment seems to give more leeway to a military solution."

Indonesia is expected to launch a major military offensive in Aceh within days, one of its biggest operations in decades. The International Crisis Group think-tank said efforts were already afoot to weaken Papua's independence movement -- although not yet through overt military means.

Democratic struggle

May riot rally blocked by police

Jakarta Post - May 15, 2003

Tertiani ZB Simanjuntak, Jakarta -- About 200 victims of the May 1998 riots were forced by police to change the route of their march on Tuesday to commemorate the fifth year of the tragedy.

Officers from the Central Jakarta Police blocked off Jl. Kramat Raya and dispersed the rally participants an hour after they left Atrium Plaza en route to the Megaria movie theater, one of the locations destroyed in the riots.

"The police said we were late in informing them about the event. They said they need to receive notice three days before an event takes place," the chairman of the march's organizing committee, Wignyo, a member of Solidaritas Nusa Bangsa, said.

Due to the police's actions, the rally participants -- victims of the May 13 to May 15 riots, activists from the New Order era and victims of the 1965 massacres -- had to end their march at the Indonesian Legal Aid Institute office on Jl. Diponegoro instead of at Proklmasi Monument on Jl. Proklamasi.

"We are here to demand the government resolve all past human rights abuses, which is the most substantial requirement of the reform process," Wignyo said.

The May riots, which followed the shooting deaths by the police of four Trisakti University students taking part in nationwide protests to demand the resignation of former president Soeharto, are regarded as a vital event in the country's reform movement.

The authoritarian Soeharto stepped down on May 21, but the riots -- which were fueled by anti-Chinese sentiment -- had already claimed 1,217 lives, according to the Volunteer Team for Humanity.

The National Commission on Human Rights (Komnas HAM) only recently established an ad hoc team to investigate the riots. It will summon for questioning next week several high-ranking military officers who were in charge of security during the violence.

According to the initial findings of Komnas HAM, the state committed gross violations of the people's rights during the May riots. This finding is based on the fact that no security officers were present to prevent the looting, burning of shops and houses, and rape.

Many witnesses have said that smartly dressed men with walkie- talkies were seen in different locations of the city provoking people to burn shops, even providing jerry cans of gasoline.

Ori Rahman of the Commission for Missing Persons and Victims of Violence (Kontras), who is also a member of Komnas HAM's ad hoc team, told The Jakarta Post on Tuesday the facts of the riots alone were sufficient to bring the case to a human rights tribunal, because they prove a conspiracy systematically to quash the people's movement.

Events and aftermath of the May 1998 riots

• May 12, 1998: Four Trisakti University students are shot and killed by security forces.
• May 13-15, 1998: Mass riots in Jakarta, Medan, Palembang, Lampung and Surakarta. A total of 1,217 people die in the riots.
• May 21, 1998: Soeharto resigns as president, is replaced by vice president B.J. Habibie.
• Nov. 13, 1998: Protesters opposed to a Special Session of the People's Consultative Assembly are fired on. A total of 17 people are killed and 456 injured 1999: A government-sanctioned fact- finding team is established to investigate the May riots. Its unpublished findings reveal that at least 66 women, mostly Chinese-Indonesians, were raped during the upheaval.
• Sept. 22-24, 1999: Protesters opposed to the imposition of an emergency bill are fired on. Nine people are killed.
• June 18, 2001: A military court is called to try 11 members of the police's Mobile Brigade for the Trisakti shootings. Only nine suspects appear.
• July 9, 2001: The House of Representatives finds no human rights abuses occurred in the Trisakti shootings, the Nov. 13, 1998 shootings or the September 1999 shootings. The House refused to include the May riots in its inquiry because it said those events were not related to the shootings.
• January 2003: The National Commission on Human Rights sets up an ad hoc team to investigate the May riots.

Labour issues

Women still discriminated against: ILO

Jakarta Post - May 17, 2003

Jakarta -- Discrimination against women remains rampant in Indonesian workplaces, the International Labor Organization (ILO) says.

In its report titled Time for Equality at Work, the ILO said that discrimination took various forms, but the most blatant example was discrimination over wages.

In many countries, female employees were mostly placed in low- paid jobs, Antara quoted the report as saying. Women also received lower wages than their fellow male workers, even if they had same level of education. Indonesia was no exception, the report said.

A survey by the Central Statistics Body (BPS) showed that on average, female university graduates received less than 25 percent of the pay received by their male colleagues, said the report, which was released last Monday in Geneva.

The Ministry of Manpower and Transmigration, collaborating with the State Ministry for Women's Empowerment, are slated to jointly disseminate the report to the Indonesian public on Monday.

'War on terrorism'

War on terror: doubts irk Jakarta

Straits Times - May 15, 2003

Devi Asmarani, Jakarta -- What will it take for the world to believe that Indonesia is serious about fighting terrorism? New anti-terror laws have been passed, the Bali bomb suspects are being tried and Abu Bakar Bashir is being kept in jail during his trial, yet too little credit has been given to the country, says the government.

National Police spokesman Zainuri Lubis told The Straits Times: "In the past week alone, we arrested three more of the Bali bombers. We also nabbed suspects of the bombings in Makassar and Menado. What more evidence do they want?"

The senior commissioner's exasperated reply was in response to an International Institute for Strategic Studies (IISS) report published on Tuesday which questioned Indonesia's commitment to the fight against terrorism. The London-based agency wrote that the blasts showed Indonesia was a "major source" and target of transnational Islamic terrorism.

Despite the capture of 33 suspected bombers, police had yet to uncover the whole terror network or establish the group's ideological and international links. Even where the Jemaah Islamiah (JI) is concerned, the authorities "seemed to be wary of probing the overall JI network ... for fear of inflaming wider Indonesian Muslim opinion", the IISS said.

But dealing with terrorism in Indonesia is not as easy as in the United States, Mr Zairuni said. For one, there are legal restrictions. "In the US, people suspected of links with Al-Qaeda can be arrested, regardless of involvement in terror attacks, because the government has declared it a terrorist group," he said.

"But it doesn't work that way here. Our law does not hold a whole organisation responsible for the individual acts of its members." That is why suspects like alleged JI spiritual leader Bashir faces fewer criminal charges. Despite intelligence reports, police and prosecutors can pursue the case only using legal evidence.

Defence analyst J. Kristiadi of the Centre for Strategic International Studies here pointed out: "The report ... shows a lack of understanding and sensitivity to the country's situation." The government had shown boldness in prosecuting some Islamic militants in criminal cases despite the support some of them had, he said.

Last year, it dissolved the Laskar Jihad group, which had fought Christians in Maluku, and arrested its leader Jafaar Umar Thalib, although he was freed later.

First trial of Bali bombing suspect begins

Agence France Presse - May 12, 2003

The first trial of a Bali bombing suspect began in the Indonesian resort island amid a huge security clampdown.

Amrozi, a village mechanic, faces the death penalty if convicted of the worst terrorist attack since September 11, 2001, in the United States. The bombing of two crowded Bali nightspots last October 12 killed 202 people from 21 countries, many of them young foreign holidaymakers.

Investigators say the Jemaah Islamiyah regional terror group, which is thought linked to al-Qaeda, staged the blasts to hit "soft" Western-linked targets in revenge for oppression of Muslims worldwide.

Amrozi, 40, was dubbed the "laughing bomber" for a lighthearted appearance before the media last November. Now he is "prepared for the worst. We told him that the maximum sentence is death," one of his lawyers, Wirawan Adnan, told reporters.

Two paramilitary policemen brought the suspect into the improvised courtroom in an ornately decorated women's function hall.

Chief judge I Made Karna asked Amrozi to confirm his name, nationality and home town. "Your religion?" Karna asked. "Islam," Amrozi replied, adding that he works in a motor repair shop and completed senior high school. "Today are you healthy?" Karna asked. "Healthy," Amrozi replied.

Prosecutors then began reading a 33-page indictment that describes in chilling detail how Amrozi and 12 others, including two of his brothers, allegedly played a direct role in the blasts.

The bombings were staged as a declaration of war against the United States and its allies in revenge for oppression of Muslims, it says. The blasts "resulted in terror on a wide scale" and destroyed 424 buildings including the two targeted nightspots -- Paddy's Bar and the Sari Club -- in the Kuta tourist district.

Police have said Amrozi's motive was to kill as many Americans as possible. His only regret, they say, is that Australians and not Americans were the main victims. A total of 88 Australians died.

Hundreds of police, some armed, guarded the courthouse. Police say a total of 3,000 are on duty island-wide. Barbed wire barricades sealed off the street amid fears of an angry backlash against the bombers. "Prosecute and sentence to death traitors to the state of Indonesia, including the Bali bombers," read one billboard.

The trial is important for Indonesia and "important for the world," said Bali police chief I Made Mangku Pastika, who led the huge multinational investigation that has netted 33 suspects. He said he hoped the trial will help "uncover all the groups of terrorists in Indonesia."

A bearded Amrozi, who appeared tense, was seated in an ordinary chair before five judges in black and red robes. The indictment says he attended several planning sessions for the Bali bombing.

At one meeting in August 2002, another key suspect Imam Samudra allegedly said "there was a big project of declaring war against the United States of America and a plan was made for some bombing targets in Bali ..." In September, Amrozi bought one tonne of potassium chloride and other chemicals used to build the biggest and deadliest of the three bombs. He sent the entire consignment to Bali by bus.

On October 5, the indictment says, Amrozi and a man called Utomo Pamungkas alias Mubarok drove a Mitsubishi van, which was to carry the biggest bomb, to Bali. At a house in Denpasar two days later, the three bombs were assembled.

On the fatal night a suicide bomber called Feri, alias Isa, detonated an explosives-stuffed vest insid Paddy's Bar. That blast at 11.08 pm drove customers into the street, where they caught the full force of the van bomb detonated outside the nearby Sari Club 29 seconds later. The van bomb was detonated by a man called Arnasan, alias Jimi, who died in the blast. Two seconds after the Sari Club blast, a man called Idris used a mobile phone to detonate a bomb outside the US consulate. It caused no injuries.

Media reports say the trial could last five months. Separate trials of other suspects are expected to begin over the next few weeks.

Indonesia faces tests of accountability

Melbourne Age - May 12, 2003

Australia and the US reasonably expect their ally to deliver justice for victims of atrocities.

Today marks the start of the trials of 30 suspects in the Bali bombings that killed 202 people, including 88 Australians, seven months ago. Australian Federal Police Commissioner Mick Keelty has warned that the trials could take up to a year and it was probably best for the victims' families to stay away because it would be "a difficult environment to be in".

The angry reactions this month to the seven-month jail sentence for the first person charged in connection with the bombings, a shopkeeper who sold chemicals used to make the explosives, confirms the highly charged nature of proceedings.

The difficulties do not end with public suspicion about the processes of a foreign court. The trials are the latest in a succession of traumatic events, ranging from Indonesian army atrocities in East Timor and elsewhere, to boat people to terrorism, which have tested Indonesia's relationship with Australia and the United States, even as they increase the importance of friendly co-operation. The countries have worked hard to mend fences since the days of open hostility when departing Indonesian troops aimed their guns and shouted insults at Australian peacekeepers in East Timor in September 1999. Yet friendly relations cannot be taken for granted.

Today also happens to be the deadline for separatist forces on Aceh to agree to Indonesia's terms for saving a December 9 peace pact. Should that collapse, and with the military under suspicion for killings in West Papua, events in both provinces could emerge as sticking points in Indonesia's relations with Australia and the United States. General I Made Pastika, who headed the Bali investigations and was this month appointed the island's police chief, has pleaded for the full restoration of training and other assistance for police and security forces, which was suspended in response to abuses in East Timor. From his recent talks in Washington with senior figures in the Bush Administration, he should know, however, that the Indonesian Government cannot expect full ties, and trust, to be restored until it calls to account those responsible for atrocities.

General Pastika also headed a police investigation into the killings of three people, including two Americans, and the wounding of a dozen others at the Freeport mine in West Papua last August. The evidence pointed the finger at Indonesian forces, but progress ended when police referred their findings to the military. This was despite Jakarta agreeing earlier this year to FBI involvement, as with the AFP in Bali. A group of 17 US senators has now written to President Megawati Soekarnoputri warning of the implications for the whole relationship between their countries. The expectations Americans and Australians both have of Indonesia are reasonable: that there be independent, unfettered investigations of the killings of their citizens; that the evidence be transparently assessed; and that individuals found to be responsible be appropriately punished. Otherwise, Indonesia's credentials as a friend will be questioned.

Corruption/collusion/nepotism

Corruption and poverty go hand in hand

South China Morning Post - May 14, 2003

Alexander Irwan -- Last year, the Partnership for Governance Reform in Indonesia published a study entitled "The Poor Speak Out: 17 Corruption Cases", which covered several poor communities in Jakarta, Yogyakarta and Makassar.

It reveals a disturbing picture. In Indonesia, the poor have more than just poverty to contend with -- they also have to pay bribes to get some essential public services. Indonesia ranked 96th in last year's Transparency International corruption index -- sixth from bottom.

The reality of everyday life is, however, far more depressing than the figures can convey. The study reveals that poor people in positions of authority shamelessly use their power to extort bribes from other poverty-stricken people.

For example, the report says, poor parents were told they would have to bribe a needy teacher at a public school in an eastern Jakarta slum to get their child's report card. When the teacher refused to release one girl's report card, her mother, Fitri, went to the headmaster. He did nothing. He even admitted that on another occasion, the teacher had made up a story about the death of a student's parent and had told other parents to give money to the family. However, the headmaster said the request for a contribution had been the teacher's business and he was unable to do anything about it.

Naturally, Fitri concluded that the headmaster probably got a share of the money extorted from the parents, and felt she had no choice other than to go back to the teacher and pay her 10,000 rupiah. However, it was not enough, and the teacher still refused to give her Nina's report card. When Nina started to cry, Fitri gave another 5,000 rupiah to the teacher, who smiled and finally gave her the report. When she got home, Fitri told neighbours of her experience. However, what she could not share was the fact that the 15,000 rupiah was actually her money to buy groceries.

The study highlights another, equally disturbing fact: that in some corruption cases the poor pay more than the rich, in absolute terms. According to the survey, the poorest fifth paid considerably more than the average to bribe officials in the National Land Body.

And the situation is even worse in the Civic Registry Office, where the poorest fifth pays almost double that of the average respondent. Even though the poorest fifth in the study paid less than the average in other corruption cases, we should not let the absolute amount of bribes fool us. In terms of income, the richest fifth among the respondents earns 15.5 times more than the poorest fifth. However, the amount paid in bribes by the average respondent is only slightly higher than that paid by the poorest fifth.

The only conclusion we can draw from the findings is that the poor pay more than the rich in all corruption cases, meaning they have to spend a much larger portion of their income on bribes. For the poor, there is no such thing as a petty bribe.

Even without having to pay corrupt officials, it is very difficult, if not impossible, for them to save for emergencies -- such as when a family member needs medical treatment -- or for when their children need new school books. And it is their daily diet which suffers when they have to find money for bribes.

When they are already living at a subsistence level, it is impossible to get bank loans. To pay bribes, some may be lucky enough to get loans from relatives or neighbours. Others are forced to go to loan sharks with sky-high interest rates.

The national and regional governments in Indonesia care little for the fact that corruption hurts the poor. In fact, they do not even care about eradicating corruption. The national government is more concerned with raising funds for its political parties, mainly through corrupt practices, to compete in next year's election.

The regional governments, under decentralisation which began in 2001, have been busy moving corrupt practices away from Jakarta to their own areas, where monitoring is almost non-existent. It is no coincidence that Indonesia has been ranked one of the world's most corrupt countries. Unfortunately, there is no way of knowing exactly what toll this exacts on the poor.

[Alexander Irwan is an Aceh and Papua adviser for the Partnership for Governance Reform in Indonesia.]

Human rights/law

Good commercial courts imperative for recovery

Jakarta Post - May 17, 2003

Muninggar Sri Saraswati, Jakarta -- The country's commercial courts, renowned for being ineffective and corrupt, must be reformed to encourage more investment and in turn boost economic recovery and growth, an expert said.

Sebastian Pompe, the resident legal counsel of the International Monetary Fund (IMF) in Jakarta, asserted that economic growth and proper commercial law application are intertwined.

"Therefore, the trust of the global market is much determined by what the commercial court does. If the court does badly, investors are afraid they will never see the money back they invest here," he said on Wednesday.

Pompe presented his views during a ceremony marking the end of the first phase of the IMF technical assistance program on the country's legal reform, including on commercial courts, funded by the Dutch government.

Indonesia has five commercial courts located in Jakarta, Semarang, Surabaya, Makassar and Medan, with 25 judges -- 14 of them working in Jakarta.

Bankruptcy litigation experts have lamented that the country's commercial courts have failed to meet expectations and instead delivered verdicts creating legal uncertainty for the business sector. Worse, commercial courts are known as one of the most corrupt legal institutions in the country.

Last year, the country was stunned by the controversial ruling of the Jakarta Commercial Court which declared PT Asuransi Jiwa Manulife Indonesia (AJMI) bankrupt after the receiver of the now defunct company, the former partner of Canada's Manulife in AJMI, brought a bankruptcy petition over an unpaid dividend in 1999. The Supreme Court overturned the decision only after international outcry over the decision.

With such unfavorable conditions, fewer and fewer bankruptcy petitions have been filed with the commercial courts, indicating that creditors do not trust commercial courts to recoup their lost money.

The low number of cases is especially evident at the Jakarta Commercial Court, which handles most of bankruptcy cases in the country. The Jakarta Commercial Court registered only 12 bankruptcy petitions as of April this year. In 1999, when the court was first established, it heard more than 100 cases.

Responding to investors' concerns, Supreme Court Chief Justice Bagir Manan said: "The results show that they are not meeting our expectations. Therefore, we need to make improvements." Bagir argued that many people here still consider bankruptcy negative for businesses. "That's incorrect. Bankruptcy is a way to settle a debt dispute," he said.

Pompe concurred, saying that some people think that bankruptcy is the same as unemployment. "Bankruptcy does not kill, it revives. It is a process whereby the law facilitates the movement of economic resources, from non-productive enterprises to more productive enterprises. Good bankruptcy law means more employment, not less," he said.

There were 1.4 million bankruptcies in the United States in 2001, he said. Also, the Netherlands sees an average of 633 bankruptcies per month. In comparison, the Central Statistics Bureau reported that 835 large and medium manufacturing companies went bankrupt last year, up from 650 the previous year. "The US and Dutch system allow entrepreneurs to go bankrupt, but afterwards they can start again," he added.

Focus on Jakarta

Public protest toll hike plan

Jakarta Post - May 15, 2003

Zakki Hakim, Jakarta -- The toll road operators' plan to increase tolls by about 25 percent at the end of the month has upset local motorists, especially as many have said the companies have not committed themselves to improving services.

"I can't understand why toll road operators need to increase the tolls, considering the poor service and the fact that the roads are always congested during rush hour," Julian, a commuter who uses the inner-toll road, said.

The reason for hiking tolls to cover operators' losses is absurd, said Julian, who is a young executive at a multinational company and spends Rp 220,000 (US$25.75) every month on tolls.

She said that since operators of the city's toll roads most likely take in millions of rupiah a day, their claim of having suffered revenue losses was unfounded. "I'm worried that I will be handing over my money straight to some large-scale crooks," she said.

Satria Ganefanto, a spokesman for PT Jasa Marga, said that traffic jams often occurred on toll roads during the rush hour. "If you see that there is no benefit to using the toll road because of a traffic jam, please do not use it," he told The Jakarta Post on Monday.

He said that the tolls should be increased because they had not been raised for many years. The increase is also expected to lure investors, he added.

Some tolls, however, will remain the same. They include the Jakarta-Bogor toll and the toll heading to the Soekarno-Hatta International Airport. The increases include a 33 percent hike for the inner-Jakarta toll road network, which is notorious for its lengthy traffic jams during the peak of the rush hour. The toll will increase from Rp 3,000 to Rp 4,000. The charge for using the Cawang-Taman Mini toll and also the Tomang-Kebon Jeruk toll will go up to Rp 1,000 from Rp 500.

An official from the Indonesian Consumers Foundation (YLKI) said that the hikes were inappropriate because the operators should first review irregularities and improve services for customers. Daryatmo, a spokesman for YLKI, told the Post that the reasons of covering operational losses, improving services and to invest in new toll roads were weak, because operators' financial problems were more a result of irregularities and mismanagement. Moreover, the operators should present a legitimate research-based argument that proves the toll hikes will significantly improve services, he said.

Kompas reported earlier that an audit of PT Jasa Marga revealed the company bore losses of up to Rp 7.556 trillion, of which half was caused by internal mismanagement. The report was made by public accountant offices Hadi Susanto and Partners and PricewaterhouseCooper (PwC), and was based on the activities of the company between January 1995 and December 1999.

Daryatmo said that based on Law No. 13/1980 on highways, tolls had to be based on the benefits a customer gets, not on the value of another investment or on the losses that need to be covered.

The House of Representatives and Minister of Settlements and Regional Infrastructure Soenarno have agreed to the proposed hikes. The minister said public buses would be exempt from paying the increase. A presidential decree is needed before the toll hikes go into effect.

News & issues

Conference to discuss next steps for global peace movement

Green Left Weekly - May 14, 2003

Herbert Docena, Jakarta -- Organisers of the "Iraq and the Global Peace Movement: What Next?" conference, which will be held here on May 19-21, expect attendance by as many as 200 delegates from the broad anti-war coalitions that have emerged in the United States, Europe, Latin America, Africa and Asia.

The US war on Iraq has given birth to a global peace movement that is historically unprecedented in both scale and reach -- mobilising at least 12 million people around the world on the February 15-16 weekend.

The organisers of the Jakarta conference hope it will bring together a broad range of representatives from peace movements around the world and draw up a concrete and detailed plan of action for responding to these developments from different fronts.

The conference is being sponsored by a group of organisations, most of which were also behind the sending of an Asian Peace Mission to Iraq on the eve of war, including a group of Indonesian organisations and individuals led by the Indonesian National Front for Workers' Struggle (FNBPI) and the Indonesia Centre for Reform and Social Emancipation (INCREASE).

Also part of the conference organising committee are the Bangkok-based Focus on the Global South and the Amsterdam -based Transnational Institute.

The conference is open to all those who wish to attend but participants will have to take care of their own travel and accommodation expenses.

Environment

Minerals and forests are sources of profit - and conflict

South China Morning Post - May 14, 2003

Marianne Kearney -- When members of East Kalimantan's timber mafia, or cukong, need some illegally logged timber smuggled through the province's forests and rivers, they usually contact Pemuda Pancasila, or another group of well-connected thugs for hire.

Often they do not even bother to buy illegally logged timber. Rather, they pay Pemuda Pancasila to organise a roadblock and redirect a truckload of timber to their mill. Employing a bit of muscle from Pemuda Pancasila or other groups, such as the United Region of East Kalimantan (PDKT), the cukongs are able to avoid paying for costly forestry licenses or tax on the logs, and obtain their timber at a fraction of the cost. No one dares oppose Pemuda Pancasila, a group once patronised and used by the leading Golkar party, or the boys from PDKT, which has high-level connections to East Kalimantan's politicians.

Another tactic deployed by these cukong and their thugs is to persuade village heads to hand over their small community forests for a small fee or in exchange for the party drug Ecstasy. This payment system fuels the villagers' dependence on the drug, and, therefore, their need to keep logging. At the same time it keeps them dirt poor, says Diah Rahardjo, a researcher for non- government groups.

One village which refused to accede to a logging company's overtures was attacked and all the residents fled, she says. The people of these villages have little recourse to the law or the local government because everyone, from the military to the local forestry department and the police, is involved in the logging and smuggling business, says Ms Diah.

Through a tidy system, stolen timber confiscated by forestry police is auctioned off at a low cost, then snapped up by representatives of the same cukong that arranged for the theft in the first place.

Other money-spinning businesses in East Kalimantan, such as illegal gold mining, have been snapped up by ethnic Banjar gangs of thugs, say local journalists. As the competition for timber, natural resources and land has intensified over the past few years, so too have the violent conflicts between communities, thugs for hire and members of the securities forces hired to protect companies, say observers such as Ms Diah.

Non-government groups say this is largely a result of regional autonomy. Since the central government is providing less funding to local governments, local elites, including parliamentarians, are focusing on making money wherever they can. "One problem is that those who are involved in the process of destroying forests are strategically well placed in government, or else they are party leaders, so they get protection from their party," says Edi Suprapto, from Arupa, a non-government group based in Central Java.

In Blora, central Java, at least one villager has been killed in a clash over logging rights. Last October, villagers clashed with forestry police after they were caught logging in a state-owned forest. Wiji, a 40-year-old farmer from Blora, was so badly beaten by the forestry police that he lapsed into a coma and died five days later. In the eyes of the state forestry company, the villagers are stealing the state's forest.

But Mr Edi says the villagers believe they have a right to that timber, as according to adat, or traditional law, the villagers living near a forest have the right to use it and the responsibility to protect it. "This is a historical problem because since the Dutch land rights were not clarified. The Dutch took over the land that, according to traditional laws, belonged to the villagers," says Mr Edi. The state forest company, Perhutani, argues that under Indonesian law, it owns this land and refuses to negotiate.

Watching their ancestral forests being destroyed with the backing of the local elite and corrupt police officers, the villagers reason that they, too, might as well take their share, according to Mr Edi. Clashes occur every month throughout the forests, with villagers often burning down the offices of Perhutani in retaliation for using the riot police to stop illegal logging. The villagers are well aware that these same troops, brought in to stop them stealing timber, are also involved in providing protection for the transport of illegally logged timber.

In a one-month period after the downfall of president Abdurrahman Wahid in 2001, when police and military were occupied elsewhere, local villagers took the opportunity to log at least a 1,000 hectares in a week, says Arupa.

The fight over natural resources has become equally brutal in other resource-rich regions, such as Riau on Sumatra, home to a Caltex oil refinery and dozens of paper and pulp companies. Last October, two security guards at a pulp and paper company were murdered during a demonstration by local villagers. The company had hoped the guards would stop theft of its timber. Security experts say they suspect that a local parliamentarian -- whose logging business relied on timber stolen from the company -- was behind the mob violence.

Other plantation and palm oil companies in Riau, who were given land at ridiculously low prices during the Suharto era, are in conflict with the original landowners, who are demanding compensation. But instead of negotiating with the landowners, many companies prefer to use force. "Companies often engage and hire preman [thugs] to protect their firms. These people are not concerned with human rights, have no training, and it's quite risky [dealing with them]," said one western security expert.

[Marianne Kearney is the Post's Jarkata correspondent.]

Art & popular culture

Anti-Inul protest held at TV stations

Jakarta Post - May 15, 2003

Jakarta -- More than a thousand people staged a rally on Tuesday at television stations SCTV and Trans TV on Jl. Gatot Subroto in Central Jakarta to protest their continued airings of performances by controversial dangdut singer Inul Daratista.

The protesters, mostly women from the Communication Forum for Anti-Pornography, criticized the television stations for airing Inul's performances, which they called "pornographic". The protesters also demanded the government and the House of Representatives draft a bill to fight pornography. At SCTV, the protesters met with the station's operational director, Alex Kumara, and public relations manager Budi Darmawan.

Inul rose to fame on her so-called "drilling" dance and has been in the headlines recently after being condemned by dangdut legend Rhoma Irama, who called Inul's dancing pornographic.

However, Rhoma's criticism moved many individuals and social organizations, including the National Commission for Women, to defend Inul and her right to express herself.

Economy & investment

Indofarma debacle bitter pill for Jakarta

Asia Times - May 15, 2003

Bill Guerin, Jakarta -- Publicly listed state-owned pharmaceutical giant Indofarma is in the public eye over its miraculous transformation of a reported Rp88.6 billion profit in the first three quarters of 2002 into a net loss of more than Rp20 billion (US$2.3 million) by the end of the year.

Though rumors had been rife for some time that all was not well at Indonesia's second-biggest pharmaceutical company, few had any idea of the sheer scale of the financial irregularities that have, to all intents and purposes, deceived the market, potential investors and the public.

On Friday Indofarma held a public presentation to disclose its unaudited report after the Jakarta Stock Exchange (JSX) decision to suspend trading of the company's shares because it had not handed over its 2002 financial report to the Capital Market Supervisory Agency (Bapepam) and the JSX itself.

Indofarma president Edy Pramono and financial director Purwo Kartiko told the press that mistakes in the inventory during the first three quarters and the need to dish out massive discounts to pharmacies had contributed to more than Rp108.6 billion in discrepancies in the fourth quarter.

Pramono has presided over a major enterprise whose standards of accounting and common sense can scarcely be credited. A Rp57 billion ($6.5 million) discrepancy in the stock inventory was hardly surprising given that Indofarma admitted it did a full inventory only once a year.

The practice of calculating the basic cost of goods based on prices established at the beginning of the year and then applying them only at the end of the year when the inventory was taken threw up the startling gap between the net profit of Rp15.92 billion in the first quarter of 2002 and the real figure of Rp6.61 billion after adjustment for increases in the cost of goods sustained over the full year.

Pramono went into even greater detail for the benefit of reporters. The announced operating profit of Rp26.72 billion should have read Rp12.78 billion, though sales remained unchanged at Rp119.07 billion, he said. In the second quarter of 2002, though sales of Rp267.73 billion were a true figure, the net profit reported of Rp45.31 billion was, in fact, a net loss of Rp12.62 billion, just as the initial operating profit figure of Rp69.03 billion was actually a net loss of Rp9.20 billion. Sales of Rp444.08 billion in the third quarter were a real figure but the Rp88.57 billion net profit reported was, in fact, a loss of Rp1.41 billion and operating profit of Rp134.32 billion should have read only Rp17.10 billion.

The scandal, just beginning to gather steam, is acutely embarrassing for a government that was ready last year to divest a majority of its 81 percent stake in Indofarma and maintain majority control of government-owned pharmaceutical stablemate Kimia Farma.

The government has marked Indofarma for privatization throughout the past two years, but hit repeated snags from unfavorable market conditions and political interference.

Last May investor interest had been whetted by a 56.5 percent jump in Indofarma's net profits in the first quarter, to Rp15.92 billion. Potential buyer Dutch pharmaceutical and health-care- products giant Nutricia International BV wanted a cast-iron agreement from the government allowing them to continue to produce generic medicines for the public in the event of a deal being reached on the majority takeover.

This was quickly followed by an about-turn by the government, which backed a new strategy, said to have been proposed by Health Minister Ahmad Sujudi, that resulted in a revised decision to divest only a minority stake in Indofarma, because of its role as the primary supplier of cheap generic drugs to the general public and government health-care centers (puskesmas).

Stablemate and rival, state-owned Kimia Farma, the largest pharmaceutical manufacturer in the country, also withdrew from a plan to set up a joint-venture company with the German STADA Arzneimittel AG to sell generic drugs in Indonesia because of uncertainty over the privatization strategy.

While all this was going on, Indofarma was fighting off stiff competition brought on by the relatively small market size, complex import clearance procedures for raw materials and the intrinsic weakness of the Indonesian rupiah against the dollar.

A subsidiary, PT Indofarma Global Medika (IGM), which distributes the generic medicines, caused Rp71.03 billion of the shortfall through the need for heavy discounting of these products, according to Pramono.

Corrupt customs officials make it difficult even for state-owned enterprises to import drugs legally and are also responsible for the flood of illegal and fake medicines on the market in Indonesia. The local industry remains severely threatened by these cheaper, smuggled and fake products, which have flooded the market since 1998. Bribes to customs officials smooth the path, and even machinery and raw materials needed to counterfeit medicines have been found in the country.

The dependency of the pharmaceutical industry on imported raw materials makes it extremely vulnerable to the fluctuation of the rupiah against the US dollar. With so much of their raw materials imported, and paid for in dollars, local producers find it well nigh impossible to reduce production costs and the price of the products.

In 1998, the cost of producing drugs more than doubled and retail drug prices were up by more than 400 percent. The rupiah lost nearly 80 percent of its 1997 value, precipitating a crisis in the health system. The government was forced to give subsidies on pharmaceutical raw materials. By 2001 Sampurno, head of the powerful Food and Drug Supervisory Board (BPOM) that approves licenses for medicines and foodstuffs, and one of Indofarma's commissioners, tried but failed to get a protectionist deal for Indofarma that would allow it to produce and distribute no fewer than 20 medicines.

The rationale was that efficient production methods would be able to reduce prices of the drugs by 50-60 percent, but other pharmaceutical companies, both state-owned and privately owned, lobbied for the withdrawal of the plan.

Only three months ago Pramono had pleaded with the government to allow it to raise the prices of its generic medicines, the prices of which are set by the government for the official market, as the company had been hit by rising production costs. He said an alternative would be to exempt the company from paying 10 percent value-added tax (VAT).

Neither request was granted, and yet barely a mile as the crow flies from Indofarma's administrative headquarters in Central Jakarta is the Pramuka market, where all manner of branded and generic drugs as well as hospital consumables and prescription drugs are sold at very competitive prices.

Indofarma's hospital and pharmacy customers have no need to pay Indofarma prices, at least those who have businesses in metropolitan Jakarta. Neither do they need to hold substantial stocks as, with the exception of a few imported drugs that are scarce on the market, Pramuka merchants hold wholesale levels of stocks themselves.

Sales tax on Indofarma's products leaped from 27 percent to 43 percent last year, causing a Rp16.60 billion loss in terms of net sales on their sales mix of roughly 80 percent generic drugs and 20 percent brand-name drugs. Indonesia's No 2 drug maker is a massive operation with 28 branches across Indonesia. It produces about 4.5 billion generic tablets every year together with supplementary health-care products and patented herbal medicine potions. It is against this background that Indofarma's need, and ability, to turn a profit needs to be seen and the pressures generated on staff and management, who are not the industry's best, understood.

Anthony Sunarjo, chairman of the Indonesian Pharmaceutical Federation (GPFI), says there are currently some 160 pharmaceutical companies operating in Indonesia, 38 of which are owned by foreign companies, and none of which have a market share of above 10 percent. An estimated 1,500 distributors, 6,500 dispensaries and 5,000 drugstores form the infrastructure that gets the medicines to the public. Indofarma and Kimia Farma cover the whole country through a branch network, though the latter has the edge with its ability to sell directly to the consumer through its chain of pharmacies.

GPFI estimates there are also upwards of 100,000 traders operating illegally in a market whose value is essentially the same as Thailand and the Philippines, about $1.5 billion a year.

The rub is that Indonesia has the lowest consumption of drugs per head of the three countries. In 2002 Indonesia, with a population of 210 million, spent only $7.10 a head, up from US$4 in 2000, as against Thailand's $23.80 a head with a population of 63 million and the Philippines consumption of $19.20 per head in a population of 78 million.

The fallen star will now be placed under a special restructuring program, according to the Ministry of State Owned Enterprises, which controls the privatization program. A similar fate awaits Kimia Farma.

Pramono succeeded Gunawan Pranoto as president director. The latter has substantial political clout, and the health minister himself appointed Pranoto to head up Kimia Farma. The two pharmaceutical giants were among four state companies scheduled for sale last year as part of the privatization program. The selloffs, together with those of Bank Mandiri, the country's largest bank, and Angkasa Pura II, which controls Jakarta's international airport, were moved back to this year because of various technical problems.

The sales of Indofarma and Kimia Farma were included in successive Letters of Intent (LoIs) signed by the International Monetary Fund and the government, though this is no longer a constraint given Indonesia's intention to pull out of the IMF support program.

In March, when pleading for special help for the company, Pramono also criticized the government for dragging its feet on the divestment, and said Indofarma expected the government to fix a definite schedule for the privatization because if it continued to postpone the program, it would discourage foreign investors.

"I have met several officials from the Ministry of State Enterprises and I have urged them to give us an assurance on the divestment plan. The uncertainty would surely have a negative impact on our investment climate," said Pramono.

Though Pramono this week said he was ready to be replaced should any "error" on the part of management be identified, the fact that these gross irregularities took place under his watch, and in effect scuttled the chances of even a remote interest from investors, will haunt him for years to come.

Possible sanctions against the management and more independent audits of the company's books seem likely, and some local brokers say they are getting ready to ditch Indofarma stocks in the light of the inevitable public scrutiny.

The Indofarma debacle will have strengthened the arm of those legislators pressing for the privatization program to be deferred until at least after next year's elections, arguing that selling national assets in such an unfavorable investment climate would be folly.

Indonesian bank struggles to revamp image

Asia Times - May 14, 2003

Tony Sitathan, Jakarta -- When a troubled commercial bank in Indonesia needed to improve its standing with the public and the business community, it turned to Landor Associates, considered one of the world's foremost authority in image building and branding. Landor was to develop a new visual identity and overall brand expression to mirror the new direction of Bank Internasional Indonesia (BII).

Remaking BII's image was no easy task, as it was one of many banks to be recapitalized in 1997 because of the Asian financial crisis. BII was left with a huge loan exposure of close to US$1.3 billion from its founding parent company Sinar Mas Group and its flagship company Asia Pulp and Paper, which had run up massive debts in excess of $12.2 billion.

The Indonesian Bank Restructuring Agency (IBRA) now owns 57 percent of BII, while the Sinar Mas Group owns less than 3 percent. As part of the IBRA's national loan program with the International Monetary Fund, it has agreed to sell the bank -- although plans to merge BII with Bank Mandiri have been shelved for the time being.

Bank Internasional Indonesia was founded in 1959 as a commercial bank and licensed as a foreign-exchange bank in 1988. BII's first initial public offering was in 1989 and since then has been seen as one of the six top banks in Indonesia in terms of sheer asset base. It has more than 2 million customers, about 250 branch offices, and its own network of 600 automatic teller machines, and is considered the second-largest card business and the leading electronic-banking system provider in Indonesia. Its e- banking strategy received kudos when its Internet Banking won the i2bc eAward last year in the financial category from Indonesia Infocosm Business Community (i2bc). It was also acknowledged as one of 10 best companies applying e-business in the Brick and Mortar Company Category.

Landor recommended that BII build on the success of its tradition and focus on developing new products and services through innovative thinking, building lasting customer relationships and embracing new technology.

Ebrahim Kazi, a branding consultant for Landor Associates, said its job was in essence to ensure that all brand propositions are focused. "It was important that the brand stays relevant for BII while focusing on its strengths and be able to build lasting relationships with their clients. It also helps to focus on its marketing and advertising efforts while helping to keep these big investments in line," he said.

Michael Ip, Landor's managing director for the Asia-Pacific region, said the integral component of BII's branding system is the new brand architecture. "It is common to see complicated branding relationships in the marketplace, which customers have very little time to understand and sift through. BII is moving away from communicating multiple brands to focusing on a single, strong corporate brand, from which new products and services can be launched," he said.

By placing a positive spin on BII's position and identity in the Indonesian banking scene, BII hopes to create a lasting impression with its shareholders, stakeholders and, most important, the public. BII needs to improve its image in the public eye. For example, last May, an offering of planned rights certificates, which are used to raise the recovery levels of bank loans of up to 25 percent, failed to live up to expectations. Instead of raising the expected Rp1.4 trillion (US$159 million), only Rp300 billion ($34 million) was raised. The offering was part of the Ministry of Finance's and the central bank's plan to ensure that IBRA announces the recovery rate of problem loans it has been managing.

It has been announced that this year BII will attempt to issue a Rp2 trillion ($225.2 million) bond to improve the bank's balance-sheet structure. It is hoped that BII will improve its high cost of funding, which mainly comes from deposits. A financial risk consultant for Axiom Consulting based in Hong Kong, Benjamin Tan, said he felt that BII needs to reshape its short-term loan structure. "In order to maximize its ability to offer long-term credit facilities to its corporate customers it cannot depend on its short-term fund position. This is detrimental to the bank as it shows that certain sectors within the bank are inadequately capitalized," he said.

BII has thus far written off Rp1.2 trillion in non-performing loans (NPLs). This was done to improve the overall quality of the bank's assets. One of BII's directors, Sukatmo Padmosukarso, has informed the Jakarta Stock Exchange that the bank still reserves the right to claim the non-performing credits either by restructuring, by auction or even through litigation. The writeoff decision was approved by its shareholders in a meeting last December.

Perhaps all these measures do create a sense of credibility for the Indonesian banking scene, which has been blamed for much of the financial chaos of 1997-98. So far BII has undergone two management shakeouts, displacing the old vanguard and those with implicit ties to the debt-laden Sinar Mas Group. Several analysts have also warned against members of the Sinar Mas family making a comeback similar to the founders of Bank Central Asia or Lippo Bank.

Taking control of a banking entity with the ability of raising funds for business conglomerates is an attractive option. Perhaps legislation should be passed in parliament and mooted by the central bank where business conglomerates should be debarred from managing or running banks. A good example of a banking institution that has stood the test of time is Bank Rakyat Indonesia (BRI). Calling itself the People's Bank, it has been free from the clutches of powerful conglomerates and has been professionally managed since it was founded about 150 years ago. Its debt-to-equity ratio is among the lowest of banks in Indonesia while its NPLs are less than half of the national average. That speaks volumes for a bank.

It is to be hoped that BII can learn valuable lessons from the likes of BRI instead of relying too much on new branding strategies or what some call window-dressing. Spin doctors can only do so much. The rest is up to the people managing the banks.

BP alarmed buyers from new Indonesia field scarce

Far Eastern Economic Review - May 15, 2003

John McBeth, Jakarta -- Indonesia's 25-year reign as the world's largest liquefied-natural-gas (LNG) exporter is under threat, though it's taken a distracted government years to wake up to the fact.

Three factors jeopardize Indonesia's primacy: customers' concern over security of supply, the entry of competitive new suppliers and the way China's emergence as a major buyer has upended LNG pricing structures.

These challenges are starkly illustrated in Anglo-American oil- giant BP's trouble finding buyers for much of the planned output from its new Tangguh gas field in Papua, Indonesia's easternmost province (formerly known as Irian Jaya).

With construction of the first phase of the $2.8 billion project due to begin early next year, there's a lot of nail-biting at BP's headquarters in Jakarta. Says one industry analyst: "It's a project that's all dressed up with nowhere to go."

BP's basic problem is that Tangguh is in a remote and sometimes volatile corner of the world, which makes customers counting on reliable delivery schedules nervous about locking in long-term contracts.

The company had hoped to line up deals for Tangguh's first two 3.5-million-tonne production trains -- the facilities that convert natural gas into transportable, liquefied form -- but things haven't gone as planned. BP had counted on winning the 3- million-tonne contract for China's first LNG terminal in Guangdong province, due to be completed in 2005. However that contract went to the consortium controlling Australia's Northwest Shelf gas field, leaving Tangguh's developers with the consolation prize -- a 2.6-million-tonne contract to supply the province of Fujian.

Now, they and Indonesian government salesmen are scrambling to nail down contracts with other buyers to underwrite the cost of developing the field. "It is almost inconceivable that it won't go ahead," says Gerald Peereboom, president of Tangguh LNG. "Is it 100% [bound to proceed]? We can't really say. But Tangguh is all part of BP's future outlook; it is one of the key growth areas we have."

Peereboom says the Tangguh consortium -- comprising BP, Mitsubishi, the China National Overseas Oil Corporation (CNOOC), Nippon Oil, British Gas and four other Japanese partners -- plans to make what he calls "a final investment decision" on whether to go ahead with the project by the end of this year. By then, he says, "we expect to have sufficient commitments from the markets" -- an indication that a lot is riding on finding more buyers.

Tangguh's proven gas reserves stand at 14 trillion cubic feet, but BP is confident the field could hold as much as 24 trillion cubic feet. Eventually BP, which holds a 37% stake in the project and a 30-year concession to exploit the reserves, hopes to be operating six production trains, and will have land available for two more.

But changing market conditions are complicating things. China's awarding of its first two contracts has turned LNG pricing on its head. That's because both supplier groups agreed to prices considerably lower than what has prevailed for North Asian contracts over the past 20 years. Indeed, Tangguh's price is just half of the $4.25-4.30 per million British Thermal Units (BTUs) currently being paid by utility companies in Japan and South Korea. Japanese and Korean buyers are already making it clear they will drive a hard bargain over future renewals of Indonesian contracts. Industry sources say disgruntled Taiwanese utilities are on the verge of shifting to new suppliers.

Meanwhile, in addition to the Northwest Shelf, Indonesia has to contend with new competition from Malaysia's planned 23-million- tonnes-a-year Sarawak LNG complex, which went into partial production in March, and from Qatar, which expects to be producing 45 million tonnes a year by 2010.

Industry analysts believe that with ExxonMobil's Arun gas reserves in Aceh province being gradually depleted, Indonesia waited too long to promote Tangguh as a new companion to Bontang, the country's other established LNG centre in East Kalimantan. They also point out that when separatist rebel activity closed Arun temporarily two years ago, it ended the premium Indonesia had enjoyed in the market for security of supply.

It now remains to be seen whether Japanese and Korean buyers have been sufficiently frightened by Arun's temporary closure to move their business away from Indonesia as the time approaches to renegotiate contracts, many of which will expire between 2009 and 2011. They'll be aware that Papua could become a security problem as well, though the low-level separatist insurgency there has never touched the area around Tangguh.

BP's failure to win the LNG contract in Guangdong meant a major adjustment in planning. The company slashed $100 million from its 2003 budget for Indonesia , laid off staff and put construction plans back by a year. Peereboom calls the delay "breathing space" -- space that is now needed to find buyers. "Obviously we want at least one train's worth [of buyers] by the start of construction to make the lenders feel comfortable," he says.

Under BP's financing plan, the company will cover its equity stake from internal sources and raise the rest through bank loans. Many of the questions about Tangguh's fate begin with Fujian, BP's anchor contract. Industry analysts point to a lack of any real planning, either for CNOOC's proposed LNG receiving terminal or for the two 650-megawatt power stations and home- supply networks that will use the gas.

The company can take some comfort from the fact that under the take-or-pay provision of the contract, Fujian must begin paying for the gas from 2007, whether its facilities are ready or not. Peereboom says that CNOOC, which paid $275 million for a 12.5% stake gin the Tangguh project, has "every incentive" to see it go ahead.

Unlike Guangdong, resource-scarce Fujian badly needs alternative sources of energy for its future development. Even if Fujian comes through, BP is finding it tough to attract other customers for Tangguh. Perhaps its best hope rests on the Indonesian government persuading Japanese and Korean buyers to transfer two existing contracts, for 3.3 million tonnes of gas a year, from Arun to Tangguh when they expire in 2009-10. Both are expected to be renegotiated this year.

Another potential customer for Tangguh's gas is GNPower, a private Philippine company which signed a letter of intent in 2001 to take 1.3 million tonnes a year for a planned 1,200- megawatt power station in Bataan, northwest of Manila. But the key to nailing down that contract is a power-purchase agreement between GNPower and the Manila Electric Company that has been held up by deregulation issues.

BP is also bidding to supply 1.1 million tonnes of LNG a year to SK Corp., South Korea's top oil refiner, and Pohang Iron and Steel Corp., plus another 1.7 million tonnes to Taiwan Power's planned 4,000-megawatt Tatan complex in northern Taiwan.

Peereboom says that shipping LNG from Tangguh to Java is another option, particularly with demand for power rapidly overtaking supply on Indonesia's most densely populated island. BP executives are even considering the possibility of sales to the American West Coast or Mexico's Baja California, where six LNG terminals are on the drawing board. Says BP Vice-President for Marketing Jimmy Straughan: "It could be a factor in the first two trains, or it could be part of the longer-term market."

Finally taking action to maintain its LNG markets and find new ones, the Indonesian government has sent a sales team to Mexico, and Mines and Energy Minister Purnomo Yusgiantoro recently led a team to Japan to secure commitments to renew contracts due to expire at the end of the decade. As befits the changing market conditions, however, price and terms have still to be negotiated.