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-- Attacks attributed to Islamist groups are shaking the Philippines and 
Indonesia. The Bali bombing in October has weakened President Megawati, leading 
to economic difficulties and the risk that the army may intervene. 
by SIDNEY JONES *

THE Bali bombings on 12 October were not Indonesia's first encounter with 
international terrorism, but no attack on this scale had happened before, and 
no Indonesian believed that peaceful Bali would ever be a target (1). There 
were ever more urgent warnings from the United States throughout September that 
al-Qaida operatives were planning attacks in Indonesia, but mostly they fell on 
deaf ears. Indonesians were very sceptical about the reality of the terrorist 
threat. The government neither wanted to be seen as capitulating to US 
pressure, nor to be viewed as returning to the Suharto-era arbitrary arrests of 
political suspects. There was concern that any move against hardline Muslims, 
such as the cleric Abu Bakar Ba'asyir, would be politically divisive, when 
President Megawati Sukarnoputri knew that she needed support from Muslim 
parties if she was to win another term in 2004. 

The atmosphere changed dramatically with the bombings: the cabinet approved a 
new anti-terrorism decree on 18 October and next day Abu Bakar Ba'asyir, head 
of the Jemaah Islamiyyah, was arrested. But the impact on Indonesia goes far 
beyond this. President Megawati has been seriously affected by the events. 
Before them she was widely regarded as unbeatable in the elections. That has 
changed. There is a now a serious effort to look for a suitable contender, both 
from within her Indonesian Democratic Struggle Party (Partai Demokrasi 
Indonesia Perjuangan or PDIP), and from outside. Her lack of leadership had 
already made PDIP members unhappy, but her performance after the bombings 
appalled many. Indonesians saw no effort to direct policy, or to force her 
cabinet members to speak with one voice. A senior PDIP parliamentarian told us 
that she had let the country drift, and even after the bombings, there was no 
sign of focus. She had become a liability: "It used to be that Megawati's name 
attracted people; now it repels them." 

The Indonesian armed forces (Tentara Nasional Indonesia or TNI), whose 
influence had waned with the fall of General Suharto in 1998, could be the 
major beneficiary of her weakness, even though General Endriartono Sutarto, the 
TNI commander, has said repeatedly that the military has no interest in a more 
prominent role (2); it could, in fact, benefit in three ways. 

Since the police were separated from the armed forces in 1999, they have had 
primary responsibility for internal security. The army, particularly at local 
level, chafed as the police usurped its role and took the opportunities for 
graft and corruption that came with it. The poor performance of the police in 
handling serious violence has intensified the army's resentment. Nowhere was 
the incompetence of the police more obvious than in Bali, where officers failed 
to seal off the bombsite and allowed anyone to tramp through it with no concern 
for forensic evidence. 

The new anti-terrorism regulation, adopted on 18 October, gives the military 
only a small formal role as part of a task force to create strategy to combat 
terrorism. But under the new law's looser rules of evidence, suspects can be 
detained on the basis of intelligence reports - and a great fear of the 
political reform movement in Jakarta is that the role of military intelligence 
will increase, without effective checks by civilian authorities. Both Sutarto 
and the army chief of staff, General Ryamizard Ryacudu, are pressing for a new 
national intelligence co-ordinating body (3). The need for better co-ordination 
is not disputed; the concern is how the intelligence will be used. 

Indonesians committed to military reform consider that a gradual elimination of 
the territorial command structure, through which the army has posts at 
provincial, district, and subdistrict levels, is critical in getting the army 
out of politics. The structure brings direct influence over local politics: the 
military commander is near-equal, and sometimes superior, to the civilian 
executive in local decision-making. When Suharto resigned in 1998, advocates of 
military reform, even within the army, agreed that the territorial structure 
had to go. 

Over the last two years there has been steady retreat from that position, 
because of communal, ethnic and separatist violence, and the importance of 
local commands as a source of revenue for military operations. New regional 
commands were created in the Moluccas (Maluku in Indonesian) in 2000 and in 
Aceh in 2001. After Bali, more could follow, and the army has explicitly 
advocated this so it can be "closer to the people" (4). Since there is 
insecurity among ordinary Indonesians after the bombings and a new nostalgia 
for the Suharto era, the army might find political support for the move. This 
would be a serious blow to political reform and civilian supremacy in a 
democratising government. 

Western governments, whose citizens or installations could again be targeted by 
al-Qaida, desperately want an effective partner in the war on terror, which 
could lead to increased funding and training of the TNI. But there are great 
pitfalls to this: the army is still a highly politicised organisation, and it 
leaks both information and weapons. Rebel movements still get most of their 
arms from corrupt soldiers (and police), and the extent of the army's 
involvement with the criminal world is only slowly emerging. Enforcement of 
discipline is extremely weak: an attack by soldiers in September on a police 
post in North Sumatra, in which a ton and a half of marijuana disappeared, is 
just one of TNI's smaller problems. Trials of army officers for crimes against 
humanity in East Timor have been farcical, and have undermined, rather than 
strengthened, any prospect of accountability for soldiers responsible for 
serious crimes. 

The threat of terrorism is real, yet only a few Muslims are radicals, and even 
fewer advocate violence. The best-known radical groups - Laskar Jihad, Front 
Pembela Islam (FPI, Islamic Defenders Front) and the Jemaah Islamiyyah 
networks - have problems, but not all as a result of the bombings. And the new 
heightened security may not have much of an impact on radical Islam. Most of 
these groups are convinced, as are many other people in Indonesia, that the US 
government planned the Bali attack to bully countries previously reluctant to 
join its anti-terrorist operations to support a war on Iraq. So reactions 
against the bombings are not likely to lead to a change in the extent or 
content of Islamic radicalism in Indonesia. 

Who are the Muslim radicals?
The Jemaah Islamiyyah is the only network with significant ties to 
international terrorism, but it seems to be an elusive coalition of underground 
groups, rather than a single organisation that can be easily banned or broken 
up (5). The danger it poses is unlikely to be much affected by the arrest of 
Abu Bakar Ba'asyir, one of its alleged leaders, particularly when the man 
thought to be its operational commander, Riduan Isamuddin, alias Hambali, 
remains at large. 

Laskar Jihad is a militia based in Yogyakarta, known for its violence in the 
Moluccas and Poso (Central Sulawesi). It was formally disbanded a week before 
the bombings, a decision announced over Laskar Jihad radio in Ambon on 15 
October; departures began the next day. The leader of Laskar Jihad, Ja'far Umar 
Thalib, is currently on trial for incitement after a violent attack in Ambon in 
April. One source said Laskar Jihad was torn by internal dissent, short of 
funds and infiltrated by intelligence. The disbanding of Laskar Jihad is good 
news for Ambon and Poso, but what will happen to young men recruited locally, 
and where are the weapons it had? 

The Front Pembela Islam (FPI) is known for smashing nightclubs and discotheques 
and any other places it judges to be dens of iniquity. But most of its members 
are young thugs with a few Islamic leaders, headed by a cleric named Habib 
Rizieq, who was detained on 16 October. He was charged with incitement 
connected with an FPI raid in Jakarta on 4 October; his arrest warrant seems to 
have been issued before the bombing. 

All three organisations used violence, but had fundamental ideological 
differences. Laskar Jihad and FPI believed that it was forbidden under Islamic 
law to revolt against a Muslim government, no matter how repressive or wayward. 
Laskar Jihad was ultra-nationalist, committed to Indonesia's territorial 
integrity and convinced its mission was to fight Christian separatists because 
the security forces were incapable of doing it. But Abu Bakar Ba'asyir and the 
men of the Jemaah Islamiyyah believe that jihad against enemies of Islam is 
obligatory, even if those enemies are Muslim, and that the only acceptable 
government is a restoration of the caliphate. 

It is too early to assess the economic impact of the bombings, but it will 
obviously be serious. In the two days after, the central bank had to buy up 
millions of dollarsworth of rupiahs to prevent the currency's value from 
plummeting. That staved off a crash, but the bigger issue is the loss of jobs, 
and the general sense of fear, particularly for foreign companies. As an 
executive noted, there was not much new investment coming in, and the real 
question was whether businesses already here would leave. Most were determined 
to stay, despite non-essential diplomatic staff and dependents being ordered 
home 

Bali is likely to be deeply scarred anyway, economically and socially. Kuta, 
the centre of the tourist district, is already a ghost town. Within a week of 
the bombing, the occupancy of hotels dropped from 90% to 27%. The service 
sector will suffer, and so will exports, as many tourists were small-scale 
exporters buying handicrafts to retail abroad. These sales accounted for almost 
half of Balinese exports, according to the local press (5). Local officials 
expect the loss of 150,000 jobs and perhaps $20m in tax revenues (6). Most big 
foreign tourist agencies have put travel to Bali on hold, and it will take a 
long time for the industry to recover. 

Bali may see worsening communal relations with migrants from other parts of 
Indonesia, although local leaders are doing their best to ensure this does not 
happen. Anti-migrant sentiment has been building for years, and because many of 
the migrants are Muslim, there was a fear that the local Balinese civilian 
security groups, pecalang, might take their anger out on non-Balinese. 

The bombings have temporarily displaced Indonesia's other problems: rebellion 
in Aceh and Papua, and sectarian conflict in Maluku and Poso, with hundreds of 
thousands of internally displaced people. And there are also problems of 
decentralisation. But every response of the Megawati government to the bombings 
will affect its ability to handle other challenges. After initial arrests of 
Jemaah Islamiyyah suspects the government could make suspected Acehnese 
guerrillas the next target under the new laws. 

The government will have to address the radical Muslim groups not merely by 
cracking down on them, but by providing alternatives to the way of life they 
offer. This is not just an economic question, since many of the recruits come 
from the educated middle class as well as from the poor. If the government does 
not address the demobilisation of groups like Laskar Jihad, which may be 
temporary, it may face worse problems in the future. The Indonesian government 
was already in serious trouble on 12 October: the events in Bali have deepened 
that.
* Sidney Jones is director of the Indonesia project for the International 
Crisis Group, Brussels 

(1) For an analysis of earlier incidents, see International Crisis 
Group, "Indonesia: Violence and Radical Muslims," Indonesia Briefing, 
Jakarta/Brussels, 10 October 2001.
(2) See, for example, "Ditandatangani, 2 Perpu Antiterorisme," Kompas, Jakarta, 
19 October 2002.
(3) "Pemerintah akan Bentuk Badan Baru Intelijen," Republika, Rabu, 17 October 
2002.
(4) "KASAD: Tak Ada Lagi Kodam Bubar," Kompas, 17 October 2002.
(5) "Ekspor secara Cangkingan Terpukul," Bali Pos, Bali, 19 October 2002.
(6) Taking account that the central government granted Bali tax relief through 
December 2002; see "Bali Kehilangan Pajak Rp 190 Milyar," Bali Pos, 19 October 
2002 and "150 Ribu Naker Pariwisata Terancam Nganggur," Bali Pos, 18 October 
2002
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