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The 12 October Bali bombings have surely served to bolster claims that Indonesia is a staging post for terrorist groups (such as the shadowy Jemaah Islamiah and al-Qaeda) and that Southeast Asia, with Indonesia as the epicenter, is the second front in the war on terrorism. Whilst there were grave doubts initially that the Indonesian government would be able to move decisively and effectively in tracking and cracking down on terrorist cells and those responsible for the bombing, breakthroughs have been made. There have been some tensions, though, during the course of the investigation amongst the various Indonesian and other security agencies working on the case.
The bombings are a major blow to Indonesia's tattered international image and are bound to further affect economic sentiment already crippled by corruption and political mismanagement. Foreign direct investment dropped 11 per cent in the first nine months of 2002. More recently (in November) several international schools were closed following warnings of possible terrorist attacks on 'soft' targets. These security alerts sap the morale and confidence of locals and foreigners alike. However, the impact on domestic politics appears to have been minimal. With an eye to the 2004 elections, it is unlikely that any party, not least President’s Megawati’s PDI-P (Partai Demokrasi Indonesia – Perjuangan), would upset the status quo and antagonize key Muslim and nationalist constituencies.
There is no persuasive evidence that terrorism or terrorists have widespread popular support. The Muhammadiyah and Nahdlatul Ulama, Indonesia's largest Islamic organisations, came out immediately to denounce the attacks. However, the government must rally these organisations and the general population if there is to be widespread support for a crackdown on violent extremist groups. There has been a perception among some of the educated elite and others that the US, via the CIA, was responsible for the Bali carnage. Further economic malaise would only add to any festering discontent and provide fertile ground for potential radicalization amongst the disaffected at the grassroots level.
ASEAN regional cooperation and Jakarta-Canberra relations are critical in the fight against terror. Behind the fašade of diplomatic cooperation, one can sense the tensions and caution. Travel advisories issued by western governments, including Australia, can only hurt regional economies still reeling from the 1997 financial crisis. ASEAN countries must cooperate closely for terrorists will readily exploit any lack of cooperation, communication and consensus.
The crackdown on terror could provide the pretext to shift the focus away from the political and economic reforms badly needed in Indonesia’s transition. Megawati’s trademark non-committal profile suggests that she may not have fully grasped the immensity of the task ahead. Much more effort and commitment are needed if Bali - an oasis of calm since the bloody anti-communist purge of 1965/66 - is to help Indonesia recover.
WATCHPOINT: Will Indonesia be committed to a sustained campaign against terror while pursuing a reformist agenda? Cooperation with ASEAN neighbours, Australia and the USA has been somewhat lukewarm. Unless the government acts resolutely, the bombings may act as a catalyst for a deterioration in Indonesia's political and economic position. This will not augur well for Southeast Asia.
About our company:
AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.
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