Negotiations between East Timor, Australia and oil companies working Timor Gap offshore fields have bogged down over tax issues, with the companies saying they fear Dili may be seeking to impose higher rates than expected.

Jakarta – The Indonesian rupiah spiked to around 9,800 to the dollar on Thursday and the stock market gained 1.40 percent, welcoming Muslim politician Hamzah Haz as the country's new vice president.

Jakarta – The World Bank yesterday welcomed the appointment of Ms Megawati Sukarnoputri as Indonesia's new president, and urged her to assemble a strong economic team to tackle the country's daunting problems.

"This is a time of great challenge and opportunity for Indonesia," bank president James Wolfensohn said in a statement two days after Ms Megawati's appointment.

Jakarta – Hamzah Haz, who became Indonesia's ninth vice president on Thursday, is a seasoned lawmaker and politician and the first in more than three decades to come from a Muslim party.

G.K. Goh, Jakarta – Abdurrahman Wahid's farewell to his followers Thursday was much like his 21 months as Indonesian president – chaotic, confusing and sadly anti-climactic. About 1,500 people attended a rally outside the presidential palace near Jakarta's famous Independence Monument and crowded around a small wooden stage to listen to his parting words.

Achmad Sukarsono, Jakarta – Indonesian legislators on Thursday elected an unlikely deputy for their first female president – a Muslim politician who has said women are not fit to lead the world's largest Muslim nation.

Hanoi – The United States is watching the Indonesian military closely after the rise to power of President Megawati Sukarnoputri. Its officials have yet to decide whether to increase limited ties with Jakarta's armed forces, according to a senior US State Department official.

Irwin Arieff, United Nations – The United Nations said on Wednesday it would reduce its presence in East Timor after the tiny territory gained its independence, expected early in 2002, but had to stay on alert against militias in neighboring West Timor as long as Indonesia failed to disband them.

Sonya Ross, Washington – Federal investigators looking into alleged fund-raising abuses by Democrats questioned President Clinton extensively about his ties to Indonesian businessman James Riady, dating back to his 1992 White House campaign.

A joint campaign by seven political parties to hit the hustings in Lospalos Monday was called off because transportation promised by UNTAET failed to turn up.

Mark Dodd – The Nobel laureate Bishop Carlos Belo has indicated support for a Fretilin victory at the election for a Constituent Assembly on August 30.

East Timor's official television and radio station's have begun broadcasting the second round of campaign messages allotted political parties and independent candidates contesting the August 30 constituent assembly elections.

Hong Kong – Megawati Sukarnoputri may well put Indonesia on the path to political stability, but even then it may not be smooth enough to tempt back emerging market investors whose sentiment is soured by external volatility.

I Made Sentana, Jakarta – Indonesia's new President Megawati Sukarnoputri faces a tough balancing act between building a workable political coalition and fulfilling hopes among financial market players to appoint economic technocrats, analysts say.

In the months leading up to President Abdurrahman Wahid's removal as president yesterday, American State Department officials and the National Security Council developed a contingency plan that calls for the quick resumption of economic aid to Jakarta if his successor, Megawati Sukarnoputri, begins to carry out economic reforms.

Jakarta – Indonesian police authorities have arrested seven of their own senior officers and are hunting down another one in what appeared to be a clean up of the force following Abdurrahman Wahid's sacking, police said Tuesday.

Seth Mydans, Jakarta – When she was still something of a neophyte six years ago, Megawati Sukarnoputri spoke with wonder about the hard work of politics. The most difficult thing to learn, she said, was patience.

"It's only human that I have ups and downs," she said then. "I've had to train myself to remain clear and detached in the face of problems."

Seth Mydans, Jakarta – In the most peaceful transfer of power in Indonesia's history, Megawati Sukarnoputri was sworn in as president today, moments after the nation's top legislative body voted to cut short the fractious and rudderless tenure of her predecessor.

Vaudine England, Jakarta – Chinese sports officials have decided to withdraw their badminton team from next week's Indonesian Open Championship, citing the unstable political situation in the capital.

Jakarta – Indonesian MPs Monday opened a special session which could impeach President Abdurrahman Wahid, even though he issued a decree disbanding parliament. Following is a chronology of his 21 months in power:

1999

Jakarta – The Indonesian armed forces yesterday staged one of the biggest show of force seen in the capital in years. Another convoy of 40 armoured vehicles of the Jakarta military command also converged on the central square from East Jakarta.

Jakarta – Indonesia's first leader, President Sukarno, was ousted from office 35 years ago by right-wing army generals. On Monday, Sukarno's daughter rose to the presidency on a wave of support from the military brass – still this nation's kingmakers.

Vaudine England, Jakarta – Despite two bombs in the morning and a gathering of forces for a major political showdown today, it was hard to find signs of concern outside Parliament building yesterday afternoon.

Mark Dodd, Aileu – When it came time to harvest new varieties of sweet potato in an agriculture project in Aileu, an East Timor mountain town, the response was overwhelming – the farmers made off with most of the cuttings.

Ian Timberlake, Jakarta – President Abdurrahman Wahid's threat to declare a state of emergency tonight is a deliberate tactic to foster negotiations with his political opponents, according to observers. "It's psychological warfare," said Arbi Sanit, a political-science lecturer at the University of Indonesia.

Jakarta – In an effort to end a long-running separatist war, Indonesia's Parliament yesterday passed a Bill granting Aceh province sweeping autonomy. The legislation, which will not come into effect until 2002, is not expected to have any immediate effect on the conflict which has claimed over 900 lives this year.

Jakarta – General Wiranto, the former Indonesian military commander blamed for the violence surrounding East Timor's 1999 independence vote, emerged Friday as a possible vice-president if President Abdurrahman Wahid is forced to quit.

Lindsay Murdoch, Jakarta – They call him King Rat. Of many influential Indonesians plotting the downfall of President Abdurrahman Wahid, none is doing more to undermine his rule than Surojo Bimantoro, the national police chief.

Jakarta – In a new twist to Indonesia's political turmoil, the national assembly chairman Friday warned President Abdurrahman Wahid he would face a snap impeachment hearing if he swore in a new police chief.

Muklis Ali, Jakarta – Indonesian President Abdurrahman Wahid on Friday stood by a threat to declare a state of emergency to counter fresh efforts to impeach him, edging the country closer to a potentially explosive showdown.

Marianne Kearney, Jakarta – The seemingly endless battle between the Indonesian Parliament and President Abdurrahman Wahid over who should rule the country has left the government with little time to focus on the business of running Indonesia.

Lee Siew Hua, Washington – The United States said turmoil in Indonesia will threaten its immediate neighbours and hollow out Asean, while endangering US strategic goals.

Jakarta – The shocking escape of an army soldier, held on charges related to last year's bombing of the Jakarta Stock Exchange (JSX) building, has sparked a furore among the authorities, with the military police chief's head being the first to roll.

Mark Dodd, Viqueque – East Timorese voters have sent their political leaders a strong message to end violence and work towards improving living standards and social services.

Avelinho Coelho, the secretary-general of the Timor Socialist Party (PST) said the Constituent Assembly to be formed after the 30 August election must not be structured like the now-dissolved National Council.

Devi Asmarani, Jakarta – Indonesia's defiant police chief General Suroyo Bimantoro yesterday promoted and reshuffled 138 middle-ranking officers, in an apparent bid to garner more support within the fractured police force.

Jakarta – Despite the faint glimmer of a possible compromise, Indonesians were Thursday bracing for President Abdurrahman Wahid to make good his threat to declare a state of emergency to stave off an impeachment move. Late on Wednesday he renewed his threat to declare a state of emergency, plunging Indonesia into another bout of uncertainty.

Lindsay Murdoch, Jakarta – Some of Jakarta's most influential political leaders are trying to broker a last-minute compromise to save President Abdurrahman Wahid from impeachment.

Yogyakarta – Some fifty members from East Timorese prointegration groups held a modest ceremony on Tuesday at Yogyakarta's East Timor Students Dormitory to celebrate what they called "the 25th anniversary of East Timor's integration to Indonesia".

A team dispatched to verify rumors of planned election violence in East Timor reported Wednesday they had found the territory's "most vulnerable" areas "calm and serene".

Teh Jen Lee – The haze caused by fires set to clear land for plantations may be less severe over South-east Asia this year because of lower palm-oil prices. Indonesian Palm Oil Producers Association president Derom Bangun said the low prices would discourage companies from increasing the plantation areas.

East Timorese electoral officials Wednesday acknowledged "systematic failures" in the preparation of voters' lists for the August 30 constituent assembly balloting and appealed to the population to carefully check posted preliminary lists.

Don Greenlees, Jakarta – Seated in a conference room of the Sheraton Nusa Dua Hotel in Bali, an agitated Indonesian president B.J. Habibie thumped his fist on the table. "We will not have any foreign troops. You have got to understand that. I can't allow foreign troops into Indonesia," he said.

Three days after the start of the official campaign period for August 30 elections, the Timorese Democratic Union (UDT) became the first party to publish an advertisement in the East Timorese press.

Jon Land – Three activists from the Acehnese Democratic Peoples Resistance Front were detained by police in Banda Aceh on July 11 during a protest against the United States-based company ExxonMobil.

A Defensive Alexander Downer undoubtedly has his eyes on the history books with the publication of the Government's apologia for its handling of the East Timor crisis. But East Timor in Transition 1998-2000, the official Department of Foreign Affairs and Trade account of the tumultuous period and Australia's role in mediating the crisis, deserves more than cursory dismissal.

Banda Aceh – Indonesian troops shot dead three more separatist rebels in Aceh as representatives from both sides entered a third-day of talks here, the military said Wednesday.

Craig Skehan – An official history of Australia's role in East Timor's transition to independence reveals that the Federal Government knew more than it was willing to admit at the time about orchestrated Indonesian military violence.

Karen Polglaze, Canberra – A new book on Australia's foreign policy approach to East Timor from 1998 to 2000 is highly selective and partisan, opposition foreign affairs spokesman Laurie Brereton said today.

East Timor's Independent Electoral Commission has rejected more than 70 potential candidates for the August 30 constituent assembly elections. The final lists of party-backed and independent candidates obtained Tuesday by Lusa indicate that the Commission rejected 27 national and 46 district-level candidates.