Jakarta's vice-presidential battle may help Soeharto save face, suggests George J. Aditjondro

Indonesia's central bank governor, Dr Sudradjad Djiwandono, who closed banks linked with the First Family last year, was "honourably discharged" by President Soeharto. He had already tendered his resignation the previous week in protest at Soeharto's plan to peg the rupiah to the US dollar.

This latest confrontation with the IMF, and the military's endorsement of the vice-president candidacy of Technology Minister B.J. Habibie, overshadowed another political event in Jakarta. A day before Djiwandono's sacking, former Indonesian environment minister Professor Emil Salim decided to challenge Dr Habibie's for the vice-presidential post next month.

Outstanding among Salim's hundreds of supporters is Sumitro Djojohadikusumo. The founder of the University of Indonesia's Faculty of Economics, he is the father-in-law of the sacked central bank governor, and also the father of the 47-year-old rising army star, Prabowo Subianto, who is married to Soeharto's second daughter.

Interestingly, while his father and brother-in-law seem to disagree with Soeharto, Prabowo himself was promoted last week to Lieutenant General to command the powerful Army Reserve Unit (Kostrad). He is a strong Soeharto loyalist.

To divert the public's anger from his father-in-law, Prabowo and his clique of Army officers have instigated anti-Chinese and anti-Christian sentiments among Indonesian Muslims. They have accused a Sino-Indonesian tycoon Sofyan Wanandi of funding the underground left-wing People's Democratic Party (PRD), and encouraged demonstrations at the Centre for Strategic and International Studies in Jakarta, ironically Soeharto's main support group before he began to woe Muslim support with Habibie's assistance in the late 1980s.

These dirty tactics have raised eyebrows among relatives of Prabowo, whose mother is a Christian. Prabowo's younger brother, Hashim, who runs the family's multi-billion business empire with Prabowo's wife, works closely with many Chinese business partners.

So, Djiwandono's opposition to the currency board, his father-in-law's campaign for Salim's vice presidency, and Prabowo's Chinese scapegoating campaign can be seen as emerging cracks in the Suharto's oligarchy.

On the other hand, the Salim campaign can also be seen as a face-saving tactic for Suharto himself. It is mainly addressed at Washington, which has not made up its mind whether to continue supporting the ailing 76-year old dictator, or to dump him.

There is much support for Habibie as Suharto's running mate – and potential successor – from US aircraft industries and airlines. The Miami-based Gulfstream International Airlines bought four airplanes made in Habibie's aircraft industry, IPTN. Habibie's son, who directs IPTN's national jet project, did his apprenticeship with Boeing in Seattle in 1995.

After a recent meeting with Soeharto in Jakarta, Boeing boss Philip Condit said: "We have worked over the years with IPTN, we are supporting the current development of the N-250, and we will continue to assist that airplane proceed toward certification."

Promoting Salim to vice-president may prevent conflicts between the White House and Capitol Hill with the powerful US military industrial complex, while still prolonging US support for the Suharto oligarchy.

Salim was a Berkeley-educated economist prepared by the CIA to assist Soeharto's take over from Sukarno in 1966. In 1978, after the student movement opposed Soeharto's presidency, Salim saved Soeharto's image among the young activists by supporting Indonesia's emerging environmental movement. As Environment Minister for 15 years, Salim discouraged Indonesian environmentalists from applying Greenpeace tactics, and encouraged them to develop a non-oppositional style of environmentalism instead.

Without an explicit agenda to restructure Indonesia's political and economic system, Salim's vice-presidential candidacy may become a new sugar coating on the bitter pill of Suharto's oligarchy.