Jakarta – Indonesia's military now acknowledges the legitimacy of the country's new government and realises that a coup attempt would trigger a bloodbath, a senior US official said yesterday.

Mr Stanley Roth, US Assistant Secretary of State for East Asian affairs, discounted fears that the once all-powerful armed forces would move against the civilian administration of President Abdurrahman Wahid.

"They are acutely aware ... that this is a popularly-run and elected government and that any efforts to overthrow this government by force would bring the people out onto the streets and require the type of bloodbath that the military in Indonesia is simply not willing to do," he said.

During a tense standoff last month between Mr Abdurrahman and former armed forces chief General Wiranto, the US Ambassador to the United Nations, Mr Richard Holbrooke, sparked fears that a coup was imminent when he publicly warned the military not to move against the President.

Speaking to reporters at Jakarta's Centre for Strategic and International Studies, Mr Roth accused the media of overstating Mr Holbrooke's remarks. But he warned that Indonesia was still in a "vulnerable stage" and that its stability was threatened by its ailing economy.

"Until the economy is growing at a significant rate ... it is very difficult to guarantee that there will be stability in the country. Unemployment is very high, the banking sector is still essentially not working and the corporate restructuring is making only minimal progress," he said.

Indonesia's economy collapsed in 1997, plunging the world's fourth-most populous nation into its worst economic crisis in a generation. Mr Abdurrahman has promised to reform the country's economy and boost investment.

Speaking at a seminar at the Centre for Strategic and International Studies, Indonesia's Foreign Minister Alwi Shihab reiterated the importance of reviving the economy. "If we fail to solve our economic problems, the rest of the region will have to suffer," he said.