Jakarta/Brussels – Widespread criticism of President Megawati's performance following the 12 October attacks in Bali means she is no longer a virtual certainty for re-election in 2004 but other political and security consequences remain question marks.

An International Crisis Group briefing paper published today, "Impact of the Bali Bombings", considers the implications for Indonesia's fledgling democracy including likely presidential candidates, and attitudes toward the military and reform as the country comes to terms with the shock.

ICG Indonesia Project Director Sidney Jones said: "The Bali bombings are going to have a profound effect on Indonesia's political course. Perceptions that the President is weak will no doubt throw up other candidates, but the military could also benefit from the sense of a lack of leadership. Urgently needed reforms could be set back as the domestic and international focus reverts to security".

However few of Indonesia's radical Islamic groups are likely to change their ideas following the Bali attacks. Most are convinced, as are many Indonesians, that the US government planned the bombings as a way of prodding reluctant countries to support the war on terrorism or a campaign against Iraq. Horror over the bombing, therefore, is unlikely to lead to a perceptible change in the extent or content of radicalism in the nation with the world's largest Muslim population.

The arrest of Abu Bakar Ba'asyir, the alleged leader of the Jemaah Islamiyyah network, suspected of involvement in the Bali attacks, is also unlikely to reduce danger, particularly when the man who appears to be the operational commander, Riduan Isamuddin alias Hambali, remains at large.

The economic blow – particularly to tourism – could wipe as much as one percentage point off GDP in the coming year. Bali itself has been devastated. As donors, governments and international financial institutions give much-needed assistance, however, they should pay careful heed to where the money is going to ensure that still extensive corruption doesn't set back the progress Indonesia has made since the fall of Suharto.