John Mcbeth – Moulding tragedy into a political turning point in disaster-stricken Aceh presents both a glittering opportunity and a dangerous pitfall for President Susilo Bambang Yudhoyono's three-month-old administration.

Success could mean the end of nearly 30 years of conflict and bitterness in the once gas-rich province. Failure could well mean the 4.2 million Acehnese – about 90 per cent of whom were unaffected by the December 26 tsunami – will never trust the Jakarta government again, with all the long-term consequences which that will bring.

None of this seems to be lost on Dr Yudhoyono himself after the frustrating central role he played in the failed Aceh peace talks nearly two years ago. Nor is there a lack of genuine political will on his part to get the job done. After all, he won 75-80 per cent of the Acehnese vote in last year's presidential election.

But elsewhere in government, in the military and among ministry and provincial bureaucrats, the understanding that there may never be a second chance is perhaps less grasped.

Government sources say political coordinating minister Widodo Adi Sutjipto and other senior leaders are putting much more stock in engineering a solution on the ground in Aceh than in talking to the long-exiled leadership of the Free Aceh Movement (GAM). Apart from maintaining and even stepping up military pressure, that involves marrying the reconstruction effort to the full implementation of the 2001 Special Autonomy Law and providing Acehnese with a genuine alternative to independence.

The recent Finnish-brokered peace talks in Helsinki between government and GAM negotiators barely got to first base. Few people give a planned second meeting this month any real chance of success, particularly on the fundamental issue of independence.

What the military does not want is any cessation of activities on the ground, as has happened in the past, as that would give GAM a chance to recoup its losses after a year of sustained operations that have allowed the government to win back control of 80 per cent of rural villages.

The gameplan now is to target the two-thirds of GAM that may be susceptible to inducements, ranging from amnesty and limited political power-sharing to free land and direct financial payoffs. That, say Western intelligence sources, would be aimed at whittling down the rebel force from its current strength of 2,500 (only about 800 of whom are believed to be armed) to a manageable hard core of 200 guerillas – most of them concentrated in east and north Aceh and in inland areas of Bireun and Sigli.

Mr David DiGiovanna, the US Embassy's former Aceh watcher, told the US-Indonesia Society recently that GAM's field commanders have, in the past, shown greater flexibility than the ageing political leaders in Sweden, but have been reluctant so far to discuss policy issues with Jakarta.

Reflecting the views of a growing number of Indonesian leaders, Mr DiGiovanna believes that trying to outwait Stockholm would be a mistake. "Only a comprehensive and inclusive political process based on the Special Autonomy Law has a chance of success in resolving the conflict," he said.

The earthquake and tsunami have shown that only the government can muster the global support needed to get Aceh back on its feet.

For some Acehnese, in a province where everyone has lost a family member to the conflict, revenge over-rides all considerations. There is no question that civilians continue to die. But Mr DiGiovanna and other independent observers say the army's so-called raider battalions, all of which now receive Red Cross human rights instruction, have adopted far more discriminatory tactics than in the past.

Armed forces commander Endriartono Sutarto has vowed that the military will not interfere in the peace process, presumably as long as GAM is not seen to be using the presence of foreign aid workers to internationalise its cause. Reformists worry, however, that the space now available for civil society to make a difference may soon close if the army seeks to reassert its authority under the existing state of civil emergency.

"We have to extend an olive branch and portray it as a way to build a new and more equitable Aceh," says Mr H.R. Dillon, executive director of Partnership, an organisation set up by the government and international lending agencies to facilitate governance reform across Indonesia. "This should not be about rebuilding Aceh, but building a new one altogether."

Like many concerned Indonesians, Mr Dillon is emphatic that Acehnese should be allowed to decide "what they want from us, what we can do for them and what they want to do themselves".

Up to now, that has been problematic. Only 30 per cent of the Aceh provincial government is functioning. With governor Abdullah Puteh under suspension and facing trial in Jakarta for graft, much of the burden has fallen on his respected deputy, Mr Azwar Abu Bakar, an architect and member of Muslim leader Amien Rais' National Mandate Party.

"All the planning seems to be coming from Jakarta," says an Acehnese relief worker. "It's Jakarta this and Jakarta that. There's so little local officials can do in terms of overall planning."

Under fire for not involving the Acehnese enough, the government recently dropped the idea of forming a special authority to manage the reconstruction effort. Clearly, wiser heads saw the flaws in forming an organisation that could end up working at cross purposes to Aceh's provincial and district administrations.

Getting government departments to coordinate their work has always been a problem in Indonesia and, along with fears of rampant corruption, is likely to remain the biggest obstacle in the recovery effort.

Acehnese have not been served well by their elected local representatives either. Three years after the Special Autonomy Law was signed, the provincial parliament still has to pass a raft of 20 regulations that are needed to fully implement the law.

For many reformers, one of the major challenges will be to revamp Aceh's weak bureaucracy and find local replacements for the estimated 2,000 civil servants, many of them schoolteachers, who died in Banda Aceh and along Aceh's west coast.

Abdullah's long-anticipated removal is widely seen as a step towards more meaningful self-government in Aceh. But historic direct elections in mid-year to replace him and select new and presumably more accountable district chiefs and mayors have been postponed indefinitely in areas where voting lists, land title deeds and other personal records were lost in the disaster.

"The government is shocked and confused and doesn't really know what to do," says Partnership adviser Endah Nurdiana. "They work hard, but they don't work smart. There is no fixed mechanism to manage the reconstruction funds. This is a great opportunity for the government to show the Acehnese it cares. But it could also be a real threat. If it fails, it will never have another chance."

[The writer was formerly the Jakarta correspondent for the Far Eastern Economic Review.]