This week Indonesia's People's Assembly unanimously voted President Soeharto another five-year term. But he can't buy a vote of confidence from the IMF, or from many of his own people. Louise Williams reports.

In Less than two minutes, the presidential election was over. "As there are no other candidates," the parliamentary Speaker, Harmoko, said, "I announce President Soeharto the winner."

The People's Consultative Assembly rose to cheer their patron, their efforts to punch the air with their fists as they had done when he first came to power more than 30 years ago constrained by age and the tight fit of their formal suits.

The President sat slumped in his chair, smiling, on the stage of the cavernous assembly building. The self-congratulatory atmosphere inside was more like that of a club meeting of the political elite than a crucial moment in the history of modern Indonesia.

Thus, Soeharto this week entered his 33rd year as leader of Indonesia, his control over the stultified proceedings inside the assembly building as complete as ever. But, for a man of humble and popular beginnings, Soeharto now lives a somewhat bunkered existence, his home in tree-lined Jalan Cendana surrounded by crack troops, his every move through the crowded streets of Jakarta eased by roadblocks and squads of police escorts.

And his re-election for a seventh consecutive term was equally removed from the tough, turbulent reality of daily life in a nation battling inflation, unemployment, drought and fire.

There were no interruptions to the 11-day political script played out every five years by the People's Consultative Assembly. Its 1,000 members had been carefully vetted well in advance to ensure that not one dissenting nomination or vote would be registered. Thousands of troops were deployed to protect the VIPs from the disturbances of an increasingly hostile public.

But outside, at a small hotel on Jakarta Bay, a group of activists staged their own political theatre, with a mock offering to the people of something they have never had under Soeharto's New Order Government - a choice of presidential candidates.

Within an hour, nine of the organisers were under arrest and facing up to five years in jail for breaching regulations banning public meetings during the presidential elections. Already this year, according to Amnesty International, 330 people have been arrested for peaceful anti-Government protests.

On dozens of university campuses tens of thousands of students continued to rally, mourning Soeharto's re-election, mocking the pomp and ceremony with streams of toilet paper, and money stuck across their mouths. In Bandung, just west of Jakarta, 10,000 gathered; in the central Javanese university city of Yogyakarta 20,000 chanted anti-Soeharto slogans. By Thursday, thousands of students were fighting police in the industrial city of Surabaya.

Indonesia is facing challenges not seen since the hunger and chaos of the 1960s. The economy is on the verge of collapse and the lenders from the International Monetary Fund (IMF) are standing in the wings baying for economic reforms that undermine the pyramid of privilege and patronage that has allowed Soeharto to wield such control over this vast nation.

But, clearly he is still determined to rule, and in doing so he will be seeking to protect much of what he has built, including the controversial business empires of his children.

"In five years' time, God willing, I will be standing on this podium again," he said when he rose to deliver a brief acceptance speech. His children, four of whom had a vote to cast inside the assembly, hugged each other and congratulated him.

"You can forget about all those theories that he is preparing to step down mid-term," one Asian diplomat said. "He will be spending his time trying to protect what he has built. His first priority will be his own political power and the second the position of his children; there will be no moves towards preparation for political succession." So, after months of tension Indonesia emerges from the five-yearly political show exactly where it was before.

Soeharto's age – he will be 77 in June – means the lack of any succession plan, and the absence of political reforms to accommodate growing demands for accountability, may spark a behind-the-scenes power struggle for first place in the line.

"The crunch really starts now – they haven't resolved anything," another diplomat said. "Soeharto hasn't adjusted the basic way he does business; he is trying to continue is the same way with a government centred on him and strong control."

If informal lists of the new Cabinet, due to be announced over the weekend, are correct, Soeharto is preparing to appoint a team peppered with allies who owe their fortunes to his personal patronage. Gone will be the "technocrats" of more independent ideas, and in will come his entrepreneur daughter, Siti "Tutut" Hardiyanto Rukmana, and even the king of the plywood cartel, Bob Hasan, according to a list published by the Singaporean newspaper Business Times. How is it possible that a man approaching 80, with an economy in despair and the IMF hacking at the very system that enriches the loyal, is still in charge? Over 30 years Soeharto has earned a reputation as a master tactician. His New Order system has not just crushed dissent, but has offered real rewards for those who have offered it their support. For the military there have been business rights, reaping huge profits for many generals and the officers below; for the bureaucrats there have been fortunes to be made in petty graft and corruption for every piece of paper the Government demands of ordinary people.

Every position of power has offered an economic reward, and access to those positions has, ultimately, been controlled by Soeharto and those below him – and they require evidence of political loyalty.

Dissent has been dealt with harshly and a culture of fear has emerged, discouraging those who might like to push for reforms with the exhaustion of fighting an unwinnable battle.

But logic would suggest that the recipe for success is already out of date.

"He believes he is going to be in power for the next five years," one analyst said. "But the economic problems are starting to hit home and he is not going to have the patronage to give away. His position is a lot weaker than it was before."

Another diplomat said: "I think he is getting increasingly anxious, but he is not throwing up his hands in despair; he probably still thinks he can get out of this economic crisis and still keep whatever he has built."

The immediate key to the short-term alleviation of the economic pain is the result of a stand-off with the IMF. Soeharto and several members of his Government pushed the dispute over economic reforms to the edge this week, complaining that demands to remove monopolies and subsidies were unconstitutional.

The bail-out package, as it stands, demands the dismantling of much of the patronage that gives Soeharto his power, as well as a painful dose of reforms for ordinary people. The IMF terms include the removal of fuel and food subsidies, at a time when millions are being forced back into poverty by spiralling prices and unemployment.

"Soeharto is really gambling for high stakes now. He is saying to the IMF, you push me and I will go over, and there is no alternative leader," one diplomat said. "He is calling the IMF's bluff and gambling with his country."

Soeharto has warned international lenders that a meltdown in Indonesia will have severe ripple effects in the region and may even trigger a worldwide recession.

Just how well informed the President is about the conditions facing most of his people is the subject of debate. As he has aged, he has become increasingly isolated from the ordinary peasants with whom he traded political rights for primary health-care clinics, subsidised rice, roads and cheap buses.

He is widely believed to have surrounded himself with teams of dukuns, Javanese mystical experts. Dukuns spend their time analysising spiritual forces and performing the appropriate animal sacrifices and ceremonies to head off bad fate.

"Mentally, he is still very street-smart. He listens to people around him and uses his instinct, but he doesn't read widely or watch CNN; he relies on what people tell him, so he may not have an accurate picture," a diplomat said.

That Soeharto is surrounded by people who owe their fortune to his patronage suggests a lot of criticism does not come through and his own perception of his remaining personal power may be exaggerated.

"The drama being played out on the Indonesian stage goes well beyond the straightforward economic and political problems; it is a Greek drama," the columnist Desi Anwar wrote in the English-language newspaper The Observer this week.

"It began as the triumph of good over evil seen when he put an end to the suffering of the people and brought peace and prosperity to the land and by doing so, brought greatness to himself. And the gods favoured him with seemingly endless sunshine and riches.

"But, as in all tragic stories, courage very soon turns to conceitedness, humility to hubris. He filled his own coffers before those of others, favoured flatterers to truth-tellers and tried to turn peat land into rice bowl. The mortal entertained ideas of immortality that infuriated the gods and flouted his destiny."

How the story will end remains unclear. Political analysts repeatedly point to Soeharto's success in preventing the emergence of an alternative leader. Those who have risen rapidly within his own New Order system have been crushed, just as effectively as he has crushed outsiders.

"The momentum is there for the economy to continue to slide, with a cascade affect on unemployment and inflation," one analyst said.

"The Government is printing large amounts of money and we know these things have real social impacts. It will be a very difficult environment in which to govern. "His authority is not what it used to be. You talk to those whose lot has been with the New Order and they are very disillusioned. Circumstances will throw up an alternative leader."

At the same time, some analysts believe that the armed forces may not be willing to put down student protests if the economic crisis is eroding their business privileges at the top and hurting the families of those among the ranks.

In Desi Anwar's column, the errant hero bows his head and acknowledges his mistakes and begs for the people's trust once again. But, somewhere far away, amid the cool, green rice fields of Java, a volcano is stirring.