Vaudine England, Jakarta – While international attention is focused on the forthcoming ballot in East Timor, the Indonesian armed forces chief has threatened to impose emergency rule in Aceh. At the same time, President Bacharuddin Habibie's promise of an independent commission to investigate military abuses in Aceh was proving as hollow as his earlier pledge that no more blood would be shed, said a prospective member of the commission.
The source said Mr Habibie's offer of a true accounting of recent military massacres was not serious, as he was personally approached to fund the commission out of his private savings and commission meetings were taking weeks to arrange.
Thousands of refugees were returning to their homes yesterday after armed forces chief General Wiranto promised to withdraw riot troops, state sources said.
The general, after a fleeting visit to Aceh this week, has demonstrated the iron hand in a velvet glove approach.
He first said 1,200 joint military and riot police troops would be withdrawn – at least from residential areas – then said if security conditions did not improve he would impose emergency rule.
Yesterday he offered separatist rebels a general amnesty if they disarmed and ended guerilla activities. He promised "to train those eligible fighters to become members of the local military".
In the latest clash, one suspected rebel died when 20 separatists attacked soldiers in North Aceh yesterday.
More than 200 people have been killed in Aceh since May, helping to transform what was a minority separatist movement into a popular cause. "[Jakarta's] approach shows they have learned nothing from their failure in East Timor," said another member of the investigatory commission.
Recent visitors to the separatist fighters in Aceh said the Free Aceh Movement intended to step up rebel actions. Caught between the military and the separatists, many Acehnese civilians have fled and now more than 100,000 are in growing camps of internally displaced people.
General Wiranto has said the separatists must stop attacking government buildings and civilians, stop kidnapping and killing troops and disrupting economic activities and public transport, and they must surrender their weapons and stop flying the separatist flag. If not, the army would implement emergency rule, General Wiranto said.
World Bank threatens Indonesia
Associated Press - August 24, 1999
Jakarta – The World Bank is threatening to halt funding for Indonesia if it doesn't swiftly conclude an investigation into a banking scandal involving the ruling Golkar Party.
"If this case is not resolved early and satisfactorily, it is difficult for us to provide budget support to the government of Indonesia," Mark Baird, the World Bank's director for Indonesia, said Tuesday. Last year, the World Bank provided about $1.6 billion to Indonesia.
The scandal broke last month after an audit into Bank Bali found its directors had used government bailout money to pay a $80 million fee to a debt collection company controlled by a senior official of the Golkar Party.
The disclosure has sparked an uproar in Indonesia, unsettled financial markets and threatened its economic recovery. It has also led to calls for senior officials – including the finance minister and central bank governor – to resign.
The money, which has since been returned, was disbursed by the central bank as part of a government guarantee program. It was supposed to compensate Bank Bali for funds owed it by a bank that closed. But the funds were then transferred from Bank Bali to a firm controlled by Golkar's deputy treasurer.
Opponents of Golkar allege the money was to be used to bankroll President B.J. Habibie's campaign to retain the presidency.
Habibie's main rival in the presidential race is Megawati Sukarnoputri, whose party won the largest share of seats in parliamentary election in June, Indonesia's first free ballot in 44 years.
Last week, the International Monetary Fund called for an audit of the central bank. The IMF is leading a $43 billion program to bail out Indonesia's moribund economy.
On Tuesday, central bank deputy governor Achjar Iljas confirmed that an international firm will be allowed to audit Bank Indonesia.
The World Bank's vice president for East Asia, Jean-Michel Severino, also urged the government to swiftly look into the affair.
"It is clear that the Bank Bali case has major macroeconomic and microeconomic implications," Severino said in Jakarta. "I imagine that the World Bank can't carry on its activities unchanged if the issue isn't satisfactorily resolved." The World Bank says Indonesia needs to fully disclose the findings of its investigation and punish any wrongdoers.