In his test of wills with the Indonesian military, President Abdurrahman Wahid has received much foreign support, particularly from Washington. On January 31 at the World Economic Forum in Switzerland, he met with Stanley Roth, the US assistant secretary of state for East Asia and the Pacific. Roth then spoke with Asiaweek Editor Ann M. Morrison and Senior Correspondent Alejandro Reyes. Excerpts of the interview:

What can you say about the report on the violence in East Timor last August, which has just been released in Jakarta?

[Wahid] has said consistently that anyone indicted would be asked to leave the cabinet – would be fired, in other words. What happened today [in Jakarta] is not an indictment. It's a report concluding that 40 individuals, including Gen. Wiranto and five other generals, should be brought before the attorney-general for further investigation.

There is the theoretical option that the attorney-general decides there is not enough evidence to prosecute ... [If offenders are pardoned,] will that be viewed as pulling punches?

The point we have made consistently is that the Indonesians should see the process all the way through.

How well is Wahid handling ethnic strife?

Sectarian violence obviously is a huge humanitarian tragedy. It also has implications for economic recovery. It undermines the government by projecting the image that they are not in charge, not only undermining them internationally but encouraging people within to think maybe they can take over.

Now, the Malukus aren't going anywhere. It's not like there's a free Malukus movement. And in places like Lombok and Bintan Island one has to believe this was not spontaneous violence but instigated. There is probably a lot of serious tension in Indonesia based not just on economic hardship, but on transmigration policies of the past 30 years, plus traditional ethnic rivalries. It doesn't take much provocation to set it off. I don't think one should assume that that is going to lead to the dissolution of the state. The challenge, though, is to respond quickly and effectively to get these areas under control.

Are fears that ethnic strife may spill over to the neighbors exaggerated?

Hugely. First of all, you have a president who's got an entire lifetime record devoted to tolerance. Megawati as well. Second, over the last two years, it has been possible to insulate many problems of Indonesia from the rest of the region. You've seen remarkable recovery in Thailand, the Philippines, Malaysia.

How can other nations support Wahid?

There's a vast array of things [starting] from trying to help them revive the economy. From us, that's less in terms of huge bilateral assistance, [but more in] technical assistance, institution building; also working with the World Bank, the IMF, the ADB to make sure they do get the aid. They're in a good moment because the IMF is going to resume disbursements.

Second, this is a country where there are very few institutions. It was Suharto Inc. for 30-plus years, so you have no tradition of democratic governance. The press went from completely repressed to yellow journalism where anything can be printed. They have weak civil society. The court system is a mess.

The police need to be separated from the military and professionalized. The military is in need of reform. Almost without exception whatever institution you look at needs to be strengthened. That's one challenge for the outside world to try to systematically help them with.

What about Aceh?

The government has created the sense that negotiation is possible. Two or three months ago, the common wisdom was that Aceh was going to blow. By January, it hadn't happened. Instead, what we see is a remarkable phenomenon of the Acehnese attempting to organize themselves with what is called the All-Aceh Congress to see if they can get enough of a unified position to negotiate with the government. That's a hopeful moment. It could fall apart. They could get into negotiations and not succeed. And there is a very high level of violence in Aceh; a lot of victims have been civilians. But overall there seems to be a real effort to see if a negotiated outcome is possible.

Have Wahid's trips helped by eroding foreign support for Aceh's independence?

That's a piece of it, but it's also that he and his minister of state for human rights have really talked to the Acehnese and reached out and created a sense amongst most Acehnese that a deal is possible. So it's both: you marginalize or eliminate external support and you work on the internal side. That's something we are keeping our eye on. Can they get through this window of opportunity before it closes?

Are we looking at a federal system?

If you eliminate the word itself, which is deeply neuralgic in Indonesia, there seems to be a growing consensus that there has to be a change in the relationship of power between the center and the other islands. There has always been this dilemma that Java is population-heavy and resource-poor and the other islands are the reverse, so you have resources flowing to the center.

The country can't exist if you completely reverse that. At the same time, there are all kinds of possibilities for redistribution, local government. The sense is this will happen. I've heard [Wahid] say many times that it won't be federalism, but it will be federalism.

How is he holding up?

He's enjoying the job. He's much less frail. He's not an old man; he's 59. He really seems to thrive on the challenge and joy of the job.

He's had two strokes.

But this is no doddering old man. This is a fully compos mentis individual.

But how effective a leader is Wahid? Some have noted his flip-flops.

I haven't detected any trace of ignorance. I've never asked about something and he didn't know what I was talking about. Put it this way: I have much more confidence in his grasp of information than in Ronald Reagan's when he was president. Don't judge the guy in 100 days. There is a huge transition from an opposition figure and head of a religious organization to president of a country, particularly a country that has to have a democratic transition.

In other democracies you have cabinet shakedowns after periods of time, presidents reversing their positions from their campaigns or learning how to deal with the press. But so far, this president has got an IMF agreement, World Bank disbursements, successful trips to the US and many other countries. He helped to attract investment, foreign aid, support for the territorial integrity of the country. [He achieved] progress on human rights, release of all political prisoners, negotiating progress on Aceh. For all the problems of the Malukus, the fact that Aceh is not settled, and residual issues on [East] Timor, it's not a bad start.