Vaudine England, Jakarta – The South Jakarta Court's decision yesterday to close the fraud case against former president Suharto poses one of the gravest challenges yet to the Government of President Abdurrahman Wahid, and is unlikely to provide closure for many Indonesians.

Members of radical, sometimes militant, student groups whose actions helped depose Suharto in May 1998 were already saying yesterday that if Mr Wahid fails to press for a "real trial" of Suharto, then they will agitate for Mr Wahid's fall too.

"The doctors are all lying," said demonstrator Zul Sikri on the independent doctors' report to the court that Suharto was medically and mentally unfit to stand trial. "Suharto must go to jail and we will keep protesting until that happens."

Mr Wahid, who is on one of his foreign trips, on Wednesday appeared to encourage students to protest – and even take the law into their own hands – in comments made to the Indonesian community in Caracas, Venezuela, where he is attending an Opec summit. "The most they can do is throw stones at the windows. Leave them be. I mean, Suharto was very corrupt, wasn't he?" Mr Wahid was quoted as saying by the national news agency Antara.

"It is not the military personnels' duty to ban people from staging demonstrations. Prohibiting university students from demonstrating only happened during the New Order [Suharto] administration," he added.

Lawyers and political analysts suggested that the Government probably knew which way the Suharto case would end up before Mr Wahid left on his travels on Monday. Only last Saturday, Attorney-General Marzuki Darusman was saying that the public must be prepared to accept whatever decision the court made on Suharto's health.

"If Mr Suharto is found to be unfit for the legal process, to the extent that the medical team has come out with a fair and objective examination, then I think the public will have to accept that," Mr Marzuki said.

He highlighted the need for a legal process against Suharto to be acceptable in the court of public opinion. The trial "will have to go through to the very end to the point where the public is satisfied that the legal system has exhausted, as far as possible, this case", he said.

But prosecutors have been left with few options. Yesterday's decision to drop the case followed discussion – and rejection – by the bench of prosecutors' requests to bring Suharto to court anyway so that the court could decide his fitness for trail, or to allow an appeal to the Supreme Court for the holding of a trial in absentia. Lawyers said they knew of few further options, although anything was possible and further redrawing of the verdict could not be ruled out.

In defence of the Government's handling of public demands for Suharto to be convicted, some lawyers argued that the administration had done its best by starting a transparent court process and could not be blamed if, because of genuine ill-health, the defendant could not be tried.

"That won't fly," a foreign lawyer in Jakarta said, contradicting this view. "Even if you assume Suharto is really ill, there is always some way to enforce accountability, through apologies or money returns. Now this blatant lack of accountability will trickle down through the system. It will fester and grow."

The lawyer and several diplomats agreed that although Mr Wahid and Mr Marzuki probably knew Suharto would be able to escape trial by claiming ill-health, they had to push the legal process as far as it would go. "The whole trial thing was a kind of bone to throw at the students. The students are saying it was all a whitewash, and they're probably right," a political observer said. "It's a dramatic triumph for the former first family."