John Mcbeth, Jakarta – The deadly Christmas and New Year bombings in Indonesia and Manila, which killed 40 people and left hundreds injured, have Indonesians and Filipinos puzzled. Is radical Islam, they wonder, entering a dangerous new phase in Southeast Asia? Or is Islamic militancy, as police investigators and analysts now seem convinced, merely a convenient cover for politically powerful rivals bent on using terror campaigns in their struggle for supremacy? In this era of wrenching change when forces with different agendas make for unlikely bedfellows, evidence from Indonesia's 24 Christmas Eve blasts across Java and Sumatra points clearly to the involvement of both elements. Police have put the blame for these blasts and for similar incidents over the past two years on well-heeled remnants of President Suharto's New Order regime, who they say have been drawing on a loose mercenary network of active and retired soldiers, Muslim extremists and disparate criminal elements. Their motive: to head off the prosecution of Suharto-era crimes, and to install a government more compliant with the preservation of their financial and political interests.

In the Philippines, official suspicion for the deaths of 22 people in five separate explosions at the New Year has fallen on Mindanao's secessionist Moro Islamic Liberation Front. But there are doubts whether the MILF, after suffering a heavy battlefield setback last July, is capable of mounting such an operation in Manila, far from its traditional stronghold. Many Filipinos are more convinced the bombings were planned by supporters of then-President Joseph Estrada trying to distract public attention from his impeachment trial, or by a military faction eager to build the case for martial law.

In Indonesia, President Abdurrahman Wahid is in serious political trouble and has been unable to halt the country's lingering economic crisis or put reforms in place. His government suffers from institutional decay and has failed to fill the political and leadership vacuum left by Suharto. Indeed, not only has the bombing campaign underlined the difficulty of uprooting Suharto's New Order regime and its pervasive culture, but it also demonstrates how a collapse in law and order has opened the door for extremist Muslim groups willing to use violence to get their way.

A few years ago, the Indonesian military would never have tolerated groups such as Laskar Jihad, still operating in Maluku, and the Defenders of Islam Front (FPI), whose specialty is wrecking Jakarta bars and restaurants in the name of Islam. Political analyst Marcus Meitzner, a specialist on the army and Islam, believes that with the apparent erosion of the state doctrine of Pancasila – and its philosophy of sectarianism – the military's traditionally strict adherence to national security and stability has given way to simply the protection of its own institutional interests.

That view of the decay of military principles seems to be shared by former army chief of staff Gen. Hartono, long regarded as a member of the military's Islamic wing, and recently cited by Wahid as a possible suspect in the bomb attacks. "Under Suharto, this would never have happened-so why does it happen now?" he says in a rare interview in his South Jakarta home. "I myself am disappointed with the military because it seems they are very afraid of being accused of committing human rights abuses. I would rather sacrifice the human rights of one person, rather than the human rights of many people. The military is too scared now to carry out its duties, even in safe-guarding the nation." Converging interests are clearly at play. Officials have pointed to Suharto's fugitive son Tommy and other New Order figures, to Muslim radicals, and to at least seven generals, five of whom are still active. In a recent meeting with a civic action group, political coordinating minister Bambang Yudhoyono referred to a conspiracy of "old friends and old soldiers." Wahid told the same group that when Yudhoyono briefed him in late December, he named Hartono and ex-special forces commander Lt.-Gen. Prabowo Subianto, who both have links to Suharto, as "possible" masterminds.

Hartono and Prabowo both hotly deny having any part in the bombings. Hartono has threatened legal action against the president for going public with the accusation. "I really don't understand why I am a target," the former army chief told the Review. "I live my life by my religion. Terrorism is against religious teaching." Still, he makes no secret of his contention that life was better under Suharto. "The common people are saying that – and I agree with them – for them, reform is frightening. You can't start from scratch like we're trying to do." In a swipe at Wahid, Hartono says the country lacks the leadership "to give direction and provide a good example. Maybe Suharto was too strict, but now it's far too relaxed." Army Chief-of-Staff Gen. Endriartono Sutarto is adamant that the military had nothing to do with the bombings. That may be true of the army as an institution. But with the rift between Wahid and his generals widening – and the president now backing new civilian legislation which would reinforce limitations on the military's political role – there are suspicions that the army leadership may be powerless to resist the activities of more extremist elements in the officer corps.

Certainly, the military's footprints have often been obvious. Police investigators say privately they were told to "switch off" when their inquiries into the April 19, 1999 bomb blast in the basement of Jakarta's Grand Mosque homed in on former and serving members of the Indonesian Special Forces' psychological warfare group. That same unit was involved in the abduction and torture of political activists prior to Suharto's downfall.

Indeed, there is a widely held view that rogue elements in the military have become guns for hire. This suspicion is reinforced by the fact that two of the six suspects who have been charged in the September 13 blast at the Jakarta Stock Exchange are soldiers from the special forces and Kostrad, the Army Strategic Reserve. A recent report by the privately funded International Crisis Group supports claims that underpaid soldiers and police sold or rented weapons and ammunition to combatants in the Muslim-Christian violence in Maluku. In some cases, the report said, whole units joined the battle on one side or the other.

The Christmas bombings have also thrown up evidence of a military linkage. Informants close to the investigation say mobile-phone records show one of the 10 suspects arrested so far made several telephone calls to the military's Strategic Intelligence Agency.

Investigators believe the suspects belong to the same Bandung, West Java-based network that was involved in the 1999 mosque bombing and a well-planned West Jakarta bank heist.

But the police often only seem to be going through the motions. "If you look at the way they have handled cases in the past, the police seem to get only so far and then hit a big wall and go no further," says Bara Hasibuan, coordinator of Indonesia Forum for Peace, a newly established activist group that wants to ensure the same thing doesn't happen with the investigation of the recent bombings.

If the police face barriers, the presidential palace may be part of the problem. Several days before the bombing, according to palace insiders, civilian intelligence chief Arie Kumaat went to the palace with a report foretelling possible violence over the holiday period. Wahid wasn't available, so he left the report with a member of the president's family – who promptly put it in a bag and forgot about it.

Analyst Meitzner says the military's primary concern is that the president has proven to be an unreliable partner, unwilling or incapable of rewarding loyalty. Last December 29, in a statement believed to reflect the views of many senior generals, the military's former political and social affairs chief, Bambang Triantoro, urged the president to take sick leave and leave his duties in the hands of Vice-President Megawati Sukarnoputri. More recently, army chief Sutarto pointedly declared that the military's loyalty is to the state and not to the president as an individual.

There appears to be no shortage of people willing to create mayhem for money. One shadowy group known as Gunung Tidur, after the mountain that lies behind the Indonesian Military Academy in Magelang, Central Java, comprises cadets who failed the four-year officer course. Western intelligence sources suspect this gang of short-haired young men was involved in setting a series of deadly fires during the May 1998 riots that precipitated Suharto's downfall.

Another part of the loose network of mercenaries is rooted in the troubled Sumatran province of Aceh, where criminal gangs – some operating under the guise of the Free Aceh independence movement – run protection and marijuana-smuggling rackets, allegedly under military patronage, according to human-rights groups and published reports. The Aceh connection surfaced in the aftermath of the bombing of the Stock Exchange, which killed at least 15 people. US officials are trying to determine whether the TNT used in the latest blasts was had been stolen last year from an Exxon-Mobil warehouse in the Aceh town of Llokseumawe.

Indonesia explodes

• 15 April, 1999: West Jakarta. A powerful blast is followed 10 minutes later by an attempted bank robbery. An Islamic organization is blamed.
• 19 April, 1999: Jakarta. A powerful bomb in the basement of the Istiqlal mosque injures four. Retired generals are blamed.
• 26 April, 2000: Jogjakarta. A small explosion at Kauman mosque leaves minor damage. Police defuse a second bomb in the mosque.
• 28 May, 2000: Medan. Sixty are wounded when a home-made bomb goes off in a Protestant church, one of three explosions in churches the same day.
• 4 July, 2000: Jakarta. One hour after prosecutors question Tommy Suharto, an explosion at the attorney general's office leaves minor casualties. Two other bombs are found the next day in the same building. Suspects range from the military and Tommy's bodyguards to police officers and army personnel. No one is charged.
• 1 August, 2000: Jakarta. A powerful bomb blast outside the Philippine ambassador's residence kills three and wounds 21.
• 20 August, 2000: Medan. Two bombs go off near a church, causing no injuries and only minor damage.
• 27 August, 2000: Medan. Two bombs at two sites: there are no serious casualties, and no one is charged.
• 27 August, 2000: Jakarta. A grenade blast in the parking lot of the Malaysian embassy leaves no serious casualties. Two suspects are interrogated.
• 13 September, 2000: Jakarta. A powerful bomb rocks the parking lot of the Stock Exchange, killing at least 15 and injuring dozens more.Thirty people are arrested: six people, including two soldiers, have been indicted for the blast.
• 24 December, 2000: Jakarta, Mojokerto (East Java), Mataram (East Nusa Tenggara), Ciamis and Sukabumi (East Java), Medan and Pematang Siantar (North Sumatra), Pekan Baru and Batam (Riau). Christmas Eve: 24 bombs explode, of 45 distributed, killing 18 people and injuring 84. Some bombs are disguised as gift parcels and handed to churchgoers.