Melinda Liu – Terrified, the victims hid in the jungle. At long last the police came, announcing over loudspeakers that it was safe to come out. So some 300 Madurese-Muslims whose families had settled in Borneo over the last four decades-emerged from the bush. That was the worst mistake many of them would ever make.

This was Indonesia, where neither police nor the Army can hold the line any longer against the forces of chaos and savagery. The Madurese were met by a large crowd of machete-swinging Dayaks-an indigenous people whose ancestors were animists and cannibals. The handful of police ran away, and the Dayaks descended. They beheaded some of the Madurese and ripped open chests to tear out and eat still-beating hearts. "They were like wild pigs," one shocked witness, Tuguh Ernawan, told Newsweek after the incident last week. "I saw a beautiful young woman die. They stabbed her with a spear in the side, then cut off her head and took out her heart."

Indonesia used to be considered an important place-when Washington bothered to notice. With 210 million residents, it's the world's most populous Muslim country. Some 40 percent of the world's commerce passes through its key sea lanes. Western corporate giants such as Caltex, Mobil, British Petroleum and Freeport-McMoRan represent vast oil and mining investments here.

Three years ago, when the Southeast Asian financial crisis blew through the region, battering Indonesia like a monsoon, Washington was alarmed. International Monetary Fund chief Michel Camdessus, prodded by the US Treasury, rushed in and imposed a harsh financial fix on the then President Suharto that led to the collapse of many banks and businesses. The IMF later admitted its policy was too draconian, but it was too late. The bailout scheme failed, Suharto resigned and the West exulted at the expected dawning of democracy. Then, for the most part, it stopped paying attention.

But the Suharto regime's mechanisms of control disappeared along with him. The iron hand of the military had previously tamped down restive ethnic communities in this vast archipelago. Now the Army became weakened, distracted. Two years ago ruthless militias began murdering separatists in East Timor, and Indonesia spiraled into a seemingly endless cycle of ethnic violence. Christians and Muslims began killing each other in the former Spice Islands. Javanese soldiers have slaughtered civilians while fighting separatist rebels in Aceh. Indigenous residents in Irian Jaya rioted and clashed with police over the raising of their independence flag.

"Nobody can overcome these conflicts, and if there are more of them, the government will collapse," says Jusuf Wanandi, head of the Institute for Strategic and International Studies.

With an ethnically diverse population spread across an archipelago of 14,000 islands, Indonesia might seem to be ripe for disintegration, like Yugoslavia a decade ago. Yet few expect the country to break up totally, not least because the military, however less organized it is today than under Suharto, is resisting it. "Indonesia is too big to fail completely, but we could become a danger to ourselves and to our neighbors," says Dewi Fortuna Anwar, a prominent political scientist. It's more likely that Indonesia descends into a long-term state of disorder, and central authority simply vanishes. Yet that's worrisome, too, because there's no clear-cut end state. Massive refugee flows, piracy, regional tensions and environmental devastation are already occurring; haze from unchecked slash-and-burn farming is choking nearby Singapore. As a result, Jakarta-based Western diplomats have invented a whole new category of chaos: the "messy state." "This isn't failing," says one. "There's a new sort of entity emerging-but no one knows what it is yet."

And neither Washington nor other Western countries seem very interested in stepping in, as they did during the East Timor crisis and the financial contagion. Nor even does Indonesia's president appear especially concerned. As the bloodshed increased last week in Borneo's Central Kalimantan province, President Abdurrahman Wahid, 60, a nearly blind Muslim cleric, set off on a 15-day trip to the Middle East and Africa. Wahid told journalists in Cairo that the news media had blown things "out of proportion" and there were "only two headless bodies" found. Western governments displayed a lack of urgency, too. Secretary of State Colin Powell recently told Congress that Australia should "take the lead" in dealing with Indonesia's problems, adding that Washington doesn't have to jump at "every 911 call that's out there." The Sydney Morning Herald shot back in an editorial that Australia has enough on its plate "without the new US administration's inevitable policy fumblings being dumped on it." The West's influence on Jakarta's policies began long before the 1997 financial scare. For decades, Western governments and businesses courted President Suharto's regime.

They generally chose to ignore the regime's rampant corruption and human-rights abuses. One of Suharto's most controversial policies was a program called "transmigration." Entire communities were moved from densely populated islands like Java and Madura to less crowded ones, such as Borneo, mingling diverse and sometimes antagonistic ethnic groups. "In the beginning, it all seemed like a wise plan," says a Western diplomat who was a development officer in Indonesia in the 1980s. "The World Bank gladly supported transmigration to the tune of $5 billion." But Suharto's government failed to pay adequate compensation for the land it seized. Now Jakarta is grappling with more than 1 million internally displaced people-10 percent of the world's total-many of them transmigration victims forced out of their adopted homes by the post-Suharto chaos. Last week's grisly scenes on Borneo culminated in a cruel mirror image of Suharto's transmigration scheme. Soldiers and police herded thousands of traumatized Madurese migrants-many of whom had been shipped to the area in the '70s-onto evacuation ships for safe passage out of Central Kalimantan. At one point police and soldiers engaged in a two-hour fire fight against each other .

The violence has since taken on a medieval religious cast as well.

In the Moluccas (formerly known as the Spice Islands), Christians attacked Muslim settlers who were perceived as monopolizing scarce jobs. Sociologist Thamrin Tomagola of the University of Indonesia says there have been more deaths per capita there than in Bosnia, making the Moluccan conflict "the most terrible civil war in the world."

The once idyllic Moluccan capital of Ambon, perched on the edge of a crystalline bay, is now an Asian Sarajevo. It's segregated into Muslim and Christian sectors, sliced apart by a green line that locals simply call "the Border." The day may come when Ambon wishes it were Sarajevo; after all, the war in Bosnia eventually ended thanks to Western intervention. By contrast, no one today has any ideas for saving a messy state.

[With Paul Dillon in Borneo and Joe Cochrane in Jakarta.]