A leading Indonesia analyst says Jakarta has grossly mishandled the troubled province of Papua, and now seems to be stepping back to watch it disintegrate.

Presenter/Interviewer: Graeme Dobell

Speakers: Sidney Jones, the Southeast Asia director, the International Crisis Group

Dobell: Sidney Jones says the core fear of the Indonesian Government is that any concessions to Papua will encourage separatists. This means Jakarta puts all its effort into weakening any institution which could foster Papuan nationalism, rather than strengthening local government to deliver services.

Jones: Of all of the issues confronting the Indonesian governnment, there isn't a single one a the moment that is as sensitive as Papua; not Aceh, not decentralisation, certainly not terrorism and certainly not the elections. There's no area of the country that is in more need of good governance, and no part of the country that is less likely to get it. I don't think there's anywhere in Indonesia where the policies of the Megawati government have been so misguided, or criticism of them so unwelcome, particularly from non-Indonesians.

Dobell: During the previous Wahid Presidency, the province got a series of concessions – special automony, a People's Council, and a new name, Papua rather than Irian Jaya. Sidney Jones says President Megawati has attacked special autonomy as a potential engine for the independence movement. In a Presidential instruction, issued in January, last year, Megawati divided Papua into three provinces. Even though Indonesia's new Constitutional Court is still rule on whether the decree is legal, Ms Jones says special autonomy is now dead. She says the creation of 14 lower-level district administrations across Papua has divided the people because of the struggle for potential power, budgets and contracts.

Jones: This whole process seemed to send a signal that was effectively saying to the Papuans: OK, it's all yours, we're going to sit back and we're going to watch the place disintegrate. This may not be what is happening; it's certainly what the understanding of Jakarta's intention towards the Papuans is inside Papua. Corruption and nepotism are also so bad in some of these new districts that one of the Bupatis [District chiefs] has been accused of embezzling almost the entire budget. And one of the local district Parliamentarians said to me: "It's gotten so bad we're almost beginning to think it was better when we were colonised by Javanese."

Dobell: Sidney Jones says the fragmentation of Papua at the district level raises the danger of ethnic conflict. She says the Megawati government seems oblivious to the damage it's inflicting and in Papua the level of distrust and suspicion towards Jakarta is higher than ever.

JONES: Papua is not going to become the next East Timor, nor is it going to become the next Aceh, nrt is it going to be a place that produces a massive outflow of refugees. But the divide and rule tactics are going to produce a certain level of misery for some time to come.