Bill Guerin, Jakarta – Just hours after the December 2004 tsunami battered Indonesia's coastal areas, Vice President Jusuf Kalla jumped into action. Kalla unilaterally summoned the relevant ministers and from the ground began delegating relief efforts from the worst-hit province of Aceh.

Kalla signed an executive decree on December 30 authorizing the formation of a national disaster relief team. Extraordinary times called for extraordinary measures, and the Indonesian government was widely lauded for its response to the massive humanitarian crisis. But it was not lost on many political observers that Kalla had overstepped his constitutional authority by issuing a de facto vice presidential decree.

The unusual power dynamic between President Susilio Bambang Yudhoyono and Kalla has since led to much speculation that Indonesia is effectively being guided by two leaders rather than one. Similar to the executive branch dynamic that has emerged in the United States between President George W Bush and Vice President Dick Cheney, Indonesia's charismatic vice president is single-handedly guiding many of the country's key policy decisions.

Kalla, a highly successful entrepreneur, was one of the chief financiers of Yudhoyono's successful 2004 presidential election campaign. He is also now chairman of Indonesia's most powerful political party, Golkar, which underpinned former strongman Suharto's 32-year rule and continues to represent powerful vested interests in the military. Kalla has required a return from his investment in Yudhoyono's rise and has emerged as the country's most powerful vice president.

Kalla's and Golkar's support gives Yudhoyono nominal control over the legislature, a majority his Democratic Party sorely lacked when he first assumed the presidency in October 2004. At the same time, there is a growing perception among government insiders that Kalla's huge influence has recently become more of a threat than a complement to Yudhoyono's authority, and that the second-most powerful man in Indonesia is busily building a political power base aimed at defeating his current boss at the next presidential polls, which must be called by 2009.

The 64-year-old Kalla claims publicly that he has no ambition to become president, often saying that by 2009 he will be too old to run and that his ethnic background would hinder his ability to garner votes from the majority Javanese. Those denials, of course, look past Golkar's extensive political reach at the grassroots level and the fact the party is now heavily invested in Kalla's political ascent.

From the outset of Yudhoyono's term, the two veteran politicians are said to have agreed to a division of labor. Kalla was tasked with managing the economy while Yudhoyono handled broad issues related to politics, security and national strategies. Kalla currently leads the government's infrastructure team and, according to local businessmen, has acted to accelerate several key construction projects. Kalla's authority over trade and industry projects allows him to make decisions without consulting the president, government insiders say.

Also, Kalla has appeared to overstep those agreed boundaries – particularly in instances where a high-profile decision or appearance has acted to enhance his public image. For instance, he played a key role in brokering last year's peace deal in Aceh between rebels and the government, and he continues to actively monitor the implementation of that internationally watched accord. He had earlier played peacemaker in his home province of Sulawesi, though that pact between combative Christians and Muslims has not held up as well as expected.

"In several policy formulations, the position of the president is inferior to the vice president," said Eko Budhihardjo, rector of Semarang's Diponegoro University. At times, "[Yudhoyono] is even subordinate to the vice president".

Yudhoyono had initially decided to postpone fuel price hikes planned for last year until after the Muslim fasting month of Ramadan, but then abruptly raised them "when the vice president repeatedly stressed that the increase must be in October 2005", Budhihardjo said.

With Yudhoyono's permission, Kalla recently became the first vice president to hold an official state ceremony for a high-ranking foreign guest. Indonesian diplomatic protocol requires that only presidents host such high-profile events, but Kalla in late April was allowed to borrow presidential guards and cannons to welcome a visiting South African deputy president.

Ambitious businessman

As a businessman, Kalla has always been ambitious – at times apparently to the extreme. He turned around the family-owned business he inherited from near bankruptcy and over three decades transformed it into one of eastern Indonesia's biggest conglomerates. More recently, Kalla has come under the spotlight for recent projects in the power and construction sectors that members of his family are allegedly involved in, some of them even situated in his home territory of Sulawesi.

Asked about a potential conflict of interest between his public office and his family's business interests, Kalla often explains he is not in a position to prevent people close to him from doing business. For Kalla, that line of defense hasn't always held up. In April 2000, then-president Abdurrahman Wahid fired Kalla from his post as industry and trade minister, allegedly for "corruption, collusion and nepotism" in a US$75 million Japanese-funded contract to connect with power lines the Central Java town of Klaten to the West Java town of Tasikmalaya.

The claims were never substantiated, but in June that year Wahid cancelled the project and demanded a new bidding round on the grounds the company that had won the December 1998 tender had a "poor track record". The company was the Bukaka Group, an engineering group then headed by Kalla, but now managed by his younger brother, Achmad Kalla.

Nowadays, the company is back in government business. Together with two small, state-owned enterprises and Siemens Technology Inc, Bukaka recently won a tender for a $498 million project to develop technology for the soon-to-be-built Jakarta monorail. The engineering company also won a multimillion-dollar construction project to build a seven-kilometer stretch of a planned 114-kilometer toll road connecting the towns of Cikampek and Palimanan.

Bukaka has also recently won an estimated Rp1.6 trillion ($176 million) project to build a 200 megawatt steam-powered, electricity-generating power plant in south Sulawesi, where the electricity produced will be sold to the State Electricity Company (PLN) in south and central Sulawesi at a generous set price of between 4.3 and 4.4 cents per megawatt.

The Bosowa Group is owned by Kalla's brother-in-law Aksa Mahmud, who is also deputy speaker of the Peoples' Consultative Assembly (MPR). In April, Kalla headed up a delegation to China to oversee the signing of a cooperation agreement between the Bosowa Group and a Chinese company to develop Jakarta's new mass rapid transportation system (MRT). One of the 14 companies involved in that project is PT Bukaka Trans System, which is part of the Bukaka Group

Kalla-linked companies have also won projects for the construction of 11 kilometers of the Makassar toll road in Sulawesi, a contract worth an estimated $49 million. Sources with knowledge of several meetings to evaluate a $94 million project to expand Hasanuddin Airport in Makassar, Sulawesi, say Kalla has stressed the importance of giving priority to local contractors.

Muted nationalism

Kalla has largely refrained from publicly airing nationalistic sentiments. But foreign investors and economic analysts believe that he favors more economic nationalism than the foreigner-friendly Yudhoyono.

Kalla has been more public in his opposition to privatization for privatization's sake. And in February he unilaterally called upon US mining giant Freeport McMoRan Cooper & Gold to triple the amount of revenue it is currently contractually obliged to share with the government to accommodate spiking global commodity prices.

Kalla's somewhat unorthodox economic views have at times brought his macroeconomic management into question. Pressed recently on the government's slow pace of privatization – proceeds from which could help cover the budget deficit rather than seeking new short-term loans from the Consultative Group on Indonesia (CGI) – he replied: "All our assets have been sold by the previous government. What are left now are the bad ones." Kalla has steadfastly defended the controversial appointment of State Enterprises Minister Sugiharto, who has been more antagonistic to foreigners when voicing his blatant resistance to privatization.

International economists maintain that Indonesia desperately needs new foreign capital to help develop the country's abundant natural resources, which if more efficiently drilled and mined would earn the government badly needed foreign currency-denominated revenues. At the same time, Kalla, who generally still has the support of local and foreign business groups, pressed for and won changes to the national investment law that has opened the way for more foreign investment in certain extractive industries.

He has been notably less aggressive in pursuing changes to the 2003 labor law, which provides strong protection to labor considerations, including provisions making it difficult to sack workers. Earlier in the year a draft revision of the law that allowed for the use of more temporary workers and cut severance payments stirred angry nationwide street protests and paralyzed many business activities.

Yudhoyono at first publicly backed the controversial amendments as a way to promote more foreign investment, while Kalla remained notably silent on the hot button proposal. House of Representatives speaker Agung Laksono, who also notably serves as deputy chairman of Golkar, officially asked the government to drop the proposal and by association put Kalla on the popular side of the debate without ruffling Yudhoyono's feathers.

Almost two years into Yudhoyono's five-year term, many political analysts believe Kalla has effectively outmaneuvered the president in dealing with potentially sticky domestic issues, particularly ones that pitch foreign and domestic interests. Yudhoyono's soft-spoken style, a big part of his electoral appeal in 2004, is now adversely compared to Kalla's perceived entrepreneurial, risk-taking brand of leadership.

Yudhoyono and Kalla both served as senior ministers under the previous Megawati Sukarnoputri administration, but resigned their posts ahead of the 2004 presidential election. Kalla recalls that when Yudhoyono stepped down the two made a personal pact that whoever made it as president would give the other a chance in his administration. "Then we hugged each other," Kalla said.

Kalla later left the Golkar party, led then by the embattled Akbar Tandjung who was trailing badly in the polls, so that he could become Yudhoyono's running mate. The pair won a landslide executive mandate in 2004 in the country's first-ever direct presidential and vice presidential elections. Despite their resounding presidential and vice presidential electoral victories, Yudhoyono's small Democratic Party overall won a mere 10% of the popular vote, and even aggressive coalition building could not cobble together a legislative majority.

Golkar party chief Tandjung, who commanded 23% of legislative seats, set up a formidable opposition coalition that included Megawati's Indonesian Democratic Party of Struggle (PDI-P), the National Awakening Party and a number of smaller parties, and even before the newly elected legislature was convened he threatened to bring Yudhoyono's promised reform agenda to a standstill.

Two months after the new administration took over, and just two days before the tsunami disaster on December 26, 2004, Kalla was overwhelmingly elected as Golkar's new leader, sidelining Tandjung who had led the party for more than six years. With Kalla as Golkar's leader, Yudhoyono was suddenly assured of a parliamentary majority and a strong mandate to press ahead with his reform agenda.

Friend or foe?

Kalla is on record as admitting that the strategy to target Golkar's leadership was actually directed by Yudhoyono. "If that was the president's wish, I accept. I took it as a responsibility."

However, Jakarta-based political analysts note that as leader of parliament's largest faction, Kalla has from behind-the-scenes slowly but surely chipped away at Yudhoyono's authority. Mohammad Qodari, of the Indonesia Survey Institute (LSI), described Kalla's victory as "a double-edged sword" for Yudhoyono, saying the move effectively acted to "accumulate all the power in Kalla's hands".

Political chaos in previous post-Suharto administrations, particularly during the short-lived tenure of former president Wahid, cost Indonesia dearly in terms of market perception and foreign investor sentiment and in some domestic quarters cast democracy in a bad light. Yudhoyono and Kalla have together regained some of that lost confidence, but conservative forces in the House of Representatives, which under the amended constitution is not restrained by executive veto power, have recently piqued new investor concerns.

Kalla has played both sides of the legislature and to his credit has pushed through some controversial and arguably necessary economic measures. He was pivotal in lobbying legislators to enlist support for the politically unpopular fuel subsidy reductions last year and also for hammering out terms for the internationally praised Aceh peace accord.

At the same time, the MPR has stalled in debating and passing legislation central to Yudhoyono's reform drive. In 2005, the MPR had agreed to a target of passing 55 new laws, but by the end of the year only 12 bills made it through the legislative morass. This year the target is 43 new bills, but so far no significant reforms have been passed. In fact, Yudhoyono has on occasion played his trump card and issued presidential decrees to speed up the pace of his more urgent reform initiatives.

If Kalla is indeed a future presidential contender, his views toward democracy are significantly different from Yudhoyono's. After years of military service, including controversial tours in East Timor while under Indonesian military occupation, and later stints as a low-profile cabinet minister, Yudhoyono was throughout loyal to Suharto's authoritarian government. Yudhoyono won his liberal stripes in 2001 when as top security minister he declined to invoke a state of emergency when requested by Wahid, who at the time was facing impeachment proceedings.

In contrast, perhaps, Kalla has recently called for a more "efficient democracy", arguing that Indonesia's brand of democracy is marred by lingering widespread perceptions that the government is corrupt and inefficient and in the new democratic era must face constant criticism from the media and detractors. "This is not democracy. Let's just make democracy more efficient and... support what we agree upon."

Kalla has since backed a Golkar-led move to create a simplified two-tier election system, which it claims would cut costs and improve efficiencies. "The public will have less headaches and the government will spend less money on concurrent elections and thus things are expected to be more efficient," Kalla has said.

Some political analysts fear that with Golkar's well-established political and business machinery, a new electoral system could be designed to the party's favor and potentially give Kalla a big edge at the next presidential polls.

If such polls were held today, political analysts predict that Kalla would likely win. A recent survey by the Indonesian Survey Circle (LSI) disclosed growing resentment about unpopular policies made by Yudhoyono's government, including the recent scrapping of fuel price subsidies and planned amendments to the labor law. Only 37% of survey respondents said they approved of Yudhoyono's job performance, his lowest rating yet.

Yudhoyono rose to power by promoting himself as "a man of the people", thus capitalizing on Megawati's perceived failure to improve living standards for the country's massive poor population. Now, inflation is edging up at double-digit rates and unemployment is rising again. Increasingly, the same complaints that marred Megawati's administration are being leveled at Yudhoyono's government. As the political temperature rises, a politically ambitious Kalla could be tempted to more publicly distance himself from Yudhoyono's more controversial policies.

If so, it is possible that the Yudhoyono-Kalla power dynamic could in the coming months intensify into a full-blown executive power struggle.

[Bill Guerin, a Jakarta correspondent for Asia Times Online since 2000, has worked in Indonesia for 20 years, mostly in journalism and editorial positions. He has been published by the BBC on East Timor and specializes in business/economic and political analysis related to Indonesia. He can be reached at softsell@prima.net.id]