Indonesia's ruling coalition is struggling to stay together amid differences over the US military action and has shelved crucial economic reforms as a result, a veteran economic consultant said Thursday.
James Castle, chairman of the American Chamber of Commerce, told a seminar on investment prospects in Indonesia the government was distracted by the terrorist attacks in the US and the loud opposition on the streets to the US-led retaliation.
"The impact of the September 11 attacks on Indonesia has been profound and will get worse," he warned during an informal discussion held when the morning session was cancelled.
Several ministers he had been talking to had "given up" trying to reform the economy, Castle said.
"One of the most immediate consequences is it's distracted the government... it seems they've already given up. The politics are too complex. They're too concerned, too afraid."
Since mid-September there have been almost daily demonstrations in several cities against the US-led military action against terrorists it believes to be operating from Afghanistan.
There have also been repeated but as yet unrealised threats by small militant Muslim groups to drive foreigners out of the country.
The government, nervous at alienating Islamic groups, was silent for weeks.
The day after the attacks began it issued a middle of the road statement that neither condemned nor supported the US-led military action.
"The crisis has distracted them from economic reform and the political capital needed for economic reform is being spent on holding the coalition together," Castle said.
He was referring to the fragile coalition between President Megawati Sukarnoputri's nationalist party and conservative Muslim parties allied behind her deputy Hamzah Haz.
While the government was refraining from outright criticism of the attacks, Haz spoke out and said the military action should be stopped.
Megawati has since echoed her vice president's criticism, saying Sunday that no country had the right to attack another to defeat terrorism.
Castle said most of the protesters were paid. It was "a puzzle to all who study Indonesia, why such a small group... has such an enormous influence on government policy.
"It can only lead one to believe that a deep crisis is behind it... and it leads to a sense of unease even though the day-to-day life is quite comfortable" -- Jakarta, (AFP)
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