Australia, Indonesia no closer after year of turmoil

Reporter: Tim Palmer

TIM PALMER: Something had been happening in Indonesian society that its own leaders chose to ignore and deny.

Groups of men taking their motivation from events as far away as the Middle East and Afghanistan were spreading their extremist views and making plans.

Despite warnings from its neighbours and Western powers, the Indonesian Government missed it all until a night in Bali tore those illusions and scores of lives apart.

JUSUF WANANDI, CENTRE FOR STRATEGIC AND INTERNATIONAL STUDIES: I think 12 October, as I see it, has awaken us.

We have been in self-denial for so long, especially the government and actually the security agencies, the law enforcement agencies.

And to a certain extent also the moderate majority of our Muslims that this could not happen to us.

TIM PALMER: It has to be said Indonesia's government had plenty of crises to distract it from the extremists beneath the surface of society, from the uncontrolled concrete sprawl that brought devastating floods to Jakarta at the start of the year to communal fighting in its fraying outer provinces, poor economic growth, mass unemployment, ecological degradation.

The war on terror was on the agenda when John Howard met President Megawati Sukarnoputri in February to complete a memorandum of understanding, but even then it was people smuggling that dominated discussion of his visit.

Perceived criticism of Indonesia's policies on the issue prompted a boycott by parliamentarians, including Chairman Amien Rais and Speaker Akbar Tanjung.

AKBAR TANJUNG, SPEAKER: We don't want your PM to interfere in our internal affairs, you know.

TIM PALMER: Akbar Tanjung would of course find himself frozen out some months later.

The parliamentary speaker found guilty of misusing millions in state funds faces three years jail but holds his seat while waiting for an appeal.

He wasn't the only face from the old order to complete a fall from grace.

Tommy Suharto, who controlled a billion-dollar empire during his father's profitable presidency, went to jail for murder - handed a 15-year sentence after he hired two hitmen to kill a judge who'd pursued him over corruption.

Given the crime, the sentence was light.

Tommy remains the only Suharto to have seen the inside of a prison cell.

In August, the military was finally pushed out of its automatic place in the parliament but still operates by its own rules across an Indonesia that increasingly lacks central authority.

The army, left underfunded and out of control, was again accused of corruption and violence from drug trafficking and illegal logging in Aceh and supporting Muslim militiamen in Ambon all the way to fresh accusations of murder in Papua, where three civilians - two of them Americans - were gunned down near the Freeport mine.

JUSUF WANANDI: How could you discipline an army that has to survive on their own for 70 per cent of their livelihood because the budget is only providing them with 30 per cent of what they need to survive?

TIM PALMER: A parade of senior officers escaped punishment in Indonesia's courts for the army's conduct in the dying days of Indonesia's grip on East Timor.

So far, 12 cases of crimes against humanity alleged to have occurred in East Timor have been brought before the courts.

But, of all the soldiers and police tried, just one has been convicted.

Another two men, both civilians, have been sentenced to jail, the militia leader Eurico Guterres given the minimum 10-year sentence for the murderous campaign his men carried out, while former East Timor governor Abilio Soares was sent to jail for three years.

East Timor tried to put that bitter past behind it, elections followed by an independence day and a new president.

XANANA GUSMAO, EAST TIMOR PRESIDENT: We wanted to be ourselves.

We wanted to take pride in being ourselves, a people and a nation.

TIM PALMER: There were warnings of growing pains in the world's youngest nation by year's end, though, as unemployment and frustration at the new government saw Dili burn once more.

By year's end, President Megawati, criticised by many as a do-nothing leader, could claim success in striking peace deals between warring Christians and Muslims in Ambon and Sulawesi and a truce in Aceh where civilians had tired of separatist rebels and a vicious army alike and now hope that this pause in 26 years of war will hold.

But the calamity in Bali swept away all the government's small achievements.

MAN: We heard this ginormous bang and everything went dark.

NURSE: Most of the patients had legs ripped off, like this gentleman here.

The limbs are missing.

JOHN HOWARD, PRIME MINISTER: Australia has been affected very deeply but the Australian spirit has not been broken.

TIM PALMER: For Indonesians as well as Australians, there was a shocking toll.

WOMAN: Nobody can believe it happen in our island, in our country.

TIM PALMER: Indonesia's Vice-President, Hamzah Haz, had declared there were no terrorists in the country.

He'd dined with the man who had already been the focus of Western concern, Abu Bakar Bashir.

Now the radical cleric was to be arrested on suspicion of his role in previous bombings but still denying any knowledge of the Bali plot.

ABU BAKAR BASHIR (TRANSLATION): I'm sure that the accusations against me about the bombings are not true and it's making me crazy.

I know that all the witnesses against me are creating a big drama.

I have never played in those games.

TIM PALMER: The hidden faces of Indonesian terror were to be quickly revealed as a joint police investigation brought startling results.

From a poor East Javan village, the police swooped to net Amrozi, who beamed at reporters when put on parade.

Then came Imam Samudra, the alleged mastermind further up the chain of Jemaah Islamiah and trained in bomb making in Afghanistan.

For many Indonesians the shattering truth hit home that this act could have been planned and carried out by its own people despite the months of denials.

JUSUF WANANDI: They know that there is an element now of viciousness, of extremism that never existed before, and that is willing to sacrifice their own innocent people at the same time.

And now you can see the results.

TIM PALMER: But even then there was a widespread belief among many Indonesians that this was the work of outsiders, many preferring to believe the CIA had planted the bomb to discredit Indonesian Muslims.

While an emergency anti-terror decree was introduced, critics say even now President Megawati remains so trapped by her fear of the political power of Islamist groups in Indonesia that she lacks the courage to demonstrate leadership against extremism.

There was no national broadcast from the President and no marshalling of support against the extremists.

JUSUF WANANDI: Actually she could rally the parliament and she could rally all the leaders.

She could call them together and say, "This is our struggle now.

This is now our jihad against this terrorism," and that is what she has not done.

TIM PALMER: What public sympathy there was for Australia in the wake of Bali ebbed away, replaced by anger as a rabid Indonesian press described ASIO raids in Australia as anti-Indonesian terror and an even more furious response followed to PM John Howard's suggestion that Australia might launch strikes at terrorists on foreign soil.

MARTY NATALEGAWA, INDONESIAN FOREIGN MINISTRY: Well, it has the potential to harm Australia's interests and effort in combating terrorism because it could be misunderstood.

TIM PALMER: Beyond all that, the rhetoric that drove the Bali attack remains - Habib Riziq, head of the radical Islamic Defenders Front in Jakarta, was arrested in the same week as Abu Bakar Bashir.

He's now back at home, and still warning the West that it should stop interfering in the Muslim world.

HABIB RIZIQ, ISLAMIC DEFENDERS FRONT (TRANSLATION): If the international world doesn't want to see someone like Osama bin Laden born or someone like Imam Samudra born, then the key's to stop American violence, especially against the Islamic world.

If America's disgraceful acts aren't stopped and they still wreak evil on the Muslim world, I believe tomorrow there will be born 1,000 Imam Samudras and a million Osama bin Ladens in the world.

TIM PALMER: The language once aimed exclusively at America is now equally targeted at Australia -- what Habib Riziq calls America in the Pacific.

HABIB RIZIQ (TRANSLATION): Australia deserves to be attacked.

Yes, if Australia joins an attack on the Islamic world or any Muslim country in the world, Australia deserves to be attacked.

Australia has done what its teacher has done and its teacher's name is America.

TIM PALMER: The new face of Indonesia at the end of the year that changed the country and its relations with Australia forever.