SINGAPORE -- Indonesian President Megawati Sukarnoputri has signed a presidential decree putting Aceh under martial law and authorizing military operations after the latest peace talks collapsed in Tokyo last weekend.
Following more than five months of a wobbly peace accord in Aceh, the Tokyo talks had hinged on a governmental demand that the separatist Free Movement of Aceh, or GAM, officially renounce claims to independence and accept special autonomy for the province within the framework of a united Indonesia. The refusal to do so by GAM's negotiators and the government's adamant stance not to accede to independence demands means an official all-out war against separatism. Thirty thousand government troops and paramilitary personnel have amassed in Aceh.
What impact would war in Aceh have on Indonesia? Economically, Indonesia is buoyant. Macro-economic indicators are impressive for a country used to extreme economic gloom since 1998. Jakarta's stock market is at an all-time high, almost topping 500 points; it has gained about 25 percent over the past two months. The Indonesian rupiah, once an embattled currency, trades at an unusually high rate of less than 8,500 to the U.S. dollar. The central bank, Bank Indonesia, has reported that the country's reserves stand at $33 billion, with inflation and interest rates low and stable. All major financial rating agencies have upgraded Indonesia, the latest being Standard & Poor on May 12.