INDONESIA - Part 4 - The Decision Makers.

The future of Indonesia depends on the way decision makers act at the centre in Jakarta, and in the country's 32 provinces, with devolution having started on Jan. 2, 2001. Still rebels in some provinces are struggling for secession.

Much power has shifted from Jakarta to the provinces across the archipelago. Over 2m civil servants moved from Jakarta to these regions from 2001 to help administer grants and provide services to local communities. They have since spread corruption to the provinces.

Suharto, who took the presidency in a coup against the republic's founder Sukarno in 1967 but was forced to step down in May 1998, had transformed Indonesia into an emerging industrial power. But Suharto's regime was accused of being a kleptocracy, and in mid-1997 the country plunged into its worst economic crisis since independence. When he was succeeded by J.B. Habibie as interim president in May 1998, about half of Indonesia's population (now over 240m) was living below the poverty line, with 40m unemployed.

The situation began to improve after Abdurrahman Wahid was elected president in October 1999. But ethnic and sectarian conflicts, checked under much of Suharto's tenure, remained dangerous. Wahid turned out to be erratic and corrupt (see Vol. 56, OMT 12). He was impeached in July 2001 and immediately replaced by his vice president, Megawatie Sukarnoputri (Mega). A housewife-turned politician and daughter of Sukarno, Mega won the next presidential elections (see Vol. 60, OMT & Gas Market Trends No. 12). But she lost in Indonesia's first direct presidential elections in the autumn of 2004.