Indonesia crisis: New leader struggles to exert control

INDONESIA'S new leader, Bacharuddin Jusuf Habibie, was struggling to establish his credibility last night, hours after the dramatic resignation of President Suharto, ending 32 years as the leader of the world's fourth- biggest nation.

In a nationally televised speech, Mr Habibie, 61, promised to revive the economy, democratise the political system, and review repressive laws. But there was deep scepticism in the country about the sincerity of his intentions and whether he would be able to distance himself from either Suharto or the country's powerful armed forces.

The day began in euphoria, with 77-year-old Suharto's early-morning resignation. Speaking at the presidential palace, after a sleepless night spent in consultation with his close aides and members of his family, he admitted defeat after an extraordinary fortnight in which nationwide demonstrations escalated into uncontrollable riots on the streets of Jakarta and the occupation of the country's parliament building by protesting students.

Dressed in his habitual black hat, Suharto admitted that his attempts to build a "reform committee" had failed. "In view of this situation, I found it difficult to carry out my duty as the country's ruler and to push ahead with the nation's development," he said. "I have decided to resign as President of the Republic of Indonesia effective immediately as of the reading of this statement". Mr Habibie was immediately sworn in to carry out the remainder of the President's term of office, which officially ends in 2003.

Lieutenant General Wiranto, the commander of the armed forces, spoke on television immediately after Mr Habibie was sworn in to offer him his support. "The succession of the Vice-President is in keeping with aspirations of society," he said. But it remains unclear whether the military commanders are united in support for Mr Habibie and whether they played a role in persuading Suharto to go.

The announcement of Suharto's departure was greeted with delight by the students occupying the parliament, many of whom danced and jumped for joy into the fountains in front of the building. But by the end of the day, doubts were growing about Mr Habibie's capacity to rescue Indonesia from the crisis into which it has descended over the last 10 months.

Amien Rais, the Muslim leader whose outspoken criticism of President Suharto played a crucial part in leading to his downfall, offered Mr Habibie his qualified support. "I think that there is a satisfaction now, that we will have true democracy," he said, after advising the nation that a total break with the past was not possible at this stage. "Let's give him a fair chance to prove his ability."

Mr Rais said Mr Habibie should be a transitional president and present himself for election by Indonesia's special election council within six months. He promised to act as Mr Habibie's "sparring partner" before standing himself in the next presidential elections.

But the student protesters remained defiant, and vowed to maintain their occupation of the parliament after describing Mr Habibie as no more than a puppet for the deposed President Suharto.

Claiming victory for forcing the resignation of the man who has governed Indonesia for the past three decades, they insisted that they would continue to press for full political reform.

Last night, in an address to the nation, Mr Habibie was confronted with the difficulties of the balancing act he is expected to perform. He tried to placate the protesting students, reassure international investors in Indonesia, while at the same time offering praise for his despised predecessor, whom he credited with responsibility for the nation's development over the past three decades.

Although he was unable to take his oath of office in parliament, as it was occupied by protesting students, Mr Habibie offered an olive branch to his most implacable opponents, describing the student demonstrations as "the current which is rapidly carrying us into the 21st century".

He promised to tackle corruption, put political reform at the top of his new government's priorities and create more economic opportunities for the people, while honouring tough economic policy obligations imposed by the IMF. It was those obligations that helped start the riots.

Mr Habibie has known Suharto since he was 13 years old. Trained in Germany, he was recalled by Suharto to serve as his Technology Minister.

He is an eccentric figure, and controversial both at home and abroad. As Technology Minister, he spent large sums in pursuit of his pet dream: a national jet plane.

His unorthodox economic theories have caused unease abroad: when Suharto first hinted that Mr Habibie would be appointed Vice-President, the rupiah fell to an all-time low of 17,000 to the dollar.