How do we measure the real cost of the three bombs in Bali this past weekend?

Of course anyone would go past the tragedy of the dead and wounded and add to that the economic cost of lost business that inevitably will follow. After all, the 2002 bombs cost the fabled isle over half its tourism in the first year, adding up to billions of dollars in losses. But what do those added costs really amount to?

Is it sufficient just to add up the losses of income almost every Balinese family suffered? Or should we add the medical costs from the resulting inability to buy medicines? And add in the lost cost to society from educational programs abandoned?

It all depends on how comprehensive we wish to be. But let's be clear: the real costs of such trauma as this is always far greater than assumed.

Let us consider Indonesia as a whole. If President SBY does not show leadership and the casualty list exceeds one hundred, it is possible that Bali will lose another year of tourism, in the sense that for two years half its prospective tourists will change plans; and that the economic growth rate of Indonesia as a whole will be cut by two percentage points.

So we're well above five billion dollars US now in losses. But add in the opportunity costs the things that might have been done with that growth money plus the human costs in Sumatran villages where just a little bit less income, in already poor regions, means more babies die in childbirth, more academic programs are aborted, and so on.

Economic question

Would it be about right to say we are talking not 100 casualties but 50,000 and almost all of them, like the casualty list last weekend in Bali, Muslim! It simply isn't fair for good Muslims to bear the vast costs of a fringe of fanatics.

The economic question now is whether the new Bali bombs will be a tourist blip or another catastrophe. We don't know the final numbers, but they will be substantially less than 2002's. However, tourists might just say 'this is the third big one for Indonesia,' and given the bureaucratic hassles imposed on tourists the long lines to pay the 'visa on arrival' for a shortened period, compared with Malaysia and Thailand, both greatly outdrawing the archipelago the cut in tourism may be as bad as in 2002.

The big difference however is in leadership potential. In 2002 President Megawati Sukarnoputri was at her calm best or worst. It took quite a time for even to go out and inspect the damage, let alone say anything meaningful to rally the nation. It seemed as if she was just carrying on as usual, despite the explicit warning western intelligence services had given her of the imminence of an attack.

President Susilo Bambang Yudoyono is cut from sturdier cloth. He went right to the site on Sunday. But quite possibly the biggest challenge he will have in his presidency, even possibly in his life, is how he motivates Indonesia in the next weeks.

He already had a big enough crisis on this hands. Like low-paid city folk throughout the third wold, the masses of Indonesians dependent on cheap transportation don't get it that oil has to be paid for, and the price is not determined by cabals of crooks in Jakarta, but by world market supply and demand.

Indonesia has had the cheapest gas at the pump of any country in the world save Iran, because government was paying half the price and running up huge deficits. These deficits were in turn cheapening the currency (the rupiah had been at 8500 to the dollar for several years before turning south this year to as low as 11,000).

President SBY was firm, very firm, with the first increase. He told the Parliament that it could debate all it wanted, but the decision was made and final. Now he's pushing the price up nearer its real price, to cut that $11 billion subsidy and lower the deficit. The street doesn't like it.

Standing tall

If he shows real leadership, addresses the country about reality and what must be done to get the economy moving, by getting foreign investment and new oil fields pumping, and what must be done finally to end the scourge of terrorism, and gives the message in visits all over the country, he'll have made a good first step.

It will be standing tall, the way Dr Mahathir Mohamad did in the Asian economic crisis, in freezing the ringgit and defying foreign economic forces. It will be like President Kennedy rallying America for the Cuban Missile Crisis. It will be like President Charles de Gaulle defying all the constraining political forces of France and creating a path to a new republic.

But it will take more. He is going to have to ask for special powers during what he must call an emergency. It wouldn't be unjustified among democracies to declare martial law for Bali, for a limited period, in order to root out the cadre behind the bombers. Tourists wouldn't mind. Balinese wouldn't mind. My Balinese employees reported that everyone wanted to storm the Kerobokan jail where the 2002 bomber-prisoners are; calmer voices prevailed.

And then things must start to happen. Sentences have to be carried out swiftly against terrorists. I well recall the 1970s in London when ministers were under constant threat and bombs going off regularly. The IRA was on the attack. A great journalist, Peregrin Worsthorne, wrote a memorable essay in the Sunday Telegraph. I can paraphrase the argument, more or less what I have suggested for SBY in Indonesia. But I remember precisely the title "let the monsters swing."

I suspect that until the JI knows that SBY will maintain that tough stance, and will show that he and the vast majority of the country won't be intimidated, like Mrs Thatcher, the bombs will keep coming. Leniency will be interpreted as precisely that: as weakness. Indonesia happily astonished the world last year with its fair and honorable elections. It's the biggest state in the region and has to show strength or the region loses confidence too.

Good Luck, President SBY. Most of the world is cheering for you and wishing Indonesia the best. Your role in history will be determined by your actions in the weeks ahead, and Indonesia's position as a dynamic and democratic state as well.

W SCOTT THOMPSON, an adjunct professor of international politics at the Fletcher School of Law and Diplomacy, Boston, is a former assistant secretary of state for the Ronald Reagan administration. He also served as Donald Rumsfeld's assistant at the Pentagon in 1975-76. He lives in Bali and Washington DC.