(IPS) analysis

Indonesian President Megawati Sukarnoputri got from Washington pledges of financial aid and investment crucial for the country's battered economy, but these successes now threaten to become liabilities to her political standing at home.

In Indonesia - the world's largest Muslim country - these have come at the expense of domestic political support in the wake of the Sept 11 terrorist attacks in the United States and of criticism from some Muslim leaders and politicians of Megawati's support for US policy since those attacks.

In more 'normal' times, what Megawati got from her US visit would have been seen as a clear achievement for an economy still trying to recover from the 1997 economic crisis and instability under a previous government.

Washington promised her a package comprising US$630 million to promote trade and investment in the oil and gas sector, bilateral trade and legal and judicial reforms.

The package also included US$27.4 million for purposes ranging from internal refugees to the training of police.

But these financial rewards have drawn less than applause from some quarters at home. Some Muslim leaders accuse Megawati of swapping millions of dollars in loans from Washington for Indonesia's support for the US military campaign shaping up against Afghanistan.

Political minefield

Megawati is thus walking a political minefield. In power for more than two months, she needs to balance the maintenance of good relations with the US and the accommodation of Muslim interests and concerns here at home.

Islamic parties have been putting pressure on Megawati on her US policy, asking her to explain to the House of Representatives her discussions in Washington last month - she was among the first leaders to meet personally with US President George W Bush after the Sept11 attacks, in a visit planned way before they occurred.

''Things should be clear. If it is proven that she (Megawati) has not protected Muslim interest, we will surely withdraw our support for her,'' says Nadir Muhammad of the United Development Party (PPP), the biggest Muslim-based party at the House of Representatives.

The two largest Muslim organisations, the Nahdatul Ulama and Muhammadiyah, have stated that it is not the right time for ' jihad ' or holy war, but have strongly warned Megawati that they will stand against her if she turns the government into a 'puppet' of the US administration.

Other political leaders have also warned against turning criticism of US government policy into anti-Americanism, but say a backlash among Islamic groups is likely.

For instance, Amien Rais, a popular figure with the Muhammadiyah and chairperson of the People's Consultative Assembly (MPR), has called on radicals not to launch anti-American campaigns - but says a ' jihad ' would be necessary once Afghanistan, accused of harbouring the Saudi-born dissident Osama bin Laden, is attacked.

Some say the government's movements after Sept 11 may well strengthen the hand of politicians from other parties, including Muslim-based ones. Others say this may even impact on Megawati's political survival ahead of elections in 2004.

''The Indonesian government shares what other Muslim-populated countries like Saudi Arabia, Iran and Pakistan are going through. If the US goes ahead with the attack on Afghanistan, they will hardly be able to calm down the Muslim fundamentalist groups,'' explains Juwono Sudarsono, a lecturer at the University of Indonesia.

''She has the image of a secular politician and leader,'' says J Kristiadi, a political expert at the Indonesian Institute of Science (LIPI). ''This image would be more obvious to many Muslims if she is silent when the US invades Afghanistan.''

Domestic threats

Already, mounting pressure from local Muslim communities prompted the Megawati government to convene a special meeting Thursday to assess the situation after the Sept11 attacks.

Also, the government has to deal with indications of anti-American hostility that officials say has the potential of souring Indonesia-US relations.

A day after Bush gave Megawati commitments of financial assistance and improved ties, US Ambassador to Indonesia Robert Gelbard publicly expressed disappointment on the ''poor'' performance of local police in protecting US nationals from threats by radical Muslim groups there.

Gerbard said some embassy staff and employees of American business operations have returned to the US, in fear of threats by groups like the Islam Defenders' Front (FPI), Islamic Youth Movement (GPI) and the Hizbut Tahrir Indonesia (HTI).

Anger against US policy and calls for ' jihad ' have been expressed by preachers at mosques, public gatherings and other religious proceedings in recent weeks, as the US and its allies amass military force for a potential strike against Afghanistan.

Still, moderate Muslim groups have come out to express disagreement with such sentiments, saying that hostility against Americans would, among others, hamper economic recovery.

Tightened security by the military and police have not been able to dispel fears among Americans here for their safety. Meantime, Megawati has called on extremist groups not to scare 'guests' and firmly warned that they would face the law for any illegal acts or violence.

Amid this scenario, Indonesian officials are worried about the country's economic problems, not the least the perception of instability and hostility that may affect investments and new loans on which it heavily depends on.

Already, the departure of foreigners has pushed up dollar demand, causing the rupiah to plummet.

Capital flight

Officials say that the US worries about its citizens in Indonesia could affect not only trade - the US is Indonesia's top export market - but Jakarta's efforts to get new loans at the upcoming meeting of the Paris Club group of creditors.

The Paris Club III meeting is expected to reschedule Indonesia's external debts as well grant new funds. Jakarta is seeking a US$4.1 billion loan to cover its 2002 budget.

''If Indonesia fails to get the funds, then it will not be able to carry out its government programme in 2002,'' says Drajad Wibowo, an economic expert with the Institute for Development, Economic and Finance.

But the more serious effect could be capital flight. Tony Prasetiantono of the Yogjakarta-based Gajah Mada University (UGM) estimates that capital flight has now reached US$40 billion since 1997 - the year before Suharto fell from power.

He says the figure includes US$5 billion that have left the country ''since anti-American sentiments broke out a few weeks ago''.

Recently, the Investment Coordinating Board (BKPM) said foreign direct investment fell by 26 percent to US$5.75 billion since January.

Local industries, like those in many Asian countries, are also suffering as a result of the Sept 11 attacks. Among them is the tourism sector, which has been directly hit by the threats against US citizens by militant Muslims.

The Association of Indonesian Indigenous Business People (Hippi) expressed concern over threats by radical groups to drive Americans out of the country.

''We're shocked to see such sentiments expressed here. As a Muslim myself I appeal to my fellow Muslims to cool down. Let's focus on how to overcome more urgent problems, including unemployment and education,'' says Suryo Sulisto, Hippi chairperson.