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INDONESIA:
Crackdown Raising Political Tension (U)
extensive rioting in central Jakarta over the weekend following the police seizure of the headquarters of Ihe opposition Indonesia Democracy Party (PDI) is likely to widen differences between President Soeharto and some of his advisers and cause more displays ofpublic opposition to the regime.
including Vice rYcsicfc.it Sutnstwand Defense Ministermonth opposed Scenario's hcavyhandcd effort to oust PDI leader Megawati Sukarnoputri, which led her supporters to refuse to vacate party headquarters.
transparent bid to crush his 'political opponents win increase doubts within the establishment about his capacity tor continued leadership and tarnish his claim that he enjoys consensus backing if he decides to seek another term. The attacks on Megawati may backfire byallying point for disparate groups critical of the regime.
The government is concerned about the potential for more violence.
communications links between
students and public interest organizations throughout Indonesia may facilitate national reactions to events in Jakarta.!-
In Ihe aftermath of the runs, foreign speculators may sell short-term holdings in local slock markets this week, and ihe government could intervene in currency markets to defend ihe mpiah. The Jakarta slock market fell sharply in early trading today, and Ihe rupiah was hit by heavy setting, according to press reporting.
Barring widespread, sustained disturbances, foreign and local companies are unlikely lo alter long-term plans lo investountry where most analysisercent growth this year.
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