Indonesia’s internal security situation remains complex. The latest developments include violent demonstrations in May 2008, in which city-dwellers protested share increases in fuel prices (which came about because the government cut fuel subsidies). This is the latest reminder that the fundamental problems in Indonesia are economic, rather than political or religious.

The general strength of the Indonesian economy over the last few years has also facilitated efforts to restore peace, or at least to reduce conflict, in places such as central Sulawesi and Maluku. In addition, real success has been achieved in the campaign to reduce the ability of militant Islamic groups such as Jemaah Islamiyah (JI) and Laskah Jihad. There is some evidence that a much weakened JI is moving away from violent struggle towards the waging of an ideological debate through a network of affiliated publishing houses. Unrest persists in Papua, where what was originally an independence struggle waged by Organisasi Papua Merdeka (OPM) has transformed into something more complex – not least because a substantial number of predominantly Muslim immigrants (from other parts of Indonesia) are keen for the national government to maintain control. For the moment, Aceh – at the other end of the country – remains calm.

However, tensions that are being exacerbated by the corruption on the part of some former insurgents who now hold political office, the fragmentation of the Gerakan Aceh Merdeka (GAM) organisation, and the activities of TNI – the Indonesian military – mean that risks of violence are real. The growth of the economy in recent years has also greatly increased the funds available to the military for procurement of equipment. Given the small size and limited scope of Indonesia’s indigenous defence companies, the main beneficiaries of increased spending are foreign. Because the military and the government are keen to avoid exposure to another US arms embargo, the main suppliers are Russian, Czech, or Russian/Indian consortia.