Sunday, August 9, 2009

Does resurgent terrorism threaten Indonesia's bright prospects?

Up until the deadly suicide bomb attacks on two upmarket Jakarta hotels last month, the discourse surrounding Indonesia was all about the country's bright prospects.

From investment bankers to academics and journalists, everyone was talking about the remarkable transition to peacecful democracy and how Indonesia's economy, freed from reliance on exports to the West, was set to be the next emerging market success story.

The hotel attacks and the subsequent mopping up operations against Noordin Top and his Jemaah Islamiyah henchmen have changed the tone of the debate.

Reme Ahmad, who works on the foreign desk of the Straits Times, is one of many who has warned that "every bullet and bomb they use could destroy Indonesia in the eyes of investors and tourists".

But, as I have noted before when writing about Sri Lanka, terrorism tends to put fewer investors off than you might think. Sure, tourists are scared away in the initial aftermath of any major attack, but for the rest of the country it's business as usual.

The real danger comes from a sustained campaign of violence. With Noordin and many of the other key JI leaders now reportedly dead or under lock and key, this seems less likely.

But as with Al-Qaeda, even though JI appers to be becoming a more splintered grouping, autonomous, individual cells still remain a serious, if less co-ordinated, threat.

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