Positive developments in Aceh offset by bombings in Bali being reported 1 October as CrisisWatch going to press. Aceh peace process continued to unfold smoothly. First stage of disarmament and troop withdrawals ended: GAM turned in 25% of weapons, 6,000 troops and additional 1,300 paramilitary mobile brigade (Brimob) police reportedly withdrawn. Aceh Monitoring Mission made first ruling, saying GAM responsible for armed clash wounding 2 soldiers. 3 bombs detonated in Bali 1 October; early reports 22 dead, casualty figures expected to increase. Attacks against churches and Ahmadiyah sect in West Java raised concerns about growing Islamic radicalisation and police inaction. Military presence in Papua steadily growing. Long-awaited Papuan People’s Assembly to be established early October after key figures previously threatened to pull out. Navy fired on Chinese fishing vessel in Arafura Sea 19 September, killing 1; 10 crew remain in detention..

Historic peace agreement signed between Free Aceh Movement (GAM) and government in Helsinki 15 August. GAM and Indonesian military met 22 August to decide on new security arrangements: meeting described as positive by EU and ASEAN monitors. All military movements of more than platoon size to require prior notification of head of monitoring mission. Government released over 1,400 prisoners 31 August as part of agreement. Elsewhere, 2 Muslim men shot dead in Poso suburb 3-4 August in suspected reprisal attacks for giving information to police about other recent incidents in area. Papua saw one of its largest demonstrations ever over slow implementation of Special Autonomy: 10,000 marched to provincial parliament in Jayapura 12 August demanding law be reviewed. Supreme Court rejected radical cleric Abu Bakar Ba’asyir’s final appeal 6 August but sentence reduced by 4.5 months under annual Independence Day remission. Australian Embassy bomber Achmad Hassan received life sentence 23 August. 9 injured by small bomb 25 August at market in Ambon in first incident there since May.

Encouraging developments in peace talks between government and Free Aceh Movement (GAM). Memorandum of understanding initialled 17 July, formal peace agreement to be signed 15 August. Draft deal agreed after fifth round peace talks, mediated by Crisis Management Initiative, headed by former Crisis Group Chair and Finnish President Martti Ahtisaari. President Susilo Bambang Yudhoyono ordered Indonesian military to end Aceh offensive in effort to help peace process after clashes left 10 dead. Government announced troop reduction between September and December - Jakarta’s control of army key to making peace process work.

Jakarta rejected key Free Aceh Movement (GAM) peace talk demand GAM be allowed to run as local party in elections. Security Minister said Jakarta could not agree since would necessitate changes to law requiring parties be nationally based. Fifth round of talks to start from 12 July in Helsinki. Bloody clashes reported almost daily since peace talks began in January; army said would continue to fight GAM until deal reached. Security forces and GAM blamed each other for non-fatal shooting of Aceh aid worker 23 June. First ever direct elections for local government officials proceeding relatively peacefully, even in former conflict areas. Central Kalimantan candidate for governor who helped foment violence against ethnic Madurese in 2001 received only 4% of vote.

Bomb blasts 28 May in Tentena, majority Christian town near Poso, Central Sulawesi, site of serious Christian-Muslim fighting 1999-2001, killed at least 20. Indonesian negotiators and Free Aceh Movement (GAM) started fourth round of Helsinki peace talks 26 May: discussed GAM demand for locally-based political parties and document on security issues. Next round of talks set for July. Despite talks and 19 May end of civil emergency, Indonesian military stepped up operations in Aceh. On Moluccan island of Ceram, gunmen attacked paramilitary (Brimob) police unit 16 May, killing 6 and raising fears of return to sectarian violence. 14 arrested, 2 of whom were police, others believed members of Laskar Mujahidin militant group responsible for attacks in Maluku, February 2005. Apparently unrelated border dispute between 2 villages in Southeast Maluku 27 May killed 3, injured 51. U.S. embassy and consulates closed 26 to 31 May after detailed floor plans found on jihadist web site. Security stepped up at Australian, British, and Japanese embassies.

Third round talks between government delegation and Free Aceh Movement (GAM) held Helsinki under former Finnish president Martti Ahtisaari. Both sides agreed definition of special autonomy - “self-government of Aceh province within the Republic of Indonesia” but key security issues unresolved; next talks due late May. Clashes between Indonesian military (TNI) and GAM continued. Aceh governor Abdullah Puteh found guilty of graft; sentenced to 10 years 11 April but later released into “city arrest” due to “health” concerns’. TNI to give up lucrative enterprises within 2 years as part of reforms but will keep cooperatives and foundations. Violence re-erupted Mamasa district of West Sulawesi province 24 April killing 4; fifth outbreak since Mamasa created 2002. Political parties voted for new (non-parliamentary) heads for next 5 years: House of Representatives deputy speaker Muhaimin Iskandar National Awakening; Businessman Soetrisno Bachir -National Mandate Party; Vice President Jusuf Kalla for largest party, Golkar; former president Megawati Sukarnoputri re-elected leader of Indonesian Democratic Party of Struggle.

Despite 3rd round Helsinki talks between government and Free Aceh Movement (GAM) scheduled for 12-17 April, security officials vowed to intensify operations against rebels. Jakarta announced extension by up to 2 months of 26 March deadline for aid agencies to leave Aceh. Devastation returned to region with 28 March earthquake near Nias island off coast of Sumatra. Tensions with Malaysia over disputed oil concessions off coast of Borneo, near Sebatik, led to increased military presence in area but diplomatic rhetoric generally restrained. Simmering unrest in Ambon as Muslim/Christian attacks 5 and 21 March left several injured. President Susilo Bambang Yudhoyono ordered police and military “intelligence operation” to capture culprits. Military announced 15,000 troops from Kostrad (Strategic Reserve Command) to be deployed to Papua province over next 4 years, bringing total to more than 50,000. Radical Islamic cleric Abu Bakar Ba’asyir found guilty of conspiracy over October 2002 Bali bombings, sentenced to 30 months in jail, but sentence could be overturned on appeal due to weak case.

Second round of talks between Free Aceh Movement (GAM) and government in Helsinki described as “constructive” by former Finnish President Martti Ahtisaari, chief mediator. Indonesian government claimed GAM dropped independence demand, but this denied by GAM spokesman, Bakhtiar Abdullah. Both sides agreed to discuss “self- government” but not clear any common ground. Next round of talks scheduled for 12 April. Corruption in aid distribution remains major concern, while army claimed GAM attempting to infiltrate IDP camps. Army killed 7 suspected rebels 7 February. Charge dropped against radical Islamic cleric Abu Bakar Ba’asyir of planning or inciting terrorist acts, requested sentence of 8 years for lesser charges. U.S. State Dept. restored Jakarta's eligibility for International Military Education and Training program in significant step towards restoration of full military ties - cut in 1991 due to rights concerns.

Positive development in Aceh peace process as talks, under chairmanship of former Finnish President Martti Ahtisaari, held in Helsinki between government and exiled leadership of Free Aceh Movement (GAM) 27 January. Both parties agreed to “try to refrain from hostilities” while aid operations are ongoing in Aceh - and to resume discussions 21 February. But no formal ceasefire agreed; before talks military claimed to have killed 206 rebels in previous month. Once closed to foreign journalists and aid groups, Aceh now crammed with Indonesian and international relief agencies (including evangelical Christian and hardline Muslim groups) and over dozen foreign militaries. As of 25 January, 228,164 Indonesians reported dead or missing as result of tsunami. Witnesses at 2nd trial of radical Islamic cleric Abu Bakar Ba’asyir on charges relating to Bali and Marriott bombs continued to backtrack on Ba’asyir’s involvement. Decree signed clearing way for creation of Papuan People’s Council, but Papuan provincial leaders expressed concern over government plans to include newly-created and legally controversial West Irian Jaya province on list of regions to hold direct elections of regional heads in 2005.

Devastating impact of 26 December earthquake and tsunami left as many as 100,000 dead, most in Aceh: much of conflict-wracked province in ruins, including local government structures. Free Aceh Movement (GAM) declared unilateral ceasefire, but longer term impact of disaster as yet unclear, with much depending on how relief and reconstruction effort handled: if well, central government stands to win major new support, but if poor coordination continues, or serious corruption takes place, GAM independence movement will be major beneficiary. Restrictions on access by international aid agencies and foreign media lifted. Vice-President Jusuf Kalla elected head of Golkar, auguring better relations between executive and legislative branches. Corruption Eradication Commission arrested Aceh governor Abdullah Puteh 7 December, pending trial for alleged involvement in 2002 graft case. Minister of Defense Juwono Sudarsono announced government to take over military business enterprises with assets worth U.S.$550,000 or more. Susilo Bambang Yudhoyono’s government announced multi-agency intelligence teams to be set up throughout Indonesia to boost security. Five injured in 12 December attacks on 2 churches in Palu, Central Sulawesi province.