Police arrested 4 in connection with 9 September bombing outside Australia's Jakarta embassy, including field commander for attack, Rois; other main suspects, Malaysian JI members Noordin Mohamad Top and Azhari Husin, remain at large. President Susilo Bambang Yudhoyono (SBY) extended emergency rule in Aceh for further 6 months; vowed to seek alternative methods to end violence. More violence in central Sulawesi: bomb on Poso bus 13 November killed 6; police found severed head of Christian chief of Pinedapa village 5 November; and clash between 2 Muslim groups in Donggala 3 November killed 2. Approximately 100 Papuans, apparently members of Free Papua Movement (OPM), ambushed convoy of officials from Puncak Jaya district 12 November, killing 1. Local human rights groups called for investigation, believe incident directed by military but evidence unclear. Two people killed and 5 wounded in separate land disputes involving plantations in Riau and Jambi provinces, Sumatra 23-24 November.

Susilo Bambang Yudhoyono sworn in as Indonesia’s first directly elected president 20 October; said priorities are fighting corruption, creating jobs and bringing peace to Aceh and Papua, though has yet to articulate concrete policies. West Sulawesi communal violence killed at least 3 as Muslim sub-districts rejected incorporation into newly created Christian-majority Mamasa district. Central Sulawesi violence killed 3 in Poso and Donggala districts. In Papua, 2 attacks allegedly by Free Papua Movement rebels killed 5 civilians in Puncak Jaya 12,14 October - 800 residents evacuated from area; 2 suspects detained by police for questioning; 4 killed, including priest, reportedly by shots fired from army helicopter. Investigations into 9 September Australian embassy blast indicated joint operation by Malaysian JI members Noordin Mohamad Top and Azhari Husin, in collaboration with Darul Islam splinter group from Banten, West Java. Police hunting 4 men after small explosion and discovery of live bombs in house in Sukabumi, West Java 14-15 October. Clashes continued in Aceh, reportedly killing 35 Free Aceh Movement rebels, 1 soldier 28-31 October. Man arrested in Sukabumi 21 October for possession of explosives. Second trial of Abu Bakar Ba'asyir on charges relating to Bali and Marriott attacks began 28 October.

Former general Susilo Bambang Yudhoyono (SBY) defeated incumbent Megawati Sukarnoputri in landslide election victory with 61% of votes. Optimism, but not yet clear SBY’s acknowledgment of need for non-military solutions to Aceh and Papua will lead to new policies. On downside, major bombing outside Australian Embassy Jakarta 9 September highlighted continued terrorist threat. Bomb killed 9, injured over 180. Appears to be work of Malaysian JI bomb experts Azhari Husin and Noordin Mohamad Top in collaboration with non-JI group from West Java. Police arrested more than 12 suspects, but Azhari and Noordin, on run since Bali, continue to elude capture. Fighting continued in Aceh; Free Aceh Movement’s (GAM) Eastern commander Ishak Daud killed Peureulak 8 September; first senior GAM commander killed since military operation began May 2003. Human Rights Watch report accused government of torture, ill-treatment and unfair trials. Five districts in southeast Aceh granted permission to create separate province, Aceh Leuser Antara, in repeat of ill-fated Papua process, but timetable remains unclear.

Run-off vote between incumbent president Megawati Sukarnoputri and former general Susilo Bambang Yudhoyono to be held 20 September. Fighting escalated in Aceh in lead-up to Indonesian national day 17 August. Additional troops deployed to Free Aceh Movement (GAM) strongholds, where they reportedly forced villagers to fly national flags. GAM rebels launched series of grenade attacks 17 August, killing civilians at national day ceremonies as well as security personnel throughout province. Villagers from Wei and Dambo tribes armed with arrows and machetes clashed in Papua’s Keerom district 13 August in dispute over national day commemoration. Approx. 1,000 people gathered in Papua’s capital, Jayapura, for peaceful rally calling for UN to convene Timor-Leste style referendum. Free Papua Movement (OPM) guerrillas ambushed army garrison in Papua’s Puncak Jaya district 17 August; 2 OPM killed. In Ambon, 2 explosions 11 August raised fears after April violence.

Opening round of first ever direct presidential elections proceeded smoothly. Former general Susilo Bambang Yudhoyono (SBY) polled highest; to face incumbent President Megawati Sukarnoputri in second round 20 September. Election results gave SBY 34%, Megawati 27%, former general Wiranto 22%. Constitutional Court ruled new anti-terrorism law, used retroactively to convict Bali bombers, violates constitution, but ruling will only apply to future cases: police dropped plans to charge cleric Abu Bakar Baasyir over Bali bombings (though still to be charged with heading Jemaah Islamiah). Aceh province governor Abdullah Puteh suspended from duties while being investigated over graft case. Over 230 people described as “suspected terrorists” killed in Aceh since martial law lifted in May. Protestant minister killed in church shooting Palu city, Central Sulawesi.

First direct presidential election set for 5 July. Polls indicate Democratic Party candidate Susilo Bambang Yudhoyono clear favourite. Clashes in Aceh continued; at least 18 suspected rebels, 3 soldiers killed. Exiled leaders of separatist Free Aceh Movement (GAM), including “prime minister” Malik Mahmood, arrested for “crimes violating international law” in Sweden: later released. Trial of Rusman Gunawan, charged re Jakarta’s August 2003 Marriott hotel blast, started 21 June. Attorney General’s office announced Muslim cleric and suspected JI leader Abu Bakar Baasyir’s case ready for trial. New constitutional court overturned controversial January 2003 decision to divide Papua by creating new provinces of West and Central Irian Jaya; interior ministry appealing decision. In central Papua, conflict between Damal and Nduga tribes resolved after 4 killed, over 120 injured. Investigations into April/May Ambon violence continued with members of Christian group arrested on arson charges but no progress on sniper attacks. Maluku police, including son-in-law of separatist Front for Moluccan Sovereignty leader Alex Manuputty, reportedly involved in violence. ICG Southeast Asia project director Sidney Jones and analyst Francesca Lawe-Davies expelled from Indonesia 6 June, generating much local controversy and international concern.

Martial law lifted in Aceh, replaced with ‘civil emergency’; no reduction of 40,000 troops. Military claimed it has killed 2,000 Free Aceh Movement (GAM) members and captured 3,000 since 19 May last year when offensive began. GAM released well known Indonesian cameraman 18 May, and around 150 other civilians, some of whom believed to be hostages; others had reportedly gone to GAM for protection. Ambon still tense after violence claimed 39 last month; bomb explosion 17 May, hours after separatist flags raised in Muslim area of city; explosions 23 and 25 May killed 1 injured 17. ICG's Sidney Jones to be effectively expelled 10 June with work permit not renewed, following complaints from director of State Intelligence Agency General A.M. Hendropriyono about critical ICG reports; considerable media attention generated.

President Chen Shui-bian, re-elected by wafer-thin margin in 29 March election, said would push ahead with plans for new constitution in 2006, angering China, which sees plan as step toward independence. U.S. cautioned Chen against aggressive pro-independence stance. Recount of election results demanded by opposition Kuomintang party likely to take place mid-May.

Campaigning for 5 April national elections began 11 March amid security fears. Bomb exploded during training exercise of radical Islamic group in Jakarta 21 March. Police seized explosives (same as used in Bali and Marriott bombings), handgun and jihadist propaganda. Ten people arrested; 8 suspects still at large. Sentence of JI leader Abu Bakar Ba’asyir reduced after successful appeal to Supreme Court; to be freed within weeks. Acting head of JI Abu Rusdan sentenced to 3 1/2 years for sheltering Bali mastermind Ali Ghufron (Mukhlas). Police stabilisation force of 100 deployed to Poso 31 March after 3 shooting incidents, 2 dead. Machete attacks in Central Sulawesi by unknown assailants on predominantly Christian village in Donggala regency 11 March killed 1, injured 5. Fears that deadly Christian-Muslim fighting of 2000-2001 could be reignited. Four killed, 28 injured 11 March when villagers attacked police station in Manggarai regency in Flores; culmination of long-running dispute over illegal coffee plantations. Senior official of Free Papua Movement (OPM) killed by army in Sarmi district 12 March where military claims OPM rebels were planning election disruptions. Additional 5,500 police stationed in Aceh to guarantee stability during elections, while access restrictions tightened for foreign journalists.

Supreme Court 12 February acquitted Golkar chairman Akbar Tandjung of corruption charges re misappropriation of approx. U.S.$4.5 million in state funds allocated for poverty alleviation. Decision sparked days of protests in number of cities. Demonstrators clashed violently with police, resulting in hospitalisation of more than 60 in Jakarta alone. Two sentenced to life imprisonment for involvement in October 2002 Bali bombing. Government completed draft revision of anti-terrorism law to transfer more power to security forces to deter acts of terrorism.