World reaches out to Megawati

The new president faces many challenges

World leaders have recognised Megawati Sukarnoputri as Indonesia's new president, but have made clear the scale of the challenges she faces.

US President George W Bush, speaking on a visit to Italy, called for the country's crisis to be resolved peacefully.

"We look forward to working with President Megawati and her team to address Indonesia's challenges of economic reform, peaceful resolution of separatist challenges and maintaining territorial integrity," he said.

Foreign government have called for calm

Japanese Prime Minister Junichiro Koizumi sent a message of congratulations to the new president and stressed Japan's support for reform in Indonesia, where it is an important foreign investor.

Foreign ministers from the 10-member Association of South East Asian Nations (Asean), meeting in Vietnam for unrelated talks, were more guarded.

Indonesia is the association's most powerful member and Asean ministers are traditionally wary about commenting on fellow-members' internal politics.

The more stable Indonesia is, the more the whole region will benefit

Thai Prime Minister Thaksin Shinawatra

Asean Secretary-General Rodolfo Severino said: "I think it's a reality, this change... the supreme court has spoken, the parliament has spoken, and we have to accept that."

Singapore's Prime Minister Goh Chok Tong went further, sending Megawati a congratulatory letter.

"We hope Indonesia will recover soon," he said, referring to the country's mounting problems since a 1997 economic crisis set in train the ousting of long-term ruler Suharto.

'No violence'

Thai Prime Minister Thaksin Shinawatra said the change of president in Indonesia would benefit the entire region.

"The more stable Indonesia is, the more the whole region will benefit," Thaksin said.

Australia, which saw relations with Indonesia come under strain over the 1999 East Timor crisis, welcomed Megawati's appointment. Prime Minister John Howard said she had long been a champion of democratic ideals.

The European Commission stands ready to assist in efforts for economic and political stabilisation

Spokesman Gunnar Wiegand

European Commission spokesman Gunnar Wiegand said it was important for Indonesia to remain calm and for there to be no violence.

He said the day's political drama deflected attention from the challenges now facing Indonesia's new leader, such as decentralisation and economic stabilisation.

"The European Commission stands ready to assist in efforts for economic and political stabilisation," he said.

Markets surge

Indonesia's battered financial markets welcomed Megawati's election.

The country's currency, the rupiah, gained more than 10%. The stock market surged to a 10-month high, which analysts said was a response to the lifting of short-term uncertainty about the presidency.

The International Monetary Fund said a change of government should not make any difference to the resumption of a vital $5bn loan programme designed to shore up the country's economy.

"We agreed with the government on a set of policies and that set of policies can be put into place irrespective of the composition of the government," IMF senior resident representative in Jakarta John Dodsworth told Reuters news agency.