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![]() ![]() ![]() ![]() New violence in Indonesia ![]() ![]() There has been further violence in the Indonesian city of Medan, 1400km north-west of Jakarta, after the government imposed steep increases in the price of fuel and electricity. Local residents report a heavy security presence on the streets of the city after a large crowd of people attacked cars, shops and a police station. Medan has been the scene of several clashes between students and the security forces over the past ten days. The price increases were triggered by a reduction of subsidies agreed with the International Monetary Fund last month. The IMF has now approved the payment of the next instalment of financial aid to Indonesia. Our Jakarta correspondent, Jonathan Head, reports:
It is not clear whether it was students or local residents who were involved in the latest violence. The authorities' greatest fear is that the student demonstrations could escalate into a much wider anti-government movement, and the security forces have tried hard to restrict the student rallies to the university campuses, with only partial success.
The task of the military is now likely to become more difficult after the government was forced to raise the price of fuel and electricity. Petrol has gone up by 70%, and even the price of kerosene, which is widely used for cooking, has risen by 25%. With millions of Indonesians already suffering from the impact of previous price increases, and growing unemployment, the authorities are clearly worried about the prospect of further unrest.
With the collapse of the Indonesian currency, the cost of producing electricity and fuel, much of it in dollars, has risen sharply, and the government simply could not afford to keep subsidies at the same levels. Its adherence to the terms of the IMF deal has won Indonesia the release of a further $1bn in financial assistance, but its economy, burdened by massive debts and political uncertainties, will still take years to recover.
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