The latest violence follows almost daily protests

After days of sporadic confrontation between protesting students and riot police, the situation in Medan has become explosive, with thousands of people taking to the streets, attacking cars and buildings.

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 armed forces commander, General Wiranto, has warned of possible anarchy, and he has ordered tough measures to be taken against rioters.

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.

Stone throwing youths have confronted police

But the government has little choice but to keep increasing prices under the terms of its agreement with the International Monetary Fund.

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.