New Indonesian leader faces first test

Megawati Sukarnoputri has the presidency and many issues to resolve

JAKARTA, Indonesia -- President Megawati Sukarnoputri faces the first big test of her leadership this week when she tries to choose a cabinet that has broad appeal.

The selection must satisfy the interests of her coalition partners and the financial community.

International issues are also awaiting resolution, among them the need to restore confidence and Australia's desire that she brings the pro-Jakarta militia responsible for atrocities in East Timor to justice.

After travelling around several provinces in recent days, Megawati will meet Vice President Hamzah Haz on Monday to thrash out the formation of a government, an official said on Sunday.

"Tomorrow, Mr Hamzah will meet the president to discuss the cabinet,"Husnie Thamrin, deputy chairman of Haz's Muslim-oriented United Development Party (PPP), told Reuters.

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Officials from Megawati's Indonesia Democratic Party-Struggle (PDI-P) were not immediately available to comment.

Thamrin declined to say when the cabinet would be unveiled, but some local media have predicted Wednesday.

Few Indonesian cabinet announcements will be as closely watched as this, with Megawati and her future team facing an unstable country, a sick economy and sceptical foreign investors.

Local media have quoted PDI-P officials as saying Megawati would expand the cabinet to 30-35 posts from the current 26, partly to cement alliances with other political parties that will be crucial to avoid the attacks that helped bring down her predecessor, Abdurrahman Wahid.

Thamrin said the number of cabinet positions could be fixed at 32. He gave no more details.

Officials had hoped the cabinet would be announced last week, but Megawati's absence from Jakarta -- underscoring her aloofness and detachment from the political fray -- along with a delayed vice presidential election put that plan back.

Most analysts are betting key economic posts will be shared among economists in PDI-P. These include former chief economics minister Kwik Kian Gie and ex-investment minister Laksamana Sukardi.

Respected former chief security minister Susilo Bambang Yudhoyono is a strong contender to win back the post that pitted him against Wahid over the Muslim cleric's threats to declare a state of emergency to try to prevent his ouster.

Wahid eventually went ahead with that move but it was roundly ignored and failed to save his job.

Most analysts expect the defence minister's post to revert back to a military man after two civilians under Wahid, a move sure to concern Western governments and human rights groups eager to see civilian control over the generals.

Hamzah Haz will have his say on Megawati's cabinet team

Megawati has much better ties with the military than Wahid because of her staunch nationalism.

She is also unlikely to interfere in its activities, threatening stop-start efforts to assert civilian control over an institution that often has been a political tool or operated with impunity across the archipelago in recent decades.

Megawati has made few public comments in Jakarta since being appointed president last Monday by the top assembly after it sacked Wahid for incompetence. During her trip to several provinces on Friday and Saturday she urged local officials to stamp out graft, repay loans for infrastructure projects on time and use natural resources wisely.

Reuters contributed to this report.