Indonesia's Island Fever: The refugees created by ethnic violence could be the country's next time bomb.

The scenes from Borneo last week were both horrific and horrifyingly familiar. Gangs of local Dayaks in the Indonesian province of Central Kalimantan hunted down ethnic Madurese with spears and machetes. Hearts were ripped out of corpses; bodies, even those of children, were decapitated. As many as 500 people, almost all Madurese, may have died.

The true number of victims may ultimately be much higher. Already 21,000 Madurese have been evacuated to East Java, for temporary resettlement on Madura itself, a desiccated, barren island just off the coast. An additional 30,000 sit in fetid refugee camps in Central Kalimantan, waiting to be relocated. Together they account for most of the province's Madurese community--and add to Indonesia's growing population of internally displaced people, which now stands at more than 1 million, roughly 10 percent of the world's total.

Those floating communities --expelled from their homes in the brush-fire wars that have racked Indonesia since former strongman Suharto stepped down in 1998, trapped in disheveled camps or unfamiliar provinces or even long-forgotten hometowns--may be the country's next time bomb. They contradict the hope that Indonesia can cohere as a pluralist state, with more than 300 ethnic groups spread across 13,000 islands and speaking some 450 languages. And they only confirm the fears of those who think the nation might shatter into dozens of fragile, "independent" states.

The killings in Borneo present perhaps the starkest example of this cycle of violence. In late 1997 mobs of indigenous Dayaks also attacked Madurese settlers, many of whom had lived in Kalimantan for more than 20 years. A thousand were killed and 40,000 evacuated. Resentment between the communities has simmered ever since. Violence has tended to flare at the least excuse: in 1997 riots erupted after a dispute over a bus fare. Police say the latest outburst began on Feb. 18 after two Dayaks, angry at losing their jobs at a local forestry office, paid a mob to attack a Madurese family's house. Madurese retaliated, killing 15 Dayaks, and the town erupted. On Feb. 25, 118 Madurese were slaughtered as they were being evacuated by police. The violence spread 200 kilometers east to the provincial capital, Palangkaraya, where Dayaks looted and torched Madurese homes.

At the same time, the savagery reflects deeper resentments. The Madurese in Kalimantan largely arrived as part of the Suharto-era transmigration program, in which millions of Indonesians were relocated from the crowded central islands to more remote, less populated provinces. The idea was to reduce pressure on the resources of Java, Bali and other islands and develop isolated areas. Suharto didn't worry about the ethnic and religious combinations he was creating; in fact, his officials argued that blending communities would help foster an overarching national identity. And besides, the armed forces and police could quell any unrest by brute force. "In the beginning it all seemed like a wise plan," says one Westerner who was a development officer in Indonesia during the 1980s, when the World Bank put up $5 billion to support Jakarta's transmigration schemes. "But the Suharto government was very highhanded. They just went in and took land and didn't give any compensation to the local people, and then they gave the migrants all the economic deals. It's like what happened to the American Indian."

In Borneo, the program brought in thousands of settlers from Madura, an inhospitable island whose residents have traditionally made their living elsewhere. Their new neighbors were the indigenous Dayaks, already angry at being pushed off their tribal forest ...