A Military Mafia.(Statistical Data Included)

Armed with an M-16 machine gun, Sergeant Juwono was--literally-- cornering the market. The Indonesian soldier stood along a main road in war-torn Aceh province selling bumper stickers commemorating the country's upcoming Aug. 17 Independence Day. He stopped every car driving north and gave a simple but effective sales pitch: buy a sticker or else. A NEWSWEEK correspondent traveling along the road promptly handed over 5,000 rupiah, or about 50 cents, to the armed salesman. He smiled politely, withdrew his weapon from the car's window and waved the foreigners on. It's a quick way to make a buck, to be sure, but most soldiers in Aceh have set their sights much higher. "That is chicken feed," says Ahmad Humam Hamid, a political analyst in the provincial capital of Banda Aceh. "They've got their hands in so much more."

The problem goes well beyond simply picking Aceh's pocket. The Indonesian military, or TNI, recently requested an additional 8,000 troops to boost its current 22,000 forces in the devoutly Muslim province, ostensibly to crush a 26-year-old armed separatist movement once and for all. But many Acehnese wonder how eagerly the soldiers want to end the conflict. Already unwelcome because of past brutalities, troops in Aceh have also built up a vast, often illegal, business empire--encompassing everything from logging to coffee growing to everyday extortion--that would make any Mafia don jealous. Acehnese have long resented Jakarta for not sharing the billions in oil and gas revenues their province produces. But they hold a special contempt for soldiers like Sergeant Juwono, whom they blame for sucking the province dry, dollar by dollar. Recalling an old saying, Kamaruzzaman, a civilian peace negotiator for the Free Aceh Movement, or GAM, says, "Soldiers come here with an M-16 but leave with 16M"--as in 16 million rupiah.

Under former strongman Suharto, the TNI developed a web of business interests all across the sprawling archipelago, partially to shore up its war chest. But the military's business ventures in Aceh have drawn special attention in recent weeks because top brass--touting the terrorist threat posed by GAM--are urging President Megawati Sukarnoputri to declare martial law in the province. Many Acehnese, who fear the prospect of the TNI's being given a freer hand, saw the maneuver as a thin excuse to tighten the military's financial stranglehold on the province. (An Aug. 5 decision on the matter was delayed.)

The people of Aceh aren't the only ones watching for Megawati--and the TNI's--next move. During a visit to Indonesia earlier this month, U.S. Secretary of State Colin Powell suggested that the International Military Education and Training program, which promotes ties between the U.S. and Indonesian militaries, might soon be reinstated. The TNI has been blacklisted from the program since a military massacre of East Timorese civilians in 1991. But its eagerness to be reinstated may not be driven, as many assume, by a desire for American military hardware. "What's important for [the TNI] is the political significance of the decision in Washington," says Rizal Sukma, an analyst at the Center for Strategic and International Studies. "Once they have the U.S. confidence again they can use this to tell the public... we are making progress on the human-rights front." That in turn would deflect attention from abuses allegedly being committed in places like Aceh. The TNI can be nonchalant about U.S. aid precisely because of the business opportunities it finds in conflict zones. Some 60 to 65 percent of the military's operating expenses come from so-called off- budget sources. Some of those are more legal than others, particularly in areas far from Jakarta. "There is a lot of money to be had in Aceh, not only from the exploitation of natural resources, including logging, but also through smuggling going on in Sabang, and that's real, big- time smuggling," says Sidney Jones, the Indonesian project director of the International Crisis Group, who visited Aceh last month. According to Faisal Hadi, a member of the Aceh-based NGO Coalition for Human Rights, the TNI gets a cut on all automobiles shipped from Singapore into the province's port island of Sabang. Besides the military markup, ...