Indonesian officials link bombing with al-Qaida

BALI, Indonesia -- Indonesia's government, reeling from a bomb attack that killed at least 180 people, acknowledged for the first time Monday that al-Qaida is active on its soil -- setting the stage for a possible crackdown on extremists.

Stocks plummeted in the capital Jakarta, and markets sank elsewhere in Southeast Asia as tourists fled the country, already one of the region's most fragile economies.

But many Americans said they were planning to stay, contrary to State Department advice and despite warnings U.S. interests could be the next targets.

The car bomb Saturday at a nightclub packed with foreigners on this resort island is likely to harm more than just the economy and tourism. Since the Sept. 11 attacks, and despite U.S. pressure and the discovery of an al-Qaida-linked terror network in neighboring Singapore and Malaysia, Indonesia has insisted there is no threat of violent extremism on its soil.

The turnaround came after a Cabinet meeting in Jakarta Monday, when Defense Minister Matori Abdul Djalil said: "We are sure al-Qaida is here."

"The Bali bomb blast is linked to al-Qaida with the cooperation of local terrorists," he said.

President Megawati Sukarnoputri is likely to face growing demands to arrest high-profile suspects whose continued freedom has astounded law enforcement officials in other countries.

In Washington, President Bush had strong words for the Indonesian leader, saying he planned to talk to her about the need to crack down on terrorism.

"I hope I hear the resolve of a leader who recognizes that any time terrorists take hold in a country it's going to weaken the country itself," Bush said. "And there has to be a firm and deliberate desire to find out -- find the killers before they kill somebody else."

Security Minister Bambang Susilo Yudoyono said there were signs terrorists were planning attacks against industrial sites.

On Bali, there was no visible evidence of a higher security presence or stricter controls at the airport, though police insisted an elite unit had been deployed.

The FBI and Australian detectives joined the hunt for the killers. Investigators from Scotland Yard were on the way, and Germany said it might send experts.

Bali police said 27 witnesses had been questioned.

Suspicion has fallen on Jemaah Islamiyah, a group that Singapore says is based in Indonesia and is linked to Osama bin Laden's terror network. But the group's leader denied involvement.

"All the allegations against me are groundless. I challenge them to prove anything," Abu Bakar Bashir said. "I suspect that the bombing was engineered by the United States and its allies to justify allegations that Indonesia is a base for terrorists."

Indonesia has refused to arrest Bashir, saying he has committed no crimes.

Embassy vacated

The U.S. Embassy ordered all nonessential staff and dependents to leave Indonesia, and said other Americans in Indonesia should consider leaving. Up to 20,000 Americans are believed to be in Indonesia, although few are permanent residents. Many are employees of U.S. energy companies, which have extensive interests in the resource-rich nation.

Rising death tolls

Foreign countries compiled rising tolls of their citizens killed in the bombings, while volunteers at a hospital-turned-morgue piled ice on bodies and loaded others into refrigerated containers to slow decomposition in the tropical heat.

Australian Foreign Minister Alexander Downer, whose countrymen are believed to top the death list, arrived on Bali on Monday. The bombings may be the work of al-Qaida and its allies, he said, but stopped short of calling for Bashir's arrest.

A pair of explosions, one from a car bomb, tore through a maze of bars, restaurants and nightclubs Saturday night at Kuta Beach, a haunt for surfers and young vacationers. The open-air Sari Club was turned into an inferno. Little remained Monday except a huge hole.

Government officials said 181 people died, although hospital workers put the total at 190. More than 300 were injured.

Balinese officials said that only 39 positive identifications had been made -- 15 Australians, eight Britons, five Singaporeans, six Indonesians, one German, one French citizen, one Dutch citizen, one New Zealander and one Ecuadorean.

Two Americans were killed and four injured, the U.S. State Department said.