Facing the Enemy

Though the blasts jolted a nation into realizing that terrorism was no longer a thing of the past, the prevailing attitude among Jakarta residents seems to be one of determined resilience. "Bad things can happen anywhere: car accidents, illness," says Syarif, an accountant window-shopping at a glitzy mall with his wife and two small children. "The bombing was bad, but we have to continue our lives." By the end of the weekend after the blasts, restaurants and bars were buzzing again in the Indonesian capital, even though security measures at some potential targets were lackadaisical. At one five-star hotel, for instance, guards failed to adequately check approaching taxis while a bomb-sniffing dog snoozed at the checkpoint.

Now the question is whether the foreign community will be as relaxed. Over the past year, Indonesia has profited from the political uncertainty in regional neighbors Thailand and Malaysia, with foreign investors considering the once turbulent country as an alternative location to park their cash. Indonesia recorded 4.4% year-on-year growth in the first quarter of 2009, a particularly impressive feat given the global economic crisis. But the July 17 bombings, as well as the assassination a week earlier of an Australian mine employee working in the remote province of Papua, reminded the world that foreigners continue to be the intended victims of terrorism in Indonesia. Not only did the bombs detonate at two American-branded hotels that are popular with foreign guests, but the suicide attacker at the Marriott appears to have deliberately targeted a side room where a group of mostly Western businessmen and diplomats were conducting a breakfast meeting. Three Australians, one New Zealander and an Indonesian who were in that room were killed. (Read "Why Indonesia Matters.")

Risks to foreigners notwithstanding, there are some encouraging precedents for the country's economic prospects: the 2003 Marriott bombing didn't result in a major investment outflow, and Bali's tourist trade eventually recovered from the pair of attacks on its soil. "The initial reaction of the international business community is one of concern but not so much as to deter plans for investment," says Arian Ardie, a strategic-risk consultant and member of the American Chamber of Commerce in Jakarta. "People are better able now to put things in perspective. They know this is not an unstable country but the act of a few crazed individuals."

Still, it takes only a few renegades to wound the reputation of a country of 240 million people. Indonesians decisively rejected Islamic political parties in April's legislative elections, partly in reaction to the violent ideology that has crept into some strains of political Islam. But as Ken Conboy, a terrorism expert who has written a book on JI, notes, the recent hotel attacks were "probably organized by about 10 guys, so it will be hard to stop these kinds of things from happening."

That's a sobering prospect for S.B.Y., whose legacy during his second term will depend somewhat on his ability to keep terrorism at bay. Luckily for the President, in his first five years in office he enabled Indonesia to establish one of the most knowledgeable and dedicated antiterror units in Asia. S.B.Y.'s supporters, of whom there are many, aren't letting the bombings ruin the postelectoral season. "This is a distraction, but I would not say the honeymoon is over," says Bara Hasibuan, a member of Yudhoyono's campaign team. "If the police make more arrests over the next few weeks, we will recover the confidence of the Indonesian public." A nation awaits.

— with reporting by Jason Tedjasukmana/Jakarta

See pictures of terror in Jakarta on LIFE.com.