By Jackson Diehl
Washington Post Foreign Service
Friday, May 29, 1998; Page A29

JAKARTA, Indonesia, May 28—Indonesian President B. J. Habibie today agreed with parliamentary leaders on a plan to hold elections in 1999, following an overhaul of the country's political system by its national assembly later this year.

Habibie, who is struggling to stabilize his one-week-old government and win the renewal of desperately-needed aid from the International Monetary Fund (IMF), offered the timetable for political change in response to mounting pressure from Indonesian opposition leaders. A number of opposition groups have called for elections within a year, and some are pressing for an immediate meeting of the national assembly to replace Habibie, who succeeded longtime ruler Suharto May 21.

Habibie met with Harmoko, the speaker of the national parliament, and senior cabinet members in a parliamentary building surrounded by troops and armored personnel carriers, and flanked by hundreds of student demonstrators. Harmoko later announced that the national assembly, made up of the 500 members of parliament and 500 other appointed officials, will meet at the end of this year or early in 1999 to revise the country's election laws, which for three decades served to prop up the authoritarian regime of Suharto.

"After the session has decided on elections, they still need time to make preparations, which include the participants and the system," Harmoko told reporters after the 90-minute meeting. "This is expected to be completed in 1999."

It was unclear tonight whether the new government's latest concession would satisfy the opposition or slow the still-powerful momentum for change here. Students who led the successful campaign against Suharto and a number of the new opposition groups are demanding that Habibie, a longtime protege of Suharto, be replaced immediately by a new president and transition government not identified with the former regime.

Muslim leader Amien Rais, a prominent leader of the protests against Suharto who has already announced his presidential candidacy, said he opposed the plan. The national assembly, he said, is "stuffed with handpicked Suharto associates," and thus could not be relied on to implement a new election system.

Military leaders, who hold the balance of political power in Indonesia, have so far supported Habibie and his political plans. But Indonesian sources say tensions within the military, which allowed Suharto's downfall last week only after a bitter internal struggle, remain high.

Today Defense Minister Wiranto, the army's top commander, grimly oversaw a ceremony in which his chief rival, Lt. Gen. Prabowo Subianto, accepted a transfer that stripped him of control over a key special forces command in Jakarta. But Prabowo, who is Suharto's son-in-law, has not yet left Jakarta, for his new post in a military college in the city of Bandung, and analysts said Wiranto still faces potential challenges from Suharto loyalists.

Indonesia has held only one free, democratic election in the 49 years since it won independence from the Netherlands. Military and civilian leaders here, including politicians from more than a dozen new political parties formed in the last week, are just beginning to debate the form and limits of new elections, though it is expected they would encompass both a new parliament and a new president.

The current parliament contains a large faction of appointed military members, and competition for the remaining seats in the 1996 elections was limited to Suharto's Golkar party and two small, officially-sanctioned rivals. The current constitution calls for the president to be elected indirectly, a provision that most Indonesian analysts expect will be retained in any new system.

Habibie's proffer of an election timetable came as his government attempted to persuade a visiting IMF official, Asia-Pacific director Hubert Neiss, that the IMF should resume a suspended bailout program for Indonesia. Neiss, who is on a four-day visit to Jakarta to gather information for a report to the IMF board, took the unusual step today of meeting with a range of opposition leaders following his session with Habibie. They included Rais, Megawati Sukarnoputri, the daughter of former populist president Sukarno, and several members of a group of six Muslim clerics and intellectuals who have met with Habibie twice in the last week.

Neiss said he met the opposition leaders to ask whether they would support a continuation of the $43 billion IMF program, which requires Indonesia to overhaul its banking system, break up monopolies and cut back on subsidies, including some for consumer goods. Rais told reporters after the meeting that he would support the IMF program. "Clearly it would be better to continue with the plan because there are no other alternatives," he said.

Western officials here said that the IMF cannot easily renew its loan program here without assurances that Habibie's government is capable of remaining in power long enough to implement it. Officials say they hope that by issuing an election timetable, a step he avoided in a national address three days ago, Habibie can defuse the demands for his removal and win a mandate to carry out the rescue program.

There is consensus in and outside the government that the economic situation is now critical. The Indonesian currency remains so depressed that even vital imports for domestic industries are unaffordable. Food importers have been unable to obtain short-term trade financing, and the riots that preceded Suharto's resignation have seriously disrupted markets in Jakarta and other cities, where prices for basic foods are soaring.

Indonesia's largest private bank, Bank Central Asia, has been suffering a run of panicked depositors withdrawing cash since last week, forcing its takeover by the government today. The bank is partly owned by two of Suharto's children.