U.S. Treasury Secretary Lawrence H. Summers told Indonesian political and business leaders today that legal as well as economic reforms are key to the recovery of the world's fourth most populous nation.

During his stopover in the Indonesian capital, Summers met with Abdurrahman Wahid, the country's first freely elected president. He also scheduled a meeting with Attorney General Marzuki Darusman, who is engaged in exposing and prosecuting a series of high-profile corruption cases against former president Suharto and his associates.

The Treasury secretary told an audience of Indonesian and American businesspeople that introducing the rule of law was "overwhelmingly important for economic success."

His visit, on his way to an economic summit meeting in Tokyo, came on the same day that Indonesia signed a letter of intent with the International Monetary Fund. The new IMF program would, with the support of the World Bank and the Asian Development Bank, make available "upwards of $10 billion over the next three years to reform and renewal in Indonesia," Summers said.

In return, the government agreed to a series of reforms, including strengthened supervision of banks and an overhaul of the court system.

International support for Wahid's government continues to hinge on the "forceful implementation" of a host of financial and economic reforms, Summers said. "With a new government and the first democratically elected president and vice president in Indonesia's history, there must be a real prospect that this period of uncertainty and logjammed reform can draw to a close."

Since Suharto's fall in May 1998, Indonesia has been plagued by outbreaks of violence from one end of the sprawling country to the other, including a separatist rebellion in the westernmost province of Aceh and vicious Muslim-Christian violence across the eastern Maluku Islands.

The visit came less than a week after Richard Holbrooke, the U.S. ambassador to the United Nations, had warned the TNI, the Indonesian military, that the rumored prospect of a coup against Wahid's legitimate government would cause immense, if not irreparable, harm to a nation in which the United States had deep and lasting interests.

Tourists were fleeing the resort island of Lombok, just east of Bali, after the latest clashes, in which Muslims destroyed Christian and ethnic Chinese properties.

Without referring to specifics, Summers said, "We have been reminded once again this week that Indonesia's greatest challenges in the months ahead are fundamentally political."

In addition, senior generals are under investigation for human rights crimes in East Timor and Aceh, sparking fears that the colloquially named "Dark Forces"--military and business interests aligned against the reformers now in charge--could foment further unrest.

During his stay, Summers also visited a disadvantaged fishing village in north Jakarta, which he said showed both the vibrancy of nongovernmental work in developing sustainable communities and gave him a better understanding of the issues involved in dragging Indonesia back from the brink of economic disaster.

CAPTION: Treasury Secretary Lawrence H. Summers talks with children near Jakarta yesterday after meeting with President Abdurrahman Wahid.