SYDNEY -- A senior adviser to Indonesia's Vice-President has raised doubts that the country can fight its way out of the current crisis because of the powerful influence of President Suharto's family.

Economist Umar Juoro, an adviser to Vice-President B.J. Habibie, told the Australian Financial Review in an interview published yesterday that Mr Suharto's eldest daughter, Mrs Siti Hardiyanti Rukmana, appeared to hold more influence over economic policy than the central-bank governor.

"I think that Suharto will make her his successor," Mr Umar said.

"This kind of cronyism gives a very negative impact to domestic and foreign investors."

He also said Indonesia would cut itself off from the global economy if it failed to win back financial support from the International Monetary Fund (IMF).

"In order for this regime to survive, they have to retreat from the open economy if the Suharto government fails to persuade the IMF to resume its US$43 billion (S$68 billion) support package," he said.

Even though the IMF was showing new flexibility in its negotiations with Indonesia, the situation was fraught because rational policy-making had broken down in Jakarta, he added.

"Indonesia's biggest problem is for the government to come up with consistent policies, and I don't think they can because the influence of the First Family's interests is too great," he said. AFP