As the crisis in East Timor continues, there have been persistent rumours - furiously denied by his aides - that President Habibie might resign.

The Indonesian Government has given many assurances that it will take responsibility for keeping order in East Timor.

That the army has been openly unwilling to do so has been a deep humiliation for Jakarta, and for President Habibie personally.

BJ Habibie: Resignation rumours denied

According to one report, Habibie had even considered dismissing his powerful Armed Forces chief, General Wiranto, if the situation there did not improve.

Rumours, of course, are only rumours: General Wiranto himself dismissed all talk of a military coup as "garbage". But what is clear is that Habibie has been deeply shaken by what has happened in Timor.

The degree to which the army has been willing to flex its muscles in the territory, in apparant defiance of orders from the government, is a stark reminder of the fragility of Indonesia's transition to democracy.

Army's agenda

So who is giving the orders in Timor?

Armed forces chief General Wiranto is one of the most powerful men in Indonesian politics, and it was his loyalty to President Habibie, during the transition period following the downfall of his old mentor President Suharto, which ensured Indonesia's stability in those early, dangerous weeks.

General Wiranto has dismissed talk of a coup

But the army's agenda has always been to prevent Indonesia's break-up at the hands of separatists in such places as East Timor, Aceh and Irian Jaya, as well as defending its own position and privileges, which have been threatened by the transition to democracy.

By announcing his intention to hold a referendum on Timor's future, President Habibie issued what amounted to a direct attack on the army's power.

It may be that Wiranto himself - who, like all senior army officers, served tours of duty in Timor - could not countenance such a challenge to the army's authority.

It was Wiranto who persuaded a reluctant Habibie to declare martial law in the territory, dramatically increasing the military's powers there, and prompting further speculation of high-level splits in the cabinet.

'Rogue elements'

There is another possibility: that control of the rank and file in Timor has slipped even from Wiranto.

The Indonesian army has had absolute control over Timor since 1975, and old habits are notoriously hard to break.

Indonesia's Foreign Minister, Ali Alatas, has admitted that what he called "rogue elements" in the army had been involved in some of the horrifying violence after the independence vote.

Political survival

Whether or not Indonesian troops can be brought into line, Habibie's lack of control has been deeply - perhaps irreversibly - damaging to him.

Megawati is opposed to East Timorese independence

Waiting in the wings is his political rival, the populist Megawati Sukarnoputri, whose party came out ahead in this June's election and who is a front runner for the presidency.

She has openly expressed her opposition to letting Timor go - although she says she will abide by the results of the UN-sponsored ballot.

Megawati knows that she, like any prospective Indonesian leader, needs the support of the army for her political survival.