IN MARCH this year, a group of Islamist radicals were scoping out new targets in Bali, hoping to enact their own murderous 10th anniversary of the 2002 attacks.
They had surveyed the Hard Rock Cafe in downtown Kuta and the Australian-run La Vida Loca bar in Seminyak. They had chosen a suicide bomber and planned to fund the operation by robbing a money changer and a gold store.
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What is not widely known is that three of the five plotters for ''Bali III'' - including their leader Hilman, aka Surya - were low-level drug pushers who were radicalised in Kerobokan prison when they were locked up with the original Bali bombers in the early 2000s.
According to research by the International Crisis Group, Hilman, who was serving a seven-year sentence for marijuana possession, was the prisoners' mosque functionary who came under the influence of Bali bomber Imam Samudra. On leaving prison he became a full-time jihadist. Another plotter shared a cell with another Bali bomber, Amrozi.
The radicalisation of their cellmates was the Bali bombers' slow-burn revenge. If an attack had overshadowed this week's 10th anniversary commemoration, they would have their last, posthumous, laugh over their jailers. (Samudra and Amrozi were executed in 2008.)
Indonesia's prisons are a breeding ground for terrorists, and so are some of the Islamic boarding schools. But despite the ever-present threat of terrorism, the Indonesian state shows little interest in tackling this issue.
After the authoritarian and secular regime of Suharto fell in 1998, many groups that were previously repressed thrived under ''Reformasi'' - Indonesia's flowering of freedom. Among them were those groups with a radical religious agenda who wanted to replace the state of Indonesia entirely with a caliphate under Islamic law.
Until the Bali bombings, whose death toll of 202 woke it from its torpor, the newly democratic Indonesia knew little or nothing of the growing number of deadly men in its midst.
Ten years on, Indonesian law enforcement, spearheaded by Detachment 88, the anti-terrorist police, has had great success in cracking down on religiously inspired radicalism. On his recent visit to Indonesia, Australian Defence Minister Stephen Smith lavished praise, saying: ''There is no country in the world that is more successful in arresting and prosecuting terrorists.''
Since the first Bali attack, Indonesia has arrested 700 people for terrorism offences and prosecuted 500. For every 10 prosecuted, another one suspected terrorist - including some of Asia's most dangerous men - has been killed by police on the streets.
That success story, though, contains the frightening truth that, in 10 years, Indonesia has produced 500 people with a proven link to terror, and many more who have gone unnoticed so far.
Every few months a new plot, with a new set of plotters, is uncovered. Some, such as a recent group calling itself ''al-Qaeda Indonesia'', have progressed far enough to start making bombs - albeit ones which blew up by accident in the kitchen.
Many now believe that law enforcement alone is not enough. They say the country's jihad factories, which still pump out recruits, must be shut down and the radicals de-radicalised. The effort so far, though, has been piecemeal and anaemic, marred by poor funding and follow-through and an apparent lack of political will.
In Indonesian prisons, extremist preachers, terrorists and would-be jihadists are locked up with common criminals. Low-level terrorists - youngsters or those who have dabbled around the edges of a radical group - are housed with hardened jihadis, persuasive men with a seductive story to tell.
The most infamous of these men, Abu Bakar Bashir, is serving a 15-year sentence for helping set up a paramilitary training camp in Aceh in 2010. But inside he is still surrounded by acolytes and young prisoners, and boasts in a written interview with The Sunday Age that he is ''busy spreading the word of Allah to the people''.
His words remain unrepentantly full of violent jihad - ideas of noble martyrdom and the overthrow of the state of Indonesia so ''that people's life may be managed by Allah's law''. Bashir refers repeatedly to ''evil Indonesia'' and offers up a contradictory mish-mash of arguments to explain and justify the Bali bombs.
First, he asserts that the massive bombs were set by three individuals, ''Mukhlas and his two friends''. He calls them ''mujahideen [holy warriors] who actively defended Islam'' and were ''slaughtered by the Jews, the United States and their allies''.
In the very next paragraph he claims the bombs were part of a conspiracy, a ''micro-nuclear device'' planted by the US to discredit Islam. ''So it was the US who essentially killed tens of Australians, not the three mujahideen,'' he writes. ''God willing, Islam will win due to Allah's help of jihad,'' he writes, before exhorting Australian journalists to ''convert to Islam so you will be saved''.
Ask most ordinary Indonesians about Bashir and his ilk and they shake their heads and pronounce him ''gila'' - ''crazy''. But his carefully cultivated look of a gentle and wise old scholar has made his loony rhetoric surprisingly resilient, despite the patent failure of the populace of Indonesia to rise up in support of holy war after the Bali bombings.
Jemaah Islamiah, Bashir's former terror vehicle, is now mistrusted in the radical community because a few of its high-profile members - notably Bali bomber Ali Imron, and former senior member Nasir Abbas - ''turned'' and offered information to police. But a whole slew of new followers have emerged. Bashir's new radical group, Jemaah Ansharut Tauhid, or JAT, has been involved in many of the latter-day plots that police have uncovered.
As disturbing is the fact that the Ngruki boarding school Bashir co-founded, and where his son (and leader of JAT) Abdul Rohim is a teacher, is still pumping out fresh-faced ''martyrs''. Bali bomber Idris, an old boy of Ngruki, said of his alma mater recently: ''That is where jihad was taught.'' But suggest that the school in Ngruki, a suburb of Solo, might be closed down, and Indonesians simply laugh.
All schools look something alike, and, apart from the enormous mosque being built and the separate sections for boys and girls, al-Mukmin school in suburban Ngruki is no exception. The classrooms have whiteboards and teachers at the front, and rowdy students in rows. In science the boys are learning about microbes. Graffiti and motivational posters adorn the walls.
But in the girls' section, along with exhortations to pious (veiled) womanhood, is a noticeboard. Pinned to it is a graphic photograph of a dead man, blood fanning out from the back of his head. The man is Farhan, a young jihadist shot dead by anti-terror police on a Solo street two weeks before our visit.
Farhan was an alumnus of the Ngruki school and the pictures and two separate stories describing his death were downloaded from radical Islamist websites, printed out and pinned up, presumably for their educational value. Depending on how it was spoken about, the story might have been placed there in mourning, or as an exhortation to righteous fury.
Asked about it, young English and Arabic teacher Abu Amar airily says the school teaches current events, just like any other. But this is not just any event. And there were no other posters on that board.
Abu Bakar Bashir's son Abdul Rohim is a senior teacher at the Ngruki school his father founded. He defends the teaching of jihad, saying: ''More than 60 verses of the teaching of jihad are in the Koran. Should we delete those verses?''
Not all the verses are about violence or war. Some are about the struggle to be a good Muslim; others about the desirability of an Islamic state. But alumni such as Idris recall a focus, particularly in extracurricular activities, on the warlike verses. Abdul Rohim bristles at any suggestion that this school is unusual, or its curriculum dangerous.
''Yes, some alumni of Ngruki are involved [in violence], but you cannot put the blame on the school,'' he says angrily. ''It's so unfair. It's so irresponsible. It's a ridiculous way of thinking. For example, in your own country, if there's a thief or a rapist, would you put the blame on their school?''
The fact is that not just one, but many terrorists have been to Ngruki, including some of the linchpins of the Bali bombings - Mukhlas, Idris, Mubarok. In a recent series of terror raids in Indonesia, a number of the jihadis arrested or killed were also Ngruki alumni. Abdul Rohim says when such cases come to light, the current students are taught that ''it's such a wrong action''.
But his words are ambivalent at best. He refuses to call the Bali bombers terrorists, saying they were, at worst, misguided ''mujahideen'' (holy warriors). ''Mujahid can make mistakes. What they did will not reduce their status as mujahideen. They must be judged by what is their intention,'' he says. ''I don't want to even subtly claim that they were terrorists. It's a word used by non-Muslims to corner Islam.''
Asked about the recent crop of alumni involved in terrorist activities, Abdul Rohim, like his father, claims a conspiracy. They were turned to terrorism by the police to discredit Islam, he says, even though a police officer was killed in one of their attacks. ''Well, it's a conspiracy. Sometimes they are willing to sacrifice their own friends for the conspiracy . . . It's a pretty normal thing for an intelligence officer to kill his own friends to cover up their own activities.''
Abdul Rohim boasts that the school has been continuously accredited by the Ministry of Religious Affairs and the Ministry of Education for more than a decade. He says demand for places grew fast in the wake of the Bali bombing, and the school is still expanding. Posters around the campus show plans for new dormitories in new locations.
Once radicals graduate from school or prison, the next stage is to be invited to join a training camp, or a plot. After the recent spate of arrests, there was a push for the government to establish a de-radicalisation program. Vice-President Boediono himself ordered an anti-terror plan to be in place by next year, and said that the fight against radical ideas had been too sporadic. ''This de-radicalisation blueprint will be comprehensive and will really serve the purpose,'' Boediono said.
But Irfan Idris, the head of the de-radicalisation program at the National Agency for Counter-Terrorism, says the entire agency has a budget of only $9.5 million, of which only a part is set aside for the ''soft approach'' of de-radicalisation (as distinct from hard law enforcement).
An existing program running in Indonesian prisons since 2010 applies three strategies, he says: culture (using traditional Wayang puppet shows); business (trying to establish an economic base for prisoners); and ideology (countering the radical brainwashing). But in the past two years, only 32 prisoners nationwide have completed the program and there has been no attempt to measure its success.
Professor Sarlito Wirawan, a psychologist working on this program and others, says it can take up to three years to convince someone not to act on their radical theology. At this rate it would take decades to even talk to one year's supply of recruits from the radical boarding schools and the prisons. Asked about the radical boarding school in Ngruki, Irfan refers me to the Religious Affairs Ministry, which keeps accrediting the school.
There are also several private sector de-radicalisation programs. Noor Ismail Huda, a journalist and former student at Ngruki, says Indonesian authorities ''have been doing extremely well after the milk has been spilled''.
He runs a program of ''disengagement'', which involves having former radicals run cafes. Here they are forced to serve customers of all cultures and religions, and they can also make money, making his program self-sustaining. ''We fight terrorism with doughnuts and coffee,'' he says.
So far, though, he has only three cafes, and has helped perhaps a handful of radicals.
Another private program is the Afghan Alumni Forum, where former radicals, the hard core who trained in Afghanistan, try to use their kudos in the jihadi community to put people on the right path.
It is led by Abu Wildan, a former senior teacher at Ngruki who was asked to join the Bali plot but refused. Abdul Rahman Ayub, Jemaah Islamiah's former deputy in Australia, is also a key member, as is one-time Bali plotter Maskur Abdul Kadir. It holds forums in suburban function rooms under a banner that reads: ''Indonesia, peace without violence, terrorism and radicalism in the name of religion''.
Psychologist Sarlito works with the forum and claims an 80 per cent success rate. He says attacking the ideology head-on simply did not work because the radical imams still hold such sway. ''I'm not replacing anything. I leave their beliefs, but I say don't do this and this . . . don't start hurting people,'' he said.
''Then we bring in the wives, families, and say, 'How about helping each other?' . . . It's step by step and it takes three years. It's not an easy job.''
As these well-meaning efforts continue, though, schools and prisons keep churning out radicals. Australia has proscribed organisations and passed laws against hate speech. People have been jailed for preaching terror. Indonesia has nothing similar.
And, according to Nasir Abbas, the highest-profile reformed member of Jemaah Islamiah, it will not develop them. ''In Indonesia it's different. They let you build whatever ideology you want, set up a school, as long as you don't do the crime . . . this is what people here call Reformasi,'' he says.
''We've got freedom of speech and expression. You can't just shut down a school.''