By Neil Chatterjee and Olivia Rondonuwu
JAKARTA (Reuters) - While Indonesia's most notorious Islamist was sitting in a cell awaiting his fate, militants linked to his supposedly peaceful Jema'ah Ansharut Tauhid group shot policemen while trying to rob a bank and wounded 30 people in a suicide bombing at a police mosque.
The attacks could signal further mergers of militant splinter factions with Islamist groups not previously involved in terror as they recruit young men left behind by a booming economy and unite in their opposition to minorities, non-Muslims and pluralism -- the bedrock of the world's largest Muslim community.
Judges on Thursday jailed frail cleric Abu Bakar Bashir, 72, the spiritual leader behind the 2002 Bali bombings, for 15 years for aiding a group that planned to kill President Susilo Bambang Yudhoyono. It was effectively a life sentence.
"There's the potential for small cells forming for joint actions at a local level, and it's not a good development," said Sidney Jones, an expert on Islamic militancy at the International Crisis Group in Jakarta.
These militant groups are showing a shift in tactics, away from Western targets such as luxury hotels and night clubs toward domestic institutions such as the police, and symbols of pluralism, in their push for an Islamic state.
A move toward Islamic law would worry investors such as consumer giant Unilever and threaten the long-term unity of an archipelago with sizeable Christian populations in the east.
The country was riven by violent sectarian conflict early last decade, so at stake is continued political and social stability that has encouraged foreign direct investment to pour into the country in recent years.
There has been an escalation of attacks and religious intolerance this year, with police failing to stop mob beatings of the minority sect Ahmadi, the burning of two churches and an attack on a court after demands for a stiffer sentence against a Catholic man guilty of distributing anti-Islamic material.
"The Islamic militant network used to be moved by the international Muslim agenda, but now it is motivated by the dynamics of the Islamic movement in Indonesia," said Andi Widjajanto, a terrorism expert from the University of Indonesia.
While previous militant groups such as Jemaah Islamiah, seen as an arm of al Qaeda and whose goal was a pan-Southeast Asian caliphate, were influenced by issues such as the U.S. presence in the Middle East and attacked Westerners, the new ones are domestically focused on making Indonesia more Islamic.
A series of parcel bombs was sent to police and proponents of pluralism in Jakarta, while groups have used anti-Ahmadi sentiment to whip up popular support, according to the head of the country's anti-terror agency, Ansyaad Mbai.
Police said they found similarities in the parcel bombs to those used by Islamic groups a decade ago in sectarian conflicts in far-flung eastern provinces.
"These are new methods, but we suspect a connection with old players," said police spokesman Boy Rafli Amar.
The nervous mood in the capital was highlighted by a advertising stunt that backfired when a firm sent coffins and notes saying "your time has come" to media organizations to promote a book -- only for jumpy editors to call the police.
Militants exploited this by a fake threat to explode 36 bombs when Bashir's verdict was announced, prompting a security clampdown across the capital.
"This is a campaign of fear that at the same time is exhausting the police," said Widjajanto.
The changing nature of the militant threat was highlighted at the trial of Bashir, which regularly attracted crowds of not only his supporters, but also members of the FPI -- a Muslim vigilante group mostly known for smashing up bars.
Yudhoyono called this month for adherence for the national pluralist ideology and has called for groups using violence to be disbanded, but none has been so far and few arrests made.
An FPI member, Munarman, who is also a lawyer for Bashir, told reporters outside the court that if Yudhoyono kept pushing pluralism and the disbanding of Islamic groups, then Muslims were ready to "Ben Ali" Yudhoyono -- a reference to deposed Tunisian President Zine al-Abidine Ben Ali.
Such comments in public show the apparent impunity that such groups have, and analysts say the lack of action against them highlights the president's ineffectiveness.
"A feeble response from the administration highlights the president's wariness of irking Islamic parties, as well as weaknesses within the cabinet," said Jakarta-based risk analyst Kevin O'Rourke.
Bashir labeled his 15-year sentence un-Islamic, striking to the heart of an argument the government does not want to have, since being seen as un-Islamic would be a vote loser as parties start to jockey for the 2014 elections.
These issues are also likely to distract the government from planned reforms on land acquisition, infrastructure and labor laws, which investors say are already long overdue.
There are no signs portfolio investment flows have been affected by recent attacks or religious intolerance, with many investors bullish on a G20 economy that could win an upgrade to an investment grade sovereign rating in the next year.
"I think the market has already priced in the threat of terrorism," said Eugene Leow, economist at Southeast Asia's top bank DBS. "It is simply a cost of doing business in Indonesia."
(Editing by Nick Macfie)