Investigators from the United States and several other countries have long believed that Bashir is a terrorist leader and should be locked up. But in Indonesia, Bashir’s antics have struck terror within the halls of power, most notably inside the palace of President Megawati Sukarnoputri. The aging cleric has taken advantage of Indonesia’s democratic freedoms to transform himself from a obscure Muslim boarding-school rector into an Asian spokesman for radical Islam. He extols violence, while disclaiming any role in it. Asked what he thought of being compared to Osama bin Laden, Bashir told NEWSWEEK: “Praise the Lord. Osama bin Laden is a Muslim hero and warrior of God.”

Bashir loves the notoriety and would probably like nothing more than to play the martyr in a standoff with Megawati’s secular government. Yet some Indonesians are perplexed by Megawati’s soft-glove treatment of Bashir. The vast majority of Indonesia’s 190 million Muslims are moderates who listen to Western music, wear designer clothes and watch American TV shows. They haven’t rallied behind the small but vocal minority of Islamic radicals who have operated with impunity for the past three years, ransacking bars, threatening to expel Western tourists and fighting against Christians in Indonesia’s eastern Molucca Islands. Still, the Jakarta government, apparently terrified of an Islamic backlash if it cracked down on the radicals, all the while denied there was a problem.

The militants’ ambitions extend well beyond Indonesia. Western governments, as well as Malaysia and Singapore, say Bashir is the leader of Jemaah Islamiah, a group affiliated with Al Qaeda. Jemaah Islamiah’s goals include creating a Pan-Islamic state comprising Malaysia, Indonesia and the southern Philippines. Since last December dozens of alleged members have been arrested in Southeast Asia, charged with plotting attacks against domestic and U.S. targets. (Bashir has repeatedly denied any connection to the group or to terrorism.) Citing lack of evidence, Indonesia refused requests to extradite him to Singapore.

Megawati’s government may now be regretting its reluctance to act. The cleric, facing the prospect of arrest, collapsed on Friday and was admitted to a hospital. Police on Saturday arrested him at his hospital bed after he ignored a summons to appear for questioning in connection with bombings two years ago. But Bashir may still have the advantage. Police say they have no evidence linking him to the Bali blasts; the information connecting him to Jemaah Islamiah comes largely from a 31-year-old Kuwaiti who confessed to investigators of being Al Qaeda’s point man in Southeast Asia. “Of course we can question him… but if we finally should release him, then he [will] become a very big hero,” says Muchyar Yara, spokesman for Indonesia’s State Intelligence Agency. Then Bashir’s rants will attract a wider audience, and Indonesia’s problems will multiply.