JAKARTA (Reuters) - In the biggest demonstrations yet sparked by comments from Singapore Senior Minister Lee Kuan Yew, some 500 Indonesians from hardline Muslim groups held fresh protests outside the Singapore embassy in Jakarta on Tuesday.
In a related development, a Muslim cleric Singapore had linked to a regional terror network, said through his lawyer he would sue Lee.
Lee said last week terrorists remained free in Indonesia's vast archipelago. His comments triggered the government to summon Singapore's envoy to clarify the statements.
Despite close ties between the tiny city-state of four million and its giant neighbour of 210 million, diplomatic relations have at times been ruffled by such blunt remarks from the Singapore patriarch and some Indonesian leaders.
Tuesday's protesters, more than half of them women, unfurled banners saying: "Singapore, a terrorist calling others terrorists".
Some burnt a Lee effigy and others demanded an apology.
"He has to apologise to the Indonesian people because there's no proof Indonesia is a terrorist hub," Suaib Didu, chief of the Islamic Youth Movement, told Reuters.
"On the contrary, Singapore is protecting corruptors who have made the country suffer. That's the real terrorists," he said.
Many Indonesians blame the country's economic slump in 1997 on conglomerates they say misused the state's coffers with help from government officials, fled the country and rebuilt their empires outside Indonesia, including in Singapore.
Elsewhere in Indonesia, a lawyer for Muslim cleric Abu Bakar Bashir, whom Singapore and Malaysia have named as a suspected leader of an Islamic militant group allegedly plotting terror attacks in Southeast Asian countries, said Bashir would sue Lee.
"We have agreed to give them a lesson through a lawsuit soon. Lee Kuan Yew is the main defendant," said Muhammad Taufik, as Bashir sat beside him in a news conference at the cleric's central Java Islamic school.
The suit would be launched in Jakarta but it was not clear what grounds would be used for the action.
Bashir has been questioned by Indonesian police but neither charged nor detained. Authorities say so far hard evidence has not emerged against him.
Indonesia is the world's most populous Islamic nation, with some 90 percent of the population Muslims, but much of the economy is controlled by ethnic Chinese. Singapore has an ethnic Chinese majority with Buddhism the leading religion.
Singapore responded to earlier criticism of Lee's remarks by saying he had stated nothing new. Officials and media in Singapore have been criticizing Indonesia for weeks for not taking stronger action against alleged terror suspects.
But Lee -- not known for diplomatic niceties -- is arguably the most senior official to make such comments.
Jakarta has countered such attacks by saying it lacks the tough laws Singapore and Malaysia use to detain suspects without charge and trial.
U.S. Ambassador to Indonesia Ralph Boyce told Reuters on Tuesday he thought President Megawati Sukarnoputri understood the terrorism issue but that not everything Indonesia was doing to help in the anti-terrorism effort was necessarily obvious, given the nature of the task.
But as for the flap between Indonesia and Singapore over Lee's remarks, he said: "I don't see it as an issue I should comment on."