JAKARTA, July 27, Reuter - Indonesia's army has arrested a rebel leader in Aceh, its northernmost province, but people in the area dispute military claims that it is getting the anti-government movement there under control.

A military spokesman in Medan said the armed forces had arrested Abdullah Ismail bin Ibrahim, whom he said was a commander of what the army calls the GPK, or security disturbing movement.

A political observer in Aceh on Sumatra Island said the rebel leader was a minor figure whose arrest would do little damage to the movement. Others say most Acehnese continue to support the rebels.

The government says the GPK is made up of common criminals, but political analysts believe the rebels are led by soldiers expelled from the army who are using the rhetoric of separatism to gather support among the disgruntled Acehnese and wreak revenge.

Their main targets are police and the military, mostly from Java, although Javanese peasant migrants to the province have also been shot and beheaded.

It is in conversation with local people about the military, not the rebels, that the word "benci", hatred, surfaces again and again. The military are seen as heavy-handed and insensitive to the strongly Islamic character of Aceh.

Aceh has always been hostile to outside authority. By homing in on Javanese targets, the rebels play on resentment of the central government's development projects, which the Acehnese say do nothing to better their lot.

Jakarta has flooded the area with 5,000 soldiers, a move seen by some local people as likely to drive ordinary Acehnese into the arms of the rebels.

Aceh gets more development funding that any other province in this year's budget and local professionals recognise this as a start to solving the province's problems of inequity. But they insist the money must be better spent.

"What we need is more money in irrigation, in infrastructure, not another smart new office for a Javanese official," an Acehnese lawyer said.