The Challenge for Australia's Overseas Development Assistance
5.2 I ndonesia
5.2.1 Aid
ACFOA supports the maintenance of a strong aid program to Indonesia, with the involvement of NGOs from both countries, as part of the Australian Government's efforts to repair and strengthen relations with Indonesia and increase links between our two countries. The design of a new AusAID Indonesia Country Strategy for 2004/6 provides an excellent opportunity to review the Australian Government's aid program to Indonesia and respond to key issues, such as the ongoing economic crisis and the persistent high levels of poverty, the need to protect human rights, increasing conflict and the challenges arising from the decentralisation process.
Indonesia will continue to need humanitarian assistance to deal with natural disasters and human-made emergencies, especially outbreaks of communal conflict and civil strife. A priority needs to be strategies to deal with IDPs. The Indonesian Government has no clear policy towards displaced people, preferring to leave the problem to under-resourced district governments to deal with. AusAID should consider reallocating a greater percentage of resources to increase Humanitarian Relief to Indonesia.
Australia's aid program to Indonesia has traditionally concentrated on Eastern Indonesia (NTT, NTB, South and Central Sulawesi and Papua). While there are clear historical reasons for this, ACFOA believes that the 2004/6 Indonesia Country Strategy provides the opportunity to revisit the geographical focus of the Australian aid program, in consultation with the Indonesian Government.
As the debate on regional autonomy develops, it will be even more essential to vary approaches in different areas. Particular emphasis needs to be placed on Papua under the new Special Autonomy arrangement, which will become effective in 2002. This law grants Papuans a large portion of revenue: 80% from forestry and fishing and 70% from oil and gas, and provides the provincial government with control over all aspects of Papuan government (such as health and education), except for foreign affairs and security.
The dramatic increase in regional revenue is likely to result in Papua having one of the highest provincial incomes, but with very poorly trained local officials and poor infrastructure for health and education. The potential for problems resulting from this situation is great. Increased support would not only assist in the development of Papua, but also could also play a significant role in reducing long-running tensions and conflict in the province.
Another key focus area should be the province of NTT that has had to bear the largest burden of people displacement problems resulting from the East Timor crisis. It is continuing to host tens of thousands of East Timorese refugees until a resettlement or repatriation solution is found. NTT is the poorest province in Indonesia and continues to face a volatile political climate with the presence of militias from East Timor and tense relations between Christian and Muslim communities.
ECHO, the European Community's main humanitarian donor, has plans to soon pull out of Indonesia, and the potential strains on funding from other donors as a result of the reconstruction needs of Afghanistan, in addition to the huge development challenges facing Indonesia, present a strong case for the Australian Government to increase real funding to Indonesia. ACFOA therefore recommends an increase in funding to Indonesia of $10m in 2002/3.
Finally ACFOA believes it is critical that AusAID examine how the wider Australia-Indonesia relationship could impact on the achievement of the strategic objectives of the aid program. If theaid program is to have significant impact on poverty, it must give consideration to influencing other aspects of Australian Government policy that impact on development and poverty reduction in Indonesia, including foreign affairs, immigration, defence, human rights and trade.
ACFOA believes that the Australian government's present refugee policy of supporting the detention of asylum seekers in the Pacific and taking a heavy-handed approach to Indonesia over asylum seekers leaving their shores for Australia doesn't acknowledge the huge strains and pressures presently placed on Indonesia as a result of over 1.25 million IDPs in their country.
In this respect, the meeting in February 2002 in Bali to discuss the issue of asylum seekers, co-hosted by Australia, is a positive move. Reaching agreement on a collaborative approach to monitoring and processing asylum seekers in an orderly and humane way gives a clear signal that Australia wishes to tackle regional issues in a collaborative and comprehensive manner.
A comprehensive approach to tackling the issue, bearing in mind the aid program's mandate of reducing poverty, would see Australia consider matters such as revision of the terms involved in the Australian Fishing Zone, assistance at district level for developing better policies to keep large-scale foreign fishers from Indonesian waters and more appropriate methods of dealing with infringement of Australian-Indonesian fishing agreements. Such initiatives, together with assistance for poor fisherfolk, might discourage fisherfolks' involvement with people smuggling.
As is the case with the Pacific, ACFOA would stress that initiatives aimed at assisting Indonesia to directly tackle people smuggling are best dealt with outside the aid program and should not detract from the program's stated anti-poverty focus.
Recommendation 10
ACFOA recommends that the Australian Government:
10.1 Increase funding to Indonesia by $10million in 2002/3.
10.2 Make an increased funding allocation for Humanitarian Relief for Indonesia.
10.3 In the context of the 2004/6 Indonesia Country Strategy, reconsider the geographical focus of Australia's aid program to Indonesia, in consultation with the Indonesian Government. At the very least, consideration should be given to supporting a small number of high profile projects in areas of Western Indonesia that are predominantly Muslim.
10.4 Place greater emphasis on Papua as it develops Special Autonomy, and NTT to deal with the burden resulting from the East Timor crisis.
The World Bank warned in a report in November that high debt service payments limited the Indonesian Government's ability to maintain essential spending on development and poverty reduction. It said concerns about the sustainability of government debt weakened investor confidence in Indonesia and made the country "highly vulnerable to shocks and leaving little margin for error in economic management."
The Indonesian Government will meet with the Paris Club of creditor nations in early 2002 to seek rescheduling of US$2.7 billion in sovereign debt, both principle and interest. This is the first time that Indonesia has requested rescheduling of interest. In 2001, the Paris Club granted Indonesia a rescheduling facility of some US$5.8 billion, but only for debt principle.
ACFOA congratulates the Australian Government on the efforts it is currently making to assist Indonesia manage its debt burden, including the provision of funds under the aid program to assist Indonesia with the task of managing domestic debt and the announcement by the Foreign Minister in August of a study into the debt issue to be carried out by AusAID in cooperation with the World Bank.
ACFOA would, however, encourage the Australian Government to have a greater involvement in advocating for a resolution to Indonesia's debt problem. ACFOA recognises that it is important that any movement on the part of donors or multilateral financial institutions on Indonesia's debt should be consistent with a more concerted effort by the Indonesian government on fighting corruption.
Recommendation 11
ACFOA recommends that the Australian Government to support:
11.1 A rescheduling of Indonesia's debt at the upcoming Paris Club meeting, including a rescheduling on more favourable terms than is currently the case.
11.2 The organisation of a broad international consultation involving all stakeholders on the creditor's as well as the debtor's side to bring about a fair and adequate assessment of the current debt situation in Indonesia, and to agree on a lasting solution to relieve the debt burden on Indonesia.
11.3 Arrangements with the Indonesian Government to ensure that funds freed by debt cancellation are used for poverty reduction programs.
Funding Implication
An increase for Indonesia in 2002/3 of $10m.
5.3 Other Geographic Priorities
5.3.1 East Timor
ACFOA commends the Government for its peace building and development commitment to the people of East Timor. ACFOA supports the maintenance of current levels of real funding to East Timor given the crucial development challenges it faces as it moves toward full independence
5.3.2 The Philippines, the Mekong, Burma, China
ACFOA supports the maintenance of current funding in real terms to the Philippines, the Mekong, Burma and China.
5.3.3 Middle East
ACFOA congratulates the Australian Government's commitment to the Middle East Peace Process (MEPP) over recent years, including additional funding commitments to the MEPP in 2000-2001, and in particular, support for emergency medical assistance to the Palestinian communities. In mid-2001, at the end of a $16 million three-year program, the AusAID Programming Mission to the Middle East (July 2001) recommended that its program of assistance to the Palestinians continue at that current level.
However, since 29 September 2000 conflict has dramatically increased in Israel and the Occupied Palestinian Territories, and hopes on both sides for a continuation or resumption of the peace process have diminished. Approximately 1,000 adults and children have been killed in the conflict and 26,000 people injured. The impacts of this conflict on the labour market and on agricultural production in the Occupied Territories have resulted in over two million Palestinians now living in poverty, with limited access to health, education and social services.
Given current deteriorating circumstances, ACFOA is concerned that the $4.5m over three years allocated to five Australian NGOs for projects in the Middle East Capacity Building NGO Program is far from adequate. ACFOA seeks a further allocation in 2002-2003 of $2m for Australian NGO programs in the Occupied Palestinian Territories for programs focused on poverty reduction, health, education, social services and support for local peace initiatives. ACFOA also urges an additional commitment for Australian NGO projects with the refugee communities in Lebanon, within a designated humanitarian funding round of $1.5m per year.
ACFOA supports maintaining Australian commitments of $3.8m per year to UNRWA, though UNRWA is less and less able to meet the increasingly urgent basic needs of the 3.73 million registered refugees in the Occupied Territories and neighboring countries.
5.3.4 Afghanistan
ACFOA commends the Australian Government for the allocation of $17m in reconstruction assistance to Afghanistan, announced at the international donors meeting in January 2002. This brings total Australian assistance to South West Asia since September 2001 to $40.3m. However much more needs to be done.
Just as it was a member of the international coalition against terrorism, Australia should be a part of the humanitarian coalition to rebuild Afghanistan not just from the recent conflict but also from almost 22 years of continuous war. Donors, including the United Nations, the World Bank and the Asian Development Bank estimate that rebuilding Afghanistan will require approximately US$15 billion over the next 10 years.
The priority though until July 2002 will be the maintenance of a large-scale humanitarian effort in support of 5-6 million Afghans assessed to be in acute emergency. In the longer term, Afghanistan will need assistance with developing a functioning administration, as well as with transport, food security, education and health. De-mining efforts are also fundamental to restoring security and safety, particularly for returning Internally Displaced Persons (IDPs) and refugees, and for the delivery of aid.
In addition to humanitarian concerns, the provision of generous assistance to Afghanistan will help to address the source of the problem regarding illegal people flows to Australia, a significant proportion of whom are from Afghanistan.
5.3.5 Africa and South Asia
Enormous poverty and development challenges still face Africa and South Asia. However, given ACFOA is seeking specific funding in basic social services and for Indonesia and the Middle East, it is requested that for the 2002-03 budget, funding be maintained at real levels. Further recommendations relating to Africa are contained in section 4.1.2 on HIV/AIDS.
Summary Of Recommendations For Other Geographic Prioirites
Recommendation 12
That the 2002/3 Budget adopt the following country-specific priorities for the distribution of Australian aid:
12.1 The maintenance of current real levels of funding to East Timor and the maintenance of current real levels of funding to the Philippines, Mekong, Burma and China.
12.2 An increase in aid to Indonesia of $10 million to assist Indonesia in dealing with the ongoing impacts of the regional economic crisis and to assist with further democratisation and reform.
12.3 An increase in the Australian Government's current commitment to the Middle-East of $5.3m per annum to a total of $8.8m in the 2002/3 financial year. This includes a further allocation of $2 million for NGO programs in the Occupied Palestinian Territories, and an additional commitment of $1.5m for NGO projects focused on Palestinian refugees in Lebanon in the areas of health care and promotion, and support for specific disadvantaged communities.
12.4 Maintain real levels of funding to Africa and South Asia.
Funding Implications
An increase in aid to Indonesia of $10m.
An increase in funds to the Middle East of $3.5m.