LEAD: Donors open Indonesia aid meeting amid protest

Asian Economic News, Oct 23, 2000

TOKYO, Oct. 17 Kyodo

(EDS: UPDATING WITH REMARKS FROM JAPANESE GOV'T, NGOs)

Indonesia's donors started a two-day meeting Tuesday to decide on a new aid package aimed at bridging the country's expected 2001 budget deficit of 52.12 trillion rupiah (about $5.8 billion), or 3.7% of its gross domestic product (GNP).

Delegates from 13 countries, including Indonesia, and eight organizations, including the World Bank and the Asian Development Bank, participated in the 10th meeting of the Consultative Group on Indonesia.

Indonesia's delegation is led by Coordinating Minister for Economy Rizal Ramli, and includes Finance Minister Prijadi Prapto Suharto, Attorney General Marzuki Darusman, Home Affairs and Regional Autonomy Minister Surjadi Sudirdja, and Settlement and Territorial Infrastructure Minister Erna Witoelar.

But members of 13 nongovernmental organizations (NGOs) staged a protest against the Indonesian armed forces for what they call are human rights violations by the military for years.

The NGOs joined into the Network for Indonesian Democracy of Japan (NINDJA) to conduct the rally in front of the meeting site -- Mita Gaigisho, a Japanese Foreign Ministry guesthouse in Tokyo.

''Back to barracks!'' one banner said, telling the Indonesian military to get out of the country's politics. ''We, citizen's groups in Japan, feel responsible about the fact Japan has long supported the authoritarian governments of Indonesia through the CGI,'' NINDJA said in a statement.

But Japan's Senior State Secretary for Finance Yoshitaka Murata praised Indonesia at the beginning of the meeting for making progress in economic programs it had agreed to with the International Monetary Fund despite such challenges as internal security.

''I hope that Indonesia, while facing various challenges, could make further progress in this reform (era),'' Murata said.

''At this meeting, however, it must be important to discuss substantially how to assist Indonesia in a long-term perspective...for Indonesia to tackle development issues such as poverty reduction and good governance as well as to achieve sustainable economic growth,'' he said.

Chaired by Jamel-ud-din Kassum, the World Bank vice president for East Asia and the Pacific, the CGI meeting is expected to be dominated by political issues and the country's corporate-debt restructuring plan.

Last Friday, the World Bank told Indonesia that CGI donors want to see progress in West Timor, where about 130,000 East Timorese refugees still live in squalid camps.

Attorney General Marzuki is expected to explain measures being implemented to disarm and disband pro-Jakarta East Timorese militias in West Timor, which were blamed for the Sept. 6 attack on the office of the U.N. High Commissioner for Refugees (UNHCR) in Atambua in which three U.N. workers were killed.

The attack caused the UNHCR to suspend relief operations in Indonesia and triggered international pressure on Jakarta to disarm the militias. They were originally created by the Indonesian military and police to halt independence efforts in East Timor.

Donors, especially the United States, will likely demand a full explanation about the progress in disarming the militias.

According to NINDJA, the human rights situation in Indonesia has been dramatically deteriorating recently, pointing to the Atambua killings and human rights violations in Aceh and Papua where local residents have called for independence.

''Human rights violations such as arrests, abductions and brutal killings of human rights defenders and volunteer humanitarian workers still continue,'' it said, adding, ''We request that aid be conditioned on achievements (in improving human rights).''

Indonesia's apparent vacillation in pushing a crucial corporate-debt restructuring program is also coming under fire from donors.

Recent moves by the government to bail out firms owned by friends of President Abdurrahman Wahid as part of a corporate-debt restructuring plan have raised concerns.

World Bank President James Wolfensohn has warned Wahid of serious consequences if he fails to end violence in West Timor.

Kassum, the World Bank president and conference chairman, has said political uncertainty, including the West Timor problem, has hurt economic recovery and driven foreign investors away.

Kassum has also said, however, he is encouraged by the promising start of the new economic team led by Ramli, the coordinating minister.

''The challenge is now to build on this momentum, develop a strong poverty-oriented development strategy, improve governance at all levels, and begin to show results on the ground,'' he said.

At a February CGI meeting in Jakarta, Indonesia received pledges worth $4.7 billion in loans to bridge the budget deficit for fiscal 2000, ending in December. The amount included grants of $520 million.

Indonesia's foreign debts as of March 2000 totaled $144.24 billion, of which $75.04 billion are government debts and $69.2 billion are owed by the private sector.