RI urged to apply for debt relief arbitration<\/p>\n
JAKARTA (JP): Indonesia should strive for a \"fairer\" debt
\nnegotiation mechanism as part of efforts to force foreign
\ncreditors to write off some of the country's sovereign debts,
\naccording to experts.<\/p>\n
Kunibert Kaffer, a senior economist from the University of
\nVienna, suggested on Wednesday that the government apply an
\ninternational arbitration procedure to allow Indonesia, as the
\ndebtor, to have an equal standing with creditors in debt talks.<\/p>\n
\"This (arbitration procedure) would be a fundamental change
\nfrom the present management of debts,\" Kaffer said in a news
\nconference organized by INFID, a non-governmental organization
\n(NGO) which has been actively campaigning for a partial write off
\nof the country's sovereign debts.<\/p>\n
The arbitration procedure would generate two generally
\naccepted principles: the rule of law and the respect for human
\nrights, he added.<\/p>\n
Kaffer said that the arbitration procedure was based on the
\nsame principle as chapters nine and 11 of the U.S. Bankruptcy
\nLaw.<\/p>\n
He explained that while chapter 11 was designed to resolve the
\ndebt overhang of the private sector, chapter 9 was specifically
\nto protect the municipality from having to cut down on its public
\nservices due to over-indebtedness.<\/p>\n
Kaffer said that the principle could also be applied at
\nsovereign level so that countries with indebtedness problems
\ncould seek a partial debt write off to allow them to provide \"the
\nminimum service\" to their people.<\/p>\n
\"No debtor should be allowed to let its children strive just
\nto pay debts,\" he said.<\/p>\n
He said that under this new procedure, both creditors and
\ndebtors would select a neutral arbitration panel to decide on the
\nsize of debt reduction and on which debt to be written off.<\/p>\n
Kaffer said that the present debt management mechanism was
\nunfair because the creditors had been dominating the debtors.<\/p>\n
\"Presently, creditors are judges, bailiffs, experts and very
\noften lawyers of the debtors all in one. You're not at the same
\nlevel.<\/p>\n
\"By contrast, in the arbitration process you're at the same
\nlevel,\" he said.<\/p>\n
He said that under the arbitration procedure, the people of
\nindebted countries had the right to be heard by the panel through
\nthe representation of NGOs and UN bodies such as UNICEF.<\/p>\n
Kaffer added that the arbitration procedure was supported by
\nvarious prominent parties, including UN Secretary-General Koffi
\nAnnan, the working committee of the OECD and Harvard economist
\nJeffry Sachs.<\/p>\n
Indonesia's overseas debts total about US$150 billion, of
\nwhich half is public debt.<\/p>\n
There has been pressure for the government to seek a reduction
\nin debt, particularly on the grounds that about 30 percent of the
\ndebt was allegedly corrupted by the previous government.<\/p>\n
Jurgen Kaiser of Jubilee 2000, an international group
\ncampaigning for debt relief for poor countries, said that
\nIndonesia was already included in the severely indebted low
\nincome countries, or SILIC, which should receive a debt write off
\nfacility from the Paris Club of creditor nations.<\/p>\n
The Paris Club agreed in April to reschedule some $5.8 billion
\nof the country's foreign debts.<\/p>\n
But Kaiser said that debt rescheduling was not enough because
\nit merely postponed the debt payment and would only cost the
\ncountry an additional half a billion dollars in interest rate
\ncharges.<\/p>\n
He said that 32 countries, including Indonesia, had been
\nincluded in the SILIC category and are entitled to the Paris Club
\ndebt write off facility, but the grouping had declined to provide
\nthe facility to Indonesia.<\/p>\n
Kaiser also supported the suggestion that Indonesia should
\nstrive for the arbitration procedure in order to negotiate a
\nreduction in its debt.<\/p>\n
He said that Jubilee 2000 had been pushing the German
\nadministration and parliament to help Indonesia obtain a debt
\nreduction facility.<\/p>\n
\"But the key to a real solution would be a clear demand from
\nthe Indonesian government,\" Kaiser said.(rei)<\/p>",
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