East Timor violence puts IMF bailout at risk
East Timor violence puts IMF bailout at risk
CANBERRA (Agencies): The Australian government Tuesday reiterated that withdrawing its support for a US$43 billion International Monetary Fund-led bailout for Indonesia is a last- resort option if Jakarta refuses to allow an international peacekeeping force in East Timor.
Australia agreed to contribute up to $1 billion in the form of a short-term loan to the IMF-led bailout of Indonesia.
The amount of the loan that hasn't been drawn down could be withdrawn "as a last resort if Indonesia isn't prepared to allow some sort of international presence on the ground, Foreign Minister Alexander Downer was quoted by Dow Jones Newswires as saying.
In an earlier briefing, high-level government sources said Canberra doesn't have any interest in humbling the Indonesian economy by withdrawing the funding.
Monday, the government said the IMF could withhold funds under the bailout program if Indonesia fails to maintain law and order in East Timor.
In Tokyo, Prime Minister Keizo Obuchi said Tuesday that the Japanese government will take a careful but positive stance to international efforts aimed at restoring peace in East Timor.
But Tokyo will not halt aid to Indonesia worth hundreds of millions of dollars, officials said.
"Our country needs to respond carefully but positively to the situation," Obuchi was quoted by Jiji Press as telling Japanese reporters in Tokyo.
"Actions by the Indonesian government and the United Nations are needed," Obuchi said. "I hope that public peace will be maintained and that governance will be restored as soon as possible."
Indonesia Tuesday imposed martial law on East Timor following the collapse of law and order after the troubled territory voted overwhelmingly for independence.
Japan is the largest aid donor to Indonesia but will not halt that aid, foreign ministry spokesman Sadaaki Numata said.
"Indonesia itself is in the process of very important transition," Numata told a news conference.
"It will need to achieve that transition. For that help from the international community is necessary."
In 1998, Japan gave US$828.47 million in aid to Indonesia. Of that figure, $589.88 million took the form of low-interest government loans with the remaining $238.59 million grant-in-aid and technological assistance.
Chief Cabinet Secretary Hiromu Nonaka said Tokyo would urge the Indonesian government to restore peace in Timor.
"It is extremely regrettable that the situation has not improved and that tensions have still mounted," Nonaka told a news conference.
Meanwhile British Foreign Secretary Robin Cook said on Tuesday that suspending financial aid to Indonesia would not help solve the crisis in East Timor.
Cook told a news conference in Tokyo that he did not believe that freezing aid to Jakarta would put pressure on the Indonesian military, which he said has proved unable to restore peace in the violence-torn territory.
"I question whether suspending aid to Indonesia will add pressure to the military, where it is most needed," he said.
Cook said he hoped the Indonesian government would reach an agreement with the United Nations in bringing in international peacekeepers to restore peace in East Timor.
"I hope we can reach an agreement...It would not help make the task easier if we speculate further of a failure," he said.
In other development, Australian dock workers on Tuesday banned work on Indonesian cargo ships at Australian ports because of violence in the bloodied territory of East Timor.
Maritime Union of Australia acting national secretary Paddy Crumlin said the union had stopped unloading all cargo and ships from Indonesia because of the Indonesian government's role in massacres in East Timor.
The nation-wide ban has support of Australia's umbrella union body, the Australian Council of Trade Unions (ACTU), which would meet on Wednesday to endorsed the bans, he said.
Indonesian bans were expected to be taken up by other Australian unions, effectively freezing work on all commercial activity with the country, he told Reuters.
"You're likely to see a fair widening of the sanctions," he said. "Manufacturing, anything that's involved in some sort of commerce with Indonesia (are expected to be involved)."
The bans would stay in place until the Indonesian government restored law and order in East Timor and halted bloodshed in the province, he said.
"The massacres and appalling treatment of the East Timorese has the Indonesian government's fingerprints all over it," he said.
"We want the human rights abuses to stop and the slaughter. We think that sufficient pressure needs to be applied from the international community."
Indonesia and Australia are major trading partners. Australian imports from Indonesia in 1998 amounted to A$3.6 billion (US$2.3 billion) while Australian exports to Indonesia totaled A$2.2 billion.
Main imports are crude petroleum, jewelry and non-monetary gold. Main exports are cotton, crude petroleum and grains. A spokesman for the Department of Foreign Affairs and Trade (DFAT) declined comment on the bans, apart from saying that the Australian government was not immediately focussing on the aspect of union activity in relation to Timor unrest.