EU-Indonesia development cooperation
EU-Indonesia development cooperation
The European Union (EU) is one of the largest aid donors in the world, providing US$7.1 billion or 10.5 percent of all aid disbursed by the Organization for Economic Cooperation and Development (OECD) countries in 1995. If this is aggregated with aid disbursed by individual EU member states, then European development expenditure amounts to almost 60 percent of all OECD aid. Of this total, EU aid commitments to Asia accounted for 9.5 percent of EU aid committed in 1995.
Over the period from 1990 to 1995, euro (EUR) 128 million of development aid from the European Commission (EC) has been committed to Indonesia. The EC's present development program consists of nine major projects with a total budget of EUR 168 million. A further EUR 15 million worth of projects are in the pipeline focusing specifically on assistance to Indonesia's recovery from an economic and monetary crisis. Funding is also being provided for a series of humanitarian aid projects, again targeted at mitigating some of the negative effects of the crisis and for the activities of local and European non-governmental organizations.
Two points must be stressed about EC development aid to Indonesia. Fist, all EC funds are donated as grants for projects which have been negotiated and agreed with the national authorities. None of the EC funds add to Indonesia's public sector debt burden. Second, all EC development cooperation is implemented in full partnership with the relevant line agencies. To emphasize the importance of this partnership: all EC projects are managed by teams that include both European and Indonesian technical experts.
Before the deterioration of Indonesia's financial and economic situation in 1997, EC development aid was directed primarily toward water and irrigation and sustainable forest management sectors. The aims of the program were to assist Indonesia's efforts to maintain food security and to assure the sustainable utilization of Indonesia's rich and important forest resources.
From the middle of 1997, the focus of the program shifted with an increasing number of new humanitarian aid projects approved -- the total amount approved to date is in excess of EUR 5 million -- and with new projects being developed to support the social safety net program. In addition, a new project to provide radar remote sensing data on the condition and expected harvest size of Indonesia's rice crop has been approved and is currently being implemented in collaboration with Board for Study and Implementation of Technology.
The EC is also active in addressing the consequences of the economic crisis from a regional perspective. One outcome of the second Asia-Europe Meeting (ASEM), which took place in London in April 1998, was the establishment of the ASEM Trust Fund. This fund, managed by the World Bank, is designed to provide Indonesia and seven other Asian countries with technical expertise to assist with financial sector restructuring and with other measures to deal with the social problems caused by the crisis. The EC has committed EUR 15 million to this fund, making it the largest single contributor.
However, the largest proportion of EC funds committed to Indonesia remains for projects in the forest sector. The EC is deeply concerned about the social, economic and environmental consequences of the depletion of the world's forest resources. The government's willingness to use the crisis as a window of opportunity to study and implement fundamental structural reforms within this vital sector is one of the few positive outcomes to emerge from the present situation.