Focusing on embargo threats and unaccountable funds

Focusing on embargo threats and unaccountable funds

Calls for an embargo can be understood while the inability to
secure all public assets poses the threat of an increasingly
declining public trust in the government, says political
economist Revrisond Baswir, who teaches at the Gadjah Mada
University in Yogyakarta.

Question: Has the United States been excessive with defense
secretary William Cohen's statement on the possibility of an
embargo on foreign aid if Indonesia fails to control the militias
in West Timor?

Answer: Regardless of America's international political role,
Cohen's statement made sense. And regardless of whether the
threat is serious, we need to understand why Indonesia is under
increasing international pressure.

The international community has long disliked the military
which led to the embargo on loans for weaponry. But even with
those sanctions, tragedies involving the Indonesian Military
(TNI) continued, including the "earth scorching" of East Timor
(after the August self-determination ballot).

The incident led to international demands to bring TNI
officers to an international tribunal.

Amid the snail's pace in the investigation of rights abuses in
East Timor, fresh violence broke out in Atambua in which relief
workers of the United Nations High Commissioner for Refugees
became victims.

This event again reminded the international community on the
gravity of the problem in East Timor and the role of the military
in it.

Q: What would the effect on a temporary hold on loans be?

A: In an embargo like that -- with the government being abandoned
by the International Monetary Fund, the World Bank, or the
Consultative Group on Indonesia -- the burden would be very
heavy.

Planned government loans for 2001 have already reached US$4.8
billion. With debt rescheduling, the need for aid next year could
reach $6.5 billion.

The effect of such an embargo could be reduced by cutting down
on development activities or by not developing anything at all.

The problem is that based on the 2000 state budget we are not
only in a deficit but also have a shortage of Rp 6 trillion for
routine expenditures.

No loans would mean a higher deficit which could lead to the
government operations becoming stagnant when it finds it cannot
pay its employees or buy anything.

We could cover the gap by selling assets or privatizing state-
owned firms but given our bleak economic prospect it would be
hard to find buyers.

Q: What about cutting down more on fuel subsidies?

A: We could do that but it would mean an even higher increase,
not merely 12 percent as planned. The policy would surely face
strong resistance. The government could also reduce subsidies on
other items like fertilizers -- but this would burden people even
more especially as at the same time the government would be
stopping projects, which could mean no jobs. An even bleaker
picture would be if it had to raise taxes.

That is akin to people being hit by the ladder when they are
falling into the river ...

Q: Would there be alternative channels for funds if foreign loans
were to stop?

A: The one alternative would be a cleaning up of the handling of
public money such as suppressing corruption; trillions of rupiah
in nonbudgetary funds should be transferred to the budget as
fresh income ...

Actually my friends in nongovernmental organizations and I
hope that the government reduces foreign loans. A more radical
stance is taken by the Anti-debt Coalition in which I'm in the
steering committee. We want a total stop of foreign loans with
the above mentioned alternative.

If public assets can be properly handled we wouldn't have a
problem with foreign loans.

If we plan a loan of $4.8 billion or some Rp 40 trillion, the
non-budgetary funds would be more than enough. The only problem
is the difficulty encountered when it comes to non-budgetary
funds.

We can observe the insensible reactions following the
investigations on the funds within the Army Strategic Reserves
Command (Kostrad). Its commander, Lt. Gen. Agus Wirahadikusumah,
was removed.

An audit by a public accountant later and the Supreme Audit
Agency revealed there were no irregularities in the use of
Kostrad funds.

Worse, it seems they don't want to admit that foundations and
firms under Kostrad are public assets. That is one case in one
Army unit -- we haven't discussed other units in TNI.

So in the short term it is difficult for the government to
gain other sources of funds apart from foreign loans.

Q: How about Iraq which is still under sanctions?

A: They might be surviving but infant mortality is rising because
the flow of medication has been disrupted. But the citizens seem
to be fully backing their government ... And Saddam Husein is not
only the national leader, he's the military leader and has the
military fully under control.

He can easily conduct a propaganda in the face of an embargo.

In many ways we're the other way round. We know Gus Dur
(Abdurrahman Wahid) is at a loss in facing resistance from the
old forces including those in the military, to the extent that
the society is divided.

In such a situation, the difficulties of living under an
international embargo could explode into resistance against the
state, more so if the resistance was mobilized by opposition
forces.

So what this nation is facing today is also a warning to
civilian leaders and the political elite. They should realize
that it's not the time for them to take over power, let alone
public assets.

This nation needs people to work together, at least on how to
face resistance (from the old forces), not to get back at them or
to kill them but how we can avoid being manipulated or prevent
them from perpetuating the old system.

Wouldn't an embargo be unfair as it would hurt the common
people most?

There are indeed strong indications that the incidents (in
West and East Timor) involved certain factions in TNI, mainly the
Army. So if an embargo was applied, Gus Dur's government would
face three fronts: elements in TNI and those supporting the old
forces; the masses venting their anger on the government; and the
international community.

So if the international community miscalculates (its strategy)
by stopping aid to Indonesia, it would pave the road for the
return of the authoritarian "pro status quo" elements.

Q: How could those former forces return?

A: If social economic conditions worsen under international
sanctions, chaos would be quite probable ... and the government
would lose even more. Those old forces could then use the
situation to draw public sympathy by campaigning against the
United States and industrialized countries in Europe in the name
of anything, maybe nationalism.

They may not use figures from TNI which is tainted but a
civilian figure known as a "reformist" to become a symbol of that
movement.

Q: Would you say Cohen's statement was only to underline demands
to settle the Timor problem?

A: Yes, and if donor agencies know the risks of stopping aid to
Indonesia they would be forced to continue the aid. They clearly
don't want the return of the military to power.

The international community must also calculate the increase
in migration or refugees from Indonesia (should there be chaos).
Outside parties know of such risks, similar to that of Vietnam's
boat people. They have good intelligence. (Asip A. Hasani)