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World Bank denies charges on Indonesia military

WASHINGTON (Reuter): The World Bank defended itself Wednesday against charges that it was indirectly financing Indonesia's armed forces.

"The Bank does not, directly or indirectly, finance military expenditure by its borrowing countries," the international lending organization said in a statement.

A pro-democracy research group has called on the Clinton administration to oppose World Bank loans to Indonesia, charging they were indirectly financing Indonesia's armed forces.

The Project on Demilitarization and Democracy charged in a report that Indonesia was under-reporting its military spending to the Bank. It also said the country's armed forces were deeply involved in the economy in ways that violated Bank standards for receiving loans.

"The report ... is merely ideology and factual errors masquerading as serious research," the World Bank said. "It ... completely misrepresents the actual relationship between the World Bank and the government of Indonesia."

The Bank said there was no evidence to support the report's claims that Indonesia under-reports its military expenditures in its talks with the lending organization.