Paris Club diplomacy mission accomplished: Hassan

Paris Club diplomacy mission accomplished: Hassan

Ivy Susanti, The Jakarta Post, Jakarta

Minister of Foreign Affairs Hassan Wirayuda said on Monday that
his team had accomplished its mission to negotiate debt relief in
last week's Paris Club meeting as well as mobilizing support for
grants and debt swaps.

The team met with leaders from four countries of the United
Kingdom, France, Germany and Italy prior to the forum.

"We (Indonesia and the four European countries) not only
talked about a debt moratorium, we also discussed wider schemes
that were proposed (by analysts, experts) in Indonesia," Hassan
told a press conference here.

"We reached an understanding that we would follow up our
discussion on the moratorium. At this point, I thought it was not
realistic to talk about the amount of the debt moratorium and so
on. In the end, the amount would depend on the World Bank's
assessment, although we agreed on terms and conditions for the
moratorium."

Nineteen creditor countries grouped in the Paris Club
announced an immediate debt repayment reprieve for countries
devastated by the recent Asian tsunami disaster, including
Indonesia, pending a full assessment from the World Bank and the
International Monetary Fund on their reconstruction and financing
needs, scheduled to be completed in three months. The Paris Club
will consider the necessary steps after that.

Criticism has been leveled at the delegation, saying it failed
in diplomatic efforts and that the government had not asked for
enough debt relief to rebuild Aceh.

Hassan said Germany, France and Italy agreed on debt swaps or
an increase in their grants. Germany has offered 500 million
euros (US$650 million) to affected countries, comprising of
grants and soft loans. German is considering raising the
percentage of their grants, he added.

Italy has agreed to convert 30 million euros of Indonesia's
debt this year to finance certain projects -- including the
reconstruction of Aceh. "Italy also offered the same amount to be
converted in 2006," Hassan said.

France has offered 300 million euros in soft loans with 1
percent interest with a 10-year grace period. The donor country
refused to convert the loan into a grant since it had to revise
its annual budget. "But one third of the loans will be in effect
a grant," Hassan said.

He added that the European Union was considering granting a
tariff reduction and lifting trade barriers for certain goods
from Indonesia. The EU will make the decision on July 1 and
Minister of Trade Mari Elka Pangestu will hold a discussion with
related EU ministries.

"France has supported the special treatment for Indonesian
textiles and is willing to consider other commodities like shrimp
and fish products," Hassan said.

He also said that Germany would help Indonesia develop a
tsunami early warning system across the archipelago, apart from
the planned system in the Indian Ocean, by sending its geologists
to an international conference on early warning systems in
Indonesia next month.