What became of the SAAR?

With regard to the claim made by the Overseas Private Investment Corporation (OPIC), the government has decided to go back to the terms of reference earlier agreed upon. Minister of Finance Boediono said yesterday (Thursday) in Jakarta that the new agreement regarding the claim was signed last Monday.

This decision deserves to be welcomed. The previous agreement -- known as the Settlement Agreement, Assignment and Release (SAAR) -- which was signed by the former Finance Minister, Rizal Ramli, when he was already in a caretaker position, placed Indonesia in a difficult position.

This previous agreement required Indonesia to pay the sum of US$260 million (about Rp 2.3 trillion) in compensation to OPIC in connection with the delay of the (geothermal) power projects in Dieng and Patuha. OPIC submitted its claim after having won the case at a court of arbitration. With this country's (debt) obligations already piled up high and the budget under heavy pressure, the government would find it extremely difficult to settle the claim.

One question remains: What will happen to the SAAR. The government will somehow have to explain this matter, and explain not only the agreement's present status. Even more important is how the SAAR came to be signed. The impression is that it was done in haste and that intervention occurred by parties not relevant to the issue (U.S. Ambassador Robert Gelbard was present at the July 31 signing ceremony at the Ministry of Finance.)

Left unexplained, the question will continue to linger and the government would be needlessly throwing away a portion of its credibility.

-- Koran Tempo, Jakarta