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ASIA: No CelebrationsUnless
Aid Tied to Environment

Indonesian environmental NGO SKEPHI issued the following response to statements made by IMF and World Bank official about aid to troubled Asian nations.


Instead of Celebrations, more fires, more floods

"There will be no celebrations, at least in half of Asia, if loans to crisis-stricken Asian countries are made so easily! Instead, we all could see a future with more natural disasters such as forest fires and floods, unless governments like that in Indonesia are pressed to introduce sustainable development objectives, by the imposition of strict conditions relating to the environment.", said Indro Tjahyono, director of SKEPHI, an Indonesian environmental non-governmental organisation, in reaction to statements made by IMF and World Bank officials.

Two weeks ago, Stanley Fischer, deputy managing director of the IMF, expressed confidence in the negotiations with the Indonesian government on the rescue loans to be made to the country which is suffering most in the financial crisis. He said, " we will have big celebrations when the programme is implemented, when the Indonesian economy returns to health, and not at the beginning".

"The One Million Problems Project"

Twenty-seven non-governmental organisations world-wide, in a month-old letter, addressed both to the IMF and World Bank, have asked for intervention and a halt to further activities in the conversion of more than one million hectares of tropical peat-swamp forests into rice fields in Central Kalimantan. This is one of the places and sources of the highly toxic Indonesian peat fires and smog of last year. While the health of approximately sixty million people in South-east Asian countries has been affected, some millions of people in Kalimantan (Indonesian Borneo) and Sumatra have suffered the smog and famine in silence. The NGO's stressed that principles of respect for the environment and the rights of indigenous populations should be linked to the prospects of any further loans to Indonesia.

Since officials of the World Bank and the IMF have failed to respond to this appeal and instead hinted at the resumption of loans to Indonesia, it is thought that the plight of the local people may be thought secondary to other considerations, such as how foreign creditors recover their money from Indonesian private borrowers. Over the past few months the IMF and Indonesia have been in dispute, after the latter signed a letter of intent to implement a broad package of reforms, but was then seen to be delaying implementation.

Lead by the Indonesian NGO, SKEPHI, in their letter - accompanied by a dossier - addressed to Mr. Michel Camdessus, managing director of the IMF, the NGOs have asked for a halt to the devastating project, as one of the conditions of the loans. The project, now also called by Indonesians "The One Million Problems Project", has been blamed as one of the main sources of peat and forest fires in 1997. The large-scale rice cultivation scheme, decreed by President Suharto almost three years ago, has been judged a failure from the start by environmental experts and agricultural practitioners. Illegal felling and timber smuggling has been increasing in other areas in the province, making use of the free logging; the Government consented to the extraction of
12 million cubic metres of timber from the project area.

Government Complicity

For some years the Government of Indonesia has been seen allowing a back sliding in its rural development policies. The Government has acquiesced to large-scale logging and sponsored commercial projects, mostly controlled by logging companies with powerful connections. These have turned out environmentally disastrous and socially unsustainable. As rice cultivation has been proven impossible, these companies switch their plans and turn to oil-palm and industrial timber plantations, using fire as the cheapest method of clearing land. Over the last few years millions of Malaysian Ringgits have been showered upon powerful government cronies to establish new oil-palm plantations, ever decreasing the community and pristine forests of the Indonesian

Indonesia's forest fires last year not only caused extreme health risks for millions of people and hundreds of million of US dollars of economic loss, but also caused death and agony to many species of wildlife, including the endangered orang-utans. On April 2nd. the European Parliament adopted an urgent resolution on the raging forest fires of Indonesia, Thailand and Brazil. The resolution in particular urged the Indonesian government, " stop activities in the framework of the Mega-Rice project on Kalimantan (Indonesian Borneo)". The European MP's have also instructed their President to forward the resolution, with others, to the World Bank. The IMF was also one of the world's institutions which should be contacted in order to "encourage the Indonesian Government into sustainable forestry management".

The cause, which is supported by an increasing number of environmental organisations world-wide, believes much more should be done before new loans are made available, starting with government-sponsored development projects affecting the forests, people and animals. "Indonesia is a rich country, with an immense wealth of natural resources. With the financial crisis it is now being confronted with the destruction of nature on an unprecedented scale. It is high time for our government to undertake a thorough change in its system of exploitation", Indro Tjahyono said. The question of whether Indonesia will still be able to rely on its forest in the future now also depends on commitments by the IMF and other donors to work on the environmental aspects.

For further information and film material, contact

Mr. Hasjrul Junaid at the
SKEPHI European Support Office in Amsterdam,
Netherlands, tel./fax. 31-20-6147972

Pacific Environment and Resources Center
Siberian Forests Protection Project
1055 Fort Cronkhite
Sausalito, CA 94965
Tel 415-332-8200
Fax 415-332-8167

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