[Kabar-Irian] Irian News - 2/07/03

[Admin]

- OCHA Consolidated Situation Report No. 114
- Indonesian military admits killing Papuan independence leader
- Military role in murder
- Moresby fears JI incursion
- PNG will not hold joint military operations with Indonesia against OPM 
rebels. 
- Minister Susilo on government policy regarding Papua
- Papuans reject the splitting up of Papua
- Plans to divide province spark protests 
- Indonesia to stop studies that threaten Papua status
- Jakarta loosens monetary control
*****************************

Source: UN Office for the Coordination of Humanitarian Affairs (OCHA)
Date: 07 Feb 2003

Indonesia - OCHA Consolidated Situation Report No. 114
1 February - 7 February 2003

1. NATURAL DISASTERS 

Papua 
Cenderawasih Pos reported on Wednesday (5 Feb.) that serious landslides 
happened in Okbul village, Okbibab sub-district, Jayawijaya district of Wamena 
due to heavy rainfalls and earthquakes. 

Cenderawasih Pos reported Tuesday (4 Feb.) that serious landslides occurred in 
Aitikima village, Jayawijaya district. The landslides continue to occur and go 
down along Baliem river. No victims or damages have been reported. However, it 
is forecasted that if no serious environment protection steps are taken, Wamena 
town will be in danger of flooding. 

Local authorities held a meeting in Provincial Planning Board (Bappeda) office 
in Jayapura on Tuesday (4 Feb.) to discuss reconstruction programmes in Nabire 
affected by the earthquakes in October and December 2002. The meeting also 
discussed the impact of flood in Nabire in January 2003. Head of Bappeda Nabire 
briefed the audience on the current situation in the disaster areas. Field 
Assistant of OCHA Papua, Max Mirino, also attended the meeting. 

6. PAPUA 

General Situation 
A local newspaper, Cenderawasih Pos, reported on Wednesday (5 Feb.) that a 
delegation of nine security officers from Papua New Guinea (PNG) had an 
official discussion recently with local authorities in Jayapura. The delegation 
will proceed to Jakarta to meet the Indonesian Foreign Minister and other 
relevant authorities. The PNG delegation's spokesman, Christopher Mero, stated 
that PNG would never tolerate TPN/OPM to use their territory as a hiding place. 

Cenderawasih Pos reported on Wednesday (5 Feb.) that a team from local NGO 
Elsham Papua (Institute for Human Rights Studies And Advocay) met a bishop in 
Vanimo, PNG, for investigation concerning the clashes occurred in RI-PNG border 
last December - January. 

Various local media reported about the debate on the Central Government's 
policy on the division of Papua province into two or more provinces. President 
Megawati has issued a Presidential Instruction (Inpres) No: 1 Year 2003 to 
declare a new province, West Papua on 27 January. 

Various local media reported on Monday (3 Feb.) that the FBI team of the U.S.A 
arrived in Timika on Sunday (2 Feb.) from Jakarta to coordinate their programme 
with national police and other relevant authorities. The team will conduct 
field investigation for two weeks in Freeport, Timika. Two teams from the TNI 
and Police headquarters in Jakarta and Papua's Vice Chief of Police, Tommy 
Jacobus, have been in Timika to work with the FBI team. 

Food Security And Agriculture 
Cenderawasih Pos reported on Wednesday (5 Feb.) that due to serious landslides 
in the last three weeks, thousands of hectares of plantations and gardens in 
Okbul village, Oksibil sub-district, Jayawijaya district of Wamena, have been 
destroyed and even buried. Having lost plantations and gardens, people in the 
village are beginning to suffer from food shortage and diseases. 

Health 
Cenderawasih Pos reported on Tuesday (4 Feb.) that an outbreak of malaria, 
amoebic dysentery, and URTI occurred in four villages (Waga, Abusa, Tulem, and 
Wadanku) of Kurulu sub-district, Jayawijaya district of Wamena. The Head of 
District Health Office, Dr. Maurits Rumsayor, said that treatment have been 
provided and so far no people died. 

Cenderawasih Pos reported on Monday (3 Feb.) that an outbreak of measles, 
amoebic dysentery, and URTI occurred in five villages in Okbibab sub-district, 
Jayawijaya district (Wamena). 65 people were reported dead and 882 people 
affected. It was reported that no medicine has been available in the puskesmas 
since three months ago. 

In cooperation with UNICEF Papua, Jayapura District Health Office is conducting 
a three day training on emergency radio telecommunication system from 6 to 8 
February in Jayapura. Some 35 people, consisting of medical doctors, nurses, 
and village midwives from puskesmas and village health centres in the district, 
are participating. Up to December 2002, UNICEF has facilitated instalment of 
some 100 emergency (medic) radios in five priority districts. 

This report and previous ones can be found at www.reliefweb.int
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Radio New Zealand International
Created at 11:44 am on 07 February 2003 
Indonesian military admits killing Papuan independence leader

An Indonesian army officer has told a court martial that one of his men 
strangled the Papuan independence leader Theys Eluay.

This is the first public admission that the military was behind the killing 
more than a year ago.

Lt Colonel Hartomo told the tribunal in Surabaya that one of his subordinates, 
Private Ahmad Zulfahmi, choked Chief Eluay but when he was left he was still 
alive.

Chief Eluay was found dead on the outskirts of Jayapura in November 2001, after 
attending a dinner hosted by the Indonesian army’s special forces unit.

Lt Col Hartomo is quoted as saying that he instructed his men to guide Chief 
Eluay and persuade him to drop his intention to proclaim an independent Papua 
the following month.

Military prosecutors have charged seven officers and soldiers in connection 
with the killing.

One of the seven, Lt Col Hartomo, insists he had nothing to do with the killing 
and only learned about it a day later.

The whereabouts of Chief Eluay’s driver, who raised the alarm over the assault 
on his cellphone, is still not known.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Asia Pacific/Radio Australia
In Focus
Military role in murder
-- The military admits it was involved in the murder of a separatist leader.
07/02/2003

The Indonesian military has indicated for the first time that it was involved 
in the murder of Papuan pro-independence leader, Theys Eluay 14 months ago. 

Lieutenant Colonel Hartomo of Indonesia's notorious Kopassus special force has 
told a court martial hearing in Surabaya that one of his soldiers was involved 
in assaulting the chief prior to his death after he refused to drop plans to 
seek Papuan independence from Indonesia. 

Theys Eluay was found dead on the outskirts of Jayapura, the capital of Papua 
province in November 2001. He went missing while driving home the previous 
evening after attending a dinner hosted by the Kopassus special forces unit. 

The military originally denied involvement in his death but following a police 
investigation, seven officers and soldiers have been charged over the killing. 

Abandoned after attack
One of the officers on trial has told a court martial that Eluay was weak but 
alive when soldiers left him in his car.

But Lieutenant Colonel Hartomo told the hearing on Wednesday that one of his 
soldiers had admitted repeatedly clamping his hands over Eluay's mouth, 
according to the Koran Tempo daily. 

Hartomo said Private Zulfahmi, who is also on trial, had told him he clamped 
his hands three times over Eluay's mouth as the latter began shouting following 
an argument. 

"Theys was left, in a weak condition, in Koya Tengah...he was still alive," 
Hartomo was quoted as saying. 

Hartomo said he had instructed several of his men to "guide" Eluay and persuade 
him to cancel his intention to proclaim an independent Papua in December that 
year. 

Who gave the order
But according to Aristides Katoppo, Indonesian journalist and commentator, 
government policy “it seems now of course the lowest-ranking private is going 
to take the rap.”

“I think some tongues will be wagging about (whether) the real officer who gave 
the order will be punished. 

Eluay's driver Aristoteles, who was with him on the night, is missing and 
presumed dead. Military investigators have dug up parts of the Kopassus base at 
Jayapura for his body but found nothing. 

The soldiers and officers face up to 15 years jail, if found guilty.
-- By Kevin McQuillan; reported by Linda LoPresti and agencies. 
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
The Australian
Moresby fears JI incursion
By Paul Toohey
February 08, 2003

Papua New Guinea's leadership believes terrorist groups associated with the 
Bali bombing are active across its border with West Papua, and Port Moresby 
fears its territory could be used to "get at " Australia.

Prime Minister Michael Somare's special adviser, Stephen Pokawin, said it was 
accepted wisdom within PNG that Laskar Jihad, a group believed to operate 
as "foot soldiers" of Jemaah Islamiah, was operational in the Indonesian 
province. 

"It is a concern of possible incursions of groups whose interests are not 
ours," said Mr Pokawin. 

"I hope PNG would not be used to get at Australia. I hope the Australian 
interests here will not be targeted. But we can't guarantee that." 

The West Papuan independence movement says it has tried to warn the federal 
Government that JI and Laskar Jihad have a firm footing in West Papua, but 
claims John Howard and Alexander Downer have repeatedly refused to discuss the 
matter. 

Franz Albert Joku, international spokesman for the Papua Council Presidium, the 
diplomatic offshoot of the Free Papua Movement, says he gets a better hearing 
from senior policy advisers in Washington. 

"The Americans are not telling us they support us to be independent, but they 
are now talking to us at a very high level," said Mr Joku. "If I go to 
Canberra, I can wait months to see someone. Even then, I'd be lucky to see the 
Opposition Leader's spokesperson." 

A December report in Port Moresby's Independent newspaper claimed 200 men were 
in terrorist training "in a jungle hide-out" at Ipargunum, on the outskirts of 
the West Papuan provincial capital Jayapura, close to the PNG border. 

Mr Joku alleges Ipargunum is not a terrorist hide-out as such but rather an 
Indonesian military base hosting terrorist destabilisation. 

Australia refuses to recognise West Papuan claims for independence. So does 
PNG, but Port Moresby human rights lawyer Power Parkop said the Government was 
distressed about what was happening to Melanesians across the border. 

"I've seen a (PNG) foreign affairs report about Laskar Jihad moving into West 
Papua through Sorong," said Mr Parkop. "My view is that Laskar Jihad is just an 
extension of the military. 

"It is trying to provoke problems for the new (Indonesian) Government." 

Mr Joku said: "It is slowly beginning to dawn on Indonesia watchers and 
concerned governments in PNG and elsewhere that there is a very thin line 
separating the official military establishment from Jemaah Islamiah or Laskar 
Jihad. 

"Given the concerns, I think Mr Howard will find it difficult to sleep at 
night. Australia and Port Moresby are within reach." 
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Radio New Zealand International
Created at 5:22 pm on 06 February 2003 
PNG will not hold joint military operations with Indonesia against OPM rebels. 

Papua New Guinea’s Defence Force has ruled out joint operations with Indonesia 
against Papuan rebels, in an apparent defiance of a statement by Jakarta that 
such an arrangement has been agreed to. 

PNG’s acting Defence Force Commander, Captain Tom Ur, has told the Post Courier 
newspaper that under no circumstances will PNG hold joint operations with 
Indonesia as each country is responsible for its own side of the border. 

Earlier, Indonesia’s military chief, General Endriartono Sutarto, said a joint 
agreement had been made to secure the border against Free Papua rebels accused 
of launching anti-Jakarta attacks from PNG. 

PNG’s foreign ministry says a delegation is currently in Jakarta to discuss 
border security issues. 

Meanwhile, a spokesperson for the Papua Presidium Council, Franz Albert Joku, 
says PNG soldiers have shown reluctance in acting against Papuans who they 
consider fellow Melanesians. 

He says PNG soldiers may not obey their superiors. 

“The military will not be forced into any joint operations with Indonesia along 
the border because the difficulty will be having Papua New Guineans taking 
action against Papuans or Melanesians. We will make it our duty to see the 
government of Papua New Guinea ensures this does not happen.” – Franz Albert 
Joku of the Papua Presidium Council. 

Sources within the PNG Defence Force warned the government to treat the OPM 
border issues sensitively. 

They say Papuans have always been in PNG either by right or because they have 
been forced to flee there. 
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
From: "Tapol" <tapol at gn.apc.org>
Sent: Friday, February 07, 2003 7:28 AM
Subject: [wp] Minister Susilo on government policy regarding Papua

Detikcom
5 February 2003
Minister Susilo on government policy regarding Papua

[Comment: A feeble attempt to dampen the storm of protest that has greeted the 
recent Presidential Instruction. He indicates that a major diplomatic offensive 
in support of NKRI is in the offing.TAPOL]

Susilo Bambang Yudhoyono, minister-coordinator for Political and Security 
Affairs, has insisted that there is no contradiction between Law 45/1999 on 
splitting up the province of Papua and Law 21/2001 on Special Autonomy.

He said both were founded on the Constitution. 'The two laws should not be 
described as being contradictory because they both have a sound constitutional 
basis,' he said. He went on to say that the two laws deal with different 
matters - the one seeks to resolve the Papuan question comprehensively, while 
the other regulates the matter of autonomy.

He said the government's priorities in 2003 and 2004 are to resolve Papua's 
problems correctly and justly so as to ensure that special autonomy is well 
implemented and Papua remains within the fold of the Unitary State of the 
Republic of Indonesia (NKRI).

There are three things the government has to do, he went on. The first is to 
ensure implementation of the Special Autonomy Law by improving social and 
economic conditions, which will require a huge outlay of money. 

The second is to handle political issues by dealing with elite politicians who 
want to separate from Indonesia. The third is to engage in intense diplomatic 
activity to uphold the NKRI.

'We call on the international community to support NKRI and not to give any 
space to the Papuan separatist movement. The government therefore agrees to 
foreign circles dealing with matters of (Papua's) history and social and 
cultural affairs. But we reject any intervention from abroad,' he said.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
From: "Tapol" <tapol at gn.apc.org>
Sent: Friday, February 07, 2003 7:29 AM
Subject: [wp] Papuans reject the splitting up of Papua

Suara Pembaruan
5 February 2003
Papuans reject the splitting up of Papua
(Abbreviated in translation)

All Papuans reject Presidential Instruction 1/2003 regarding Early 
Implementation of Law 45/1999 on the Formation of a Province of Central Irian 
Jaya, a Province of West Irian Jaya and districts of Paniai, Mimika, Pucak Jaya 
and Sorong Municipality. It is seen as being authoritarian and failing to 
acknowledge Papuans' rights as citizens.

This was the view of Papuan leaders speaking to the press in Jakarta Tuesday. 
The press conference was attended by Thaha Al Hamid, secretary-general of the 
Papuan Presidium Council, John Poli Menanti, chairman of  Young Papuans Abroad, 
and Andi Manobi, chairman of Young Papuans in Jakarta.

Manobi decribed President Megawati's instruction as a tragedy for the Papuan 
people. 'They are treating us as if we were not citizens of the Republic,' he 
said.

The Instruction will intensify horizontal conflict because it will lead to 
people from one region expelling people from other regions and to a major 
displacement of Papuans, resulting in conflict. As conflicts increase, more 
troops will be sent to Papua. 'You could have one province in favour of 
remaining in the Republic of Indonesia and another favouring independence,' he 
said.

Thaha likened the Instruction to the divide-and-rule policy of the former 
colonialists. The decision has come as the result of the failure of the 
government to enact a decision setting up the Majelis Rakyat Papua (Papuan 
People's Assembly) - MRP - as required in the Law on Special Autonomy, he said.

Article 76 of that Law states: 'Any decision to split Papua into provinces 
shall be taken with the approval of the MRP and the Papuan Provincial Council 
(DPR-Papua) after taken account of social-cultural factors, availability of 
human resources and economic capability, and future developments.'

Menanti described the government's decision as authoritarian as it is in 
conflict with the wishes of the people. The Papuan people don't want this. If 
there are some Papuans who are in favour, they are people who have been paid to 
do so by the government.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Courier Post
Plans to divide province spark protests 
Marianne Kearney in Jakarta 
08feb03

Indonesia's plan to divide Papua into three new provinces is meeting with stiff 
opposition from local leaders in the troubled eastern region.

They have warned the proposal will undermine their confidence in autonomy laws 
and spark new support for independence. 

The special autonomy law, passed in 2001 in a bid to quell popular demands for 
independence, gives the Papuan parliament control over most the province's 
affairs except for defence and the security forces. 

It also returns 70 percent of Papua's mining revenues for local use and allows 
for the establishment of a community elected people's parliament which will 
pass new laws. 

Cabinet ministers announced that President Megawati Sukarnoputri signed a 
presidential decree last week which called for the speeding up of a 1999 law 
which divides the province into three separate areas – Papua, West Irian Jaya 
and Central Irian Jaya. 

Due to the popular opposition the measure was never implemented and autonomy 
experts now argue the 1999 decision has been made void by the special autonomy 
law. 

Papuan politicians, church groups and non-government groups have criticised the 
proposal arguing that it violates the special autonomy law, which calls for the 
Papuan parliament to legislate on such issues. 

Papuan religious leaders from Catholic, Protestant and Islamic congregations 
issued a joint statement on Thursday opposing the plan. 

Dr Simon Patrice Morin, a parliamentarian from the conservative Golkar Party 
says the President's decision showed how little Jakarta respected the Papuan 
parliament's rights. 

"They treat this province like a colony not like a part of Indonesia," he said. 

Local leaders worked hard in 2001 to convince Papuans that the special autonomy 
law was a more effective alternative to armed struggle, he said. 

But with Ms Megawati signing this new decree without consulting the Papuan 
parliament, Papuans would lose faith that they could negotiate with Jakarta and 
were likely to support independence instead, said Dr Morin. 

Some Papuans suspects Jakarta has passed this decree in order increase military 
control over the province. 

"Later there will be three Kodam, lots of Kodim and many more Korem," said 
Benny Giay, a lecturer from Papua's Cendrawasih University, referring to the 
provincial, and district military commands known as Kodam, Kodim, Korem. 

Minister of Home Affairs Hari Sabarno said the decree was aimed at creating a 
better co-ordinated government for the vast but sparsely populated province. 

"It seems almost impossible at present to manage the large island ... with 28 
regencies under one province," he said on Thursday after a Cabinet meeting in 
Jakarta with Ms Megawati. 
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Radio New Zealand International
Created at 4:51 pm on 07 February 2003 
Indonesia to stop studies that threaten Papua status

The Indonesian government has called on the international community to stop 
supporting a separatist movement in Papua province.

The security minister, Susilo Bambang Yudhoyono, says Indonesia will use 
diplomatic channels to call on the international community to respect 
Indonesia’s territorial integrity.

The minister says if international support for Indonesia’s sovereignty is 
serious, the international community must not give separatists the opportunity 
to expand overseas.

He says the government has decided not to allow foreign-initiated proposals to 
conduct historical or political studies which could intervene in Indonesia’s 
sovereignty.

Indonesian rule is based on a UN-sanctioned 1969 referendum which critics say 
was a sham.

The minister’s comment comes only days after Indonesia retracted a threat to 
sever diplomatic ties with Vanuatu which supports the Papuans’ campaign for 
independence.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Asia Times Online
February 07, 2003
Jakarta loosens monetary control
By Bill Guerin 

Jakarta has officially announced that regional governments can now borrow from 
foreign sources if certain conditions are met. 

Regional administrations can qualify for central government permission to 
borrow from external sources as long as they fulfill the criteria. They must 
have additional financing sources and have no outstanding debts. If they have 
outstanding debts, the debts must have already been budgeted for and the 
administration must be committed to repaying them.The total amount borrowed 
should be no more than an amount equal to 75 percent of their previous year's 
budget. 

The government's annual budget has had to provide for the allocation and 
transfer of contingency funds to local governments to avoid any fiscal gap in 
the regions and to ensure that the quality of public services is maintained 
throughout what is still seen as a transition period. 

Regional governments receive support from the state budget in the form of a 
general allocation fund, known as DAU, and a specific allocation fund, really 
an emergency instrument but given every year, called DAK. By law, 25 percent of 
all national domestic revenues - excluding foreign loans, export revenues and 
the like - must be given via DAK directly to districts, which get the money in 
the form of block grants. 

Revenue from natural resources such as oil, gas, forestry, etc is split between 
the central government and the producing regions under a revenue-sharing 
formula. Oil and gas-producing regions get 30 percent revenue from their gas 
production, and 15 percent from oil. In the case of other resources that are 
not mined, such as forests and fisheries, those regions retain 80 percent of 
the income.

Last, but certainly not least, the borrowing should be approved by the House of 
Regional Representatives (Dewan Perwakilan Daerah). This body, a local 
legislative assembly, is similar to the US Senate and was brought into 
existence after an amendment to the constitution. The assembly consists of an 
equal number of directly elected representatives from each province. 

The new policy is intended to boost development and increase the quality of 
public services in the regions and to many will appear eminently sensible, 
although strangely there has been no official comment from the International 
Monetary Fund. In earlier days, similar moves were consistently criticized and 
vetoed by the IMF. The IMF feared that by loosening control, inexperienced 
regional governments would go on spending sprees and inflate the central 
government debt even further. 

The separation of East Timor and ongoing demands for a referendum in Aceh 
forced then-president Abdurrahman Wahid to speed up the planned laws governing 
fiscal decentralization, namely Regional Autonomy Law 22/1999 and Revenue 
Sharing law 25/1999. The laws were implemented with haste, with little 
consensus, and with few outside the legislative process even understanding what 
they were all about. 

The IMF was quick to point out glaring contradictions in the newly crafted 
laws. "Law 22 says the local government can borrow from external sources with 
approval from the central government ... but Law 25 says the local government 
can only borrow from the central government," the Fund said at the time. 

Wahid, like B J Habibie before him, needed to ensure there could never be a 
return to the autocracy at the center, as well as act against the threat of a 
more radical decentralization, ie, a possible breakup of Indonesia. When vice 
president under Wahid, Megawati Sukarnoputri said the planned autonomy law went 
against the principle of Indonesia being a unitary state as laid down in the 
1945 constitution, which she holds sacrosanct. 

Letters of intent since then have included the promise from Jakarta that "to 
ensure that Indonesia's overall fiscal management is in line with our agreement 
with the International Monetary Fund ... the central government is committed to 
prohibiting local governments from borrowing independently to fund their 
budgets". 

Local government officials, of course, are all for the new policy as they say 
it will give "flexibility" to local budgets. 

Ambiguity and technical discrepancies pepper the existing autonomy laws, 
political issues remain unresolved and Jakarta appears unwilling to believe 
that local bureaucrats and legislatures have any real capacity to craft 
budgets, or know how to monitor performance. 

However, last month's meeting with the Consultative Group for Indonesia (CGI) 
and donor groups, Finance Minister Boediono said the DAK allocations for 2003 
would be used for development of basic education and health services (as well 
as infrastructure) but from next year on more attention would be paid to 
proposals from the regions themselves rather than central government 
considerations. 

Decentralization was designed to empower regional and local authorities to help 
manage developments in their regions in an effort to help them be more 
responsive to the needs and desires of the local populations. 

Understandably, local governments are after the highest possible local 
revenues, but demands for more tax revenues and greater financial independence 
have caused willy-nilly, non-standard income-boosting schemes and regulations. 
In the early days of the new autonomy, legislators in some regions increased 
their salaries threefold amid allegations of vote-buying and bribery. Several 
cases are awaiting judicial process. 

Regional governors argued that the law is full of loopholes that can still be 
used by the central government to continue to wield power over them, but a 
study by the Research Triangle Institute showed that regional governments 
created almost 1,000 new taxes and charges during the run-up to and through 
fiscal year 2001. An estimated 60 percent of these were implemented directly by 
regional governments - that is, without central review and, therefore, in 
direct contradiction of the law. 

At the same time as the news on regional borrowing was released, the big guns 
were being rolled out at a two-day seminar in Jakarta on regional borrowing. 
Though the Finance Ministry has issued a circular that discourages local banks 
and regional banks from lending to local governments, the regional 
administrations want to issue bonds for development financing. 

Governors have been lobbying the People's Consultative Assembly (MPR) to push 
Jakarta to allow them to issue bonds, as an alternative funding source for 
financing badly needed development programs. They say the pace of economic 
development in the regions has been slow because of the lack of funding, and 
cite a "lack of financial commitment" on the part of the central government. 

The seminar, officially opened by MPR Speaker Amien Rais, is the latest move by 
regions to pressure the central government to ease the existing policy that 
bans regional governments from issuing bonds. The Finance Ministry has long 
opposed any such idea, but has let it be known that it might be taken more 
seriously by next year at the earliest. 

Bank Indonesia governor Sjahril Sabirin is even less happy. He said that 
issuing regional bonds was not an ideal policy at this moment, given the 
dimensions of the national debt burden. Sjahril prefers proper debt management, 
as he told the seminar. "What this hugely indebted country needs is a good debt-
management program, because the huge debts have made investors perceive 
Indonesia to be a high-risk country in terms of investment," he said.

Regional autonomy, by its very nature, was meant to devolve monetary authority 
to the provinces. In the old days regions were in the share-out of local and 
foreign development loans through Bappenas, the National Development Agency, 
which controlled the national borrowing. The provinces want this authority for 
the regional legislative assemblies. 

In 1999, Wahid's chief economics minister Rizal Ramli temporarily banned local 
administrations from raising both offshore and domestic loans without getting 
central government permission first. Four years later, amid different sets of 
pressure and with the benefit of experience, the Megawati administration will 
actually allow borrowing on the hope that there is more chance of controlling 
it. 

The interest on foreign and domestic debt is a stranglehold that forces 
Indonesia to seek new loans in a vicious circle that traps the government 
within a master-servant relationship with the major donors. Does the new 
paradigm make sense, given the level of existing national debt, which eats up 
some US$6 billion a year in capital and interest payments? 
-- (©2003 Asia Times Online Co, Ltd.