In 1966 Indonesia was one of the poorest countries in the world, but over the following three decades per capita income quadrupled and social services also improved. This was the outcome of economic development based on the oil boom of the 1970s and the political stability provided by the Suharto regime. Enormous amounts of foreign investment were attracted to fund this development. Then came the crisis of 1997—98. The economic miracle of the previous three decades collapsed within a few months and massive poverty and political instability once again confronted the nation. What role did international aid play in this rise and fall of the economy? Can aid promote social justice as well as economic development?
The aid industry – yes it is an industry – is diverse and ranges from groups such as the World Bank (WB) to small voluntary agencies working at the village level. The WB and other multilateral institutions, funded mainly by a coterie of the biggest western nations, create large programs designed to change the economies and social destinies of whole nations. The United Nations Development Program, other UN agencies and many western governments operate bilateral aid programs on a lesser scale, but driven by similar imperatives. The non-government sector, increasingly dominated by international networks operating under familiar names such as Oxfam, World Vision, and Save the Children, operates on a smaller scale, usually dealing directly with local communities. These agencies may loom largest in western public consciousness, but their scale of operations is small compared to multilateral and government aid, known as Official Development Assistance (ODA).
The large-scale programs that account for most ODA have, not infrequently, resulted in disastrous social and environmental consequences. For example, the WB funded the transmigration program which relocated large numbers of people from Java and Bali to the outer islands such as Papua. This program continued for two decades until the 1990s, despite the lack of any evidence that it was an effective poverty reduction strategy, or reduced population pressures on Java and Bali. It also proved disastrous for the environment; by the early 1990s transmigration was the single largest cause of deforestation, and resulted in the loss of 1.2 million hectares of forest each year amid much community unrest.
Large infrastructure projects, much favoured by the multilateral agencies in the 1970s and 1980s, have often aroused strong local opposition because they threatened livelihoods, social cohesion or the environment. The large-scale family planning activities of the Suharto era were highly successful in containing population growth, but endangered the health of many women because they lacked any effective community consultation or involvement. Much ODA money was also lost to corruption during the Suharto era. International aid was, at best, a qualified success. The reduction in poverty was universally welcomed, but the price paid in stunted social development, massive social injustice, and enormous environmental damage was far too great.
Aid in conflict areas
Although not the driving force behind the economy, aid has contributed to economic development. It has been less successful in promoting social justice and equity. It has worked best in circumstances of relative social and political stability, but is less effective in the conflict areas where it is needed most. The political constraints on the use of ODA have been most crucial in conflict areas, where social justice issues are paramount. The smaller scale initiatives of non-government agencies have been limited by lack of access.
For almost 25 years the most high profile conflict area was East Timor. The pervasive control of the military made any but the most limited aid activities impossible. ODA programs built some infrastructure and developed limited social services, but with almost no community involvement. This work was dominated by technocrats and economists, with little or no thought for social justice or social change. They worked on, oblivious to the almost palpable social crisis around them, concerned only with the latest engineering feat of their programs. Such technocratic solutions to the essentially political problems of East Timor could never work, as subsequent events have demonstrated.
For several decades Papua has been simmering with discontent over self-determination. Mining and forestry companies, as well as evangelical Christian organisations found easy access, but independent aid agencies interested in development have found entry difficult and restrictions on their work onerous. Australian agencies in particular have been accused of clandestine support for Papuan independence. Sensitivities are such that the Australian government, while happy to support local NGOs in its programs elsewhere, has banned support for any work in Papua. Thus an area with needs greater than almost anywhere in Indonesia has been denied access to most aid. Significantly aid from the organisations most likely to deal with issues of social justice has been almost impossible to implement.
In Aceh, where the need for aid has been no less than in Papua, few international aid agencies dared operate prior to the tsunami of 2004. Government regulation was just too restrictive. After martial law was imposed in 2003 needs became even greater but access almost impossible. Those few agencies that remained were required to acquiesce to government policy and ameliorate only the worst excesses of martial law. Even advocacy work became compromised. If an agency was seen to be effective in raising the plight of the Acehnese, it risked isolation and exclusion from Aceh or the country.
The tsunami crisis has heightened the dilemma for agencies engaged in emergency relief. It forced a reluctant government and military to allow an influx of international aid workers, but on the implicit condition that they ignore the pre-tsunami crisis due to the military-GAM conflict. Most chose to ignore the conflict, to the extent that some activists complained that international agencies were working with the objective of restoring ‘normality’, although ‘normality’ immediately prior to the tsunami was itself a major humanitarian crisis. The tsunami crisis certainly opened up Aceh to the outside world, and did create the conditions for a resolution of the conflict. But aid agencies played little role in that.
Focus on advocacy
In recent years more progressive non-government agencies have embraced advocacy programs to complement their traditional aid activities. They have campaigned to change the policies of companies that control private investment, and governments which set the terms under which they operate. Multilateral public institutions, such as the World Bank, are also targets. The rationale is that commercial investment in Indonesia is much greater than even ODA, and aid from non-government agencies minute by comparison. Consequently private investment and national policy has much greater impact than aid on both economic and social development. Changing the policies and practices of those who control this investment will have much greater effect on poverty and social justice than direct aid.
Has this approach worked? There were few opportunities for campaigning during the Suharto era. Scope for Indonesian NGOs to lobby privately was limited, and public campaigning almost non-existent until the 1990s. Even international NGOs found it difficult to campaign overseas. They could not publicly use much of the information from Indonesian sources because to do so would compromise their counterparts. In 1992 Suharto initiated sanctions against even some foreign governments which had criticised military actions in East Timor. He unilaterally abolished the mechanism for delivering foreign government aid. Of course there was more rhetoric than substance in the gesture, but it did emphasise to all that it was Suharto who was calling the shots.
In the new ‘democratic’ Indonesia there is more scope for campaigning, and international aid now supports many Indonesian NGOs, coalitions and movements which campaign on a wide variety of issues. Issues of corruption, foreign debt, mining policy, human rights, economic reform, environmental preservation and control of the military all have their organised and vocal advocates. The recent murder of leading human rights campaigner Munir shows that the space for advocacy is still limited, and dangers still exist. Some gains have been made, although major reform of the development process is still to come. But at least Indonesian activists now have space to develop their vision of how the country might be changed for the better. And there are many more opportunities to use international aid to support their work.
Bob Muntz (email@example.com) worked for an Australian international aid agency for fourteen years, managing development programs in Indonesia and other countries in South East Asia.