Jan 19, 2018 Last Updated 3:31 AM, Jan 6, 2018

Renegotiate the debt!

Published: Jul 29, 2007


Ngurah Karyadi

In January 2003, the Consultative Group on Indonesia (CGI) met in Bali and concluded with US$2.7 billion pledge in disbursements for 2003. CGI is a consortium of government representatives and donor agencies, convened by the World Bank, which meets annually to pledge aid disbursements to Indonesia. When it met on 21 and 22 January 2003, the Indonesian government lobbied CGI for additional aid to assist with recovery from the Bali bombing. Ngurah Karyadi attended the meeting as a civil society observer for the Indonesians People's Forum, and presented the following intervention. The 12 October bombing in Kuta resulted in a tragic loss of lives and triggered an unprecedented crisis in Bali. The sudden mass exodus of tourists altered its economy overnight. While the effects have been most visible on the economy, the potential for social tensions has also increased.

Culture of fear

After the Kuta bombing, many businesses were threatened with bankruptcy and many people were laid off. In Bali, the economic crisis has manifested an escalating xenophobia. Increasingly, people from outside the island are seen as a threat to Balinese people's economic and social stability. At the socio-political level, a number of groups are capitalising on a general atmosphere of fear by taking steps towards remilitarising society, reminiscent of the New Order period. For example, in Bali, local thugs (preman) now command their own price to maintain security. At the national level, some politicians have demanded that the government reinstate the Anti-Subversion Law. Parallel to this, the Australian government has promoted Kopassus as their partner in the War on Terror. Many of the recovery efforts have done little to address these issues and their regressive social effects.

A better political and economic order

Governments need to examine the political and economic contexts in which terrorist organisations evolve. Certainly, economic insecurity breeds terrorism. In Bali, recovery efforts need to take this into account. Ultimately, priority must be given to economic and social development, as well as justice and law enforcement.

Many world leaders espouse that free trade, open markets and public-private partnerships are key to overcoming the political, economic and even social instability. But these efforts mean little if the community is not involved. In Indonesia, free trade needs to include the democratisation of political and economic power, placing the military under civilian control, and the ongoing devolution of power from the centre.

The Indonesian government has asked CGI participants to help with the recovery effort by funding new development programs in Bali. But the government really needs to utilise this opportunity to renegotiate the current foreign debt. Unfortunately, Indonesian leaders have focused too much on adherence to IMF structural adjustment policies, at the expense of common Indonesians. Raising prices of basic commodities during the crisis created by the Kuta bombing reveals a lack of insight.

A number of crucial actions remain to be taken at the macro-economic level, in the interests of overseeing a complete recovery in the bomb's aftermath. Firstly, the government must provide for basic human needs, including food, health, education and a clean environment through a social security system. Priority should be given to those who have been directly affected by the Kuta bombing. It should also create employment through spending on much needed infrastructure in Bali as well as Indonesia.

Secondly, bureaucratic processes by which people register their businesses should be streamlined. This would enable such businesses better access to capital investment and over the long term, legitimate businesses will generate more tax revenue for the local government. This in turn would allow the government to assist farmers in rural areas, who are indirectly affected by the economic crisis.

Thirdly, a moratorium on Indonesia's debt needs to be instituted immediately. Donor institutions need to be made accountable for loans made in bad faith, where official corruption was ignored or factored into the terms of the agreement. This is vital, as it would help to restore the Indonesian people's faith in global financial institutions. It would also temporarily relieve fiscal pressure and ensure the availability of funds needed to get through the crisis.

The tragedy has become a learning process as well as a time for reflection for us all. It is essential to the future of Indonesia that together we build the faith necessary to create a better social and economic order, free of fear, in an atmosphere of democracy, justice and responsibility.

Ngurah Karyadi (gembrong@ eudoramail.com) has been active in Balinese student and non-government organisations since the late 1980s.

Inside Indonesia 74: Apr - Jul 2003

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