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David Miller: Implications for NZ in East Timor

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An Unravelling Indonesia: The Implications for New Zealand in East Timor.

See also earlier related column:
David Miller Online. Into The Mire? The NZDF And UN Peacekeeping In The 21st Century.
and the
DAVID MILLER Column Archive...

It was unrealistic to have expected the NZDF to withdraw following the November elections in the territory, however another, often overlooked reason is the continued instability in Indonesia.

Indonesia was one of the ‘Tiger’ economies that bore the brunt of the Asian Economic Crisis with aftershocks from that crisis still being felt at present. Indonesia was one of the countries to accept assistance from the International Monetary Fund, (IMF), and despite such help its financial sector remains burdened by high levels of debt and corruption.

Corruption is the Indonesian economy’s worst enemy. Recently, all but two governors of the Indonesian Central Bank resigned following a report by the government’s Supreme Audit Agency, which claimed that during the economic crisis, nearly $9 billion was distributed in emergency loans to private sector banks, many of which are controlled by Suharto cronies and which where subsequently diverted to unauthorised spending and lending. The Central Bank is unlikely to see most of this money repaid.

It is estimated that at current exchange rates, Central Bank loans total $17.2 billion and the Supreme Audit Agency estimates that up to 96% of these loans will remain outstanding while 59% of these where misspent and went in the direction of associates of Suharto.

Despite the ongoing problems the Rupiah has not collapsed this year, despite having fallen 25% from its 2000 high. The currency has been afflicted by ongoing political troubles throughout the country this year and a recent rush to buy dollars in order to service overseas debt. This comes at a time of instability at the Central bank with the re- appointment of Syahril Sabirin as head of the bank, who himself faces charges of corruption involving a bank linked to Golkar, the former ruling political party.

Instability at the core of the Indonesian economy is not a promising sign for the country. The government has little power in this regard due to a law passed in 1999, that guarantees economic independence of such institutions and while there are plans to curb such freedoms, they are inevitable running into opposition from those supporting Sabirin, and who view him as innocent of the corruption charges and someone who is fighting for the independence of the Central Bank.

Along with instability on the economic front, the economic crisis also acted as the catalyst for political fallout in Indonesia. While East Timor is the most profiled area of conflict in the Indonesian archipelago violence has also taken a hold on Aceh, Irian Jaya and Maluku provinces, with clashes occurring between separatists and government security forces. Aceh is a province with a large Christian population and has fought for independence from Jakarta since 1975, ironically the year that Indonesian troops invaded East Timor. While sectarian violence continues to plague Irian Jaya and the Maluku Islands, leaving about 5,000 people dead in two years of conflict.

The Indonesian government has announced that it will conduct talks with the community, religious and political leaders from these provinces to try and find resolution to the violence and the government has announced that it will improve the training and control of its forces in those regions to prevent further human rights abuses occurring on their behalf.

When all these parts of the Indonesian equation are put together, the future for the country is highly volatile and uncertain to say the least. There is mounting pressure on incumbent President Wahid to step aside. He too has been implicated in financial scandal, involving $6 million, and faces a parliamentary probe into his affairs. The former ruling Golkar party, which still controls one quarter of the seats in parliament has called for his impeachment should there be evidence of corruption and there have been reports that students, who helped bring down Suharto are ready to increase their demands that Mr Wahid step aside following over a year of erratic rule.

The legacy from the Suharto era still casts an extremely large shadow over Indonesia. Corruption and cronyism still plague a country trying to get back to its feet following the economic meltdown in 1997, and the subsequent ethnic and religious problems this unleashed. East Timor is one of those problems and although its plight has been aided by states such as New Zealand with troops serving under the United Nations banner, events in Indonesia loom large in its affairs. There remains a large opposition bloc to Mr Wahid and his reforms, including the military, which has a powerful voice in the affairs of state. If the hard-line generals are able to gain more control then Indonesia will inevitably slip back into anarchy and will become more of a threat to places such as East Timor.

Just when the New Zealand deployment in East Timor will finally end will remain to be seen. It should come as no surprise if even after the battalions come home, the NZDF maintains some form of presence there indefinitely as has occurred with other UN missions such as the Middle East. Those who wish to see the NZDF operate sole for peacekeeping should take caution here, in that while UN peacekeeping may appear the politically correct form of defence in the 21st Century, it could easily become the most costly. East Timor is proof of that.

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