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Cablegate: Aceh Transition Issues

VZCZCXRO0262
RR RUEHCHI RUEHDT RUEHHM
DE RUEHJA #2623/01 2610935
ZNR UUUUU ZZH
R 180935Z SEP 07
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 6320
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHKO/AMEMBASSY TOKYO 0818
RUEHBJ/AMEMBASSY BEIJING 4323
RUEHBY/AMEMBASSY CANBERRA 1199
RUEHUL/AMEMBASSY SEOUL 4203
RUEHRL/AMEMBASSY BERLIN 0551
RUEHLO/AMEMBASSY LONDON 0818
RUEATRS/DEPT OF TREASURY WASHDC
RUEHBS/USEU BRUSSELS
RUEAIIA/CIA WASHDC
RUEKJCS/SECDEF WASHDC
RHEHNSC/NSC WASHDC
RHHMUNA/USCINCPAC HONOLULU HI
RHHJJAA/JICPAC HONOLULU HI
RUEKJCS/JOINT STAFF WASHDC

UNCLAS SECTION 01 OF 02 JAKARTA 002623

SIPDIS

SIPDIS
SENSITIVE

DEPT FOR EAP/MTS AND EEB/IFD/ODF
USAID FOR ANE/AA WARD

E.O. 12958: N/A
TAGS: EAID EINV PGOV PREL ID

SUBJECT: ACEH TRANSITION ISSUES


1. (SBU) Summary: On September 17, the Ambassador and Chiefs of
other donor missions assessed Aceh's transition from the
reconstruction period to economic growth. The mandate of the
Rehabilitation and Reconstruction Agency for Aceh and Nias (BRR)
expires in April 2009. Donors work closely with local governments
and transition teams to ensure they can deliver services and
infrastructure when reconstruction projects end. Donors are
committed to support a successful democratic transition in Aceh, and
are working with BRR and Governor Irwandi to clarify roles and
define priorities for the post-reconstruction phase.

2. Summary - Continued. Some donors expressed concern that ex-GAM
fighters could still pose a threat to stability by failing to
integrate, and by engaging in illegal activities. Private sector
activity needs to be robust enough to carry Aceh through the
post-reconstruction phase with sufficient employment and growth.
The consensus was that Governor Irwandi needs to do more to manage
Aceh's transition and plan for the post-BRR phase. End Summary.

Changing the Paradigm: Aceh as "Fragile"
----------------------------------------

3. (SBU) At a working lunch with donors on September 17, the
Ambassador asked guests what the future holds for Aceh, especially
the transition period after reconstruction donors leave. He
reiterated the U.S. commitment to work collaboratively with the
donor community towards sustained development noting that we still
have time to seize the opportunity to help Aceh succeed. An
Australian government representative noted that Australia had
changed the paradigm and has assigned "fragile" status to Aceh. The
worst outcome would be to have a situation in which low-level
violence hurts economic growth prospects. Other donors added there
is still an imbalance and perceived inequality in resource
distribution between tsunami-affected districts and those with
former GAM fighters. A donor and local government culture of
constructive engagement with the former GAM fighters can help avert
renewed violence.

Targeting the Transition
------------------------

4. (SBU) A member of the United Nations Office of the Recovery
Coordinator for Aceh and Nias (UNORC) stated that Aceh's transition
teams do not yet have a clear understanding of their role and donors
need to work more closely with them as the post-reconstruction phase
nears. The World Bank-initiated Multi-Donor Fund for Aceh
reconstruction is considering extending its term to 2012 to assist
with the post-reconstruction transition phase. It has $160 million
in uncommitted funds that will be programmed to support this
transition. The donors welcomed a recent proposal to establish a
$50 million economic support facility targeting employment in
fisheries and other agri-businesses.

Need for Community Infrastructure
---------------------------------

5. (SBU) Aceh's local governments have to learn effective methods to
deliver basic municipal services such as water and electricity. In
many cases there is still no functioning community infrastructure:
some school and hospital buildings are empty shells with no staff,
power or water. Transition of existing assets also requires
training and resources. In one case, the local government has
stated it does not want to run the Kuwait-built desalination plant
because it is too expensive. BRR is working with local governments
and has presented a transition plan, but it is not clear that local
government's have the technical and human resource capacity to take
over effectively when BRR's mandate expires in April 2009.

Governor Needs Clear Vision
---------------------------

6. (SBU) The donors have so far been the main implementers but it

JAKARTA 00002623 002 OF 002


will soon have to be the local governments. The new Governor has
not yet matched budgets with plans and his vision for the transition
phase is unclear. A representative of the European Commission
complained that, Governor Irwandi is asking everybody for money and
advice but not stating his priorities. A representative of the
German Technical Assistance Agency (GTZ) noted that there is still
mistrust between the old government machinery and Governor Irwandi,
and the need for more local officials to work together. The
Japanese Ambassador expressed concern that the central Government of
Indonesia may be losing the focus on Aceh. Aceh is not yet a
success story and ex-combatants could turn to illegal activities
such as drug trafficking if economic and political stability are not
supported. Many former GAM fighters are not involved in the
planning and coordination process and do not care to be, Ambassador
Hume noted.

Private Investment?
-------------------

7. (SBU) While attracting investment is a priority of the Governor,
much of the economy is still agriculture-based. A representative of
the United Nations Development Program noted that there is not yet a
real private sector, just a lot of contractors working on
reconstruction. Donors and the private sector need to do more to
encourage commercial activity. The UNORC representative believes
that donors in general need to continue to raise Aceh in discussions
with GOI Ministries so that it does not fall off the radar screen.
The Ambassador concluded the meeting by noting that the donors are
providing productive assistance and that our Aceh partners get a
passing grade. The main challenge ahead is to encourage local
leadership and build local capacity.

HUME

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