Indonesia (Hansard, 24 March 1998)

§ Lord Whitty
My Lords, Indonesia is not one of the poorer countries which are the focus for this Government in seeking to eliminate poverty. Our aid programme will concentrate on developing partnerships to improve forest management, with increased emphasis on poor people, on assisting labour organisations and on supporting NGOs in East Timor. Indeed, the Department for International Development has today announced its first major funding of a development project in East Timor. We have urged the Indonesian Government to implement in full the reforms agreed under the IMF package so that financial instability is ended and its impact on Indonesia's poor is minimised.

§ The Earl of Sandwich
My Lords, I am grateful for the last part of the Minister's Answer. Is he aware that during the past two months price increases and inflation have risen by as much as 15 per cent. a month and that the poor are particularly affected by those increases? Do the Government intend to support the IMF's austerity measures, including more price increases? In order to compensate for that, do the Government have plans for Indonesia to return to a poverty-focused aid programme?

§ Lord Whitty
My Lords, our basic approach to the financial crisis in Indonesia is the same as that of the IMF. Indonesia needs to respond to the financial crisis and implement agreed reforms. They include ending uneconomic projects and monopolies which distort the economy and restructuring affected banks. Otherwise, the recent achievements in reducing the number of people living in poverty will be reversed. We believe that the IMF package, if properly implemented without favouritism, will maintain the progress which Indonesia was making prior to the current financial crisis. However, that requires an effort of will by the Indonesian Government.

§ Lord Marsh
My Lords, does the Minster agree that the biggest problem facing Indonesia is its government? There is a likelihood that increased aid will make the ruling political clique richer, but not do very much for the poor.

§ Lord Whitty
My Lords, there are serious problems about the way in which Indonesia is governed and about 1086 its economic management. The IMF package, supported by Her Majesty's Government and other major western governments, should provide a more stable outcome which will benefit all elements of Indonesian society. If that is not implemented, there is a serious problem of increased poverty, rather than the reverse, in Indonesia. We would address that issue in those circumstances, but at present the main responsibility rests with the Indonesian Government.

§ Baroness Williams of Crosby
My Lords, in view of the fact that poverty is driving more and more small Indonesian farmers into clearing more and more of the rain forest by burning it down, will the Minister tell the House whether within the Government's aid programme there is specific provision for encouraging substantial and sustained agriculture rather than the slash and burn which is today destroying huge areas of the Indonesian forests?

§ Lord Whitty
My Lords, yes, one of the first priorities I mentioned was improved forest management, including the area around the forests. In addition, Indonesia has experienced one of the worst environmental disasters in terms of the haze arising in that area following the disastrous forest fires which are not yet eliminated. The European Union is looking at ways in which it can help Indonesia to tackle similar environmental disasters. In developing the DfID's future forestry programme, we will seek changes in policy and management of forestry areas which presently oblige people to clear forest areas in such disastrous ways. Those changes will be part of our programme and the EU programme.

§ Lord Jenkins of Putney
My Lords, are the Government continuing to permit the sale of British arms to this corrupt dictatorship?

§ Lord Whitty
My Lords, the sale of arms to Indonesia and to other regimes was covered by the announcement of the Foreign Secretary in July. We did not think it legal or practical to end supplies under contracts already entered into. However, the new criteria, in line with our ethical foreign policy, will apply to all future applications for export licences to Indonesia.