Indonesia aid puts Labour to the test

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Pressure is mounting on Clare Short, the Minister for International Development, to cut off British aid to Indonesia, in keeping with the Government's commitment to human rights and an "ethical" foreign policy.

Campaign groups and Labour MPs, including Ann Clwyd, the former Shadow minister responsible for Ms Short's portfolio, are pressing for a suspension of aid to Jakarta in the light of evidence that the Conservative government used it as a means of acquiring contracts, including arms sales, for British firms.

"Clare Short says that we are going to focus on aid to the poorest people in the world, and by that measure Indonesia shouldn't be getting any aid at all," Mrs Clwyd said yesterday. "Indonesia is not one of the world's poorest countries and there is no evidence that British aid in the past has been targeted at those who need it most."

Paul Barber of Tapol, a human rights group focusing on Indonesia, said: "The very fact that the UK supports Indonesia is wrong, because it helps to legitimise the Indonesian regime."

On Monday, The Independent reported an appeal to Tony Blair from Indonesia's leading dissident, the imprisoned trade union leader Muchtar Pakpahan, to discontinue all aid projects unless they contain specific guarantees of human rights.

The Foreign Secretary, Robin Cook, will no doubt face similar appeals when he meets next month with Jose Ramos-Horta, who shared last year's Nobel Peace Prize for his work as the spokesman-in-exile for the occupied territory of East Timor. In America, Congressman Patrick Kennedy is sponsoring a Bill proposing to cut off aid and military training for Indonesia unless human rights improve.

In a few weeks, the newly constituted Parliamentary Accounts Committee will consider a report by the National Audit Office on aid to Indonesia. Published last November, it uncovered advice from the Foreign Office that particular aid projects should be supported because this would help British arms sales to Jakarta.

After similar arms-for-aid allegations concerning Overseas Development Administration (ODA) assistance to Malaysia, the former foreign secretary, Douglas Hurd, was found by the High Court to have acted unlawfully in approving funding for the Pergau Dam project. The Department of International Development, as the ODA is now known, is preparing a White Paper reviewing British aid, which it hopes to complete by the autumn. Publicly, spokesmen are reluctant to reveal advance details, although Ms Short has criticised the "political and commercial considerations" brought to aid policy by her Conservative predecessors. Her aides have reassured MPs and pressure groups that Labour policy will be different. But concern focuses on what is seen as a contradiction in Labour's mission statement on foreign policy announced by Mr Cook a fortnight after Labour's election victory.

Mr Cook then said: "Our foreign policy must have an ethical dimension and must support the demands of other peoples for the democratic rights on which we insist for ourselves ... The national interest cannot be defined only by narrow realpolitik ... political values [cannot] be left behind when we check in our passports to travel on diplomatic business".

But Mr Cook has also said he intends to use British embassies to expand trade and export promotion. "I once asked Robin Cook, `Does that mean more arms sales?'" one Labour MP said yesterday. "There is that suspicion, and how all this talk is going to be translated into action we don't know. My feeling is we should give them a breathing space to sort out what they're going to do, but if the policy's not right, we're going to give them hell."

Any significant reduction in aid or explicit statements about human rights would certainly offend the touchy Indonesian government and jeopardise lucrative contracts. In Jakarta yesterday protesters mounted the fourth in a series of demonstrations denouncing MrKennedy's aid-cutting proposals.

The ODA provided projects worth pounds 37.7m in Indonesia last year with another pounds 2m being channelled through other departments. About a third was in the form of Aid and Trade Provision, a form of tied aid under which contracts in recipient projects must be awarded to British firms.

In the past, Britain has supported training programmes for the Indonesian police, who have frequently been accused of human rights violations, including torture and killings.

ODA support also went to a land resource inventory designed to assist Indonesia's controversial transmigration programme. Millions of poor Indonesians from the crowded islands of Java, Madura and Bali have been transplanted to outer areas of the archipelago, provoking land disputes, racial tensions and rioting with native people. In February, as many as 4,000 settlers on the island of Borneo were beheaded and cannibalised by Dayak tribesmen after long running disputes connected with the transmigration programme.

Both of these projects have finished, but Britain continues to provide soft loans to the Samarinda Power Station in Borneo, a pounds 46m contract involving Rolls Royce. This has been criticised as uneconomic and unlikely to have any effect on poverty.