Subject: ABC: Economic sanctions to pressure Indonesia
Date: Fri, 3 Sep 1999 09:06:57 EDT

Australian Broadcasting Corp. PM News Friday, September 3, 1999 6:29 p.m.

Economic sanctions suggested to pressure Indonesia

COMPERE: Increasingly, economic sanctions are being raised as a possible way of putting pressure on Indonesian President Habibie to exert some control on his defiant army. The country is dependent on the $67 billion rescue fund brokered two years' ago by the International Monetary Fund after the crash of the Indonesian economy.

Threats to withdraw the funds are being suggested as the only way the international community can now influence fast moving events. Karon Snowdon reports.

KARON SNOWDON: Indonesia needs the rest of the world. It would sink economically without the massive amounts of foreign aid promised through the World Bank and the IMF following the decimation of its economy during the Asian financial crisis. That's something even the Indonesian military is aware of.

SCOTT BIRCHELL: The last thing that the Indonesian Generals would want is to have those IMF and World Bank tranches either delayed or withdrawn. That would be disastrous for them and for Indonesia generally.

KARON SNOWDON: Scott Birchell is a lecturer in International Politics at Deakin University. According to press reports today, two former Indonesian Ambassadors, one of them a former senior military officer, thinks the threat of pulling the plug on the funds should be used as leverage to bring President Habibie to account. And while in Australia, US Assistant Secretary of State, Stanley Roth, alluded to the possibility of economic sanctions as a last resort.

Rawdon Dalrymple whose long diplomatic career included four years as Australia's Ambassador to Indonesia, thinks threatening Indonesia's IMF funding would be effective.

RAWDON DALRYMPLE: Even the Indonesian military would be responsive, I think, if the funding was cut off. The other day the Foreign Minister, Ali Alatas, said that if that was done he'd say go to hell with your aid. But Indonesia really can't do that.

KARON SNOWDON: And where it's often the United States which usually holds the trump card in making such decisions, in Indonesia's case it could well be Japan in its role as Asia's major economic saviour.

RAWDON DALRYMPLE: The new Meazawa (phonetic) initiative totals something around $81 billion, I think. A vast amount of money. The United States has put in nothing, nothing like as much as that. I mean, or committed nothing like as much as that.

KARON SNOWDON: Rawdon Dalrymple doubts Japan would agree to sanctions because it has so much as stake in its trade relations with Indonesia.

RAWDON DALRYMPLE: I think they probably feel that East Timor, with 600,000 people or 700,000 people is such a small part of the Indonesian ... of the whole Indonesian picture in which they have enormous interests and commitments now, but they probably wouldn't want to put everything at risk.

KARON SNOWDON: And as to the other option of an immediate UN peace keeping force, the US is undoubtedly the key. But according to Scott Birchell, it's unlikely to be interested.

SCOTT BIRCHELL: We sometimes forget that although East Timor dominates the headlines the Australian press and media, it barely registers on the US radar at all. Until Washington, I think, decides ... makes the decision that it's going to have to come up with and lead a peace keeping mission into East Timor we're not going to get very far.

KARON SNOWDON: Is Australia in a position to influence the direction of US thinking at this point?

SCOTT BIRCHELL: We'd like to think so but I think the reality is no. The United States will make up its own mind for its own reasons.

KARON SNOWDON: Rawdon Dalrymple agrees the US would be reluctant but adds Australia's significant part in the UN operation so far gives us diplomatic clout with the US, despite being a small global player.

RAWDON DALRYMPLE: Whether the administration wanted a sort of Kosovo or something like that seems to me rather doubtful. It doesn't have the profile, in American politics, that Yugoslavia and Serbia and Kosovo and all of that embrolio has. It doesn't have the profile. There isn't the interest. I mean, it's a very small place very far away, and very few people know anything much about it.

COMPERE: Former Australian Ambassador to Indonesia, Rawdon Dalrymple, with Karon Snowdon.

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