Hamish McDonald – Warning of a new financial crisis in Indonesia, the Federal Opposition yesterday urged a softer approach by international lenders to the country's huge debt burden left by the collapsed Soeharto regime.
Australia should be active lobbying the International Monetary Fund and the World Bank to take a more flexible approach to Indonesia's plight during a difficult political transition, said Labor's foreign affairs spokesman, Mr Laurie Brereton.
This year Indonesia had to devote 52 per cent of its national budget to interest and repayments on its debts, compared with less than 7 per cent on education and health combined – a debt burden worsening social and political tensions.
"A significant proportion of the country's debt should be classified as 'criminal debt', as loan monies were effectively stolen by powerful political figures, officials and business cronies," Mr Brereton said, pointing out that the World Bank itself had acknowledged one-third of the total $US30 billion it had lent to the Soeharto regime had been stolen.
Mr Brereton's speech, at a seminar held by the University of Melbourne's Asialink Centre last night, fleshes out Labor's evolving foreign policy as elections approach, casting it as more sympathetic than the Government towards the region but distancing itself from Labor's earlier embrace of now-discredited Asian leaders such as Mr Soeharto.
In a shot clearly intended for the Labor MP Mr Kevin Rudd, a former diplomat, Mr Brereton said he had seen it "recently suggested by a colleague that Labor in office would simply repackage our old approach".
But Labor was not intent on rebuilding the old relationship with Indonesia. "The constant theme of our approach has been that of building a new, broadly based relationship with the new Indonesia," he said.
As well as a more sympathetic approach on Indonesia's economic problems, Australia needed to be "polite but forthright in encouraging respect for human rights and absolutely supportive of efforts to strengthen the rule of law".
Australia was already giving assistance to Indonesia's national human rights commission, but he said it should also look at building up other areas of civil society, including trade unions and activist groups, and establishing broader leadership forums.
Defence co-operation could be resumed, but focused on activities such as maritime surveillance and fisheries protection, and developing respect for human rights and law among the Indonesian armed forces. Mr Brereton urged a lift in Australian aid to Indonesia, pointing out the $121.5 million in the Budget was 14 per cent below that of five years ago in real terms.