Indonesia Risks Losing Loans, Albright Warns

Secretary of State Madeleine Albright, supported by officials of more than a dozen Asian nations, warned Indonesian Foreign Minister Ali Abdullah Alatas on Monday that his government risks the loss of crucial IMF and World Bank credits unless it starts protecting refugees from East Timor.

Albright told Alatas that Indonesia must rein in militias that are terrorizing refugees who fled to West Timor and elsewhere in Indonesia. Other Asian foreign ministers, from countries as diverse as New Zealand and Vietnam, added their criticism of Indonesia during a breakfast hosted by Albright, a senior State Department official said.

Alatas insisted that the “horror stories” had been exaggerated, said the official, who attended the meeting. The foreign minister did not directly answer complaints that the Indonesian military has been cooperating with anti-independence militias in the wake of East Timor’s overwhelming vote for independence Aug. 30, said the official. An Australian-led force has since been dispatched to East Timor to keep peace.

Describing the tone of the breakfast session, the official said: “It was civilized. It wasn’t an angry exchange. At the same time, I think it was--as they say in diplomatic parlance--frank.”

The Clinton administration earlier this month suspended direct economic aid to Indonesia, citing the brutal repression in East Timor. On Monday, Albright warned Alatas that, unless the situation improves, Washington also will vote against loans to Jakarta by the International Monetary Fund, the World Bank and other international financial institutions, the senior official said. Under the weighted voting system used by the international banks, U.S. opposition is enough to block a loan.

“The real money is in the multilateral development banks and the IMF, not in our bilateral aid,” the official said.

The United States and most of the 14 other countries represented at the breakfast are wary of destabilizing the economy of Indonesia, the world’s fourth-most-populous country. For this reason, they have been reluctant to threaten the sort of economic reprisals that Albright listed Monday. But they said they will have no choice if the condition of refugees continues to deteriorate.

“We had hoped, following the invitation for the multinational force to go to East Timor, that we would be in a position to get past this [crisis] and that we could go about the business of thinking how we can assist the Indonesian economy, which is a major interest of ours in terms of promoting stability in Indonesia and the region,” the official said.

“But the East Timor chapter is not over, and we cannot allow actions in West Timor to undermine the policy in East Timor,” he said.

Albright met Sunday with East Timor independence leaders Jose Alexandre “Xanana” Gusmao and Jose Ramos-Horta.

After that session, she said: “I am particularly troubled by credible reports that East Timorese are being forcibly relocated from West Timor to other locations in Indonesia rather than being allowed to return home. This is unacceptable and a clear violation of international standards of human rights.”