VZCZCXRO7701
PP RUEHCHI RUEHDT RUEHHM
DE RUEHJA #0302/01 0360854
ZNR UUUUU ZZH
P 050854Z FEB 07
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC PRIORITY 3140
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHRC/USDA FAS WASHDC
RHEHNSC/NSC WASHDC
RUEKJCS/SECDEF WASHDC
RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHKO/AMEMBASSY TOKYO 0207
RUEHHE/AMEMBASSY HELSINKI 0880
RUEHBY/AMEMBASSY CANBERRA 0394
RUEHTC/AMEMBASSY THE HAGUE 3298
RUEHSM/AMEMBASSY STOCKHOLM 2049
RUEHBS/USEU BRUSSELS
RHHMUNA/USCINCPAC HONOLULU HI
RUEAIIA/CIA WASHDC
RHHJJAA/JICPAC HONOLULU HI
RUEKJCS/JOINT STAFF WASHDC
RHEFDIA/DIA WASHDC

UNCLAS SECTION 01 OF 05 JAKARTA 000302 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
AIDAC 
 
DEPT FOR EAP/MTS AND EB/IFD/ODF 
TREASURY FOR IA - SETH SEARLS 
USDA FOR FAS/EC/MCHAMBLISS 
NSC FOR MORROW and MELINE 
USAID FOR ANE/EAA 
 
E.O. 12958: N/A 
TAGS: EAID ECON PGOV PREL SENV KCOR ID
SUBJECT: TSUNAMI RECOVERY AND TRANSFORMATION - ACEH AT TWO YEARS 
 
REF: A) JAKARTA 300 - ACEH AT TWO YEARS - PART 1 
 
     B) 06 JAKARTA 13604 
     C) 05 JAKARTA 16372 
     D) 05 JAKARTA 16521 
 
¶1. (SBU) Summary:  The Reconstruction and Rehabilitation Agency of 
Aceh and Nias (BRR) has made significant progress on the immense 
task of rebuilding Aceh and Nias in its 20 months of operation. 
However, in contrast to a year ago, BRR is receiving increased 
criticism for spending too slowly (or too fast), failing to 
adequately monitor construction, and not coordinating effectively 
with local governments.  NGOs claim that BRR is competing with them 
or pushing them out after they have painstakingly negotiated 
projects.  For its part, BRR is concerned that international 
non-governmental organizations (NGOs) in Aceh are failing to keep 
promises, not delivering fast enough, or pulling out early.  BRR 
staff say their coordination with local governments is improving and 
the agency hopes to hand off infrastructure projects gradually to 
them between 2008 and 2009.  Media reports of rampant illegal 
logging to feed the reconstruction effort are inaccurate.  Donors 
are sensitive to this issue and making every effort to use wood from 
sustainable sources.  Adding to the reconstruction challenge is the 
reintegration of former "Free Aceh Movement" (GAM) members, which is 
generally succeeding, although more program funds are needed for 
former GAM and GAM-affected communities.  Ref A reports on housing, 
infrastructure, and livelihood issues in Aceh and Nias two years 
after the tsunami.  End Summary. 
 
BRR Making Clear Progress 
------------------------- 
 
¶2. (SBU) Officers from Embassy Jakarta and Consulate Medan made a 
January 16-20 swing through Meulaboh and Banda Aceh to observe 
progress on reconstruction from the December 2004 earthquake and 
tsunami.  The key reconstruction institution is the BRR, which the 
 
SIPDIS 
Government of Indonesia (GOI) launched in May 2005 with a four-year 
mandate.  BRR is the dominant reconstruction player, nearly twice as 
large as the next biggest agency, the Red Cross.  Although BRR 
bashing is popular in the media, the agency is doing as well as can 
be expected given the magnitude of its task.    The health and 
education sectors in the tsunami-affected areas now seem to be 
functioning well, with adequate resources.  BRR has facilitated some 
very positive developments, such as joint land titling.  Former 
President Clinton wrote that the new land titling policy that 
provides joint ownership between husband and wife is an example of 
"building back better."  This strategy, initiated in 2006, and 
publicized with USAID technical assistance, ensures men and women 
will enjoy equal rights in land ownership of parcels that will be 
purchased and distributed to the community by BRR. 
 
¶3. (SBU) BRR has been criticized both for spending money too fast 
and for spending it too slowly.  Some international NGOs complained 
that BRR was building too fast, sacrificing quality for quantity and 
speed.  Other tsunami victims and local government officials said 
BRR was too slow and undisciplined in pulling projects and proposals 
together, taking months when it should take only days or weeks.  At 
least some of the criticisms appear valid: several observers pointed 
out that many BRR offices wait until they have funding completely in 
hand before starting the pre-tendering process, a procedure that 
routinely slows projects by three or four months.  One international 
NGO representative noted that BRR has, "Too many managers and not 
enough implementers." 
 
BRR Bashing is Easy, but the Task is Immense 
-------------------------------------------- 
 
 
JAKARTA 00000302  002 OF 005 
 
 
¶4. (SBU) One donor representative noted with some concern that BRR 
Head Kuntoro said he wants BRR to wrap up its work by 2008 instead 
of 2009 as originally planned.  The representative believes this 
"sends a poor message" to the people of Aceh.  A BRR Deputy noted 
that this was a misunderstanding:  BRR wants to get most 
infrastructure projects completed or well underway by mid-2008 so 
that it can hand them off to local governments in an orderly 
transition before BRR's mandate expires in April 2009.  However, 
another NGO representative told us that BRR's entire reconstruction 
model is wrong and that the agency should focus on livelihoods.  If 
people are earning money they can buy their own houses, the NGO 
representative noted.  The former acting governor of Aceh expressed 
a similar sentiment.  He believes that BRR should buy more land in 
safe areas and build houses there instead of making people wait 
until the complex process of land titling has been complete.  Once 
people have gone back to work, he said, they will have resources to 
rebuild their own houses.  (Comment: While well-meant, the former 
acting governor's comment greatly underestimates the time, cost and 
difficulty of purchasing large tracts of land for resettlement and 
in providing the services that would make them habitable. End 
Comment.) 
 
¶5. (SBU) Many critics claim that BRR has used double counting and 
other methods to overstate the number of houses it claimed to build 
during 2006.  A representative from BRR responded to this criticism 
by pointing to the appendix to its two-year update report, with 
exact locations of the houses built.  "Let them go and see for 
themselves," a BRR Deputy told us.  However, BRR's housing deputy 
resigned in early January 2007, a development that could slow the 
agency's decision making in the short term. 
 
Significant Good Governance Efforts 
----------------------------------- 
 
¶6. (SBU) BRR set up an anti-corruption unit (SAK) in September 2005 
that has received over 1000 complaints. A former BRR Anti-Corruption 
advisor said that the agency had passed along many of the complaints 
to the national Anti-Corruption Commission (KPK) or other 
appropriate body, and that 75% had been resolved.  Transparency 
International Indonesia (TII) began a program in Aceh in March 2006. 
 It distributed several thousand survey forms to tsunami-affected 
residents in Pidie and Bireun districts.  Not surprisingly, most 
completed surveys complained about housing issues.  TII 
representatives and several other sources told us that construction 
contractors have been responsible for the vast majority of 
corruption in Aceh in recent months. 
 
NGOs and BRR - Coping With Each Other 
------------------------------------- 
 
¶7. (SBU) Despite challenges, NGOs and BRR have found ways to work 
together - or work around each others' perceived shortcomings - to 
get projects underway. However, some tension between the BRR, NGOs, 
and other donors is probably unavoidable.  About 70 domestic NGOs 
sent a letter to BRR Director Kuntoro in January 2007 protesting 
BRR's performance.  Several international NGOs also expressed 
frustration that by acting as an implementing agency instead of just 
a coordinating agency, BRR actually competes with NGOs.  One large 
international donor told us that BRR "took away" a school project 
from a bilateral donor that had already finalized plans, and gave it 
to a BRR-appointed contractor.  BRR counters that it has a 
time-limited mandate and is under great pressure to produce results. 
 It claims NGOs are making promises and either moving too slowly or 
failing to deliver results.  BRR officials told us that in one case, 
a domestic NGO based in Java had promised to rebuild an important 
market in Banda Aceh.  The NGO started the project, but then ran out 
 
JAKARTA 00000302  003 OF 005 
 
 
of money to complete it. 
 
¶8. (SBU) BRR remains concerned that some NGOs are pulling out early. 
 Indeed, some NGOs confirmed they planned to wrap their Aceh 
programs up in 2007, a year or more earlier than originally planned. 
 BRR designed its "Reconstruction for Aceh and Nias (RAN)" database 
to be an information resource for both donors and BRR on projects. 
All NGOs and donors we met, however, told us that inputting project 
data into the RAN database is burdensome, while providing little 
benefits.  The World Bank agrees. 
 
¶9. (SBU) The tension between BRR and NGOs seems to be greater in 
Banda Aceh than in more rural areas.  One NGO representative told us 
this is partly because outside of Banda Aceh, BRR has done little to 
coordinate and has instead focused on implementing projects.  A 
representative from the local government in West Aceh confirmed this 
and said that until recently, BRR rarely attended coordination 
meetings held among the local government, NGOs and UN agencies. 
 
Turf Battles Between BRR and Local Governments 
--------------------------------------------- - 
 
¶10. (SBU) Tensions over turf and lines of authority have existed 
between provincial officials and BRR since the formation of BRR, and 
provincial and district government officials are among the most 
critical of BRR.  According to local officials, the problem results 
from BRR's unwillingness to communicate or coordinate with their 
local government counterparts.  A former acting governor, who has 
had significant differences with BRR from the beginning, told us 
that the unwillingness to work with local governments goes all the 
way to the top.  Last August, the former acting governor said, he 
attempted to help Kuntoro manage some of the criticism by offering 
to host a meeting where he could speak with the regents of the 
tsunami affected regions.  Kuntoro was reportedly unresponsive. 
 
SIPDIS 
 
¶11. (SBU) As examples of poor coordination, several local officials 
complained that they first learned of BRR projects when villagers 
came to them to ask about the new construction going on near their 
homes.  A representative from the Banda Aceh mayor's office told us 
his office has been forced to pay land compensation and been the 
subject of demonstrations by people whose land BRR had taken for 
projects that the city did not even know were underway.  Had the 
local government been notified in advance, he said, many of these 
problems could have been avoided.  BRR has attempted to respond to 
this criticism by forming regional offices responsible for clusters 
of districts. 
 
¶12. (SBU) Nonetheless, an official from the West Aceh local 
government described the BRR's initial efforts as abject failure, 
blasting BRR for refusing to so much as meet with their local 
government counterparts.  The situation improved significantly, he 
said, after the BRR appointed a former provincial government 
official to head up the regional office.  Since that time, the West 
Aceh official said, the BRR and local government have developed a 
solid working relationship whereby each side has to approve each 
project before it goes forward.  A representative from the regional 
office confirmed this and added that before new projects commence, 
BRR and the local government sign an agreement listing the 
responsibilities of each side.  BRR's goal is to have the local 
government commit to provide a small portion of the project costs 
and commit to funding the maintenance of the project after it has 
been completed.  Both sides appear happy with this arrangement, 
indicating that closer cooperation between BRR and the local 
government can speed the recovery process. 
 
¶13. (SBU) A desire for enhanced cooperation with local government 
 
JAKARTA 00000302  004 OF 005 
 
 
representatives also appears to be behind the BRR proposal to 
postpone the planned next meeting of the Coordinating Forum for 
Aceh-Nias (CFAN 3) originally scheduled for February 6.  The 
proposed delay will allow the newly elected Governor, Deputy 
Governor and district leaders to participate fully in CFAN 3, 
following their inaugurations in mid-February.  Building local 
government capacity will also be important in the next two years. 
 
Illegal Logging? Inaccurate Media Reports 
----------------------------------------- 
 
¶14. (U) In December 2006, some media reports blamed the flooding in 
Aceh on rampant illegal logging to supply wood for reconstruction. 
According to the British head of the Leuser Foundation, which 
oversees conservation efforts along Aceh's mountainous interior, as 
well as senior forestry officials working in Aceh and North Sumatra, 
these reports are incorrect.  According to them, the flooding was 
the result of exceptionally heavy rains coupled with the effects of 
extensive legal logging carried out in the region decades ago. 
 
¶15. (U) BRR's two-year report notes that reconstruction's demand for 
wood amounts to about 740,000 cubic meters, with only 100,000 
available on the local market.  BRR established a Timber Help Desk 
in 2006 and prepared a list of verified domestic suppliers.  Donors 
have also assisted by sourcing wood from sustainable sources 
overseas in Europe, Australia and elsewhere.  The "Timber for Aceh" 
program supported by USAID is one of those efforts.  Some NGOs 
noted, however, that the conflict protected Aceh's forests and now 
that the province is opened up, they may again be at risk.  Of 
course, during the years of conflict, the TNI generally had free 
rein over Acehnese resources.  BRR and donors are very sensitive to 
the illegal logging issue, however, and are making every effort to 
use wood from sustainable sources.  Houses are being constructed of 
bricks, concrete and other materials, with wood used mainly for door 
and window frames. 
 
Disaster Risk Reduction and Emergency Preparedness 
--------------------------------------------- ----- 
 
¶16. (U) BRR hopes to complete a Disaster Risk Reduction policy and 
framework in 2007, and several donors have been helping Aceh with 
disaster drills and information.  The IFRC told us that its 
emergency radio system is nearing completion in 22 offices in Aceh. 
Emergency drills and training have increased awareness of procedures 
and evacuation routes in the event of another large earthquake or 
other disaster. 
 
GAM Reintegration Proceeding 
---------------------------- 
 
¶17. (SBU) Official programs to reintegrate former members of the 
"Free Aceh Movement" (GAM) and provide compensation to persons 
affected by the conflict are working better than many expected.  In 
February 2006, the Governor of Aceh established the Agency for 
Reintegration of (Badan Reintegrasi Aceh or BRA).  In 2006, the BRA 
paid more than $21 million in compensation to 3,000 former GAM 
combatants, 6,200 other GAM members, 6,200 former members of 
anti-separatist groups, and former political prisoners.  The impact 
of these cash payments to the economy has been significant. 
Programs to identify persons crippled by the conflict or who lost 
family members are underway and some members of this group have 
already started to receive a small annuity from the government. 
Problems remain, however, as in several districts former GAM members 
are resorting to extortion and pressuring local governments to set 
aside a portion of all government contracts for them.  There is 
consensus that more assistance programs are needed for former GAM 
 
JAKARTA 00000302  005 OF 005 
 
 
and GAM-affected communities. 
 
Aceh's New Governor and Reconstruction 
-------------------------------------- 
 
¶18. (SBU) Aceh's new Governor, Irwandi Yusuf, who will be installed 
on February 8, was formerly an advisor to BRR and has been critical 
of BRR's approach toward the provincial and local governments.  He 
has recently called for the BRR to hand over much of its funding and 
coordinating functions to the provincial government so that he can 
better control the reconstruction process.  Yusuf's real message to 
the BRR, however, appears to be that he expects to play a larger 
role in reconstruction than his predecessor did.  In addition, 13 of 
the 18 district heads the GOI will install in February 2007 have 
minimal previous experience in government.  Several, in fact, do not 
even have a high school education, much less the skill needed to 
manage large-scale reconstruction programs.  The World Bank notes 
that according to 2006 surveys, "local governments have weak 
regulatory frameworks to enhance transparency and public 
participation (39%), to manage public funds effectively (41%) and to 
enforce rules and organization structures (33%)."  The USAID-funded 
Local Governance Support Program, in cooperation with BRR and UNDP, 
will offer an Executive Development Program to introduce the newly 
elected mayors and district heads to their new roles and 
responsibilities, relevant laws, local planning and budgeting 
processes and requirements, leadership skills and relations with 
local (district) legislature. 
 
¶19. (SBU) Comment: BRR may not be doing everything right, but it 
faces a daunting task and is making clear progress.    Without BRR, 
donors would have to attempt to coordinate with a bewildering array 
of overlapping local and central government authorities, a situation 
that created a great deal of wheel-spinning in the four post-tsunami 
months before BRR was created.  A major challenge facing the agency 
will be learning to coexist with a new, directly elected government 
in Aceh.  BRR will need to reach out to the new leaders to gain 
their support and establish productive working relationships. 
 
PASCOE