VZCZCXRO0262
RR RUEHCHI RUEHDT RUEHHM
DE RUEHJA #2623/01 2610935
ZNR UUUUU ZZH
R 180935Z SEP 07
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 6320
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHKO/AMEMBASSY TOKYO 0818
RUEHBJ/AMEMBASSY BEIJING 4323
RUEHBY/AMEMBASSY CANBERRA 1199
RUEHUL/AMEMBASSY SEOUL 4203
RUEHRL/AMEMBASSY BERLIN 0551
RUEHLO/AMEMBASSY LONDON 0818
RUEATRS/DEPT OF TREASURY WASHDC
RUEHBS/USEU BRUSSELS
RUEAIIA/CIA WASHDC
RUEKJCS/SECDEF WASHDC
RHEHNSC/NSC WASHDC
RHHMUNA/USCINCPAC HONOLULU HI
RHHJJAA/JICPAC HONOLULU HI
RUEKJCS/JOINT STAFF WASHDC

UNCLAS SECTION 01 OF 02 JAKARTA 002623 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
DEPT FOR EAP/MTS AND EEB/IFD/ODF 
USAID FOR ANE/AA WARD 
 
E.O. 12958: N/A 
TAGS: EAID EINV PGOV PREL ID
 
SUBJECT: ACEH TRANSITION ISSUES 
 
 
¶1.  (SBU) Summary: On September 17, the Ambassador and Chiefs of 
other donor missions assessed Aceh's transition from the 
reconstruction period to economic growth.  The mandate of the 
Rehabilitation and Reconstruction Agency for Aceh and Nias (BRR) 
expires in April 2009.  Donors work closely with local governments 
and transition teams to ensure they can deliver services and 
infrastructure when reconstruction projects end.  Donors are 
committed to support a successful democratic transition in Aceh, and 
are working with BRR and Governor Irwandi to clarify roles and 
define priorities for the post-reconstruction phase. 
 
¶2. Summary - Continued.  Some donors expressed concern that ex-GAM 
fighters could still pose a threat to stability by failing to 
integrate, and by engaging in illegal activities.  Private sector 
activity needs to be robust enough to carry Aceh through the 
post-reconstruction phase with sufficient employment and growth. 
The consensus was that Governor Irwandi needs to do more to manage 
Aceh's transition and plan for the post-BRR phase. End Summary. 
 
Changing the Paradigm: Aceh as "Fragile" 
---------------------------------------- 
 
¶3. (SBU) At a working lunch with donors on September 17, the 
Ambassador asked guests what the future holds for Aceh, especially 
the transition period after reconstruction donors leave.  He 
reiterated the U.S. commitment to work collaboratively with the 
donor community towards sustained development noting that we still 
have time to seize the opportunity to help Aceh succeed.  An 
Australian government representative noted that Australia had 
changed the paradigm and has assigned "fragile" status to Aceh.  The 
worst outcome would be to have a situation in which low-level 
violence hurts economic growth prospects.  Other donors added there 
is still an imbalance and perceived inequality in resource 
distribution between tsunami-affected districts and those with 
former GAM fighters.  A donor and local government culture of 
constructive engagement with the former GAM fighters can help avert 
renewed violence. 
 
Targeting the Transition 
------------------------ 
 
¶4. (SBU) A member of the United Nations Office of the Recovery 
Coordinator for Aceh and Nias (UNORC) stated that Aceh's transition 
teams do not yet have a clear understanding of their role and donors 
need to work more closely with them as the post-reconstruction phase 
nears.  The World Bank-initiated Multi-Donor Fund for Aceh 
reconstruction is considering extending its term to 2012 to assist 
with the post-reconstruction transition phase.  It has $160 million 
in uncommitted funds that will be programmed to support this 
transition.  The donors welcomed a recent proposal to establish a 
$50 million economic support facility targeting employment in 
fisheries and other agri-businesses. 
 
Need for Community Infrastructure 
--------------------------------- 
 
¶5. (SBU) Aceh's local governments have to learn effective methods to 
deliver basic municipal services such as water and electricity.  In 
many cases there is still no functioning community infrastructure: 
some school and hospital buildings are empty shells with no staff, 
power or water.  Transition of existing assets also requires 
training and resources.  In one case, the local government has 
stated it does not want to run the Kuwait-built desalination plant 
because it is too expensive.  BRR is working with local governments 
and has presented a transition plan, but it is not clear that local 
government's have the technical and human resource capacity to take 
over effectively when BRR's mandate expires in April 2009. 
 
Governor Needs Clear Vision 
--------------------------- 
 
¶6. (SBU) The donors have so far been the main implementers but it 
 
JAKARTA 00002623  002 OF 002 
 
 
will soon have to be the local governments.  The new Governor has 
not yet matched budgets with plans and his vision for the transition 
phase is unclear.  A representative of the European Commission 
complained that, Governor Irwandi is asking everybody for money and 
advice but not stating his priorities.  A representative of the 
German Technical Assistance Agency (GTZ) noted that there is still 
mistrust between the old government machinery and Governor Irwandi, 
and the need for more local officials to work together.  The 
Japanese Ambassador expressed concern that the central Government of 
Indonesia may be losing the focus on Aceh.  Aceh is not yet a 
success story and ex-combatants could turn to illegal activities 
such as drug trafficking if economic and political stability are not 
supported.  Many former GAM fighters are not involved in the 
planning and coordination process and do not care to be, Ambassador 
Hume noted. 
 
Private Investment? 
------------------- 
 
¶7. (SBU) While attracting investment is a priority of the Governor, 
much of the economy is still agriculture-based.  A representative of 
the United Nations Development Program noted that there is not yet a 
real private sector, just a lot of contractors working on 
reconstruction.  Donors and the private sector need to do more to 
encourage commercial activity.  The UNORC representative believes 
that donors in general need to continue to raise Aceh in discussions 
with GOI Ministries so that it does not fall off the radar screen. 
The Ambassador concluded the meeting by noting that the donors are 
providing productive assistance and that our Aceh partners get a 
passing grade.  The main challenge ahead is to encourage local 
leadership and build local capacity. 
 
HUME