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Viewing cable 08JAKARTA225, Aceh: Capacity-Funding Gap Threatens Long-Term Transition

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Reference ID Created Released Classification Origin
08JAKARTA225 2008-02-05 06:15 2011-08-24 01:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Jakarta 
VZCZCXRO9488
RR RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHJA #0225 0360615
ZNR UUUUU ZZH
R 050615Z FEB 08
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 7894
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHKO/AMEMBASSY TOKYO 1487
RUEHBJ/AMEMBASSY BEIJING 4700
RUEHBY/AMEMBASSY CANBERRA 1966
RUEHUL/AMEMBASSY SEOUL 4388
RUEHRL/AMEMBASSY BERLIN 0564
RUEHLO/AMEMBASSY LONDON 0844
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 JAKARTA 000225 
 
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: Capacity-Funding Gap Threatens Long-Term Transition 
 
Ref: A) 07 JAKARTA 2623 - Aceh transition issues; B) 07 JAKARTA 3219 
 
- Aceh budget 
 
1. (SBU) Acehnese government capacity is severely limited and is 
insufficient to absorb the central government budget allocations, 
according to Minister for State-Owned Enterprises and former Aceh 
peace negotiator Sofyan Djalil.  In a January 29 meeting with the 
Ambassador, Djalil said that this capacity-funding gap threatens 
Aceh's longer-term development and undermines the provincial 
government's ability to deliver key public services. (ref A). 
 
2. (SBU) Limited government capacity, not insufficient revenue, is 
the key issue for Aceh, according to Minister Djalil.  The 
capacity-funding gap in Aceh is due to the poorly functioning 
bureaucracy in Aceh.  Djalil regarded Governor Irwandi as a smart 
man, but noted that his institutional capacity is weak. 
 
3. (U) Aceh provincial government revenue is growing rapidly. 
Despite massive needs, the government is unable to spend the funds 
properly.  In 2007, the provincial budget was $411 million (ref B). 
Aceh was only able to spend around 75% of the budget.  Difficulty 
with budget execution is expected to worsen this year because 
provincial government revenues will double in 2008 to more than $850 
million. There are several reasons for the explosive growth in 
revenue, most notably the special autonomy fund designed to finance 
provincial development as well as Aceh's entitlement to a greater 
share of central government revenues generated within the province. 
The special autonomy funds are to be used to pay for infrastructure 
and development programs over the next 20 years. 
 
Sofyan Djalil Bio Note 
---------------------- 
 
4. (U) Minister Djalil was the State Minister for Information and 
Communication when the Helsinki Peace Accords were signed.  He and 
Hamid Awaludin were the two Indonesian negotiators of the Helsinki 
MOU. Djalil also played a key intermediary role for the President 
and Vice President during the Aceh Monitoring Mission and was a key 
interlocutor with GAM members. Governor Irwandi and many senior GAM 
members trust him.  Minister Djalil was born in Aceh, but left in 
1976.  Many observers view Djalil as among the most reform-minded 
members of SBY's Cabinet.