WRITTEN QUESTION E-3633/98

by Anita Pollack (PSE) to the Commission

(3 December 1998)

Subject: Indonesia and the environment

Is the Commission liaising with the World Bank and the International Monetary Fund to ensure that all funds allocated to Indonesia are accompanied by strict environmental and social conditions?

Answer given by Mr Marín on behalf of the Commission

(11 January 1999)

The Commission, through its representation, liaises closely and actively with both the World Bank and the International monetary fund (IMF) on all aspects of donor policy and on the conditionalities attached to new donor funds made available in response to the present economic and financial crisis in Indonesia. The Bank hosts regular donor coordination meetings both at head of mission level and on technical matters while the United Nations development programme (UNDP) is also involved in donor coordination on social and population matters. The Commission is active in ensuring that Community concerns are brought to the table in all these fora.

The basis for all donor coordination is the IMF conditions as set out in the various letters of intent. While IMF funds are paid directly into the government of Indonesia budget the majority of Bank funds are attached to specific project activities. All Community funds are committed for specific project activities including emergency actions and humanitarian relief.

In the Commission's programme environmental and social conditions are an integral part of all commitments. The on-going Community-Indonesia forestry programme's main purpose is to ensure sustainable management of Indonesia's forest resource, and it also addresses the problem of maintaining biodiversity while increasing living standards of local population(1).

Moreover, Community-funded projects also help in the government of Indonesia's effort to reduce the impact of the economic crisis with the use of labour intensive methods of implementing activities rather than mechanical ones(2).

New commitments entered into after the start of the crisis, have been almost entirely in support of the government of Indonesia social safety net strategy, and in all cases social and, where relevant, environmental criteria have been used to assess the viability of each proposal before any financing decision has been taken.

The Commission will continue to support international efforts to ensure that such considerations are given their due weight, especially under the present unstable circumstances in Indonesia.

(1) The Bureau forest management project (BFMP) and the Leuser development programme (LDP). BFMP is assisting with testing and demonstrating a replicable model of sustainable natural production forest management on lowland Dipterocarp forests in Kalimantan. The LDP assists with the conservation of a unique ecosystem by strengthening the management and protection structures of the Leuser national park and tries to reduce over exploitation by local communities by assisting them through alternative sustainable economic activities.

(2) The Punggur Utara irrigation development project specified that labour intensive methods would be used for irrigation canal maintenance when tendering these works.