Economic Affairs
As a follow-up to the European Commission's Communication of 2 February 2000 that recognises the need to upgrade relations between EU and Indonesia and to frame EU development assistance in a clearer policy framework, the Commission adopted in May 2002 a multi-annual Country Strategy Paper (CSP) on Indonesia for 2002-2006. This CSP, drafted after dialogue with Indonesian authorities, civil society, and other donors, is designed to introduce a sector-focused programme aiming at achieving a higher visibility and impact of EU's support to Indonesia. The CSP takes into account the main priorities of the Indonesian government, i.e. (1) reinforcing good governance and the rule of law, (2) increasing the capacity of regional governments in a framework of decentralisation, (3) alleviating poverty through provision of basic services and increasing employment particularly in rural areas, and (4) reducing social unrest.
Having these four broad objectives in mind, the Commission proposed that the 2002-2006 EC development assistance be focused on two sectors: good governance (including economic liberalisation, democratisation and public administration) with particular emphasis on basic health and education services to the poor, and sustainable management of natural resources in rural areas (forests, water, communities and environment).
To implement the CSP for the five-year period of 2002-2006, the EC budget for assistance to Indonesia is expected to be €216 millions. Given the diversity of Indonesia's needs, the CSP also expects additional amounts from horizontal thematic budget lines such as: air for uprooted peoples, emergency aid, democratisation, tropical forests, NGOs, and the conflict prevention and rapid reaction mechanisms. From the EU perspective, Indonesia is included in the "focus" countries eligible for the EC Programme for the European Initiative for Democracy and Human Rights.
The overhaul of the EC development strategy towards Indonesia is expected to substantially increase the amount and quality of EU assistance to Indonesia. The CSP has been translated into a more implementable 2002-2004 National Indicative Programme (NIP) 2004 that has been signed by the EC and the Indonesian government in December 2002.
In line with the NIP, in the Third Meeting of EC-Indonesia Bilateral Consultative Forum in December 2002, the EC highlighted the EU's commitment of assistance for 2003 amounting to €50 million: €20 million for FLEGT/Forest Law Enforcement Governance and Trade, €15 million for improvements in the judiciary and to local democracy, €10 million for trade-related technical assistance, and around €5 million for other forms of bilateral projects.
The implementation of the CSP marked a significant surge of EC-Indonesia development cooperation, which began as far back as 1975. Committing a grant aid of €66 million in 2002, EC aid to Indonesia has more than doubled compared to previous years.
Related links: Indonesia-EU Project Fact Sheets
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