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INDONESIA ANNOUNCES PROPOSED RESTRUCTURING OF INTERNATIONAL AID CONSORTIUM; REJECTS NETHERLANDS AS CHAIRMAN

 INDONESIA ANNOUNCES PROPOSED RESTRUCTURING OF INTERNATIONAL
 AID CONSORTIUM; REJECTS NETHERLANDS AS CHAIRMAN
 JAKARTA, March 25 /PRNewswire/ -- The Government of Indonesia announced today it is rejecting developmental aid by the Netherlands and is asking the Netherlands to terminate its chairmanship of the Intergovernmental Group on Indonesia (IGGI), an international consortium providing financial assistance to Indonesia. At the same time, the Indonesian government is requesting the creation of a new lending consortium under the neutral leadership of the World Bank.
 In rejecting the role of the Netherlands as permanent chairman of the IGGI, Indonesia said it is reacting to growing pressure from Dutch government officials critical of domestic Indonesian policies who are threatening to impose increasingly stringent conditions on Dutch loans and other financial aid to the large Southeast Asia archipelago nation.
 In a letter delivered today by the Indonesian government to the Dutch Prime Minister, Indonesia said it would accept no further financial aid from the Netherlands. As a consequence, Indonesia said, the Dutch chairmanship of the IGGI, in place since the lending group was established 24 years ago, would cease.
 "We are confident that under the present circumstances prevailing in the Netherlands, the complete absence of development assistance from the Netherlands to Indonesia -- and consequently the complete absence of the use of development assistance as an instrument of threat in our relations -- will definitely lead to improved relations between our two nations and will prevent the Government of the Netherlands from being put repeatedly in an awkward position," said Radius Prawiro, Indonesia's senior economic minister in his country's formal letter to Dutch Prime Minister Ruud Lubbers.
 Concurrently, in a separate move, the Indonesian government made a formal petition today to the World Bank to establish a new consortium of bilateral and multilateral lenders under the chairmanship of the Bank. In a letter to the World Bank president, Indonesian Finance Minister and World Bank Governor Dr. J.B. Sumarlin asked the Bank to establish a "Consultative Group" -- an established Bank forum for disbursing funds to developing countries -- to serve henceforth as the vehicle for reviewing Indonesia's financial needs.
 The IGGI, comprising 13 OECD countries and six multilateral organizations, was established in 1968 under the permanent chairmanship of the Netherlands. Its function has been to conduct an annual review of Indonesia's development needs and to coordinate the annual allotment of grants and loans.
 Last year, at the annual meeting of the IGGI at The Hague, IGGI members pledged a record $4.75 billion in assistance to Indonesia. Funds from the IGGI are used by Indonesia primarily to undertake projects of infrastructure improvement but also to support the country's international balance of payments position.
 Recently, the governments of the Netherlands and Canada announced the suspension of further aid to Indonesia following an incident in the Indonesian province of East Timor which resulted in civilian deaths through intervention by the Indonesian military.
 While other governments expressed satisfaction over the response by the Indonesian province in investigating the incident and imposing disciplinary measures, the Netherlands continued its criticism of Indonesian policy.
 "Relations between Indonesia and the Netherlands have recently deteriorated sharply as a consequence of the reckless use of development assistance as an instrument of intimidation," said Mr. Prawiro in his letter to the Dutch Prime Minister. "As long as such an exaggerated eagerness to resort to the use of development assistance as a tool of intimidation continues, relations between our two nations will further erode more rapidly."
 While taking a firm stand on future Dutch financial aid, Indonesia also acknowledged good relations between the countries in the past. "The Government of Indonesia greatly appreciates the assistance of all participants (of the IGGI), in particular the role of the Government of the Netherlands in convening and chairing the IGGI meetings for the last twenty-four years," stated Mr. Prawiro in his letter to Prime Minister Lubbers.
 Minister Prawiro's letter also contained assurances that "Indonesia will continue to meet, fully and timely, all its financial obligations resulting from loans received from The Netherlands."
 Dutch financial assistance to Indonesia last year totaled $91.3 million, representing just under two percent of total IGGI pledges.
 -0- 3/25/92
 /NOTE TO EDITORS: This material is being transmitted by Hill and Knowlton, Inc., a person registered with the Department of Justice, Washington, D.C., as an agent of the Republic of Indonesia retained to provide public relations advice and assistance. Pursuant to the requirement, the material aforesaid is available for inspection at, and copies are filed with, the Department of Justice. Such registration does not indicate approval by the United States Government of the contents of this materials./
 /CONTACT: Paul M. Matulic of Hill and Knowlton, 212-697-5600, for the government of Indonesia/ CO: Government of Indonesia ST: IN: SU:


CK -- NY037 -- 1499 03/25/92 11:58 EST
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Date:Mar 25, 1992
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