The following opinion piece by World Growth chairman Alan Oxley appeared in the Jakarta Post on April 23. See the original article here.
In 2011, the UK Government announced that it would end bilateral aid to Indonesia, with the exception of environmental programs to halt deforestation and to promote climate change remediation.
But even by 2009, UK bilateral aid spending in Indonesia (around £10 million a year) had come to be dominated by two policy areas: illegal logging and low carbon development — particularly relating to deforestation.
A key British strategy was to take the lead in promoting an EU program in Indonesia on illegal logging. The program encouraged and pressured — under threat of restricting trade — Indonesian authorities to comply with EU demands on timber exports under a bilateral agreement, and cease any further clearance of natural forest.
This was part of a larger EU campaign on global timber regulation across a number of countries for which the UK has been lead advocate.
But this relatively small UK bilateral program in Indonesia was set to deliver a much bigger result than most. The problem is that the impact is negative.
Economic modeling commissioned by the European Commission estimates that the Department of International Development (DFID) policy approach to illegal logging would have a detrimental impact on Indonesia’s forest sector. It indicated the economy could lose around $2.1 billion and around 450,000 jobs.
And in the case of the global campaign on illegal logging, not a single agreement is currently operational in the ten years since the EU committed to it.
That is not the end of it.
More than half of UK bilateral aid spending is being used to promote environmental strategies to make Indonesia a low carbon economy — particularly in relation to deforestation.
Development agencies and forest experts now generally recognize that that the leading driver of deforestation and forest degradation is not timber production — it is food production. Some estimates put agriculture’s share at close to 75 percent. It is also recognized that the majority of this is from clearing of forest land by subsistence and small-scale farmers.
The UK’s DFID’s own policy states that the UK must demonstrate that the “low carbon economy” model is viable. It has not done so.
Unsurprisingly, not a single investor has been found for a £10 million project designed to attract low-carbon investments in Indonesia.
Why would an agency that is supposed to reduce poverty spend money that damages economies?
The key motivation for DFID appears to be to advance the UK’s foreign policy goals rather than support development outcomes for Indonesia.
When UK Prime Minister David Cameron and Nick Clegg announced the reorientation of DFID spending in 2011, they declared that support for halting deforestation and tackling climate change would continue.
The UK has undertaken a concerted effort to make forest policy a key international issue since 1998. Former UK prime minister Tony Blair put in on the G8 agenda. DFID has made this a leading priority ever since, despite FAO statistics showing a steady decline in the rate of global deforestation.
DFID’s international efforts to promote action on greenhouse gas emissions focused on generating support for action by developing countries in the lead up to the 2007 Climate Change conference in Bali.
In 2006, a report by UK Treasury official, Lord Stern, argued developing countries would be worse off if they did not act quickly to substantially greenhouse gas emissions.
The report did not alter the thinking of major developing economies. Development economists considered the report flawed, overstating the benefits and understating the costs of dramatic action to reduce emissions.
The UK appeared to focus on Indonesian policies in the same period. DFID spent almost £450,000 in the lead up to the 2007 UN climate conference. One report it supported claimed Indonesia was the third-highest emitter of greenhouse gases. The Indonesian government reported numbers to the UN showed clearly it was not, but the canard remains part of climate change lore.
DFID also supported building capacity for foreign campaign groups and NGOs to lobby it for policy action on climate change and forest protection. And in Indonesia, with other foreign donors, supported projects to demonstrate how Indonesia could replace productive industries that promote growth and create jobs with substitute low carbon emission activities, like tourism.
Its current projects in Papua appear to promote locally-based activism in the name of climate change against government resource development plans. In 2011, DFID Indonesia officials stated that they have “never treated development and environmental protection as being automatically in tension”. It’s time they did.
DFID itself has acknowledged that climate change and deforestation are not priority areas for Indonesian society at large.
The question to DFID is whose interests its aid is serving?
The UK has used aid for years to advance its own national interests. One long-standing goal was to reduce Britain’s trade deficit. DFID was originally established to remove aid policy from the dictates of other UK departments of state. It seems those who set aid policy have fallen back to their old ways.
DFID should suspend all environmental and climate change related aid programs to Indonesia and commission an independent internal inquiry into the underlying costs and impact of such programs.
The writer is chair of World Growth