Dáil Éireann debate -
Wednesday, 25 Feb 1998

Vol. 487 No. 7

Adjournment Debate. - East Timor Crisis.

Mr. Spring

I seek information from the Minister of State in relation to Ireland providing funds to the IMF. I ask this question in the context of either the Department of Finance or the Central Bank, and I would like some clarification. I do not intend to go on at length about the situation in Indonesia. There is currently financial chaos in the country. The IMF is bailing out a number of countries including Thailand, South Korea and Indonesia in particular, and my understanding is that the largest tranche of money — $46 billion — will go to Indonesia. That money will come from contributions from Ireland, the European Union and other countries including the United States of America. The reality is that the largest contribution will come from the European Union, collectively, as happens now in most of these projects.

Has a request has been received by the Department of Finance or by the Central Bank? What are the procedures in the Department to assess the merits or otherwise of this request in relation to human rights in Indonesia and in East Timor? I am particularly concerned about East Timor because despite some prospects of a breakthrough last year, the report published recently by the East Timor Human Rights Centre, Breaking the Cycle of Human Rights Violations in East Timor, which I am sure most Deputies received in recent days, concludes that the breakthrough it was expecting has not happened.

We have an opportunity now in relation to any contributions that may be sought from us. I would like to believe this matter will be discussed at the ECOFIN meeting where they will not trouble themselves unduly with human rights issues, but it may also be discussed by the General Affairs Council. Will the Minister of State ensure that our Minister for Foreign Affairs raises this matter in the General Affairs Council because the General Affairs Foreign Ministers are perhaps more engaged in human rights issues than the Finance Ministers?

I would like an undertaking from the Minister of State, if the request has not been received to date, that when it is received there is some procedure whereby the request is brought into this House. It is not good enough if the Department of Finance or the Central Bank participate in the contribution of $46 billion to aid the Suharto regime. The Minister may be aware there is growing concern in the international financial community that this money may be used for the wrong purposes. The currency is in crisis and the state is being run primarily by President Suharto, his family and their friends. There is concern that this money will be used to bail out the people who matter in Indonesia which would be totally at odds with what it is intended for, namely, to save an economy.

I would like some clarification from the Minister of State as to whether the request has been received and, if it is received, what the procedures are for considering whether we will participate.

Minister of State at the Department of Finance (Mr. Cullen)

I have made a note of some of the points Deputy Spring made to which I do not have specific answers, but we will respond to them. I know the Deputy has a deep knowledge of many of the issues involved but I would like to clarify some points.

I thank the Deputy for giving me the opportunity to clarify Ireland's involvement in measures being taken to address the current crisis in Indonesia. The Deputy will be aware that Ireland supports international, and particularly EU, efforts to improve human rights in the world at large and more particularly, in the context of this motion, in Indonesia.

The Deputy has specifically raised the question of the contribution of any moneys to the IMF which he sees as grant aiding the Suharto regime. I would like to clarify the position in relation to the IMF. As the Deputy will be aware, Ireland is a member of the IMF and its share in the "capital" of this institution is about 0.4 per cent of the total. Ireland has not made any contributions to the IMF specifically earmarked for Indonesia. However, in response to the currency crisis the IMF supports a programme of economic reform in Indonesia, as well as in other Asian countries. The IMF contribution to this programme is primarily by way of a stand-by loan which is not a grant and which will have to be repaid. The loan, to the extent it is taken up, will involve the general resources of the fund and consequently a share of the Irish quota, in common with the quotas of all the other members of the fund.

Other loan contributions are being made by the World Bank, of which Ireland is also a member, and the Asian Development Bank of which we are not a member. In addition, a number of countries have indicated that they would be prepared to offer bilateral assistance provided the IMF programme is seen to be implemented.

The IMF is not equipped to be an arbiter of human rights implementation. In this matter it would defer to the United Nations where, for example, a policy of sanctions was in place. Nevertheless the programme which Indonesia has agreed with the IMF, while operating primarily from a macro-economic stance, contains a number of elements which are, in the broadest sense, in the interests of the people of Indonesia. These include conditions on the breaking up of monopolies, the reorganisation of the banking and corporate sectors, improved governance in these sectors and the insistence that such budget cuts as are required should not be at the expense of the poor. While Indonesia has made significant progress in alleviating poverty over the last 30 years, unfortunately large numbers of people still remain in poverty and it is imperative the structural adjustment programme does not result in a worsening of their economic and social conditions.

The Irish position, through the Canadian chair, in the fund has been strongly supportive of the conditions attaching to the programme. It is important, in the context of the involvement of the fund in both the Indonesian and the wider Asian crises, to consider the implications of the fund simply standing aside. This would have led to a situation which would have had worse consequences for the people of the countries concerned. I remind the Deputy that the IMF is currently reviewing compliance with the programme and will be quite prepared to act should its conditions be disregarded. Having said that, the fund is open to looking at conditions which, in the light of experience, might be seen as too stringent.

I summarise my response to the Deputy's motion as follows. Ireland is not contributing additional moneys to the IMF for Indonesia over and above what is already in the general resources of the fund. This involves loans, not grants. It is in the context of the currency crisis, not only in Indonesia but in a wider Asian perspective. The economic conditions included in the IMF programme should benefit the people of these countries and Ireland will continue to press for respect for human rights in all the appropriate fora available to us.