TSUNAMI RECOVERY AND TRANSFORMATION - ACEH AT TWO YEARS

UNCLAS SECTION 01 OF 05 JAKARTA 000302

SIPDIS

SENSITIVE
SIPDIS

AIDAC

DEPT FOR EAP/MTS AND EB/IFD/ODF
TREASURY FOR IA - SETH SEARLS
USDA FOR FAS/EC/MCHAMBLISS
NSC FOR MORROW and MELINE
USAID FOR ANE/EAA

E.O. 12958: N/A
TAGS: EAID ECON PGOV PREL SENV KCOR ID
SUBJECT: TSUNAMI RECOVERY AND TRANSFORMATION - ACEH AT TWO YEARS

REF: A) JAKARTA 300 - ACEH AT TWO YEARS - PART 1

B) 06 JAKARTA 13604
C) 05 JAKARTA 16372
D) 05 JAKARTA 16521


1. (SBU) Summary: The Reconstruction and Rehabilitation Agency of
Aceh and Nias (BRR) has made significant progress on the immense
task of rebuilding Aceh and Nias in its 20 months of operation.
However, in contrast to a year ago, BRR is receiving increased
criticism for spending too slowly (or too fast),failing to
adequately monitor construction, and not coordinating effectively
with local governments. NGOs claim that BRR is competing with them
or pushing them out after they have painstakingly negotiated
projects. For its part, BRR is concerned that international
non-governmental organizations (NGOs) in Aceh are failing to keep
promises, not delivering fast enough, or pulling out early. BRR
staff say their coordination with local governments is improving and
the agency hopes to hand off infrastructure projects gradually to
them between 2008 and 2009. Media reports of rampant illegal
logging to feed the reconstruction effort are inaccurate. Donors
are sensitive to this issue and making every effort to use wood from
sustainable sources. Adding to the reconstruction challenge is the
reintegration of former "Free Aceh Movement" (GAM) members, which is
generally succeeding, although more program funds are needed for
former GAM and GAM-affected communities. Ref A reports on housing,
infrastructure, and livelihood issues in Aceh and Nias two years
after the tsunami. End Summary.

BRR Making Clear Progress
--------------


2. (SBU) Officers from Embassy Jakarta and Consulate Medan made a
January 16-20 swing through Meulaboh and Banda Aceh to observe
progress on reconstruction from the December 2004 earthquake and
tsunami. The key reconstruction institution is the BRR, which the

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Government of Indonesia (GOI) launched in May 2005 with a four-year
mandate. BRR is the dominant reconstruction player, nearly twice as
large as the next biggest agency, the Red Cross. Although BRR
bashing is popular in the media, the agency is doing as well as can
be expected given the magnitude of its task. The health and
education sectors in the tsunami-affected areas now seem to be
functioning well, with adequate resources. BRR has facilitated some
very positive developments, such as joint land titling. Former
President Clinton wrote that the new land titling policy that
provides joint ownership between husband and wife is an example of
"building back better." This strategy, initiated in 2006, and
publicized with USAID technical assistance, ensures men and women
will enjoy equal rights in land ownership of parcels that will be
purchased and distributed to the community by BRR.


3. (SBU) BRR has been criticized both for spending money too fast
and for spending it too slowly. Some international NGOs complained
that BRR was building too fast, sacrificing quality for quantity and
speed. Other tsunami victims and local government officials said
BRR was too slow and undisciplined in pulling projects and proposals
together, taking months when it should take only days or weeks. At
least some of the criticisms appear valid: several observers pointed
out that many BRR offices wait until they have funding completely in
hand before starting the pre-tendering process, a procedure that
routinely slows projects by three or four months. One international
NGO representative noted that BRR has, "Too many managers and not
enough implementers."

BRR Bashing is Easy, but the Task is Immense
--------------


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4. (SBU) One donor representative noted with some concern that BRR
Head Kuntoro said he wants BRR to wrap up its work by 2008 instead
of 2009 as originally planned. The representative believes this
"sends a poor message" to the people of Aceh. A BRR Deputy noted
that this was a misunderstanding: BRR wants to get most
infrastructure projects completed or well underway by mid-2008 so
that it can hand them off to local governments in an orderly
transition before BRR's mandate expires in April 2009. However,
another NGO representative told us that BRR's entire reconstruction
model is wrong and that the agency should focus on livelihoods. If
people are earning money they can buy their own houses, the NGO
representative noted. The former acting governor of Aceh expressed
a similar sentiment. He believes that BRR should buy more land in
safe areas and build houses there instead of making people wait
until the complex process of land titling has been complete. Once
people have gone back to work, he said, they will have resources to
rebuild their own houses. (Comment: While well-meant, the former
acting governor's comment greatly underestimates the time, cost and
difficulty of purchasing large tracts of land for resettlement and
in providing the services that would make them habitable. End
Comment.)


5. (SBU) Many critics claim that BRR has used double counting and
other methods to overstate the number of houses it claimed to build
during 2006. A representative from BRR responded to this criticism
by pointing to the appendix to its two-year update report, with
exact locations of the houses built. "Let them go and see for
themselves," a BRR Deputy told us. However, BRR's housing deputy
resigned in early January 2007, a development that could slow the
agency's decision making in the short term.

Significant Good Governance Efforts
--------------


6. (SBU) BRR set up an anti-corruption unit (SAK) in September 2005
that has received over 1000 complaints. A former BRR Anti-Corruption
advisor said that the agency had passed along many of the complaints
to the national Anti-Corruption Commission (KPK) or other
appropriate body, and that 75% had been resolved. Transparency
International Indonesia (TII) began a program in Aceh in March 2006.
It distributed several thousand survey forms to tsunami-affected
residents in Pidie and Bireun districts. Not surprisingly, most
completed surveys complained about housing issues. TII
representatives and several other sources told us that construction
contractors have been responsible for the vast majority of
corruption in Aceh in recent months.

NGOs and BRR - Coping With Each Other
--------------


7. (SBU) Despite challenges, NGOs and BRR have found ways to work
together - or work around each others' perceived shortcomings - to
get projects underway. However, some tension between the BRR, NGOs,
and other donors is probably unavoidable. About 70 domestic NGOs
sent a letter to BRR Director Kuntoro in January 2007 protesting
BRR's performance. Several international NGOs also expressed
frustration that by acting as an implementing agency instead of just
a coordinating agency, BRR actually competes with NGOs. One large
international donor told us that BRR "took away" a school project
from a bilateral donor that had already finalized plans, and gave it
to a BRR-appointed contractor. BRR counters that it has a
time-limited mandate and is under great pressure to produce results.
It claims NGOs are making promises and either moving too slowly or
failing to deliver results. BRR officials told us that in one case,
a domestic NGO based in Java had promised to rebuild an important
market in Banda Aceh. The NGO started the project, but then ran out

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of money to complete it.


8. (SBU) BRR remains concerned that some NGOs are pulling out early.
Indeed, some NGOs confirmed they planned to wrap their Aceh
programs up in 2007, a year or more earlier than originally planned.
BRR designed its "Reconstruction for Aceh and Nias (RAN)" database
to be an information resource for both donors and BRR on projects.
All NGOs and donors we met, however, told us that inputting project
data into the RAN database is burdensome, while providing little
benefits. The World Bank agrees.


9. (SBU) The tension between BRR and NGOs seems to be greater in
Banda Aceh than in more rural areas. One NGO representative told us
this is partly because outside of Banda Aceh, BRR has done little to
coordinate and has instead focused on implementing projects. A
representative from the local government in West Aceh confirmed this
and said that until recently, BRR rarely attended coordination
meetings held among the local government, NGOs and UN agencies.

Turf Battles Between BRR and Local Governments
-------------- -


10. (SBU) Tensions over turf and lines of authority have existed
between provincial officials and BRR since the formation of BRR, and
provincial and district government officials are among the most
critical of BRR. According to local officials, the problem results
from BRR's unwillingness to communicate or coordinate with their
local government counterparts. A former acting governor, who has
had significant differences with BRR from the beginning, told us
that the unwillingness to work with local governments goes all the
way to the top. Last August, the former acting governor said, he
attempted to help Kuntoro manage some of the criticism by offering
to host a meeting where he could speak with the regents of the
tsunami affected regions. Kuntoro was reportedly unresponsive.

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11. (SBU) As examples of poor coordination, several local officials
complained that they first learned of BRR projects when villagers
came to them to ask about the new construction going on near their
homes. A representative from the Banda Aceh mayor's office told us
his office has been forced to pay land compensation and been the
subject of demonstrations by people whose land BRR had taken for
projects that the city did not even know were underway. Had the
local government been notified in advance, he said, many of these
problems could have been avoided. BRR has attempted to respond to
this criticism by forming regional offices responsible for clusters
of districts.


12. (SBU) Nonetheless, an official from the West Aceh local
government described the BRR's initial efforts as abject failure,
blasting BRR for refusing to so much as meet with their local
government counterparts. The situation improved significantly, he
said, after the BRR appointed a former provincial government
official to head up the regional office. Since that time, the West
Aceh official said, the BRR and local government have developed a
solid working relationship whereby each side has to approve each
project before it goes forward. A representative from the regional
office confirmed this and added that before new projects commence,
BRR and the local government sign an agreement listing the
responsibilities of each side. BRR's goal is to have the local
government commit to provide a small portion of the project costs
and commit to funding the maintenance of the project after it has
been completed. Both sides appear happy with this arrangement,
indicating that closer cooperation between BRR and the local
government can speed the recovery process.


13. (SBU) A desire for enhanced cooperation with local government

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representatives also appears to be behind the BRR proposal to
postpone the planned next meeting of the Coordinating Forum for
Aceh-Nias (CFAN 3) originally scheduled for February 6. The
proposed delay will allow the newly elected Governor, Deputy
Governor and district leaders to participate fully in CFAN 3,
following their inaugurations in mid-February. Building local
government capacity will also be important in the next two years.

Illegal Logging? Inaccurate Media Reports
--------------


14. (U) In December 2006, some media reports blamed the flooding in
Aceh on rampant illegal logging to supply wood for reconstruction.
According to the British head of the Leuser Foundation, which
oversees conservation efforts along Aceh's mountainous interior, as
well as senior forestry officials working in Aceh and North Sumatra,
these reports are incorrect. According to them, the flooding was
the result of exceptionally heavy rains coupled with the effects of
extensive legal logging carried out in the region decades ago.


15. (U) BRR's two-year report notes that reconstruction's demand for
wood amounts to about 740,000 cubic meters, with only 100,000
available on the local market. BRR established a Timber Help Desk
in 2006 and prepared a list of verified domestic suppliers. Donors
have also assisted by sourcing wood from sustainable sources
overseas in Europe, Australia and elsewhere. The "Timber for Aceh"
program supported by USAID is one of those efforts. Some NGOs
noted, however, that the conflict protected Aceh's forests and now
that the province is opened up, they may again be at risk. Of
course, during the years of conflict, the TNI generally had free
rein over Acehnese resources. BRR and donors are very sensitive to
the illegal logging issue, however, and are making every effort to
use wood from sustainable sources. Houses are being constructed of
bricks, concrete and other materials, with wood used mainly for door
and window frames.

Disaster Risk Reduction and Emergency Preparedness
-------------- --------------


16. (U) BRR hopes to complete a Disaster Risk Reduction policy and
framework in 2007, and several donors have been helping Aceh with
disaster drills and information. The IFRC told us that its
emergency radio system is nearing completion in 22 offices in Aceh.
Emergency drills and training have increased awareness of procedures
and evacuation routes in the event of another large earthquake or
other disaster.

GAM Reintegration Proceeding
--------------


17. (SBU) Official programs to reintegrate former members of the
"Free Aceh Movement" (GAM) and provide compensation to persons
affected by the conflict are working better than many expected. In
February 2006, the Governor of Aceh established the Agency for
Reintegration of (Badan Reintegrasi Aceh or BRA). In 2006, the BRA
paid more than $21 million in compensation to 3,000 former GAM
combatants, 6,200 other GAM members, 6,200 former members of
anti-separatist groups, and former political prisoners. The impact
of these cash payments to the economy has been significant.
Programs to identify persons crippled by the conflict or who lost
family members are underway and some members of this group have
already started to receive a small annuity from the government.
Problems remain, however, as in several districts former GAM members
are resorting to extortion and pressuring local governments to set
aside a portion of all government contracts for them. There is
consensus that more assistance programs are needed for former GAM

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and GAM-affected communities.

Aceh's New Governor and Reconstruction
--------------


18. (SBU) Aceh's new Governor, Irwandi Yusuf, who will be installed
on February 8, was formerly an advisor to BRR and has been critical
of BRR's approach toward the provincial and local governments. He
has recently called for the BRR to hand over much of its funding and
coordinating functions to the provincial government so that he can
better control the reconstruction process. Yusuf's real message to
the BRR, however, appears to be that he expects to play a larger
role in reconstruction than his predecessor did. In addition, 13 of
the 18 district heads the GOI will install in February 2007 have
minimal previous experience in government. Several, in fact, do not
even have a high school education, much less the skill needed to
manage large-scale reconstruction programs. The World Bank notes
that according to 2006 surveys, "local governments have weak
regulatory frameworks to enhance transparency and public
participation (39%),to manage public funds effectively (41%) and to
enforce rules and organization structures (33%)." The USAID-funded
Local Governance Support Program, in cooperation with BRR and UNDP,
will offer an Executive Development Program to introduce the newly
elected mayors and district heads to their new roles and
responsibilities, relevant laws, local planning and budgeting
processes and requirements, leadership skills and relations with
local (district) legislature.


19. (SBU) Comment: BRR may not be doing everything right, but it
faces a daunting task and is making clear progress. Without BRR,
donors would have to attempt to coordinate with a bewildering array
of overlapping local and central government authorities, a situation
that created a great deal of wheel-spinning in the four post-tsunami
months before BRR was created. A major challenge facing the agency
will be learning to coexist with a new, directly elected government
in Aceh. BRR will need to reach out to the new leaders to gain
their support and establish productive working relationships.

PASCOE