Should the World Bank be Reformed?

(Group Blog of Sesparlu 54 by Agung Cahaya Sumirat, Ferry Akbar Pasaribu, and Priadji)

source pic: http://newsnextbd.com

The World Bank has been playing an important role in financing international development for the last seven decades. Its role as the provider of financial resources as well as expertise on development related matter has positioned the World Bank at the forefront on global efforts in alleviating the world’s development challenges. However, there has been critics which points out that the World Bank is not able to respond to the shifts on the current global economic development. Some quarters have suggested that the World Bank needs organizational reform. So how to reform the World Bank?

New Realities
New middle-income countries, which used to be the World Bank’s clients, now plug their development fund needs through commercial markets, which offers bigger funds and less complicated procedures. Furthermore, the newly established institutions such as think tanks, universities, research centers and others are mushrooming, and they could also provide high quality expertise on addressing development issues.

Domination of developed countries, especially the United States that has veto right over major decisions, seems as a major irk to the new emerging economic powers. Countries such as China, India, Russia, Brazil, and South Africa have voiced concerns for being under-represented to the decision making process at the World Bank. China therefore took the initiative to establish the New Development Bank with Brazil, Russia, India, and South Africa (BRICS) as well the Asian Infrastructure Investment Bank (AIIB).

With regard to the increased inequality among countries, the World Bank standing argument is that the economic growth will be able to address it. However, it turned out the other around so far. Also, the World Bank’s argument to expand export has been disastrous for the developing countries, as it led to an overexploitation over their natural resources. In such cases, the World Bank’s role to promote ‘development’ deemed as a failure. These are the push factors why the World Bank should reform itself, if it wants to stay relevant.

The Challenges

Jim Yong Kim, the World Bank President since 2012, realized that he has to launch a substantial reform in order to keep the World Bank relevant towards the current economic shift. The World Bank has to undergo managerial and operational reforms. However, there are some major hurdles that Kim is facing in his efforts to reform the World Bank. First, the World Bank has transformed to become a huge bureaucracy, with more than 16,000 staffs, most of whom are permanent ones. Operational cost is unbearably expensive.

Second, the Bank was structured into 6 regional offices, which caused horizontal coordination amongst those offices to be more difficult. Accordingly, the World Bank’s efforts to encounter the world’s current development issues such as epidemic diseases, climate change, and others need to be divided into regions. At the very end this has been deemed as eroding the Bank’s efficiency in handling the world’s pressing issues.

Third, the World Bank’s executive board and share composition are basically a rigid structure, despite how different the world today in terms of distribution of power and influence in the global economy order. The creation of Group of 20 (G-20), where some new emerging economies such as Brazil, China, India, Indonesia, Mexico, Turkey and South Africa joint the developed ones, is a reflection of new realities in the world. So far those countries are not yet proportionately represented in terms of voting right.
Measures for Reform
There are some identified measures that worth considering to reform the World Bank:
First, the good governance such as voting right has to represent the current global economic order. Some view that the ideal decision making mechanism are by 50-50 representation between developed and developing countries. Also the issue of good transparency in transparency, equitable, and representative are to be addressed. In this regard, the Meltzer’s Report published by the US Congress suggests that the reform emphasizes on leadership and controlling structure.

Second, with regard to the views that the World Bank deemed to favour commercial giants, it is timely that the World Bank makes a shift by focusing more on local economic development of its client countries. Third, the World Bank should narrow the time gap between the period of an eruption of economic crisis in one country and the decision taken to assist the said country. It often happened that the gap was caused by the long negotiation over the conditions that the country in crisis must accept before it got the required financial expertise and support.

Fourth, there are some areas where the developed and the emerging economies agreed upon, namely: 1) focus on the fight against global poverty; 2) simplify the operation process; 3) enhance the technical resilience in responding to short-term global crises and 4) a more assertive World Bank leadership to reshape the international financial system.

In addition to that, for Indonesia, the main issue is on how to improve the social security net and to write off foreign debt. The World Bank should do more on debt reduction/relief since as it serves as drag factor to the developing countries’ economic growth.

Conclusion
Given its good track in providing development assistance to the developing countries at their early stage of development, the World Bank has the modality to continue doing so despite the shifting of the global economies. Therefore, the World Bank has to take immediate measures to cope with this new realities. The new emerging countries need to play more roles commensurate with their economic size.

The World Bank should consider to focus its reform by taking the fourth option, since the majority of its members have had a common ground on the 4 core areas of reform. These measures have to be immediately put in place if the World Bank would to retain its role as a knowledge bank in the world’s development process.

Jakarta, 28 March 2016

The Need to Develop an Alternative Source of Energy in Indonesia

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(by Agung Cahaya Sumirat)

Indonesia is no longer an oil exporting country. Our oil production reached its peak in the 1990s and it began to decline afterwards. In 2004 Indonesia has become a net oil importing country. Our national consumption of oil is more or less 1.6 million barrel per day (bpd) while our oil production capacity is less than 800,000 bpd. This is in stark contrast with our highest oil production record in the midst of 1990s which reached 1.6 million bpd. On the other hand, there is inevitably a future rapid growing of Indonesia’s population. In 2016 we already have 250 million of population. We therefore need to narrow the gap between energy demand and energy production.

In such a context, developing alternative energy sources has become a focus of the Indonesian Government’s objective in addressing the country’s lack of energy. In this article, I wish to highlight what type of new and/or renewable energy alternative that should be developed and provide recommendation.

Source pic: http://www.gbgindonesia.com

Shifting Paradigm to Use New and Renewable Energy

There has been a significant shift of paradigm in the management of the Indonesian energy policy. Despite an existing strong reliance on the use of fossil fuels, the Government has carried out steps to enhance a diversification of energy sources.

The Indonesian Government has adopted Law 30 of 2007 on Energy which among others stipulates the need to strengthen an energy security policy to ensure the availability of and access to energy. The Presidential Regulation Number 79 of 2014 regarding National Energy Policy or “Kebijakan Energi Nasional” (KEN) has also been adopted. The KEN highlights the need to develop New and Renewable Energy (NRE) which includes inter-alia geothermal, solar, micro-hydro, wind and bio-energy.

The KEN has set the target of achieving an energy mix by 2025 consisting of 25% of oil, 30% of coal, 22% of gas, and 23% of NRE. While the national energy mix in 2014 was 41% of oil, 30% of coal, 23% of gas, and 6% of NRE.

This policy basically suggests that the Government has a political will to develop energy diversification including through conversion of coal and petroleum-based fuels to renewable energy sources. This policy has also been instrumental in matching the overall national policy in reducing greenhouse gas emission of 26% by 2020.

Geothermal Development as a Best Option of NRE

Geothermal energy is found through cracking the rocks within the earth and extract the heat, steam or hot water which emerge from the tiny fractures of those rocks. Geothermal basically is the result of volcanic geology activity. Indonesia has lots of volcanic mountains. That is why it has enormous geothermal potential.

Its potential can reach as much as 28,000 megawatt (MW) of power. This accounts for 40% of the world’s geothermal potential resources. Currently the Indonesia’s geothermal production capacity accounts only for 1,200 MW and is the third biggest geothermal producer after the US and the Philippines.

The salient benefits of geothermal compared to other NRE inter-alia are its high availability as a source of energy, unlike the solar and wind energy. It is also categorized as a very environmental friendly type of energy.

The current Indonesian President Joko Widodo last year has stated that Indonesia will focus on the development of geothermal as a renewable source of energy. This is in fact an encouraging development.

Previously the former President Susilo Bambang Yudhoyono has also announced a plan to build 44 new geothermal plants by 2014, which will produce a capacity of 4,000 MW. By 2025, he also set out Indonesia’s plan to produce 9,000 MW of geothermal power, to become the world’s leading geothermal energy producer.

However, there are challenges in geothermal development inter-alia on its high cost-investment. It may take 5 million USD for one source of geothermal infrastructure. Its location is often in remote places and can be located within the area of protected forest. This may pose a delicate controversy so as to whether to prioritize the geothermal energy or the forest conservation.

In addition, geothermal investment is a long term project and has quite high risks. The investors may take a lengthy calculation of its return on investment in this sector. Thus far there are three main players in the geothermal business in Indonesia namely Chevron, Star Energy and Pertamina Geothermal.

The Way Forward

In recent years the overall energy diversification has progressed at a very slowly pace. Renewable energy production (hydropower, geothermal and biomass) makes up of only 3.4% of its total potential reserves. Despite an already policy shifting to energy diversification, but there has been not much significant progress. This may be associated with the lack of investment in this sector.

One source has estimated that in the next ten years, Indonesia needs an investment of around 1,600 trillion rupiah by 2025, to be able to achieve the diversification energy targets. Out of this, geothermal investment needs 475 trillion rupiah while the other sources of NRE needs 645 trillion rupiah for bioenergy, 320 trillion rupiah for hydro, and 160 trillion rupiah for other new energy.

In view of these, the Government needs to carry out several steps. It needs to enhance policy coordination among various government agencies at the national level in order to follow up the President’s instruction on prioritizing the geothermal development. There is also a need on enhancing policy coordination between the central and the local governments since several permits and licensing needs the involvement of the local government, in line with the existing autonomy law.

We also need to simplify the policy framework to encourage investment in the geothermal sector. The Government should consider the development of a single integrated service to follow up geothermal investment inquiries. All geothermal business inquiries should be channeled through this mechanism.

Other option that the Government needs to take is to establish a state owned company which its core business specifically operates in geothermal energy. Given the huge amount of geothermal potentials, this can be a good step to take to really make geothermal not only as a dormant potential but turn it into tangible results for securing the future Indonesian energy needs.

Jakarta, 25 March 2016

 

Iraq: the Challenge of Managing Conflict amidst Economic Pressure

Group Blog #5 Sesparlu: Agung Cahaya Sumirat, Ferry Akbar Pasaribu, Priadji

The image of Iraq today has been totally different from its previous golden era as it was told in the “One Thousands One Night” stories of Aladdin, Ali Baba, and Sinbad. What has been going on in Iraq is a continued instability, chaos, and sectarian conflicts. So far Iraq even with the help of external actors have not yet found a way out to address the matters. This means that these bloody clashes will continue. In such a situation, unfortunately the Iraqi Government is facing a bitter reality of the weakening of international oil price, as the oil sector contributes as big as 95% of the Government’s revenue. What should the Iraqi Government do in such a complex situation?

Root Cause of Sectarian Conflict

The sectarian conflicts basically are rifts amongst the Kurds, Arabs, Sunnis and Shias in terms of control and power sharing. During the Ottoman rule that occupied Iraq for 4 centuries, continued by the British in 1920 and replaced by the Kingdom of Iraq in 1932, Iraq was put under the Sunni control which centered in Baghdad. This was against the fact the majority of the Iraqis population is the Shias.

The removal of a Sunni President of Saddam Hussein by the United States’ military invasion in 2003 has uncovered the buried sectarian conflict. The Shias are now in power, but they are not able to control the whole country. The Kurds and the terrorist group of Islamic State of Iraq and Syria (ISIS) have control over the northern part of Iraq. The Kurds insisted in establishing an independent Kurdish states, while the Sunni has continued its resistance in the southern part of Iraq. The situation is also worsened by the internal conflict among the Shias between faction who wants to be closer with Tehran and those who want to become independent.

Source pic :https://publicintelligence.net/wp-content/uploads/2014/06/DoS-IraqSyriaConflict.jpg

The Falling Down of Oil Price and Its Impact

Iraq has a very strategic importance of its oil energy for supplying the world market. Iraq is the second largest oil producer of OPEC, predicted to produce four million barrels per day by 2016. The sinking of oil price to below US$30 per barrel has put pressures on Iraqi national budget, given the Government’s heavy reliance on oil revenue. This has made the Government is to take stiff cut on its expenditures.

Since then the Government is facing an expansion of budget deficit. The current deficit has been more than 11.9% of the 2016 GDP. That figure is expected to get higher owing to further declines in the price of oil. The Government’s budgets have been much spent on the ongoing war against the ISIS and efforts to stabilize security situation.

The impact of declining oil prices also is also felt on how Baghdad deals with the Kurdish issue. Baghdad is now forced to think harder on revenue sharing deal with the Kurds. The deal is expected to meet the expectation of the Kurds, otherwise the sentiments of separating from Baghdad will only grow stronger. Baghdad now is at loggerhead with the Kurds, as in 2014 they did not do budget transfer to the Kurds. In 2013 Baghdad only transferred 17% of net revenues out of the oil production takes place in the Kurdish area which scores around 600,000 barrel per day. The Kurds do need the budget in order to run the Kurdistan Regional Government and to support the Kurdish Armed Forces (Peshmerga) in its fight against ISIS.

What Option?

In such a complexity, the Iraqi Government should consider several options to take as follows:

Firstly, the Government needs to continue its current oil production to the maximum in order to be able to generate revenues. As a matter of fact, even the OPEC has decided not to reduce production, despite the sinking oil price. The OPEC members have instead been asked to continue its oil production. With Iraq keeps on pumping the oil, then most likely the oil price is predicted to hover below US$ 40 per barrel for the years to come.

Secondly, Iraq should demand responsibility from the US (and its allies) to assist the Government in strengthening stability and security particularly in fighting the ISIS. The Iraqi Armed Forces needs technical assistance, since most of military personnel are either degraded or traumatic due to the prolonged conflicts.

Thirdly, the Government should persuade the US to apply bombing tactics in certain parts of Iraq especially in fighting the ISIS. The US bombing tactic has been effective in solving the Libyan crisis.

Fourthly, the Iraqi Government needs to actively initiate a dialogue with various warring parties. There is of course no need to engage the ISIS in the dialogue. The Government needs to focus on engaging the Sunnis and the Kurds groups. As the most dominant power holder in Iraq now, the Shias should consider an expansion of power sharing with the Sunni and the Kurds to create and sustain peace.

Other option includes more progressive initiative by authority in Baghdad for a concrete revenue sharing deal with the Kurds on oil production. This is to avoid the Kurds from being too independent in fulfilling its needs, therefore increases the possibility of demanding a breakup from Iraq completely.

Policy Recommendation

Basically devising an ideal economic strategy in a vacuum of conflict situation in Iraq will be challenging. What best the Government could do now is to withstand the economic contraction in order not to be ruined into a total collapse. The Government needs to continue its oil production, as that is the only option available.

The most important focus of the Government is to stabilize the security situation in the country. In the short term, the option to approach the US is timely. The decreasing Iraqi military capacity is worrying. The inability of the military to control the situation will surely make the ISIS grow bigger. The Iraqi Government has a strong reason to have the US and the international community assistance.

On the other side, the Iraqi Government should seriously consider a dialogue initiative involving the Shias, the Sunnis and the Kurds. This type of dialogue will not yield a tangible result in a short term. It is a long term investment. But most importantly, it will give an atmosphere of trust building among the concerned parties. There are lots of dialogue models that can be referred to. The Iraqi Government should consider an involvement of the Organization of Islamic Countries (OIC) in this process. Given its vast experience in a peaceful transition to democracy and its success in the conflict resolution in Aceh and addressing many sectarian conflicts, Indonesia could also become a potential candidate to be involved in the dialogue process, with the full support of the OIC.

Jakarta, 21 March 2016

The Trans Pacific Partnership: What is the best option for Indonesia?

By Agung Cahaya Sumirat

Source pic : http://www.montrealinternational.com

 
President Joko Widodo has stated that Indonesia intended to join the Trans-Pacific Partnership (TPP). This statement was conveyed during a meeting with the US President Barack Obama on 26 October 2015. This is a big news for Indonesia. Since then, the President’s statement has triggered a hot debate and discussion concerning the notion of Indonesia joining the TPP. There is a pros and cons. There are those who are in favour of the President’s plan but there are also those who are against it. In this article, I wish to highlight the contradicting arguments on afore-mentioned issue and later share my observation to the issue.

TPP is an economic agreement among those of United States, Canada, Mexico, Japan, Vietnam, Singapore, Brunei, Malaysia, Australia, New Zealand, Peru and Chile which has border along the Pacific Ocean. TPP aims at promoting trade and investment, growth, innovation and creating more employment. The combined GDP of all TPP members is USD 27,8 trillion accounting for 40% of the world’s economy as well as 808,7 million of population.

Given the great economic potential of TPP cooperation, the objective of the Indonesian intention to join the TPP is to boost its economic performance. In the last five years, there has been a negative trend of the Indonesia’s export performance. In 2011, the export value reached USD 203 billion while in 2014, Indonesia could only achieve USD 176,3 billion.

The Pros for Joining the TPP
Those who are supportive for Indonesia to join the TPP argue that TPP will bring benefits to Indonesia based on several points:

1. The Minister of Trade Thomas Lembong, which has supported President Jokowi’s position in favour of the TPP, is of the view that Indonesia will use the TPP to accelerate bureaucratic reformation through reducing excessive permitting, licensing and protectionism. While the President him-self has highlighted his seriousness in carrying out deregulation. If Indonesia does not join the TPP, Indonesian products will not be as competitive as the Malaysia, Singapore and Vietnam products in entering into the TPP markets. Indonesian products will be put on 15%-20% barriers higher than those three countries.

2. Certain industry like footwear and garment will benefit much from the TPP markets especially those of the big economies of the U.S., Canada, Japan and Australia. The Indonesian footwear exports have so far been charged with up to 30% of import duties to enter the U.S. market. Joining the TPP could provide a much lower preferential tariff. Indonesia will be able to increase its market access. While in textile products, the Indonesian textile export has faced a heavy decline in the last 5 years. The Indonesia textile exports this year are estimated to be only about USD 12,9 billion, while the Vietnamese textile exports is approaching USD 25 billion.

3. By joining the TPP, foreign investors are expected to choose Indonesia as their production base and the manufactured goods that they produce will be exported to the TPP member countries with much lower barriers.

4. Indonesian consumers will reap the benefit since they can obtain quality products with cheaper price. The consumers will have lots of choices in buying better quality products.

The Cons for Joining the TPP
Those who are against in joining the TPP argue that:
1. The Indonesian economy will be very much liberalized by abolishing as much as national rules and regulation. This also means to create an economy which is more favourable to private sector process while the government’s role will be very much limited.

2. The smaller economies in the TPP will face much difficulty in adjusting to the TPP’s stricter standard such as in patent safeguards, elimination of negative list of investment and removal of privilege for government-owned enterprises.

3. The Association of Indonesian Traditional Market Traders (APPSI) has expressed concern that by joining the TPP, the Indonesian customers will shift their preference from buying local products to imported products. The Indonesian small scale and medium enterprises (SMEs) will also suffer from foreign market competition.

4. Indonesia must allow the foreign TPP enterprises’ access to compete in domestic procurement. This is a tough issue. Malaysia and Vietnam have been reported to have a serious concern on this issue.

5. There is a provision of the TPP concerning Investor State Dispute Settlement (ISDS) which allows the investors to file a complaint against the government to an independent tribunal or international arbitrage for possible breaches of investment protection. This ISDS provision will be very difficult to be accepted by the government since the domestic jurisdiction may be superseded by a foreign jurisdiction.

6. The TPP gives a different scheme of treatment for original members and new members. The new members are not able to amend the agreed regulation. In addition, new members can only join the TPP after its application is approved by individual member countries through series of individual negotiation.

Conclusion
The agenda of reforming national economy is indeed an inevitable one, particularly given the tougher international competition today and the continued decline of the Indonesia’s export in the past five years. At a glance, the TPP seemingly offers a remedy for enhancing the national competitiveness in this regard.

In many respects however, the TPP’s rule of the game is not confined only to the parameter of tariff and non-tariff barriers reduction but its standard has included sensitive national sectors inter-alia of procurement, patent, list of investment, possible international arbitrage and others. In addition, its rule of the game gives a non-flexibility scheme to new members.

All of these suggest that the Indonesian government needs to be very well informed through a comprehensive academic study and a strategic review before joining the TPP. The TPP is not only about economic transaction but its rule of the game also needs a redefinition of domestic jurisdiction.

In this connection, we need to find a method to ensure the best national interests that the TPP serves. Only through a reliable comprehensive study and review as well as intensive consultation among key national stake-holders can we believe that our national interest is best served through joining the TPP.

Jakarta, 18 March 2016

ENHANCING MARITIME COOPERATION BETWEEN INDONESIA AND AUSTRALIA

The 4^rd Group Blog by Agung Cahaya Sumirat, Ferry Pasaribu, Rully F Sukarno

Indonesia and Australia through various forum, either bilaterally (such as during the meeting between foreign and defense ministers (2+2 dialogue) in Sydney, Australia, on December 21, 2015) or multilaterally (their co-sponsorship of the EAS Statement on Enhancing Regional Maritime Cooperation) have demonstrated joint commitment in collaborating on maritime issue. Of particular interest between the two are on how to improve sustainable maritime development, maritime security, connectivity, technology cooperation and handling of transnational crimes, such as illegal, undocumented and unreported fishing.

Expanding cooperation between the two on maritime matters will be particularly challenging. In terms of policy, Australia has set up a comprehensive ocean policy that covers the civilian aspect of maritime/ocean usage, as well as a defence white paper that handles maritime security issue. Indonesia on the other hand, has yet to establish a coherent maritime policy that translates well to all sectors of the government.

Prior to the Jokowi government, the maritime interest of the two often collided. For instance, the Australian Government’s policy of turning boats suspected of carrying asylum seekers back into Indonesian seas had disappointed the Indonesian government and public. Not to mention Australian naval incursions into Indonesian territorial waters such as those during December 2013 and January 2014.

With their history of ups and downs, can the two optimize their collaboration? What policies need to be taken by the two to maximize the benefit of such cooperation without risking diplomatic stand offs?

Like Indonesia, Australia has a vast area of ocean that borders it with its neighbouring countries, comprising 13.86 million km2 (more than double the size of its land mass). It has invested vastly in developing its marine resources as well as its related technology. Therefore, maritime resources played a growing importance towards the Australian economy in terms of energy (non renewable such as oil and gas and renewable such as wind, tide, and waves), food security (fishing and aquaculture), trade, tourism, shipbuilding, and ecosystem (absorbing carbon dioxide).

Since 2009 Australia has established a plan of action called Marine Nation 2025 towards a Blue Economy country, based on its vast marine resources. It is projected that by 2025 marine-based industries will contribute more than $ 100 billion per annum. To put it into perspective, as of 2009-2010 marine-based industries contributed by $ 42.3 billion, while agriculture contributed just by $ 39.6 billion. While 99% of Australian export and import activities relied on shipping route.

Based on this plan of action, Australia would undertake the following programs:

• Enhance maritime security to protect its marine resources;
• Enhance research and development on renewable and non-renewable energies;
• Enhance food security by conducting research to support an expanding aquaculture and industry and data and tools management to have a better wild-catch fisheries;
• Enhance protection biodiversity and ecosystem by research and development;
• Enhance national capacity to deal with climate change.
• Establish policy and management issues by integrating social, economic and environmental information and developing tools and skills required.

In order to achieve these objectives, Australia has developed a vast network of national facilities (observation system, research vessels and stations, experimental facilities) using the federal budget. The Government also supports and subsidizes the collaborative research centers by all universities in Australia.

With regard to the Illegal, Unreported, Unregulated Fishing (IUUF), Australian Government considers it as jeopardising the Australian harvest of fish stocks both within and beyond the Australian Fishing Zone (AFZ), and thus the long-term survival of fishing industries and communities. The Australian Government considers that the IUUF practice in its Southern Ocean demands more serious attention since the illegal fishers are well organised and sophisticated in terms of their vessels including the vessel’s technology.

To strengthen policy in combating the IUUF, in July 2003, the Australian Government has launched a comprehensive strategy to combat IUUF through:

• better coordination and information use in both the Federal and State Governments
• enhanced on-the-water surveillance and enforcement
• strong pursuit of international action at bilateral and multilateral levels

While on its northern waters, the IUUF is largely undertaken by traditional or small-scale Indonesian vessels. Since 1974, traditional Indonesian vessels have been allowed access to a defined area of the Australian fishing zone (north west of Broome) in which Australia agrees not to enforce its fisheries laws – an area known as the MoU Box. IUU fishing by Indonesian vessels has occurred both in the MoU Box.

The Australian Government considers that the IUUF on the high seas is a highly organised, mobile and elusive activity undermining the efforts of responsible countries to sustainably manage their fish resources. International cooperation is considered to be vital to effectively combat this IUUF on high seas. By using regional fisheries management organisations as a vehicle for cooperation, fishing states, both flag and port states, and all major market states, should be able to coordinate actions to effectively deal with IUU fishing activity.

​Australia is also party to a range of conventions that establish global, regional and subregional management organisations that manage highly migratory, straddling, pelagic and demersal fish stocks. Also, Australia has signed Agreement on Port State Measures to Prevent, Deter and Eliminate Illegal, Unreported and Unregulated Fishing as the first global legally-binding instrument that aims to reduce the occurrence of IUU fishing. All of these suggest that the Australian Government has been very active and progressive in designing policy in combating the IUUF through national and international mechanism.

Some policy recommendation could be advised on how to establish a maritime cooperation between Indonesia and Australia. Indonesia could explore the possibility of making Australia Marine Nation 2025 as a reference to establish its maritime national policy. Australia has made a lot of efforts and investments in integrating its maritime sector, especially in terms of infrastructure development, as well rigorous research, observation, and conservation.

At this juncture, Indonesia should make Australia as one of its maritime cooperation partners. Indonesia could offer a collaborative research with Australia on developing its rich and vast marine resources. With regard to IUUF, Indonesia can learn the best practices that Australia has taken so far with a considerable success as well as the possibility to establish a coordinated patrol on the Exclusive Economic Zone (EEZ) between both countries. Of course Indonesia needs to prepare its human resources, infrastructure as well as appropriate law and regulation, so that this collaborative research and cooperation in maritime sector would be beneficial for Indonesia.

Australia would also be very much interested, as it may enhance further its research expertise by having a direct expose towards Indonesian rich biodiversities and marine resources. Also, by cooperating in maritime issues, Australia would secure an assurance of security from Indonesia, in terms of reducing poaching activities that are allegedly done by Indonesian vessels in the MoU Box.

Jakarta, 14 March 2016

Enhancing A System of Disaster Preparedness and Management: A Lesson from Indonesia

By: Agung Cahaya Sumirat

Located in the Pacific Ring of Fire, as one of the most active tectonic plates in the world, Indonesia is a vulnerable country vis-à-vis natural disaster. The Aceh Tsunami in 2004 was a clear testament of the disastrous impact of the Ring of Fire’s activity. The earthquake and tsunami had caused enormous devastation along Indian Ocean. More than 230,000 people in fourteen countries were killed, of which around 220,000 victims were from Aceh. The Aceh Tsunami has undeniably become a lesson learnt for Indonesia in terms of disaster preparedness and management. This article wishes to elaborate ways to enhance disaster preparedness and management in Indonesia.

Source pic: http://www.dw.com/id/apa-yang-sebenarnya-terjadi-dalam-tsunami-2004/a-18141866

The objective of enhancing a system of disaster preparedness has been a must for Indonesia given its fragility of its geographic location in the Pacific Ring of Fire. Disaster can happen at any time which necessitates us to have a good system of disaster preparedness. Specifically, there is also a need to keep on educating the public concerning this matter due to the vast size of Indonesia with its more than 17,000 of islands. It is impossible to stop disasters. However, through the system of disaster management and preparedness, we are better equipped to prepare for the disasters and reduce their impacts.

The Positive Trends after the Aceh Tsunami

After the Aceh Tsunami, there has been positive trends in Indonesia in creating a better system of disaster preparedness. Firstly, there is a change of paradigm among the Indonesian including the government in relations to natural disasters. Before tsunami in Aceh, there was a common perception that Indonesia was a secure place to live in from any possible disastrous disasters. The tsunami has taught us a stronger awareness of living in an active plate of Pacific Ring of Fire.

Secondly, the Government has made number of initiatives in strengthening national institutional capacity in the management of disaster. In 2008 “Badan Nasional Penanggulangan Bencana” or BNPB (National Agency for Disaster Management) was established. The Indonesian Government has also established the National Disaster Management Plan 2014-2019 and National Action Plan for Disaster Risk Reduction.

Thirdly, in 2007 law no. 24 concerning Disaster Management has been adopted. This new law has been considered as a breakthrough in the disaster preparedness system since it deals disaster intervention with a comprehensive manner including disaster mitigation, relief, recovery/rehabilitation and reconstruction.

Policy Options

In connection to the trends, there are numerous relevant policy options to consider among others are: firstly, given the vast size of Indonesia, there is a need to focus policy on continuously strengthening local capacities in regard to all phases of disaster response of relief, rehabilitation and reconstruction. This policy may cultivate on local knowledge and wisdom as well as engaging community groups including vulnerable groups of women, children and people with disability. The local governments and local communities are at the forefront in facing any possible disasters.

Secondly, the government needs to continue its active role in enhancing regional and international cooperation with regard to disaster management and preparedness programme inter-alia through ASEAN and Asian Ministerial Conference on Disaster Risk Reduction as well as supporting the mainstreaming of disaster risk reduction under the 2004 Hyogo Framework for Action.

Thirdly, the government should be in the driving seat in managing disaster at all management phases. During the tsunami in Aceh due to the magnitude of the tsunami, the government had been “forced by condition” to open the Indonesian territory to all types of international aid including the military aid. However, in the future the government should be in more control of all phases of disaster management and preparedness.

Policy Recommendation

Despite Indonesia has already had an established system of disaster management and preparedness, but Indonesia needs to continue and update our national capacity using the international benchmark of disaster management and preparedness. I would accordingly recommend that the Indonesian Government takes the option of focusing our active participation in enhancing international cooperation on the disaster management and preparedness.

International cooperation may serve two purposes: firstly, Indonesia will be continuously updated with more knowledge and expertise on disaster management and preparedness in the world. Secondly, Indonesia should be showing more leadership role in assisting other countries especially those who are in a process of building their capacities cultivating on the Indonesian best practice in managing the Aceh tsunami.

In this connection, the Aceh Tsunami management has then become a good case for Indonesia. International support to Indonesia had been enormous. Indonesia received more than USD 7 billion which had been very well managed by the Indonesian Government especially by the Badan Rekonstruksi dan Rehabilitasi/BRR Aceh (The Agency for Rehabilitation and Reconstruction in Aceh) which was established in 2005.

Indonesia has been praised internationally as a great success story for the disaster management. The BRR’s term of mandate was ended in 2009. At the end of its mandate, BRR was able to complete many projects inter-alia developing 13,000 houses, 3,600 new roads, 12 airports, 20 ports, 1,500 schools, 1,000 medical facilities, 987 government buildings, and creating 195,000 small scale and medium enterprises in Aceh.

Conclusion

The Indonesian fragility to natural disaster has been transformed so as to create a better system of disaster preparedness and management, which has incorporated all phases of emergency relief, rehabilitation and reconstruction. In this regard, Indonesia needs to showcase a more leadership role internationally, including through assisting other countries in enhancing capacities in this area. In other words this also means that Indonesia is in a position to project more on its humanitarian diplomacy.

Jakarta, 11 March 2016

INDIAN MARITIME POLICY: WHAT IS NEXT

Group Blog 3: Agung Cahaya Sumirat, Ferry Akbar Pasaribu, Rully F. Sukarno

India has traditionally placed a considerable strategic interest in the Indian Ocean, particularly in terms of its security and economic sphere. This is understandable as due to its position, the sea lanes in the Indian Ocean are considered among the most important in the world. Yet apart from trade and sea lane, it also houses a volatile mixture of geopolitical tension with major powers consistently maintaining a presence in its waters due to its strategic value. China in particular have viewed the Indian Ocean with much interest as it serves as a vital route for China’s energy need. To protect its vast interest, China has pursued the alleged development of ‘String of Pearls’ or the construction of naval ports in the countries surrounding India, namely Sri Lanka, Pakistan as well as Bangladesh. Such encirclement surrounding India’s sphere is troublesome and pose a security dilemma for India.

Should it not be properly managed, the situation may turn tense and disrupt the global flow of trade and energy. In this connection, India needs to design a strategic response particularly in ensuring the Indian traditional control over the vast Indian ocean.

Prior to the rise of China, India’s policy towards the Indian ocean could possibly be characterized as inattentive (in the 60s) or watchful yet could not get the issue prioritized (from the 90s until China’s rise in the region).

Yet recently, and possibly as a reaction to China’s growing presence in the region, Indian Prime Minister Narendra Modi has set Indian ocean as a national priority since he assumed the office in May 2014. He has also said that India is facing many challenges in its relations to Asia, particularly in its strategic interests in the Indian Ocean Region (IOR). This suggests that India wants to play a stronger security role in the IOR particularly through enhancing its maritime capability.

Both India and China are dependent on sea lines of communication (SLOCs) through the Indian Ocean for securing their respective trade and energy routes. Over 90% of India’s foreign trade by volume and 70% in value terms is seaborne, accounting for 42% of India’s GDP.

Nowadays, in its pursuit to become world’s 4th largest economy, India is predicted to be heavily import dependent on its energy supply in the next 20 years. With major sources of energy imports from Africa, Middle East, and Southeast Asia, it is therefore within India’s core interest to protect the energy distribution line throughout the Indian Ocean.

Meanwhile, China will double its energy import in the next 10 years. It is predicted that by 2020 China will import more than 7.3 million barrels of crude oil per day. To put it in perspective, it accounts for more than half of Saudi Arabia’s planned oil production. More than 85 percent of oil and oil products import bound for China pass the Indian Ocean and pass through the Malaka Strait. China, like India, is also keen in protecting its interests through Indian Ocean.

As China is fully aware of Indian traditional influence in the Indian Ocean, it would keep investing heavily in securing supports from the region. China’s billion dollar investment in ports and roads projects in Pakistan, Sri Lanka and Bangladesh have been successful in eroding India’s traditional influence over those countries. Even in 2014 China had its submarine docked in Sri Lanka’s new port that was built and run by Chinese company and built a naval base in Gwadar, Pakistan.

One the challenge for India in responding to China’s increasing actions in the region is how to exert its influence and presence without provoking China into taking hostile actions. To address this matter, India needs to combine engagement, diplomacy as well as military build up.

To counter China’s strategy, India has launched soft power initiative by offering various infrastructure projects in Sri Lanka and Bangladesh, as well as in Iran in the West and Myanmar in the East, all targets of China’s charm offensive. It needs to persistently do so in order to not lose momentum. India also need to increase its military resource and capability. It has done so by investing billions of dollar to strengthen its military, namely its Navy. In 2014 India was registered as the largest arms importing country.

It is building its 3 nuclear-powered submarines and 3 aircraft carriers, in addition to 155-odd warships that it has already had. Furthermore, it has strengthen its military cooperation with the US along other countries through the annual Malabar exercise held since 1992, much to the consternation of China. Meanwhile, on the diplomatic front, it has strengthened relations with other Indian Ocean littoral states, such as Vietnam, to increase its leverage along the region. It needs of course, to engage with more. .

Along the way, as these steps have the potential to be misunderstood by China, India needs to constructively engage with China to avoid potential conflicts. With adequate support from the region, a strong military, backing from major powers, India should possess enough bargaining chip to engage on an equal footing with China. With the realization that both countries need to maintain security and order in the Indian Ocean, the world needs to understand that it is also within its interest that the region remains stable. This could in major part be achieved by having the two important powers in the Indian Ocean at peace.

Jakarta, 7 March 2016

The East Asian Community and East Asia Summit: Way Forward

Presentation to Dr Hassan Wirajuda Session
by Agung Cahaya Sumirat (Sesparlu Batch 54)

Unlike Europe with its European Union, in Asia there is no regional-wide organization or regional structure which can provide discussion platform on strategic matters including politics and security. Asia has been considered as too diverse in terms of politics, economics, history and cultures. The question of strengthening Asian framework for managing inter-relations among the Asian countries have inspired much thinking particularly due to security and political challenges that Asian countries are now facing inter-alia the issues of South China Sea, North Korean nuclear proliferation, and other disputes related to territorial borders.

In the void of such an Asian regional framework, ASEAN Regional Forum (ARF) has proved to be instrumental in facilitating dialogue among its members in a frank and direct manner including on sensitive security and political matters. In this regard the ARF has been widely acknowledged to be a useful forum for discussion at the high level of political representation.

The main driver of ARF has been ASEAN. The question is then how to address situation in Northern Asian countries given the challenges of security and political dynamics considering bilateral constraints of discussion among Northern Asian countries in their sub-region.

The notion of establishing East Asian Community (EAC) has been geared toward realizing a wider forum for discussing Asian strategic matters by highlighting the concept of East Asia which accomodate both Southeast Asia and North Asia. Its mandate has been to promote prosperity and stability in East Asian region. However in later stage there has been expansion of membership involving non-East Asian countries. EAC has already 18 members and has an annual East Asian Summit (EAS). In the EAS Leaders may discuss lots of things without specific agenda.

What is the way forward of EAC and the EAS? I would propose some recommendations as follows:
1. The member countries need to discuss modalities of EAC in a more comprehensive manner including priorities, agenda of the meeting and the need for more structures of Senior Official Meeting as well as Foreign Ministers Meeting.
2. To focus discussion in the EAS, there should be a selection of more specific agenda of 1 or 2 items only which aims at encouraging indepth exchange of views among leaders.
3. There is a need for a guideline on the issue of future criteria of membership.

Jakarta, 4 March 2016

The Syrian Conflict: A Case of Arab Spring Turning into A Civil War

By Agung Cahaya Sumirat

For those who have aspired to and hoped for new democracy in Middle East, the Arab Spring has offered much hope in bringing fundamental change of governance in that region. Starting in Tunisia, the power of Arab Spring proliferated in Egypt, Libya, and Yemen. In Syria, the Arab Spring which began against the President Bashar al-Assad has escalated into a brutal civil war as well as proxy war involving regional and world powers. The story of Arab Spring in Syria turned into a sad reality of conflict. This article wishes to elaborate the anathomy of the conflict and how it come to its current complexity.
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Based on the latest data of the International Committee of the Red Cross (ICRC), there are around 13 million of Syrians in need of humanitaran assistance. 5 million of them are children. 9 million have been displaced inside Syria. More than half of 22 million of Syrian population has been forced to leave their homes. 4 million have fled their country. 60% hospitals are closed or not functioning.

At the beginning of the conflict in 2011, hundred thousands of the Syrian took to the streets to demand resignation of President Bashar al-Assad. The Syrian Government responded violently in crackingdown this movement which caused casualties and many were killed. The protest movement remained steadfast and responded fiercely instead. They began to group and arm themselves to fight the security forces. The conflict worsened and escalated to become a civil war involving support of the regional and global powers.

There are at least three dimensions of the Syrian conflict namely:
1. Civil war between the Syrian government against the rebel groups. There are around 1,000 rebel groups consisting of 100,000 fighters, among others from Free Syrian Army, Islamic Front, and Kurdish Protection Units. The radical groups of Islamic State of Iraq and Syria (ISIS) and Al Nusra (pro Al Qaida group) have also fought against the Syrian government. The involvement of Al Nusra and ISIS particularly have expanded the scope of the conflict. Their emergence have added fear of radicalism ideology worldwide. The ISIS controlled vast area of Syria bordering with Iraq.

2. Sectarian war between Shia Muslim against Sunni Muslim. 87% of the Syrian’s population is Muslim. Around 74% are Sunni and 13% are Shia (Shiite). Approximately 2 million are Alawi Shiite which has dominated the Syrian politics and military. President Bashar al-Assad is an Alawi Shia. The Sunni and the Shia has long engaged in a struggle for power.

3. Proxy war involving international powers. The conflict escalation has involved the US, UK, French, Saudi Arabia, Turkey, Qatar, and Jordan. They have provided support to the Sunni-dominated rebel groups. While Rusia, Iran, and Hezbollah fighters of Lebanon have backed up the Syrian government.

The Contest of Regional and Global Powers
Russia has supported President Bashar al-Assad. Aside from strategic point of view, there is also an economic dimension. Russia wants to ensure an access to energy resources from the Middle East through its maritime facility in Syria. Russia commenced air strikes in 2015. Russia said that they targeted the ISIS and other terrorists groups.

The US has pushed President Assad’s removal for committing widespread atrocities and human rights violation. The US supports the Syria’s opposition groups and provides military assistance to the rebels. Since 2014, the US has conducted air strikes against the ISIS and other radical groups in Syria.

Arab Saudi has provided substantial military and financial assistance to the rebel groups, including those with Islamist ideologies. Saudi agreed to take part in the US-led coalition air campaign against ISIS.

Turkey has also supported the rebels for the removal of President Assad. Turkey has faced the negative impact of the Syrian conflict by hosting almost two million refugees. Turkey facilitated the US-led coalition to strike the ISIS by allowing the use of its air bases.

Iran has been reported to have provided billions of dollars and weapons to President Assad and his government. Syria has been the Iran’s closest Arab ally in the power play in Middle East. Syria has also collaborated with Iran in the shipment of Iranian weapons to the Hezbollah in Lebanon.

Cessation of Hostilities
The latest international effort in helping to solve the Syrian crisis has been manifested through the establishment of International Syria Support Group (ISSG) in Vienna, November 2015. ISSG consists of 20 countries including the UN. ISSG have been co-chaired by Russia and the United States. On 22 February 2016, foreign ministers of Russia Sergei Lavrov and John Kerry of the US in Munich announced the deal on cessation of hostilities in Syria which began on 27 February 2016. However Russia has not committed to end their air strikes, as demanded by the rebel groups. John Kerry said that UN taskforce would “work to develop the modalities for a long term and durable cessation of violence”.

Conclusion
Given the complex situation in Syria, the deal on cessation of hostility has made one step of progress. However, its follow up on the ground especially on how the monitoring mechanism works remain to be seen. The reluctance of Russia to end the air strikes has made conflict resolution in Syria remain elusive. Only continued dialogue and self-restraint among concerned parties can there be a better chance for crafting a real peace in Syria.

Jakarta, 4 March 2016