Tsunami: The Power Plays Begin

by Andrew Burrell - Financial Review

Beyond heartfelt generosity, donor nations are jockeying for influence in Asia.
John Howard rode into town and trumped the world's leaders with a headline-grabbing $1 billion pledge towards Indonesia's tsunami relief effort that propelled Australia to the top of the global aid ladder.

In one deft move, Australia surged ahead of the world's richest nations Germany, Japan, the US, Norway, France and the United Kingdom in the race to be seen as the most generous towards a region devastated by the Boxing Day disaster.

No one at the 24-nation aid summit in Jakarta could have accused the Prime Minister of hiding his light under a bushel. Howard said after the meeting on Thursday night that Australia had been "widely applauded" for its "extremely generous" donation, which he described in successive media conferences as the "largest single aid package in Australia's history".

Australia, he acknowledged, could afford such a large contribution to the relief effort because it was a rich country that had been "blessed by providence and good fortune". He added: "But it's one thing to be in a position, it's another thing to actually provide the assistance."

Australia's pledge of $1 billion for Indonesia, comprising $500 million in grants over five years and another $500 million in interest-free loans, was the climax to a global bidding frenzy by rich nations pledging billions to the Asian relief effort.

This groundswell of generosity did not stem from humanitarian concerns alone. Much of it related to political jostling between the world's established and emerging powers, including the US, Japan, China and India, for lasting influence in Asia.

United Nations Secretary-General Kofi Annan saw the risk that much of the $US4 billion ($5.2 billion) in pledges would never be delivered, warning donor countries in his keynote address to the summit that almost $US1 billion in immediate cash was needed, rather than offers in kind.

Louis Michel, the European Union commissioner for humanitarian action, cautioned rich donors against using the summit to raise false hopes for millions of people who are suffering. "We have to be very careful and not participate in a beauty contest, to compete in order to have very high figures."

Even US Secretary of State Colin Powell, facing accusations that the US was being stingy in its aid contribution, lashed out at the notion that "we're in some kind of auction house, where every day somebody has to top somebody else".

This is the most global response to a natural disaster in history; 11 countries were directly affected by the tsunamis, and citizens from 51 countries, rich and poor, were killed. For many nations, however, it is a golden opportunity to seek to expand their influence in a region full of fast-growing economies, particularly in Indonesia. It is the world's largest Muslim country and was the hardest hit by the Boxing Day tsunamis.

Australia's massive pledge, for example, should lead to greater co-operation with Jakarta in the war against terrorism, while a viable Indonesian economy promises benefits for Australian trade and investment.

Australian companies are also now more likely to be involved in the rebuilding of key infrastructure in shattered Aceh province over the next five years.

Howard said that Indonesian President Susilo Bambang Yudhoyono who has been in the job for only 11 weeks and for whom the Prime Minister has developed a deep respect was "overwhelmed" by the donation and had promised never to forget it.

For Australia, this is certainly a diplomatic coup, although it will be much more difficult to erase suspicions in some Jakarta circles that Howard is a US "deputy sheriff" intent on launching pre-emptive strikes against Australia's neighbours.

"There is no doubt that this tragic experience has brought Australia and Indonesia closer together," Howard said after the summit.

The other coup for the Prime Minister is that he has devised a way of keeping Australian aid money out of the hands of the UN, which will be responsible for administering the billions pledged by other countries.

This must be deeply satisfying for Howard, who views the UN as a bloated bureaucracy that is deeply unpopular with both Australia and the US over its opposition to the war in Iraq.

Howard warned against the dangers of "unnecessarily bureaucratising" the relief effort and said he didn't want to see a situation in which Australian taxpayers' dollars were "put into the hands of others".

Instead, the aid will be delivered via a Jakarta-based commission operating out of Indonesia's planning agency, Bappenas. It will be overseen by both Howard and Yudhoyono and include Australian staff.

For the US too, sending money and troops into Indonesia is a unique opportunity to repair its image in a Muslim country where it once enjoyed moral authority.

President George Bush quickly raised his initial pledge of $US15 million to $US350 million and sent in the might of the US military, which is playing a pivotal role in saving lives on the ground in Aceh.

This is an extraordinary development, given the US Congress has banned military co-operation with Indonesia over concerns of human rights abuses.

In a sign that the US mission is also a security priority, Powell warned that a failure to help rebuild the economies shattered by the disaster could breed extremism.

"If nations are poor, if they don't see hope, if they're riddled by disease, if no one is helping them, then radicalism takes over, they lose faith in democracy and they start turning in other directions," he said.

China and Japan, which are competing heavily for economic influence in South-East Asia, also joined in the aid donation bidding war. In a classic case of Sino-Japanese rivalry, both countries also jostled for a leadership role in setting up a tsunami warning system for the Indian Ocean.

Until the middle of the week, Japan's pledge of $US500 million, as well as debt relief for affected countries, was the largest of any nation, although this was quickly trumped by Germany and Australia.

China's pledge of $US64 million, while not as large as many other countries', was nevertheless a record for the emerging giant, reflecting a desire to play a bigger diplomatic role in the region and worldwide.

India, one of the countries worst affected by the tsunamis, has turned down all offers of foreign aid, in what is perhaps a reflection of its emerging economic clout.