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This chapter discusses the cultural and economic advantages and disadvantages for Australia that result from its Indonesian aid links. The discussed economic and cultural benefits include the long-term development of Indonesia and its region and the improvement of employment and investment opportunities for Australian businesses and of training opportunities. The discussed economic and cultural disadvantages come from the inequitable distribution of aid, rights abuses, and government corruption that results from the over reliance on aid income and the, arguably, unrealistic nature of aid policies.

Cultural and economic advantages

Long-term development

The importance of long-term development aid is summed up in the often quoted phrase, 'a fish for a day but a fishing rod for life'. Assisting the poor living in Indonesia to encourage private investment and trade opportunities, and to create stable social institutions as an avenue to sustainability and to assist education is, arguably, to benefit both Indonesia and Australia in the long-term.

Employment and training opportunities

Approximately 45% of all Australian aid was used to buy Australian goods and services in recent years. A significant amount of this came from aid to Indonesia, with significant economic flow on effects for businesses and for increased levels of employment in Australia. Thousands of full and part-time jobs have been created in government and non-government aid agencies as well as in private consultancy firms. Voluntary aid has been said to benefit young people seeking work experience and retirees and unemployed people seeking worthwhile work. The theory is that voluntary work gives them valuable knowledge and work skills and improves cultural links between the two countries.

Enlightened self-interest

Assisting in the improvement of living standards has, arguably, increased the consumer income and consumption demands of Indonesians for Australian exports and increased the number of jobs in Australian export industries. An ongoing demand for Australian goods and services in Indonesia is tied up in its prospects for long-term development and is therefore seen to promise strong economic advantages.

Regional security

Australia's security concerns are partly linked to social and economic inequalities which are among the major causes of armed and civil conflict in the region. Other issues linked to increased cross-border movements of people and environmental impacts highlight the importance of aid that targets poverty reduction to improve security. Aid given to conflict resolution and poverty reduction is thought to result in fewer refugees fleeing Indonesia and greater regional security.

Culture and values

Australians are popularly understood to be 'champions of the underdog' believing in the 'fair go' principle. To not have an overseas aid program is thought to be inhumane and even unpatriotic. The Australian Overseas Aid Program (ACFOA) argues that most Australians support Indonesian aid simply because they sincerely care about those who are less well off. Aid to Indonesia may, then, encourage friendly relations between it and Australia and the future positive exchanges of cultural values.

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Cultural and economic disadvantages

Political problems and inequity

It has been argued that aid agencies present their goals in unrealistic ways that undermine their implementation and increase the vulnerability of the poor they seek to help. The view that social consequences are less worthy of concern than aggregate economic growth is further thought to result in equity problems. The assumption is that increases in GDP will increase social benefits, whereas reality shows this to be debatable with economic growth in Indonesia, despite the remaining highly unequal income distribution. An unrealistic view of aid targets may also result in propping up institutions that are able to be manipulated by unscrupulous local political figures.

Rights abuses

A report by ActionAid International states that hundreds of thousands of survivors of the 2004 Indian Ocean tsunami are still living in substandard shelters and are deprived of adequate health care and other basic services. The report has linked this to discrimination in the distribution of aid sent to tsunami victims and the possible result of regional economic and security weaknesses. Weaknesses come from aid-income assisted government corruption and its forced relocations of Indonesians, land grabs as well as arbitrary arrests and sexual and gender-based violence. This has highlighted the need for not just financial aid but recognition of human rights standards. Perhaps the answer to this is 'tied' aid. Tied aid is financial assistance given on condition that it is used for a specific purpose. This purpose is usually mandated by the giver of aid, with the aim of preventing waste of aid on projects that are considered unsuitable by the donor country.

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1. Why is aid to Indonesia thought to be a form of 'enlightened self-interest' for Australia?

An ongoing demand created for Australian goods and services in Indonesia

The future positive exchange of cultural values between the two countries

A more secure region resulting in fewer refugees fleeing Indonesia

All of the above


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