Transcript No. 99/61

….Mr Costello, good morning

COSTELLO:

Hello Neil, how are you?

MITCHELL:

I’m okay. Now it’s reported that you are ruling out economic sanctions on Indonesia

over East Timor – is that right?

COSTELLO:

No that’s not the case at all. The Government has said that we will be making

representations in the IMF and the World Bank, who are both aware of the situation and are

very aware of our views in relation to this. In fact I’ll be going to the IMF and the

World Bank at the end of September and making the point that we think the situation in

east Timor is a deplorable situation. The World Bank and the IMF will have to give very

careful consideration to their programs. And in addition to that, as you know, the

Australian Government had volunteered to be part of second-tier financing in relation to

Indonesia and we have not advanced any money under that second tier financing.

MITCHELL:

That was around a billion dollars?

COSTELLO:

Yeah that was around about a billion dollars. We have not dispersed a dollar of that

even though we announced in principle that we would. We have never drawn down on those

funds and…

MITCHELL:

What and we will not now?

COSTELLO:

Well I can’t see that we will be in the current situation, no.

MITCHELL:

What about trade sanctions?

COSTELLO:

Well trade sanctions are a matter that will be considered by the Government in due

course and if after that consideration the Government comes to that view I expect that it

would be announced, but it’s not my place to announce that and as I’ve said all of these

matters are kept under consideration.

MITCHELL:

You’re reported as saying that you thought economic sanctions and trade sanctions would

in fact not fix anything in the short term, is that accurate?

COSTELLO:

No the point that I’ve made is that economic and trade sanctions when they work, the

experience of South Africa was that they did work and they took twenty or thirty years to

have the effect. That was the point that I’ve been making and what we need obviously is

something that’s going to have much quicker effect than the long-term effect than trade

and economic sanctions have

MITCHELL:

And what is that, is that approaching the IMF and the World Bank or…?

COSTELLO:

Well in the first place it’s securing agreement for a peacekeeping operation in East

Timor.

MITCHELL:

Yeah.

COSTELLO:

We shouldn’t be sitting around saying to ourselves let’s do something that will have an

effect in ten or twenty years, doesn’t mean we should rule that out, but we shouldn’t be

saying well you know let’s go the long route. What we ought to be trying to do is go the

short route and the short route is a peacekeeping operation in East Timor, which is what

the Government is doing everything within its diplomatic power to try and secure.

MITCHELL:

Yes, but the Indonesians are resisting that, how do we put pressure on them?

COSTELLO:

Well we’re putting pressure on them directly with our own representation, we’re raising

it in the international forum, but more than that we expect that the UN is in negotiation

with them. Now you’ve got to come back to this point that the agreement in relation to

East Timor is an agreement which is brokered by the UN and Indonesia’s a party to it and

Portugal is a party to it and very solemn assurances were entered into as part of that and

the UN is the broker. The UN was the force that was going to monitor the ballot …

MITCHELL:

But those assurances have been broken haven’t they?

COSTELLO:

…and with assurances from Indonesia in relation to security. Now …

MITCHELL:

But those assurances have been broken haven’t they?

COSTELLO:

The UN expects those assurances to be met and in the absence of meeting them there has

been an attempt to have an international force which will be meeting them and the

Australian Government is using every means that is available to it to try and secure that.

MITCHELL:

Are you aware that armed Australian troops are now guarding the airport as people are

evacuated?

COSTELLO:

Well I know that Australia has indicated that it will help with the evacuation and it

will take the necessary measures to secure (inaudible).

MITCHELL:

Well I was talking to Lindsay Murdoch at the UN compound about an hour and he told me

that’s what’s happening. They’re being hidden on trucks, guarded as they fly out, as they

are taken to the airport. So what will you tell the IMF and the World Bank at the end of

the month?

COSTELLO:

Well we’ll tell the IMF and the World Bank that we consider the situation to be very

grave, that the IMF will have to clearly consider whether or not it’ll be proceeding with

the package and that in proceeding with the package they’ll have to assess the compliance

that Indonesia has shown in relation to this matter and in relation to economic

restructuring. We have already made these representations.

MITCHELL:

But are we asking them to withhold money?

COSTELLO:

Well we have already made representations at the IMF and at the World Bank and drawn it

to the attention of the World Bank and the IMF and we’ve secured an assurance from them

that they are looking very carefully at the situation in relation to East Timor and will

take that into account. Now the fact of the matter is that there is not another draw-down

on those funds in the near future but we have an assurance from the IMF and the World Bank

that they will consider the security situation if there is to be another draw-down in the

future.

MITCHELL:

Thank you very much for speaking to us.

COSTELLO:

It’s a great pleasure Neil.