Initial Project Information Document (PID) Report No: AB602 Project Name INDONESIA - SUPPORT OF CONFLICT-RIDDEN AREAS PROJECT Region East Asia and Pacific Region Sector Other social services (100%) Theme Conflict prevention and post-conflict reconstruction (P) Project P078070 Borrower(s) NATIONAL DEVELOPMENT PLANNING AGENCY Implementing Agency(ies) MINISTRY OF HOME AFFAIRS BAPPENAS Address: Jl. Mangunsarkoro 5, Jakarta, Indonesia Contact Person: Tatag Wiranto Tel: (62 816) 36407 Fax: (62 21) 352 4043 Email: Environment Category C (Not Required) Date PID Prepared January 14, 2004 Auth Appr/Negs Date June 15, 2004 Bank Approval Date June 17, 2004 1. Country and Sector Background Indonesia's multiple conflicts differ from many of the country contexts in which the post-conflict literature developed. Four factors are particularly relevant for understanding conflict in Indonesia. The first is that objective "grievances" have no predictive value for identifying where conflict takes place in Indonesia. Levels of poverty, degree of political repression, polyethnicity -- all factors identified as a "cause" of conflict at one time or another, are not significantly worse or better in the conflict areas compared with the areas where conflict has not broken out. The second is that the superficial characteristics of conflict varies tremendously across the country. This very variance masks a fairly limited number of causes. Superficial reviews of Indonesia's major conflicts show religion as the "cause" of conflict in Maluku, separatism in Aceh, and ethnic hostility in Kalimantan. Yet underneath all these differences is a grab for organizational and economic resources by interest groups. Previously such grabs would be controlled and restrained by the overwhelming dominance of the Indonesian state and especially the army. Indonesia compensated for its failure to develop civil institutions for mediating conflicts, such as independent judiciaries, political institutions, and mechanisms for integrating immigrant groups into local social structures simply by repressing any form of local challenge to state dominance, including the challenges to state control represented by violent conflict. The third characteristic of Indonesian conflicts is the penetration of conflict right down to the level of the kecamatan and in many cases, to the village. Indonesia's current conflicts do not create "revolutionary solidarity" among populations the way that East Timor or even Indonesia's own independence movement did. Even in the movement most closely resembling a well-organized resistance movement, in Aceh, conflicting loyalties divide local groups into violently opposed factions, thus creating fertile ground for the resumption of conflict at what often appears to be minor provocation. 2 PID The fourth factor is that the pervasiveness of conflict in rural Indonesia is badly underestimated. Seven provinces are officially classified as major conflict zones. But conflict in Indonesia is better viewed as taking place along a continuum that ranges from widespread banditry in provinces such as Lampung or Jambi to the more formally recognized conflicts of Aceh or Maluku. The susceptibility of many apparently non-conflict areas to outbreaks of civic violence is high. A genuine concern for the Bank's strategy on conflict areas is whether to limit post conflict analysis and support to the designated conflict areas, or whether to develop an approach that can apply across the general spectrum of conflict. (The proposed SCRAP project includes Lampung province to provide an opportunity for GOI and the Bank to evaluate opportunities for assisting a conflict ridden province not normally included in the standard lists) The impact of conflict on rural populations exhibits a number of common patterns across the country. First, not surprisingly, if conflict affected populations are not uniformly poorer than the country at large before the conflict, they always experience significant drops in living standards and general economic growth, in some cases dramatically so. Economic decline comes from several sources, some more obvious than others. Conflict increases risk and encourages investment to go elsewhere. Conflict also promotes the emergence of many investment dampening legal and illegal fees.An increasingly observed phenomena in Indonesia is that conflict makes groups abandon critical economic activities, such as the collapse of the essential ship repair industry in North Maluku caused by Christian shipbuilders becoming refugees, thus bringing to a halt marketing services for Muslim exporters. Second, essential community services such as education and health are severely curtailed or stop during conflioct, mainly due to loss of staff and the destruction of buildings, and may take years to recover even after the conflict has ended. Education appears to be particularly susceptible to delayed recovery despite the near uniform citation of education as a top priority by the affected communities. Rural infrastructure also decays quickly in Indonesia because of the tropical climate and the generally low construction standards, and in conflict areas it is neither maintained nor replaced. Third, most Indonesian conflicts are cyclical. As Collier has pointed out, while objective grievances do not explain violent conflict, the subjective grievances created by the conflict itself create the potential for many more future conflicts. Many of the current conflicts in Indonesia now have their own "grievance myth" that justifies the resumption of conflict not because of any one provocation, but because of an inherited cause that justifies re-starting conflicts that may have temporarily settled down. Increasing spatial segregation resulting from past conflicts exacerbates inherited grievances in places such as Maluku, where formerly co-resident communities now launch raids on each other from separated settlements. Without mechanisms to discuss and defuse inter-group tensions, they fester and worsen. Government Strategy -- The Government of Indonesia has formed a coordinating group led by Bappenas and supported by UNDP, to prepare an overarching strategy for the management of conflict. A draft strategy was produced in March, 2003. Objectives of the government's master policy framework are to promote a multisectoral approach to conflict management rather than the single sector approaches applied in the past. Further, the strategy moves away from centralized 3 PID solutions to emphasize decentralized, participatory approaches that incorporate social reconciliation into reconstruction and rehabilitation programs. Nevertheless, the overall strategy retains a number of weaknesses that have vitiated government post conflict efforts in the past. Although the strategy emphasizes local participation and close tailoring of reconstruction programs by the decentralized government agencies, the strategy still has no mechanisms for doing this and instead proposes a standardized reconstruction program for all conflict areas. The strategy also continues to promote subsidized credit and other distorting measures. More clarity on institutional responsibilities will be essential, as will further work to identify who pays and how for post-conflict support. However, the draft is not yet finalized and several of these measures can be addressed through the strong Bappenas working group that is charged with managing GOI's community and conflict development projects. The government has also made some generally forward if uneven progress towards reviewing the composition and role of the armed forces. At the political level, "dwifungsi" -- the military shadow government twinned with civilian positions -- has de facto ended. The military faction in the legislature has also steadily lost power, although it has not ended entirely. The government recently completed a white paper on defence needs, which for the first time acknowledges the budgetary problems which made extra-budgetary fundraising by regional commanders a nesseity and which has now become a contributing factor to many of the regional conflicts across the country. However, while the government now recognizes the problem of an underfunded military, there are still no signs either of curtailing the military's extra-budgetary activities or of increasing the percentage of GDP spent on the armed forces. At the level of individual agencies who will be involved in SCRAP, the Ministries of Health, Education, and Home Affairs each have units charged with support to conflict areas and all three ministries are represented on the Bappenas coordinating group. However, these ministries do not have policies or experience working in multi-sectoral approaches for conflict situations. MoNE has in the recent past tended to promote sector-specific interventions (such as block grants for schools that cater to significant numbers of internally displaced people, and counselling for traumatized students, for example). MoH has policies on health aspects of disaster management emergency response to dsiasters and conflict that focus mainly on curative interventions (e.g. mobile emergency brigades in hospitals, community psychological trauma conselling, and clinic reconstruction, for example). This includes an emergency fund at the central level to support district proposals but these have not been linked to a multi-sectoral approach. MoH welcomes and facilitates NGOs to provide humanitarian assistance and public health and nutrition support in conflict situations, but has no strategy for engaging non-government or private providers to fill service gaps in post-conflict areas or to support longer term develeopment goals. Home Affairs has the greatest experience with multi-sectoral projects, but its post-conflict units have in the past focused on what it calls "cultural" and "security" approaches to conflict management. More relevant are its experiences with the community development programs such as KDP and some of the fast-response poverty crisis programs. Home Affairs is also well-placed 4 PID for addressing many of the decentralization issues that arise in post-conflict management (i.e. "who responds"?) but it is increasingly constrained by lack of administrative capacity. 2. Objectives The general objective of this project is to help the government develop and pilot strategies to support transition to longer-term development in post-conflict areas. The project will achieve this objective through three types of activities: l strengthening community-led planning and dispute resolution processes; l promoting private investment and job creation. l increasing utilization of effective education and health services. 3. Rationale for Bank's Involvement l Research base in conflict diagnosis l Experience of design, implementation and montoring of conflict projects in other countries l Ability to mobilize a multisectoral team and their knowledge of best practice in areas of CDD approaches in Indonesia, community oriented basic services and business approaches. l Funding strength ­ large amounts of funds into poor communities 4. Description The project is expected to have three main components, all of which contribute to a transitional program for re-starting development. The objectives of the components are to promote local-level reconciliation; to re-start productive activity and spur the sustainable creation of jobs; and to restore the provision of human development services to standard levels of coverage and quality. The three components are: a) Community development, reconciliation, and dispute resolution b) Improving the Investment Environment b) Education and Health Services A. Community reconciliation and development will carry out a range of activities designed to provide village members with formal and informal mechanisms for dispute resolution that provide an alternative to violence. The planning procedures for this component will be built around the same procedures being used for the Kecamatan Development Project, which will also be taking place in the project locations. SCRAP complements KDP but it funds different items and requires a different facilitation and oversight structure. SCRAP's community development work consists of five types of activities: (i) Investment for rehabilitating infrastructure that emerge from the KDP planning process but require the cooperation of two or more villages -- these proposals are likely to include simple, infrastructure such as repair of extended water supply systems, broken bridges and the 5 PID like, but can also include regreening and reforestation in areas where conflict led to widespread cutting of orchards. A preparation decision will be whether to allow use of the funds for some types of private goods if this activity is proposed through the collective village forum and is directly linked to catastrophic results of the conflict (KDP experience in Lampung provides examples of kecamatans collectively agreeing to rebuild houses for villages that were burned to the ground during the conflict as part of a kecamatan-wide reconciliation program; in Maluku villages large numbers of farmers cannot afford to re-plant trees cut down by raiding parties, etc); (ii) Sociocultural programs that promote cross-village encounters, such as sports leagues, cultural performances that build peace, village arts programs, and the like (sponsorship for these will potentially be linked to the business forums described in Component "B"); (iii) Expanding the $2.5 million program for vulnerable female headed households in conflict areas (PEKKA) that was piloted in four provinces under a JSDF grant to the seven SCRAP provinces. The program combines a long organizing/empowerment program with a series of micro-grants for widows and other female heads of household, and in SCRAP it will be linked to some of the activities funded by the rural health program (component "C"). A similar program but with more of an emphasis on vocational training and job information will be developed for village youth; (iv) Given the prevalence of land disputes in rural Indonesia and the relatively successful experiences with community based boundary mapping, SCRAP will fund experienced NGOs to introduce community based mapping programs into kecamatans with boundary related land conflicts. These community managed mapping programs will not have a legal standing because Indonesia is still developing appropriate land registration systems for traditional land management systems. But introducing a program that gets communities to map and adjudicate where they themselves think their boundaries are will provide a first step towards giving disputants an "independent" referent when boundary conflicts break out. (v) SCRAP will draw on the Bank-funded Justice for the Poor ESW to develop and strengthen formal and informal mechanisms for local-level dispute resolution. Preparation will assess options and develop more specific proposals, but options for the formal system that are under consideration by government include a program to recruit and equip a circuit court that would hear cases in kecamatan centers, programs for community-police oversight committees, and programs to monitor and disseminate court decisions. Informal dispute settlement training will primarily cover training programs and the possible development of a dispute referral system. This component uses three main organizational mechanisms to propose and manage activities. In the villages, each village nominates male and female representatives who the villagers believe can mediate disputes. They will be trained by SCRAP. The inter-village forums established through KDP will be the kecamatan level mechanism for reviewing inter-village investment proposals (financial thresholds will provide the screen for size). Finally, representatives of the inter-village forums will form a re-development forum at the district level which will work with DPRDs and civil society groups. They will screen and approve the sociocultural proposals coming from the villages and kecamatans using the project's review criteria. 6 PID Preparation will determine the most appropriate contracting structure for the work on dispute resolution. Programs piloted under KDP suggest that a combination of university-based lawyers and advocacy NGOs can provide training and oversight for community based dispute resolution. Programs sponsored by the Partnership for Governance Reform are piloting mechanisms for community policing. The most difficult proposal to develop may be the pilot to form a circuit court staffed by judges recruited because of documented honesty and experience with local level dispute resolution. Preliminary visits to Central Kalimantan and North Maluku show strong local government demand for these activities, which is consistent with Indonesia CAS strategies of supporting subnational governance reform. The CDD component will be supported by a kabupaten level consultant team that can provide three main services: (i) training for the village and kecamatan representatives; (ii) technical review of the investment proposals; and (iii) initiation of community level reconciliation activities. The consultant team will also provide a bridge between the CDD component and the work of the other two components that is described below. Estimated costs of grants Estimated costs of facilitation Estimated costs for legal program B. The Investment Environment Component will promote private investment in the conflict areas in three ways. First, rapid surveys carried out by local universities will identify policies or regulations that block local investment. Repealing them will be the ticket for entry into the project, as will adoption of the core KGRIP fiduciary reform package (preparation will assess the realism of these entry conditions once the KGRIP package is finalized). Ongoing monitoring by universities and NGOs will make sure that once off, they stay off. Second, the project will establish business forums in each kabupaten that work with the local planning board and civil society groups to identify investments that would make for a more business friendly environment. Third, the project will establish a kabupaten investment fund that will allow conflict affected kabupaten to repair or rehabilitate basic infrastructure identified by the business forums and bappedas as essential to private investment. Investment funds in this component will go to two activities. One business forum will be for micro-entrepeneurs who have lost their productive assets to the conflict. Provided that proper screening procedures can be developed during preparation, this group will be eligible for one-off grants that allow them to purchase replacement productive assets. The second business forum is for larger commercial enterprises. It will use the PSD decentralized private sector forum methodology to identify existing productive infrastructure whose rehabilitation would have a positive investment on private businesses working ability. Priorities identified by this forum would be submitted to the investment fund for technical review. Feasible proposals would be tendered using procedures acceptable to the WB. Technical assistance needs for this component would be reviewed during preparation. For the small business forum, NGOs are likely to provide the most appropriate support. For the large 7 PID business forum, it is expected that an internationally experienced engineer/procurement specialist will be needed to review proposals and to help local governments become familiar with World Bank fiduciary procedures. Since a number of larger businesses would like to contribute to "social" projects in their neighborhood, technical assistance during preparation will assess options for creating a private-sector co-investment fund for the community development component. Estimated costs for surveys Estimated costs for business forums Estimated costs for investment fund C. Education and Health The Education and Health Component aims to improve the utilization of effective and acceptable programs by families in project areas, with particular focus on service provision at the community level. Component objectives (see outputs) are: l adequate number of functioning schools and health facilities providing basic services to a defined standard. (preparation will identify whether a defined set of minimum conditions for effective service delivery exists at schools and primary health care facilities); l to ensure that host communities are active in service planning, management and monitoring; l to strengthen linkages between the line agency and the community to ensure sustainable service provision (including greater use of non-government providers where appropriate); l to reduce financial barriers to access to essential services; and l to promote greater utilization of services through community-level awareness campaigns ­ for example back-to-school programs that attempt to attract and retain students in whatever levels of schooling the community feel is appropriate. Component Activities The component will achieve broad-based participation in and utilization of adequate education and health services by: 1. Appointing district facilitators and district committees, The component will achieve broad-based participation in the utilization of adequate health and education services by funding improvements proposed by communities and supported by the line agencies and local government. The provess will include the following steps: (i) facilitators will help complete the Participatory Rapid Appraisal; (ii) discussion of intervention options available to the community to address identified needs; (iii) proposal preparation; and (iv) service improvement/reintroduction. The inter-village forum will work to co-ordinate activities with District Health and Education Committees (DHEC). Membership on the DHEC includes line agency staff, Bappeda, user groups, women, and NGOs. TOR and membership will be prepared. 2. Conducting Participative Rapid Assessments (PRAs) of health and education needs, existing services and financing and cost structures in targeted communities. Based on PRA 8 PID outcomes, facilitators will coordinate the prioritization of community needs and will develop brief, costed proposals for project interventions. Results will be presented to District Health and Education Committees and to the inter-village health and education forum (a sub-forum of the inter-village forums being strengthened through KDP2 and 3) for public review and comment. 3. Reviewing community proposals Based on the participatory rapid appraisal, community proposals will be prepared with the assistance of the district facilitator. They will be reviewed to ensure consistency with the national and district education and health plans. 5. Resourcing and funding of interventions. The costs of approved interventions will be shared by the project and district government. Transfers of funds to communities will be in tranches, with agreed % of activity cost on signing, and further tranches at agreed intervals, related to progress in implementation. Both project and government funds would be channeled through the KPKN to the inter-village account held in a private or government bank. Where non-monetary resources are involved (school materials packages, drugs, for example) these will be supplied directly by the project or they will be supplied by a coordinating unit at a higher level, such as the province. All funds will be accounted for in a public meeting of the inter-village forum. 6. Coordinating with government programs. Support and oversight of implementation would be by community groups such as school of health facility committees and the sub-district forum, assisted by the facilitators. Easy to understand, illustrated manuals will describe proposal preparation; review and approval processes, timelines, fund channeling mechanism, financial management procedures lines and implementation and resource use (for example, Safe Motherhood Project District Block Grant Manual and SIGP rehabilitation guidelines). Dinas's will be required to share district and sub-district sector plans and budgets with the inter-village forum members. The project will finance: l Block Grants to communities to finance: (i) in health a package of inputs related to need and selected health package, covering building refurbishment, approved equipment kits, contracts or bonuses for staff, fee relief etc.- ; and (ii) in education, school rehabilitation (and in a few cases, construction), operational costs, sanitation facilities, contract teachers teaching materials, fee relief, scholarships) ­ to be matched by district/national contributions; l Resource packages to supplement grant financed activities ­ to take advantage of economies of scale (books, teaching aids); l Measurs to reduce financial barriers of poor families (e.g. scholarships, fee relief, vouchers for maternal care services); l Complementary activity plans for the Dinas to ensure supervision and technical support for service quality and for the sustainability of the minimal service conditions and agreed intervention; l Management and implementation support (monitors, facilitators, committees, surveys, technically competent NGOs, etc); l Community-based incentives/allowances for health workers and teachers. 9 PID Where appropriate, in addition to the core activities described for this component, the project will support a rapid response to urgent needs by funding assistance packages already widely used in Indonesia, such as the UNICEF school in a box, ICRC/IMC mobile clinic and outreach services, WHO public health interventions, etc. Activities and Cost estimates Community Driven Development Private Sector Development Education and Health 5. Financing Source (Total ( US$m)) BORROWER ($10.00) IBRD ($25.00) IDA ($20.00) Total Project Cost: $55.00 6. Implementation Project Implementation will be through the Ministry of Home Affairs. A national level steering committee that includes relevant agencies will provide policy and regulatory oversight. The Steering Committee will issue the General Guideline (Pedoman Umum) and the implementing agency will issue an Operational Manual (Juklak) for the project. Project coordination will be the responsibility of the province, and project funds will flow directly from MoF to a SCRAP account held by the provincial KPKN. Each province will issue a guideline that adapts the general project manual to the particular circumstances of that province. The province will also be responsible for project oversight. At each administrative level of the project, MoHa will work with the local government to form an administrative coordination committee (Tim Kordinasi Pengelolaan Program) whose functions are to provide fiduciary oversight, information to villagers about planned development programs, and to solve administrative bottlenecks and problems. SCRAP project components, however, do not require close coordination and no formal technical coordination body will be established outside of the normal MoHa structure. CDD component -- Although SCRAP's CDD component will adopt many of KDP's implementation arrangements, there are a number of important differences. SCRAP's conflict focus means that the young village facilitators and the professional kecamatan facilitators used by KDP to identify desirable investments may not have the right peace-making skills needed for SCRAP objectives. Instead, each village and inter-village forum will identify a cadre of the more senior, trusted men and women selected explicitly because of the community's trust in their ability to find peaceable solutions to problems. These people will collaborate with the BPDs and Forum Antar Desa being supported through KDP to implement the SCRAP program in the field. Within the subdistrict and villages, communities will either carry out planning through locally elected administrative councils, or though established interest groups. Larger, 10 PID inter-community plans are filtered by the administrative councils before being forwarded to the district level for support. Smaller subprojects plans are evaluated at the subdistrict level. Each subdistrict and village council chooses a small implementation committee to help with project record keeping. In the case of proposals from interest groups (e.g. sports, culture, education, health), the management of the activity should be by the group concerned, but with periodic supervision from the respective administrative council. Management teams must make written and verbal public reports of progress. The government will be supported by district level consultants drawn from private sector and NGO backgrounds for technical verification and implementation. Project preparation will assess the feasibility of paying consultants as individual direct hires paid through a national level float account. Preparation will look into the practicalities of such arrangements and the perceptions that are created locally when facilitators are paid direct from a central government source Private sector component -- Each participating district will have two business forums. One will be a "chamber of commerce" like forum for registered, standard business-people. These already exist in many parts of Indonesia although they are rare in the conflict areas. The second will be for micro-entrepeneurs. Government will not play a formal role in the forums, but there will be an office from the economic section of the Bappeda assigned to coordinate with each forum and to review proposals. Preparation will determine the most transparent way to review and approve proposals. All proposals will be let competitively. Education and Health Component -- In addition to the District Education and Health Committee, arrangements will be established at the provincial level for (a) technical review and support; (b) coordination of project activities with the province level line agency (Dinas). At the sub-district level, the project'scommunity development facilitators will help the village and subdistrict forums name education and health subcommittees. At the village level, a local facilitator for education and health will be trained. TORs and administrative relationships will be defined during preparation. 7. Sustainability This project is intended to help conflict affected provinces return to normalcy. Sustainability will come from three sources: institutionalization of the community-led planning process; resumption of sectoral service delivery; and restoration of private sector investment. The project is not expected to be sustainable in the sense of repeater projects or becoming a mainstay of local programming. It is meant to bridge the period between the end of hostilities and the resumption of normal development. However, the reforms it introduces should contribute to the development of institutional approaches to conflict resolution in Indonesia. 11 PID 8. Lessons learned from past operations in the country/sector A detailed review will be provided in the appraisal report. For this PCD, three main lessons are reflected in the proposed design. The first is to keep the design simple and its core architecture rigid. Project preparation should eliminate discretion -- i.e. either village proposals meet minimal criteria or they don't, business forum proposals are accepted on the basis of minutes or not, and so on. The second is that project designs must include mechanisms for incorporating local knowledge. Striking a balance between individually tailored programs and the gains of working to scale is not easy. The project's focus on planning rather than substance provides one way to build in adaptation. The third lesson is that projects in conflict areas must have easy to operate on-off switches so that individual activities or locations can be stoppped when violence breaks out and re-started after it settles down again. Such "switches" must cover topics such as contracts (how long do consultants get paid for if they are not in their field sites?), disbursement orders, and re-start triggers. 9. Environment Aspects (including any public consultation) Issues : Conflict areas raise a number of unique environmental challenges. These are usually caused by the breakdown of institutional controls on environmental opportunism. In many areas, conflict becomes an opportunity for large interests to mine nominally protected resources such as forests. Additional pressure comes from local populations, who shift into increased natural resource exploitation when alternative income sources disappear. As noted below, the project does not anticipate large adverse environmental impacts from investments. Procedures for the CDD component are well-developed and have proven to be effective in the field (albeit needing some improvements as described in the KDP3 PAD), while the private sector investment fund will only rehabilitate existing infrastructure that has been damaged by the conflict. However, preparation will also include an assessment of opportunities to limit the environmental damage that is associated with both conflict and recovery. 10. List of factual technical documents: .. 11. Contact Point: Task Manager Scott E. Guggenheim The World Bank 1818 H Street, NW Washington D.C. 20433 Telephone: 5781-9-391-1908/9 Fax: 62-21-5299-3111 12. For information on other project related documents contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-5454 Fax: (202) 522-1500 Web: http:// www.worldbank.org/infoshop Note: This is information on an evolving project. Certain components may not be necessarily included 12 PID in the final project.