Rich nations throw Asia a tsunami debt lifeline

Rich creditor nations have thrown a lifeline to the millions of survivors of the Asian tsunami by agreeing to freeze debt repayments across the affected region.

The worst hit nation, Indonesia, owes about US$48 billion (NZ$67.9bn), and would have had to pay more than US$3 billion in principal repayments alone this year - about the same amount it says it needs to recover from the crisis.

"The suspension takes effect immediately," Jean-Pierre Jouyet, president of the Paris Club of creditor nations, told a news conference after talks in Paris.

He said it would apply to those countries that wanted to accept it but did not immediately give any details.

Jakarta sowed some confusion on the long-term aid effort to reach those still struggling for water, food and shelter by saying it wanted the thousands of foreign troops helping organize the relief to leave by March at the latest.

"Three months are enough. The sooner, the better," Vice President Jusuf Kalla said. "We don't need foreign troops."

US, Japanese and other troops are ferrying aid to remote parts of Aceh province, which lost two-thirds of the 158,000 people killed by the giant waves that smashed across the Indian Ocean after an undersea quake on Dec. 26.

The government is edgy about a large foreign presence in an area where separatists have fought the army for three decades, though both sides have avoided major clashes since the tsunami.

CEASE-FIRE

The White House said it was seeking clarification from Indonesia.

"Obviously, I think that we want to make sure that there is rapid and immediate relief provided to all the affected persons. And that remains a priority for the United States, as well as the international relief organizations in the area," spokesman Scott McClellan told reporters.

"But we hope that the government of Indonesia and the military in Indonesia will continue the strong support they have provided to the international relief efforts so far."

Rebels from the Indonesian province of Aceh on Wednesday repeated a cease-fire offer to help efforts to rebuild the shattered region.

"The people in Aceh really need to be cared for," Malik Mahmud, the Free Aceh Movement's leader in exile, said at a news conference in Stockholm.

The tsunami has already created a deep divide between haves and have-nots in Banda Aceh, the devastated capital of the province. It serves as an aid headquarters, with a tent city of 1,125 aid workers from around the world erected at the airport.

Tens of thousands of locals are homeless, but those whose homes were safe above the tsunami waterline can make a year's wages in a few weeks, renting homes to aid workers and media.

"It's like two different cities. The other half is empty and haunting," Chief Social Welfare Minister Alwi Shihab said.

The waves cut a swathe out of the staunchly Muslim city of 300,000 people. North of a line running from the southwest to northeast is a wilderness. South of it, little has changed except for the influx of foreigners and their money.

In the worst hit area, cars are still on the roofs of houses and wooden fishing boats still litter the streets, now strewn with sewage, more than two weeks after the tsunami.

WARNING SYSTEM

In Sri Lanka, dangers to children loomed large as police arrested a 60-year-old man they said had tried to sell his orphaned grandchildren at a refugee camp. The boys, on offer at US$500 each, were aged seven and nine.

India let the first global agency into the remote Andaman and Nicobar islands, many of which are off limits to outsiders. UNICEF, the UN Children's Fund, arrived to immunize children.

Governments across the world have promised US$5.5 billion in aid, with individuals and corporations pledging at least US$2 billion more.

Thailand and India say they can cope on their own but Indonesia and Sri Lanka are most in need of help.

"A moratorium is absolutely indispensable in order to allow the affected countries to overcome their immense difficulties," French Finance Minister Herve Gaymard said ahead of the Paris Club agreement.

He said he expected Indonesia, Sri Lanka and the Seychelles to accept the deal. The external debts of all the affected nations total about US$272 billion.

Indonesian Foreign Minister Hassan Wirajuda had welcomed the prospect of a debt freeze, but also said Jakarta needed more donations to cope with the disaster.

At a conference in Mauritius, the United Nations said a tsunami early warning system could be in place for the Indian Ocean by June 2006.

- REUTERS