Cordaid, one of five foreign funding agencies for Papuan NGOs, has been involved for more than 30 years in social development work in Indonesia, focusing on economic empowerment of the poor.

In a letter dated July 23, 2010, to Cordaid country director in Jakarta, Muman Nuryana of the Social Services Ministry said the donor agency had breached a "principle provision" in the memorandum of agreement with the Indonesian government.

"Cordaid has been involved in commercial and political activities by being a shareholder of Bank Andara and sponsoring the participation of a community group in the Initiatives for International Dialog *IID*, a forum that supports secessionist movements in southern Thailand, Myanmar, the Philippines and Indonesia," Muman said in the letter, a copy of which was obtained by The Jakarta Post.

The government requested Cordaid to hand over ongoing projects to its local partners and neither expand the scope of the projects nor extend deadlines.

While accepting the ban, Cordaid said its share in Bank Andara was less than 10 percent of shares outstanding.

The share is meant to serve microfinance institutions, particularly those with a strong focus on poverty reduction, helping clients who are considered too poor by other fianancial institutions to get loans, the agency said.

"Microfinance institutions encompass more than 50,000 institutions serving millions of poor Indonesians through better access to financing by providing new and additional financial assistance and services for their benefit, which may not be offered by common commercial banks," Cordaid sector manager Margriet Nieuwenhuis wrote in reply to the Social Services Ministry's notice.

Nieuwenhuis strongly denied government accusations that Cordaid helped Papua separatists.

"We do not support any separatist activities whatsoever, which includes our relationship with IID or any other organization," she said.

The Indonesian government has voiced suspicion of Cordaid's exchange program between Papua and Mindanao, a restive province in southern Philippines, to pro- mote the participation of women in development in their areas from a faith-based and women's pers-pective.

"The participants met only with Mindanao community groups and women leaders, not with political actors," Nieuwenhuis said, adding that the program had been stopped.

The government's policy to ban Cordaid was criticized by lawyer Todung Mulya Lubis. He said the decision was taken "too hastily" and without sufficient evidence.

"It could set a bad precedent and lead outsiders to believe Indonesia is isolating Papua," he said.

Todung said the government needed foreign donors to help develop Papua, one of Indonesia's poorest regions.

"To stop foreign social funding is akin to killing off NGOs in Papua, which almost entirely depend on overseas funding," said Todung, who is also a human rights activist.

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