Wires

Indonesia ramps up Pacific diplomacy with aid fund

JAKARTA, Oct 18 (Reuters) - Indonesia launched an international aid agency on Friday to strengthen its regional diplomatic relations, some of which have been strained by Jakarta's approach to the restive Papua region.

Several Pacific nations have backed calls for investigations into allegations of violence by security forces in Indonesia's easternmost region, although only Vanuatu has openly voiced support for independence of former Dutch colony Papua.

Jakarta, which has defended the actions of security forces in Papua, said on Friday that the new agency, with an initial budget of about 3 trillion rupiah ($212 million), can provide development aid or disaster relief to smaller countries.

"The main objective is to increase our diplomacy effort to help partnership with other developing countries to tackle issues like refugees or conflicts," Vice President Jusuf Kalla told a news conference after the launch.

Foreign Minister Retno Marsudi told a news conference that Indonesia's new Agency for International Development (AID) was a way for the G20 economy to help other countries achieve sustainable development goals.

The government made no link to Papua-related diplomacy during the fund's launch and a foreign ministry spokesman declined to comment on any connection when asked by Reuters.

Yose Rizal Damuri, the head of the economics department at the Jakarta-based Center for Strategic and International Studies (CSIS), said the fund should strengthen Indonesia's diplomacy beyond its usual allies and expand export markets.

"Including on Papua. For anything related to small countries, one of the most effective instruments is to provide aid," Damuri said.

A separatist movement has simmered in Papua since it was incorporated into Indonesia in 1969 in a widely criticized U.N.-backed referendum. There has been a spike in violence since August after racial slurs against students on the main island of Java, with demands for a new independence vote.

Indonesia has provided grants to seven countries this year, including five Pacific nations for tackling climate change. Other beneficiaries were Myanmar and the Philippines.

"It's difficult not to conclude that the aid is more a political tool, to win favor from those countries," Andreas Harsono, a senior researcher for Human Rights Watch, said. ($1 = 14,145.0000 rupiah) (Reporting by Jessica Damiana and Tabita Diela; Editing by Ed Davies and Alexander Smith)