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ConclusionThis paper has discussed recent progress in the reconstruction and rehabilitation of Aceh and Nias following the greatest natural disaster in recorded Indonesian history. On the economic front, the December 2004 earthquakes and tsunami severely affected the livelihood of hundreds and thousands of people in the region. Furthermore, despite large-scale reconstruction activities in the aftermath of the disaster, many people have still been unable to find jobs. Moreover, the region was also affected by relatively high inflation partly caused by the reconstruction process itself. Notably, the various stakeholders in the reconstruction process have been virtually unanimous in claiming that progress has been too slow. Many reconstruction plan targets have not yet been met and it appears likely that achievements will tend to fall short of targets in the foreseeable future. Budget expenditures have fallen well behind targets as well, even though a four-month extension of the 2005 fiscal year was agreed to with the aim of providing leeway in implementing activities. Late and non-realisation of the 2006 budget are no less worrying—a mere 18 per cent of spending had taken place up to the end of September 2006. Several observations may be made about this slow progress. Effective coordination among agencies, both domestic and foreign, is essential. The BRR as a coordinating agency needs to operate in close collaboration with local people, local governments, and donor agencies. If there is inadequate consultation and coordination, reconstruction programs will be delayed, parties will lack a sense of ownership towards the various activities, and the risk that different agencies will operate at cross-purposes will increase. A second issue relates to the overall financing needs of reconstruction. In the longer-term, unanticipated and large cost increases in reconstruction activities can be expected to produce a funding gap that must be met one way or another if reconstruction work is to be completed. In one respect at least, the awful natural disasters brought some benefits to the conflict-ridden region of Aceh. Three decades of political and military conflict before the tsunami had caused widespread suffering in the province. Peace talks had commenced before the tsunami but progress had been slow. The natural calamity put sharply renewed pressure on the parties to the peace negotiations to reach early agreements on key issues so that reconstruction activities could proceed smoothly. In short, suddenly the great majority of people in the region were united in their demand that there be peace. One nagging question remains: How can Indonesia best prepare to cope with natural disasters in the future? It seems clear that in a developing country such as Indonesia, disaster management should start with local society, at the local level. In this context there are two main lessons to learn. First, it is important to improve local early warning systems across the nation and to increase awareness of the local indications that a natural disaster might be about to occur. Indeed, as we have discussed, local knowledge of some of these indications currently exists among some traditional community groups in Indonesia. As a country prone to natural disasters, Indonesia should acknowledge the great importance of disseminating such traditional knowledge throughout the country by, for example, including the topic of natural disasters in the national curriculum beginning at the elementary school level (Kompas, 12 October 2006). Second, it is important to note that community self reliance is vital in a society facing severe natural disasters, especially during the critical first hours following a disaster. It is inevitable that outside help will take time to arrive, especially in remote areas. Indeed, by the time that news of the disaster has been reported on the national, and especially the international media, it is often that case that many of the injured have already died. And, of course, international agencies also need to improve their ability to respond much faster and much more efficiently to disasters in developing countries. As a last observation, it should be emphasised that reconstruction after a natural disaster poses numerous difficult challenges. Close coordination between all of the agents involved is essential, as is a peaceful socio-political environment and active community involvement in program implementation. Further, it is important that there are no false promises of assistance so that local people have realistic expectations about the speed of reconstruction work. Targets should be realistic, significant cost increases must be expected and budgeted for, and plans should reflect a sensible approach to the sequencing of programs. In particular, from the very beginning, rebuilding economic livelihoods and housing reconstruction should be seen as top priorities. Strategies must be developed to ensure that there is efficient coordination among different agencies, that commitments of assistance from both domestic and international organisations are fulfilled, and that those agencies are accountable for the promises that they have made. Finally, reconstruction agencies should set out clear exit strategies to allow for a smooth transfer of activities into the hands of local governments and organisations at the end of the reconstruction period. 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