The Discourse over Debt Trap and Mineral Plunder Adi Widyanto**
Indonesia is recently facing the new era of mining boom. The new government’s policy to boost mineral production and its economic growth target of 7% will result in the development of new mining projects and revival of old licenses suspend since 1999. Without provision for the security of the indigenous people and the environment, the coming of the second mining boom means more disaster to the people and drains the national mineral reserve for future generation.
The economic crisis hit Indonesia in 1997 has not yet ended until today. The crisis itself has again becoming an entry to the IMF and World Bank to resume their “imperialism through loan” agenda over Indonesia for the second episode. Under the Letter of Intent Indonesia is ordered to undertake liberalization of the national economic asset management such as strategic state’s companies and natural resources sector, for sure. On the other way the government is ordered to cut off subsidy on public services to its people. The World Bank has also contributed much in liberalization of national assets through its Structural Adjustment Loan such as WATSAL (water), FORSAL (forest), and AGSAL (agriculture).
With mounting amount of foreign debt that is barely payable Indonesia has absolutely fallen into debt entrapment that makes the country should be classified as Highly Indebted Poor Countries (HIPC). With annual debt payment burden taken almost half of annual national budget, the government to governments’ main objective is none other than boosting investment to payback the debt. However, the debt trap itself has results in a condition in which Indonesia government to always do what the northern countries’ government demand, any rejection will implicate in embargo on economic or military.
Under such a condition northern countries mainly US, as the biggest share holder of the most powerful world financial institution World Bank, plays its agenda over Indonesia. Through institution like World Bank and IMF, developed countries push to impose their agenda over indebted countries rich in natural resources. Indonesia’s natural resources have become collateral for the debt payment. This is the proof; Indonesia has been ordered by World Bank to liberalize its natural resources management regime. The once public goods have now been valued with currency in order to be marketed by multinational companies of northern countries.
Mining sector in Indonesia has long been the domain of multinational companies draining enormous wealth upon precious mineral ore from country’s underground. Mineral exploitation has been totally supported by government’s policy which allows any part of the country to become mining concession, including protected areas. A total of 870 mining concessions occupy one third of Indonesia’s total upland area. Excessive mining concessions granting has then results in the overlap between mining concession and Protected Forest and National Park and became national issue for over 5 years since 1999. The case was then brought into the Constitutional Court in 2005 to settle. Seven out of thirteen mining companies were remains prohibited to conduct open pit mining in protected forest as they’re not yet entering exploitation stage.
As the court decision is regarded as hampering the agenda of mineral resources liberalization, the government plans to take the other way in order to facilitate multinational miners’ expansion all over the archipelago. The adoption of mineral liberalization was then stipulated into the general objective of the current regime in the mining sector. The mentioned objective is to prevent the decrease of mineral production through intensifying the exploration and development of new mining sites. The policy targets less exploited eastern Indonesia’s territory for mining expansion.
Start it with Infrastructure Development
Eastern Indonesia’s territory famed as less populated but rich of natural resources like mineral, oil, and gas with less modern infrastructure access like road, telecommunication, harbor, and power transmission, the whole a mining industry rely upon very much to smoothen business. The government and the banks of course aware of this matter very well. A package of infrastructure development has been prepared by SBY administration to develop the eastern Indonesia’s facility. During the January 2005 Infrastructure Summit in Jakarta, the government offered 91 infrastructure projects worth US$ 22 billion to the private sectors. This policy will results in issuance of new mining licenses in eastern Indonesia. In next January 2006, the government of Indonesia will again hold the “Infrastructure Summit 2006”.
Deregulation package
In the early days of its admininstration the current government made its way to ensure the investors to invest in those infrastructure projects in eastern Indonesia by immediately issue several regulation on land procurement/acquisition. The said regulation is the Presidential Decree No 36 year 2005 on Land Procurement for Development Purposes will smoothen way for government and corporations in obtaining land for infrastructure projects. On the other way it threatens the people who wants to keep legal ownership over their land.
The one being drafted is the Draft Presidential Decree on the Utilization of Forest Area for non-forestry Development Purposes. The non-forestry development covers mining, power generation, renewable energy, and telecommunication installations. It will of course threaten the buffer and protected areas with conversion. Whereas the Constitutional Court’s ruling ends dispute over open pit mining in the protected forest, this Pres. Decree will result in massive encroachment of forest areas by infrastructure projects and mining operation.
Since 2004 legislation process of Mineral and Coal Mining Bill have come faster than ever. The draft delayed for 2 years in preparation by Ministry of Energy and Mineral resource has now becoming first priority of the government to legalize this year, expectedly in March. Starting from May 2005 the draft was still in the Ministry desk, but rapidly in July the House began to start the bias public hearing. The process was flawed as it neglected participation of the most potentially affected stakeholder, the local community.
Again, the mining companies use their illegitimate role in intervening the term of Indonesian sovereignty about concession granting. The government plans to change the contract system with permit. This will implicate in government as the regulating body that will issue mining permit. The government position is regarded more appropriate in such system rather than that under contract system in which it acts as a private body in equal position with corporation. The mining corporations challenge this idea since they demand equal position with the state so that in term of dispute they cannot be brought to court, otherwise it will be settled through arbitration just like among business partners.
A very clear example of contract system’s weakness is the Indonesian government’s lawsuit against Newmont that was dismissed by Jakarta court. Judges argued that since there are terms of arbitration in the contract signed between government and Newmont, any disputes among them should be settled in arbitration. Whereas, the verdict was actually flawed since the subject of lawsuit isn’t a contract breach but is a matter of violation of Indonesia’s environmental regulations.
The Extended Use of Submarine Tailings Disposal
The Submarine Tailings Disposal (STD) effectively banned for environmental safety reason in the US, Canada, and Australia where the major mining companies come from. However, the Indonesian government remains reluctant to ban the application of such technology, despite evidence proves that STD has resulted in marine organism (fish, benthos, plankton) and human contamination of heavy metal by mining waste. In the Buyat bay (North Sulawesi) pollution case by Newmont Mining, most of Buyat residents suffer from severe headache, skin rashes, limp, swelling, and paralyses. Newmont shut down its Minahasa mining in August 2004 and is now facing criminal and civil cases trial in the Indonesian court appealed by the Indonesian government.
Newmont has also been operating its Batuhijau (Sumbawa island) mine since 2000 and again using the Submarine tailings disposal. The government has just renewed Newmont’s STD license in May 2005 despite strong resistance of local fisherfolks complaining the loss of their livelihood.
The former Indonesian minister of environment Sonny Keraf once promised that there will be no more STD license in Indonesia. However, just recently PT Meares Soputan Mining/MSM (Archipelago Resources-UK) stated its plan to use STD in its Toka Tindung project (North Sulawesi). The plan opposed by the alliance of fisher folks and tourism workers around Bitung and North Minahasa regencies. According the their calculation such plan will threaten the livelihood of 18,000 people make their live of the coastal resources. However, the recent minister of environment unwilling to guarantee that STD would not be given to MSM.
* This Paper was presented to the Mining Caucus Conference during the Campaign against Ministerial Meeting of WTO in Hong Kong, December 2005.
** Campaigner with Mining Advocacy Network (JATAM)
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