Security dilemma for investors

By Lesley McCulloch

JAKARTA (JP): On Monday at the opening of the Jakarta International Energy Conference, President Abdurrahman Wahid stated that the government would use force if need be to protect the operations of mining companies against disruption from "outsiders".

Yet on Tuesday, Minister of Defense Juwono Sudarsono lamented the fact that the government was unable to guarantee the security of its people due to lack of funds. The deficiencies of the Indonesian defense budget are nothing new, and have resulted in the close to obsolete state of much of the equipment belonging to the Indonesian Military (TNI).

In an interview with this author on July 7, Juwono said that it would take five to 10 years to even begin to acquire the desired state of military capability, but that "the process cannot even really begin until we have tangible economic recovery." This is a dilemma indeed.

If the government is willing to use scarce resources to protect foreign investors and their operations, while the civilian population tolerates increasing crime and violence, there may be serious political repercussions.

The Jakarta Post reported on Tuesday that Juwono had requested that mining companies cooperate with the police and the security forces to ensure the security of their operations.

Many have being doing just that for a long time. The "security" payments by Freeport -- and other companies -- to certain services within the armed forces is no secret. Juwono himself has conceded that the military may in some cases be the source of insecurity, as some individuals or groups within the military seek to line their own pockets by participating in and/or protecting illegal mining operations.

Those few mines which have been forced to temporarily close down operations are often those who have lost favor with the military by refusing to pay for protection, have attempted to stop it "helping itself" or are selling concessions which are not theirs to sell.

In addition, trouble often comes either from disgruntled employees; locals who accuse the companies of environmental damage; or exploitation (even pillaging) of resources and cultural insensitivity -- with little of the benefits being felt by them directly.

Given the propensity of the military to engage itself in economic interests as the "need" and ability arises, one may be forgiven for thinking that the President's recent order to "protect" mining operations may actually increase the insecurity of the very operations they have been dispatched to secure.

Indeed, since the fall of Soeharto the military has become even more active in areas such as illegal logging and mining, and also in protection rackets for legal enterprises in these fields.

Information on the scale of involvement is patchy due partly to the fact that these operations take place in remote areas, but it has been a common secret for many years. The isolated nature of these operations make it even more likely that financial exploitation (with Abdurrahman's inadvertent blessing) will take place.

Speaking with Juwono on Friday it was apparent that he is acutely aware of the persistent wheelings and dealings of the military, and that off-budget financing will continue for some time. The fact that TNI has little choice but to rely on these off-budget sources does not concern him per se.

The source of his disappointment is more the knowledge that "if certain elements within the military were not so intent on lining their own pockets, our off-budget funding could be double what it is now".

Juwono is an impressive figure. He is a man with a mission, and has the backing of his President. "Removing the military from its economic interests is a big adjustment process ... it must be steady and comfortable ... we must be willing to tolerate a degree of corruption for the foreseeable future ... perhaps for as many as five more years. If we move too quickly there may be repercussions", he says.

The fact remains, however, that a government policy to send even more military personnel to these "lucrative" outposts will give even more business opportunities to the "underfed, underequipped and undertrained" military. Of course we can understand the problems the government faces.

It would be very bad for the economy if, for example, production at Freeport's Grasberg copper and gold mine, deep in the mountains of the remote eastern province of Irian Jaya were to be disrupted; it is the country's single largest tax payer.

On the other hand, using scarce military resources, or placing the military in a position where they are able to "sell" these military resources for private gain will solve nothing.

Perhaps the government should move to address the concerns of those who seek to secure more of the benefits of such operations for local people, and remove those elements within the military who contribute to the problems in these remote areas.

I would like to ask Juwono whether he really does think it a wise strategy to "expose" the cash-strapped military to such lucrative opportunities.

Surely the temptation will be all too much for it to resist? And if this is so, then what does this say for the desire expressed by the minister to me on Friday that "in an ideal Indonesia, the defense budget would be enough and there would be no off-budget financing". If this is really your long-term goal, then surely the government should reconsider the policy options before it to solve this current problem.

The author is conducting a study of Indonesian military spending for the Bonn International Center for Conversion in Germany, and is currently a Visiting Fellow at the Centre for Strategic and International Studies, Jakarta.