Official aid agencies have increasingly being plying non-government organisations (NGOs) with money and influence in Indonesia and elsewhere hoping that they would combat corruption and promote democracy.
The crisis recently confronting Newmont Mining, where five of its senior executives (including an Australian) were imprisoned in Indonesia, illustrates the folly of this belief.
The firm started production of its Newmont Minahasa Raya (NMR) goldmine at Buyat Bay in North Sulawesi in 1996. Like virtually all the foreign-owned mining ventures in Indonesia, NMR was, from its inception, subjected to a campaign by "local" NGOs. They have alleged that NMR was polluting Buyat Bay with mercury, arsenic, lead, copper, cadmium and other toxic compounds from its tailings. Newmont has produced independent evidence, including from CSIRO, to refute these claims.
The NGO campaign against NMR increased in intensity in 2004 as the mine was being wound down. The NGOs issued a new set of even more extreme claims, including that 30 villagers had died from Minamata disease, a severe form of mercury poisoning. An Indonesian NGO, purporting to represent the alleged victims, then filed a lawsuit seeking criminal charges and a US$543 million in damages against Newmont and its executives.
Shortly afterwards, Indonesia's National Police arrested NMR's most senior executives. The Jakarta Post reported that it came about after "dozens of Buyat people, encouraged by NGOs, filed a complaint with the National Police against NMR in August over alleged contamination that, it was claimed, had affected their health".
The actions against NMR has undermined the already low level of investor confidence in Indonesia generally and specifically in its mining sector. Investment in the mining industry has declined over the last seven years from AUD$3.6 billion to a paltry AUD$244 million.
In Indonesia, as in other developing countries, local anti-mining NGOs are partners with Western activists and are funded almost entirely from abroad. For activists in the developing countries, these campaigns are about earning a living. As the Asia Times has noted the NGOs "follow the gospel as laid down by anti-mining foreign NGOs to the point that they pursue global anti-mining campaigns and spend their time attacking foreign companies rather than working to protect and preserve the environment".
What makes the plight of Newmont in Indonesia galling is the fact that the NGOs running this campaign are funded by western foreign aid money. Though they don't disclose their sources of funding, the money has come from the likes of Oxfam, Care and official aid agencies including AusAID, USAID and the World Bank.
Western aid funding of NGOs is ostensibly provided to facilitate promotion of the rule of law and mediation of conflict. The reality of the Newmont experience demonstrates the opposite. Not have their activities in that case jeopardised jobs but they have also exacerbated conflict between the relatively affluent Christian villages on one side of Buyat Bay and the mainly Muslim and notably poorer people across the bay, in the village of Buyat Beach.
The mine is located nearer the Christian villages and has provided jobs and economic activity, as well as schools, clinics and roads. Not surprisingly, the people living in these villages are highly supportive of the mine. However, the people on the other side of Buyat Beach have benefited little from the mine and are disgruntled.
Instead of attempting to reconcile the differences within the community and provide political leadership, however, the NGOs have augmented tensions. They have mobilised the poorer Muslim villages with highly emotional and false claims of pollution and poisoning, offering the lure of huge payments from lawsuits for those who participate in the anti-mining campaign.
Sadly, "local" NGOs in Indonesia funded by Western aid dollars, according to the Asia Times "are the driving force behind much of the unrest that has caused investors to head for the door". They are trying to sabotage an industry that is generating wealth and opportunity in the world's most populous Muslim country, and stirring up hatred towards Westerners in a country which unfortunately has considerable poverty and is vulnerable to Islamic fanatics.
The misuse of aid money by NGOs is creating resentment in Indonesia even amongst groups supportive of a more open and pluralistic civil society. Indeed, this was in part, behind the decision of the Megawati Government last year not to renew visas for a number of representatives of international NGOs in Indonesia.
It is in the interests of both Australia and our neighbours to stop funding such groups. AusAID needs to review its entire NGO programme. It needs to weed out its funding of those NGOs that are actually destabilising our neighbours and creating additional risk for companies who are prepared to invest and create jobs and economic growth.
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