Since the economic crisis of 1997 and the arrival of the post-Soeharto reform era, illegal mining has spun out of control. It not only is causing great harm to the environment and resulting in enormous losses of state revenue, but also has given rise to conflicts between local people and newcomers, between illegal miners and mining companies, and among local elites. My intention in choosing the coalmining business in the city of Sawahlunto and the district of Sawahlunto-Sijunjung, both in West Sumatra, as the subject of this case study is to analyse the causes and development of illegal coalmining as well as local bureaucrats' reactions to the development of this business.

ILLEGAL COALMINING IN WEST SUMATRA

Illegal mining is not a new phenomenon in Indonesia. Long before independence and afterwards, local people in the Bangka and Belitung islands carried out illegal tin mining and illegal trade in tin (Vous 1990; Andaya 1993; Erman 2004). Under the New Order regime, the first officially recognised case of illegal mining involved the Lusang Gold Mining Company, which was illegally extracting gold in Lebong Tandai in the province of Bengkulu in the early 1980s (Aspinall 2001). Today's illegal mining activities have spread to coal, tin, diamonds and even mixed minerals. Illegal mining mainly takes place on the periphery of legal mining operations in West Sumatra, West Java, Kalimantan and North Sulawesi, although in all 16 provinces are affected (Jakarta Post, 29 October 2001).

The term ‘illegal mining’ (penambangan liar) was used during the New Order period to refer to mining activities, typically small-scale operations using traditional equipment, undertaken without a licence from the government.

Introduction

New Zealand's formal diplomatic relations with East Timor began on 20 May 2000, when the former Portuguese colony became fully independent. In the prior 25 years East Timor had been invaded and annexed by Indonesia, suffered loss of life from guerrilla resistance and Indonesian reprisals, stabilized by an international peacekeeping force, and assisted and tutored by a UN mission.

New Zealand had been cultivating bilateral relations during the four years prior to independence. And for nearly three decades before that East Timor had been a security, diplomatic, and humanitarian concern to successive governments in Wellington. This chapter traces the evolution of New Zealand's involvement with East Timor from early awareness in the 1970s to deep involvement from 1999, touches on costs and gains, and speculates on future relations.

Early Awareness

Prior to 1974 East Timor (then Portuguese Timor) was known mainly as a battleground between Japanese and Australian forces during World War II, and later as a backward but tranquil colony in an otherwise turbulent region. New Zealand officials first took serious note of East Timor in the months following Portugal's change of government and acknowledgement of its overseas possessions’ right of self-determination and independence. East Timor seemed poised to make a leap from colonialism to self-government and independence, but this was a process fraught with uncertainty, particularly in the Cold War context.

New Zealand officials+ generally favoured self-government for East Timor but were anxious that the transition be done peacefully, and not disrupt the fragile Southeast Asian consensus. To this end New Zealand officials conferred with their counterparts in neighbouring Indonesia in November 1974, agreed that developments should contribute to stability, and hoped East Timor would not come under the influence of the Soviet Union or China.

In the early months of 1975, as the political climate heated up, New Zealand officials made informal contacts with some of the new East Timorese leaders. One of the first was José Ramos Horta, the foreign affairs spokesman of the popular FRETILIN party, who visited New Zealand in July 1975 to publicize his cause amongst NGOs and the media. That same month New Zealand diplomats contacted leaders of the rival UDT party in Díli. These were the two largest of the several parties that sprang up following the liberalization of colonial policy by Portugal in 1974.

INTRODUCTION

The ‘natural resource curse’ is one of the more colourful phrases to be coined about a major subject in development economics, alongside the ill-fated ‘East Asian miracle’. The ‘curse’ is that of slow growth due to a failure to sustain efficient factor use, especially in industrial sectors where the potential for productivity gain is highest. According to Sachs and Warner (2001: 828):

Predictions derived from these apparent empirical regularities raise two puzzles for students of Southeast Asian economic development. First, are resource-abundant Southeast Asian economies that have experienced sustained high rates of economic growth different in some way from the group of countries from whose data the Sachs–Warner statement is derived? Second, is there anything in current market and policy trends that might predispose Southeast Asia's resource-abundant economies to lower growth in the future?

Two concurrent phenomena challenge the continued economic success of Southeast Asia's resource-rich economies. First, the growth and structural transformation of China, along with its increasing integration in world markets through actions such as accession to the World Trade Organization (WTO), abolition of the Multi-fibre Arrangement (MFA) garment export quotas, and reduced trade barriers with Japan, East Asia and ASEAN, is expected to have significant effects on the structure of Southeast Asian production and trade.

Introduction

The history of relations between New Zealand and Vietnam since 1945 is punctuated most dramatically by the period in the 1960s and 1970s when New Zealand was drawn into direct military participation in the Vietnam War. As a consequence, Vietnam is the only country in Southeast Asia which, for a time, provoked heated domestic debate about some of the most fundamental features of New Zealand foreign policy. It is also the only nation in the region whose existence in its current political form as a unified communist-led state was actively opposed for several decades by the New Zealand government. Yet, for all the drama associated with participation in the Vietnam War, interaction between the two countries after 1975 reverted to the mutually limited interest which had generally characterized bilateral relations prior to the early 1960s. Indeed, from 1978 to 1989, the only prominent issue in the bilateral diplomatic relationship related to a third country, because of Vietnam's invasion and ongoing occupation of Cambodia. As had occurred during the Vietnam War, New Zealand's policy on this issue was not driven by bilateral concerns but by alliance considerations — in this instance, principally relations with the ASEAN states. Since the 1990s, the relationship has settled into a more common pattern of New Zealand's evolving interaction with Southeast Asia, involving more diverse forms of engagement which are centred not so much on politics and security but primarily on trade, investment, export education, and immigration.

The First Indochina War: 1945–54

As was the case generally for Southeast Asia, developments in Vietnam drew little interest from New Zealand in the immediate post-war years. Even after the First Indochina War broke out in 1946 between the communist-dominated Viet Minh and France and its local allies, there was no discernible New Zealand policy towards Vietnam for several years thereafter. Only from 1949 did New Zealand policy-makers begin paying closer attention to the fighting there. This burgeoning interest in France's colonial war in Indochina reflected broader shifts in Wellington's thinking about regional security and coincided closely with American and British concerns about the conflict, though tempered by practical qualms about direct New Zealand involvement. Officials in the New Zealand Department of External Affairs opposed communist control of Vietnam, but they were dubious about the strength and legitimacy of indigenous non-communist forces there.

INTRODUCTION

Illegal logging has emerged as a critical issue in debate on Indonesia's forest policy and as a key environmental concern. People have long known that Indonesia's forestry sector has been affected by organisational and operational irregularities for much of its history. However, the fall of Soeharto's New Order regime in 1998 enabled these problems to be discussed more openly.

Criticism of illegal logging in Indonesia initially spanned a range of crosscutting sectoral issues. They included abuses associated with large-scale concession- based logging; industrial overcapacity; clear-cutting for plantation estates; problems resulting from the activities of cartel-like timber extraction and trade associations; and small-scale community-based timber extraction. However, there has been a gradual shift in the government and general public perception of what is wrong with Indonesia's forests.

In this chapter, I use the generally accepted definition of illegal logging as any activity associated with timber extraction or processing that contravenes existing forestry regulations – for example, overcutting, cutting outside authorised blocks, underreporting of production, manipulation of documents or bribery (Contreras-Hermosilla 2001; ITTO 2001; FWI–GFW 2002). While the government, the media and NGOs generally agree with this definition of the term ‘illegal logging’, they tend to single out small and medium-sized logging operations based on district-level permits and cross-border smuggling and identify them as the essence of the illegal logging problem in Indonesia. Such perceptions seriously affect the outcome of measures currently in effect to oppose illegal logging. In particular, law enforcement agencies assume that small and medium-sized logging operations are the main perpetrators of illegal logging and target them without looking at the issue more broadly.

Introduction

The relationship with Malaysia was one of New Zealand's most significant in Southeast

Asia. At times, in the early years, the relationship displayed an intimacy which meant it almost warranted a “special” epithet (though, ironically, this term was not actually employed until the 1990s). The intimacy between the two countries was wholly derived from the Commonwealth connection. This connection initially provided the foreign and defence policy framework for both states and it also manifested itself in the areas of aid and education. The Commonwealth link was particularly significant because through it New Zealand was an active participant in the formative experiences of the Federation of Malaya and its larger successor, the Federation of Malaysia. Though the Commonwealth connection was to gradually decline in importance because of leadership changes in Malaysia and changes in New Zealand's foreign policy perspectives and priorities, it remained at least a residual factor throughout the period under consideration.

Whilst the Commonwealth connection was based on shared interests, the relationship between New Zealand and Malaysia was not always perceived to be one of equals in the earlier period. As the Commonwealth link gradually weakened, however, and Malaysia adopted a more independent and sometimes divergent foreign policy stance (often as a result of fundamental domestic political changes) the bilateral relationship displayed increasing equality with which came normality.

A feature of the normalization of bilateral relations was that whereas defence and security issues had tended to be predominant, they were now just one part of the relationship as it became multi-faceted and encompassed a wider range of issue areas including the environment and human rights. A more normal, broad-based relationship also meant that whilst there were instances when New Zealand and Malaysia cooperated closely on the basis of shared national interests and common regional and international concerns, there were several occasions when their interests diverged markedly. On these occasions, the relationship displayed the sort of friction that can characterize international diplomacy between states.

The Commonwealth Connection: 1948–66

Although New Zealand's diplomatic relations with Malaysia were not fully established until after the Federation of Malaya became an independent state in August 1957, New Zealand's relationship with the peninsula predated this by several years.

Prelude

The comfortable relationship which grew up between New Zealand and the Republic of Singapore in the second half of the twentieth century played a decisive part in introducing New Zealand to Asia. This, though, was one of history's happier ironies. For much of that century New Zealand looked to Singapore as its protection from Asia, first from the ambitions of Japan and then from those of Chinese-backed communism.

In the years between the two world wars New Zealand, a loyal son of Empire, had no intrinsic interest in East Asia, then largely ruled by the European colonial powers. It did, however, become increasingly concerned about the ability of the British navy to continue to guarantee the security of the Pacific. Worried about the rise of Japanese militarism and with few hopes of an isolationist United States it looked anxiously for a means of sustaining British power in the Pacific. It seized on Britain's compromise proposal to send its main battle fleet to Singapore in the event of trouble in the region. Wellington immediately offered £100,000 in 1923, scouting any suggestion that we should instead rely on the League of Nations for protection, and in 1927 committed the substantial sum of £1 million to complete the Singapore base.

This became in effect New Zealand's defence policy. New Zealand's first Defence White Paper, in 1935, called Singapore the key to local defence, leaving New Zealand only to find the capability to deal with sporadic raiding vessels. But as the European outlook darkened it became alarmingly apparent that Britain had to “defend a two-hemisphere empire with a one-hemisphere navy”. After Munich the New Zealand Prime Minister was advised that the assumption of a strong British fleet at Singapore had become unrealistic. In April 1939 Walter Nash asked a British admiral what could be done if the Singapore strategy failed. His reply, “Take to the Waitomo caves”, was not reassuring. A year later, after the fall of France, Britain informed Australia and New Zealand that a fleet could no longer be spared. The Waitomo caves would have been crowded but for the US naval victories at Midway and the Coral Sea.

New Zealand's relationship with Southeast Asia has evolved significantly since the end of World War II (WWII). With the exception of New Zealand and Australian pressure on Great Britain to shore up the Singapore base prior to WWII New Zealand did not have interests in Southeast Asia beyond the continuation of British power in the region. The end of the War in the Pacific dragged New Zealand into a relationship with the countries of Southeast Asia. This interest was based on meeting future threats that might come through a weak and unstable Southeast Asia. In the 1950s a New Zealand Minister of External Affairs, T.C. Webb, characterized Southeast Asia as “like so many stepping stones leading down to Australia and New Zealand”. Asia as a whole appeared to be a large threatening continent, in which communism was taking hold. Furthermore, New Zealand's policy-makers believed the Southeast Asian region was being destabilized through external subversion as part of a Cold War confrontation with China and the Soviet Union.

Thus, in the immediate post-war decades, New Zealand foreign policy in Southeast Asia was concerned with security in Southeast Asia. The stability of struggling regimes throughout the region was of grave concern throughout the first half of the Cold War. Wellington went along with a two-pronged plan formulated by the western allies to promote regional stability. First, New Zealand's contribution to the Colombo Plan, initially designed to channel aid to commonwealth Asia and later to much of non-communist Asia, assisted with developmental aid projects in South and Southeast Asia in order to provide social cohesion and economic security for the emerging post-colonial nations. In 1951, F.W. Doidge, Minister of External Affairs, observed that giving aid to the wider region emerged from New Zealand's desire to “stem the tide of Communism”. While force had been necessary in some contexts (like Korea), Doidge argued, helping the “teeming masses” out of their poverty was a better means to check communism in the long term. Secondly, New Zealand signed an array of regional defence arrangements including the Canberra Pact with Australia, the Commonwealth Strategic Reserve, ANZUS (Australia, New Zealand, United States) and the South-East Asia Treaty Organization (SEATO).

INTRODUCTION

Institutions play a central role in the success or failure of natural resource management. As the author and implementor of natural resource policies, government institutions with authority in this area are viewed as a source of hope as well as a source of constraints in relation to proper natural resource management. Today, the institutional challenges to Indonesia's natural resource policies consist of a combination of longstanding, unresolved issues from the New Order era and more recent issues that have emerged since the advent of the reformasi movement and the transition to regional autonomy. A wide range of institutional reforms is under way but will take considerable time to implement. Several studies have observed and analysed these recent institutional changes (World Bank 2001). Several chapters in this book also discuss the ongoing institutional changes in several natural resource sectors and their implications (see Chapter 6 by Fox, Adhuri and Resosudarmo, Chapter 9 by Gellert and Chapter 10 by Dutton).

This chapter works more on a conceptual level; the approach is general, intended to cover multiple natural resource sectors. It depicts the institutional issues currently surrounding natural resource policies and offers some ideas on the institutional transformations needed to ensure effective natural resource policy-making. The chapter points out that some provinces and districts are setting an example in achieving such transformations. However, since the main goal of the chapter is to convey a general concept of the kinds of institutional transformations needed, rather than how these should be implemented in practice, it does not cover practical implementation in any detail.

Introduction

Despite its size and relative proximity to New Zealand, Indonesia has often seemed more distant and less influential than countries further afield. Early recognition of Indonesia's independence promoted positive, if shallow, political ties but bilateral relations remained less substantial than with Southeast Asian countries which shared New Zealand's British connections, though they achieved independence much later. Development assistance delivered through the Colombo Plan was the core of bilateral relations for the first decade. Until the mid-1970s, trade was negligible and defence contacts were rare. Well into the 1980s relations were conducted essentially by a small number of government officials on both sides.

Impressions of Sukarno's Indonesia were shaped by the presence of Colombo Plan trainees, by the influence of Indo-Dutch migrants no longer welcome there, and by press reports increasingly focused on Indonesia's political and economic turmoil and foreign policy adventurism. Australia's perspectives were important to policy-makers who, though not always accepting Australian interpretations, were reluctant to act in ways Canberra might construe as disregarding its strategic concerns about Indonesia. Official disillusionment grew with Sukarno's efforts to wrest control of West New Guinea from the Dutch, and was compounded by “Confrontation”, the campaign to destabilize the Federation of Malaysia.

The potential of the relationship was more fully realized in the Suharto era. The two governments forged a rounded relationship comprising political links, development assistance, trade and economic ties, diplomatic coordination on regional problems, defence cooperation and a range of people-to-people contacts. Persistent underlying tensions, reflecting New Zealanders’ discomfort with the authoritarian character of the Indonesian government, were generally held in check by realpolitik calculations of New Zealand's interests. Not until the 1990s did public disquiet about Indonesia's occupation of East Timor, and a sense that stagnation in Indonesia's leadership made engagement less productive, feed a new wave of disillusionment.

The Impact of Indonesia's Independence Struggle

Nationalist resistance to the resumption of Dutch administration of the Netherlands East Indies (NEI) after World War II drew the New Zealand government's attention to a territory in which it had previously shown little interest. Before the war New Zealand had received occasional British reports on NEI political and economic developments, and rare consular cases were dealt with on its behalf by British officials.