Downstream Nickel and Our Natural Resource Story
God provided these to the Indonesian people, but the authorities handed it over to foreign corporations and private individuals. Now will be the starting point to correct the mistakes that have been made from 1967.
Didie SW
The government has stated that nickel ore, the mineral in its raw form that exists Indonesian soil, can no longer be extracted by foreign companies and transported directly to their base country.
The government, through Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan, said that nickel ore must be processed domestically into semi-finished products for further processing infor use in manufacturing, including battery production. Unfortunately, awareness about this policy has emerged only now. The hope is that not only nickel will be treated this way, but all minerals that exist in Indonesian soil.
Since 1967, our mineral resources have been "exploited" by giant foreign corporations and private Indonesian individuals (as derived from Bung Hatta\'s term, orang partikelir, or “private person”). During the administration of the first President of the Republic of Indonesia, Soekarno, the palace was flooded with the executive leaders of giant foreign corporations asking for concessions to explore and exploit our natural resources, especially very expensive minerals.
Bung Karno refused them all while ordering Deputy Prime Minister Chairul Saleh, who was in charge of energy and mineral resources (ESDM) at the time, to give permits to just a few foreign companies to gain the foreign exchange we desperately needed. When Megawati asked him why, Bung Karno replied: "Later, it [our mineral wealth] will be exploited by our own engineers." I heard this story directly from Megawati.
The hope is that not only nickel will be treated this way, but all minerals that exist in Indonesian soil.
Bung Karno then "begged" for scholarships from any country in the world so Indonesian students could study at their universities. By 1967, there were many engineers in all fields, including geology graduates from the best universities in the world as well as the Bandung Institute of Technology (ITB), which had existed since the colonial era. But then, what happened?
They ended up working for foreign companies as salaried workers to massively exploited our mineral resources. What Bung Karno had feared really happened, that even though Indonesia was independent, it had become "Een natie van koelies en een Koelie onder de naties" (A nation of coolies and a coolie among other nations).
Role of the ‘Berkeley Mafia’
This story is revealed in Economists With Guns: Authoritarian Development and US-Indonesian Relations, 1960-1968, written by Bradley R. Simpson and published by Stanford University Press (2008). I believe everything he wrote is true and authentic. Simpson earned his PhD from Northwestern University with a dissertation that involved researching authentic documents concerning RI-US relations. Almost all the documents he researched were classified.
After his dissertation was published, the US government appointed him as the director of the National Archives so he had greater direct access to authentic documents. His book contains almost no sentences that are not supported by authentic documentation. In the “Works Cited” section, the bibliography of supporting documents spans 73 pages, while the principal text comprises 259 pages.
I will cite the relevant parts in terms of Indonesia’s domination by developed/powerful countries, especially the US, in chronological order. Page 19 reveals that the Ford Foundation (FF) funded the education of Indonesian social scientists, which directly shaped development thinking.
Between 1952 and 1962, the FF, alongside AID [sic], provided education and training programs for generations of Indonesian economists through a partnership between the University of Indonesia (UI) and the University of California, Berkeley, and funded economics postgraduate studies at MIT, Cornell University, and other institutions. Two years later, the FF reported that its economic education and training programs had a major impact on Indonesian development.
Page 20 reveals that UI economics professors Widjojo Nitisastro, Mohammed Sadli, Subroto, Ali Wardhana and Emil Salim played a crucial role in rearranging Indonesia\'s economic policy after the fall of Soekarno in 1966 by destroying Soekarno’s “Guided Economy”, an act that led them to be known as "the Berkeley Mafia".
On 16 Dec., several high-ranking Indonesian officials gathered to discuss Chaerul Saleh\'s proposal on the takeover of Caltex and Stanvac. In the middle of the meeting, Soeharto dramatically arrived by helicopter and entered the negotiation room with a very clear instruction: the Indonesian Military (TNI) would not take over the oil companies. He said just that and immediately departed.
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Page 219: Soeharto understood that he needed technocrats if he wanted to save the economy so he hired them immediately. Widjojo, Salim and Wardhana told Edward Master that in the autumn of 1966, they held various meetings with KOGAM, Bank Indonesia (BI) and Sultan Hamengkubuwono IX to convey the message that the economy was in a very bad state and needed saving.
Page 227: The FF financed a generation of UI economists to study in the US. “You cannot have a modernizing country without a modernizing elite,” said Frank Sutton, deputy vice president of the FF’s international arm. In the early 1960s, UI organized the US-style Executive Development Program to train military and civilian leaders. In 1966, Robert McNamara said the program had proved to be of high value.
Page 231 clearly illustrates the Freeport Sulphur case. In 1959, Freeport received a report from a Dutch geologist about copper deposits in then-West Irian. In April 1965, Freeport obtained preliminary approval from the Ministry of Energy and Mineral Resources for copper and nickel exploration.
President Joko Widodo gave a speech at the ground breaking event for the construction of a nickel-based electric vehicle battery factory, PT HKML Battery Indonesia at the Karawang New Industrial City Complex, Karawang Regency, West Java, Wednesday (15/9/2021).
Soekarno had closed Indonesia\'s doors to foreign investors. In early September, James Moyer, Freeport\'s director of information, became a member of staff at the White House, where his brother Bill Moyer worked. Two months later, when the Army launched its massacre of PKI (Indonesian Communist Party) supporters, Freeport opened negotiations with the generals to reenter Indonesia. A few days after Supersemar, Freeport surveyors flocked to the forests of West Irian, competing with Japan’s Mitsui. What Freeport found was a towering 600-foot mountain full of high-quality copper ore. The discovery of Ertsberg, the world\'s largest copper reserves, convinced the company to move quickly to obtain concessions.
Page 244: In April 1967, the first trade mission arrived in Jakarta from the state of Oregon and San Francisco, California, representing medium-sized exploration companies in the timber, plywood, chemicals, mining and oil industries. Trade missions from Belgium, the Netherlands, Australia, France and North Korea followed. Dutch daily De Volkskrant reported fierce competition to access the lucrative market in Indonesia.
The new world rulers
The US Embassy praised Soeharto for accepting foreign investment as the main source of development outside Java. However, the technocrats were concerned because the giant multinationals considered the engines of development had not responded to the imitative. Only small companies like Freeport and IAPCO came. Page 245: Two months later, a much more important meeting took place in Geneva.
Before Simpson published Economists With Guns, he and Jeffrey Winters gave an interview to senior journalist John Pilger, about which Pilger recounts in his book, The New Rulers Of The World.
On page 37, he reveals: “In November 1967, following the capture of the \'biggest prize\' (read: the fall of Bung Karno), the catch was divided. The Time-Life Corporation sponsored a special conference in Geneva, which within three days planned the takeover of Indonesia.” The conference participants were the most powerful capitalists in the world, like David Rockefeller.
All Western corporate giants were represented: oil companies and banks, General Motors, Imperial Chemical Industries, British Leyland, British American Tobacco, American Express, Siemens, Goodyear, International Paper Corporation, US Steel. Across the table sat Soeharto\'s men, whom Rockefeller called “Indonesia\'s top economists”.
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“In Geneva, the Sultan’s team was known as The Berkeley Mafia, because some had enjoyed scholarships from the US government to study at the University of California at Berkeley. They came as beggars who voiced the wishes of their boss. Offering the items for sale from the state and his people, the Sultan offered: ... abundant cheap labor, ... large reserves of natural resources, ... large markets."
Page 39: “On the second day, the Indonesian economy was divided, sector by sector. ... This is done in a spectacular way,” says Winters. Simpson had studied the conference documents.
“They divided it into five sections: mining in one room, services in another, light industry in another, banking and finance in another. What Chase Manhattan did was sit down with a delegate who dictated policies that were acceptable to them and other investors. We watched the leaders of these large corporations going around from table to table, saying: \'This is what we want: this, this, and this\', and they were essentially designing the legal infrastructure to invest in this country. Indonesia. I had never heard of such a situation before, where global capital sits down with representatives of countries that are assumed to be sovereign states [who] draft the conditions for the entry of [foreign] investments into their own countries.”
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Grasberg open pit mining area in Timika, Papua, Wednesday (27/2/2019).
Freeport got a hill full of copper in West Papua. A European consortium got nickel deposits in West Papua. Giant Alcoa bagged the lion\'s share of Indonesian bauxite. A group of US, Japanese and French companies acquired tropical forests in Sumatra, West Papua and Kalimantan. A law on foreign investment that was hastily proffered to Soekarno made this "plunder" tax free for five years. In fact and in secret, control of Indonesia\'s economy was moved to the IGGI, whose core members were the US, Canada, Europe, Australia and, most importantly, the IMF and the World Bank.
So, since 1967 Indonesia has been divided into plots under the guidance of the nation\'s own elite who were in power at that time.
Then, there are some controversial notes from John Perkins in his book, Confessions of An Economic Hit Man. He worked for MAIN, a US consulting firm. His first assignment was Indonesia. He was part of a team of 11 people who were sent to create a blueprint for a plan to build a power plant on Java. He had to create an econometric model for Indonesia and Java.
Page 13: “I know statistics can be manipulated to arrive at many conclusions, including what the analyst wants on the basis of the statistics he makes.” Page 15:
“First, I have to justify the enormous debt that will be rerouted to MAIN and other US companies [such as Bechtel, Halliburton, Stone & Webster, and Brown & Root] through the sale of giant engineering and construction projects.
"Secondly, I have to bankrupt the country that receives the loan [of course, after MAIN and other US contractors are paid], so the target country is forever in the grip of its creditors, so that the debtor country [read: Indonesia] becomes an easy target if we need favors, including military bases, votes in the UN, or access to oil and other natural resources.”
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Pages 15-16: “The hidden aspect of all these projects is that they make huge profits for the contractors and make happy a few families in the debt-receiving countries who are already rich and influential in their respective countries. Thus, the financial dependence of the debtor country becomes permanent as an instrument to gain loyalty for the debtor government. Therefore, the greater the debt, the better. The fact that the huge debt burden will afflict the poorest sectors of the nation in health, education and other social services for decades does not need to be taken into account.”
Page 15: “The most decisive factor is GDP. The project that contributes the most to GDP growth should be won. Even if there is only one project to win, I have to show that building the project in question will bring superior benefits to GDP growth.”
Page 16: “Claudia [Claudia Martin, the CIA officer tasked with giving orders to Perkins] and I discussed the misleading characteristics of GDP. GDP growth, for example, can occur even if it only benefits one person, namely the owner of a public service company, by placing a very heavy debt on the people. The rich become richer and the poor become poorer. Statistics will record it as economic progress.”
The wealth of a nation can be divided into two categories, manmade wealth and existing wealth (God-given wealth), such as natural resources in the Indonesian soil, flora and fauna in the oceans, a climate that is conducive to many types of foods and medicine, as well as vast lands.
Kwik Kian Gie
God provided these to the Indonesian people, but the authorities handed it over to foreign corporations and a handful of private individuals. Hopefully, now will be the starting point to correct the mistakes that have been made from 1967 until now.
KWIK KIAN GIE, Coordinating Minister for Economic Affairs (1999-2000), and Minister of National Development Planning/Head of Bappenas (2001-2004).
This article was translated by Kurniawan Siswoko.
