Received from Network for Rule of Law and Human Rights in the Central Highlands [NB: This is a long document and will be translated in two parts. I. Developments that occurred prior to the incident A group of about fifty members of the OPM attacked the police station in Pirime on 27 November 2012 when three police officers and two others were killed, including the local police chief Rofli Takubesi. A 14-year old girl, Arina Tabuni, was shot dead by members of the elite force. KOPASSUS on 1 July 2013. The military handed over 450 million rupiahs to the family, but nothing has been done to find and charge the perpetrator. An ojek [three-wheel bike] rider called Nasito, 30 years old, was killed in Dugume Kampung on 17 July 2014. This is thought to have been perpetrated by members of the Papuan National Liberation Army - TPNPB. A hunt is under way to find the perpetrators. II The initial incident: On 20 July 2014 at 10am, four heavily-armed policemen from Tiom were seen riding in a Mitsubishi vehicle in the direction of Pirimedan in the District of Makki, looking for Enden Wanimbo, commander of the local liberation army. They were in a state of readiness with the commander mobilising his troops to hunt down the liberation fighters. In order to be in a state of readiness, it is thought that the police were mobilising heavily-armed forces wearing their uniforms and they launched an attack against forces of the OPM. Fighting broke out between the two sides who were shooting at each other. This happened at around 12.30 in Indawa Kampung, the sub-district of Awinaya District of Lani Jaya. During this fight, one policeman was killed and three others were wounded along the Wamena main road. The Enden Wanimba group seized four weapons from the police and a large cache of ammunition, then fled into the forest in the direction of Pirime. The victims were taken to Wamena to be treated for their injuries. On 1 August 2014, from 8.30 in the morning till 6.20pm, the police and the OPM fought each other. During this encounter, a ten-year old boy, a Christian named Abetnok Wakerwa, was burnt alive in his home by members of the police and the army. The boy was the son of the district chief, Bermandus Wakerwa. Two weeks later on 15 August, the police attacked Nanim Kampung in the district of Bogonaterjadi and set fire to many people's homes. The precise number of the homes burnt down is not known, III. THE GENERAL SITUATION IN LANI JAYA DISTRICT Since the incidents that occurred on 28 July in the District of Lani Jaya, the villages there have become uninhabitable as a result of which the inhabitants, all of them civilians, have fled into the forest, seriously traumatised by the fighting between the army/police and the liberation army. No one has come there to alleviate the inhabitants and help them get over their trauma. Meanwhile, members of the local administration have simply disappeared, with no officials available to help the local people get over their trauma. Instead of being there to help the people solve their difficulties, they have all fled. The civilian population have been left there in a situation which is very unsafe while all basic activities such as schools, health facilities and economic activities are at a standstill. Conditions of the population are extremely bad.They have no food or clothing because all their homes were burnt down by the army and the police. They are living in tents while the police and army are spending all their time hunting down the liberation fighters in order to be able to crush them. There have been efforts to resolve the conflict by calling a meeting between local community leaders and police chiefs. which was attended by the Bupati [district chief] of Lani Jaya, the commander of Cenderawasih Regiment, religious leaders and community leaders. The district leader urged the Church leaders to help organise a dialogue so as to be able to put a stop to all the fighting. Meanwhile, some religious leaders, local NGOs and human rights activists have strongly criticised the Bupati for urging army and police to hunt for and shoot members of the Enden group. Translated by Carmel Budiardjo [End of first part of the translation]
Forcibly rewriting contracts will deter future foreign investment.
Updated Sept. 8, 2014 3:39 p.m. ET
Jakarta has won its battle to extract extra tax revenue from foreign mining companies. After eight acrimonious months during which mines suspended operation, Freeport-McMoranFCX -0.31% and Newmont have both agreed to pay a 7.5% levy on mineral exports. At least now production can resume, thousands of laid-off workers can return to work, and Indonesia can begin recouping billions in lost revenue. But the government's shakedown will deter future investment, and not merely in mining.
Freeport and Newmont had long-term contracts with the Indonesian government that guaranteed their investments a stable regulatory environment free from political expropriation. It turned out they were worthless.
When Jakarta announced a 20% export duty in January that would rise to 60% by 2016, both firms invoked their contracts, halted exports and asked the government to reconsider. Newmont pushed especially hard, declaring force majeure at its Batu Hijau mine in June and initiating international arbitration a month later.
The government responded in full nationalist dudgeon. President Susilo Bambang Yudhoyono condemned Newmont for having "undermined the sense of justice of the Indonesian people" and for failing to value "Indonesian soil, the birthplace of Indonesia's ancestors." Jakarta threatened to rescind Newmont's mining license.
The threats worked. Freeport caved in July, perhaps reckoning that it couldn't stand to lose its Grasberg mine in Papua province, which accounted for about 20% of its revenue last year. Newmont followed last week. The companies did manage to bargain Jakarta down to a 7.5% rate plus higher royalties. But now that their contracts have been violated once, they can have little confidence that this deal won't also unravel.
The firms further agreed to begin financing the construction of smelters for processing raw ores into metals—$25 million from Newmont, $115 million from Freeport. Smelting inside Indonesia is largely uneconomical because the geography is unsuitable, the infrastructure is poor and there is excess smelting capacity overseas. But Jakarta wants to develop its minerals industry for political reasons, never mind the misallocation of resources.
While officials in Jakarta celebrate these deals, foreign investors have more reason to avoid Indonesia. It doesn't help that the official responsible for mining policy, Energy Minister Jero Wacik, was forced to resign last week after being named a suspect in an investigation by the Corruption Eradication Commission.
Another red flag: Jakarta has promised to cancel some 67 bilateral investment treaties with countries including Germany, Britain, France, the Netherlands, Australia, Singapore and China. The government considers the treaties unfair because they include dispute settlement mechanisms that allow foreign firms such as Newmont to seek international arbitration if Indonesia threatens to expropriate assets.
Oil and gas firms are likely paying particular attention. Indonesia badly needs new energy investment as import costs rise and domestic oil production falls toward 800,000 barrels per day from one million in 2010.
All of which underscores the challenges that face Joko Widodo when he is sworn in as President on Oct. 20. Markets cheered when he won election this summer because as a former entrepreneur he at least understands the risk-reward calculus of business.
Yet Mr. Widodo also has a nationalist side, and he has supported the government's squeeze on foreign miners. Respecting contracts is in the country's long-term interest, but it is a rare Indonesian politician who can resist the temptation of populism.