TCS Daily

NGOs Undermining Democracy

By Mike Nahan - November 24, 2004 12:00 AM

Over the last decade or more, official aid agencies have increasingly plied non- government organizations [NGOs] with money and influence in the belief that they provide a corruption free channel for aid. Five senior executives of Newmont Mining, a large US based mining company, are being held in jail in Indonesia on bogus charges as the result of the activities of an NGO which has been generously funded with foreign aid money. This money has been used to block projects, stymie growth, deter investment and foster corruption.

Since the early 1990's Indonesia has been a major target of global anti-mining campaigns. While Indonesia is not a major mining nation, it is very prospective and in the early to mid 1990s experienced a large inflow of investment from global mining firms. With the global miners came their opponents in the NGO sector.

Newmont was an early entrant into the Indonesian mining industry, starting with the development of its PT Newmont Minahasa Raya (NMR) gold mine which began production at Buyat Bay in the province of 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 backed and funded by western activists.

In the case of the campaign against NMR, this included: the Indonesian Center for Environmental Law (ICEL), the Indonesian Mining Advocacy Network (Jatam), the Institute for Policy Research and Advocacy (Elsham), KELOLA and the Indonesian Forum for the Environment (Walhi), aka Friends of the Earth Indonesia, just to name a few.

The main line of attack against NMR was that it knowingly polluted Buyat Bay with mercury and arsenic. More recently, the NGOs claimed that pollution was so sever that 30 villagers had died from Minamata disease - a severe form of mercury poisoning which could only be acquired by direct ingestion of mercury.

When the appropriate Indonesian government ministers dismissed, on expert advice, the claims of the NGOs, the NGOs filed lawsuits against them.

With the assistance of friendly 'experts', these claims were successfully promoted in the West, such as in a recent New York Times feature story.

What the New York Times and its NGO sources ignored was the considerable body of evidence that directly contradicted the NGO line.

Shortly after the New York Times ran the story in September, the Indonesians National Police arrested six of NMR's most senior executives (one was released due to health risks) on charges based on the NGO claims that the NMR and its executives knowingly polluted the Bay and damaged the livelihood and health of the local community.

The fact that the action took place only as mining was coming to an end fed rumours that charges had been created to force a pay-out from Newmont before the mine closed.

The main English language newspaper in Indonesia, The Jakarta Post, in an editorial argued that the approach of the police bordered "on the bizarre" and that the speed and haste with which they acted against Newmont contrasted sharply with the their characteristic lack of energy in pursuing corruption and other crimes.

The police case (and NGO case) received a setback when the World Health Organization and the Minimata Institute of Japan investigated the area and failed to find any signs of mercury poisoning or related symptoms.

More significantly, the Indonesian Government released a report prepared by the Government Integrated Team, which was set up to examine the claims and found that "Buyat Bay was not polluted with mercury","or with arsenic". But also found that "fish from Buyat Bay are fit for human consumption."

Shortly after the inauguration of the new Indonesian President Susilo Bambang Yudhoyono, the Newmont executives were released though the police investigation continues.

The action against NMR diminished the already low level of investor confidence in Indonesia generally and specifically in its mining sector. The investment in the mining industry has declined over the last seven years from $2.6 billion to a paltry $177 million. The travails confronting Newmont will contribute to this decline.

In Indonesia, like in other developing countries, local anti-mining NGOs are partners with western activists. While they claim to represent the local community, they are in fact funded almost entirely from abroad. For activists in the developing countries, these campaigns are as much about earning a living as saving the environment. Just as in the developed world, protesting has become a profession. What gives NGOs' agendas away is the fact that they only campaign against foreign joint ventures. They leave local mines alone, even those that extensively use mercury and operate with poor standards. Moreover, when foreign investors sell-out to locals, the NGO campaigns invariably stop.

A large portion of their funding comes ultimately from western sources. For example Wahli, a leading Indonesian anti-mining NGO which was involved in the campaign against NMR, receives funding from CARE, OXFAM, USAID, Netherlands Organization for International Development Cooperation (NOVIB), AusAID, Belgium's National Center for Development Cooperation (NCOS), and Canadian Development Agency (CIDA). As James Sheehan's book, The Global Greens also notes, Wahli also shared in a US$14 million contract from the World Bank with WWF Indonesia. In addition, it previously received funds from USAID, the American Government's foreign aid arm.

Western funding of NGOs is usually rationalized on the basis that NGOs promote the rule of law, find solutions and mediate conflict. The reality of the Newmont experience is that NGOs facilitate corruption, create risk, destroy jobs, and accentuate conflict rather than ameliorate it.

Naturally, U.S Ambassador Ralph Boyce raised the NMR case with the outgoing Indonesian President. However, his actions were attacked by US activists. "The US Embassy's actions are a dangerous example of the Bush administration's misguided foreign policy," said Stephen Mills, Director of the Sierra Club's International Program.

Mills went on to argue that "the transgressions of American companies operating abroad reflect poorly on our country and damage our national security."

But Mills' attempt to invoke national security does inadvertently expose a major problem which has been tolerated for far too long. Broadly speaking, what damages US national security is local NGOs funded by western aid dollars trying to sabotage an industry that could generate wealth and opportunity in the world's most populous Muslim country, which unfortunately has more than its fair share of Islamic fanatics.

It's time that the U.S Congress started looking more deeply into the whole issue of foreign aid funding of anti-development NGOs. There is no doubt that what they find will appall them.

Mike Nahan and Don D'Cruz are with the Institute of Public Affairs, Melbourne Australia.


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