A Future Resource Curse in Indonesia: The Political Economy of Natural Resources, Conflict and Development

Abstract

This paper addresses two main questions: First, to what extent is the current international literature on resource conflicts relevant to Indonesia? Second, to what extent have natural resources been a factor into different types of conflict in Indonesia and what channelling mechanisms are in place? The paper also seeks to identify the policy implications for Indonesian development practitioners and policymakers. This paper identifies four channelling mechanisms linking natural resource abundance and conflict: economic disruption, institutional failure, growth failure and relative deprivation. Natural resources play different roles and have varying importance in the four actor-based categorisations of conflict explored in this paper: separatism, the state vs. community, company vs. community and inter-communal groups. The relationships can be direct or indirect. Separatism and inter-communal violence are the most severe types of conflict in contemporary Indonesia. For separatism, feelings of relative deprivation among indigenous peoples in four resource-rich provinces against the rich were a commonly identified factor, termed herein 'the rage of the potentially rich.' For inter-communal conflict, natural resources can be a trigger or proximate cause of conflict, the underlying structural cause of conflict, or provide a context in which inter-communal violent conflicts take place. In short, grievance matters. The paper concludes by pointing to three arguments drawn from research findings: (i) the possibility of a resource curse in the four natural resource-rich provinces studied; (ii) the utilitarian reasons for private business to combat poverty through innovate strategies for managing natural resources; and (iii) the need during policy-making to consider the changing positions of groups relative to one another at sub-national levels