Indonesia suspends cartel membership to avoid cuts
- 2 Dec 2016 – bankokpost.com
JAKARTA: Indonesia has suspended its membership of the Organization of Petroleum Exporting Countries, less than a year after rejoining the cartel, as the net oil importer said it could not agree to the group’s production cuts.
The decision came as the cartel agreed its first oil output cut since 2008 in a bid to tackle overcapacity and prop up prices.
The suspension could be a setback for Indonesia, Opec’s only East Asian member, which had hoped to benefit from being closer to Opec countries when it reactivated its membership at the start of the year.
Opec had proposed Indonesia cut oil production by about 37,000 barrels per day (bpd), or about 5% of its output, which would dent the already slipping oil rent in Southeast Asia’s largest economy.
Indonesia’s Energy and Mineral Resources Minister Ignasius Jonan, who attended the Vienna meeting, said the only reduction Indonesia could accept was a cut of 5,000 bpd, which had been approved in the country’s 2017 budget.
“There are still big government revenue needs in the 2017 budget,” he said, adding that as a net oil importer a cut to production would not benefit Indonesia, particularly at a time when oil prices were expected to go up.
The temporary suspension was in the best interest of all Opec members, the Energy and Mineral Resources Ministry said in a statement.
It was not clear whether Indonesia was asked to suspend its membership or if it left voluntarily. Qatar, the current Opec president, said on Wednesday that Indonesia had been suspended.
For Saudi Arabia — which took the lion’s share of cuts — a key criteria for the deal was collective action by Opec beyond those countries, Iran, Libya and Nigeria, which were given an exemption, said Jason Gammel of US investment bank Jefferies.
“Indonesia was the only member to not participate and their Opec membership was ‘frozen’; otherwise the group demonstrated more cohesiveness than at any point since at least the 1.5 million barrels per day cut in 2008,” he said.
Indonesia is seen as a somewhat odd member of Opec and has had a patchy membership history.
After first joining in 1962, it left in 2009 as dwindling production meant it had become a net importer of crude oil, which is against Opec’s statute for full membership.
Since rejoining, Indonesia has made several deals on crude imports, overseas upstream investments and refining partnerships, including with Opec bigwigs Iran and Saudi Arabia.
Indonesia’s crude oil output peaked at around 1.7 million barrels per day in the mid-1990s. But with few significant oil discoveries in Western Indonesia in the past 10 years, production has fallen to roughly half that as old fields have matured and died.
The industry is a vital part of the Indonesian economy, but its contribution to state revenue has dropped from around 25% in 2006 to an expected 3.4% this year, according to data compiled by consulting firm PricewaterhouseCoopers(PwC).
Three days later, it was the dead reds. Following the conclusion of an activist-initiated “people’s tribunal” in The Hague that found the Indonesian government “responsible for genocide” in the 1965-1966 killing of at least 400,000 people suspected of being associated with the Indonesian Communist Party (PKI), Ryamizard again fronted the press.
The tribunal’s findings were “lies,” he said. “If we listen to them, we will break apart,” he warned. “This is the work of the PKI.”
In reality, neither of these things is true. Pokémon Go might be annoying to some — and it did suffer from a gaping initial privacy hole — but it’s still just a game. And the PKI, for its part, was wiped from the Earth; those killings half a century ago effectively eradicated the left from Indonesia’s political map, along with many ethnic Chinese. The slaughter, in turn, paved the way for the rise of the late dictator Suharto, whose kleptocracy lasted until 1998 on a base of steady anti-communist propaganda. Even today, both Marxist teachings and the PKI are banned under Indonesian law.
But Ryamizard’s comments are part of a worrying wave of often xenophobic paranoia under the presidency of Joko Widodo, popularly known as Jokowi, who was elected in 2014. Despite campaigning on promises of deepening democratic reforms — and pledging to resolve past rights abuses like the 1965-1966 killings — the former Jakarta governor’s rule has been marked by a series of panics over threats that are either grossly exaggerated or straight-up fictional.
Some have come from Jokowi himself. The president has been a strong advocate of the idea (based on questionable evidence) that the country faces a “drug emergency.” Under Jokowi’s direction, the country has executed 18 drug convicts since last year, including four last month. The vast majority of those killed have been foreigners.
Of more concern have been two intertwined scare campaigns being run by reactionaries both inside and outside Jokowi’s administration — often in ways that embarrass and undermine the president.
One is the red scare. Since mid-2015, police, soldiers, and vigilantes have broken up dozens of events, from film screenings to meetings of massacre survivors, which have been labeled “communist.” Meanwhile, Islamists and nationalist groups have held rallies of thousands of people vowing to “crush” communism in cities and towns, and the media have carried grave warnings by prominent Indonesians of a looming red takeover.
At the same time, there has been a rising panic about so-called proxy wars being waged by unnamed foreign enemies against Indonesia. Armed forces chief Gen. Gatot Nurmantyo, appointed by Jokowi last year, has frequently raised the specter of these enemies spreading immorality and drugs in order to create chaos and steal Indonesia’s wealth. In February, amid a nationwide campaign of hate speech against lesbian, gay, bisexual, and transgender Indonesians, which was sparked by a backlash against a support group at the University of Indonesia, Ryamizard labeled the fight for LGBT rights as a threat with the potential to do more harm than nuclear weapons.
The defense minister was a driving force in the creation last year of Bela Negara (meaning “Defend the Nation”), an organization that claims 1.8 million members and aims to instill nationalism through paramilitary-style training, including reportedly teaching civilians how to use weapons. Paramilitary groups have been popular in Indonesia since before the Suharto era and played a key role in both the 1965-1966 massacres and violence across the country in the years surrounding Suharto’s fall.
The nationalist tide has left Jokowi’s administration in a policy muddle. Jokowi has pledged to address the troubled legacy of the 50-year-old massacres and in April organized the country’s first symposium featuring both survivors and the military. But no matter what happens, a state apology for the killings is off the cards, presidential spokesman Johan Budi told Foreign Policy.
Budi pointed out that Jokowi has already instructed overzealous authorities to rein in raids against events deemed “communist.” This has indeed happened. But the president has done nothing to muzzle senior figures invoking the red menace or talking of proxy wars.
“The president can’t ignore reports from the community … that there are some people trying to bring the communist party back in Indonesia,” Budi said. “The president has to respond.”
Jokowi’s attempt at the middle road is pleasing no one.
Jokowi’s attempt at the middle road is pleasing no one. Despite the fact that he has given Cold Warriors open slather in his administration, opponents frequently seek to label him as a red in disguise. In June, a collection of former Suharto-era generals organized their own symposium to counter the government’s reconciliation effort. The crowd included members of Islamist street thug groups such as the Islamic Defenders Front (FPI), an organization formed by generals in 1998 to fight pro-democracy protesters in the streets. Also in attendance were uniformed members of Bela Negara.
Jokowi’s support for even limited reconciliation over the mass killings means “he’s pretty much part of efforts to bring communism back,” Ahmad Shobri Lubis, the head of the FPI, told FP. “It’s a twisted, crazy step. It goes against common sense that the government would ask for forgiveness from criminals. It’s madness.”
But not everyone in Indonesia has bought into the hype. Social media has frequently pilloried the more hysterical announcements, and reactions from some of the establishment — including military types — have ranged from eye rolling to alarm.
In Indonesia’s muddled party system, opinions similarly vary, including within Jokowi’s Indonesian Democratic Party of Struggle (PDI-P). Former President Megawati Sukarnoputri, who championed Ryamizard’s appointment and has a reputation for brittle nationalism, heads the party.
Others take a different view. The paranoid upsurge is “all bullshit,” T.B. Hasanuddin, a former general and a senior PDI-P politician, told FP.
Behind it all is a collection of former generals who are being driven by two factors, Hasanuddin said. One is fear that a reckoning over the bloody legacy of the 1965-1966 killings — in which the military and traditional elite are deeply implicated — could unleash chaos. The other is a more concerted attempt to use vague bogeymen to fight the country’s democratization, he said. For some, these fever dreams are simply a cynical ploy. For others, they are indisputable fact, born of indoctrination during Suharto’s 31-year New Order regime.
“There are those from the military who, in the way they analyze things, always need there to be threats. If there are no threats, then they need to make them up,” Hasanuddin said. “Now it’s communism.”
Why is all this happening under Jokowi? Less than two years ago, the former furniture salesman was hailed as a new hope in a political system dominated by old faces with ties to the New Order. Liberals flocked to Jokowi’s campaign, seeing him as a democratic bulwark against his main rival, Prabowo Subianto, a former general (and former son-in-law of Suharto) implicated in serious human rights abuses.
But Jokowi has long sought to accommodate the old guard. Even during the transitional period between his election and taking office, Jokowi began an embrace of hard-liners close to Megawati, who retains undisputed control of the PDI-P.
“He’s just weak,” said Ian Wilson, an Indonesia expert at Australia’s Murdoch University. “He’s been outmaneuvered by seasoned players, seasoned brokers, and the kind of warlords of elite politics, including someone like Megawati, [who is] an ultranationalist and a militarist.”
Observers of Indonesia have hoped of late that Jokowi might finally be finding his feet. But even if he is increasingly calling the shots, the result is still a doubling down on his embrace of the old dinosaurs. In a late July reshuffle, the president sidelined Luhut Panjaitan, a relatively liberal former soldier, as the chief security minister and replaced him with Wiranto — who, like many Indonesians, only goes by one name — a former general indicted by a United Nations-backed tribunal for crimes against humanity in East Timor.
Wiranto, a man accused of having command responsibility for militia violence in 1999 that is believed to have killed well over 1,000 civilians, is now in charge of handling the government’s response to past abuses. This includes the 1965-1966 killings and his own alleged crimes.
Few rights advocates now expect much from Jokowi’s administration.
Photo credit: AGOES RUDIANTO/NurPhoto via Getty Images
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