Rachel Marsden

No nation is keener on raw minerals than China, the world's manufacturing base. Knowing that Russia and China are best buds, should it have come as any surprise that Russian mining oligarch Oleg Deripaska successfully convinced the Indonesian government earlier this year that an export ban on mineral ore would be in Indonesia's best interests (right after China had stockpiled all it needed, of course), to drive up prices and force the building of new domestic facilities?

Indonesia has also imposed a new export tax against Western mining operations that applies to the minerals that were exempted from the ban. The export ban is seen as a quid pro quo between Indonesia and Russia after Russia's pledge to invest billions of dollars to build Indonesian smelters and processing plants. The tax is regarded as an attempt to force Western interests into similar pledges.

The lobbying of Indonesia was a brilliant strategic move by Russia: Not only does the West get squeezed, but it's forced to fund Indonesia's increased operational independence to the West's own eventual detriment.

Western mining companies have already made alleged payoffs to Indonesian military figures and public officials to maintain the security and viability of their operations in the world's largest Muslim country (and a notorious terrorism hotbed), and now they're faced with more extortion: Build us smelters or pay the price. The threat is working, with Western interests agreeing to conduct a feasibility assessment for a new copper smelter. The telltale sign of danger is that with Russia as a mentor, the negotiating leverage has shifted to the Indonesians.

History suggests that Indonesia's primary preoccupation is keeping military and political leaders ensconced in the lifestyle to which they have become accustomed, thanks largely to private corporations. If Russia and China can fill that need, then Western companies with assets in Indonesia -- the cornerstone of Obama's economic pivot to Asia -- are at risk of becoming obsolete in that part of the world. Those companies should be giving serious thought to Plan B in the event that Indonesia nationalizes its assets, and those companies' multibillion-dollar investments are ultimately co-opted to serve America's geopolitical competitors.

If there's any doubt about the effectiveness of such subversion, recall what we've just witnessed with Russia in Ukraine and with China in Iraq.


Rachel Marsden

Rachel Marsden is a columnist with Human Events Magazine, and Editor-In-Chief of GrandCentralPolitical News Syndicate.
 
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