The Jakarta Post, Jakarta

The International Crisis Group (ICG) reported on Friday that the exploitation of Indonesia's natural resources was out of control, damaging the environment and societies in ways that increased the risk of conflict.

ICG said the country suffered damage from illegal operators, corruption and greed in the mining, logging and fisheries industries, although the industries had also brought economic benefits to the country.

"ICG urges Indonesia and the international community to take much tougher action against unsustainable and illegal practices to secure viability of its industries in the future, and also to reduce the risk of violence," the group said in its new report.

ICG said the timber trade in Kalimantan and the massive illegal cros-border traffic to Malaysia was an important example of illegal and unsustainable resource exploitation.

Those practices were also an important contributing factor in the fighting between indigenous Dayaks and Madurese immigrants in Kalimantan early this year, in which 500 Madurese were massacred and thousands more were forced to flee, ICG added.

According to ICG, the illegal resource industry was protected and sometimes even organized by corrupt elements in the civil service, security forces and legislature.

"This is not just a question of protecting the environment, it's also a problem of governance and crime. Foreign donors and lenders have put heavy pressure on Indonesia to deal with illegal logging, but the government is still a along way from turning the tide," ICG senior analyst Diarmid O' Sullivan said.

ICG said it had put forward a series of recommendations to the government, army, police, trading partners and financial backers to end illegal resource exploitation and reach more sustainable levels.

A resource strategy should start with improved law enforcement against the key organizers of illegal extraction and the corrupt officials who assist them, a reduction of the capacity of wood-processing companies and a review of debt structures to ensure they do not encourage the use of illegal timber, ICG said.

"A crackdown on illegal cross-border trade in timber is essential if Indonesia is to sustain its forestry industry," ICG said.

According to ICG, donors and lenders to the country should provide technical assistance and consider offering debt write-offs in return for tangible outcomes.

But if vested interests continued to block reform, lenders should consider linking future loans to curbing illegal extraction and refuse to provide capital to companies that did not use legal and sustainable raw materials, ICG added.