Sian Powell – Turf wars over extortion rackets often trigger armed clashes between the Indonesian military and the nation's police force, a conference on the weekend was told.

Harold Crouch, of the Australian National University, is a former chief of the International Crisis Group's Indonesia Project and a world authority on the Indonesian military. He told the annual Indonesia Update conference in Canberra that a shortfall in government funding had pushed the army and police into crime, and clashes between them often led to shootouts and fatalities.

Only 30 per cent of military costs are funded by the Indonesian Government, and units within the Indonesian military have independently resorted to extortion, prostitution, gambling and smuggling to fund their operations. Marcus Mietzner, also from the Australian National University, told the conference the Indonesian military's claim that it relied on authorised foundations and businesses for funds was highly suspect. According to audit results released recently, nearly all these foundations and business were "technically bankrupt", Mr Mietzner said.

Professor Crouch said the main source of military income was from "illegal activities, which can only be called extortion". These range from extorting money from large multinational mining and petro-chemical companies to running gambling dens and overseeing smuggling operations. Huge mark-ups were also routinely added to military purchases. "Manufacturing and commercial enterprises in cities and towns are also 'taxed' by the military and police, while illegal taxes are routinely extracted at ports and from land transport companies," he said. "Security personnel are deeply involved in illegal logging, mining, fishing, cattle rustling and smuggling. And, at the lowest level, military and police officers either control or provide 'backing' for illegal gambling, narcotics and prostitution."

He said that as well as controlling its own funding, there was speculation the Indonesian military deliberately maintained bubbling conflict in the troubled areas of Aceh, Maluku and Papua, partly to demonstrate the necessity of a powerful army. "This is not to say that the military wants an all-out war in these regions, but a continuing atmosphere of tension and uncertainty makes it much easier to extract contributions," Professor Crouch said. "Giant foreign petro-chemical or mining enterprises, for example, would be unlikely to make large payments to military officers if they felt no threat to their security."

In an atmosphere of uncertainty, violence and tension, he said, criminal activity was easier, and constraints were loosened on activities such as smuggling, trading in marijuana or selling arms and bullets to combatants in ethnic conflicts. Professor Crouch said that although the Indonesian Government had resisted demands for the introduction of a military emergency in Aceh, and the escalation of the Maluku emergency from "civil" to "military" status, in practice the provinces were under military control.

The behaviour of the security forces in these regional conflicts had been very poor, he added, with examples of serious indiscipline condoned by commanders; "sweeps" for weapons becoming looting expeditions and road blocks turning into a means of extracting "tolls".

"In Maluku in particular," he said, "military and police personnel often joined their co-religionists in battles or at least supplied them with weapons."