This research discusses the conflict between regional and central elites in the nationalization of PT Inalum in 2013-2015. The elites of North Sumatra, namely the Governor of North Sumatra Gatot Pujo Nugroho, 10 regents/mayors Lake Toba region and Asahan Watershed, and Luhut B. Pandjaitan, shared the interest to take part in the nationalization of PT Inalum. Among elites in the central government, in this case including President Susilo Bambang Yudhoyono, Coordinating Minister for Economic Affairs Hatta Rajasa, Minister of State-Owned Enterprises Dahlan Iskan, Minister of Industry MS Hidayat and several Heads and Members of Commissions VI & IX of the House of Representatives of the Republic of Indonesia, were involved in the process. This study questions state-business relations in implementing nationalization of PT Inalum, what form, what factors shape the form and under what circumstances does it change.

Studies on this subject varies from statist, elitist, culturalist and rationalist approach. The statist approach focuses on the role of the state, questioning whether it dominate the politics (Evans), dominated by certain social class (Marx), or relatively autonomous (Poulantzas). Elitist approach focuses on the concentration and exercise of power by elites (Mills, Mosca, and Pareto) in shaping policies. Culturalist approach emphasizes the norms and values affecting the relationships between politicians and business people, such as patron-client relationship (Scott) and bureaucratic patrimonialism (Anderson). Rationalists argue that rational motives drive the formation of state-business relations, including the rent-seeking tendency (Tullock, 1967; Krueger, 1974).

This research shows that the conflict between the regional elite and the Central elite is caused by dispute over economic resources particularly the ownership of PT Inalum. The dispute over the economic resources within the administration had led to the dysfunction of state autonomy in which case is the Provincial Government of North Sumatra, indicated by how the state became the instrument of the capitalist class and consequently enriched rent seeking and created conflicts between regional elite that disrupted consolidation of regional government. This occurred due to the ability of the capitalist class to influence the policy of the North Sumatra regional government. In turn this impacted the state, in this case the government of North Sumatra, to be incapable of taking normal political decisions. Whereas the state, in this case the Central government by the consent of Commission VI of the House, took political measures to reduce the influence of the capitalist class in nationalization of PT Inalum by way of nationalizing PT Inalum by unilaterally providing North Sumatra government 30% of share.

This study supports and corroborates Ralp Miliband’s theory on the state as the instrument of capitalist class and Nicos Poulantzas’ on the state’s relative autonomy. In particular on state autonomy that is distorted by the interest of the capitalist class namely Luhut Pandjaitan. Based on Ralp Miliband’s state autonomy perspective in the context of local political elite power relations in North Sumatra, then the North Sumatra Governor, 10 Regents/Mayors of Toba Lake region and Asahan Watershed, as well as several other political elite, are the instruments of capitalist class in this case Luhut Pandjaitan in realizing the ambition of the capitalist class in accumulating economic resources.  While President SBY along with his ministers, by the consent of the House, reduce the influence of the capitalist class in terms of taking political decisions so as to keep the state relatively autonomous in taking political decisions, as explained by Nicos Poulantzas’ theory. What has not been stated by Nicos Poulantzas in his theory of the state’s relative autonomy is the manner in which the state manages the distortion or pressure of the global capitalist class.

Keywords: state autonomy, capitalist class, political elite, oligarchy, rent seeking