UPDATE 4-France's place in Europe at issue in vote for president
* Polling stations opened at 0600 GMT; last close at 1800 GMT
JAKARTA Dec 4 A battle over the control of Indonesia's resources is intensifying ahead of 2014 elections, creating legal uncertainty that threatens to drive off investment and hurt long-term output in one of the world's top sources of coal, gas and metals.
The central government has shaken up the resource sector with a series of rules this year that give it greater control, by centralizing the licensing process, taxing ore exports and pushing for investment in smelters. The moves have battered metal ore exports and drove some firms to exit.
"The sector is becoming so over-regulated it's Soviet Union-like," said the Indonesia country head of an international energy firm, which is staying in the country. "It will lead to less confidence, less investment and ultimately less supply."
Entering the fray is an unlikely coalition of local governments, mining associations and nationalist Muslim groups, challenging resource laws in court and winning several cases on the grounds that some of the policies were unconstitutional.
Also at stake are the revenue flows that can be skimmed off from a complex series of approvals, licenses, royalties or taxes in one of the region's most corrupt countries.
The policy moves and challenges come as potential presidential candidates are seeking to raise money and lift their popularity to contest a wide open race for 2014, when two-term President Susilo Bambang Yudhoyono has to step down.
"It's a good vote winner - you can wave the national flag ahead of presidential elections," said David Quinlivan, executive chairman of Churchill Mining Plc. "A lot of things that are happening are making it hard for investors to justify investing in Indonesia," he said.
Corporate disputes have escalated. UK-listed Churchill and British financier Nat Rothschild have been the highest-profile casualties of disputes over licenses or partners. Both disputes are over major coal assets with firms part-owned by leading presidential candidates.
Newmont Mining Corp has been caught in the middle of a dispute in which the business-backed local government is contesting the central government's right to buy a 7 percent stake Newmont is divesting in the huge copper and gold mine.
The issue has been further complicated after the Constitutional Court ruled that the central government must first have parliamentary approval for the purchase.
UK-listed Avocet Mining is facing a $1.95 billion lawsuit by former partner PT Lebong Tandai over the sale of gold mines. Australia-based gold miner Intrepid Mines Ltd may also be preparing for legal action after being evicted from its Indonesian asset by its local partner. It has brought in an Indonesian TV mogul - another presidential candidate - as a shareholder in an effort to give it some negotiating clout.
Security of tenure is now seen as one of the biggest risks, and recent events have sent "shivers" through some firms including his own, one copper mining executive said.
"I'm hearing from a lot of companies that pressure has been put on them to contribute funds because next year there's a lot of regional elections," he said, adding officials were 'hinting' they could cancel contracts if firms did not pay up.
At least five metal exploration firms have pulled out of the country this year, including Oxindo, a copper explorer owned by Chinese mining group MMG. Interest in doing coal deals has also declined, said a Jakarta-based international lawyer.
"You start to think at this time before the elections there may be other challenges," said one lawyer, who declined to be identified. "We haven't had people knocking on the door like they did for coal mine acquisitions last year."
The country's second-largest Muslim group, Muhammadiyah, succeeded in getting the country's energy regulator scrapped by the constitutional court in November. Next, it will study whether laws on mining, water and forests are constitutional, said Syalful Bakhri, dean of the law faculty at Muhammadiyah University in Jakarta.
The nationalist push focuses on a line in the constitution, which says resources "shall be under the powers of the State and shall be used to the greatest benefit of the people".
Many are against the country's current use of production sharing contracts, liked by foreign firms as they get a stake in the resource but also a system opposed by nationalists in other resource exporters from Iraq to Ecuador.
"Muhammadiyah has a vision to make the state of Indonesia truly independent. All the sources of energy in Indonesia are for the people," said Ibnu Sina Chandranegara, one of the group's lawyers.
Analysts say the key judge in these constitutional court cases, Mahfud, has political ambitions himself. Following the cases, he emerged as the most popular out of 18 contenders for president in an Indonesian Survey Institute poll last week.
Muslim parties form part of the ruling government coalition, including the chief economics minister Hatta Rajasa, who some analysts say has been behind this year's nationalistic resource policies. He is also a presidential candidate.
All these legal challenges are complicating the outlook for nickel prices and may delay a rally in the metal, according to Barclays Capital. It had expected prices to climb because of a 2014 ban on ore shipments from Indonesia, the top exporter.
"Indonesian government policy is the key wildcard for the nickel story," said Nicholas Snowdon, a Barclays metals analyst.
The immediate impact has been mixed. Nickel ore exports to key buyer China recovered last month as more firms met the central government's new permit requirements. But iron ore and bauxite exports are still well down on last year after the government rules.
"My view of next year is there will not be a recovery... because margins are so small, many firms could not compete with current prices and so many them have reduced their production. Some of them have stopped their production already," said Syahrir Abubakar, chief of the Indonesia Mining Association.
The longer-term result is that firms have to prepare to meet new rules or work around them, but now don't know if those rules will be later challenged and overturned.
"Today's investments are tomorrow's production," said Xavier Jean, credit analyst at Standard & Poor's, adding the major effect could be plateauing output and depleting reserves.
The government is already reworking one rule and backtracking on others. It is likely to relax deadlines for two issues seen as critical for investors - the timeframes for smelter investment and mining asset divestment.
Investment chief Chatib Basri told Reuters he is seeking greater investor input before policies are finalised, implying some of the moves have been overly hasty. The 10 years given for foreign firms to divest mine assets was too short, he said.
Nationalist sentiment has risen after the good times of recent years, he said. Although foreign direct investment in Indonesia has surged to record levels this year, he sees the legal uncertainty switching investors' focus away from resources to the consumer sector for next year.
"If you talk to people in the oil and gas and mining sectors, they are so gloomy about Indonesia," said Basri.
* Polling stations opened at 0600 GMT; last close at 1800 GMT
WASHINGTON, April 23 White House budget director Mick Mulvaney said talks between Republicans and Democrats in Congress could reach an agreement to avoid a government shutdown as early as Sunday.