Sun, 30 Mar 2003

The Politics of Power: RI's corrupt culture is Western-induced

Harry Bhaskara, Berkeley, California

The Politics of Power; By Denise Leith; 372 pages; US$19

It can't be true. Could a company be willing to dispense multi- million dollar loan guarantees to a dictator? Yes, it can. This is PT Freeport Indonesia in Soeharto's Indonesia. Indeed, the mining company is still providing US$40 million in interest payments for Nusamba, one of the dictator's crony companies. This is one of the figures dug out by Denise Leith -- figures that are mostly of staggering proportions, and that should have always belonged in the public domain.

Freeport, which is the operating subsidiary of New Orleans- based Freeport-McMorRoran Copper and Gold, first signed its contract with the then new Indonesian government in 1967. Now it has land rights over nine million acres. Sitting on the largest gold mine in the world, the Grasberg mine has estimated reserves of 50 billion pounds of copper and 63 million pounds of gold, in the area surrounding the now depleted Ertsberg mine, West Papua.

The 2.5 kilometers wide Grasberg mine is located at an altitude of 4,700 meters. A total of 700,000 tons of rock are moved from the mine areas every day. To extract 1.5 grams of gold one needs to move five tons of rock. The operation continues 24 hours a day, 365 days a year. The mine will continue to yield precious metals for as long as 35 years.

In 1995, Freeport accounted for 86 percent of total imports to West Papua province, one of the biggest and yet most sparsely populated regions in the country. In 1996, it was responsible for more than 50 percent of Indonesia's gross domestic product.

By the end of 1999 the company had paid a total of $10.2 billion to the Soeharto government since it began its operation in 1967. In 1995 when Freeport's indirect benefit totaled a whooping $997 million, it paid $295 million in dividends, taxes and royalties out of gross revenues of $1.48 billion.

Such data was a rare commodity during Soeharto's three-decade reign ending in 1998 as Freeport managed to operate undisturbed under his patronage regime. To the laymen the company's true economic scale has always been a question mark. Reports about environmental degradation in the area of its operation only started to leak out in 1995.

Detailed as her study has been, Leith readily acknowledged that the actual figures might still elude her since finding them proved to be an arduous task. But one will not only find figures in Leith's book as she also exposes the company's relationship with power.

She addressed the involvement of the Indonesian military and its human rights abuses as eloquently as she did the displacement of the traditional people, the extent of environmental damage and the role of the NGOs. She believes that the company has compromised the interests of the Indonesian people, the West Papuans and their environment.

Until 1997, Freeport conveniently ignored the traditional landowners, especially the Amungme and the Kamoro people, whose land had been totally destroyed.

Freeport knew that the Indonesian military is the main perpetrator of human rights abuses in West Papua and yet it worked with them. With 20,000 troops now stationed in the province, West Papua is easily one of most militarized zones in the country.

It operated with the full support of the government and the Indonesian Military that committed human rights abuses in a region whose people were still living in a culture that is backward by Western standards. Those who opposed the company's presence were fragmented and rendered powerless against the combined forces of the American transnational and the Indonesian government.

Until the collapse of Soeharto in May 1998, Freeport had been able to operate in West Papua with relative impunity due to its close relationship with the government, the military and the Soeharto elite.

When the company's contentious operation finally came under the scrutiny of international NGOs, it hastily responded with an ineffective high profile charity program albeit with short-term results.

It was as if a sinner caught red-handed after doing so for a long time and promptly wished to prove himself right.

Although the company now claims it spends $40 million every year for environmental programs, critics say their industrial practice is still under par.

Leith's view of Freeport was critical and yet balanced. She believes that in order for a mining industry to operate in the best mining practice, it needs an accountable government first of all. Secondly, it needs NGOs that are willing to engage the industry, no matter how difficult it would be, on top of its advocacy work.

The company, which has its own security forces, was operating in a government characterized by contradictions and myths, Leith says, one that claimed unity in diversity as its motto but failed to accept diversity in its practices.

She describes the difficulties Freeport encountered when it took a U-turn in its policy and came to the rescue of the local people. It back-fired due to its lack of sophistication in carrying out development programs. Development, it turns out, is not an easy job to do.

As to the future of the company, Leith believes that Freeport, which has been channeling money to the non-violent independence movement in West Papua, will be better off if the province secedes from Indonesia. As such the company does not have to fund the Indonesian military or be threatened by its violence.

Leith concludes by saying that the Western world was partly responsible for the deep corruption culture in Soeharto's Indonesia. Without the Western worlds complicity, corruption had not been running so deep, she says.

"Initially, geopolitical considerations dictated the West's lending policies. Eventually, the profits enjoyed by the West's capital producers became the determining factor," she says.

In her eyes, Freeport is only one example which "supported the corrupt and ailing business ethos" in Indonesia.

Leith also pointed out the problematic environmental audit carried out by two independent environmental auditors, Dames and Moor and the Montgomery Watson audits, while citing that in the United States tailings and disposals are not allowed to be dumped directly into rivers, nor is storage are allowed.

The high military presence in the remote province and the systematic human rights abuses committed by them defies the myth that the government has succeeded in carrying out an experiment in development and homogeneity, a myth widely propagated by the New Order regime with the support of "rapacious Western governments".

The writer ( is a visiting scholar at the Graduate Journalism School at the University of California, Berkeley.