Wed, 15 Mar 2000

Why not renegotiate?

I would like to thank Freeport's Mr. Bruce E. Marsh for his candid reply to my complaint about Henry Kissinger. If I may summarize my understanding of his rebuttal: Freeport has indeed dug up a mountain and dumped it (minus the minerals) into a river, because an impressive array of experts has concluded that "in-river" tailings management is the best way to proceed. Mr. Marsh does not consider this an environmental catastrophe, I do: so be it. Catastrophe means different things to different people.

But let me return to the main point of my letter, which is broader than the environmental issues, and which Mr. Marsh did not address.

Simply put, Freeport should allow the government of Indonesia to renegotiate their contract of work because there are at least three strong indications that it is unfair to Indonesia. First, the contract is the product of a cozy relationship between Freeport and an utterly corrupt past regime and its cronies, who ran Indonesia as a vehicle for personal gain, usually at the expense of the general public.

Secondly, the people of West Papua feel the current arrangement is deeply and hurtfully unfair. Only a token amount of the wealth coming out of the mine reaches them, and this is a major factor in their secessionist sentiments.

Thirdly, there are serious and recurring concerns about the environmental impact of the mine's concerns that have not gone away despite Mr. Marsh's attempts to minimize environmental damage and the firm's public relations campaigns to appease the public.

Any one of these problems would be fair grounds for reappraisal of a contract. Taken together, they constitute a very strong case indeed.

To have Henry Kissinger warn against renegotiation by raising the specter of spooking investors is not the solution. It is simply a scare-tactic attempt to avoid discussion of what is fair. One can only speculate why. Perhaps Freeport realizes that the current contract is indeed loaded in their favor -- that the terms that they won from the New Order regime are untenable in this more democratic era. Or perhaps they are so used to having their way in Indonesia that they are unable to appreciate that the country has changed fundamentally and that fairness, distribution of wealth to the regions, transparency and accountability to the general public are now major issues that will not go away.

By renegotiating an equitable agreement that clears up the above concerns once and for all, Freeport could secure its long- term business interests and perhaps begin to gain respect from the Indonesian public. It might not make quite as much money as before, but then again it would not have to face a constant barrage of criticism that may one day lead to the mine's closure.

Kissinger's scare tactics only reinforce Freeport's image as a company accustomed to using political might to get its way, regardless of the merits of its case. And this is very much against Freeport's long-term interests in Indonesia.