Doing Business With Indonesia's Dictator

IN a world of disappearing trade barriers and open markets, corporations devote increasing amounts of time and energy to courting foreign governments, sometimes at the expense of human rights and democracy. Nowhere is this more apparent than in Indonesia, a country much admired by US multinationals despite being ruled by a dictator, General Suharto, who is known to be far more attentive to foreign companies than to the needs of his own people.

At a recent dinner celebrating the 40th anniversary of the Asia Society (a nonprofit organization dedicated to fostering understanding between Asians and Americans), General Suharto was warmly introduced by one of his leading corporate patrons and beneficiaries, James Robert Moffett, the chief executive officer of Louisiana-based mining company Freeport-McMoran. In the Indonesian province of Irian Jaya, Freeport runs the world's largest gold mine and third-largest copper mine, an operation in which Jakarta has a 10 percent stake.

Mr. Moffett explained that in Javanese custom, ''there is a tree that provides shade and shelter and security for the people.'' For Suharto, ''that tree should be business, a strong domestic and international business community that is supported by government so that the people of Indonesia could prosper.''

Native people, environment hurt

But not all of them are prospering, as Moffett is aware. As in so many places in the world, in Irian Jaya the wealth being extracted comes at the expense of indigenous people - in this case, the Amungme and Komoro tribes that have inhabited the area for thousands of years.

Freeport, for example, dumps 115,000 tons of untreated mine tailings onto Irian Jaya's ecosystem every day. WALHI, a leading Indonesian environmental organization, says these tailings are toxic, killing fish in local rivers and causing river re-routing that has flooded and destroyed adjoining rain forest.

Freeport denies that the process is harmful. But on Oct. 31, the Overseas Private Investment Corporation (OPIC), the federal agency that insures many US companies operating abroad, revoked Freeport's political risk insurance. In a letter to the company, OPIC General Counsel Robert O'Sullivan explained that, in OPIC's determination, ''massive deposition of tailings'' from Freeport's operation ''has degraded a large area of lowland rainforest,'' posing ''unreasonable or major environmental, health or safety hazards with respect to the rivers that are being impacted,... the surrounding terrestrial ecosystem, and the local inhabitants.''

The Amungme and Komoro have also suffered vicious treatment at the hands of the Indonesian Army. Freeport's mining site has always been heavily patrolled by Indonesian soldiers. Indeed, the company's contract stipulates that it provide food, transportation, and shelter for government security forces.

In the past year, according to two recent reports, these troops have committed gross human rights abuses against local people. In April, the Australian Council for Overseas Aid, a respected human rights monitor, reported that 22 civilians and 15 members of an indigenous rebel movement had been killed or disappeared in the region. The report accused Freeport security personnel of taking part in several killings last Christmas, when an Amungme flag-raising ceremony was interrupted by gunfire.

In August, the Roman Catholic Church of Jayapura released a report detailing similar atrocities. According to the report, three civilians died while being tortured by Indonesian soldiers in a Freeport ''workshop,'' and 15 were tortured inside a Freeport shipping ''container,'' in which victims ''were beaten with sticks, with rifle butts, and were kicked with boots.''

Freeport adamantly denies responsibility. ''The allegations about Freeport security are totally false,'' a company spokesman says. Of the Indonesian military, the spokesman adds: ''We don't comment on allegations about the Indonesian government.''

This, of course, is how courting authoritarian regimes is handled. The same company whose CEO describes Suharto as his ''partner'' opts to make no comment about abuses committed by troops under Suharto's command. Given that some abuses have occurred on Freeport's property, and that the Indonesian Army often acts in retaliation for indigenous protest against the company, Freeport's role is in fact central.

''For us,'' notes a recent statement of the Amungme people, ''the root cause of the human rights violations is Freeport.... Our sacred lands have been defiled and destroyed, our lands seized and taken over.''

Companies must demand reform

If human rights are to matter in places like Irian Jaya, corporations like Freeport must be made accountable. As a general rule, notes Richard Dicker, associate counsel at Human Rights Watch, ''corporations cannot stand by silently if abuses are occurring in their area.... In such cases, it is appropriate to press a company to publicly and privately condemn violations and take steps to prevent recurrences.''

In this spirit, international NGOs including the International Rivers Network, Friends of the Earth, and the Center for International Environmental Law are calling on Freeport to drastically reduce the Indonesian military presence in the area, allow independent environmental monitoring of its operations, and set up an independent mechanism by which local people may air their grievances against the company. Without such steps, people like the Amungme will disappear and be forgotten as swiftly as trade barriers fall.

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