As Indonesia sent fresh combat troops to Aceh and adopted a more belligerent tone toward the separatist rebellion there, ExxonMobil shut down its sprawling gas operation in the province and evacuated more than 600 employees.
It's the first time the Arun complex has been shut since production began in 1977. The operation, which produces about $1.5 billion of natural gas a year, had been kept open despite the kidnapping of employees, potshots taken at company airplanes, and the hijacking of supply trucks in the past.
That's left many in the capital asking an alarming question. "If they weren't convinced by all that to shut down," says one Jakarta-based executive for a US company, "What are they afraid of now?"
The question has begun to be answered by reports filtering in from the province. Analysts say hostilities have reached a point of no return in which all pretense of negotiation has been dropped. As President Abdurrahman Wahid's grip on power has appeared increasingly tenuous, the military has grown more bold.
"The conflict has entered a new phase, with the addition of troops and the ramping up of hostilities," says a diplomat in Jakarta. "The rebels aren't afraid of this. They're well armed and can hide in the mountains. The ones who are going to suffer are the average people."
On Tuesday, Defense Minister Muhammad Mahfud said the rebel Free Aceh Movement (GAM) had been outlawed and that "security operations will immediately be conducted." He made the announcement after meeting with Mr. Wahid, and it appeared the president had signed off on the new policy.
Wahid initiated peace talks with GAM when he came to power more than a year ago, and officially they continue to drag on. However, for the past few months both GAM and the military have ignored a series of cease-fires.
Indonesia also appeared to seek the blessing of the United States for the offensive. Foreign Minister Alwi Shihab met with US Secretary of State Colin Powell in Washington this week, and asked the US to support efforts to hold on to Aceh, as well as resume military aid.
The surge in fighting will reverberate far beyond the lush province. This is the first time that Indonesian unrest has disrupted any of the major mines or oil fields operated by multinationals here.
The Arun plant is within days of defaulting on most of its delivery contracts, which will leave electric utilities in Japan and South Korea scrambling for fuel - and tarnish Indonesia's reputation as a supplier. Sources close to the company say it will be closed for weeks, at least.
The Indonesian stock market and currency, the rupiah, have both tumbled in the past week for fear of a deteriorating investment climate and the threat of national disintegration.
"The action that we took was forced upon us by the circumstances we were operating under for several months," says Bill Cummings, an ExxonMobil executive in Jakarta. "Since it's a combination of security problems, that means there can't be a simple solution."
Citizens in and around Lhokseumawe, ExxonMobil's base, and other parts of Aceh, reported almost continual firefights and explosions over the past two days, and reported a much higher density of troop movements than normal.
"Everyone is bracing for the violence to get worse," says Cut Syamsurniati, a human rights activist in Lhokseumawe. Rights activists say at least 10 civilians have been shot by the military in the past two days. As troops have been added, GAM has also gone on the offensive.
The Indonesian press has reported 11 separate GAM attacks on police and military posts throughout Aceh since the start of the week.
Diplomatic sources say responsibility for security in Aceh is being taken from the civilian police and given to the military. There are already 30,000 troops in the province of 4 million people.
GAM has been fighting a low- level insurgency against Indonesia since 1974, inspired by complaints that the province's natural wealth has gone almost entirely to Jakarta.
But the movement has gained numbers and military sophistication in the past two years, proving more than a match for the Indonesian military in head-to-head combat. Counterinsurgency efforts have, diplomats and human rights activists say, more often targeted civilians than rebels.
That has created a legion of new recruits and sponsors for the cause.
"The military's doctrine seems to be that it can terrify the population away from GAM, when in fact the violence is completely counterproductive," says the diplomat. "Which is a pity: The military solution will fail."
(c) Copyright 2001. The Christian Science Monitor