New Internationalist

Way Beyond Petroleum

Issue 344

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West Papua / TRANSNATIONAL COMPANIES

Artists' impressions of BP's Bintuni Bay venture.

Oil giant British Petroleum's glossy, eco-friendly advertising campaign says the company has gone 'beyond petroleum'. In resource-rich West Papua, the company seems to be living up to its claim by helping to fund an emerging government. Can it be trusted? If not, what's the alternative?

[image, unknown]

Looking out of the window as we drive up the hill behind the rambling capital of Jayapura, Dennis Heffernan is explaining how even the real estate here is political. He uses the unlit cigar in his hand to point at the houses he talks about. The Governor’s house is lower on the hill than the one that belongs to the chief of the military. Not only does the military chief get a better view of the capital city and its tropical bay, but when he and the Governor meet it’s the Governor who does the calling.

Dennis Heffernan is a man with many mantles. A North American by birth, he spent 20 years in state and national politics in the US before moving with his second wife to Indonesia. He’s now the publisher of the Van Zorge Report on Indonesia, an élite finger-on-the pulse journal on Indonesian politics and economics. ‘Very well connected,’ was how the Associated Press journalist described him at breakfast. Dennis was breakfasting at the table behind me with Willy Mandowen, one of the philosophical brains behind the Papua Council. Now, as we drive, Dennis is telling me that he’s also a consultant to British Petroleum (BP) and their Bintuni Bay project in West Papua. He is emphatic – BP will not make the same mistakes as Freeport McMoRan has done.

While Freeport mining has excavated an El Dorado for both the company and the Indonesian Government, it has been an ecological, social and economic purgatory for the Papuans (see box below). From the beginning, Indonesian armed forces were deployed to protect the mine from understandably angry Papuans. They have done their job through rape, murder, torture and intimidation.

Dennis argues that companies like Freeport and BP now have to undertake a radical rethink of how they operate here and elsewhere. There’s a good reason for this, he says. As a result of its activities in Timika and the communities around its Grasberg mine, Freeport shareholders watched the company’s share price drop from $38 to $8. He thinks that, before starting operations, companies must consult with local communities to form a long-term partnership, developing the community as well as corporate profit. A prerequisite for this is ‘capacity building’: assisting local leaders to acquire the skills they will need to bargain effectively with the company.

Sound familiar? Perhaps. But BP’s ‘capacity building’ is not just the rhetoric of corporate PR. It reaches way past the local community where it will extract oil and gas to encompass the future leaders of West Papua. As we drive, Dennis tells me that BP is helping to pay for the Papua Council’s running costs. I’m surprised. If Papua gets independence, its government is likely to emerge from this Council. So, as the floorplan for a fledgling nation is being drawn up, corporations are in on the ground floor.

Here is an example of how globalized markets can capture political systems. What will be the balance between profit and people?

This close connection between BP and the Papua Council explains in part why Dennis and I are being chauffeured around town by two SATGAS members: part of the volunteer police service set up by Papuans as an alternative to its corrupt and abusive Indonesian equivalent. The Council’s Willy Mandowen has asked them to drive Dennis to Jayapura’s Hamadi market for the afternoon, where he wants to buy some wood-carved drums. Dennis tells me that BP will use community police to secure its proposed Bintuni Bay gas project. I’m wondering whether he means this fledgling police force. Dennis is in town for Theys Eluay’s funeral. He and Papua Council leaders like Willy are staying at a hotel just near where Theys was buried. When I meet Willy at the hotel for breakfast the next day, the connection between BP and the Papua Council tops my list of questions.

Willy facilitated the dialogue between the Indonesian Government and the Papuan people leading up to the people’s congress in June 2000, from which the Papua Council sprung. The Council – which tries to draw together all groups struggling for independence – has two parts: a full council, with 501 legislators from all over the country, and an executive body (Presidium) of 31 members. Willy has the difficult task of facilitating the Council negotiations with the Indonesian Government, officials and corporations.

He confirms that BP and Freeport McMoRan support the Council by paying for accommodation, transportation and a quiet meeting place. As we talk over toast and coffee, he tells me that BP is also helping to set up – and will fund – international bodies to investigate human-rights abuses. In addition, it’s assisting the Council’s Presidium in its negotiations with Indonesia by participating on advisory committees. I’ve no doubt that, after 20 years in US politics, Dennis Heffernan should be able to tell Presidium members a lot about wheeling and dealing.

BP consultant Dennis Heffernan (right) mingles easily with West Papuans.
Photo: Chris Richards

But I’m incredulous all the same. How can any transnational corporations be trusted as partners here, particularly after West Papua’s terrible experience with Freeport? Willy acknowledges that transnationals will only provide funding and assistance when they have interests parallel with the Papuans. He points to Manokwari and Wasior in the western Bird’s Head region as an example. BP wants to extract gas from nearby Bintuni Bay. It is in the interests of both the local community and the company that the military presence there should be wound back.

I’ve been refused permission to go there. ‘Too dangerous,’ say the police. For years, villagers in Wasior have been in dispute with a local logging firm over the amount of compensation they received for the trees that were felled on their ancestral forest land. Three employees of the company were shot dead at the end of March last year, when the dispute was reaching a climax. Suspecting the OPM liberation army, reinforcements from the crack force of the police, Brimob, were sent to guard all the logging companies in the area. After another armed attack that left five Brimob dead, more police were flown in to conduct Operation Sweep and Crush. Wasior is now sealed off. An untold number of civilians have apparently been killed, some after being beaten to death during police questioning. Thousands have fled into the forests.

It’s near this region that BP is proposing to extract gas. Many Papuans believe that this is why the armed forces have been provoking conflict in Wasior – to justify a greater presence there. The money they receive from the Indonesian Government is much less than they need. A report by the army in 1999 showed that salaries paid to their rank and file are only enough to sustain them and their families for two weeks of each month. So they supplement their income by putting the squeeze on logging and mining businesses in exchange for security: companies big and small, international and local, whether or not there’s a security risk there. In BP the armed forces see a large and cashed-up potential client. But the company says that it has learnt from Freeport’s experience and will not use the Indonesian armed forces for security around its operations. This will create a dangerous precedent for the police and military. And what better way to convince BP to change its mind than by fuelling violence close to where its equipment and staff will eventually be working?

Willy Mandowen explains that BP are joining them in submitting to the Government that what’s happening in Wasior is unacceptable. BP are also prepared to fund international investigators to lift the lid on the activities of the armed forces in the area.

I still want to know how transnationals can be trusted. Willy explains that control over the environment, land rights and human development will remain with the people. Local leaders haven’t got the capacity to manage money yet. So a special trust fund will be set up in each region, with every company contributing to the fund. Seven or so community and church leaders will come together to make decisions about how the money will be spent. And the model for this? BP’s very own – in Kuwait.

Tom Beanal, the new Papua Council head, joins the breakfast table. He’s telling me how he is trying to change company culture from within, just as fresh-fruit platters quietly appear in front of each of us. Dennis Heffernan is sitting at the next table. I assume he’s ordered them for us.

On the recommendation of former President Wahid, Tom’s been asked to join Freeport as a Commissioner. This gives him no power, but he has access to the Chairman and senior members of the company. So far, they’ve taken his advice to recruit more Papuan people at top levels of the company, and to give $1.25 million compensation to landowners around their operations. He hopes that he’ll be able to convince Freeport to stop contracting the military to secure their mining operations: something, he says, he could never have done from the outside.

It’s 9.30 am. The fruit has been eaten and the coffee cups are empty. Tom leaves to talk with other Presidium members. Dennis and Willy have to go to Jayapura together for meetings, and will be there all day. The SATGAS police appear again to drive them there, leaving me still at the table to wonder whether the close relationship with BP is a healthy one.

For decades, corporations have been openly making donations to political parties in places like North America, Australia and Britain. So, arguably, financial assistance to the Presidium is just a version of the same thing. The difference is that the political parties of the minority world are slick machines filled with savvy operators. By contrast, West Papuans say they have yet to develop the skills they’ll need to govern – and negotiate with companies like BP.

If the Papuans need training to manage their own country, why aren't NGOs providing it?

Here is an emerging example of how economics can capture political systems in globalized markets. Joint meetings with the West Papuans and the Indonesian Government should bring BP to the cutting edge of policy development in independent West Papua in any area that they care to dabble. I’m wondering what deals BP will be able to cut on issues like taxation, environmental controls around their mine, and labour regulation. And I’m also wondering what ethical framework a government built from corporate assistance can hope for. What will be the balance between profit and people?

The leaders of this fledgling nation are taking a risk. They need to establish a working democracy. Flying in more than 500 people from around the country for three meetings of the Papua Council each year, is a laudable start. The money has to come from somewhere. The Papuans don’t have it. The transnationals do.

It’s a dilemma that signals a challenge to non-governmental organizations (NGOs) in the region. If corporations don’t provide the funding, where are the alternatives? If the Papuans need training so that they can manage their own country, why aren’t local and international NGOs providing it?

Weeks later, activist John Rumbiak helps explain to me the absence of local NGOs from the capacity-building scene. John heads ELS-HAM, an institute for human-rights study and advocacy that bravely and regularly reports on the military murder committed in West Papua. He says that BP has garnered the support of nearly all its likely critics – academics, church and community leaders. Many are being attracted to work for BP by the comparatively large salaries on offer.

West Papuans are training their own community police force to protect independence leaders and meetings from the Indonesians.
Photo: Paul Kingsnorth

‘My brothers are displaying their naïveté,’ John says. ‘They don’t know the track record of this company. BP will continue to exploit. That’s their business.’ He met the head of BP, Sir John Browne, in London recently. Browne told Rumbiak that BP had done the wrong thing in Colombia, but wanted to be good neighbours in West Papua. Rumbiak responded: ‘You’re not a church. You’re a business. All you want is money, money, money.’

I see Dennis Heffernan one more time. We talk about international NGOs. He thinks they do valuable work in Indonesia. But he says that – in the main – they only have the capacity to be critical. Indeed, the more critical they are, the more likely they are to attract funding. Consequently, he says, they’ve developed little or no expertise in searching for solutions. And it’s solutions that are needed. He gives me two copies of the Van Zorge Report. Less than 500 subscribers receive this fortnightly report. At $800 per annum, it’s executive-only stuff.

One copy sheds more light on corporate cosiness with the Papuans. It contains an interview with Bruce Marsh, former Vice-President of Environmental Affairs with Freeport in Indonesia. He reflects on the mistakes he thinks that one of Indonesia’s largest tax payers has made in West Papua. He talks about the community expectations for development that were raised when Freeport’s Grasberg mine started operating. These expectations remain unfulfilled. ‘The company can help by bringing in all the local community development people, but you can’t do much unless you have a functioning civil government... At some point there is a line between what a company should do and what the government must do. But we had no government [in West Papua]. The government in Jakarta just took all the resources.’ So Freeport took up the role of local government itself. And it failed. It set up 154 community development programmes. Many of them are not used or supported by the local community and have angered leaders.

Special autonomy legislation, implemented by Indonesia in January, will for the first time return to the province much of the Government’s take from the extensive natural wealth in the region. Under the new laws, West Papua is set to receive 70 per cent of oil and gas revenues and 80 per cent of revenues from natural resources such as forestry, fisheries and mining (excluding Freeport’s taxes). The problem is that there in nothing in place to give West Papuans the capacity to manage this wealth. Its neighbour, Papua New Guinea, became independent in 1975. It adopted a Westminster-style government. The wealth of its resources means that its streets should be lined with gold. But still, like West Papua, it does not have even basic infrastructure – good roads, accessible schools, safe and reliable healthcare. Its wealth has been squandered by corruption, mismanagement and inefficiency.

For BP, the best way to secure its mining operations is to make sure benefits flow back into the community after the resources have been extracted. This ensures community support. But, unless BP is to build the roads and plan the healthcare systems itself, this means the country must have local and regional government efficient enough to manage the money and spend it in accordance with the wishes of the people. Willy Mandowen has said that BP will work with the Papua Council when it suits their interests to do so. At the end of the day, establishing a capable governing structure for West Papua suits BP’s interests.

At the moment, at least.

Digging out the heart and soul of Papua

PT Freeport’s gold and copper mining in West Papua – pictured below and on the previous page – are more than 4,000 metres (13,500 feet) above sea level in the central highlands. The company has cut the top off one of the mountains. The indigenous people of this region – the Amungme – depict this mountain as the sacred head of their mother, with Freeport now dipping into her heart. Freeport plans to increase its dumping of untreated tailings into the Aghawaghon River system to 285,000 tonnes daily: the equivalent of a ten-tonne dump-truck load every three seconds. To place this in a regional context, the controversial OK Tedi copper mine in Papua New Guinea disposed of about 80,000 tonnes of tailings per day into the Fly River system. Within 40 years all that will be left is a crater 100 metres deep surrounded by new, corporate-made mountains of crumbling, acid-leaching rockwaste, and a wasteland downstream stretching to the coast.

Compensation continues to be an issue. In 1996, CEO Jim Bob Moffett made around $41 million, while the thousands of indigenous people living around the mine were offered $14 million. Suspecting retaliation from an angry local community, Freeport mines have relied on security provided by the Indonesian armed forces throughout its 42-year history in West Papua. A 1995 Australian Council for Overseas Aid report described these security officers engaging in acts of intimidation and torture, in addition to shooting and ‘disappearing’ the local people. Hundreds of Amungme people, out of a population of 8,000, have died.

Based on information from Danny Kennedy, Pratap Chatterjee and Roger Moody
Risky Business: the Grasberg gold mine
, Project Underground, Berkeley, 1998. http://www.moles.org/ProjectUnderground/motherlode/freeport/tenrisks.html


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