Published: Jul 26, 2007

David Tonkin

In late June 2004, the US government officially charged a West Papuan rebel leader for his role in the killing of two American and one Indonesian teacher in the remote highlands of the province in August 2002. The teachers worked at a school for the children of mining giant Freeport Indonesia employees, and were returning from a picnic at the time.

A preliminary Indonesian police investigation found a ‘strong possibility’ that the shooting was carried out by the Indonesian military. A subsequent investigation by the US State Department appeared to support this view.

Nevertheless, Anthonius Wamang’s indictment brings with it the likelihood the US Government will seek his extradition to face trial in the United States. In announcing the indictment, US Attorney General John D. Ashcroft asserted that his government was ‘committed to tracking down and persecuting terrorists who prey on innocent Americans in Indonesia and around the world.’

Ashcroft’s battle cry is more than just political rhetoric. It is a clear vote of confidence in and support for the New Orleans-based Freeport McMoRan, whose Indonesian subsidiary, PT Freeport Indonesia, operates a huge gold and copper mine in West Papua.

Freeport’s current concession, centred on the monumental Grasberg mine site, is regarded as by far the largest known deposit of gold. Its open-cut operations span more than 2.5 kilometres in width, and sit 4,270 metres above sea level. It operates 24 hours a day, 365 days a year. 700,000 tons of rock are moved every day.

The Grasberg deposits of gold and copper are so large that the company’s operations are predicted to last at least another thirty years. But despite the fabulous riches to be had, Freeport’s glittering Eldorado has come at significant cost to all parties involved.

Exhaustive study

Denise Leith’s exhaustive study of Freeport’s operations during President Suharto’s lengthy rule makes a significant contribution to the debate surrounding the mine, and rightly claims to be the first major analysis of the company’s presence in Indonesia.

The Politics of Power positions Freeport in the intricate web of Suharto’s crony capitalism, and places the company centre stage in Jakarta’s stormy relationship with West Papua.

The book examines how an influential American company — ordinarily subjected to rigorous scrutiny and restrictions in its home country — could adapt to, and even thrive in, a foreign business environment riddled with corruption, and operate in a remote area effectively under military law.

It also explores how the company could operate such a vastly invasive mining operation in an area of such ecological and cultural significance, yet still pollute so irresponsibly with relative impunity.

Freeport’s operations are the cornerstone of West Papua’s economic importance to Jakarta. In the early years of the New Order regime, Suharto used the vast mineral riches of West Papua as collateral against foreign loans aimed at holding the archipelago together.

In his government’s eagerness to steer the country toward economic stability and international credibility, generous concessions were granted to Freeport in its first Contract of Work. This first Contract of Work has been portrayed by many authors as a blank cheque for Freeport to operate in any way it chose with little regard for the consequences.

Freeport invested vast amounts of capital to initiate the extraction process and the mine itself is widely regarded as one of the great engineering feats of our time. During the early New Order, the company became pivotal to the political future of West Papua and Indonesia, and central to the fledgling regime’s legitimising platform of economic development.

The Politics of Power points out that by the early 1970s, the government was already sufficiently well established to wholly co-opt Freeport into Suharto’s development agenda. By the early 1990s, Leith argues, the company had become an integral part of Suharto’s patronage system.

Mutual benefit

Not least because of a lack of transparency under Suharto, it is difficult to argue this point convincingly, but The Politics of Power makes a very strong case.

While others have wheeled out the hoary theoretical chestnut of a Western transnational exploiting an Asian government desperate for foreign capital, Leith depicts a regime fully cognisant of the potential of using Freeport to further its own agenda.

In a way, Freeport was so dazzled by the riches hidden in its mine site, it failed for a long time to see the dirt from which it sprang. Nevertheless, as Leith points out, the mining company and Jakarta enjoyed a mutually beneficial relationship. Given the risks associated with Freeport’s initial investment in an area with little or no infrastructure and bureaucracy, the company would have been forever grateful for its liberal first generation Contract of Work.

In turn, the Freeport mine — and the mining industry in general — was seen as a vital tool in opening up the less developed ‘peripheral’ areas of the archipelago. Indeed, Freeport has been the largest provider of employment, education, infrastructure, se]vices and technology in West Papua, the provision of which has been part of its contracts.

Freeport was therefore perhaps inevitably drawn into the corruption, collusion and nepotism or KKN (Korupsi, Kolusi dan Nepotisme) that characterised the Suharto era. For example, the company was contractually obliged to outsource some of its operations to sub-contractors owned by well-known Suharto cronies.

Allegations that Freeport have been at least partly responsible for instances of human rights abuse are given credence by the fact that the company’s Contracts of Work have explicitly obligated it to provide logistical and infrastructure support to the Indonesian government, including the heavy military presence in its concession area.

It is largely thanks to the Indonesian and international NGO community that the company has found itself under the spotlight for its impact on the peoples and natural environment of West Papua, and Leith discusses in detail the numerous efforts by NGOs to bring greater accountability.

But to her credit, Leith is hesitant in hastily implicating Freeport in the widely documented human rights abuses perpetrated by TNI in and around the company’s concession area. As is the case with other contentious mining operations in the Asia-Pacific, hostile opposition to the company’s presence encourages the company’s cooperation with — or reliance on — its host government for security.

An impressive book

This is an impressive book and an important contribution to the study of Suharto’s Indonesia. It is researched in great detail, and takes a measured and well-balanced approach to contentious issues. Leith is to be congratulated for bringing much-needed academic scrutiny to a company operating largely outside the spotlight.

Freeport was an integral cog in the politico-business machinery of New Order Indonesia. Leith concludes that without the complicity of players such as Freeport and the international community at large, the corruption of the Suharto era could not have developed to the extent that it did. Likewise, the New Order’s lax regulation of human rights and environmental exploitation allowed these companies to prosper at the great expense of others.

It remains to be seen if Freeport will be able to operate with such impunity in the post-Suharto era.

Denise Leith, The Politics of Power: Freeport in Suharto’s Indonesia, University of Hawai’i Press, Honolulu, 2003

David Tonkin (david@unibooks.com.au) works at Unibooks, Adelaide University campus. He wrote an honours thesis entitled ‘Spears of development? Impacts of the Freeport mine in Irian Jaya’ in 1997.

Inside Indonesia 80: Oct - Dec 2004