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22/03/2006 | INDONESIA- Violent Protests: A Message to Multinationals?

Stratfor Staff

Some 50 protesters destroyed a workers' camp operated by the world's largest gold mining company on the Indonesian island of Sumbawa on March 19, forcing the company, U.S.-based Newmont Mine Corp., to shut down exploration operations at the site.

 

The company, apparently warned of an impending attack, had evacuated all 200 workers prior to the rampage, and no injuries were reported. Although the perpetrators have not been identified, the sudden violence against multinationals in Indonesia suggests that local generals might be sending a signal.

IndonesiaThe Newmont attack marks the third incident of violence against U.S. operations in Indonesia in the past week. On March 16, protesters demanding the closure of the Grasberg gold mine in eastern Papua province run by U.S. company Freeport-McMoRan Copper & Gold, Inc. killed four Indonesian security officers. Three days later, Indonesia police were called in to suppress a demonstration in central Java over the choice of ExxonMobil to lead operations in the Cepu oil block, Indonesia's largest untapped oil reserve.

Protests against multinational corporations in Indonesia are not uncommon, though they rarely reach the point of causing property damage. Three direct confrontations in a week, therefore, seem too coincidental to be separate acts. In fact, Indonesian Defense Minister Juwono Sudarsono said March 20 that "there seems to be integrated coordination among the incidents of Freeport, Cepu and Newmont," though he did not speculate as to who is behind the protests.

The first possibility is that the Newmont attack was simply a copycat protest by local villagers inspired by the recent rash of protests on Papua. Mining facilities on remote islands throughout Indonesia have long been blamed by locals for their alleged disruptive impact on the ecosystem and native way of life. The claim is that waste and runoff from these facilities pollute the local habitat, causing myriad health problems. In the past, companies placated the native population by investing in local infrastructure, while Indonesian security forces prevented protests from escalating to violence.

Coming on the heels of two other large demonstrations, however, the Newmont attack could indicate the involvement of larger nongovernmental organizations (NGOs) that fight for the closure of mining operations around the world. NGOs such as Oxfam, Friends of the Earth International, Friends of the Earth Indonesia, and Global Witness all are active on environmental and human rights issues relating to Indonesia's mining industry. It is not out of the realm of possibility, then, that NGOs could be supporting local protests against the U.S. companies.

The question, however, is why the violence is just now happening. The answer to that could be a U.S. Justice Department investigation into the practices of U.S. businesses in Indonesia -- where protection from local security forces often is needed to ensure that a company's operations remain safe from protesters -- and oftentimes from the military itself.

The Justice Department, however, recently launched an investigation to determine whether U.S. companies operating in Indonesia have violated the 1977 Foreign Corrupt Practices Act, which forbids U.S. companies from bribing overseas officials for any reason, even protection. The investigation, which brings with it the possibility of regulatory action against offending firms, has put pressure on those multinationals that might be involved in such practices to stop.

The Newmont attack, then, could be a reminder from regional generals to all multinationals in the country of the importance of protection payments. This is not to say that the Indonesian military instigated the latest attack, rather that it perhaps did nothing to stop it -- which also could be the reason the demonstrators were emboldened to act in the first place. The lack of action also could serve to remind policymakers interested in attracting foreign investment that the generals cannot be ignored.

Stratfor (Estados Unidos)

 



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