Global Policy Forum

ExxonMobil in Aceh


By Michael Renner*

Global Policy Forum
*Opinion Forum
April 17, 2006

On March 3, 2006, U.S. District Judge Louis Oberdorfer issued an important ruling. He allowed a case against ExxonMobil, brought by the International Labor Rights Fund (ILRF), to go forward. Filing its lawsuit in June 2001 under the Alien Torts Claims Act on behalf of 11 villagers from Indonesia's Aceh province, ILRF charged the company for complicity in murder, torture, kidnapping, and sexual abuse by Indonesian soldiers. ExxonMobil successfully requested the Bush administration to intervene. In 2002, the State Department asked that the suit be dismissed because it could hurt U.S. interests. This left the case in limbo until Judge Oberdorfer's ruling.

The case is part of a larger struggle for peace, justice, and corporate accountability in Aceh, where an armed conflict for independence raged from 1976 until 2005.

ExxonMobil operates the massive Arun natural gas deposits and an associated liquefied natural gas (LNG) plant located in Lhokseumawe, Aceh's industrial center on the northeast coast. For decades, Arun has been a major source of profit for both the company and the Indonesian government. It yields about 1.5 billion cubic feet of gas per day, equivalent to some 11 percent of ExxonMobil's worldwide production in 2004. The company reportedly has extracted some $40 billion worth of gas during the past decade alone. Indonesia derives 30 percent of its total oil and gas export income.

But for the local population, Arun's fruits have been exceedingly bitter—ranging from expropriation to exploitation, and from pollution to savage repression. After natural gas was found in the early 1970s, the Suharto dictatorship took hundreds of acres of land in the area from villagers without compensation. Hundreds of families were displaced, many condemned to poverty. Most of the revenue from the gas deposits has gone to Jakarta, enriching Suharto cronies.

Surrounding communities have lived in the shadow of arrogant corporate behavior ever since Mobil showed up in Aceh (and things got worse after Mobil merged with Exxon, villagers told me when I visited the area last December). Natural gas flaring and chemical spills have caused a range of health problems in nearby villages and industrial waste has polluted rice paddies and fish ponds.

Like so many other extractive industry operations in the world, ExxonMobil has the trappings of a state within a state. Its facilities are fenced off from surrounding communities. Expatriate management and engineering staff enjoy luxurious living quarters. The company has its own landing strip. At Medan Airport in neighboring North Sumatra province, departure and arrivals screens display the ExxonMobil logo for company exclusive flights .

Then there is "Exxon's Road." A few miles inland from the coastal thoroughfare and away from the urban streets of Lhokseumawe, it is the only paved road. For many years, it was off limits to ordinary Acehnese who have to travel on narrow dirt roads. When I visited the area with a Global Exchange delegation during the rainy season last December, one of these roads had been turned into a muddy roller coaster, badly churned up by army trucks and rendered almost impassable.

Along with excessive political centralization, the unjust exploitation of Acehnese resources was a major contributing factor in the emergence of the Free Aceh Movement (GAM) in 1976. Although the initial uprising was easily squashed by the Indonesian military, atrocities committed by the Indonesian military and police fueled resentment among the Acehnese and led to surging membership in GAM from the late 1980s on. The Indonesian government imposed martial law in the 1990s, and again in 2003 after peace negotiations failed.

The area surrounding Lhokseumawe was a major GAM operating area. As many as 5,000 troops were deployed to protect ExxonMobil. Until recently, Exxon's Road was lined with military posts spaced just 100 meters apart, each manned by about 30 soldiers. Activists charge that the soldiers were in effect employed by the company, and that ExxonMobil made its facilities and equipment available to soldiers carrying out atrocities against civilians. Villagers I spoke with were eager to tell stories of the abuse they have suffered—soldiers taking cattle, burning food stalls, ransacking houses, and beating and killing people without cause.

The devastation of the December 2004 Indian Ocean tsunami finally changed the dynamics of the conflict, making possible a peace agreement that was signed in August 2005. Essentially, GAM gave up its goal of independence in return for greater autonomy and democratization. The initial phase of the peace process may have been the easiest: GAM gave up its weapons and the government withdrew the soldiers and police that were brought in during martial law (but some 25,000 "organic" forces remain).

The peace deal also includes a provision entitling Aceh to retain 70 percent of its natural resource revenues, up from the meager 5 percent the province was allowed in the past.

Democratization and ending the culture of impunity within Indonesia's military is going to be much harder. The peace agreement calls for the establishment of a Human Rights Court and a Commission for Truth and Reconciliation. After much delay, the government says it will set up a court by June, but pressure from the military and nationalist members of Indonesia's parliament make it unlikely that it will have the power to examine past abuses.

This makes it all the more important for the ILRF case to go forward. The Bush administration has readily come to the defense of corporate interests, dismissing legitimate human rights concerns. It has also shown a disturbing eagerness to restore ties with Indonesia's army, even though its officers have not been held to account. Half of all respondents in a recent Acehnese poll expressed fear that the police and military would still make unwarranted arrests. Foreign military aid should be put on hold until democratization and peacemaking are much farther along.

International observers with the Aceh Monitoring Mission—who have overseen the implementation of the peace deal since last September—are scheduled to leave by mid-June. But this is much too early, given the delays in passing a new governing law for Aceh, the formation of provincial political parties, and elections. As the lead force behind the mission, the European Union should press Jakarta for a substantial extension of the Mission's mandate to ensure that the agreement is carried out in letter and spirit.

About the Author: Michael Renner is Senior Researcher at the Worldwatch Institute and Board Member at Global Policy Forum.

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