Global Policy Forum

By Dan Murphy

Despite efforts to be good corporate citizens, foreign companies are mired in separatist conflicts

The Aceh coffee is thick and sweet, the grounds sticking to the teeth the way they like it here, as a tense group sips and talks in the thatched shade of a cafe across from an ExxonMobil pump station.

One of the men, Sulaiman, gestures around the room: That quiet farmer on the bench lost his father and a brother to Indonesian soldiers nine years ago. Another man's motorcycle repair shop was burned by the military late last year. A third says his uncle was disappeared.

Sulaiman suddenly chokes off his narrative. "You'd better go,'' he says. Out in the tropical glare, two soldiers have noticed a visitor and are ambling over. "We're probably in danger already."

It's hard to disagree with him. In the last year, more than 1,200 people have been killed in Aceh, most of them civilians, and it appears the conflict is evolving into something more deadly still. At least 250 have been killed since the start of the year, and this month, faltering peace talks between the government and the Free Aceh Movement (GAM) rebels have collapsed completely.

On Wednesday the commander of the Army's elite Strategic Reserves said that a "military operation" had begun on March 1, in apparent violation of a cease-fire with the rebels. "GAM is an enemy of the state. We must get them all," Lt. Gen. Ryamizard Ryacudu told local reporters. Diplomats in Jakarta say intelligence reports indicate the military is planning a major offensive.

Violence has intensified throughout Aceh since 1998, when East Timor won its independence and former President Suharto fell, two events that inspired a surge of separatist activity and met with a brutal counterinsurgency.

Lhokseumawe, the boomtown where ExxonMobil's pipelines, pumps, and work crews are tangled up with the local people's lives, is one of the main arenas of conflict. The company's natural gas operation in the province is, by unhappy circumstance, the common thread between the dream for independence, human rights abuses, and Aceh's hopes for a peaceful and prosperous future.

Near where Sulaiman - who like many Indonesians uses only one name - and his friends sip coffee and curse the military, ExxonMobil runs the Arun gas field, Indonesia's largest. Analysts estimate the field spits out about $1.5 billion of product most years, helping to make Indonesia the world's biggest exporter of liquefied natural gas.

Yet almost all of the money has gone to Jakarta. Bringing that money back is one of the central rallying points of GAM. "Once we're independent, that field will make us as rich as Brunei," says GAM's Amni Ahmad Marzuki.

Natural resources not only inspire GAM, but lie at the heart of Indonesia's determination to hold on. Soldiers guarding ExxonMobil's operation have tortured and killed civilians, say human rights investigators. GAM attacks are also higher in the area: If you stick a pin in a map of Aceh where every alleged human rights abuse has occurred, Lhokseumawe bristles like a porcupine.

It's an increasingly familiar pattern across the globe. Gas, oil, and gold are shimmering lures for independence movements, which are then met with violence by the controlling regimes.

"Rebel movements ... need both a grievance and a source of funding. Oil and mineral wealth can help provide both," says Michael Ross, a political scientist at the University of Michigan who studies resources and conflict.

Companies like ExxonMobil - which have to cooperate with the government to stay in business - end up in the hot seat. For instance, ExxonMobil's contract with Indonesia requires it to pay for the military and police presence.

"Without Mobil, we wouldn't have so many soldiers," says Yusuf Ismail Pase, a Lhokseumawe-based lawyer and human rights activist. "These military posts - they're like machines to make people disappear."

ExxonMobil is understandably sensitive about its position and its executives declined to be interviewed. In a written response to questions, it stressed that it is not responsible for the behavior of the soldiers: "Our company condemns the violation of human rights in any form and has actively expressed these views to the President of Indonesia."

Sometimes even the good can have negative consequences. Lhokseumawe is Aceh's second-largest city, thanks to Arun. In a province where most people are farmers, the city is home to dozens of small businesses that service Arun's workers. But that zone of economic opportunity is also helping to pay for both sides' guns: The city's relative wealth, combined with the conflict, creates extortion opportunities. Mr. Ross says that GAM probably generates revenue from extorting money from local businesses.

The military does, too. The International Crisis Group estimated that 80 percent of the military's money comes from protection rackets and other outside ventures, usually illegal.

The modern incarnation of GAM was founded in 1975, four years after the Arun field was opened. A military backlash that has resulted in thousands of civilian deaths soon followed, according to organizations like Amnesty International and Human Rights Watch.

That was supposed to change after the 1999 election of moderate President Abdurrahman Wahid. But, as a Western diplomat points out, "The Army continues to punish whole villages for their independence sympathies."

Around Lhokseumawe, attitudes toward ExxonMobil are complex, and few are willing to speak about the company. Locals often blame ExxonMobil for abuses, since its presence justifies military posts in the region. But residents say they can live with ExxonMobil, provided more benefits flow their way. Back at the coffee shop, Sulaiman says he'd like a job. "We don't have a problem with Mobil," he says. "We have a problem with the military they've brought here."

ExxonMobil has built mosques, schools, and hospitals, and made contributions to local charities. Yet even those efforts have begun to suffer. One ExxonMobil official says the full budget for local programs wasn't spent last year, in part because of the disruptions in the Lhokseumawe area. ExxonMobil itself has suffered hijackings of its vehicles and, last year, a brief hostage-taking involving a group of engineers. The violence is beginning to threaten the long-term viability of Aceh's cash cow.

Mr. Pase, the human rights activist, says the company hasimproved as a corporate citizen, both in environmental protection and in community relations. But he says the best thing ExxonMobil could do would be to push the military to leave. "They have a moral responsibility to make that change."

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