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IndonesiaDeceived Again? The "War Against Terrorism", OPIC, and UNOCAL Operations in East Kalimantan Indonesia's President Megawati Soekarnoputri was the second foreign leader to visit George Bush in the aftermath of the September 11, 2001 destruction of the New York World Trade Center buildings. According to media accounts at the time, she "reaped instant rewards" as a result of assuring the U.S. that Indonesia opposed the terrorist attacks.[1] During her U.S. visit, Megawati pitched the resumption of military ties with Indonesia in order to protect Indonesia's "territorial integrity and political sovereignty."[2] The Bush Administration pledged that the U.S. would lift its embargo on commercial sales of "non-lethal defense equipment" to Indonesia and removed duties on four types of plywood sheeting, copper ores and concentrates and nine other Indonesian products. In order to "support President Megawati as leader of the world's largest Muslim democracy", the Bush administration announced that OPIC, US ExIm, and the US. Trade and Development Agency would "provide a total of $400 million to promote trade and investment, especially in the oil and gas sector."[3] Unfortunately, this last pledge, carried out entirely by OPIC, would translate into expanding a highly controversial American investment plagued by shootings and beatings in 2000 - Unocal's East Kalimantan oil and gas operation -- in a region inhabited by a deeply religious Muslim population of Indonesian Borneo. In early 2002, the Indonesian Mining Advocacy Network, JATAM, presented OPIC with results of an analysis outlining the substantial environmental and social problems associated with Unocal's operations in East Kalimantan over the past thirty years -- beginning with the forced seizure of land and crops with no prior dialogue, consent, or compensation for local communities at the start of the company's operations.[4] JATAM contended that environmental impacts and human rights violations associated with Unocal operations included the pollution of rice fields, fish impoundments and near-shore marine areas with oil and toxic chemicals; resulting declines in fish stock; damage to the marine environment as a result of dredging; acid rain as a result of sulfur dioxide and nitrogen dioxide emissions; toxic chemical releases leading to the death of livestock and the creation of "dead zones". According to JATAM, decades of frustration culminated in September and October, 2000 when 300 local residents blockaded access to Unocal. Apparently a special landing strip had been constructed near the Unocal operation to allow the rapid transport of Indonesia's notorious "Mobil Brigade" security forces directly to the region in order to defend the company's operations. Security forces were called in: seven people were shot and sixteen were severely beaten at the site, effectively crushing the blockade. In January, 2002, OPIC sent a "due diligence" team to East Kalimantan to "closely investigate the allegations" made by JATAM. Dspite the fact that a number of the environmental impacts and the shootings and beatings are a matter of public record, Harvey Himberg, OPIC's Deputy Vice President and Director of Environmental Affairs reported to JATAM that, "There is no way for us to confirm the facts that you allege c to have occurred in and around the Santan terminal during the past 30 years." With out mentioning the October, 2000 shootings, Harvey Himberg informed JATAM that, "Since October 2000 the Company has assigned a full time, senior management official to work with the community to identify and resolve community concerns. A community council (Marangkayu Society Commitee) was formed to identify priority issues and approve plans for community assistance efforts to be financially supported by Unocal." According to JATAM, however, this "community council" was not at all a community initiative, but rather was proposed four days after the shootings during a meeting between Unocal representatives, the notoriously corrupt Indonesian parastatal oil and gas company, Pertamina, a senior official of the East Kalimantan House of Representatives, the East Kalimantan head of police and a military commander. This group then recruited an international NGO and several individuals from surrounding communities to serve on the hastily formed "community council", leading to increasing tension and conflicts within affected villages. On February 8, 2002, following the passage of new oil and gas laws in Indonesia, OPIC announced the provision to Indonesia of $350 million in loans for the construction of deep-water oil and gas production platforms, at least 40 production wells, and two 60 kilometer oil and gas pipelines for Unocal's East Kalimantan expansion. Despite claims that OPIC could find no evidence of the human rights violations and environmental destruction described by JATAM, interestingly enough, a letter from Mr. Himberg to JATAM, dated February 11, 2002 states that, in 2001: "A new 3-phase separator or flotation cell (WEMCO) was installed in the produced water treatment plant at the terminal. This treatment unit reduces oil concentration in the produced water from an average of 106 ppm to 9 ppm, which is well within the World Bank guideline of 20 ppm for onshore installations." This appears to indicate that prior to 2001, the oil concentration in the water produced at the company's water treatment plant was 500% greater than that allowed under World Bank guidelines, underscoring the veracity of JATAM's claims of environmental devastation associated with Unocal operations. In February, 2002, JATAM reminded OPIC of Indonesia's new environmental
regulations which stipulate that (1) any new project must first be publicized
in the local new media so that people in a project area are first made
aware of the potential project; (2) a period of public consultation must
occur prior to an EIA; (3) the EIA must be made available for public comment.
According to JATAM, Unocal has not followed these regulations and has
not made an environmental impact analysis available to the local communities. As news of the impending OPIC deal reached Indonesia's Minister of Energy and Mineral Resources, Purnomo Yusgiantoro, the Minister warned that "OPIC will only be allowed to invest in Indonesia if it uses its own money, rather than loans or compensation claims. He said that the government "would refuse if the fund for it came from the claim worth US$260 million the government should pay to OPIC following the cancellation of the Dieng-Patuha geothermal project in 1997. The Minister Purnomo concluded, "The government will never agree with such an investment system. We do not want to be deceived again." [6] This "War on Terrorism" initiative, therefore, was rushed ahead despite the fact that local communities in this deeply religious Muslim area have apparently been severely affected by pollution, loss of resource-dependent livelihood, and the climate of terror and intimidation associated with Unocal operations in East Kalimantan for decades, including the recent shootings & beatings. To all appearances, with 40 new wells in planning stages and two new proposed 60 kilometer-long pipelines, the climate of terror in coastal East Kalimantan is now poised to grow far worse. Endnotes: 1.Jakarta Post, 9.21.01, "U.S. Showers Indonesia with Promises"
Stephanie Fried,
Environmental Defense
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