The Suharto-U.S. Corporate Connection
excerpts from the book
Corporate Predators
by Russel Mokhiber and Robert Weissman
Common Courage Press, 1999
The sudden exit of Suharto from the Indonesian presidency
has cast the international spotlight on the crony capitalism that
enabled Suharto and his family to amass a fortune estimated to
be on the order of $40 billion. Bribery and graft, sweetheart
government contracts, government-protected monopolies and a host
of other schemes made the Suharto family and a small coterie of
close friends into billionaires.
Much less noted are the ways in which the Suharto regime facilitated
super-profit-making by foreign multinational corporations which
eagerly accepted benefits and protections from Suharto's brutal
dictatorship.
Foreign multinational corporations benefited from the twin
pillars of the Suharto economic program: unsustainable extraction
of Indonesia's rich natural resources and unabashed exploitation
of poor, unorganized Indonesian workers.
Consider the New Orleans-based Freeport McMoRan, which operates
the world's largest gold mine and third largest copper mine in
Irian Jaya, the Indonesia side of the island of New Guinea.
The company has ripped the top 500 feet off Puncuk Jaya Mountain,
sifting through the dirt for copper and gold. After crushing the
ore, mixing it with water and dousing the mix with chemicals to
bring the metals to the surface, Freeport dumps the resultant
waste rock-more than 100,000 tons a day-into mountain rivers.
Those rivers are the lifeblood of downstream communities of
thousands of indigenous people. Environmentalists and the indigenous
people themselves charge the rock waste has poisoned the water,
killing fish and the riverside forest and making massive flood-plains
inhospitable to crops. Freeport denies the charges.
But the Amungme and Komoro peoples are angry enough to have
organized ongoing protests. The Indonesian military has met those
protests with an iron fist, beating, torturing and killing many
of the indigenous protesters. Freeport denies any responsibility
for the military's human rights abuses of the protesters, and
also denies charges that it has assisted the repression.
The Freeport-McMoRan controversy is typical of resource controversies
in Indonesia, with local communities fighting against pillage
of their resources and pollution of their lands and water by big
national and multinational mining, oil and timber companies operating
with the protection of the Indonesian military.
Or consider Nike, which is emblematic of the labor-intensive
manufacturers that have located production (directly or through
subcontractors) in Indonesia.
Nike subcontractors in Indonesia have two great advantages.
First, wage levels in Indonesia are extremely low (though not
as low as China and Vietnam). The minimum wage, which the government
acknowledged to be below a "living wage," was set at
$2.46 a day in 1997. With the collapse of the Indonesian currency,
the rupiah, Indonesians' real earning power has dropped by about
three-quarters. Stated otherwise, the real wage cost to Nike and
other foreign investors has dropped by 75 percent. Under pressure,
Nike agreed to nudge up workers' wages, but not to pre-financial-collapse
levels.
The second benefit conferred on foreign investors like Nike
is vicious repression of workers' attempts to organize. Under
Suharto, Indonesia allowed only one official trade union federation.
Workers' attempts at independent organizing were routinely quashed,
with rival union meetings broken up by security forces and strikers
facing threats and firings. Muchtar Pakpahan, the founder and
leader of an unauthorized, independent labor federation, languished
in an Indonesian jail until he was freed earlier this week.
Against this backdrop, in moving displays of courage, Nike's
workers-most of them girls and young women-walked out twice in
1997. Still, conditions in Nike subcontractor factories remain
dismal.
Protests against both Nike and Freeport McMoRan in Suharto's
Indonesia helped spark solidarity campaigns in the United States.
The higher-profile campaign against Nike has recently scored an
important victory, as Nike CEO Phil Knight announced the company
would require subcontractors to permit independent monitoring
of their shops and to enforce U.S. occupational safety standards.
Even if Nike carries out these promises in good faith, much
more remains to be done: Knight did not announce an upgrading
of wages nor explain how workers' right to organize would be guaranteed
in countries that do not respect basic labor rights.
The ouster of Suharto should further empower grassroots and
labor activists in Indonesia, which should in turn embolden allies
in the United States and elsewhere in the industrialized world
to turn up the heat on corporations doing business in Indonesia.
But the overthrow of one of Asia's most brutal dictators should
also be a moment of pause for Americans, a time to contemplate
the various ways that U.S. corporations helped support, and were
supported by, a ruthless autocrat who ruled with the barrel of
a gun.
Corporate Predators