The Suharto-U.S. Corporate Connection

[Robert Weissman <rob@essential.org>]

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-profitmaking 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 floodplains 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, Indonesian's 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 for 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 by the barrel of a gun.

Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime
Reporter. Robert Weissman is editor of the Washington, D.C.-based
Multinational Monitor.

(c) Russell Mokhiber and Robert Weissman

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