/* Written 2:04 PM May 29, 1998 by peg:jclancy in web:reg.china */
/* ---------- "The Suharto-US Corporate Connection" ---------- */
from: [EMAIL PROTECTED]
subject: The Suharto-US Corporate Connection
To: [EMAIL PROTECTED] Date: Wed, 27 May 1998
Author: Robert Weissman <[EMAIL PROTECTED]>
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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
Focus on the Corporation is a weekly column written by Russell
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