IJGR 11,1-2_ f4-114-142 7/28/04 7:16 AM Page 115

International Journal on Minority and Group Rights 11: 115–142, 2004. 115 © Koninklijke Brill NV. Printed in the .

The Impact of Corporate Strategy on Community Dynamics: A Case Study of the Freeport Mining Company in West ,

ADÉRITO DE JESUS SOARES*

1. Introduction

This article aims to trace the relationship between multinational corporations and local communities. It will especially focus on the presence of the Freeport Mining Company1 in , Indonesia, and will examine the impact of the company’s policies on local groups in the mining area and the influence exer- cised by those communities over Freeport’s operations.2 This article is divided into six parts. Following this introduction, the second part outlines the historical background of West Papua in its political relations with Indonesia, and the his- tory of Freeport’s presence in West Papua. The third part deals briefly with the discourse on corporate responsibility, the relationship between corporate respon- sibility and government, and the role of civil society. The fourth part describes the actors involved in the relationship between Freeport and the local community in which it operates. It covers broadly the role of central and local governments, the involvement of the Indonesian military (TNI), local tribal organizations, and lastly the role of other groups in the region such as NGOs. The fifth part of this article explores Freeport’s responses to the demands of local communities, and especially focuses on the design and implementation of the ‘One Percent Trust Fund’ policy. The article concludes with comments on the impact of Freeport’s policies on local people, and the advantages, if any, of such policies, and espe- cially the impact of the One Percent Trust Fund.

* Special gratitude goes to Professor Benedict Kingsbury and especially to Kirsty Gover for their generous support during the writing of this paper. Thanks goes to several other friends: John Miller, Sanne, Brigham Golden, John Rumbiak, Oto Mote, Sam Rumbrar, Yoppy Kilangin, and Alo. However, the author is responsible for the paper. 1 In this paper ‘Freeport’ refers to Freeport Indonesia, which operates in West Papua, Indonesia, and not to Freeport McMoRan Copper and Gold Mines, its parent company in New Orleans, US unless otherwise stated. 2 Formerly known as Irian Jaya under ’s regime. After Suharto’s resignation in 1998, the name of Irian Jaya was changed to West Papua, a name that is closely associated with the (OPM). This name was formally adopted by the new government under former President Abdurahman Wahid. IJGR 11,1-2_ f4-114-142 7/28/04 7:16 AM Page 116

116 ADÉRITO DE JESUS SOARES

2. The Historical Trajectory of West Papua

2.1. Indonesia’s West Papua?

West Papua is one of the largest provinces of Indonesia, located in the East- ern part of country, bordering Papua . Soon after Indonesia became independent in 1949, its government asserted sovereignty over West Papua and struggled to gain control over the territory.3 Despite the efforts taken by the Indonesian government at the time, West Papua remained under Dutch control until the early 1960s. In 1962, the sponsored talks between the Dutch and Indonesian governments on the future of West Papua, under the ‘guid- ance’ of the US government.4 Indigenous Papuans were excluded from these talks, although prior to the talks, they had elected representatives to discuss with the Dutch colonial government how to exercise their right to self-determination.5 Following these talks, the Indonesian government and the Dutch Colonial Admi- nistration signed a US brokered agreement on 15 known as The . Under the New York Agreement, Indonesia was required to hold an (Penentuan Pendapat Rakyat, Pepera) in which West Papuans could decide the status of the region. Pending the Act of Free choice, as part of the New York Agreement, in October 1962 West Papua was brought under a temporary UN trusteeship, the UNTEA (United Nations Transitional Executive Authority). Administrative responsibility for West Papua was trans- ferred to Indonesia on 1 May 1963.6 The New York agreement was signed fol- lowing the objection by the US and the Indonesian government to the Luns Plan proposed by the Dutch. The Luns Plan, as noted by John Saltford, “envisaged

3 On 19 December 1961, the Three Commands of People (Tiga Komando Rakyat or Trikora) oper- ation was launched by Indonesia’s leader, . The operation was aimed to ‘return’ West Papua to Indonesia from the Dutch colonial government. TRIKORA operation was continued by Mandala Commando lead by Suharto after he was appointed by Sukarno. 4 The involvement of the US government in initial discussions concerning Indonesia’s assertion of sovereignty over West Papua included a visit by Attorney-General Robert Kennedy to Jakarta and the Hague in February 1962 to initiate talks between Indonesia and the Netherlands. Following this visit, a meeting of State parties was held on 20 March 1962 mediated by US Diplomat Ellsworth Bunker, which resulted in the rejection of the Luns Plan. J. Saltford, United Nations and the Indonesian Takeover of West Papua, 1962–1969: The Anatomy of a Betrayal (Routledge Curzon, London, 2002), p. 12. 5 A. Abrash and D. Kennedy, ‘Repressive Mining in West Papua’, in G. Evans et al. (eds.), Moving Mountains: Communities Confront Mining and Globalization (Oxford Press, Sydney, 2000), p. 59. Available online at visited on 8 January 2004. 6 Article XVIII of the agreement states: “Indonesia will make arrangements, with the assistance and participation of the United Nations Representative and his staff, to give the people of the terri- tory the opportunity to exercise freedom of choice. Such arrangements will include . . . the eligibility of all adults, male and female, not foreign nationals, to participate in the act of self determination to be carried out in accordance with international practice, who are resident at the time of signing of the present Agreement and at the time of the time of the act of self determination”.