The Indonesian government is preparing to intensify military operations against separatist guerrillas in the province of Aceh in northern Sumatra in a bid to reopen lucrative gas fields and processing facilities shut down for more than three weeks.
The giant US corporation Exxon Mobil, which operates and partly owns the facilities, suspended production at three gas fields and the Arun liquified natural gas (LNG) plant last month, citing inadequate security. The Indonesian armed forces (TNI) have more than 2,000 troops backed by armoured vehicles in the area but still have been unable to assure the safety of the company's 800 employees and more than 2,000 contractors.
The closure only adds to the government's economic difficulties. Indonesia is the world's largest producer of liquified natural gas. The Aceh gas fields, which have never been previously closed, account for more than one third of the country's gas exports and provide around $100 million a month to government coffers.
Jakarta is under increasing pressure from Exxon Mobil, the US and overseas buyers to take whatever steps are needed to ensure the reopening of the plant.
Last week US ambassador to Indonesia Richard Gelbard visited Aceh to meet with leaders of the separatist Free Aceh Movement (GAM) to urge them to stop targetting the Exxon plant and making threats against employees. During a meeting with the Aceh police chief, he offered US assistance in training police in the province in anti-riot and anti-terrorism methods.
This week Baihaki Hakim, president of Indonesia's state-owned oil and gas corporation Pertamina, warned that LNG contracts with buyers in Japan and South Korea were in jeopardy if the Aceh fields remained closed. He said that supplies from Bontang, the country's second LNG production facility in East Kalimantan, would only be able to fill the gap until June. The Japanese company Tohoku Electric Power has already increased its LNG orders from Malaysia to make up for shortfalls.
The loss of revenue from Aceh gas production comes at a crucial time for the government of President Abdurrahman Wahid. An International Monetary Fund (IMF) team is currently in Indonesia for talks over the release of a delayed $400 million loan installment, and, among other demands, is insisting on a cut to the budget deficit. Indonesia desperately needs IMF approval to secure further financial aid from the World Bank, the Asian Development Bank, the Japanese government and other creditors.
Mark Baird, World Bank country director for Indonesia, warned last week: “Some tough issues have to be resolved. But the IMF faces new problems, such as the looming budget deficit, which need to be resolved quickly.” The deficit for 2001 was predicted to be about $5 billion based on an exchange rate of 7,800 rupiah to the US dollar. But, since the budget was handed down, the value of the rupiah has slumped to over 10,000 to the US dollar. According to World Bank estimates, the deficit will blow out to more than $8 billion.
The government simply cannot afford the continued closure of the Aceh gas fields. Last month Wahid ended negotiations with GAM, denounced the organisation as subversive and gave approval for limited military measures in Aceh. With the threat of impeachment hanging over him, the president is under pressure from his political opponents and sections of the military to take even tougher action.
According to last week's issue of the Far Eastern Economic Review, “President Abdurrahman Wahid and the Indonesian military are engaged in a renewed contest of wills, this time over the rapidly deteriorating security situation in western-most Aceh province, which could put another nail in the president's political coffin. Army generals want to mount limited offensive operations against thousands of well-armed separatist rebels. Wahid is baulking, insisting that any new security measures should only be aimed at restoring production at Exxon Mobil's onshore gas fields, which have been idle for nearly a month.”
A senior presidential aide told the magazine: “There's always a tug of war between negotiation and military operations. The president prefers negotiation. He doesn't believe in military actions. He refuses to use the word ‘operation' and the word ‘military'.”
Vice President Megawati Sukarnoputri is pushing for the president to authorise a more far-reaching “multi-faceted action program”. She is widely touted as the replacement for Wahid should his critics succeed in having him removed from office.
Recent comments by Indonesia's strategic forces (Kostrad) head, Lieutenant General Ryamizard Ryacudu, indicate the degree of tension between Wahid and the military. In what was a thinly veiled demand for a free hand in Aceh, Ryacudu insisted that the government take responsibility for any casualties. “Let us say that Kostrad troops are deployed in Aceh and then a lot of people are killed. The soldiers should not then be quick to be blamed and dragged to the court for legal matters... [W]e should also be protected. If not, then do not send Kostrad troops.”
The Indonesian army is widely hated within Aceh as a result of the systematic repression and atrocities carried out under the Suharto dictatorship. Since the separatist struggle erupted in 1976, at least 5,000 people are estimated to have died and many more have been maimed and left homeless. When Wahid came to power in 1999, he negotiated a truce with the separatists and initiated talks over a limited form of autonomy for the province and a greater share of Aceh's gas revenues.
But the talks have proven fruitless and the bitter fighting has continued. More than 300 people have died already this year. Last Friday at least seven people were killed in gunfights across the province. On the same day a fire broke out at one of Exxon's gas extraction installations near Lhokseumawe. The military allege that separatist fighters lobbed a hand grenade into the facility—a claim that GAM has denied. On Monday, police shot and killed a teenager in the Birem Bayeun subdistrict of East Aceh, claiming he was a GAM member.
On Tuesday, a 49-member delegation from Aceh, including teachers, local MPs and social activists, appealed to Wahid to call off the military crackdown, saying that the government's “limited military operation” was already effectively underway. The group also called for a renewal of negotiations with GAM and urged Wahid to allow a mediator to take part in talks.
Wahid's reluctance to unleash the armed forces in Aceh is motivated by concerns over the possible reaction within the province to a new round of military repression. Last November tens of thousands of people defied police and army roadblocks to take part in a pro-independence rally in Banda Aceh. The previous year an estimated one million people took part in a similar demonstration.
But under pressure to reopen the Exxon operations as well as to neutralise the criticisms of his opponents, Wahid has adopted a tougher stance and given the go ahead for intensified military operations. The security forces have an estimated 30,000 soldiers and police stationed in Aceh and are pushing for the deployment of specially trained anti-guerrilla troops to spearhead an offensive which will undoubtedly lead to widespread bloodshed.