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Tara Sosrowardoyo for TIME.
SLIPPERY GOLD: Caltex oil fields generate billions of dollars in revenue, but many locals still live in poverty.

A Fair Share of the Spoils
The oil-rich province of Riau generates 20% of Indonesia's wealth but gets back only a fraction of that. The locals are demanding more
By JASON TEDJASUKMANA Pekanbaru

Syaparudin, a former logger, stands next to the Caltex oil pipeline that stretches for 900 km across the central Sumatra province of Riau. Locals call it the "giant snake," and many of them—including Syaparudin—would like to kill it. A member of the Sakai people and a recent convert to the crusade against the American oil giant, Syaparudin knows just how he would do it. "If I were to shut off the water and electricity, the oil would stop flowing," he says. Fear of military reprisal keeps him from acting on his threat, but he warns that his people are getting impatient with Caltex. "We know how to cripple them and will not hesitate if they don't start giving something back to us soon."

As the largest multinational operating in Riau, Caltex Pacific Indonesia, owned by U.S. oil firms Chevron and Texaco, has become a favorite target among locals demanding a better deal in return for their natural resources. Despite Riau's vast supplies of oil, natural gas and timber, more than 40% of its 4.3 million people live below the official urban poverty line of $240 a year. Residents demanding jobs have staged sit-ins and demonstrations in front of the company's main offices in Rumbai. Six Caltex vehicles in Duri were burned in July, prompting the firm to tighten security. "We're concerned," says Caltex senior vice president Robert Galbraith. "In Indonesia there isn't a strong line drawn between demonstrations and anarchy."

Officials in Jakarta should also be worried. Two new autonomy laws go into effect next May, requiring the central government to share fiscal and administrative powers with regions and districts. But the necessary financing, staff and infrastructure are not likely to be in place by then, which should only lend momentum to the growing independence movement. "More empty gestures from the central government will only radicalize the people," says Tabrani Rab, 59, a Riau University professor who became head of the Free Riau Movement in February, when a majority of community leaders voted in favor of independence.

A quick look at the numbers reveals why people in Riau are so angry. The provincial government estimates it sent $8.4 billion in revenues to Jakarta last year but got back only 2% of that in its provincial budget. Resources from Riau account for nearly one-fifth of the central government's total budget, yet Riau has a per capita income of only $500. The Caltex oil fields produce 715,000 barrels of crude a day, just over half of the country's total and nearly four times the entire output of Brunei. "We have crude oil beneath the ground and palm oil above, yet most of us can't afford to buy kerosene for our lamps," says Gusmar Hadi, a student activist at the National Institute of Islam.


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The new law will allow provinces to keep up to 80% of revenues from mining, forestry and fishery, as well as 30% from gas and 15% from oil. Locals remain skeptical that the law will be observed. "Autonomy would work only if the central government didn't have so many needs," says Al Azhar, 39, a professor of comparative literature and an independence activist. Those needs are found chiefly on the nation's most populous island, Java, which consumes more than 60% of national expenditures. Says Azhar of autonomy: "It will never happen."

Azhar took over the Free Riau Movement in July, when Rab decided to join the government's Regional Autonomy Council. Local media labeled Rab an opportunist and even a traitor. He insists he will use his position on the council to make sure the government keeps its promise of fiscal decentralization. Says Azlaini Agus, vice chairman of a committee following up on the results of February's independence vote: "The movement will continue without Tabrani Rab."

With cracks appearing in the independence movement, Riau is not likely to witness the separatist violence that has hit Aceh or Papua just yet. But Azhar says activists in the three provinces set up an informal alliance in June to expand their overseas lobbying, and several hundred members of the Free Riau Movement are said to have received military training in Aceh. "People will rise up if the government does nothing," warns Ribut Susanto, head of a local advocacy organization. "In the meantime, Caltex needs to be more proactive and responsive to the community."

Caltex is quick to cite the $600 million it has spent over the past 40 years building roads, hospitals and schools as proof of its commitment to community development. The company says 21.5% of its 6,000 employees were born in Riau, though it concedes that most are given "lower-skilled" jobs. A Caltex official admits: "If Riau gets independence, we'll all have to get passports."

That is a prospect neither Caltex nor Jakarta wants to consider, given Riau's vast mineral wealth. The province has an estimated 19 billion barrels of oil reserves still in the ground. The largely undeveloped Natuna islands in the eastern Riau archipelago sit atop the world's largest natural gas fields, with proven and potential reserves of 1.4 trillion cubic meters. Caltex expects to sign an agreement with the central government to begin exploring a new field in Riau this year. "We have very high expectations," says Galbraith. In a province with only 2% of the country's population but nearly 20% of its wealth, locals are wondering why they shouldn't be as prosperous as the citizens of Brunei. "If we can support Indonesia, why couldn't we support ourselves?" asks Eddy Herman, an unemployed machine operator who lives in a tiny shack on the Siak River. That is a question Jakarta will soon have to answer.

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