Fair Share of the Spoils
Sosrowardoyo for TIME.
SLIPPERY GOLD: Caltex oil fields generate billions of dollars in
revenue, but many locals still live in poverty.
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 themincluding Syaparudinwould
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.
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
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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