Indonesian Military Business Interests Impede Human Rights Accountability

Some commanders and units of the Indonesian military have long benefited from the Aceh conflict because it provided them with an opportunity and a cover to proceed with lucrative, if often illicit, economic activities. A new Human Rights Watch report analyzes the human rights impacts of the military’s involvement in business ventures in Aceh and across Indonesia. Among others, the report assesses the cases of Freeport (copper and gold mining operations in Papua), PT Arutmin (coal mining in South Kalimantan), drug dealing in North Sumatra, and ExxonMobil (natural gas in Aceh).

The Indonesian military draws on extra-budgetary funds derived from military-owned enterprises, informal alliances with private entrepreneurs to whom the military often provides services, mafia-like criminal activity, and corruption. Much of the revenue from such ventures goes directly to commanders, specific units, or individual soldiers. Some of the funds are used for day-to-day operating expenses of the armed forces, but much goes to commanders’ personal enrichment.

Military business activity dates back to the latter part of the 1950s and became deeply entrenched under the Soeharto dictatorship starting in 1967. The military took over ownership of privatized state companies, gained vast forestry exploitation rights, and enjoyed favored access to government contracts, licenses, and credits. Large swaths of land on which indigenous communities depended were taken away, dispossessing them without due process and with little or no compensation.

The military’s economic standing slipped dramatically as a result of the 1997 economic crisis that ultimately helped bring down the Soeharto administration. An estimated two-thirds of the military’s companies did not survive the crisis.

After Soeharto’s downfall, the withdrawal of the military representatives from parliament (completed in 2004) helped reduce the military’s political influence. But as long as the military’s revenue and spending are outside civilian government control, the harder it is for the government to engage in meaningful oversight and to demand accountability.

The weak performance of the “regular” businesses owned by the military has contributed to the spread of informal and illegal military economic activities that are more hidden and more difficult to control. These include partnerships and paid protection services for private businesses.

Military businesses have faced increased competition from the police, leading to struggles over turf that have repeatedly involved violence.

Human Rights Watch, Too High a Price: The Human Rights Cost of the Indonesian Military’s Economic Activities, New York, June 2006.
Link: http://hrw.org/english/docs/2006/06/21/indone13587.htm (full report at: http://hrw.org/reports/2006/indonesia0606/indonesia0606web.pdf).