Freeport and the Suharto Regime, 1965-1998
Abstract

Abstract:

In 1967 the transnational mining company Freeport was the first foreign company to sign a contract after Sukarno was sidelined by Suharto. Eventually, Freeport-McMoRan Copper and Gold, through its subsidiary PT Freeport Indonesia, came to operate the biggest gold mine and lowest extraction-price copper mine in the world in the isolated mountains of the Indonesian province of West Papua. It also became politically and economically significant to the Suharto regime. In the absence of the central government, the American mining company became the de facto developer and administrator of its concession in West Papua while in the United States it served as an important political lobby group for Jakarta. With Freeport becoming the largest taxpayer in Indonesia, one of the largest employers, and eventually running one of the largest socioeconomic programs in the republic, it was described by Suharto as essential to the nation's economy. Freeport's importance encouraged the development of mutually beneficial and supportive relationships between the company, the Indonesian president, his military, and the nation's political elite. In return, Freeport was politically and physically protected by the regime. Eventually, Freeport's financing of the president and his cronies' interests in the company threatened to see Freeport violating the United States' Foreign Corrupt Practices Act.

Today Freeport's past relationship with Suharto has made it a high-profile target for anticorruption reformers in Indonesia. Because of the pivotal economic role the company continues to play in Jakarta and West Papua, any question of future independence for the province will be inextricably linked to the company.