Private Empire: ExxonMobil and American Power

by Steve Coll

  A large share of the Arun field belonged to Mobil. It contained about 17 trillion cubic feet of gas (the equivalent of just under 3 billion barrels of oil) and proved to be highly remunerative: In the decade leading to the Exxon merger, the Arun field accounted for about a fifth of Mobil’s overseas revenue from oil and gas production. The subsidiary that extracted Aceh’s gas and then liquefied it for transportation to Japan and other markets earned $295 million in profits in 1998, $311 million the next year, and $498 million the year after that. The earnings reflected lucrative contracts Mobil had negotiated during the panicked period of the Arab oil embargoes and the early Iranian Revolution, when many energy-importing nations in Asia feared they would not have access to supply at any cost and proved willing to pay relatively high prices for guaranteed long-term deliveries.

  “My nightmare is to pick up the New York Times and read that both Nigeria and Indonesia are in flames,” Lou Noto, Mobil’s chairman, told industry colleagues in the late 1990s. Those two countries accounted for a lopsided share of Mobil’s profits; both were wracked by internal rebellions. Noto, therefore, had extra incentive to muddle through the Aceh war. ExxonMobil, under Lee Raymond, was not going to lightly set aside half a billion dollars in annual profit, either, but the merged corporation had more financial flexibility to tell the likes of Abu Jack to go away. The Indonesian government’s position was more like Mobil’s had been—it was dependent on keeping the gas profits flowing. Its take from Aceh was about $1.2 billion in 2000, more than a fifth of the government’s total oil and gas receipts that year, and about 6 percent of its revenues from all sources, before international aid.2

  To a great extent Aceh’s war had evolved into a contest over who could bargain or shoot his way to control the Arun field’s cash flow. One of the contenders was a former New Yorker named Hasan di Tiro, a charismatic Acehnese nationalist leader to some, and to others, “a quixotic, self-promoting political dabbler prone to hysterics and exaggeration,” as one biographer put it. Di Tiro was a great-grandson of a heroic nineteenth-century anti-Dutch guerrilla fighter. He grew up in unassuming circumstances in Aceh, migrated to Indonesia’s main island of Java to attend law school, and then won a scholarship to the United States in 1950, at the age of twenty-five. He attended Columbia University and later worked in the information department of the Indonesian mission to the United Nations. He made the acquaintance of Edward Lansdale, the Central Intelligence Agency’s legendary Asia hand during the cold war. Di Tiro found himself “circulating in the eddies and backwaters of international diplomacy” in New York.3

  He absorbed the radical ideas of Marxist-influenced, postcolonial liberation movements that spread worldwide during the 1960s, but he also tried to provide for his family through business ventures back in Indonesia. In 1974, one of Di Tiro’s companies, Doral Inc., bid for a contract to build a pipeline connected to Mobil’s Acehnese gas field; the job went instead to the San Francisco–based Bechtel Corporation. Di Tiro’s opponents later emphasized this commercial setback as a cause of his final radicalization. Di Tiro told a different story: Soon after he lost the pipeline bid, he was flying aboard a private jet when its engines died. He promised himself that if he survived, he would lead a revolution for Acehnese independence. He had reached late middle age and believed that he had “lived long enough,” he told an interviewer. His biographer felt that Di Tiro was describing a “midlife crisis of sorts.”4

  He founded the Gerakan Aceh Merdeka, or “Free Aceh Movement,” known as G.A.M. His followers snuck into the province from Malaysia and opened their “armed struggle” in the rain forests and volcanic hills of the rugged Pidie region on October 30, 1976. Di Tiro issued a declaration of independence six weeks later, drawing on his American education: “We, the people of Aceh . . .” he began. His war strategy, he later wrote, was to shut down “foreign oil companies . . . to prevent them from further stealing our oil and gas.” G.A.M. leaflets warned Mobil and Bechtel employees to “pack and leave this country immediately.” Di Tiro organized about three hundred fighters and managed to make contact with Muammar Gaddafi, the Libyan dictator; he sought training for his men at Libyan camps. “They have Mobil Oil,” Di Tiro reportedly told Gaddafi, “so you must support us.”5

  Because Mobil employed nearly three thousand Acehnese directly or by contract, it proved risky for G.A.M. to target the company; job losses would alienate the rebels’ population base. Abu Jack’s extortion demand reflected the murky war that had evolved in reaction to these constraints: Rather than throw Mobil out, G.A.M. sought to access the corporation’s revenues, directly and indirectly. Racketeering had become commonplace on both sides of the conflict.

  The violence was sporadic, but it was often most intense around the sprawling, fenced-in Mobil gas facilities. On the north side of Lhokseumawe (the town’s name meant “Everything Deep,” a reference to the swampy terrain in which it sat) stood the factory-size Arun liquefied natural gas (L.N.G.) plant. On the other side of town lay the gas fields themselves, spread out across tens of square miles, intermingled with inhabited villages. A modern gas well is relatively unobtrusive in comparison to an oil well: a chest-high, cylindrical metal structure with no moving parts. Mobil installed these robot-looking creatures in fenced areas with names such as Cluster I and Cluster II.

  Point A was the main administrative and engineering headquarters for the gas fields. ExxonMobil compounds worldwide displayed a universal design: yellow security lights, high double fences at the entrance, and just inside (after the post-Valdez safety campaigns evolved) a large billboard declaring “Nobody Gets Hurt.” About 220 expatriate employees—Americans, Australians, Japanese—lived within ExxonMobil’s compounds in Aceh. Around them lay clayroads, rice paddies, grazing fields with a few stray cattle, and tin-roofed village homes.

  G.A.M. fielded a few thousand guerrillas; its most sophisticated weapons were semiautomatic rifles and rocket-propelled grenade launchers. The guerrillas taxed and extorted villagers and erected roadblocks to take money and property from passing vehicles. A few miles away from a G.A.M. roadblock constructed from fallen tree trunks, Indonesian soldiers might man their own barrier, peering into cars in search of suspicious-looking young Acehnese men.

  Mobil had adapted to the war without ever missing a gas delivery. Early in 2001, however, a stream of extortion letters and phone calls started to arrive at ExxonMobil’s offices. The corporation’s security department, which ran its own intelligence operations in the province, heard “widely divergent rumors,” as a U.S. embassy cable put it, about what lay behind the letters and whether the commander known as Abu Jack was, in fact, responsible: “One source says he’s now in jail and that imposters are making the threats; others say he is a double agent in the employ of the security forces.”6

  ExxonMobil’s security department had also received reports that Indonesian executives at a partner company had recently paid a $100,000 ransom to win the release of a kidnapped Indonesian-born executive. The alleged payoff had “heightened concern” that rebels might now be encouraged to kidnap someone at ExxonMobil, perhaps an expatriate. To deter G.A.M., ExxonMobil suggested to the U.S. embassy in Jakarta that the corporation take out newspaper advertisements declaring its “refusal to make illicit payments”; the embassy judged, however, that “any effort to publicly defy the G.A.M. . . . is not advisable.”7

  Abu Jack, or whoever he was, telephoned ExxonMobil once more on the morning of March 9. A large rebel force had gathered to attack the corporation’s gas fields, the caller reported; G.A.M. had ordered villagers in the area to leave. ExxonMobil’s local employees could see that nearby residents were, in fact, leaving. Around the same time, a mortar attack and a roadside pipe-bombing targeted a bus carrying corporate personnel. The evidence suggested to ExxonMobil that G.A.M.—or some faction of the undisciplined rebel movement—had changed its targeting policy to go after the company directly, either to advance its extortion campaign or because senior G.A.M. leaders had quietly decided
that ExxonMobil was now an enemy of its rebellion, in a way it had not been seen as before.8

  Ron Wilson, who was the president of Mobil Oil Indonesia, the subsidiary that managed all of ExxonMobil’s oil and gas operations in the country, decided he could wait no longer. He was accustomed to managing risk on behalf of expatriate and local employees, but he concluded that G.A.M. had now crossed a line. Wilson reported through ExxonMobil’s chain of command ultimately to Harry Longwell, Raymond’s executive vice president for upstream operations on the Management Committee, the corporation’s supreme governing council. Raymond’s judgment about the war he had inherited in Aceh, he recalled, was that “Mobil wasn’t shooting anybody, but obviously the military was going to protect” the gas field, “driven by orders from Jakarta, and Mobil was kind of in the middle of it.” Raymond entrusted the day-to-day decision making to Longwell.

  He decided to shut down operations in Aceh. The decision shocked Indonesia—newspapers covered the story under front-page banners. Until the Indonesian government created conditions in which ExxonMobil’s employees felt safe, Ron Wilson and other ExxonMobil spokespeople declared, Jakarta’s billion-dollar annual revenue flow would be turned off.

  Robert Gelbard served that winter as the United States ambassador to Indonesia. He was a large, balding, and sometimes combative war-zone diplomat who had served in the Balkans during the Kosovo conflict. He told Ron Wilson that he supported ExxonMobil’s decision. Gelbard’s responsibilities included the safety of American citizens in Indonesia, and he felt the situation in Aceh was becoming “dramatically dangerous,” he said later, and he was “really worried” that some of ExxonMobil’s people “were going to get killed.”9

  Still, Gelbard wanted to intervene to help restart gas production as soon as possible. Indonesia had embarked only recently on a shaky, unstable democratic transition after decades of military rule. The country’s president, Abdurrahman Wahid, could ill afford the loss of taxes and royalties from ExxonMobil’s Aceh gas fields.

  The United States formally rejected G.A.M.’s independence drive and supported Indonesia’s claims of sovereignty over Aceh. G.A.M. leaders nonetheless considered the United States to be friendly to their aspirations because American diplomats advocated autonomy negotiations that would grant Acehnese leaders greater control over local affairs within a united Indonesia. With approval from Washington and the Indonesian government, Gelbard flew to Singapore for a secret meeting with one of G.A.M.’s most senior leaders. Gelbard recalled that he “wanted to be very clear with them: Yes, we like them, but no, we didn’t support independence.” At the same time, Gelbard believed that a military victory was not feasible for either side in the war—only successful autonomy negotiations between Jakarta and G.A.M. could end the violence. Wahid’s democratic government was inclined toward such peace negotiations, but Wahid had attracted opposition from hard-liners in the Indonesian military who wanted to eradicate G.A.M. by force. If Gelbard could restart ExxonMobil’s gas production, he might, among other things, deliver a victory to Jakarta’s beleaguered civilian peace-promoting forces. Gelbard said later that his intervention in the Aceh war had nothing to do with ExxonMobil’s business interests or the profits it produced from the Arun gas fields; he sought to reduce the Aceh conflict’s violence so that Indonesia would have a better chance to move from dictatorship toward democracy.

  ExxonMobil could not be precise about what improvements in security would be necessary to persuade the corporation to restart operations in Aceh. “We’ll know it when we see it,” an ExxonMobil executive told one of the ambassador’s colleagues at the embassy.10

  One way to reassure the corporation would be to persuade G.A.M. to publicly declare that ExxonMobil was off-limits in Aceh’s war. Gelbard thought that the United States should “read the riot act” to G.A.M. about its decision to target ExxonMobil. The ambassador and other senior Bush administration officials decided that spring to embark on an extraordinary campaign to restore ExxonMobil’s Aceh operations, and by doing so relieve pressure on Indonesia’s wobbly elected president. It was unusual for an American administration to negotiate directly with a guerrilla force over its targeting strategies, and even more unusual for it to apply American pressure to remove from insurgent target lists a lucrative field operated by ExxonMobil.

  Aceh’s conflict was a dirty war characterized not only by kidnapping and extortion, but also by a brutal campaign carried out by the Indonesian military, a campaign that included torture and summary executions of suspected guerrillas. By aligning itself with ExxonMobil and Indonesia’s government to pressure G.A.M., the Bush administration risked associating itself with the Indonesian military’s tactics. Sections of the military were on ExxonMobil’s payroll to provide security at the perimeter of the Arun fields. These payments to Indonesian soldiers by the corporation were mandated by ExxonMobil’s contract. In return, the corporation’s Indonesian partners agreed to “assist and expedite” ExxonMobil “by providing . . . security protection . . . as may be requested” by the oil company. As a practical matter this meant that the Indonesian government supplied troops from the Tentara Nasional Indonesia, or Indonesian National Army, known as the T.N.I., to protect the gas fields. Under the arrangement, ExxonMobil paid the Indonesian soldiers’ salaries; by the time of the extortion campaign in early 2001, the going rate was about $294 per month for a typical enlisted man. The soldiers were by all accounts—including that of the Bush administration—engaged in appalling human rights violations.

  As ExxonMobil prepared to shut down in Aceh, Ambassador Gelbard signed a confidential cable to Washington. He reported his embassy’s judgment that G.A.M. was guilty of “atrocities.” He also described, however, the ongoing crimes of Indonesian security forces that protected ExxonMobil’s gas fields: “The military/police offensive [in Aceh] is resulting in significantly growing human rights abuses. Many civilian corpses bear marks of torture and their hands are tied behind their backs. Neighbors of those later found dead often report that non-Acehnese men in plainclothes kidnapped the victims.”11 ExxonMobil’s daily operations were fixed in the middle of that dark violence.

  The Indonesian military’s brutality in Aceh traced to the authoritarian “New Order” government of Indonesian president Mohammed Suharto, a former general who took power during the 1960s after a violent purge of the Indonesian Communist Party. The United States saw Suharto as a vital link in its anti-Communist strategy in Southeast Asia. Indonesia is an unwieldy archipelago of about seventeen thousand islands spread out over three thousand square miles. Suharto consolidated his power by allowing the military to enrich itself during deployments around the country’s resource-rich islands; he also constructed a tight-knit circle of family and ethnic Chinese business cronies in the capital of Jakarta. To shore up his security alliance with Washington, the president allowed American corporations to enjoy access to Indonesia’s minerals, oil, and gas. Suharto offered mining concessions to Freeport-McMoRan Copper & Gold and he delivered to Mobil the large stake in Aceh’s Arun field. (Mobil offered a share of the field to Exxon at the time, but the latter’s upstream executives demurred, to their enduring regret.)

  Mobil entered into a production-sharing contract with Indonesia’s P. T. Pertamina, then a state-owned oil company. Under Indonesian law Suharto could name certain “Vital National Objects” that required military protection; in 1983, the Aceh property was so designated. Thousands of T.N.I. soldiers poured into North Sumatra to protect Mobil from the threats and sporadic attacks carried out by G.A.M.

  Suharto had tried and failed to win the war in Aceh by force during the 1990s. He declared the province a special military zone. Torture and disappearances became commonplace. The T.N.I. rounded up thousands of young Acehnese men, interred them in camps, and forced them to sing the national anthem as part of their reeducation. According to human rights investigators, army officers set up schemes to profit from their deployments to Aceh—they ran logging operations, marijuana farms, and
other rackets.

  Security posts and unmarked interrogation houses became the settings for the blackest chapters of Aceh’s conflict during this period. Some of the interrogations took place on Mobil property or very nearby. The T.N.I. units set up posts along the fenced perimeters of the gas fields; the posts were sometimes separated by just a few hundred yards. Two of the most notorious facilities around Mobil’s fields were known as Post A13 and Rancong Camp. A post might consist of a two-story concrete building or just a barbed wire, sandbagged encampment with makeshift sleeping quarters.

  One area with a particularly heavy security presence lay toward the south of Lhokseumawe, where pipes gathered gas from scattered wellheads and drew it into trunk lines for transport to the liquefied natural gas plant. A large trunk line ran down a straight, miles-long corridor known as the Pipeline Road. By early 2001, G.A.M. had taken to planting bombs and digging up pipes along the road. The T.N.I. erected security posts at intervals along the Pipeline Road and ran patrols in the area.

  During the mid-1990s, Indonesian soldiers and intelligence officers arrested a number of G.A.M. leaders, including Sofyan Daoud, at the Lhokseumawe port, as they returned from exile in Malaysia. “They were taken to the Mobil facility for interrogation,” according to Ifdhal Kasim, the chairman of Indonesia’s National Human Rights Commission, which collected evidence about the case. There were more than twenty detainees and “they were tortured at that complex,” according to Kasim. “There was all sorts of torture by the soldiers.”12 Over the years, hundreds of young men arrested in the vicinity of the Mobil gas fields disappeared, according to Acehnese separatist activists and independent human rights investigators. Acehnese villagers assumed that the missing men had been killed in custody and had probably been buried near the T.N.I.’s security posts.