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ICE Case Studies: Aceh
Number 85, May, 2001


The Acehnese Resistance Movement and Exxon Mobil,

Jeremy Schanck

Case Background
Environment Aspect
Conflict Aspect
Environment Conflict Overlap
Related Information


1. Abstract

The province of Aceh has a long tradition of resisting the Indonesian central government in Jakarta. This resistance began as a religious movement, but acquired a different tone once Mobil Oil Indonesia (MOI) discovered a vast wealth of oil and natural gas deposits in Lhok Seumawe, North Aceh in 1971. This discovery inspired the development of the Lhok Seumawe Industrial Zone (ZILS); an enclave devoted to oil and liquefied natural gas (LNG) extraction for foreign export. While the ZILS has been lucrative for MOI (now Exxon Mobil Indonesia) and power brokers in Jakarta, the Acehnese have only experienced the zone's harmful side effects: environmental degradation, dislocation of indigenous families, significant inflows of migrant workers, and disruptions in their traditional livelihoods. These inequities led to the emergence of the Free Aceh Movement (GAM), a separatist front determined to see Aceh become an independent and oil-rich sultanate. Exxon Mobil has attempted to present itself as a "neutral" player in the fight waged between Jakarta and the rebels, maintaining a somewhat false separation between business and "politics". This strategy has proven unsuccessful. Recently, Acehnese rebels have specifically targeted Exxon Mobil, a development that has led the corporation to suspend LNG production in the ZILS until security is restored to the province.

2. Description

On March 9, Exxon Mobil Corporation shut down oil production in Aceh, claiming that credible threats from the Free Aceh Movement (GAM) had compromised the security of company employees and operations. The corporation evacuated its entire staff to Medan two days later. Exxon Mobil's actions, though extreme, seem justified in light of past events: several Exxon Mobil employees have been abducted, the company's vehicles have been shot at or set on fire, and refineries in the Lhokseumawe Industrial Zone (ZILS) have been attacked with grenades. Antara, the Indonesian news service, reported that GAM rebels have repeatedly attempted to convince Exxon Mobil to pay "protection fees" to GAM, instead of the Indonesian Mobile Brigade (Brimob). Many have likened these actions to extortion.

Exxon Mobil's relationship with Brimob has led many Acehnese to regard the corporation presence in the province with ambivalence. Exxon Mobil has built mosques, schools, hospitals in Aceh, and has also contributed to several local charities. However, these good deeds were significantly undermined in November 1998 when a mass grave containing Acehnese rebels was discovered within the grounds of the PT Arun liquefied natural gas (LNG) refinery site. Exxon Mobil, Pertamina (The Indonesian national oil company), and a Japanese firm jointly own PT Arun. The discovery of the grave not only incensed the Acehnese, but also focused intense scrutiny on the Exxon Mobil's operations by international human rights watchdogs.

The Shared History of GAM, the Indonesian Military, and Mobil Oil Indonesia

Regardless of the 1998 discovery, many Acehnese associate the Mobil Oil's presence in Aceh with the beginning of tension between the central government and Acehnese rebels. Indonesian President Suharto's emphasis on economic development entailed attracting foreign direct investment to Aceh, a task simplified by Mobil Oil Indonesia (MOI)'s discovery of vast quantities of oil and natural gas in the province in 1971. This discovery led to the construction of a vast industrial enclave near the town of Lhok Seumawe in North Aceh. By 1977, the Lhok Seumawe Industrial Zone (ZILS) not only housed Mobil Oil operations, but also accommodated PT Arun, a liquefied natural gas (LNG) refinery jointly owned by Mobil Oil, the Indonesian national gas company Pertamina, and Japanese investors. Several Indonesian fertilizer companies also joined Mobil Oil and PT Arun in the ZILS.

While the development of the ZILS should have translated into profit for the Acehnese people, the opposite proved to be true. Under the deal struck between the Suharto government and MOI, only 5% of the revenue from the ZILS went to the Acehnese provincial government. Consequently, the Acehnese received almost nothing from the ZILS except considerable environmental degradation and disruptions in their traditional ways of earning income (see no. 6 below).

This inequitable distribution of wealth played a key role in instigating the formation of the GAM in 1976. The GAM envisions an Aceh free to become an independent, oil-rich Muslim sultanate like Brunei Darussalam and interprets the aactions of the Indonesian government to be "neo-colonialist". These ideas were initially propagated by Hasan Di Tiro, an Acehnese exile living in Sweden. Hasan's mandate to lead GAM stems from his direct descent from Teuku Cik Di Tiro, a renowned hero of Aceh's fight against the Dutch in the Aceh War (1873-1913). While Hasan had previously belonged to Darul Islam, an insurgency movement devoted to transforming Indonesia into a Muslim state, the Free Aceh Movement seemed primarily motivated by the desire to divert oil profits away from the central government and towards the Acehnese people.

GAM's first attempts at subverting the New Order regime were quickly suppressed by the Indonesian military in the late 1970s; however, the guerrillas gained confidence and professionalism following their covert training by Libyan paramilitaries in the mid-1980s. In the late-1980s GAM launched several effective maneuvers against Indonesian military installations in Aceh. Though GAM blamed many problems in Aceh on the strong presence of Mobil Oil Indonesia (MOI) in the ZILS, the corporation's operations were not targeted. (This may be attributed to MOI's hiring of Indonesian military as security guards at the plant's perimeter).

The GAM attacks simultaneously infuriated the New Order regime in Jakarta and worried Mobil Oil representatives in Aceh. As a result, the Indonesian government essentially declared martial law in Aceh, labeling the province a Military Operations Area (Daerah Operasi Militer, or DOM) and launching Operation Red Net; a brutal military campaign aimed at eradicating GAM separatists from Aceh. The declaration of martial law ushered an unprecedented wave of terror into Aceh: Acehnese citizens were intimidated and arbitrarily arrested, tortured, raped, and murdered as the Indonesian army carried out its strategy of "shock therapy" to rid the province of insurgents. Houses were systematically burned to the ground and indigenous Acehnese were forced to form counter-militias to the GAM; joining a counter-militia often entailed beating and torturing members of one's own family. The military's human rights abuses under the DOM trickled off around 1993; however, international human rights and democracy groups regularly reported abuses from 1993 onwards.

In 1998, then-Chief of the Indonesian Armed Forces General Wiranto visited Aceh to officially declare martial law (DOM) over in the province. The euphoria surrounding this announcement was short-lived, as fighting between the GAM and the TNI appeared to increase, rather than decrease, following the announcement. Many have speculated that this increase in fighting did not come from GAM rebels, but from rogue elements hired by the TNI to instigate trouble. The province's appearing unsafe provided the justification for continued TNI presence in the area.

The democratic election of Indonesian president Abdurrahman Wahid, or "Gus Dur" as he is familiarly called, promised reform for the central government's Aceh policy. Laws aimed at decentralizing greater political, economic, and cultural powers to the provinces led some to believe that the conflict between GAM and the central government would eventually be resolved in a peaceful manner. However, these laws have proven particularly difficult to implement and the majority of Acehnese have no faith in the central government that has fed them so many lies in the past. Consequently, the majority of Acehnese people favor independence and have demanded an East Timor-style referendum be conducted in the province. These demands have further exacerbated tensions between GAM and the central government.

The Implications of the Shutdown: Indonesian Economy or Acehnese Freedom?

Exxon Mobil's halt in production has, by default, crippled the operations of PT Arun, and four Indonesian fertilizer firms who were reliant on Exxon Mobil's fuel. This has spelled out even more trouble for Indonesia's already ailing economy. PT Arun has supplied liquefied natural gas (LNG) to nations like South Korea, Japan, and Taiwan uninterrupted since 1971; however, the political strife in Aceh has led the East Asian nations to seek LNG supplies from alternative sources in Malaysia, Australia, and Qatar. Concerned with this development, Indonesian Foreign Minister Alwi Shihab met with U.S. Secretary of State Colin Powell in Washington. Shihab seemed confident after the meeting that the US would support the efforts of the Indonesian police (through reinstated IMET training?) to protect American business interests and maintain the territorial integrity of Indonesia. Nothing more has been forthcoming on US involvement in this issue.

Meanwhile, Pertamina's attempts to convince Exxon Mobil to return to Aceh have been consistently undermined by outbreaks of violence around the oil fields. On March 20, a helicopter carrying Indonesian Minister of Mines and Energy Purnomo Yusgiantoro was shot at during a visit to the PT Arun site. Two days later, more gunfire was again reported near the field. GAM denied responsibility for both incidents, blaming "rogue elements" in the province. In response to these incidents, representatives of the Indonesian central government and GAM met briefly in Banda Aceh, agreeing to establish two "peace zones" within the province from March 22-April 3. The peace zones were Bireuen and North Aceh, where Exxon Mobil's operations happen to be located.

On March 23, Exxon Mobil hinted that the company might declare force majeure on its oil and natural gas contracts, a declaration PT Arun had already toyed with the week before. Pertamina received this news with considerable annoyance, inferring that if Exxon Mobil did not resume operations in Aceh, Pertamina would place their own employees in charge. Exxon Mobil retracted their force majeure statement the next day, but gave no indication as to when they would resume operations at Lhokseumawe. President Wahid, with his usual tact and political savvy, publicly intimated that Exxon Mobil had not ceased production because of security concerns, but rather to negotiate a more lucrative contract with the Indonesian government. Wahid's statement left Pertamina head Baihaki Hakim scrambling for damage control. Baihaki told members of the press that President Wahid had clearly been "misled".

On March 24, Indonesian Vice President Megawati Sukarnoputri met with several high-ranking TNI generals to confer about a "limited military operation" in Aceh. This initial meeting was followed by a second, unscheduled meeting held between Megawati and the generals on April 3. At this meeting, the TNI encouraged Megawati to persuade President Wahid to sign a presidential decree (Inpres 4/2001) declaring that "comprehensive measures" should be used to stop the violence in Aceh.

With the "peace zone" agreement rendered ineffective April 4, U.S. Ambassador to Indonesia Robert Gelbard arrived in Banda Aceh on April 7 to meet with members of GAM. At the meeting, GAM offered to protect Exxon Mobil's operations for the same amount that the corporation pays yearly to Brimob: 5 billion rupiah. The talks ended inconclusively, rendered even more ineffective when a grenade exploded in PT Arun's gas field two days later. The grenade sparked a huge blaze in the field that took over ten hours to extinguish. After a cursory investigation, an Exxon Mobil team determined that the fire was not started by the grenade, but rather by a "mechanical event" that followed a power interruption at the refinery.

Meanwhile, President Wahid waffled on signing Inpres 4/2001, claiming that Aceh-Jakarta relations would be better served by involving an international third-party mediator. However, on April 12 Defense Minister Mahfud MD announced that Wahid had indeed signed the decree, allowing the military and police to restore law and order to Aceh. Wahid assured the general public that "we will not target the wrong people". Nevertheless, several Acehnese protestors gathered in front of the U.S. Embassy in Jakarta demanding that the Inpres be rescinded. These sentiments were echoed by H. Abdullah Puteh, Aceh's governor.

On April 17, Pertamina was finally obliged to declare force majeure on their liquefied natural gas contracts from the PT Arun plant, a move that could not have helped the rupiah's precipitous decline against the dollar. Coincidentally, Exxon Mobil President K.T. Koonce made an official visit to Indonesia the same day. Koonce's "diplomatic visit" hoped to show the world that Exxon Mobil still considers Indonesia a country with great growth potential and a "great place to do business". While this visit may have been informed by the troubles in Aceh, more likely Exxon Mobil was more concerned with finalizing some contentious negotiations on building a new refinery in Cepu, on the island of Java. As of this writing, the Exxon Mobil refineries in North Aceh remain closed, and the Indonesian military is poised to re-enter the province to restore the requisite "law and order" to convince Exxon Mobil to resume operations. Hopefully, the new military operations will not hearken back to the last time Mobil Oil expressed concern: in 1989, shortly before the implementation of the DOM.

3. Duration: 1976-now

Aceh has a long history of resistance against state rule; however, the conflict between GAM rebels and the central government dates from 1976-present.

4. Location

Continent: Asia

Region: Southeast Asia

Country: Indonesia (Aceh)

5. Actors

Indonesia-specifically Indonesian Armed Forces (TNI), Kopassus (Indonesian Red Berets), Brimob (Indonesian Mobile Brigade), Free Aceh Movement (GAM), Mobil Oil Indonesia (MOI); later renamed Exxon Mobil Indonesia.

II. Environment Aspects

6. Type of Environmental Problem

Pollution Land

As was mentioned above (see no.2), the formation of the Lhok Seumawe Industrial Zone (ZILS) has brought the Acehnese people more harm than good. A key detriment of the ZILS has been large-scale pollution of both land and water. For example, in mid-1991, 60 percent of Acehnese fishermen were discovered to be living below the poverty line. Further investigation revealed that these conditions were attributable to the decreasing size of fish catches due to the dumping of the ZILS' industrial pollution into the local waters. One case documenting this pollution involved an underground pipeline carrying waste from the PT Iskandar Muda fertilizer factory to the sea. The pipeline "fractured at its seaward end, discharging viscous yellow liquid onto the shore and into the surrounding waters". Before the fracture, local residents had had no idea that the pipeline ran so close to their homes. In 1991, Mobil Oil Indonesia (MOI)'s chemical waste was also deemed responsible for water pollution: MOI had been discovered discharging industrial waste into public drainage channels, an act that led to the destruction of dozens of hectares of shrimp and fish ponds owned by 240 Acehnese farmers.

Acehnese have also suffered as a result of airborne pollution produced in the ZILS. The fertilizer factories located in the ZILS were known to regularly leak noxious ammonia gas into the atmosphere, causing hundreds of Acehnese villagers to seek treatment for respiratory ailments. The head of the ASEAN Aceh Fertilizer Clinic, located within the ZILS, reported in 1992 that 68 percent of children treated at the facility had contracted respiratory diseases-an alarming figure. The Indonesian Legal Aid Institute and the Indonesian Environmental Forum attempted to sue the ZILS companies on behalf of the afflicted Acehnese families; however, New Order repression and the corrupt Indonesian legal system precluded any meaningful actions from being taken. Indonesian environmental NGOs, while noble in intent, have unfortunately had neither the material and human resources nor the power base to affect real change.

Forced Land Appropriation and Migration/Overpopulation Difficulties The development of the ZILS necessitated the forced appropriation of land, which in turn demanded the forced relocation of Acehnese families. Many of the relocated families have had considerable difficulty adjusting to their new environments and finding meaningful employment in their new areas. For example, when the ASEAN Aceh Fertilizer plant was constructed within the ZILS, over 400 families had to be resettled in another part of Aceh. This resettlement site ultimately ended up deserted: either the villagers could not adjust to a new lifestyle, or they realized that new land promised to them by the government was not to be delivered.

Some resettled Acehnese denied their traditional ways of earning a living attempted to find work with the newly installed companies located within the ZILS. However, these jobs have tended to be low-skill temporary positions. Jobs requiring greater skills and training have often been filled by migrants from outside of Aceh, primarily from the island of Java. In the first years of ZILS development, the lure of employment brought thousands of migrants to North Aceh, straining the area's ability to accommodate the population increase. Population figures from the 1970s and 1980s demonstrate the magnitude of this increase: between 1974 and 1987, the population of North Aceh (where the ZILS is located) increased by almost 50 percent. In the three subdistricts at the center of the ZILS, population increased by 300 percent during the same period. This massive inflow of migrants has not only taxed the provinces already-deficient village infrastructure (water supply, power supply, sanitation, etc.), but has also encouraged inter-ethnic tension between native Acehnese and the "outside" ethnic groups competing for jobs within the zone.

7. Type of Habitat: Tropical

8. Act and Harm Sites:

Indonesia (Aceh)

III. Conflict Aspects

9. Type of Conflict: Civil

Acehnese guerrilla insurgency and counter-insurgency movement launched by Indonesian military.

10. Level of Conflict


11. Fatality Level of Dispute (military and civilian fatalities)

6,000 dead during the DOM period.

IV. Environment and Conflict Overlap

12. Environment-Conflict Link and Dynamics:

While elements in Acehnese society have previously demanded independence from Jakarta based on religious and/or cultural issues, the Free Aceh Movement (GAM) appears to have directly sprung from the inequitable economic, social, and environmental conditions engendered by the development of the ZILS-an endeavor spearheaded by the Indonesian central government and Mobil Oil corporation.

13. Level of Strategic Interest

National, Regional

14. Outcome of Dispute:

Several attempts have been made to breach a peace between the Indonesian central government and the Free Aceh Movement. Several "humanitarian pauses" have been brokered through the Henri Dunant Mediation Centre in Geneva, Switzerland, but these agreements have seldom been maintained in Aceh. Unfortunately, pinpointing the instigators of violence in Aceh often proves problematic. As was mentioned earlier, the TNI has often been accused of instigating trouble in Aceh and blaming it on GAM rebels; this tactic justifies continued TNI presence (and repression) in the province. Sometimes GAM rebels are, in fact, to blame. Yet other violent instances can be traced to rogue criminal elements within Acehnese society who have exploited the tension between GAM and TNI as a "front" for their own mercenary operations.

Whatever the case, the situation in Aceh has remained volatile enough to convince Mobil Oil Indonesia (now Exxon Mobil) to shut down their operations in the ZILS until "security" is restored to the province. The Exxon Mobil shutdown has proven disastrous for the ailing Indonesian economy, and has implications not only for the Wahid government, but also for Japan, South Korea, and Taiwan-countries that all rely on Indonesian LNG to make up their energy supplies.

V. Related Information and Sources

15. Related ICE and TED Cases




16. Relevant Websites and Literature

Aceh Links

International Forum for Aceh

Tapol, The Indonesian Human Rights Campaign

Aceh and Mobil Oil

Hasan Di Tiro's Declaration of Aceh-Sumatra Independence

After Ogoniland, Will It Be The Turn of Aceh? By George Aditjondro

Business Week Article: What Did Mobil Know?

Mobil Sees Its Gas Plant Become Rallying Point for Indonesian Rebels By Jay Solomon, Wall Street Journal

CorpWatch: Indonesia: NGOs Implicate Mobil in Aceh

The Atjeh Times

U.S. Committee for Refugees: Political History of Aceh

Indonesia Human Rights Network

Amnesty International: Indonesia and East Timor Country Page

Human Rights Watch: Aceh Page

Exxon Mobil Homepage

December, 2000