Wahid Wavers Between Western Oil Alliances and Asian Unity (fwd)

["M.G.G. Pillai" <pillai@mgg.pc.my>]

---------- Forwarded message ----------
Date: 04 Mar 2000 13:07:14
From: tapol@gn.apc.org
Reply-To: "Conference act.indonesia" <indonesia-act@igc.org>
To: Recipients of indonesia-act <indonesia-act@igc.org>
Subject: Wahid Wavers Between Western Oil Alliances and Asian Unity

From: TAPOL <tapol@gn.apc.org>
Subject: Wahid Wavers Between Western Oil Alliances and Asian Unity

Received from Joyo Indonesian News

Stratfor Commentary
March 2, 2000

Wahid Wavers Between Western Oil Alliances and Asian Unity

Indonesian President Abdurrahman Wahid has the Herculean task of finding 
sufficient sources of foreign joint-venture investment to bolster Indonesia's 
troubled economy. In the oil sector, he appears both willing to court wealthy 
Western multinationals and to follow a trend toward Asian unity and 
self-reliance. Ultimately, political necessity may orient him more squarely 
toward Asia.

Two events this week highlight Wahid's dual interest. Both involve 
state-owned oil company Pertamina. Wahid sought Brunei and Malaysia’s 
cooperation in exploiting and funding "oil resources and the expensive 
technology involved," but also appointed a new company president, Baihaki 
Hakim, an Indonesian who many Pertamina officials consider "too westernized," 
reported the Jakarta Post. Baihaki is the former president of American oil 
company Caltex Pacific Indonesia.

Wahid appears willing to bargain with Western oil companies in hopes of 
improving Pertamina's profitability and the size of Indonesia's oil take in 
general. He likely appointed Baihaki with foreign executives in mind. Caltex, 
Baihaki’s former company, is now squabbling with Pertamina over control of an 
oil field in Riau. The appointment accomplishes two things. First, it gives 
Caltex a better bargaining position. Second, it may convince Caltex that with 
more trustworthy management, Pertamina will soon become a more reliable 
business partner.

Yet while Wahid seems interested in partnering Pertamina with Western 
companies, he has conspicuously avoided pursuing U.S. and Australian 
investment. In fact, Wahid seems more interested in focusing his efforts on 
relations within the region than abroad. When he suggested that Indonesia, 
Malaysia and Brunei cooperate on oil, he stressed the importance of their 
"similar heritages." More significantly, Wahid has pursued a close 
relationship with Malaysian Prime Minister Mahathir Mohamad, the most 
outspoken advocate of Asian unity and more importantly of the "Asian economic 
model," which rejects Western-mandated reforms of banking, finance and 
corporate reporting practices. The two leaders will meet in Jakarta in early 
March.

For now, the dual strategy has not caused significant political damage to 
Wahid. However, his choice for Pertamina's new president has drawn some heat 
that may signal potential for future backlash. Irwan Prayitno, head of a 
legislative commission on mines and energy, has accused Wahid of using the 
appointment to pander to American interests. The Indonesian Association of 
Mining Experts has also criticized the choice. Many Indonesians in the 
central government and in the provinces see the giant Western multinationals 
as domineering and exploitative. Pressure to oust them ­ or at least play 
hardball in negotiations ­ will likely grow.

Pursuing investment outside of Asia could pose another problem: Partnerships 
with Western companies may force Wahid to dig deeper into government 
corruption than the country can bear. Pertamina, for example, is infamous for 
the corruption and mismanagement that has racked up more than $4.7 billion in 
losses, according to Price Waterhouse Coopers. Western firms expect more 
transparency in business deals than do Asian firms. Such demands could push 
Wahid to take his anti-corruption campaign too far, too fast, provoking 
backlash from the many officials who still profit from Suharto's kleptocracy. 
At that point Wahid may abandon his dual strategy and set his sights on Asia.

 

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TAPOL, the Indonesia Human Rights Campaign
111 Northwood Road, Thornton Heath,
Surrey CR7 8HW, UK
Phone: 0181 771-2904   Fax: 0181 653-0322
email: tapol@gn.apc.org
Internet: www.gn.apc.org/tapol
Campaigning to expose human rights violations in
Indonesia, East Timor, West Papua and Aceh

26 years - and still going strong 
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