Energy Compass January 28, 2005
Indonesia: Aceh devastation could spur peace
By Christian Schmollinger, Singapore
An estimated 225,000 Indonesians died in the earthquake and tsunami that devastated countries ringing the Indian Ocean on Dec. 26 (EC Jan.7,p11). Aceh, on the northwestern tip of Sumatra, was particularly badly hit, since it was closest to the epicenter. But out of the worst natural disaster in living memory could spring some good, with the Indonesian government apparently getting serious about negotiating an end to a 30-year insurgency that has claimed an estimated 12,000 lives and deterred investment in gas-rich Aceh. Both sides have been down this road before, but a recent change of government in Jakarta and the international spotlight thrown on Aceh have created hope that peace talks will succeed this time round.
Rebels have been fighting for sovereignty since Indonesia gained independence from the Netherlands in 1949, but the current phase of the conflict began with the creation of the Free Aceh Movement (GAM) in 1976. After a peace deal brokered in December 2002 collapsed six months later, former President Megawati Sukarnoputri closed the province to outsiders as she launched the biggest military campaign since the invasion of East Timor in 1975.
Since his inauguration in October 2004, Megawati's successor, Susilo Bambang Yudhoyono, has trodden more softly (EC Dec.17,p11). His latest move is to send three top ministers to Finland for talksscheduled on Jan. 28 with the exiled Aceh leadership. James Van Zorge, a partner in Van Zorge, Heffernan and Associates, a political risk firm in Indonesia, cautions that some elements of the military have profited from the war, so might not want it to end. But as Indonesian expert Kevin O'Rourke points out, Yudhoyono, a former general, should be able to exert control over the military. He, like Van Zorge, believes GAM is looking for a change. "GAM has every incentive to forge a peace accord," Van Zorge says, since the Acehnese need outside help to recover from the disaster.
Since neither the military nor government backs an independent Aceh, the best GAM can probably hope for is a ceasefire and the promise of some autonomy. Under the 2002 peace plan, Aceh was promised free elections and a partly autonomous government, but it fell apart when the rebels failed to disarm and the Indonesian military didn't withdraw.
A permanent ceasefire could lure back more energy investors. Right now, the only active energy project is Exxon Mobil's liquefied natural gas export facility at Arun. Declining output from the gas fields feeding Arun has halved exports, a trend exacerbated by the diversion of gas to nearby fertilizer factories. Development of the offshore Block A, estimated to hold 500 billion cubic feet of gas, could revive Arun's flagging production. But neither Exxon nor ConocoPhillips, which hold rights to the field, has shown interest in proceeding, citing the unrest, though they may be using the field as a bargaining chip in other tussles with the government. But even with a peace accord, no one expects investors to flock back anytime soon.
The US response to the disaster could bring the two countries closer. Washington sent ships and helicopters to ferry supplies, while deputy defense secretary Paul Wolfowitz, a former US ambassador to Indonesia, met with Indonesian officials. Wolfowitz's visit suggests that the US is trying to reengage Indonesia, the world's most populous Muslim country and Opec's only Asian member, as part of the war on terror. It may pave the way for a bigger US presence in the region, especially in the Strait of Malacca, the narrow stretch of water between Indonesia and Malaysia through which around half the world's oil passes, amid fears of a terrorist attack.
Both Indonesia and Malaysia denied the American navy permission to patrol the strait earlier this year, instead beginning naval patrols with Singapore (EC Jul.2,p12). After Wolfowitz's visit, the US navy sent a survey ship to map the strait, ostensibly to see whether the earthquake had changed the sea floor. According to security analysts GlobalSecurity.org, the class of ship used for the survey -- the USNS John McDonnell -- provides data "that helps to improve technology in undersea warfare and enemy ship detection."
Some hope the tsunami may have rid the straits of the pirates who have plagued it for centuries. Since Dec. 26, the International Maritime Bureau has reported not a single incident after a surge in piracy through 2004. The PRC's Noel Choong says the tsunami may have killed the pirates or destroyed their boats, or they may simply be lying low. "After six months with no attacks," he says, "then maybe we can say they were affected."
© Copyright 2005, Energy Intelligence Group, Inc.
