Pillage in the Pacific

by David Minkow and Colleen Murphy-Dunning

 MORESBY, PAPUA NEW GUINEA - Outsiders didn't discover Papua New Guinea (PNG) until the sixteenth century and didn't begin developing this lush, mountainous country until the nineteenth. But foreign companies, realizing the opportunity to exploit one of the world's last great natural treasures, are making up for lost time: they are well on their way to destroying Southeast Asia's largest remaining rainforest, as well as more than 700 distinct cultures.

 These multinational corporations - among them Amoco, CRA and Chevron - are operating with the approval of the PNG government. A crippling foreign debt of $2.5 billion has driven the government to trade the country's natural resources for short-term and short-sighted gains. Raw materials such as minerals, timber and oil account for almost all of the country's export earnings.

 "The interests of our people are paramount and any decision to conserve forests must be weighed against their need for development," Forests Minister Jack Genia once rationalized.

 Fed unrealistic and often unrealized promises by multinational companies and their government, the people of PNG have been persuaded to sell off their resources and livelihoods.

PNG's robber baron era

 The PNG government has developed stringent environmental and social standards for foreign investors, but it is so dependent on earnings from resource extraction that it often makes exceptions to the rules, and its primary efforts are devoted to attracting foreign investment. In October 1991, for example, the PNG government hosted a series of seminars in Canada and the United States for potential investors interested in developing PNG's mineral and petroleum resources. The government hoped to restore investor confidence in the country, which has been shaken by a series of violent attacks by local residents on large-scale development projects. The investors are largely responsible for these reactions, having ignored the needs and ways of the local PNG people.

 PNG's unique land tenure system - local clans own 97 percent of the land communally - contrasts dramatically with the highly unequal land distribution patterns found throughout much of the Third World. Communal ownership could provide the foundation for genuine sustainable development, based primarily on people producing food and goods for their own needs. Instead of taking advantage of the land tenure system, however, the PNG government has encouraged landowners to form landowner associations, organizations which can enter into contractual agreements with multinationals. Through the Timber Rights Purchase process, the government negotiates with the landowners on behalf of interested corporations; the government then strikes its own deal with the companies, so that both the association and the government receive royalties from the corporations.

The process is rife with abuse. In 1987, the government asked Judge Thomas Barnett (an Australian by birth but a long time PNG national) to oversee a commission of inquiry into the timber industry. The Barnett Inquiry found that Japanese companies, which comprise 90 percent of the timber industry in PNG, had bribed PNG officials to allow them to export more logs than was contractually permitted. In addition to cheating landowners of royalties and benefits, these companies defrauded the government of timber royalties, export duties and tax revenues.

 "It would be fair to say, of some of the companies, that they are now roaming the countryside with the self-assurance of robber barons: bribing politicians and leaders, creating social disharmony and ignoring laws in order to gain access to, rip out and export the last remnants of the province's valuable timber," the Inquiry concluded. "It downgrades Papua New Guinea's sovereign status that such rapacious foreign exploitation has been allowed to continue with such devastating effects on the social and physical environment, and with so few positive benefits." The Inquiry resulted in the resignation of Deputy Prime Minister Ted Diro, who was found guilty of 86 counts of corruption and other misconduct.

 In July 1990, the subject of increasing international attention, PNG placed a two- year ban on new logging permits.

Yet logging on PNG is accelerating. Understaffed, underfunded and undermined by corruption, the PNG government has made many exceptions to the moratorium. The government has also allowed companies found guilty by the Barnett Inquiry of violating agreements and PNG law to continue to operate, under new names.

 Yalaum Mosol, a spokesperson for the Bemal village in Madang, describes the effects of unchecked logging in his region. Japan and New Guinea Timbers (JANT), a wholly owned subsidiary of the Japanese Honshu Paper, has been clearcutting for pulp in the Madang area. "We have no water to wash in, and hardly any water to drink that is not polluted. We have no good ground left on which to grow food. We have no mushroom ground, no good trees for fruit, no clay-pot ground. Our secret places and wild animals are gone, and all our ancient big trees are being destroyed."

 Poorly compensated for the destruction of their way of life, frustrated PNG citizens have resorted to taking matters into their own hands.

Bougainville: worst-case scenario

 The closing of a mine which polluted the environment and was operated by a company that ignored the needs of local people sounds like a complete victory for both the environment and the local people. But it is much more complicated than that.

 What has happened on Bougainville Island, a coastal island 500 miles northeast of PNG and home to the Panguna copper and gold mine, is a tragedy.

 From 1972 to 1989, CRA, a subsidiary of the British mining giant Rio Tinto Zinc Corporation, discharged mine tailings directly into the Jaba and Kawerong rivers, killing most aquatic life. In some places, waste rock raised the Jaba River bed by 40 meters.

The PNG government allowed this to happen, ignoring a long list of the landowners' grievances. The landowners were upset that they received less than 1 percent of mining profits, while the government got 58 percent. In 1988, the landowners demanded that CRA agree to renegotiate the Bougainville Copper Mining Agreement, which included a provision calling for review every seven years. The landowners also demanded $11.5 billion for environmental and social damages.

 After waiting a year for a response, mine employee Francis Ona formed the Bougainville Revolutionary Army (BRA), which waged a bloody sabotage campaign against the mine. At the end of 1989, CRA closed Panguna.

 The PNG government responded harshly to the BRA, since the Panguna closing has deprived the country of 40 percent of its export revenues.

In 1989 and 1990, PNG military forces destroyed thousands of Bougainville village homes and commited widespread human rights violations. In March 1990, the PNG government withdrew its military forces as well as all government service providers. In April 1990, PNG imposed a total embargo on all medical and other supplies destined for Bougainville. Bougainville representatives claim thousands have died as a result.

In May 1990, Bougainville declared independence, but PNG refuses to recognize the declaration. PNG subsequently attempted to reinvade the island, and now maintains military control over its northern tip. The embargo continues.

There is talk of reopening the mine, but it would take an estimated 2 years and 300 million Kina (1 Kina = US$1.05) to do it.

The lost Bougainville revenues have severely affected PNG's finances, compelling the government to step up other projects and devalue the Kina by 10 percent.

Chevron: false savior

 The PNG government is banking on the Kutubu oil project, run by San Francisco- based Chevron, to help make up for the Bougainville loss. Chevron expects this venture to produce 170 million barrels of oil over a 10-year period.

The project site is located in a pristine area near Lake Kutubu, a region that was first reached by foreigners in 1936. Chevron expects to spend about $1.4 billion before the project extracts any oil. The Kutubu project includes construction of a 163-mile-long pipeline, which extends through one of the largest expanses of mangroves in the world, a tanker-loading buoy, a mile-long airstrip, a 65-mile road and a network of roads from the well sites to the central processing facility.

The government requires investors to prepare environmental impact statements for potential projects, but George Marshall, director of the London Rainforest Action Group, criticizes Chevron's statement. "The chances of a major accident are suspiciously played down. ... Were there to be a major accident, neither the company nor the government have the facilities to deal with it," Marshall says.

 The landowners are seeking higher royalties from the government; they are currently receiving only .31 percent of the well-head value. They also complain that Chevron has not met its promises to provide roads, jobs, tree compensation, schools and health facilities.

 A leader from Wasemi village says, "We've just about had it. We want our services before Chevron pumps out oil." Fears of Bougainville-like disruptions have prompted security measures at the project site.

 Environmentalists, both in and outside of PNG, are calling for an independent environmental impact assessment that examines the potential impact of pipeline leaks from Chevron's project. They fear recurrences of "unforeseen" environmental catastrophes associated with past development projects in PNG.

Ok Tedi is not okay

 One of those projects is the Ok Tedi mine, located near the Irian Jaya border. A 1989 landslide destroyed a temporary tailings dam that prevented the release of waste rock from the mine into the Ok Tedi River. Ok Tedi Mining Limited (OTML), which operates the mine, contends that it does not make economic sense to build another dam in such an unstable area, so the company now dumps 80,000 tons of sediment into the river each day. OTML is jointly owned by U.S.-based Amoco (30 percent), the Australian Broken Hill Proprietors (30 percent), the PNG government (20 percent) and a German consortium (Degussa - 7.5 percent, Metallgesellschaft - 7.5 percent and the German government - 5 percent).

Periodic flooding has deposited sediment loads that are contaminated with heavy metals onto the river banks, making them unsuitable for farming. OTML officials admit that Ok Tedi River water is too polluted for consumption and are trying to provide alternative water supplies. Even worse, OTML has twice spilled large quantities of sodium cyanide into the water.

The government has discouraged opposition to the project. For example, when the Wau Ecology Institute, a local environmental group, brought a case against Ok Tedi to the Amsterdam-based International Water Tribunal earlier this year, the PNG government responded by denying research visas to visiting scientists. Foreign Affairs Minister Michael Somare warned Institute Director Harry Sakulas "to stick to research, and immediately desist from any environmental activism."

 The International Water Tribunal recommended that OTML study the mine's long- term social and environmental effects and find a safe way to store and treat the wastes. The Tribunal concluded, "If no such storage or no cost-effective storage is feasible, the jury believes that the externalized costs of the project grossly exceed the benefits and, consequently, the activities of OTML should be phased out."

 The Tribunal also concluded that the mine's foreign shareholders should ensure that OTML meets environmental standards comparable to those in their home countries, as well as those appropriate to the Ok Tedi region.

 A German parliamentary delegation has called upon the German Government to sell its 5 percent stake in OTML because of pollution from the mine.

 As part owner of the mine, the PNG government has an inherent conflict of interest in policing the operation. The Tribunal recommended that monitoring compliance with environmental regulations be done by a state institution not involved in managing the mine, not, as is currently the case, by the Department of Mines.

 The situation in Ok Tedi is volatile. Taking a cue from Bougainville, landowners have staged protests which have closed down the Ok Tedi mine several times. But OTML is increasing its output of copper and silver at the encouragement of the PNG government, which is still struggling to make up for losses at Bougainville.

What now?

 As is the case throughout the Third World, the options for economic betterment in PNG through conventional means appear depressingly few. Jean Eapro of the Melanesian Solidarity Group for a Nuclear Free and Independent Pacific says, "My people have no choices. They can choose between the big logging companies - with all their short-term benefits and long-term destruction - or nothing."

 But the choices available to PNG citizens are becoming less grim, as the National Alliance of Non-Governmental Organizations begins to have an impact on national policy. Many groups in the alliance are working to raise landowner awareness of environmental threats and promote sustainable development alternatives.

 The wokabout somill, a PNG-devised portable sawmill, may hold the key to developing a sustainable logging system in PNG. Manufactured by the PNG-based Village Development Trust, the relatively small wokabout somill - in combination with PNG's communal land tenure system - makes small-scale, community- based logging feasible, enabling local people to use and profit from local resources while preserving forests' ongoing viability. And, because the wokabout somill allows operators to mill a tree right where it is cut, it makes unnecessary the construction of the massive roads which are often used to transport raw logs - and which often leads to logging of previously inaccessible areas.

The development of non-timber forest products, farming of insects, traditional crafts and ecologically oriented tourism are other alternatives to traditional development schemes.

 "From our perspective," says Lafcadio Cortesi, a PNG campaigner for Greenpeace International in San Francisco, "it is locally based initiatives that will lead to genuine development, rather than the initiatives of transnationals or the pre-determined spin-off opportunities created by resource extractive projects."



The Grass isn't greener on the other side

THE ENVIRONMENTAL OUTLOOK for Papua New Guinea is good compared to prospects for the western side of New Guinea island, claimed by Indonesia as the province of Irian Jaya.

 The Indonesian government has been less responsive to internal and international pressure to address environmental concerns than the PNG government. Its "Go East" policy encourages multinationals to invest in Irian Jaya and other eastern Indonesian islands. To encourage this investment, the government has relaxed environmental requirements. Martha Belcher, who has spent years working in Indonesia with Indonesian and Irianese non-governmental organizations and is currently with the San Francisco- based Rainforest Action Network, says, "Irianese people feel threatened by the ęGo East' policy because they suffer from the environmental and social consequences of large-scale development projects without any true economic benefit to their province."

 One long-time exploiter of Irian Jaya is Freeport McMoran, a U.S.-based mining company which has operated the Mt. Ertsberg gold, silver and copper mine under a veil of secrecy for 20 years [see Rich Land, Poor People," Multinational Monitor, October 1990 ].

Freeport's activities have long had a devastating impact on the Amungme, an indigenous group whose traditional hunting ground overlaps with part of the company's mining complex. In the 1970s, the Amungme sabotaged Freeport's operations, leading to vicious government retribution. Many Amungme became ill as a result of living in new climates and new poverty after they were resettled away from the area of Tembagapura, the company town.

 According to an ex-employee of Freeport, who recently left a high-level position in Irian Jaya and requests anonymity, Freeport continues to abuse and displace local indigenous peoples. The former employee reports that the Amungme continue to settle around Tembagapura, and that Freeport continues to periodically move them north of the bordering mountains.

 In 1988, according to the former employee, Freeport moved a nearby lower-Waa village of 1,000 people to the coastal lowlands. In one month alone, 38 people died from malaria. Demonstrating callous disrespect for the indigenous people, Freeport employees made room for town expansion by unearthing and moving about 50 corpses from the lower-Waa cemetery. The same thing happened at upper-Waa, but some indigenous people from that village returned and rebuilt their homes, prompting Freeport's Government Relations Office to call in security forces. According to witnesses, the forces burned down a hut, killing one man. An Irianese environmental organization recently demanded an investigation of this and other human rights abuses.

 Freeport has also seriously damaged the region's environment. After many years of silence, the corporation recently admitted that its Mt. Ertsberg operations have caused extensive downstream pollution in three rivers. Because the water has been contaminated, Freeport gave 78 drums to families to catch rainwater for drinking. Freeport Environment Manager Bruce March has told people living in the Koperapoke area to stop consuming sago, their staple food, since it too has been contaminated by pollution from the mining operation.

 In July 1991, following a 1990 meeting with the company, environmentalists conducted a site visit of Freeport's operations. With only two days to inspect the site, the visiting team could not undertake an in-depth study of the environmental and social impacts of the corporation's operations. Environmentalists hoped this visit would be the first step in a long process of monitoring, but Freeport has been unwilling to grant a second, more substantial site visit.

 Freeport is now moving on to exploit the largest proven deposit of gold in the world at Mt. Grasberg, where it expects to mine a record 57,000 tons of ore daily. Due to the magnitude of the new operation, Grasberg will likely have an even more severe environmental and social impact than the Ertsberg mine.

 The opening of Freeport's Grasberg mining operation coincides with the launching of a public relations campaign to bolster the company's international image. In 1990, after 19 years of production, Freeport opened a small environmental department for its Irian Jaya mining operations. The company also hired Ogilvy & Mather, one of the world's largest public relations firms.

 - D.M. & C.M.-D.