FREEPORT AND THE CRISIS OF MULTINATIONAL COMPANIES

First published in The Jakarta Post, March 9, 2006

FREEPORT AND MNC CRISIS

Alpha Amirrachman, Serang, Banten

Local miners, armed with bows and arrows, clashed with security guards, soldiers and police after they sifted through PT Freeport Indonesia's tailings in Papua (The Jakarta Post, Feb. 27, 2006). It is not unusual for a multinational company operating in a developing country to be embroiled in conflict over environmental degradation. While 77 percent of U.S. companies -- many of them have grown into multinational ones -- have a formal system in place to proactively identify key environmental issues, the attack on Freeport in Papua certainly reveals a sad story.

Freeport arrived in Indonesia in 1967, before the government under Soeharto formulated the foreign joint-investment law, enabling the U.S. gold and copper mining company to hold a wholly-owned subsidiary. The company has amassed incredible wealth from its operation. It has been accused of polluting Otomona River, by constantly dumping crude copper tailings into Ajika River. Environmental groups have revealed that around 420 square kilometers of the area surrounding the company has been environmentally damaged.

From an organizational point of view, the clash between local Papuans and the mining giant should be regarded as the failure of a modern organization to deal humanely with marginalized people. Due to the incident, the discourse on the concept of a postmodern organization has come to the fore as it has failed to achieve its initial noble objective of leading human beings to a more humane, advanced and civilized society. However, the notion of postmodern organization itself is not unproblematic.

While postmodern organization is often seen as an antithesis of modern organization which is believed to be more environmentally friendly and flexible, with continuous education and empowerment and greater participation of marginalized groups within and outside the organization, there has not been a fixed definition of postmodernism. Likewise, postmodernism hypercritical of modernism and its insistence on abandoning the latter has been criticized, too, as Schmidt (1994) asserts that "modernism is a continuum and it must be reflected, cannot be abandoned."

Despite its perceived greater flexibility and noble objectives, there is still doubt that the "less authoritative" postmodern organization could have a concrete and effective agenda to impose an education that could empower individuals and to deal with the issues of the minority. The attempt of the defenders of postmodern organization to revoke authority is debatable, as it is unthinkable that an organization can effectively operate without having authority. Perhaps, what an organization needs is a more humane, sensitive, flexible and accountable type of authority exercised by democratic leadership. What is clear is that the emergence of postmodern organization has given a fresh catalyst to conduct a critical evaluation of modern multinational companies.

So how do we see postmodern organizations? There seems to be two schools of thought here. First is to regard this as a totally different form of organization that views itself as an antithesis of the classical modern organization. Second, is to look at this phenomenon as a continuous and gradual process of evolution of a contemporary organization into something more humane. Therefore a middle path is sought for compromise.

Equally important, this discourse on postmodern organization should be seen as a reflection of the success and failure of the modern organization in the ongoing quest toward the betterment of any organization. So can this quest help multinational companies to sensitively and comprehensively deal with the issues of local people? It is clear that the continuous transfer of knowledge, honest dialog, just and transparent empowerment programs, and tangible mutual collaboration between multinational companies such as Freeport and indigenous people within and outside the organization in inevitable.

Multinational companies should show their moral determination to ultimately return most of their privileges to the local people who are now still incapable due to the lack of knowledge, know-how and technology. Otherwise, local people would be increasingly marginalized, the environment would further deteriorate, and multinational companies would grow into a serious threat to civilization.

The Freeport row would not have occurred without the complicity of the elite groups of the country, both civilian and military, who have long benefited from the exploitation of Papua's natural resources. They too should abandon their personal greed, put pressure on Freeport and generate the maximum benefit for the development of the local people.

The writer is lecturer at Sultan Ageng Tirtayasa State University (Untirta) in Banten and a researcher at the International Center for Islam and Pluralism (ICIP).