VZCZCXRO5376
RR RUEHCHI RUEHFK RUEHHM RUEHKSO RUEHPB
DE RUEHJA #3690/01 0810040
ZNY CCCCC ZZH
R 220040Z MAR 06 ZDS
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 1498
INFO RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION COLLECTIVE
RUEHBY/AMEMBASSY CANBERRA 9252
RUEHJA/AMCONSUL SURABAYA 1299
RHMFISS/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC

C O N F I D E N T I A L SECTION 01 OF 02 JAKARTA 003690 
 
SIPDIS 
 
NOFORN 
SIPDIS 
 
C O R R E C T E D  C O P Y(ADDED CLASSIFIED BY) 
 
E.O. 12958: DECL: 03/27/2016 
TAGS: ECON EMIN ENIV PGOV ASEC ID
SUBJECT: FREEPORT SEES LOOSE-KNIT GROUP BEHIND PAPUA 
PROTESTS 
 
REF: A. A. JAKARTA 03484 (TENSION HIGH IN ABEPURA) 
 
     ¶B. B. JAKARTA 03404 (DEMONSTRATIONS TURN VIOLENT) 
     ¶C. C. JAKARTA 02492 (FREEPORT MINE CLOSED BY 
        ILLEGAL MINERS) 
Classified by Econ Officer Kurt van der Walde for reasons 1.4 (b) and 
(d) 
 ¶1. (C/NF) Summary.  Calm returned to the Indonesian province 
of Papua over the March 18-19 weekend following the deaths of 
four security officials during a March 16 rampage by 
anti-mining protestors.  A disparate group of political and 
economic actors with varied agendas use anti-Freeport 
sentiment to fuel their pursuit of political power or 
 
JAKARTA 00003690  001.2 OF 002 
 
economic profit, according to PT Freeport President Director 
Adrianto Machribie, who briefed the Ambassador, March 20. 
Machribie described recent protests at ExxonMobil,s Cepu 
site and the weekend destruction of a Newmont Mining company 
exploration camp on the island of Sumbawa as a continuation 
of this possibly orchestrated backlash against Western 
investors.  The Ambassador and Machribie agreed to explore 
whether the GOI might create an independent body, similar to 
the Agency for Reconstruction and Rehabilitation (BRR) in 
Aceh, to administer at least some of the Special Autonomy 
monies paid by Freeport.  End Summary. 
 
¶2.  (C/NF) Calm returned to the Indonesian province of Papua 
over the March 18-19 weekend following the killing of four 
security officials on March 16 during a rampage by 
anti-Freeport protestors.  Police have made 14 arrests and 
questioned more than 80 in connection with the violence, 
according to news reports.  President Susilo Bambang 
Yudhoyono has called for calm in the restive province. 
Security Coordinating Minister Widodo replaced the police 
commander in Jayapura, which seems to have lowered the 
tension in the provincial capital.  The deaths of the 
security officials at the hands of protestors culminated a 
series of protests throughout the country which ignited when 
illegal local miners began a blockade of the Freeport 
facility at milepost 74 on February 22.  The illegal miners 
continue to protest for increased economic benefits, 
including the right to sift the Freeport mine tailings in 
search of trace gold and access to Freeport community 
development funds, according to Freeport. 
 
Freeport: Disparate Group Behind Protests 
----------------------------------------- 
 
¶3.  (C/NF) Protests around the country--in Jakarta, Manado, 
Northern Sulawesi and the Papuan provincial capital Jayapura 
as well as the violent attack on the Sheraton Hotel in Timika 
near the Freeport mine Checkpoint 1--result from a disparate 
group of economic and political actors seeking power or 
economic enrichment or both, according to Machribie.  He 
said, however, that Freeport and the GOI still are trying to 
figure out who provides leadership and resources to the 
protests. 
 
¶4. (C/NF) Machribie speculated that several streams appear 
leading and feeding resources to the protests.  First, former 
presidential candidate and past speaker of the People,s 
Consultative Assembly (MPR) Amien Rais seems to see fomenting 
ultra-nationalist sentiment as a way of unifying his National 
Mandate (PAN) political party behind him as he prepares to 
make another run at the presidency in 2009.  Machribie did 
not accuse Rais of inciting the violence, only that he used 
it opportunistically.  He said PAN had split before Rais 
began his most recent round of attacks in the beginning of 
the year, but it now seems firmly behind him.  Machribie 
added that the Muslim-based United Development Party (PPP) 
recently issued a statement that condemned Rais indirectly 
and called on all parties to show restraint in the wake of 
the anti-mining protests. 
 
Jakarta Elite Want a Stake on the Cheap 
--------------------------------------- 
 
¶5.  (C/NF) The second stream feeding the protests, according 
to Machribie, seems to flow from the Jakarta politica lite 
whohpe t use the tumult to make a tidy short-term profit 
on PTFI shares, or better yet to gain a sizeable chunk of the 
company on the cheap.  Machribie showed the Ambassador a 
letter to Freeport-McMoRan written on behalf of local 
businessman Peter Sondakh.  Sondakh offered to purchase a 
significant, non-controlling share of PTFI equity.  Machribie 
speculated that Sondakh might represent the interests of 
Coordinating Minister for Peoples, Welfare Aburzial Bakrie 
and Vice President Jusuf Kalla. 
 
¶6. (C/NF) Machribie said Sondakh,s offer does not come close 
 
JAKARTA 00003690  002.2 OF 002 
 
 
to representing a controlling interest in PTFI.  He expressed 
puzzlement over Sondakh,s offer to buy a non-controlling 
stake in PTFI instead of shares in parent company 
Freeport-McMoRan, much more liquid and actually cheaper than 
PTFI equity.  He said he has heard rumors for some time that 
members of the Jakarta elite might try to use the protests to 
make short term profits by depressing the stock price of 
Freeport McMoRan.  The shares did fall 14 percent during the 
initial protest in February though they have since recovered 
to pre-strike levels.  (Comment: We have heard rumors along 
these lines as well, but the logic eludes us.  Trying to 
depress the price of a minerals company for a quick 
short-term profit during a historic boom in global prices 
does not seem the best strategy to maximize return on 
investment. Peter Sondakh might serve as a front for Bakrie 
and Kalla, but Machribie offered no proof.  It seems just as 
likely, however, that he seeks somewhere to invest the USD 
800 million in cash that he got last year for selling his 
telecommunications company. End comment). 
 
Papuan Separatists See an Opening 
--------------------------------- 
 
¶7.  (C/NF) A third stream feeding the protests seems to come 
from the Papuan separatist camp.  Machribie noted that the 
March protests took place as the Papuan separatist cause 
gained a higher international profile.  London-based NGO 
Tapol plans to take the issue of Papua,s 1969 annexation 
under the Act of Free Choice to the International Court of 
Justice in The Hague, using the Drooglever report 
commissioned by the Dutch parliament.  Machribie added that 
anger over rampant corruption among provincial and regency 
officials has stoked Papuans, disenchantment.  Average 
Papuans see few benefits from the royalty and tax payments by 
Freeport and other extractive industries that should go to 
the province under the Special Autonomy law.  This corruption 
hurts Freeport,s image with Papuans as well.  Machribie and 
the Ambassador saw as worthwhile to propose that the GOI 
create an independent body, similar to the Agency for 
Reconstruction and Rehabilitation (BRR) in Aceh, to 
administer at least some of the Special Autonomy monies in a 
more transparent and independent way. 
 
¶8.  (C/NF) Machribie said PTFI thinks it has support from the 
President after a long meeting with SBY last week. He added 
that PTFI also got support from Minister of Energy and 
Mineral Resources Purnomo. Machribie hoped that PTFI,s 
troubles would lead to a demand within Indonesia for greater 
transparency in the distribution of extractive industry 
revenue. He sees foreign investors in the energy and mining 
sectors facing tumultuous months and perhaps years. Machribie 
described protests at ExxonMobil,s Cepu site and the 
destruction of a Newmont exploration camp on the island of 
Sumbawa as a continuation of an orchestrated backlash against 
Western investors. 
 
¶9.  (C/NF) Comment: Machribie did not offer a grand 
conspiracy theory, nor did he imply that all the actors 
described worked in concert, only that they opportunistically 
jumped on the bandwagon. This seems plausible since we find 
it unlikely, for example, that Amien Rais would work with 
Bakrie and Jusuf Kalla. While we find it unlikely that Amien 
is able to orchestrate attacks against Western businesses, we 
do find it plausible that he would use the Freeport issue to 
gain populist support. 
PASCOE