By Jeffrey Udin

Never again is what the world came to say after the Holocaust, and so thousands of books are written, articles penned, museums erected, and movies made — all to make sure the Third Reich’s crimes against humanity are forever remembered. But should “never again” be applied only to the gas chambers and slave labor, or to those American investors who turned a blind eye to murder in the name of profits and market share? Did investors let the well-publicized atrocities against Jews and others stand in their way of investing in the Third Reich?

If the answer is no, then why has it been allowed to happen (again) in the case of Indonesia and East Timor? United States investment increased in Indonesia after General Suharto took power. Both regimes provided “stability” to their American trading partners, and both went on to commit genocide, one of which continues to this day.

Stability Part I: Nazi Germany
In January 1933, Adolf Hitler became chancellor of Germany amid the beginnings of an economic turnaround. Almost immediately, Hitler passed a number of laws restricting Jews from a variety of professions and organized the boycotting of Jewish stores. These facts were not only reported in the British and American press at the time, but Jewish groups in the U.S. publicly denounced Germany’s actions — both through demonstrations and in print. A New York Times correspondent in April 1933 described firsthand the conditions at Dachau. Nevertheless, more than $12 million worth of oil was sold to Germany by American petroleum companies in 1934.

Hitler had the trade unions and German Communists crushed along with the Left while the government used the Keynesian model of state intervention to help bring Germany out of the global depression. American investors lined up. According to a 1936 letter from Ambassador William E. Dodd to President Roosevelt, Standard Oil of New Jersey (Exxon) had invested $2 million in Germany in December 1933 to help them make Ersatz gas for war purposes. Standard Oil made $500,000 a year but could not take their earnings out of Germany, Dodd reported. President of Standard Oil, Walter Teagle, extended a secret pact with I.G. Farben after Hitler came to power, giving Germany the patents for tetraethyl lead, a crucial ingredient for 100-octane aviation fuel. In return, Standard Oil looked to Germany to develop synthetic rubber, which proved vital to the Nazi war machine, and cut back on its research in America. After Germany invaded Poland in September 1939, scientists at Standard Oil kept providing important information to the Nazis.

The President of Texaco, Torkild Rieber, made deals in the 1930s with the Third Reich that allowed Germany to receive oil from Colombia. Like Standard Oil, this continued after Hitler started the war in Europe, and Rieber even met Reich Marshall Hermann Goering in Berlin to clinch a tanker deal. He resigned from Texaco’s board in August 1940 after his ties to a prominent Germany lawyer in the Reich had been exposed.

Sir Henri Deterding, chair of Royal Dutch/Shell Group, dominated the company for 30 years, and in 1935 he made a deal with the Nazis that gave them a year’s oil reserves on credit. Shell’s board had to ease him out the following year because of his erratic behavior and pro-Nazi sympathies.

The Nuremberg Laws were passed in September 1935, taking away all legal, civil, and political rights for Jews, making them second-class citizens and subjects of the state. Once again, Jewish groups and a few others in the U.S. protested the increasing Nazi repression by calling for a boycott of the upcoming 1936 Olympic Games in Munich. The plea fell on deaf ears. According to the 1936 letter from Ambassador Dodd to Roosevelt, more than 100 U.S. corporations had subsidiaries in Germany or collaborating arrangements.

When the International Chamber of Commerce gathered in Berlin in 1937, its new president, Thomas J. Watson of IBM, set the agenda for the meeting: “World Peace through World Trade.” Hitler and Goering, who had an industrial combine that belonged to the Third Reich, both attended the conference, as did Economic Minister Hjalmar Schacht. All three witnessed U.S. corporate investment rise faster in Germany that anywhere else in Europe.

In November 1938, U.S. investors could not have missed Kristallnacht (“the night of broken glass”), when for a 24-hour period, synagogues were burned, Jewish store windows were smashed, and Jewish families were evicted from their dwellings during the Nazi-sponsored riot. Dozens were killed, more than 100 synagogues were set ablaze, and thousands of businesses were damaged or destroyed. More than 20,000 Jewish men were sent to concentration camps Dachau, Buchenwald, and Sachsenhausen. Once again, these facts were widely reported, denounced openly by President Roosevelt, and protested through demonstrations, and nearly 1,000 different editorials on the topic, condemning Germany’s actions. Still, the U.S. continued trade relations with the Nazis. American oil companies sold more than $34 million worth of oil to Germany in 1938 — nearly a three-fold increase since 1934. U.S. petroleum companies had more refineries operating in Germany than anywhere else in Europe, the Middle East, or Asia by 1939.

Many of the same oil companies that found a good trading partner in the Third Reich today do business with Suharto’s Indonesia, a fact that compels concerned people to wonder: What, if anything, has the world learned since the Holocaust?

Stability Part II: Indonesia
The relevant history begins in the early morning hours of October 1, 1965, when General Suharto and the army rose to power under the fraudulent pretext that the Indonesian Communist Party (PKI) was going to take over the country. Suharto and the military decided to crush the PKI, the largest mass-based political party in the nation, a group that “was in no position to defend itself against the army-backed offensive,” notes scholar Harold Crouch.

Accordingly, Suharto and the army launched a blood-bath that Amnesty International calls “one of the worst massacres of this century.” The army, working with vigilante groups, carried out most of the killings, targeting the defenseless PKI, their trade unions, peasant and other mass organizations, school teachers, and anyone else thought to be sympathetic to them. In many cases entire families were slaughtered, and at least one town had 4,000 people murdered in just a few days. In the city of Medan, some 10,500 prisoners were reportedly slaughtered in just a few days as the killings spread throughout Indonesia. Sanitation problems developed because of the scale of the killings; the smell of decaying flesh became pervasive.

An internal CIA research study called it “one of the worst mass murders of the 20th century” and compared it to “the Nazi mass murders during the Second War.” Estimates by Amnesty International and others report that 500,000 to 1 million people — mostly landless peasants — were slaughtered under the direction of Suharto and the army. In 1967 Suharto established himself as president and launched the “Orde Baru” (New Order), setting up a fascist regime ruled by terror and torture that continues to this day. The benefits of Suharto’s bloodshed to American oil companies are no secret. A recent report published by the Commerce Department notes that Indonesia’s “oil boom did not really begin, however, until 1967 when Indonesia pioneered the production-sharing contract and the `New Order’ launched the country on the road to economic and political stability.”

In the wake of what the CIA paper calls “one of the ghastliest and most concentrated bloodlettings of current times,” multinationals such as Phillips Petroleum, Mobil Corp., and others signed production-sharing contracts with Indonesia’s state oil company in 1968 — the same year the London Economist called the killings a “holocaust.” Phillips spokespersons say that when the company operates in a country, it looks at “the stability of the government and the political situation in general.”

Like the American investors who had to choose between investing in the Third Reich or leaving the German market, U.S. oil companies had to work through Indonesia’s state-owned and military-dominated oil company — Pertamina. Funds from oil companies played an important role in supporting the military leaders who carried out the bloodshed. “Oil revenues were vital for the Suharto regime,” says a recent U.S. Library of Congress study sponsored by the Department of Army, because these resources helped the regime with “political stability.” The most important source for raising funds for the military came from Pertamina. Indeed, General Ibnu Sutowo, who ran Pertamina for many years, conceded that “he uses state petroleum earnings to help finance Gen. Suharto’s army, which can’t exist on regularly budgeted funds,” the Wall Street Journal reported in 1967.

While Phillips and other companies reported oil and gas discoveries by working with Suharto’s New Order, the military grew in size, the corrupt generals became wealthy, American oil companies signed contracts, and Indonesia began looking elsewhere to expand its borders.

Acts of Aggression and Genocide
East Timor had been a Portuguese colony since the 16th century and home to one of the last few remaining ancient civilizations. The people of East Timor spoke more than a dozen languages and lived mostly in an assortment of villages in the small island that covers just 7,400 square miles. On December 7, 1975, less than two weeks after East Timor declared independence from Portugal, Indonesia invaded the island (By this time, more than 35 companies were engaged in production-sharing contracts with Indonesia). Radio Dili (capital of East Timor) gave its final broadcast to the outside world: “The soldiers are killing indiscriminately. Women and children are being shot in the streets. We are all going to be killed. I repeat, we are all going to be killed . . . This is an appeal for international help. Please help us . . .”

Victims in East Timor were brought to a pier facing the sea, where bodies fell into the water as they were executed. The waters of the Areia Branca beach, east of the capital, were later referred to as “the sea of blood” by the local population. An eyewitness testified to similar atrocities: “The Indonesian’s tore the crying children from their mothers and passed them back to the crowd. The women were then shot one by one, with the onlookers being ordered to count.” Two months into the invasion, the Indonesian-installed deputy governor of East Timor said 60,000 Timorese had been killed, roughly 10 percent of the population.

C. Phillip Liechty, CIA desk officer in Indonesia during the invasion, saw the reports coming out of East Timor. “There were people being herded into school buildings by Indonesian soldiers and the buildings set on fire,” he told award-winning journalist John Pilger. People who tried to get out were shot, “with most of the people being burned alive. There were people herded into fields and machine-gunned, and hunted in the mountains simply because they were there. We knew the place was a free-fire zone.”

For Phillips Petroleum Co., however, a profit was to be made. “New contract terms were negotiated in 1976,” Phillips’ annual report. After recovery of exploration and development costs, Indonesia received 85 percent of the production. The Phillips Group, of which Phillips had half the interest, got the remaining 15 percent. Crude oil production was expected to start at 40,000 gross barrels a day in 1977.

Pertamina was Indonesia’s biggest enterprise and one of the world’s 200 largest corporations, helping oil revenues account for 60 percent of the nation’s 1976 budget. The Indonesian military used Pertamina, which all foreign petroleum companies must go through today, to finance their dictatorship and the military. Caltex Co., a joint venture between Texaco and Chevron, played an especially important role. Oil production in Indonesia rose from 174 million barrels in 1966 to 476 million barrels per day in 1975 — mostly as a result of contracts between Caltex and Pertamina. Daniel Yergin, scholar turned “energy consultant,” notes the new production-sharing relationship “was pioneered by Indonesia and Caltex in the late 1960s” (Yergin never mentions the slaughter in Indonesia or the genocide in East Timor in his work that won him a Pulitzer Prize). Just two days before the invasion, the New York Times spoke of “the oil men and the generals who were [and are] reaping huge rewards” from Indonesia’s growing economy. Corruption reached “staggering proportions,” the Far Eastern Economic Review reported. “Indonesia in 1976 was still klondike country for corrupters. Men with energy and connections have appeared to plunder the national treasury almost at will.” Meanwhile, U.S. imports — more than 80 percent in oil — rose 30 percent between 1975 and 1976, where it reached $3 billion.

In 1977 the second phase of the invasion began, when Indonesia pilots, armed with American counterinsurgency aircraft, began bombing Timorese villages and crops, destroying their food supply. Timorese fled into the coastal areas where the Indonesian’s put them in concentration camps. Mass starvation set in, and the largest number of children died in the Indonesian-induced famine. The same year a priest in hiding in East Timor spoke of “completely destroyed” villages and warned that “genocide will come soon,” a Phillips-led group began producing oil that Pertamina said was generating 33,000 barrels a day, expecting to reach 50,000 barrels a day by 1978.

On page five of the Wall Street Journal under the headline, “Exxon, Phillips, Indiana Standard Sign Oil Accords With Indonesia,” it was announced that these companies signed contracts with Pertamina (read: Suharto and his generals), “committing them to invest about $100 million for exploration over the next six years.” Phillips, operator for the joint venture with Indiana Standard, “paid signature bonuses totaling nearly $4.8 million to Pertamina,” where once again, 85 percent of the production went to Indonesia. Bordering this story, under the headline, “Indonesia Plans Jump In Its Budget to Spread Benefits of Oil Bonanza,” the Journal reported that “Indonesia plans to use its huge oil receipts to finance a strongly expansionary budget for the year . . . “

Allowing History to Repeat Itself
Through mass slaughter and starvation, the Indonesians eventually killed an estimated 200,000 Timorese civilians out of a population of 650,000. The Foreign Affairs Committee of the Australian Parliament reports that “at least” 200,000 have died under the Indonesian occupation. Just two years before the invasion, “Pertamina [was able] to further its own interests at the expense of the foreign companies,” Crouch writes, when it “unilaterally increased the share of oil produced by foreign companies that had to be surrendered to the Indonesian corporation.” Led by Caltex and then by other companies, they all agreed “to a sharp increase in Indonesia’s share in oil profits.”

Ignoring articles and editorials from the New York Times to The Nation that publicized the genocide, a review of Phillips’ annual reports shows that the company profited from Indonesia throughout the 1980s. Phillips operated more than 100 wells by way of Indonesia’s dictatorship, even after the company got burned in the early 1970s in what former Wall Street Journal reporter Jonathan Kwitny calls “one of the baldest shakedowns in history.” General Sutowo, who used the regime’s oil revenues to finance Indonesia’s military, was able to “coerce” oil companies like Phillips, Exxon, Mobil, Atlantic Richfield Co. (ARCO), and others for more than $1.1 million, according to the U.S. Securities and Exchange Commission (SEC). These companies were all either working with or seeking relations with Pertamina, the SEC found. “I doubt we can avoid this shakedown,” said an executive of an Exxon subsidiary in a memo to a colleague. Gen. Sutowo, dismissed from running Pertamina in 1976 because it went $10 billion in debt, “pocketed at least $2.5 million from a tanker deal Pertamina entered,” Kwitny writes. It’s all “part of the price that foreign companies are willing to pay for Indonesian oil [and gas] . . . It is money coming right out of the pockets of Indonesian and American citizens,” Kwitny notes. Even after Phillips had to spend $75 million to fend off two hostile takeover attempts in the mid-1980s, causing its debt to more than double within a year, the company still found money for the Indonesian generals.

The Right Connections
After President Richard Nixon visited Indonesia in 1969, American military assistance expanded. A year later, when the U.S. sent $18 million in aid to Indonesia — more than a three-fold increase from the previous year and became its leading supplier of military equipment — Melvin R. Laird was secretary of defense (under Nixon), a position he held until 1973. (Oil and gas companies alone gave more than $10 million to Nixon’s 1972 re-election campaign, including $100,000 from Phillips and other companies, much of it illegal). Several years after Laird left government, he joined Phillips’ board of directors and stayed for the next 17 years. Clark M. Clifford, secretary of defense and advisor to three presidents, joined the company’s board in 1969. As one of the country’s most influential Washington lawyers, Clifford made deals for Phillips going back to the early 1950s that included lobbying Federal Power Commission regulators. The pre-Suharto government of Indonesia had hired Clifford for several years in the 1950s after he had worked on behalf of U.S. business interests in Indonesia (which included development rights for oil and other natural resources). Clifford retired from the board in 1979.

The connection continued. The Commerce Department, whose Secretary Ron Brown personally lobbied Suharto on behalf of a Baltimore-based company last April that resulted in a $21.5 million deal, recently awarded two high-tech, multi-company projects to Phillips worth more than $6 million. Researchers and scientists from Emory University, the University of Minnesota, and University of Oklahoma (OU) will take part in the projects. Phillips will donate $500,000 over the next five years to OU primarily for Native American, Hispanic, and African American student scholarships.

This is all part of the university’s “Reach for Excellence” campaign, not likely to include courses on Indonesia and East Timor, especially since the university’s president, former Oklahoma Sen. David Boren, also sits on Phillips’ board of directors. For part of the time Boren was senator, Oklahoma exported $12 million in goods to Indonesia in 1994, making it one of the state’s largest developing world buyers, according to the World Bank.

Since the invasion, the United Nations has passed ten resolutions against Indonesia, two from the Security Council and eight from the General Assembly, condemning the invasion and demanding self-determination for East Timor. Indonesia ignored the UN, violated the resolutions, and annexed East Timor, calling it its 27th province, Phillips produced 2,000 barrels a day of crude oil from Indonesia in 1992. In December of that year the Wall Street Journal reported that Louisiana Land and Exploration Co. agreed to acquire all of Phillips’ Indonesian exploration and production assets. In other words, Phillips stopped its oil and gas production — not because its money was being used to support slaughter and starvation — but because its profits began to slide. Before Phillips sold its holdings, it made one more deal, this time to take East Timor’s natural resources.

The Timor Gap
Working with Australia, Indonesia decided to carve up East Timor’s sea lanes, the Timor Gap, for international oil companies in 1989. The Timor Gap Treaty is “null and void under international law,” says Roger S. Clark, distinguished professor of law at Rutgers Law School. These resources belong to (occupied) East Timor — not Indonesia or foreign oil companies like Phillips, Oryx Energy, USX/Marathon, Shell, and Chevron, that are exploiting the area, he says. “Australia,” he adds, “is acting like a receiver of stolen property.” These companies signed the contracts less than five weeks after (another) massacre in East Timor.

In November 1991, a funeral procession of several thousand East Timorese marched to a cemetery near the Timor capital to honor a slain student, shot dead two weeks earlier just outside a church by Indonesian soldiers. About 10 minutes after the procession arrived at the cemetery, Indonesian troops systematically slaughtered 270 men, women, and children, their bodies dumped in mass graves or thrown in the ocean. Indonesia’s commander of the armed forces, today its vice president, said, “These ill-bred people have to be shot . . . and we will shoot them.”

Indonesia Development News reported right after the massacre that Phillips and its partners (such as Dallas-based Oryx Energy, formerly a top acreage holder in Indonesia), committed $58.54 million for survey work and drilling. Marathon and its partners will invest $85.96 million; Chevron and a Shell Oil Co. unit will spend a projected $11.6 million. These companies explore in Zone A of the Timor Gap, where production is be shared 50-50 between Australia and Indonesia.

At Phillips’ annual shareholders meeting in May 1995, President and Chief Operating Officer Jim Mulva described the Timor Gap as one of 12 places around the world where Phillips explores and produces. Also present was Lawrence Eagleburger, who joined the company’s board of directors in 1993. In 1991, while Eagleburger was deputy secretary of state, the U.S. sent $50 million in outright aid to Indonesia. At a sensitive meeting of senior State Department officials in 1975 — less than two weeks after the invasion — then deputy undersecretary Eagleburger took part in a high-level discussion on Indonesia and East Timor. Sending arms to Indonesia was discussed along with the illegality of the invasion and keeping the matter hidden from the public. “If it’s part of the written record,” Eagleburger said, “it will be dragged out eventually.” The U.S. went on to supply Indonesia with 90 percent of its arms during the invasion, becoming its leading supplier.

Mulva told the shareholders that Phillips would start to see profits in the Timor Gap in two to three years. Last March, Phillips announced the discovery of natural gas and condensate in the Bayu-1 well that it operates (the company has the largest interest in the block). The well flowed at a combined rate of 90 million cubic feet of gas per day, plus 5,250 barrels of condensate per day. In mid-February of this year Phillips made another discovery, this time in the Bayu-2 well, where 35 million cubic feet of gas flowed per day, and 2,100 barrels per day of condensate. A third exploratory well was spudded in March, and that month the company announced that one of its wholly-owned subsidiaries signed an agreement to purchase Bridge Oil Timor Sea, Inc., a subsidiary of Parker & Parsley Petroleum Co. With the acquisition, Phillips stake in the Timor Gap could increase to 60 percent, subject to any partners rights. In mid-May 1996 the transaction is expected to close.

All of this is illegal under international law, Clark says, and there’s “no question” that the company’s activities in the Timor Gap support Indonesia’s financial interest while it occupies East Timor. This was confirmed by a public relations officer at the Pertamina Representative Office For the Americas in Los Angeles, who said companies exploring in the Timor Gap “contribute to their [Indonesia's] revenue.”

For the last several years the legality of the Timor Gap treaty has been before the International Court of Justice (World Court), but last June, the Court decided not to make a determination on the case because Indonesia refuses to recognize its jurisdiction (just as Indonesia has ignored resolutions by the UN, European Parliament, and Non-Aligned Movement). Phillips defended Indonesia and Australia’s role in carving up the Timor Gap, saying it “remains the recognized administrator of the area” and that “nothing has occurred to invalidate the Treaty.”

In the meantime Indonesia continues its brutal occupation of East Timor. Amnesty International describes rape, sexual mutilation, burnings, slashing with razor blades, and other forms of torture at the hands of Indonesia’s security forces (in Indonesia and East Timor).

American oil companies continue without objection. A joint venture between Texaco and Chevron (P.T. Caltex Pacific Indonesia) accounts for nearly half of Indonesia’s total oil production. “It’s useful for Chevron and Texaco that Caltex be known as being a big player in Asia,” said retiring Caltex Chairman and CEO Patrick Ward. “That’s the kind of thing that affects your stock price.”

Exxon recently signed a contract with Pertamina calling for an estimated $40 billion to be invested for exploration of liquefied natural gas off Natuna island — the most expensive gas project in the world. Pertamina, the world’s 10th largest oil company, has a 50 percent stake in the project along with Exxon. (Indonesia is the world’s leading exporter of liquefied natural gas).

The Commerce Department reports that out of 15 nations, the U.S. has more oil and gas companies in Indonesia than any other. These 23 American oil companies account for about 80 percent of Indonesia’s crude oil and 50 percent of the nation’s natural gas production. Indonesia also imports most of its oil and exploration equipment from the U.S.

Not surprisingly, these American oil companies — which get about $1 billion a year in annual subsidies from the U.S. government — don’t mention the ongoing genocide in East Timor in their annual reports or media releases. Instead, the public is treated to a massive, well-orchestrated public relations campaign. Phillips, for example, made an initial $500,000 commitment to a joint program with the American Red Cross Tulsa Area Chapter a month after the April 19 bombing in Oklahoma City. The company has the audacity to help bring a violence-awareness program to school children in Arkansas.

And what American oil company isn’t concerned with higher education? Phillips committed $1 million to Oklahoma State University last year for a variety of programs, one designed (with Phillips management staff), to “accelerate intellectual . . . development, to broaden global awareness and cultural perspectives.” OSU President James Halligan said Phillips “has continued to help bring dreams to life.” When Phillips recently pledged to contribute up to $300,000 for schools in Bartlesville, Oklahoma, the company’s chair and CEO, Wayne Allen, said, “We intend to contribute to the quality of life in Bartlesville and other Phillips communities where we operate.”

In Phillips’ 1993 annual report, Allen, then president, refined the company’s corporate mission statement: “There’s only one reason we’re in business — to achieve superior financial return for our shareholders.”

Meanwhile, the Indonesian dictatorship continues its military occupation of East Timor. “To the capitalist governors,” wrote a priest in East Timor, “Timor’s petroleum smells better than Timorese blood and tears. How long do the Indonesian’s think they can imprison, torture, and kill? That is what the Timorese people in their concentration camps have asked themselves since 1975.”

Jeffrey Udin is a former journalist for the Bartlesville Examiner-Enterprise. This article is dedicated to the memory of Michael Emery.

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