Cablegate: Elephants and Biofuel Don't Blend

DE RUEHDS #0189/01 0241214
R 241214Z JAN 08





E.O. 12958: N/A

1. (U) The conflict between conservation and investment in Ethiopia
has escalated. Caught in the cross-fire is a chronically food
insecure community that welcomes the opportunity to grow a cash
crop. In 2007, the regional government of Oromia granted the
Israeli-German firm, Flora EcoPower (FEP), thousands of hectares of
land both outside and within the Babille elephant sanctuary - a
federally managed transboundary park - in order to grow castor beans
for bio-fuel and other export uses. The clear cutting of sanctuary
forest by FEP threatens the elephants' ability to access water and
forage resources. End Summary.

2. (U) The rapid reduction in the number of African elephants
(Loxodonta africana) due to loss of habitat and poaching has placed
them on CITES' Appendix 1 for endangered species. According to
wildlife experts, Ethiopia has lost about 90% of its elephant
population since the 1980s. There are currently less than 1220
elephants in Ethiopia, split among isolated pockets of protected
areas and unprotected peripheral areas-two in the northwest, two in
the west, three in the southwest, one in the south, and one in the
southeast. Babille Elephant Sanctuary, spanning parts of both
Oromia and Somali Regions, sustains Ethiopia's largest elephant
population of at least 323 individuals. This population has been
isolated from Ethiopia's other elephant populations for over eighty
years; it is the last relic elephant population in the far Horn of

3. (U) Babille Elephant Sanctuary (7000 sq. km; 4350 sq. miles) was
created in 1970 by Emperor Haile Selassie to protect elephants and
other large mammals including the Black-maned lion, leopard,
cheetah, and over 250 endemic plant and bird species. At that time
human influence was minimal, the main interference being subsistence
agriculture and charcoal making on the road from Babille to Jijiga.
Illegal activities such as poaching, charcoal making, and the
encroachment of subsistence agriculture and grazing, have since
reduced the practical boundaries of the sanctuary, posing a threat
to the species within. Elephant numbers have been declining for
several decades, and they have lost about 82% of their range in
areas surrounding the sanctuary since 1970. With no effective
conservation strategy in place, scientists working in Babille
believe the Babille elephants are in danger of becoming extinct,
with the greatest threats being habitat loss and conflicts between
elephants and local residents.

4. (U) As a transboundary protected area, management of Babille is
under federal authority. In an effort to regain control over park
boundaries, while recognizing the physical and economic needs of
surrounding villages, the Ethiopian Wildlife Department (EWD)
conducted a wildlife survey in Babille in May 2006. The EWD drafted
a re-demarcation plan based on this survey. Pending adoption of the
EWD's re-demarcation plan, the Oromia Regional Government granted a
land concession in early 2007, much of which was within current park
boundaries, to a German-registered, Israeli-owned company, Flora
EcoPower (FEP), for castor bean production with the intent to
produce crude castor oil for export sale to the biofuel and
cosmetics/pharmaceutical industries.

Conservation vs. Investment
5. (U) The Investment Commission of the Oromia regional government,
without regard for formal legal procedures calling for technical
consultations, gave 10,000 hectares of land in and adjacent to the
northwest portion of the park to FEP. Environmentalists and other
concerned individuals were upset at this concession-the first time a
sanctuary designated for wildlife protection was given over for
investment-and demanded that both regional and federal governments
intervene to stop clearing within the sanctuary and form a taskforce
to assess the situation and formulate a response. In a meeting with
an official from the EWD in May 2007, the Regional Environmental
Assistant (REO/A) was told that the investor had already cleared
approximately 1000 hectares and had not yet made any promises to
stop clearing. The number of hectares is disputed-some experts
claim 5000 hectares were cleared. According to EWD observations,
elephants were not leaving the sanctuary and water holes were still
intact, but clearing had taken place in an important elephant

ADDIS ABAB 00000189 002 OF 003

corridor and feeding grounds between valleys in the northwestern
section of the sanctuary.

6. (SBU) The EWD also found that the sizes of the castor plots shown
on the investor's map are smaller than the plots on-site. The
actual size indicates that FEP cleared more forest area than it
reported. The EWD reported that over 56% of the current farm plots
granted to Flora EcoPower are found within the most important
elephant habitat and block the main elephant corridor. Thus, the
elephants have no room left for further movement. The EWD further
states that if the last remaining habitat is destroyed this endemic
subspecies will face extinction.

7. (SBU) By June 2007 negative press in Ethiopia and Europe led to
growing public awareness about the investor's activities in the
sanctuary. In a meeting with embassy representatives in October,
the investor claimed he became aware that they had cleared plots
inside a protected area only when the issue was presented in the
German press in June 2007. FEP shares are traded on the German
stock exchange and sales dwindled after the release of the story.
According to all parties involved, it was at that point the company
agreed to stop all clearing and new cultivation within sanctuary
boundaries. FEP's senior representative in Ethiopia claimed "even
if the regional government says yes, we won't clear any more in the
protected area." In an agreement among local NGOs and FEP that was
brokered by the German and Israeli Embassies it was decided that
plots within the sanctuary that were already cleared and under
production would remain so for the productive life cycle of the
castor bean plant (about three years). All of the stakeholders and
regional and federal officials agreed to a "gag order" pending a
decision by the Deputy Prime Minister. In fact, attempts by the
Regional Environment Office (REO) to get information in October were
repeatedly rebuffed.

8. (SBU) According to a credible source, no further clearing and
cultivation has taken place within official sanctuary boundaries.
The EWD is using the official 1970 Ethiopian Environmental
Protection Agency (EPA) maps for Babille Elephant Sanctuary, while
regional authorities are using recent maps with proposed new
boundaries that show agricultural encroachment within the park and
bolster arguments to degazette the park accordingly. The EPA maps
from 1970 indicate that more than 80 per cent of the land plots
granted to FEP are within the sanctuary. Of this, more than three
quarters are within the present range of the current elephant
population. Global positioning systems (GPS) and maps indicate that
most of the cultivated areas are more than 4 kilometers deep into
the sanctuary. Maps that show the proposed re-demarcation indicate
that more than 50 per cent of the concession would be within
sanctuary boundaries.

Regional vs. Federal Jurisdiction
9. (SBU) Babille is split between two regional states, Oromia and
Somali. The federal government has total jurisdiction under
Ethiopian law due to the transboundary nature of the protected area.
Notwithstanding, the Investment Commission of the Oromia Regional
Government granted the concession to FEP without consulting federal
authorities. According to credible sources the investor commenced
clearing without the knowledge or approval of federal officials or
consultation with technical personnel at zonal and regional levels.
The source also indicated that he was subject to intimidation by the
Chief Administrator, including being taken to the police station,
and was banned from traveling to the site until October 2007.
Sources from the Ministry of Agriculture and the investor emphasized
that the Oromia regional government picked the site and gave it to
the investor.

10. (U) In addition, no environmental impact assessment (EIA) was
completed as required by Ethiopian law. According to numerous
sources, no contact was made with regional or federal environmental
authorities before the agreement was reached. In the normal course
of activity, the Oromia region Environment Bureau should have been
informed of and provided with an EIA for lands under federal
jurisdiction, they would then have forwarded the EIA on to the
federal EPA for review. Since no report was submitted, EPA was out
of the loop at both regional and federal levels.

11. (U) In August, the Ministry of Trade and Industry called the
first high-level meeting of stakeholders from all sides of the issue
to address conflicting equities as reported in the press. One month

ADDIS ABAB 00000189 003 OF 003

later the Deputy Prime Minister called another high-level meeting to
discuss the issues. In September stakeholders agreed that a team
consisting of the Institute for Biological Diversity and
representatives from relevant regional and federal government
departments would go to Babille and make a recommendation that would
be a "win for both conservation and development." The group,
including the regional chief, was expected to report their
recommendations back to the Deputy Prime Minister in mid-October.
To date, no report has been made.

Biofuel Production vs. Conservation
12. (U) The State Ministry of Agriculture claims local communities
are pleased with the concessions because of the employment
opportunities it provides. FEP claims that they are focused on a
"community farming model" where they provide seeds, fertilizer, and
water to farmers with plans to cultivate up to 200,000 hectares of
castor bean in the coming five years. They also discussed plans for
secondary assistance in the form of health clinics and schools, but
no movement has been witnessed on these activities.

13. (U) FEP claims to have invested at least 11 million USD secured
from European sources in its castor oil venture. Part of that
investment includes a recently completed castor oil production
factory. The factory produces crude oil from the castor bean that
will be exported for use in biofuels or the cosmetics/pharmaceutical
industry. At its inaugural ceremony, Oromia State Chief
Administrator, who referred to the project as "environment
friendly," reiterated the government's strong support for the
investors that are playing an important role in Ethiopia's
development. The GOE encourages this type of direct foreign
investment for several reasons: it narrows the trade deficit because
all foreign currency coming in passes through the Ethiopian banking
system and it diversifies non-traditional exports. In addition,
according to GOE's Investment Proclamation, all but 10% of income
from exports must be converted to Ethiopian currency within 28 days
of sale.

14. (U) The Regional Administrator also expressed appreciation for
the investor's decision to construct the factory in a relatively
undeveloped area near Harar that is prone to famine and drought.
The mill has a production capacity of 80,000 tons of crude oil (the
current market price is 750-900USD per ton) and employs about 150
people. To reach that capacity 50,000 hectares need to be
cultivated. Current reports from the investor indicate that
approximately 5000 hectares have been cultivated, most on "community

15. (U) The investment also supports the Biofuel Development and
Usage Strategy declared by the Ministry of Mines and Energy in
August 2007. Some key objectives in Article 4 include: to achieve
foreign exchange savings by replacing imported petroleum with
domestically produced biofuels; to accelerate agricultural and
agro-processing facilities development by maximizing biofuel
development; to create employment opportunities; to increase the
productivity of agricultural lands; and to protect the environment
from pollution and contribute to global efforts to stem the effects
of this pollution through the use of biofuels. Ethiopia's first
priority for biofuels has been to focus on fuel blending using
ethanol produced from sugar cane and benzene. However, the export
of all of the crude castor oil seems at odds with their overall
biofuels strategy.

16. (SBU) Comment: This situation starkly illustrates the
consequences of promoting biofuel as an economic panacea. Not only
is the elephant population of Babille facing increased habitat loss
that may lead to their extinction, but the farmers of Oromia - a
chronically food insecure area - are replacing sorghum, a staple
crop, with a cash crop that faces an uncertain market. While the
market price of castor oil is currently high, there is the
possibility that new EU definitions for sustainable biofuel
(BRUSSELS 104) will limit the ability of Flora EcoPower to access
world markets. End Comment.


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