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Cablegate: Brazil's Deforestation Cycle (Part 3 of 3): Government Has

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RR RUEHRG
DE RUEHBR #0246/01 0551303
ZNR UUUUU ZZH
R 241303Z FEB 08
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 1046
INFO RUEHSO/AMCONSUL SAO PAULO 1626
RUEHRI/AMCONSUL RIO DE JANEIRO 5808
RUEHRG/AMCONSUL RECIFE 7709
RUEHRC/DEPT OF AGRICULTURE WASHDC

UNCLAS SECTION 01 OF 04 BRASILIA 000246

SIPDIS

SENSITIVE

SIPDIS

DEPT FOR OES/PCI - L.SPERLING AND F.COLON
DEPT FOR OES/ENCR - S.CASWELL AND C.KARR-COLQUE
DEPT FOR OES/EGC - D.NELSON AND T.TALLEY
DEPT FOR WHA/EPSC - L.KUBISKE

E.O. 12958: N/A
TAGS: SENV EAGR ENRG KSCA BR
SUBJECT: BRAZIL'S DEFORESTATION CYCLE (PART 3 of 3): GOVERNMENT HAS
LIMITED ABILITY TO BREAK THE CYCLE

REF: (A) BRASILIA 224, (B) BRASILIA 229

1. (U) THIS CABLE IS SENSITIVE BUT UNCLASSIFIED AND NOT FOR
INTERNET DISTRIBUTION.

2. (SBU) SUMMARY. The Government of Brazil (GOB) has a limited
ability to use "sticks," various law enforcement measures to control
deforestation. Even if it could obtain the tools it currently lacks
(sufficient law enforcement units, clear proof of violations, judges
willing to penalize, etc.), a massive crackdown would border on
political suicide. Illegal deforestation has benefited many,
possibly millions, in the Amazon; an estimated 80% of the
approximately 730,000 square kilometers that has been cleared since
the 1970's was done illegally. The Congress would be up in arms
with a serious campaign against illegal deforestation; 33% of the
Senators and 18% of the Chamber of Deputies come from the Amazon.
The federal government has not yet tried "carrots" to halt
deforestation. Meanwhile, the GOB has a variety of programs that
result in clearing forests, even though that is not the intended
goal of these measures (e.g., the constitutional requirement that an
owner must make "productive" use of agricultural land).

3. (SBU) This is the last cable in a three-part series on
deforestation. While we identify serious problems confronting the
GOB's efforts to control deforestation, it does not follow that the
situation is hopeless. The GOB in fact has had a critical success
with what sometimes is referred to as "constrangimento" or "guilty
conscious" policy: raising environmental consciousness about
deforestation in the political class. Further, several policies and
measures either have recently been introduced or are under
consideration which could in the long run markedly help control
deforestation: (a) improving forest management, especially with a
new Forest Service law that established a system for granting forest
concessions to responsible companies; (b) improving the land title
registry system; and (c) lowering the Forest Code requirement that
80% of forest on private property be conserved, which has been such
a high standard that it has left most ranchers and farmers in the
Amazon outside of the law. END SUMMARY.

4. (SBU) Government policies of establishing settlements in the
Amazon alongside roads and soft agriculture credits contribute to
deforestation, as do plans to construct additional highways and
dams. There are changes afoot that could lead to a permanent
reduction in the deforestation rate. The most important are: land
cadastrationor registry programs, new forest management regimes,
improved monitoring and enforcement, and certification programs.
Moreover, the Congress is considering modifying the Forest Code,
which could transform vast numbers of ranchers and farmers into
law-abiding citizens. END SUMMARY.

MODEST "STICKS" AND NO "CARROTS"

5. (SBU) GOB officials have consistently spoken out against the
illegal deforestation of the Amazon (which for this cable means the
Legal Amazon, a region of nine states that encompasses about 60% of
the country). When a report was released at the end of January
indicating a sharp rise in deforestation in the last five months of
2007, President Lula called an emergency cabinet meeting to consider
the problem. To date, the GOB has not developed "carrots" to
encourage the residents of the Amazon not to illegally clear the
land. In 2007, the isolated, northern State of Amazonas announced
the "Sustainable Amazona" fund with R40 million (over US$20 million)
to encourage residents of that state living on forest reserves (not
private property) to not clear the land. It is too early to say how
effective it will be or whether it might be transferable to other
states. In short, at this time there are practically no "carrots"
or positive incentives for residents of the Amazon not to deforest.

6. (SBU) The January 24 emergency cabinet meeting adopted a number
of "sticks" or punitive measures. The GOB would send in about 800
more Federal Police to combat environmental crimes, it would
strengthen controls over the livestock and agriculture sectors
(supposedly requiring proof that these agricultural goods were not
the result of illegal deforestation), requiring re-registration of
land titles and better monitoring at 36 municipalities with
high-rates of deforestation, and helping state governments to
monitor and combat deforestation. President Lula recently
acknowledged that the federal agency responsible for enforcing the
environmental laws (IBAMA) might not be up to the task and said that
"For this reason, I don't think IBAMA alone should be responsible
for enforcement." Thus, the Federal Police and to some extent the
Brazilian Army are asked to assist.

BRASILIA 00000246 002 OF 004

7. (SBU) COMMENT. More federal agents on the ground is a step
forward, however, there are weaknesses throughout the system - lack
of judges, difficulties in proving violations, long appeals process,
and then inability to collect fines. Paulo Barreto, a senior
researcher at the respected NGO IMAZON, estimated that only two to
three percent of fines imposed on illegal loggers are ever
collected. It is commonly accepted that law enforcement until now
has been practically non-existent. All in all these new measures
are more than symbolic, but not by much. They are likely to end up
as more proclamations from Brasilia without sustained, effective
actions to back them up. END COMMENT.

8. (SBU) While the GOB decries deforestation, several of its
policies do result inevitably in clearing forested land in the
Amazon. These policies include:

- Improving roads and infrastructure projects pursuant to the GOB's
Program for Acceleration of Growth (PAC). For example, the PAC
envisions building two hydroelectric plants on the Rio Madeira near
Bolivia, which are estimated to bring in as many as 100,000 new
settlers to that region.

- Establishing new settlements by the National Institute for
Colonization and Agriculture Reform's (INCRA) in the Amazon. The
GOB continues with its program of developing settlements for the
poor and landless alongside of roads constructed in the Amazon.

- Requiring an owner to make "productive" use of the land or risk
losing it under Articles 184 and 185 of the Brazilian Constitution.
The widely held view is that keeping a standing forest is not
considered a productive use.

- Providing soft agriculture credits even though the majority of
agricultural land was illegally cleared. The emergency cabinet
meeting initially proposed cutting off credits to those who could
not prove they had legally acquired their land. Subsequently,
President Lula exempted small farmers and ranchers and INCRA
settlers from this measure.

THE POLITICAL LIMITATIONS

9. (SBU) Stark political realities limit what a government can do
to control deforestation in the Amazon. While there are no exact
figures, it is commonly thought that at least 80% of the
deforestation in the Amazon is illegal, which means at least 580,000
square kilometers of the 730,000 square kilometers cleared since the
1970's was done illegally. Thus, a campaign against those involved
or benefiting from illegal deforestation could affect huge numbers,
possibly in the millions. Furthermore, the Amazon has tremendous
clout in the Congress. Although only 13% of Brazilians live in the
Amazon, the region has 33% of the Senators and 18% of the Deputies
in the Chamber of Deputies. COMMENT. Since President Lula's Labor
Party (PT) and allied parties have only a slim majority in the
Senate, he cannot afford to have such a large block up in arms.
Antagonizing the "Amazon block" by actions that threaten large
numbers of their voters and important economic interests would also
put into jeopardy other GOB priorities requiring legislative
approval. END COMMENT.

THE SUCCESSFUL "CONSTRANGIMENTO" POLICY

10. (SBU) The national governments since the return of democracy in
1985 have accomplished a critical feat, without which the prospects
for eventually controlling deforestation of the Amazon would be very
bleak indeed. President Lula's administration and those that
preceded it have in one generation changed the view of the political
elites about the value of the Amazon. Previously, the political
class considered the Amazon forest as a burden, something that had
to be cleared to make it productive. This view was held towards the
Atlantic Forest, which has been reduced to just 7% of its original
size, and many still hold it today towards the vast Cerrado (or
savannah) region, where 40% has been cleared in just a matter of
decades. Although less than 20% of the Amazon has been cleared
(REFTEL A), today politicians of all stripes pay homage - whether
they believe it or not - to sustainable development and protecting
the Amazon.

11. (SBU) This consciousness raising was the work of years, but it
has come to fruition under Lula. Environment Minister Marina Silva
refers to this as the "constrangimento" or "self-consciousness"
policy, which causes people not to want to be seen as destroying the

BRASILIA 00000246 003 OF 004


forest (something akin to the efforts to shame those who litter in
the United States). The Governor of Mato Grosso and so-called "King
of Soy", Blario Maggi, is a good example of the success of this
policy. His state has cleared more of the Amazon than any other.
Still, Maggi is sensitive on this issue. He was quick to deny that
his state is responsible for the ongoing deforestation. A
generation ago you would expect to see him proudly being
photographed next to a bulldozer.

OTHER POSITIVE DEVELOPMENTS

12. (SBU) The GOB has a number of policies that are being
introduced or under consideration that could significantly help to
control illegal deforestation. Three notable ones are:

-- Improved forest management pursuant to the new Forest Service
Law. The GOB plans to award long-term concessions to logging
companies that will take responsibility for managing and preserving
the forest. These concessions will allow harvesting of trees, but
in a rationale, sustainable manner. More importantly, these
concessions should create entities that have an economic interest in
protecting the forest and preventing illegal deforestation. The
first concession process is underway in the State of Rondonia, and
others are scheduled to follow.

-- Land Registry. President Lula asserted last fall that the Amazon
had an "owner", however, to this day the question of title to land
in the Amazon is a murky subject. Most of the land in the Amazon
belongs to the national government, yet one often hears how ranchers
and farmers end up - in some mysterious way - with papers that
suggest they may have title. There seems to be a greater focus by
the GOB on clearing up title and land cadastration to determine what
are the property boundaries. Mark Lundell of the World Bank in
Brazil views addressing the lack of clarity on land title as a top
priority. What is evident is that there has been no "owner"
preventing illegal loggers, ranchers and farmers from logging,
clearing and using vast swaths of the Amazon.

- Revising the Forest Code to allow more productive use of land. In
1996, President Fernando Henrique Cardoso issued a "Provisory
Measure" revising Article 44 of the Forest Code to require a
landowner in the Amazon to preserve 80% of the land, versus the 50%
requirement then in the law. Knowing that the Congress with the
large Amazon contingent would block enactment of the law, the
Provisory Measure was reissued 67 times to keep it in effect, until
2001 when the procedure was changed to require Congress to vote on
any Provisory Measures. This Provisory Measure was never brought up
for a vote, however, the GOB has treated it as having legal effect.
Now, the GOB is considering reducing the conservation requirement
back to 50%. If this were to happen, then it might be possible for
large numbers of ranchers and farmers who are out of compliance with
the 80% requirement to come in from the cold. Such a move could
make dealing with the past - and preventing future - deforestation
on a more manageable scale. Environmental groups in Brazil are
divided on this step. Greenpeace views it as a sell-out; Friends of
the Earth consider it a pragmatic and constructive step. The
question of "amnesty" for deforesters continues to generate a heated
debate within and outside government circles.

13. (SBU) COMMENT. As with illegal immigration in the United
States, illegal deforestation in the Amazon leaves the national
government with two main problems to address - preventing future
illegal activity and sorting out the status of those who acted
illegally in the past. At the same time, meeting the economic
imperatives of Brazil ranging from reliable electricity supply to
farmland to viable transport routes to enhance economic growth in an
environmentally sustainable way remains a political and practical
challenge for Brazil. These are complex problems and there are
powerful political constraints limiting the government's room for
action. Nonetheless, the GOB has scored a major success with its
"constrangimento" or "guilty conscious" policy and has laid the
ground for possible future actions that would seriously address
these issues. The GOB has some of the tools in hand already (such
as land registry, modern forest management, and better law
enforcement) and is considering others (such as modifying the land
use rules). If these measures were followed through, the rate of
deforestation could come down significantly over the long-term. The
GOB is clearly under significant domestic (such as from Environment
Minister Silva and the media) and international pressure to address
deforestation in a serious manner. However, it is too early to say
whether this level of pressure is sufficient to persuade the GOB to
use its limited political capital to take on this daunting task.

BRASILIA 00000246 004 OF 004


END COMMENT.

SOBEL

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