Cablegate: Forestry Issues Dominate Visit of Oes a/S Mcmurray To

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E.O. 12598: N/A

1. (U) Summary. In a visit to Indonesia July 26-29, OES A/S
McMurray discussed deforestation and climate change with senior
Government of Indonesia (GOI) officials from the Ministries of
Forestry and Environment, non-governmental organizations, and a
policy advisor to President Yudhoyono. The GOI welcomed engagement
from the USG on illegal logging, and thanked us for our assistance
in training enforcement officials. Lack of enforcement for proper
land use policies is permitting encroachment on high-value
conservation forest by logging companies and palm oil plantations.
End Summary.

Forestry and Environment Ministry Meeting

2. (U) On July 26, A/S McMurray noted to senior officials from the
Ministry of Forestry (MOF) and Ministry of Environment (MOE) that
the Climate Change and Forestry Conference in Sydney included
discussion on the links between climate change and deforestation.
All agreed that biofuel development as well as biodiversity
conservation had to factor into that discussion. GOI officials
stated that decentralization had in general encouraged local
governments to be more responsible in forest management, but
acknowledged that in some cases confusion over jurisdictional issues
and a lack of capacity at the local level has hurt conservation.
They emphasized the importance of engaging China on the illegal
timber trade.

MOF Forestry Policy Priorities

3. (U) Dr. Yetty Rusli, Head of the Forestry Planning Agency
highlighted Indonesia's five forest policy priorities:
-- combating illegal logging and trade;
-- revitalizing the forest industry sector;
-- conservation and rehabilitation of forests;
-- stabilizing forest areas through sustainable forest management;
-- empowering communities in forest areas.

Dr. Rusli added that these priorities are consistent with efforts to
tackle climate change, and that the role of Indonesia's forests
should be given due importance leading up to the COP-13 conference.

Illegal Logging and Wildlife Conservation

4. (U) The MOF explained that they have made progress on combating
illegal logging, citing MOUs with the U.S., U.K., Japan, and China.
MOF officials admitted that there has been little progress in
implementing the Indonesia-China MOU; the GOI expects talks to
resume soon. MOF and MOE officials emphasized the importance of
stricter standards and laws in intermediary and consumer countries
for tackling trade in illegal timber. They welcomed any U.S.
engagement with China in this context, as well as with Malaysia.
Discussion is underway on legislation that would ban the import of
illegal timber into the E.U., and work is continuing on a legality
standard that can be included in bilateral or multilateral
agreements on illegal logging.

5. (U) MOF officials explained it issued Government Regulation No. 6
this year (forest land use and forest management planning) to
clarify misunderstandings among Indonesia's 450 districts about
logging within forest concession areas. The regulation increased
penalties for over-cutting and illegal logging within concession
areas. Under the regulation, MOF established community forest
plantations encompassing 5.4 million hectares and 360,000 households
to provide alternatives to illegal logging. Dr. Hadi Daryanto,
Secretary to the Director General of Forest Production Development,

said that MOF is also developing an online system for timber
tracking and administration. Japan is providing some assistance in
this effort.

6. (U) A/S McMurray appreciated the various activities of the
Association of Southeast Asian Nations Wildlife Enforcement Network
(ASEAN-WEN), emphasizing continued U.S. commitment to wildlife
conservation efforts. Dr. Tonny Soehartono, MOF Director of
Biodiversity Conservation, thanked the US for its assistance in

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training and capacity building for Indonesian police, customs
officials, judges, and forest rangers. Asked whether Indonesia
would be interested in developing a regional mechanism similar to
ASEAN-WEN for timber, Dr. Soehartono responded that the GOI would
like to optimize existing cooperative arrangements such as Forest
Law Enforcement and Governance (FLEG) and the International Tropical
Timber Organization (ITTO).

Legality Standards and International Cooperation
--------------------------------------------- ---

7. (U) MOF officials explained that one of their key efforts is the
development of a domestic timber legality standard. The MOF has
cooperated with the Indonesian Ecolabeling Institution (LEI) to
coordinate and organize a multi-stakeholder consultation on this new
standard. USAID and the UK's Department for International
Development supported this consultation process which also provided
a set of guiding principles that determine legality. The MOF and
its working group are examining the resulting draft internally and
expect a decision before year's end. Implementation of the legality
standard will require GOI capacity-building, especially for auditing
institutions. The US Forest Service (USFS) will assist Indonesia in
the legality standard implementation under the US-Indonesia Illegal
Logging MOU.

8. (U) The EU and Indonesia held the second Forest, Law Enforcement,
Governance and Trade (FLEGT) Voluntary Partnership Agreement (VPA)
on illegal logging and associated trade negotiation meeting in
Brussels on July 11-13, 2007. The MOF reported that the issues
discussed included assurances that VPA legality standards would be
in line with prevailing Indonesia laws and that the Timber Legality
Assurance System (TLAS) will be managed by an Indonesian Legality
Entity using criteria of verification and monitoring agreed by both
parties, as well as possible legislation to prohibit the import of
illegal timber into the E.U.. (Note: The MOF wants one standard that
would be accepted by importing countries, which currently use
different standards. The U.K. has the strictest standard; the U.S.
has no real equivalent in place but is developing legislation that
would require identifying the country of origin of forest products;
and Japan is seeking a better verification system for the existing
paperwork. The U.S. Forest Service plans to meet with the U.K.'s
Department for International Development this fall to discuss closer

Haze Management

9. (U) A/S McMurray raised the importance of addressing peat and
forest fires for reducing emissions. The MOF responded that it will
rent helicopters and deploy fire brigades in affected provinces,
particularly in West and Central Kalimantan and Riau in Sumatra
(fire incidents have been decreasing in East Kalimantan). The MOF
and local governments conduct fire monitoring in peat areas in West
Kalimantan, while MOF has also developed a communications system
between provincial centers and the MOF that allows for rapid
response to reports of forest hotspots. At the national level, the
MOF has the lead on an action plan for fire prevention for 35 key
districts. The MOE is helping communities implement "zero-burning"
land clearing practices through training on composting and the
production of wood briquettes. MOE official Antung Ardiansyah added
that Indonesia is active on the issue in the ASEAN disaster
mitigation committee.

Biofuel Development

10. (U) The MOF acknowledged that oil palm expansion has raised
environmental and social problems in some areas, but claimed that
there is sufficient land currently designated as bare, degraded or
non-productive that can be exploited for oil palm development
without shrinking forest cover. The MOF has designated areas for
plantation development, and claims that only 200,000 out of 5
million hectares designated in 2001 as production land in East
Kalimantan has been developed so far. To minimize natural resources
degradation, the MOF will, together with Ministry of Agriculture,
conduct a case study and environmental impact analysis (EIA) before
additional plantation development for biofuel takes place. (Note:
This does not resolve the problem that many local officials are

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ignoring the central government's policy and sanctioning the
clearing of high-value conservation forest for palm oil

Due to previously scheduled travel, neither the Environment nor
Forest Ministers were in the country during A/S McMurray's visit.
The ministers organized a group of their senior officials to meet
with her, including:

-- Dr. Achmad F. Mas'ud, Head of Center for Forest Information,
-- Dr. Tonny Soehartono, Director of Biodiversity Conservation,
-- Dr. Harry Santoso, Director of Center for Plantation Forest
Research and Development, MOF.
-- Dr. Hadi Daryanto, Secretary to Director General of Forest
Production Development, MOF.
-- Pratikna, Deputy Director for Investment Promotion and
International Trade Cooperation, MOF.
-- Mr. Agus Purnomo, Special Assistant to the Minister for
International Environmental Issues and Partnership, MOE.
-- Mr. Antung Ardiansyah, Assistant Deputy for River and Lake
Degradation Control, MOE.
-- Dr. Yetty Rusli, Head of Forestry Planning Agency, MOF.

NGO Roundtable

11. (U) A/S McMurray participated in a roundtable discussion with
environmental NGO leaders. McMurray noted that as the COP-13
conference in December draws closer, the U.S. will be looking more
at what developed countries can do to conserve forests and avoid
deforestation. McMurray added that the 2002 "State of the Forest"
for Indonesia is discouraging in that little seems to have improved
in the past five years. The Nature Conservancy (TNC) representative
concurred that there had been little overall improvement in the
forestry sector, adding that logging and plantation companies are
encroaching on national parks.

Wood Labeling and Certification

12. (U) The Kehati (Biodiversity Foundation) representative said
there are opportunities for dialogue with importing consumer
countries in Europe and North America. Companies and countries
importing wood for furniture, hardwood floors, and similar products
should be informed about the need for certified wood from
sustainable areas. This could help preserve high-value conservation
forests. Some retailers are already active, with Home Depot and
Armstrong cited as examples by the NGOs. The participants noted
however that wholesalers are less keen to participate in any
certification scheme. Other NGO representatives pointed out that
consumer countries in Asia and the Middle East often do not care how
suppliers source wood. The Ecolabeling Institute representative
noted that after a 3-4 year process, there is now a legality
standard in place for timber imports to the E.U. He hopes that
China, the U.S., and other timber importing countries adopt this
standard, as it would be arduous to negotiate separate trade
standards for each importer.

Enforcement Issues

13. (U) Several NGO participants noted that enforcement was
difficult due to corruption, too few enforcers, and the tendency for
smugglers to easily find alternative shipping routes. Police do not
really know the difference between legally and illegally logged
wood. Forestry regulations have a lot of loopholes. Enforcement
officials tend to go after the easier targets, the small players
rather than the big ones. Some illegal logging crackdowns have led
to unemployment in sawmills and furniture companies, creating a
backlash. One NGO noted that a potential solution is to create
areas for sustainable community logging. This helps increase the
price of wood to sustain livelihoods, while avoiding large,
industrial-scale clear cutting operations. A representative from
Conservation International suggested that joint international
patrols and regional customs cooperation could help enforcement

JAKARTA 00002140 004 OF 004

The Biofuels Problem

14. (U) The roundtable participants stressed that the development of
oil palm plantations for vegetable oil and biofuel is a huge threat
to forests. Kalimantan and Sumatra are already heavily deforested.
Papua has the most pristine remaining rainforest, but even there,
plantation companies want to convert 100 million hectares for oil
palm. While the central government's stated policy only allows oil
palm plantations on degraded land, the participants all agreed that
this was not the practice. Many local officials simply ignore the
central government's policy. The biofuels drive and global demand
for palm oil (used in over 1000 consumer products) will cause
continued conversion of forests to plantations. Indonesia's
biofuels policy is badly coordinated between local officials and
four national ministries: agriculture, forestry, trade and energy.

NGO Roundtable Participants:

-- The Nature Conservancy
-- Conservation International
-- Kehati (Biodiversity Foundation)
-- Wildlife Conservation Society
-- Orangutan Foundation International
-- World Wildlife Fund
-- Tropical Forest Foundation
-- Ecolabeling Institute
-- Telapak
-- Forest Watch Indonesia

Wehea Site Visit

15. On July 27-29, A/S McMurray visited Wehea, a 38,000 hectare
former logging site in Kotai Timur district, East Kalimantan, that
is now a protected forest and key orangutan habitat. Wehea is one
of the USAID Orangutan Conservation Services Program (OCSP) sites
and home to approximately 700 orangutans. OCSP team members
explained that the key to protecting any species, including the
orangutan, is to protect their habitat. They emphasized that loss
of forest habitat through unsustainable and illegal logging and
forest conversion represents the main threat to wild orangutan
populations and the largest source of carbon emissions in Indonesia.
They recommended that the international community offer economic
incentives such as carbon funds as alternatives to investments such
as oil palm plantations, which contribute to deforestation. In a
meeting with the Wehea Management Council, local leaders also
emphasized that protecting forest areas not only helps the
environment and wildlife, it preserves the cultures of the
communities that live in those forests. The Dayak indigenous tribal
residents of Wehea welcomed McMurray's visit and gave her the Dayak
name "Heling Lejie", or "a hopeful beginning".


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