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Cablegate: Ambassador Weighs in On Dow Chemical Project Suspension

VZCZCXRO2135
OO RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHBK #2742/01 3010713
ZNR UUUUU ZZH
O 280713Z OCT 09
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8740
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC IMMEDIATE
RUEATRS/DEPT OF TREASURY WASHINGTON DC IMMEDIATE
RUEAWJL/DEPT OF JUSTICE WASHINGTON DC IMMEDIATE
RHMFIUU/DEPT OF HOMELAND SECURITY WASHINGTON DC IMMEDIATE
RUEHCHI/AMCONSUL CHIANG MAI IMMEDIATE 7212
RHHMUNA/CDR USPACOM HONOLULU HI PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS PRIORITY
RUEHC/DEPT OF LABOR WASHINGTON DC

UNCLAS SECTION 01 OF 02 BANGKOK 002742

STATE FOR EAP/MLS, EEB, DRL
STATE PASS TO USTR FOR BWEISEL, BKLEIN
COMMERCE FOR EAP/MAC/OKSA FOR JKELLY
TREASURY FOR OASIA
SINGAPORE FOR FINATT BLEIWEIS

SENSITIVE
SIPDIS

E.O. 12958:N/A
TAGS: ECON EINV ELAB ETRD SENV PREL TH
SUBJECT: AMBASSADOR WEIGHS IN ON DOW CHEMICAL PROJECT SUSPENSION

REF: A: BANGKOK 2678 (PRIME MINISTER MEETS WITH ASIA-PACIFIC
AMERICAN CHAMBERS OF COMMERCE)
B. BANGKOK 2597 (ENVIRONMENTALISTS VERSUS INDUSTRIALISTS)

BANGKOK 00002742 001.2 OF 002


1. (U) Summary: As reported ref B, the Industrial Estate Authority
of Thailand (IEAT) has been ordered by Thailand's Central
Administrative Court to halt construction in the Map Ta Phut
industrial zone, where U.S. firms Dow Chemical and Chevron have
multi-billion dollar projects underway. IEAT has been ordered to
suspend the issuance of new construction permits in accordance with
the court injunction, a move that could cost Dow alone $10 million a
month. The Ambassador has weighed in with the Prime Minister on the
situation, emphasizing our respect for the court ruling and the
support that the U.S. firms involved have for the environmental
issues. The Prime Minister noted that his government has appealed
the court ruling, but it could be months before the appeal is heard.
End Summary.


2. (SBU) In accordance with an injunction issued by the Central
Administrative Court on September 29, IEAT has been ordered to halt
all construction currently underway in Map Ta Phut. However, as IEAT
does not have authority to suspend construction of a private entity
unless the company is found to be in violation of specific codes,
the IEAT is limited in its ability to affect on-going construction.
And, to mitigate against any possible lawsuits that might be
initiated by investors who may suffer losses as a result of actions
taken by IEAT, the government body is moving very cautiously as it
seeks to satisfy the stipulations of the injunction. Where the
IEAT's hands have been tied is in the issuance of new construction
permits, which has now ceased in accordance with the court
injunction.

3. (SBU) According to Dow Thailand representatives, this new move
leaves Dow without an additional 20 permits needed for the
completion of its $1.5 billion investment in MTP. As Dow's
construction in MTP is done in a module by module manner, permits
are sought on an "as needed" or "just-in-time" basis. Thus, Dow has
yet to receive construction permits for modules planned for next
month and beyond. Complicating matters for Dow is the fact that
while its Environment Impact Assessment (EIA) for the construction
of its hydrogen plant (joint venture with Belgian company Solvay)
was approved just one week prior to the announcement of the court
injunction, the issuance of the actual certificate of approval was
held up in the Office of Natural Resources and Environmental Policy
and Planning (ONEP) in the Ministry of Natural Resources and
Environment. Now that the court injunction is in place, the
Ministry of Natural Resources and Environment will not issue the
certificate of approval.

4. (SBU) Despite the freeze on the issuance of new construction
permits, Dow representatives claim to have been given verbal
permission by IEAT officials to proceed with its USD 1.5 billion
project. In a teleconference between U.S. Ambassador Eric G. John
and Heinz Haller, Dow Executive Vice President, the Ambassador fully
endorsed Dow's interest in remaining on the right side of the law.


5. (SBU) According to Dow, the immediate cost to their operation of
halting construction is calculated at $10 million/monthly. Dow
estimates that the indirect costs could go as high as $60-80
million/monthly, and affect 6,000 jobs currently and another 4,000
jobs that were to have been created over the next four months.

6. (SBU) In response to the Ambassador's inquiry about the Map Ta
Phut dispute in a one-on-one meeting (ref A), the Prime Minister
expressed frustration with the process and emphasized that his
government had appealed the ruling by the Administrative Court and
that he hoped the Supreme Administrative Court would overturn the
ruling so that companies, including Dow Chemical and Star Petroleum
Refining Co. (a subsidiary of Chevron), could proceed with their
investment projects. However, he acknowledged that a decision by
the Supreme Administrative Court could take a couple of months, and
indicated that the government is currently reviewing other options
to enable the projects to proceed, particularly if the court's
initial ruling is upheld. The Ambassador stated that the U.S.
Government will not interfere with the legal process and stressed
that all parties want to reach an environmentally friendly solution

BANGKOK 00002742 002.2 OF 002


to the problem.

7. (U) According to industry players, the Joint Standing Committee
on Commerce Industry and Banking (a non formal consultation group
co-founded in 1977 by the Board of Trade, Federation of Thai
Industries and the Thai Bankers' Association) has formed a Working
Committee on Map Ta Phut. The first meeting of the Working
Committee on Map Ta Phut was held on October 20, and attracted
representatives from Thailand's Ministry of Industry, the Federation
of Thai Industries, the Joint Foreign Chambers of Commerce in
Thailand, the Thai Banker's Association, the Board of Trade and the
American Chamber of Commerce in Thailand, together with local
residents (who have an interest in seeing the projects proceed).
The parties discussed possible solutions that would meet the needs
of all. At the conclusion of the meeting, the group endorsed the
idea that "economic development and environmental protection can
co-exist," but was unable to produce a plan on how to proceed to
resolve the current impasse.

JOHN

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