CANADA'S ACTION ON ASIA PULP AND PAPER

UNCLAS OTTAWA 000578

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: ECON EFIN EINV SENV CA AA
SUBJECT: CANADA'S ACTION ON ASIA PULP AND PAPER

REF: A. A) JAKARTA 2431


B. B) OTTAWA 484

C. C) STATE 44188


1. (SBU) On February 28 Finoff touched base with Canada's
Department of Foreign Affairs (DFAIT) for an update on GOC
action with regard to proposals on Asia Pulp and Paper
restructuring. The joint letter to President Megawati to be
drafted by the Canadian Embassy in Jakarta (ref A) has been
cleared in Ottawa and is being circulated among the
participating embassys in Jakarta. The GOC hopes to have the
clearance process completed by early next week, but
understands there are likely to be changes to the text.


2. (SBU) The possibility of calling in Indonesia's
ambassador to Ottawa to protest handling of the case is under
consideration, but a final decision has not been made.
According to DFAIT, the GOC "might go that route."


3. (SBU) The Export Development Corporation, Canada's ECA,
said that they are "not that strongly contemplating" a firm
decision to take private corporations off cover and are not
planning to put anything in writing. He added that he
believes, speaking generally, that most ECAs are reluctant to
draw a line in the sand that continues for an indefinite
period. "Actions speak," and they are not thinking of doing
anything publicly. EDC believes the next step is the letter
to President Megawati, and they'll see what happens after
that.


4. (SBU) Comment: Today's conversations in Ottawa confirm
the view (Ref B) that GOC action and decision making on this
issue are driven by the Canadian Embassy in Jakarta. EDC
does not have a presence in Jakarta and DFAIT appears to be
relying on the Ambassador's judgment. EDC, which operates as
a private company, showed the hesitation about discussing
proprietary matters that would be expected of a banker
talking about a client. There seems to be a strong
inclination on the part of the GOC to await the response to
the joint letter to Megawati before moving on to other steps.
End comment.
CELLUCCI