CAN A ROAD SAVE THE AMAZON? THE BR-163

UNCLAS SECTION 01 OF 02 BRASILIA 001657

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SUBJECT: CAN A ROAD SAVE THE AMAZON? THE BR-163


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REFTEL: (A) 05 BRASILIA 598, (B) 05 BRASILIA 2426


1. Summary: BR-163 is an unpaved highway located in Brazil's
Amazon Forest which leads from the city of Santarem, in the state of
Para, to Cuiaba, Mato Grosso. While abandoned for the past three
decades, it has once again become a government priority for the
development of that area. The region is home to three large
hydrographic basins, and is one of the most productive agricultural
areas of the country, especially in terms of soybean production.
However, the road provides a challenge for the GoB to demonstrate
that it can sustainably develop the Amazon and mitigate the
construction's potential environmental impacts. End Summary


2. The Santarem - Cuiaba road (BR-163) was initially built in 1973
and is approximately 1,756 km long, with roughly 956 km, as of yet,
unpaved. If paved, BR-163 would create a more direct route to port
for the region's agricultural products, reducing transportation
distances by half and representing an estimated 20% decrease in
transportation costs for Brazilian soybean producers. Brazil's
agricultural boom and the subsequent producer pressure to decrease
shipping costs have made paving BR-163 a strategic initiative in
terms of both regional and national development. In addition to
agribusiness, local politicians and entrepreneurs argue that the
road would facilitate the transportation of electronic products from
the industrial center in Manaus to markets in the South of the
country.


3. Even though there are these economic advantages to building the
road, there remains significant concern of social and environmental
damages associated with its construction. The first time BR-163 was
built there was very little planning, which resulted in
deforestation, unorganized migration and social conflicts that lead
to a considerable increase in violent crime including homicides in
the region. This time around, rural communities are demanding
government planning in order to minimize impacts from land
speculation, predatory exploitation, social violence and
environmental degradation. Initial pronouncements surrounding the
road's paving caused the area's population to increase by 6% between
1996 and 2000 and recent announcements about the road's future led
to a 500% increase in deforestation in the towns along the BR-163.
Studies show that road construction and the resulting population
surplus generate land problems and, many times, uncontrolled
exploitation of natural resources.


4. Related to development, land titling and speculation have been
historical woes in the Amazon Basin. The process of land occupation
in the region started in the 1940s. Mining, cattle ranching and
logging were considered the ideal occupational activities for a
location that was considered a "demographic blank" that needed to be
developed and occupied. Most land occupation was done illegally,
without any government control and often within Indigenous
Territories. This problem has become so serious that social
conflicts and human deaths have been part of the issue and continue
to occur, as evidenced by the death of Dorothy Stang last year (Ref
A). Unclear land tenure in the region also played and continues to
play a central role in the present rate of deforestation. The lack
of monitoring and government enforcement, the cheap price of land
and high economic return, along with the expansion of soybean
production and cattle grazing are all considered obstacles to
sustainable development.


5. While paving BR-163 has become one of the Lula Administration's
priorities, the GoB is attempting to avoid many of the mistakes
previously made. With USAID support, local grassroots movements,
NGOs and civil society organizations conducted, in 2003, a series of
participatory workshops designed to discuss regional development
options for the BR-163 region. This was part of the impetus behind
the "Santarem Letter" which the BR-163 NGO network presented to the
GoB in March 2004. The Letter outlined the actions that the GoB
needed to implement in order for the paving to take place in a
sustainable manner. After receiving the letter, the GoB convened a
technical working group responsible for elaborating a document that
establishes the actions and planning necessary for the construction
of the highway.


6. In paving BR-163, the government's goal is to show that it is
possible to develop the Amazon region sustainably. To this end,
they have created two new policies. The first is known as the
BR-163 Sustainable Plan and involved the work of 17 Brazilian
ministries. The plan's initial actions include putting into
practice some emergency procedures to intensify the State's presence
and public authority in the region. Some of these procedures
include supplementary forest inspections and raising the number of
personnel in the area. Additional measures are being implemented to
ensure public safety, land organization and environmental
monitoring, to name a few. Compensational actions for environmental

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hazards and integrated policies, amongst all the states involved,
for regional development are also found in the pan. The plan
covers seventy one cities: 28 of tem are in the state of Para, 37
in Mato Grosso and 6 in Amazonas covering a total area of 1,23
milion square kilometers. This area corresponds to 2.6% of the
total Legal Amazon Region and 14.47% f the nation's territory.
Little of the Plan has in fact, been put into practice, due to
continued discussions concerning environmental impacts and otential
complications. Many communities and NGs fear that the plan looks
good on paper, but ma never be implemented.


7. Complementing the BR163 Sustainable Plan is the Action Plan for
Prevention and Control of Deforestation in the Legal Amaon, which
promotes a new development model for te Amazon region based on
social inclusion, cultural diversity and economic development.
Sustainable use of natural resources will be encouraged through
financial incentives, the implementation of environmentally
sustainable structure and the recovery of degraded forest areas. In
June 2006, the GoB officially implemented the 16 million hectare
BR-163 forest district which utilizes the Action Plan and will
incorporate Brazil's new forest concessions law (Ref B). The
district will receive investments for sustainable development and
production of forest products. GoB has promised to invest US$30
million in infrastructure and public land mapping for the BR-163
forest district. Economic development will proceed through
managed logging and controlled utilization of forest resources.
Brazil's Minister of Environment Marina Silva was quoted as saying
that "building this road means that environment and development are
working together."


8. The creation of the BR-163 Sustainable Plan involves not only
government officials, but also the agricultural sector, NGOs, local
communities and business. If the actions in the plan are actually
put into practice, little resistance from local community members is
likely. On the other hand, the current lack of private sector
partners interested in paving the road might hamstring the project.
Yet, in June, President Lula reinforced his promise to begin
constructing the road saying that by the end of this year the laws
with all the conditions and requirements to begin the work will be
ready.


9. Nevertheless, recent events highlight how tentative BR-163 plans
still are. In May 2006, Brazil's Minister of National Integration,
Pedro Brito do Nascimento, announced that the Government, together
with the Army Engineering Forces, would begin paving the road this
year through a Public and Private Sector Partnership (PPP). Prior
to the announcement, the expectation was that paving would have
started in the beginning of this year. As th project will rely on
funding from the private sctor, many environmentalists do not
believe that the road will actually be paved. Recent GoB estimates
evaluate the total cost to pave BR-163 will be US$ 500 million and
the project will take two to three years to conclude. The GoB once
again promises that paving will now take place in the beginning of
next year, sometime after the election.


10. Still other events underscore the problematic nature of the
paving project. Just last week, approximately 200 Indians blocked
the Santa Helena to Itaba part of the BR-163 for two days.
Claiming that Indigenous demands were not included in the BR-163
Sustainable plan, the tribe was demanding additional protections of
their lands during the paving period. As a result of the blockade,
Par and Mato Grosso were isolated and faced shortages of supplies
including fuels and food. The Caiaps Indian tribe leader, Megaron
Txucarrmce claims that the development of cities (along BR163) is
encroaching on Indigenous Lands. The trbe is against paving BR-163
unless Indigenous lad delimitation takes place before the paving
begns.


11. Comment: The new sustainable economic/environment development
model of the Amazon remains a controversial issue due to the
enormous forest destruction that took place in the past and demands
from rural and indigenous communities that still have to be
considered. BR-163 could be the start of a successful development
model, if its Sustainable Plan is actually implemented and the GoB
has the necessary funding for its paving. Many, NGOs included, now
see hope, as the GoB's efforts could provide a possible solution to
the region's land speculation, deforestation and development
difficulties. Paving BR-163 is definitely not the solution to all
problems of the Amazon Region, but in case it works the beginning of
a new phase for the sustainable management of the Forest could be
starting. End Comment

SOBEL